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Exhibit 4.1

SEARS
PUERTO RICO SAVINGS PLAN

Effective 

 As of January 1, 2005

 

 

 

 

SEARS
PUERTO RICO SAVINGS PLAN

Effective As of January 1, 2005

SECTION 1

General

          1.1 History,
Purpose and Effective Date. Sears, Roebuck and Co. (the "Company"),
a New York corporation, has established the Sears Puerto Rico Savings Plan to
encourage eligible employees to save a portion of their earnings on a regular
basis, to accumulate capital for their future economic security and to share in
the profits of the Company. The Plan consists of a profit sharing plan with a
cash-or-deferred arrangement which is intended to qualify under sections 1165(a)
and 1165(e) of the Puerto Rico Internal Revenue Code of 1994, as amended (the
"Code"). Except
as expressly designated herein, the Plan is effective as of January 1, 2005,
generally the "Effective Date" of the Plan as set forth herein.
If a different effective date is set forth herein with respect to a particular
provision, that date shall determine the effective date with respect to that
provision.

          1.2 Related
Companies and Employers. The term "Related Company" means
any corporation or trade or business during any period during which it is, along
with the Company, a member of a controlled group of corporations or a controlled
group of trades or businesses, as described in section 1028 of the Code. The
Company and each Related Company which adopts the Plan with the consent of the
Company are referred to below collectively as the "Employers"
and individually as an "Employer".

          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" and "Plan
Administrator" as that term is defined in Section 3(16)(A) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
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, 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, 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, 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.

          1.4 Plan
Year. The term "Plan Year" means the
twelve-consecutive-month period beginning on each January 1 and ending on the
following December 31.

          1.5 Accounting Dates. The term "Accounting Date" means
each day on which the New York Stock Exchange is open for business, as
determined by the Company in its sole discretion.

          1.6 Applicable Laws. The Plan shall be construed and administered in
accordance with the laws of the Commonwealth of Puerto Rico, including the Code
and the Regulations promulgated thereunder and the laws of ERISA, to the extent
that such laws are not preempted by federal law.

          1.7 Gender
and Number. Where the context permits, words in any gender shall include any
other gender, words in the singular shall include the plural and the plural
shall include the singular.

          1.8 Notices.
Any notice or document required to be filed with the Company under the Plan will
be properly filed if delivered or mailed, postage prepaid, to the Company (or
its delegate), at its principal executive offices. Any notice required under the
Plan may be waived by the person entitled to notice.

          1.9 
Form of Election and Signature. Unless
otherwise specified herein, and except as provided in Section 11.4, any election
or consent permitted or required to be made or given by any Participant or other
person entitled to benefits under the Plan, and any permitted modification or
revocation thereof, shall be made in writing or shall be given by means of such
interactive telephone and/or computer system, such as website access, as the
Plan Administrator may designate from time to time as the sole vehicles, for
executing regular transactions under the Plan (referred to generally herein as
the "Phone System"). Each Participant shall have a personal
identification number or "PIN" for purposes of executing
transactions through the Phone System. In addition, the Plan Administrator can
establish an alternate procedure for executing regular transactions through the
Phone System by which each participant can use individually identifiable
information (other than his PIN) as specified by the Plan Administrator.

          The entry by a Participant of his PIN (with his Social Security Number) or
any other identification information specified by the Plan Administrator, shall
constitute his valid signature for purposes of any transaction the Company
determines should be executed by means of the Phone System, including, but not
limited to, enrolling in the Plan, electing contribution rates, making
investment choices, executing loan documents (if loans are permitted under the
Plan) and consenting to a withdrawal or distribution. Any election made through
the Phone System shall be considered submitted to the Plan Administrator on the
date it is electronically transmitted, unless such transmission occurs after the
applicable cut off date, as determined by the Company in its sole discretion,
for the Phone System for that day, in which case it will be considered submitted
on the next day on which the New York Stock Exchange is open for business. 

          1.10

 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.

          
1.11

 Action by Employers. Any action required or
permitted to be taken by the Company or any other Employer which is a
corporation shall be by resolution of its Board of Directors or a duly
authorized committee thereof, or by a duly authorized officer of the Employer.
Any action required or permitted to be taken by any Employer which is a
partnership shall be by a general partner of such partnership or by a duly
authorized officer thereof.

          
1.12

 Plan Supplements. The provisions of the
Plan as applied to any Employer or any group of employees of any Employer may be
modified or supplemented from time to time by the Company by the adoption of one
or more "Supplements". Each Supplement shall form a part of the
Plan as of the Supplement's effective date. In the event of any inconsistency
between a Supplement and the Plan document, the terms of the Supplement shall
govern.

          
1.13

 Defined Terms. Terms used frequently with
the same meaning are defined throughout the Plan. The Index of Defined Terms
attached hereto contains an alphabetical listing of all such terms and the
subsections in which they are defined.

SECTION 2

Eligibility Service

          2.1 Year
of Eligibility Service. Each
employee, regardless of whether he is a full-time, part-time, seasonal or
temporary employee, who has not already been credited with a Year of Eligibility
Service (or who has been so credited but who after the Effective Date is treated
as a new hire pursuant to subsection 2.2) will have a Year of Eligibility
Service at the end of the first Computation Period during which he completes
1,000 Hours of Service (without having to be employed on the last day of such
Computation Period), with "Computation Period" for purposes of
this paragraph meaning the initial 12-month period beginning on the date the
employee is first credited with an Hour of Service and each Plan Year beginning
after such date. For purposes of this paragraph, if an employee who terminates
employment with the Employers and related Companies is reemployed, the Plan year
containing his reemployment date will constitute a Computation Period, and if
such employee is reemployed in a Computation Period that is different than the
Computation Period in which he terminated employment, the twelve-month period
beginning with his reemployment date will also be a Computation Period (in
addition to the Plan Years beginning after his reemployment date).

          2.2 Treatment
as New Employee After Consecutive One Year Breaks in Service. If an employee
who has never become a Participant (and therefore does not have a nonforfeitable
right to any benefit under the Plan) terminates employment with the Employers
and Related Companies prior to January 1, 2005, and the number of his
consecutive One Year Breaks in Service equals or exceeds seven (six in the case
of an individual whose first 12 months of a Maternity or Paternity Absence are
disregarded under subsection 2.4), then any Year of Eligibility Service (and any
eligibility service not yet constituting a Year of Eligibility Service) earned
prior to the first such One Year Break in Service shall be erased and, if he is
later employed or reemployed by an Employer or a Related Company, he shall be
considered a new employee for all purposes under the Plan.

          Effective with respect to terminations of employment on or after January 1,
2005, if an employee who has never become a Participant (and therefore does not
have a nonforfeitable right to any benefit under the Plan) terminates employment
with the Employers and Related Companies, and the number of his consecutive One
Year Breaks in Service equals of exceeds the greater of five (or his years of
Vesting Service prior to his termination) then any Year of Eligibility Service
(and any eligibility service not yet constituting a Year of Eligibility Service)
and any Years of Vesting Service (and any vesting service not yet constituting a
Year of Vesting Service) shall be erased and, if he is later employed or
reemployed by an Employer or a Related Company, he shall be considered a new
employee for all purposes under the Plan.

          Notwithstanding the foregoing, an individual who was employed by the Company
or a Related Company before 1998 and who terminates employment after having
earned a Year of Eligibility Service and attained age 21 but before becoming a
Participant by making contributions to the Plan shall retain his Year of
Eligibility Service regardless of the length of his absence. The foregoing
exception shall not apply to any individual who was hired before 1998 but who
terminates employment with the Employers and Related Companies without having
earned a Year of Eligibility Service.

          A Participant's number of Years of Vesting Service accrued after five
consecutive One Year Breaks in Service shall be disregarded for purposes of
determining the nonforfeitable percentage of his benefit under the Plan derived
from Employer contributions which accrued prior to such break.

          2.3 Hour
of Service. The term "Hour of Service" means, with respect
to any employee, each hour for which he is paid or entitled to payment for the
performance of duties for an Employer or a Related Company or for which back
pay, irrespective of mitigation of damages, has been awarded to the employee or
agreed to by an Employer or a Related Company, subject to the following:

        (a) An
        employee or Participant shall be credited with the number of regularly
        scheduled working hours included in the time period on the basis of
        which payment to the Employee is calculated (or, if the number of such
        hours is not determinable, 8 Hours of Service per day (to a maximum of
        40 Hours of Service per week)) for any period during which he performs
        no duties for an Employer or a Related Company (irrespective of whether
        the employment relationship has terminated) by reason of a vacation,
        holiday, illness, incapacity (including disability), layoff, jury duty,
        military duty or leave of absence but for which he is directly or
        indirectly paid or entitled to payment by an Employer or a Related
        Company; provided, however, that an employee or Participant shall not be
        credited with more than 501 Hours of Service under this paragraph (a)
        for any single continuous period during which he performs no duties for
        an Employer or a Related Company. Payments considered for purposes of
        the foregoing sentence shall include payments unrelated to the length of
        the period during which no duties are performed but shall not include
        payments made solely as reimbursement for medically related expenses or
        solely for the purpose of complying with applicable workmen's
        compensation, unemployment compensation or disability insurance laws.

        (b) Solely for purposes of determining whether an employee has
        incurred a One Year Break in Service, the employee shall be credited, to
        the extent not otherwise credited in accordance with the foregoing
        provisions of this subsection 2.3 with 8 Hours of Service for each day
        up to a maximum of 40 Hours of Service for each calendar week for any
        period during which the employee is absent from active employment with
        an Employer or Related Company by reason of a Maternity or Paternity
        Absence. Hours of Service credited in accordance with the foregoing
        sentence shall be credited for the Plan Year during which the absence
        begins to the extent that such crediting would prevent the employee from
        incurring a One Year Break in Service during that year and, in each
        case, shall be credited in the immediately following year.

        (c) Hours
        of Service shall be calculated and credited pursuant to Department of
        Labor Regulation section 2530.200b-2, which is incorporated herein by
        reference.

          2.4 One
Year Break in Service. For an absence beginning before the Effective Date,
the term "One Year Break in Service" means the
12-consecutive-month period commencing on the day after the day an employee's
employment with the Employers and Related Companies is terminated for any
reason, unless such absence constitutes a Maternity or Paternity Absence. With
respect to paragraph 2.1, any absence of less than 12 months following such
termination of employment shall be disregarded. An individual who is absent
because of service in the U.S. Armed Forces will begin a One Year Break in
Service on the 91st day following his discharge from military service, if he
does not return to work within 90 days of such discharge. With respect to an
individual whose absence from employment constitutes a Maternity or Paternity
Absence, the term "One Year Break in Service" means the
12-consecutive-month period commencing on the second anniversary of the first
day of such absence if he is not paid or entitled to payment for the performance
of duties for an Employer or a Related Company during that 12-consecutive-month
absence. The period between the first and second anniversaries of the first day
of a Maternity or Paternity Absence shall not constitute a period of continuous
Service.

          The term "Maternity or Paternity Absence" means an
employee's or Participant's absence from work because of the pregnancy of such
individual, the birth of a child of such individual, the placement of a child
with such individual in connection with the adoption of a child by such
individual, or for purposes of caring for the child by such individual
immediately following such birth or placement. The Plan Administrator may
require the employee or Participant to furnish such information, as it considers
necessary to establish that such individual's absence was a Maternity or
Paternity Absence.

          For an absence beginning after the Effective Date, the term "One Year
Break in Service" means with respect to any employee, any Plan Year during
at least a portion of which he is not an employee of an Employer or a Related
Company and during which he completes fewer than 501 Hours of Service.

          2.5 Military
Absences. Notwithstanding any other provision of the Plan to the contrary,
eligibility service shall be credited, and make-up contributions shall be
permitted (and made), as required by Chapter 43 of Title 38 of the United States
Code. 

          2.6 
Service With Sears Canada Inc. Any eligibility service earned by
an employee of Sears Canada, Inc., who subsequently becomes employed by an
Employer as defined in this Plan, will be recognized under this Plan.

          2.7 Pre-Acquisition
Service. By written resolution of the most senior executive of the Company
with primary responsibility for employee benefit matters, regardless of title
(the "Benefits Executive"), or by the terms of a stock or asset
purchase agreement, merger agreement or other transaction document executed by
the Company, the Company may recognize pre-acquisition service with, or
pre-acquisition eligibility under a plan similar to the Plan of, a company which
becomes a Related Company or the assets of which are acquired by a Related
Company, for purposes of determining eligibility under the Plan. Such
pre-acquisition service and/or eligibility shall be calculated in such manner as
the Benefits Executive in his sole discretion shall determine.

SECTION 3

Participation in Plan

          3.1 
Eligibility for Participation. Subject to the terms and conditions of
the Plan, each Eligible Participant who was a participant under the Sears 401(k)
Savings Plan prior to January 1st, 2005 shall become a Participant in
the Plan on the effective date of his election to participate in the Plan,
provided such individual is an Eligible Employee on such date. An Eligible
Employee will become a "Participant" in the Plan on the later
of (i) the first day of the third month following the date of hire, regardless
of age and (ii) the effective date of his election to participate in the Plan,
provided he is still an Eligible Employee on such date. Each employee of an
Employer is an "Eligible Employee" for any period in which he
satisfies all of the following requirements:

        (a) He belongs to a group of employees to whom participation in the
        Plan has been extended by the Company ("an eligible group"),

        (b) He is not a member of a collective bargaining unit, unless the
        Plan has been extended to the collective bargaining unit under a
        currently effective collective bargaining agreement,

        (c) He is not a person employed outside Puerto Rico who is neither a
        United States citizen nor a resident of Puerto Rico, and

        (d) He does not perform services for an Employer under a contract,
        agreement or arrangement that purports to treat him as either an
        independent contractor or the employee of a leasing organization or
        agency, even if he is subsequently determined (by judicial action or
        otherwise) to have instead been a common law employee of such Employer.

        (e) He is not a seasonal, temporary or peak employee, nor an intern.
        (However, if a seasonal, temporary, or peak employee is reclassified at
        a subsequent time in his employment with an Employer, then for
        eligibility purposes his original date of hire will be used.)

          For purposes of paragraph (a) above, all employees of an Employer will be
considered to belong to an eligible group unless the Company by written action
of the Benefits Executive designates certain groups of employees or business
units as ineligible to participate in the Plan.

          Except as provided in section 2.2, if a Participant ceases to be an Eligible
Employee for any reason, including termination of employment, and he again
becomes an Eligible Employee, he will be eligible to recommence his
participation in the Plan immediately upon again becoming an Eligible Employee.
In the event an employee of an Employer or a Related Company who was not an
Eligible Employee becomes an Eligible Employee, such employee will immediately
be eligible to commence participation in the Plan if he has completed a Year of
Eligibility Service; provided that, in the event an employee of an Employer or a
Related Company, who was not an Eligible Employee, becomes an Eligible Employee,
such employee will immediately be eligible to commence participation in the Plan
on the first day of the month following the date he becomes an Eligible
Employee, or if later, the first day of the third month following his date of
hire.

          3.2 Commencement
of Participation. Each Eligible Employee is required to make an election to
participate in the Plan. An Eligible Employee may elect to commence
participation in the Plan on the first day following the date he has satisfied
all of the eligibility requirements set forth in subsection 3.1. If an Eligible
Employee does not properly elect to commence participation on such date, he may
commence his participation on any day thereafter. Any such election will be
effective with the first payroll that is administratively feasible following
such election.

          3.3 Inactive
Participation. If an individual ceases to meet the eligibility requirements
of subsection 3.1, such individual shall be considered an inactive Participant
in the Plan as long as any amount is credited to his Accounts under the Plan,
and:

        (a) no
        contributions shall be made by or for him under Section 4 or Section 5;
        and

        (b) except
        as otherwise expressly provided herein, he may not make a withdrawal
        under Section 10 after he ceases to be an employee of an Employer or a
        Related Company.

          3.4 Plan
Not Contract of Employment. The Plan does not constitute a contract of
employment, and participation in the Plan will not give any employee or
Participant the right to be retained in the employ of any Employer nor any right
or claim to any benefit under the Plan, unless such right or claim has
specifically accrued under the terms of the Plan.

          3.5 Leased
Employees. The term "Leased Employee" means a person who is not an
employee of the Employer and who provides services to the Employer if: (a) such
services are provided pursuant to an agreement between the Employer and any
other person, (b) such person has performed such services for the Employer on a
substantially full time basis for a period of at least one (1) year, and (c)
such services are performed under primary direction or control by the Employer.
If a person satisfies the above for treatment as a "Leased Employee",
such Leased Employee shall not be eligible to participate in this Plan but, such
person shall be treated as if the services performed by him in such capacity
were performed by him as an employee of a Related Company which has not adopted
the Plan; provided, however, that no such service shall be credited for any
period during which not more than 20% of the non-Highly Compensated workforce of
the Employers and the Related Companies consists of Leased Employees and the
Leased Employee is a participant in a money purchase pension plan maintained by
the leasing organization which (i) provides for a non-integrated employer
contribution of at least 10 percent of compensation, (ii) provides for full and
immediate vesting, and (iii) covers all employees of the leasing organization
(beginning with the date they become employees). For purposes of this subsection
3.5, "Highly Compensated" shall have the meaning set forth in
subsection 8.5.

SECTION 4

Pre-Tax, After-Tax and Rollover Contributions

        4.1 Pre-Tax
Contributions.

      
      (a) Subject to the limitations set forth in subsections 4.3 and Section
      8, the provisions of paragraph 4.1(b), below, and such additional rules as
      the Company from time to time may establish on a uniform and
      nondiscriminatory basis, for any payroll period a Participant who has
      reached the Match Eligibility Date, as such term is defined in Section 5.6
      may elect to have his Eligible Compensation reduced by a whole percentage,
      and a corresponding amount contributed on his behalf to the Plan by his
      Employer as a "Pre-Tax Contribution", which amount shall
      not be less than 1 percent and shall not exceed ten (10%) percent of his
      Eligible Compensation (as defined in subsection 4.7) for that payroll
      period or eight thousand dollars ($8,000), whichever is less, or such
      higher amount as may be permitted by Section 1165(e)(7) of the Code in any
      Plan Year.

      
      (b) Any election pursuant to this subsection 4.1 shall be effective as
      soon after it is entered into the Phone System as is administratively
      feasible.

          4.2 After-Tax
Contributions. Subject to the limitations set forth in subsections 4.3 and
Section 8 and such additional rules as the Company from time to time may
establish on a uniform and nondiscriminatory basisan Eligible Employee for any
payroll period, may elect to make "After-Tax Contributions" to
the Plan through payroll deductions in a whole percentage that is not less than
1 percent nor more than 10 percent of his Eligible Compensation for that payroll
period. Any election pursuant to this subsection 4.2 shall be effective as soon
after it is entered into the Phone System as is administratively feasible.

          4.3 Total
Pre-Tax and After-Tax Contributions. Notwithstanding the foregoing
provisions of this Section 4, Pre-Tax Contributions made on behalf of a
Participant and After-Tax Contributions made by such Participant for any payroll
period may not together exceed (20%)twenty percent of his Eligible
Compensation for such payroll period.

          4.4 Payment
of Pre-Tax and After-Tax Contributions. Pre-Tax Contributions and After-Tax
Contributions shall be paid to the Trustee by the Employer on the earliest date
on which such contributions can be reasonably and accurately segregated from the
Employer's general assets with appropriate data confirmation to ensure proper
crediting.

          4.5 Modification,
Discontinuance and Resumption of Pre-Tax or After-Tax Contributions. Subject
to such rules and restrictions as the Company may establish on a uniform and
nondiscriminatory basis, a Participant may adjust his Pre-Tax and/or After-Tax
Contributions prospectively by entering into the Phone System, prior to the time
such change is to be effective, an election to make any of the changes listed
below:

        (a) change
        his Pre-Tax and/or After-Tax Contribution rates within the limits
        specified above;

        (b) discontinue
        making Pre-Tax and/or After-Tax Contributions; or

        (c) resume
        making Pre-Tax and/or After-Tax Contributions.

          4.6 Rollover
Contributions. A Participant may make a Rollover Contribution (as defined
below) to the Plan, in cash, subject to the determination of the Company that
such rollover satisfies the requirements of this subsection 4.6. Before
approving a rollover, the Company will request the information required under
Article 1165 of the regulations promulgated under the Code and may request from
the Participant any documents which the Company, in its discretion, deems
necessary. The term "Rollover Contribution" means a rollover
contribution of a complete distribution which, under Section 1165(b)(2) of the
Code, is permitted to be rolled over to a qualified plan. The
Plan will accept a direct rollover from another qualified plan described in
section 1165(a) of the Code. The Plan will also accept a Participant
contribution of a lump sum distribution received by a Participant from another
qualified plan under Section 1165(a) of the Code, which is transferred in its
entirety by the Participant to the Plan within sixty (60) days following his
receipt therefore. 

          4.7 Compensation and Eligible Compensation. The Plan takes into
account different items of compensation paid to Participants and Eligible
Employees for different purposes. Generally, all items of taxable compensation
are divided into the following five categories:

        (a) regular
        pay, which includes (but is not limited to) hourly wages, salary,
        commission/draw, shift differential, standby pay, paid time off (normal
        vacation, holiday and illness pay), Sunday premium pay, business
        training pay, salary continuation pay paid in installments;

        (b) special
        pay, which includes (but is not limited to) vacation or salary
        continuation pay paid in a lump sum, taxable moving allowances and any
        related tax gross-up, merchandise and trip awards, cash prizes, tuition
        reimbursement, sign-up bonuses, stay bonuses, referral bonuses, state
        disability income;

        (c) annual
        bonus and regular incentive pay;

        (d) deferred
        compensation, including amounts paid to or from any nonqualified
        deferred compensation plan sponsored by the Employers and Related
        Companies or any long-term incentive plan; and

        (e) gain
        from the exercise of a nonqualified stock option or the lapsing of a
        restriction on Company stock awards.

          All items in categories (a) and (c) that are paid to a Participant during a
Plan Year or that would have been paid to a Participant during such Plan Year,
but for his Pre-Tax Contribution election under this Plan (or any other cash or
deferred arrangement maintained by the Employers and Related Companies),
constitute "Eligible Compensation" for such Plan Year. All
items in categories (a), (b) and (c) (determined prior to any Pre-Tax
Contribution election under this Plan (or any other cash or deferred arrangement
maintained by the Employers and Related Companies), are considered to constitute
"Compensation" for purposes of applying the limits of Section 8
of the Plan. Items in categories (d) and (e) are not taken into account for any
purpose under this Plan.

SECTION
5

Employer Contributions

          5.1 Amount of Employer Contribution. Subject to the terms and
conditions of the Plan, including subsection 5.5,
the "Employer Contribution" to the Plan for the Plan
Yearwith respect to Enhanced Match Participants, shall be an amount equal to 150
percent of the Pre-Tax Contributions made on behalf of Participants for such
Plan Year on the first 1 percent (1%) of their Eligible Compensation for the
Plan Year plus 100 percent of the next 4 percent of their Eligible Compensation
for the Plan Year, excluding (i) Eligible Compensation for any period before
their "Match Eligibility Date," as defined in subsection 5.6, and (ii)
Eligible Compensation for the period prior to the date that they become
Participants in the Plan.

          "Enhanced Match Participants" consist of Participants who are
not "Grandfathered Pension Plan Participants" (as defined under the
Sears Pension Plan). A Grandfathered Pension Plan Participant who terminates
employment with Sears and its Related Companies and is thereafter reemployed,
but is not, under the terms of the Sears Pension Plan, eligible to resume
participation in the Sears Pension Plan, shall be treated from such date of
rehire as an Enhanced Match Participant, except for any period that such
individual becomes ineligible to participate in this Plan.

          Notwithstanding the above, for Participants who continue to participate in
the Sears Pension Plan, the Employer Contribution to the Plan for the Plan Year
shall be an amount equal to 70 percent of the Pre-Tax Contributions made on
behalf of Participants for such Plan Year that do not exceed 5 percent of their
Eligible Compensation for the Plan Year, excluding (i) Eligible Compensation for
any period before their "Match Eligibility Date," as defined in
subsection 5.6, and (ii) Eligible Compensation for the period prior to the date
that they become Participants in the Plan. The Employer Contribution shall be
allocated to Participants in accordance with the provisions of subsection 5.5.

         
5.2
Medium of Employer Contribution. The Employer Contribution will be made
either in cash or in Common Stock, or partially in each. Any Common Stock
comprising a portion of the Employer Contribution shall be valued at the Fair
Market Value thereof at the date or dates on which any contribution in that form
is made.

         
5.3
Time of Employer Contribution. The Employer Contribution for a
Plan Year will be made quarterly, but in no event, later than the due date
(including extensions thereof) for the filing of the Puerto Rico income tax
return of the Company for the tax year in which the last day of such Plan Year
occurs.

         
5.4
Allocation of Employer Contribution To Employers. The share of each
Employer in the Employer Contribution for any fiscal year shall equal the total
sum credited out of such contributions to the Accounts of all Plan Participants
who are employees of such Employer on the date as of which the contribution is
credited.

             
    5.5
    Allocation of Employer Contribution Among Participants. Subject to
    the terms and conditions of the Plan, including paragraph 7.3(b), the
    Employer Contribution for a quarter will be allocated among and credited to
    the Accounts of Participants who made Pre-Tax Contributions during any
    quarter of the Plan Year and who were employed by the Employers and Related
    Companies at the end of such quarter and who have attained the "Match
    Eligibility Date"; provided that the Company, by written action of the
    Vice President of Compensation and Benefits, may waive the employment
    requirement referred to above in the case of Participants who are employed
    by an Employer or a business unit which is sold to or merged or combined
    with another entity or otherwise disposed of in a business transaction and
    whose employment is terminated because of such transaction, as determined by
    such Benefits Executive in his sole discretion.

          
5.6 Match Eligibility Date. An Eligible Employee will attain his
"Match Eligibility Date" after completing a "Year of Eligibility
Service", as defined in subsection 2.1.

          An Eligible Employee whose employment is terminated for any reason after
having met the Year of Eligibility Service requirement and who is subsequently
rehired will have his Match Eligibility Date immediately reinstated, unless such
individual is treated as a new employee pursuant to subsection 2.2 (describing
the rule of parity).

         
5.7
Qualified Matching Contributions. For each Plan Year any Employer may,
but shall not be required to, contribute an additional percentage of the Pre-Tax
Contributions made on behalf of Participants employed by such Employer who are
not Highly Compensated (as defined in subsection 8.5). Any contribution made
pursuant to this subsection 5.7 shall be referred to hereinafter as a "Qualified
Matching Contribution". At the discretion of the Company, Qualified
Matching Contributions may be tested under subsection 8.3 in accordance with
applicable Code regulations.

         
5.8
Limitations on Amount of Employer Contributions. In no event shall the
sum of any Pre-Tax Contributions, Employer Contributions and Qualified Matching
Contributions made by an Employer for any Plan Year exceed the limitations
imposed by Section 1023(n) of the Code on the maximum amount deductible on
account thereof by the Employer for that year.

                 
        5.9
        Payment of Employer Contributions. Each Employer's contributions
        under the Plan (other than Pre-Tax Contributions) for any Plan Year
        shall be paid to the Trustee, without interest, no later than the time
        prescribed by law for filing the Employer's Puerto Rico income tax
        return, including any extensions thereof.

  
    
      
        
         

        

      

    

  

  Section
  6

  

  Investment of the Trust Fund

          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, 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 the
"Company Stock Fund" invested in Common Stock of the Company
and cash or cash equivalents held for liquidity purposes.

          6.2 Investment Fund Accounting. The Company shall maintain or cause to
be maintained separate subaccounts for each Participant in each of the
Investment Funds to separately reflect his interest in each such Fund and the
portion of such interest that is attributable to each of his Accounts. The
Company, in its sole discretion, may establish uniform rules for reporting the
value of each such subaccount, including but not limited to using a
"unit" measurement to reflect each Participant's interest in an
Investment Fund that has the effect of blending the value of the cash or cash
equivalents that comprise part of that Fund with the value of the securities in
which the Fund is primarily invested.

          6.3 Investment Fund Elections. At the time that a Participant enrolls
in the Plan he may specify the percentage, in increments of 1%, of contributions
subsequently credited to his Accounts that are to be invested in each of the
Investment Funds in accordance with uniform rules established by the Company.
Any such investment direction shall be deemed to be a continuing direction until
changed by the Participant. During any period in which no such direction has
been given in accordance with rules established by the Company, contributions
credited to a Participant shall be invested in the Investment Funds as
determined by the Company. A Participant may modify his investment direction
prospectively by using the Phone System prior to the effective time of the
change in accordance with uniform rules established by the Company.

          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 form a Participant's exercise of his right to direct the investment of
his Accounts.

          6.4
Transfers Between Investment Funds. Subject to uniform rules established
by the Company, each Participant may elect to transfer, prospectively, the value
of his Accounts held in any Investment Fund to any other Investment Fund then
made available to such Participant. Any such election shall be made by entering
it into the Phone System prior to the time it is to be effective in accordance
with uniform rules established by the Company. Amounts
attributable to Employer Contributions invested in the Company Stock Fund may be
transferred to other Investment Funds, provided that, notwithstanding anything
herein to the contrary, in no event may Employer Contributions (or any earnings
thereon) be transferred while contingently allocated under paragraph 7.3(b).

          
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 the Named Fiduciary in the case of all 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.

          6.6
Voting and Tendering of Common Stock. Notwithstanding any other
provisions of this Plan:

    (a
    ) Common Stock held by the Trustee shall be voted as follows:

  
            (i) Before
            each meeting of the Company's shareholders, each Participant shall
            be furnished with a proxy statement for the meeting, together with
            an appropriate form on which the Participant may provide voting
            instructions (including instructions on matters not specified in the
            proxy statement which may come before the meeting) for the Common
            Stock allocated and contingently allocated under subsection 7.3(b)
            to the Participant's Accounts under the Plan on the Accounting Date
            coinciding with or next preceding the record date for such meeting
            for which the number of such shares has been provided to the Plan
            Administrator. Upon timely receipt of such instructions, such shares
            shall be voted as instructed.

            (ii) Common
            Stock for which the Trustee does not receive timely voting
            instructions, including those shares which are not allocated to
            Participants' Accounts, shall be voted in the same proportion as all
            Common Stock held under the Plan (including shares held in a
            separate trust fund) with respect to which directions are received
            by the Trustee.

  

        (b)
        Tender and exchange rights with respect to Common Stock held by the
        Trustee shall be exercised as follows:

  
            (i)
            (Each Participant shall be furnished with a notice of any tender or
            exchange offer for, or a request or invitation for tender of, Common
            Stock, together with an appropriate form on which such Participant
            may instruct the Trustee with respect to the tender or exchange of
            Common Stock allocated and contingently allocated to his Accounts.
            Common Stock as to which the Trustee has received timely
            instructions shall be tendered or exchanged in accordance with such
            instructions.

            (ii)
            Common Stock allocated to Participants' Accounts for which
            instructions are not timely received shall not be tendered or
            exchanged.

            (iii) Shares
            of Common Stock which are not allocated to Participants' Accounts
            shall be tendered or exchanged by the Trustee in its sole
            discretion.

  

    
    (c ) The Company and the Trustee shall take all reasonable steps necessary
    to assure that Participants' individual directions shall remain
    confidential. Notwithstanding the foregoing, the Trustee shall provide such
    information with respect to the tender or exchange of Company Shares as an
    independent record keeper may require for operation of the Plan, if the
    recipient of such information agrees to keep such information confidential.

    d)
    The Trustee shall execute such ballots, proxies or other instruments as may
    be necessary or desirable in order to effectuate the provisions of this
    subsection 6.6.

          6.7 Sale
of Common Stock to the Company. If, because of distributions, withdrawals or
transfers involving Common Stock in the Company Stock Fund, it is necessary or
desirable for the Plan to sell Common Stock, the Trustee shall notify the
Company. At the timely direction of an Investment Manager, the Trustee shall
sell such Common Stock to the Company for cash. The sales price for the shares
of Common Stock sold to the Company shall be no less than Fair Market Value,
(Fair Market Value is defined as the closing price of a share of such stock as
of any date as reported on the New York Stock Exchange, unless such date is not
a trading date, in which case it means the closing price as reported on the next
preceding trading date), and no commission shall be charged on such sale. The
Company and the Trustee shall establish in writing such rules and procedures
regarding such sales as are required to meet applicable laws.

 

SECTION
7

Plan Accounting

          7.1
Participants' Accounts. The Company shall maintain the following "Accounts"
in the name of each Participant:

        (a) an
        "Employer Contribution Account," which shall reflect
        Employer Contributions, if any, made on his behalf and the income,
        losses, appreciation and depreciation and expenses attributable thereto;

        (b) a
        "Pre-Tax Account," which shall reflect Pre-Tax
        Contributions, if any, made on his behalf and the income, losses,
        appreciation, depreciation and expenses attributable thereto;

        (c) an
        "After-Tax Account," which shall reflect After-Tax
        contributions made by the Participant and the income, losses,
        appreciation, depreciation and expenses attributable thereto;

        (d) a
        "Qualified Matching Account," which shall reflect
        Qualified Matching Contributions, if any, made on his behalf, and the
        income, losses, appreciation, depreciation and expenses attributable
        thereto;

        (e) a
        "Rollover Account," which shall reflect Rollover
        Contributions, if any, made by him and the income, losses, appreciation,
        depreciation and expenses attributable thereto.

In addition, the Company may maintain subaccounts within the Pre-Tax and
After-Tax Accounts to distinguish contributions (and the earnings thereon)
eligible to be matched from contributions (and the earnings thereon) above the
matching limit, as well as subaccounts to reflect balances transferred to this
Plan from another qualified plan that are subject to special rules. The Accounts
and subaccounts provided for in this subsection 7.1 shall be for accounting
purposes only, and there shall be no segregation of assets within the Investment
Funds among the separate Accounts. Reference to the "balance" in a
Participant's Accounts means the aggregate of the balances in the subaccounts
maintained in the Investment Funds attributable to those Accounts.

         
7.2
Allocation of Fund Earnings and Changes in Value. As of each Accounting
Date, interest, dividends and changes in value in each Investment Fund since the
preceding Accounting Date shall be allocated to each Participant's subaccounts
invested in such Investment Fund by adjusting upward or downward the balance of
his subaccounts invested in such Investment Fund in the ratio which the
subaccounts of such Participant invested in such Investment Fund bears to the
total of the subaccounts of all Participants invested in such Investment Fund as
of such Accounting Date, excluding therefrom, for purposes of this allocation
only, all Pre-Tax, After-Tax, Employer, Qualified Matching and Rollover
Contributions received since the preceding Accounting Date, so that the total of
the subaccounts of all Participants in each Investment Fund shall equal the
total value of such fund (exclusive of such contributions) as determined by the
Trustee in accordance with uniform procedures consistently applied. The Plan
will use a daily valuation system, which generally shall mean that Accounts will
be updated each business day to reflect activity for that day, such as new
contributions received by the Trustee, changes in Participants' investment
elections, and changes in the unit value of the Investment Funds under the Plan.
Such daily valuation is dependent upon the Plan's recordkeeper receiving
complete and accurate information from a variety of different sources on a
timely basis. Since events may occur that cause an interruption in this process,
affecting a single Participant or a group of Participants, there shall be no
guarantee by the Plan that any given transaction will be processed on the
anticipated day. In the event of any such interruption, any affected transaction
will be processed as soon as administratively feasible and no attempt shall be
made to reconstruct events as they would have occurred absent the interruption,
regardless of the cause, unless the Company in its sole discretion directs the
Plan's recordkeeper to do so.

          7.3 Allocation of Contributions. Subject to the provisions of Section
8, contributions shall be allocated as follows:

        (a) Pre-Tax,
        After-Tax, and Rollover Contributions made on behalf of a Participant
        shall be allocated to that Participant's appropriate Accounts as of the
        Accounting Date coinciding with the paycheck date to which such
        contribution relates.

        (b) Employer
        Contributions described at subsection 5.1 for a Plan Year shall be
        allocated as of the last day of each quarter of the Plan Year to every
        Participant who is employed by the Employers and Related Companies at
        the end of such quarter.The Employer Contributions due with respect
        to Pre-Tax Contributions made for a calendar quarter will bebased on
        year to date information.

        (c)
        Any Qualified Matching Contributions made by an Employer for a Plan Year
        shall be allocated as of the last day of that year by such Employer in
        accordance with subsection 5.7.

Notwithstanding the foregoing, unless the Company establishes uniform rules
to the contrary, contributions made to the Plan shall share in the gains and
losses of the Investment Funds only when received by the Trustee with verified
data.

         
7.4
Correction of Error. In the event of an error in the adjustment of a
Participant's Accounts, the Company, in its sole discretion, may correct such
error by either crediting or charging the adjustment required to make such
correction to or against income and expenses of the Trust for the Plan Year in
which the correction is made or the Employer may make an additional contribution
to permit correction of the error. Except as provided in this subsection 7.4,
the Accounts of other Participants shall not be readjusted on account of such
error.

          7.5 Statement of Plan Interest. As soon as practicable after the last
day of each Plan Year and at such other intervals as the Company may determine,
the Company shall provide each Participant with a statement reflecting the
balances of his Accounts. Each Participant is responsible for reviewing his
statement and any Participant who discovers an error shall bring it to the
attention of the Company within 90 days of receipt of the statement. If a
Participant does not bring errors in his statement to the attention of the
Company within 90 days of receipt of his statement, the Participant will be
deemed to have confirmed the accuracy of the statement.

SECTION
8

Limitations on Compensation, Contributions and Allocations

         
8.1
Reduction of Contribution Rates. To conform the operation of the Plan to
sections 1165(a)(4) and 1165(e)(3) of the Code, the Company may establish limits
on the Pre-Tax and After-Tax Contribution rates that may be elected by
Participants, may unilaterally modify or revoke any Pre-Tax or After-Tax
Contribution election made by a Participant pursuant to subsections 4.1 and 4.2,
and may reduce the share of the Employer Contribution (even to zero) allocable
to any Participant as a match pursuant to subsection 5.9. In the event that the
Company determines, prior to the end of a Plan Year, that the limits it has
imposed on Highly Compensated Participants to ensure compliance with section
1165(e)(3)(ii) of the Code are more restrictive than necessary based upon
preliminary testing results, the Company in its discretion may modify such
limits prospectively and may also permit affected Participants to make
additional contributions from Eligible Compensation payable during the remainder
of such year, provided that no such Participant may contribute more, on an
annual basis, than the effective annual rate of contribution permitted for
Highly Compensated Participants as a group, applied against the maximum amount
of Eligible Compensation permitted to be taken into account for that Plan Year
under section 1165(e)(7) of the Code.

          8.2 Annual Limit on 1165(e) Deferrals. In no event shall the Pre-Tax
Contributions for a Participant under the Plan and any other elective deferrals
under any other cash-or-deferred arrangement maintained by an Employer or a
Related Company for any taxable year exceed the maximum amount as may be
permitted under section 1165(e)(7)(A) of the Code. If during any taxable year a
Participant is also a participant in any other cash-or-deferred arrangement, and
if his elective deferrals made under such other arrangements together with his
Pre-Tax Contributions made under the Plan exceed the maximum amount permitted
for the Participant for that year under section 1165(e)(7)(A) of the Code, the
Participant, not later than March 1 following the close of such taxable year,
shall notify the Company of such excess and may request the Company to direct
the Trustee to distribute all or a portion of such excess to him, with any gains
or losses allocable thereto for that Plan Year determined in accordance with any
reasonable method adopted by the Company for that Plan Year that either (i)
conforms to the accounting provisions of Section 7 and is consistently applied
to the distribution of excess contributions under this subsection 8.2 and
subsection 8.4 to all affected Participants, or (ii) satisfies any alternative
method set forth in applicable Code regulations. Any such request shall be in
writing and shall include adequate proof of the existence of such excess, as
determined by the Company in its sole discretion. If the Company is so notified
and the Plan designates the distribution as a distribution of excess deferral,
such excess amount shall be distributed to the Participant no later than the
April 15 following the close of the Participant's taxable year. In addition, if
the applicable limitation for a Plan Year happens to be exceeded with respect to
the Plan alone, or the Plan and another plan or plans of the Employers and
Related Companies, the Company shall direct such excess Pre-Tax Contributions
(with allocable gains or losses) to be distributed to the Participant as soon as
practicable after the Plan Administrator is notified of the excess deferrals by
an Employer or the Participant, or otherwise discovers the error (but no later
than the April 15 following the close of the Participant's taxable year).
Notwithstanding the foregoing provisions of this subsection 8.2, the dollar
amount of any distribution due hereunder shall be reduced by the dollar amount
of any Pre-Tax Contributions previously distributed to the same Participant
pursuant to subsection 8.4; provided, however, that for purposes of subsection
8.3, the correction under this subsection 8.2 shall be deemed to have occurred
before the correction under subsection 8.4.
In the event, that the Participant additionally makes contributions to an
individual retirement account under Section 1169 of the Code, the maximum amount
of adjustment may not exceed the difference, if any, between the amount
allowable as contribution under Section 1165(e)(7)(A) of the Code and the
contributions made under the provisions of Section 1169 of the Code, excluding
the contribution to an individual retirement account attributable to the spouse
of a married Participant.

         
8.3
Section 1165(e) Testing. The average of the Deferral Percentages (as
defined below) for that Plan Year of each eligible employee who is Highly
Compensated for that Plan Year (the "Highly Compensated Group Deferral
Percentage") is not more than the average of the Deferral Percentages
for that Plan Year of each eligible employee who is not Highly Compensated for
that Plan Year (the "Non-highly Compensated Group Deferral Percentage"),
(i) multiplied by a factor of 1.25 or (ii) the excess of the Highly Compensated
Group Deferral Percentage over that of the Non-highly Compensated Group Deferral
Percentage is not more than two (2) percentage points and the Highly Compensated
Group Deferral Percentage is not more than the Non-highly Compensated Group
Deferral Percentage multiplied by two (2). The "Deferral Percentage"
for any eligible employee for a Plan Year shall be determined by dividing his
Pre-Tax Contributions (and Qualified Matching Contributions, if applicable) for
that Plan Year by his Compensation for that Plan Year (measured from the date he
first becomes eligible to participate in the Plan and not the date he actually
becomes a participant), subject to the following special rules:

        (a) any employee eligible to make Pre-Tax Contributions under the
        Plan at any time during a Plan Year in accordance with subsections 3.1
        and 4.1 (without regard to any suspension imposed by any other provision
        hereunder) shall be counted, whether or not any Pre-Tax Contributions
        are made on his behalf for the year.

        (b)
        the Deferral Percentage for any Highly Compensated Participant who is
        eligible to participate in the Plan and who is also eligible to make
        elective deferrals under one or more other arrangements described in
        section 1165(e) of the Code that are maintained by an Employer or
        Related Company for a plan year that ends with or within the same
        calendar year as the Plan Year (other than a plan subject to mandatory
        disaggregation under applicable Code regulations) shall be determined as
        if all of such elective deferrals were made on his behalf under the
        Plan;

        (c)
        Pre-Tax Contributions distributed to a Participant as excess deferrals
        under subsection 8.2 shall be counted in determining such Participant's
        Deferral Percentage,

        (d)
        if this Plan is aggregated with one or more other plans for purposes of
        section 1165(a)(3) of the Code (other than the average benefit
        percentage test), this subsection 8.3 shall be applied as if all such
        plans were a single plan; provided, however, such aggregated plans must
        all have the same plan year,

        (e) all
        Participants who are members of collective bargaining units shall be
        tested separately under this subsection 8.3.

         
8.4
Correction Under Section 1165(e) Test. In the event that the Highly
Compensated Group Deferral Percentage for any Plan Year does not initially
satisfy one of the tests referred to in subsection 8.3, the Company shall direct
the Trustee to distribute to Highly Compensated Participants enough of their
Pre-Tax Contributions under the leveling method (first reducing the Participant
with the highest dollar contribution and then the next highest, and so forth)
described in applicable Code regulations and notices, along with allocable
income determined in accordance with such notices or regulations, so that the
Highly Compensated Group Deferral Percentage meets one of the tests referred to
in subsection 8.3. The amounts to be distributed to any Participant pursuant to
this subsection 8.4 shall be reduced by the amount of any Pre-Tax Contributions
distributed to him for the taxable year ending with or within such Plan Year
pursuant to subsection 8.2. The Company shall take such actions and cause any
distribution to be made no later than the close of the Plan Year following the
Plan Year for which the excess contributions were made.
However, at the discretion of the Company, the excess may remain in the Plan as
Employee After-Tax Contributions. Such recharacterization shall be done within 2
1127:    1/2 months after the close of the Plan Year to which the recharacterization
relates. Such excess, along with any earnings allocated to it, shall be credited
to the Employee After Tax Contribution Account.

         
8.5
Highly Compensated. An employee or Participant shall be
"Highly Compensated" if he is more highly compensated than two thirds
of the eligible employees under the Plan.

          8.6 Forfeiture of "Orphan" Matching Employer Contributions.
In the event that any Pre-Tax Contributions are distributed to a Participant to
correct a situation where there are excess deferrals, excess contributions
pursuant to subsections 8.2 or 8.4, any Employer Contributions allocated as a
match with respect to such Pre-Tax Contributions shall be forfeited and used to
reduce future Employer Contributions required at subsection 5.1 and shall be
allocated in accordance with subsection 5.5.

SECTION
9

Vesting and Termination Dates

          9.1 Vested
Interest. Except as provided in paragraph 7.3(b) or subsection 8.6, a
Participant hired on or before December 31, 2003, shall at all times have a
fully vested, nonforfeitable interest in all of his Accounts. A Participant
hired on or after January 1, 2004 shall at all times have a fully vested,
nonforfeitable interest in his Pre-tax Account, After-Tax Account and Rollover
Account, and a fully nonforfeitable right in histhe Employer Contribution
Account upon completion of3 Years of Vesting Service. A Year of Vesting Service
is a Plan Year in which an Employee is credited with at least 1,000 Hours of
Service.

          Notwithstanding the above, a Participant shall have a fully vested,
nonforfeitable interest in all of his Accounts when he attains age 65 while
employed by an Employer or Related Company.

         
9.2
Termination of Employment. If a Participant's employment is terminated
for any reason, his "Termination Date" generally will be the
last day for which he is paid wages or salary for services performed for an
Employer or Related Company, unless he is terminated while on an unpaid leave of
absence, in which case his Termination Date will be the day as of which he is
notified by his Employer of his termination or he resigns (whichever is
applicable).

          In the case of a Participant who terminates employment and is not fully
vested in all of his Accounts under the Plan, the Participant shall forfeit the
unvested portion of his or her Accounts upon the earlier of: (i) the date the
Participant takes a distribution of his or her vested benefit under the Plan; or
(ii) upon the date that the Participant incurs five consecutive One Year Breaks
in Service under the Plan. Any amounts forfeited under this subsection 9.2 shall
be used to reduce Employer Contributions to the Plan required at subsection 5.1
and shall be allocated in accordance with subsection 5.5.

SECTION
10

Withdrawals While Employed

          10.1 Partial Withdrawals from the Plan Without Terminating Employment. No
more frequently than once in any six month period, a Participant may elect to
withdraw from the Plan, without terminating employment, an amount specified by
him, which amount shall be no less than $250 (or the remaining balance available
for withdrawal in the Participant's account if less than $250) and shall not
exceed the balance of such Participant's Accounts reduced by the following:

        (a) Any Employer Contributions (and the earnings thereon) allocated
        under paragraph 7.3(b) as of the effective date of this Plan;

        (b) If he has not participated in the Plan for at least 5 years, an
        amount equal to the Employer Contributions (and the earnings thereon)
        credited to his Accounts for the last two Plan Years; and

        (c) If he has not attained age 59 1/2 , all Pre-Tax Contributions and
        any earnings attributable thereto.

          In addition, the six month limitation period will not be applicable to a
Participant who has not attained age 59 1/2 and is confronted by a Hardship (as
defined below). Such participant may withdraw any amounts described in Sections
10.1(a)-(c) plus his Pre-Tax Contributions (up to the amount required by such
Hardship), but not the earnings on his Pre-Tax Contributions, provided he has
first withdrawn all other amounts then available under the Plan.

 

         
10.2
Hardship A withdrawal will not be considered to be made on account of
"Hardship" unless the withdrawal is requested because of an
immediate and heavy financial need of the Participant caused by one of the
following:

            (a) the payment of medical expenses described in Section
            1023(aa)(2)(P) of the Code incurred by the Participant, the
            Participant's spouse, or any dependents of the Participant (as
            defined in Section 1025 of the Code);

            (b) purchase of a principal residence for the Participant
            (excluding mortgage payments);

            (c) payment of tuition and educational expenses for the next 12
            months of post secondary education for the Participant, the
            Participant's spouse, children or dependents;

            (d) the need to prevent the eviction of the Participant from his
            principal residence or foreclosure on the mortgage on the
            Participant's principal residence; or

            (e) any other expenses that the Secretary of Treasury of Puerto
            Rico determines as qualifying as a "hardship" under
            Section 1165(e) of the Code.

To be considered a Hardship withdrawal under this subsection 10.2, the
withdrawal must also be necessary to satisfy the immediate and heavy financial
need of the Participant, and will be so deemed if the Participant represents to
the Company (or its delegate) in writing that the need cannot be relieved:

            (a) through
            reimbursement or compensation by insurance or otherwise;

            (b) by
            reasonable liquidation of the Participant's assets, to the extent
            such liquidation would not itself give rise to an immediate and
            heavy financial need;

            (c
            ) by ceasing to make contributions to the Plan (or any other
            deferred compensation plan); or

            (d) by borrowing on reasonable commercial terms or by other
            distributions or nontaxable loans from plans maintained by the
            Employer.

          10.3
Sources of Withdrawals. Any partial withdrawal will be made from and will
be charged to, the withdrawing Participant's Accounts, subject to the limits on
amounts available for partial withdrawals set forth in subsection 10.1, as
follows: first, from the portion of the Participant's Accounts reflecting his
After-Tax Contributions and reflecting the earnings on such After-Tax
Contributions; next, from the portion of the Participant's Accounts reflecting
his Rollover Account; next, from the portion of the Participant's Accounts
reflecting his Employer Contributions; next, from the portion of the
Participant's Accounts reflecting his Pre-Tax Contributions. Unless otherwise
requested by the Participant, his various investment subaccounts will be charged
in the order and in such proportions as the Plan Administrator may specify. A
Participant who makes a withdrawal may elect to have any specified amounts which
would otherwise be payable to him in cash used by the Trustee to purchase and
distribute whole shares of Common Stock to the Participant at a price determined
in accordance with subsection 5.1. Requests for payment in Common Stock may be
required to be processed as two separate transactions within the Phone System,
the first being an investment transfer and the second being the actual
withdrawal; both transactions may occur on the same Accounting Date.

              10.4Method
    of Making Elections, Revocations, etc. All actions required of, or
    permitted to be taken by, Participants shall be followed by whatever written
    forms and documentation the Company deems appropriate.

              10.5 Loan to Participants. A Participant who has not terminated
    employment with the Employers and Related Companies, may borrow from the
    Plan an amount equal to or greater than $1,000, but not in excess of $50,000
    or 50% of the Participant's vested account balance. The Participant may only
    have one outstanding loan at any time. The Participant's accounts will be
    reduced by the amount of the loan in the following order:

                  A Participant may elect a loan term of a minimum of one year or the
      maximum of five years. Any loan shall be subject to interest rate which
      shall be the prime rate plus one percent as published in The Wall Street
      Journal on the last business day of the previous month in which the loan
      is processed. Said rate will be fixed by the duration of the loan.
      Repayment of the loan may be made in equal installments through the
      Participant's payroll deductions

                  Notwithstanding the above, the outstanding principal amount of the loan
      shall become due and payable immediately following the Participant's
      retirement, termination of employment due to disability or other
      termination of employment. In such event, the outstanding loan amount will
      be deducted from the Participant's Account balance and therefore, the
      amount to be distributed to the Participant will be reduced by the
      outstanding loan amount. A loan will be considered in default if a
      Participant does not make a payment following one hundred and twenty (120)
      days on which said payment had to be made.

SECTION
11

Withdrawals After Termination of Employment

         11.1
Withdrawals by and Distributions to Participants After Termination of
Employment. When a Participant's Termination Date occurs (for a reason other
than his death), his Accounts shall be distributed or withdrawn in accordance
with the following provisions of this Section 11.

            (a) If
            the value of the Participant's Accounts does not exceed $5,000, the
            vested portion of his Accounts will be distributed to him in a lump
            sum payment as soon as practicable after the Plan's Recordkeeper is
            notified of his termination of employment.

            (b) If
            the value of the vested portion Participant's Accounts exceeds
            $5,000, the Participant may withdraw his Accounts on the
            Distribution Date (as defined in paragraph (c) below) he elects, in
            a lump sum; provided, however, that such a Participant may make a
            partial withdrawal of a portion of his Accounts during the first
            fifteen months following his termination of employment, deferring
            payment of the rest of his Accounts until such later Distribution
            Date as he elects (within the limits set forth in this Section 11).
            In the case of all Participants, other than a Participant who
            retired prior to January 1, 2000, a partial withdrawal under this
            paragraph 11.1(b) may be made no more frequently than once in any
            six months period and may be in an amount no less than $250 (or the
            balance available for withdrawal if less).

            (c) A
            Participant's "Distribution Date" shall mean the
            date as of which a payment is made to him pursuant to this Section
            11, without regard to any administrative delay. A Participant may
            elect that his Distribution Date occur on any Accounting Date
            occurring after his Termination Date (but not later than the date on
            which he attains age 70), provided that no election of a
            Distribution Date will be valid if it is made more than 90 days
            prior to such date.

         
11.2
Distributions to Beneficiaries. If a Participant dies while his Accounts
remain undistributed, payment of his Accounts will be made to his Beneficiary or
Beneficiaries as soon as practicable after the Recordkeeper receives
confirmation of his death.

         
11.3
Limits on Commencement and Duration of Distributions. Unless
the Participant elects otherwise, in no event shall distribution commence later
than 60 days after the close of the Plan Year in which the latest of the
following events occurs: the Participant's attainment of age 65, or the
Participant's Termination Date. The failure of a Participant to consent to a
distribution is deemed to be an election to defer commencement of payment for
purposes of the preceding sentence.

         
Notwithstanding
any other provision herein to the contrary, distribution of a Participant's
Accounts shall be made to him (or on his behalf) in the form of a lump sum
distribution on or before his Required Beginning Date (as defined below). A
Participant's "Required Beginning Date" is April 1 of the
calendar year following the calendar year in which he attains age 70 1/2 or
terminates employment, whichever is later.

         
11.4
Beneficiary Designations. The term "Beneficiary" shall
mean the Participant's surviving spouse. However, if the Participant is not
married, or if the Participant is married but his spouse consents (as provided
below) to the designation of a person other than the spouse, the term
Beneficiary shall mean such person or persons as the Participant designates to
receive his Accounts upon his death. Such designation may be made, revoked or
changed (without the consent of any previously-designated Beneficiary except his
spouse) only by an instrument signed by the Participant and filed with the
Recordkeeper prior to his death. A spouse's consent to the designation of a
Beneficiary other than the spouse shall be in writing, shall acknowledge the
effect of such designation, shall be witnessed by a notary public and shall be
effective only with respect to such consenting spouse. In default of such
designation, or at any time when there is no surviving spouse and no surviving
Beneficiary designated by the Participant, his Beneficiary shall be his estate.
For purposes of the Plan, "spouse" means the person to whom the
Participant is legally married at the relevant time. Notwithstanding the
foregoing provisions of this subsection 11.4, no spousal consent to the
designation of a person other than, or in addition to, the spouse as Beneficiary
shall be required if it is established to the satisfaction of the Plan
Administrator that the spouse's consent cannot be obtained because there is no
spouse, because the spouse cannot be located or because of such other
circumstances as may be prescribed in applicable ERISA or Code regulations.

              11.5
    Distribution Only Upon Separation From Service.

            (a) A Participant may not commence distribution of the portion of
            his Accounts pursuant to this Section 11 prior to the date he
            attains age 59 1/2, even though his employment with the Employers and
            Related Companies has terminated, unless or until he also has a
            "separation from service" within the meaning of
            section 1165(e)(2)(B)(i) of the Code. The foregoing restriction
            shall not apply, however, if the Participant's termination of
            employment occurs in connection with either (a) the sale by an
            Employer or a Related Company to an unrelated corporation of
            substantially all of the assets of a trade or business or (b) the
            disposition of its interest in a subsidiary to an unrelated entity,
            and the requirements for distribution under applicable Treasury
            regulations on account of such sale or disposition are met.

            (b) all of a Participant's Accounts shall be available for
            distribution on account of the Participant's separation from
            service. However, such a distribution shall be subject to the other
            provisions of the Plan regarding distributions, other than the
            provisions of paragraph (a) of this subsection 11.5 that require a
            separation from service before such amounts may be distributed. For
            purposes of Section 10, such separation from service shall be
            treated as a Termination Date.

          11.6
Form of Payment. Distributions from the Company Stock Fund shall be made
in cash unless the Participant elects to have all or a portion of his interest
in such fund distributed in shares of Common Stock. Distributions from the other
Investment Funds shall be made in cash, unless the Participant elects that some
or all of such cash be converted to Common Stock.

          11.7
Facility of Payment. Notwithstanding the provisions of subsections 11.1
and 11.2, if, in the Company's opinion, a Participant or other person entitled
to benefits under the Plan is under a legal disability or is in any way
incapacitated so as to be unable to manage his financial affairs, the Plan
Administrator may direct the Trustee to make payment to a relative or friend of
such person for his benefit until claim is made by a conservator or other person
legally charged with the care of his person or his estate. Thereafter, any
benefits under the Plan to which such Participant or other person is entitled
shall be paid to such conservator or other person legally charged with the care
of his person or his estate.

          11.8
Interests Not Transferable. The interests of Participants and other
persons entitled to benefits under the Plan are not subject to the claims of
their creditors and may not be voluntarily or involuntarily assigned, alienated
or encumbered, except in the case of a properly documented levy of the Internal
Revenue Service, required tax withholding or qualified domestic relations orders
that relate to the provision of child support, alimony or marital rights of a
spouse, child or other dependent and which meet such other requirements as may
be imposed by section 206(d)(3) of ERISA or regulations issued thereunder.
Notwithstanding any other provision of the Plan to the contrary, distribution of
the entire portion of a Participant's Accounts awarded to his alternate payee
may be made in a lump sum payment, as soon as practicable after the Company (or
its delegate) determines that such order is qualified, without regard to whether
the Participant would himself be entitled under the terms of the Plan to
withdraw or receive a distribution of such lump sum amount at that time, but
only if the terms of the order provide for such immediate distribution either
specifically or by general reference to any manner of distribution permitted
under the Plan.
Notwithstanding any provision of this subsection to the contrary, an offset to a
Participant's accrued benefit against an amount that the Participant is ordered
or required to pay to the Plan with respect to a judgment, order, or decree
issued, or a settlement entered into, on or after August 5, 1997, shall be
permitted in accordance with ERISA Section 206(d)(4).

          11.9
Absence of Guaranty. None of the Company, the Trustee, or the Employers
in any way guarantee the assets of the Plan from loss or depreciation, or
guarantee any payment to any person. The liability of the Trustee to make any
payment is limited to the available assets of the Plan held under the Trust.

          11.10
Missing Participants or Beneficiaries. Each Participant and each
designated Beneficiary must file with the Recordkeeper from time to time in
writing his post office address and each change of post office address. Any
communication, statement or notice addressed to a Participant or designated
Beneficiary at his last post office address filed with the Recordkeeper, or, in
the case of a Participant, if no address is filed with the Recordkeeper, then at
his last post office address as shown on the Employers' records, will be binding
on the Participant and his designated Beneficiary for all purposes of the Plan.
None of the Company, the Employers, or the Trustee will be required to search
for or locate a Participant or designated Beneficiary.

              11.11 Direct Rollovers.

            (a) Notwithstanding any provision of the Plan to the contrary
            that would otherwise limit a distributee's election under this Plan,
            a distributee may elect, at the time and in the manner prescribed by
            the Plan Administrator, to have any portion of an eligible rollover
            distribution paid directly to an eligible retirement plan specified
            by the distributee in a direct rollover.

            (b) Eligible rollover distribution: An eligible rollover
            distribution is a distribution of all of the balance to the credit
            of the distributee under an eligible retirement plan due to
            separation of service, death or retirement.

            (c ) Eligible retirement plan: An eligible retirement plan is an
            individual retirement account described in section 1169 of the Code,
            or a qualified trust described in section 1165(a) of the Code, that
            accepts the distributee's eligible rollover distribution. However,
            in the case of an eligible rollover distribution to the surviving
            spouse, an eligible retirement plan is an individual retirement
            account. The definition of "eligible retirement plan"
            shall also apply in the case of a distribution to a surviving
            spouse, or to a spouse or former spouse who is the alternate payee
            under a qualified domestic relations order, as defined in section
            206(d)(3) of ERISA.

            (d ) Distributee: A distributee includes an employee or former
            employee. In addition, the employee's or former employee's surviving
            spouse and the employee's or former employee's spouse or former
            spouse who is the alternate payee under a qualified domestic
            relations order, as defined in section 206(d)(3) of ERISA, are
            distributees with regard to the interest of the spouse or former
            spouse.

            (e) Direct rollover: A direct rollover is a payment by the Plan
            to the eligible retirement plan specified by the distributee.

          11.12 Minimum Required Distributions. The requirements of this
subsection 11.12 shall take precedence over any inconsistent provisions of the
Plan.

            
            (a) Required Beginning Date. The Participant's entire
            interest will be distributed to the Participant no later than the
            Participant's Required Beginning Date, as defined in subsection
            11.3.

            
            (b) Death of Participant Before Distributions Begin. If the
            Participant dies before distributions begin, the Participant's
            entire interest will be distributed no later than as follows:

                (i) If the Participant's surviving spouse is the
                Participant's sole designated Beneficiary, then distribution of
                the Participant's entire interest will be made to the surviving
                spouse no later than December 31 of the calendar year
                immediately following the calendar year in which the Participant
                died, or December 31 of the calendar in which the Participant
                would have attained age 70-1/2, if later.

                (ii) If the Participant's surviving spouse is not the
                Participant's sole designated Beneficiary, then distribution of
                the Participant's entire interest to the designated Beneficiary
                will be made no later than December 31 of the calendar year
                immediately following the calendar year in which the Participant
                died.

                (iii) If there is no designated Beneficiary as of September
                30 of the year following the year of the Participant's death,
                the Participant's entire interest will be distributed no later
                than December 31 of the calendar year containing the fifth
                anniversary of the Participant's death.

                (iv) If the Participant's surviving spouse is the
                Participant's sole designated Beneficiary and the surviving
                spouse dies after the Participant but before distributions to
                the surviving spouse begin, this paragraph 11.12(b) other than
                paragraph 11.12(b)(i) will apply as if the surviving spouse were
                the Participant.

                (v) For purposes of this paragraph 11.12(b), unless paragraph
                11.12(b)(iv) applies, distributions are considered to begin on
                the Participant's Required Beginning Date. If paragraph
                11.12(b)(iv) applies, distributions are considered to begin on
                the date distributions are required to begin to the surviving
                spouse under paragraph 11.12(b)(i).

            (c) Form of Distribution. All distributions under this
            Section 11 shall be made in the form of a lump sum and shall be made
            no later than the Required Beginning Date.

SECTION
12

No Reversion to Employers

          No part of the corpus or income of the Trust shall revert to the Employers or
be used for, or diverted to, purposes other than the exclusive benefit of
Participants and Beneficiaries, subject to the following:

            (a) Employer
            contributions under the Plan are conditioned upon the deductibility
            of the contributions under section 1023(n) of the Code, and, to the
            extent any such deduction is disallowed, the Trustee shall, upon
            written request of the Employer, return the amount of any
            contribution (to the extent disallowed), reduced by the amount of
            any losses thereon, to the Employer within one year after the date
            the deduction is disallowed.

            (b) If
            a contribution or any portion thereof is made by an Employer by a
            mistake of fact, the Trustee shall, upon written request of that
            Employer, return the amount of such contribution or portion, reduced
            by the amount of any losses thereon, to that Employer within one
            year after the date of payment.

            (c) If,
            upon termination of the Plan, any amounts are held under the Plan in
            a suspense account and such amounts may not be credited to the
            Accounts of Participants, such amount will be returned to the
            Employers as soon as practicable after the termination of the Plan.

SECTION
13

Administration

          13.1
Administrative Authority. The Company shall be the Plan Administrator of
the Plan and shall have the following discretionary authority, powers, rights
and duties in addition to those vested in it elsewhere in the Plan or Trust
Agreement:

            (a)
            to adopt such rules of procedure and regulations as, in its opinion,
            may be necessary for the proper and efficient administration of the
            Plan and as are consistent with the provisions of the Plan;

            (b)
            to enforce the Plan in accordance with its terms and with such
            applicable rules and regulations it may adopt;

            (c)
            to determine conclusively all questions arising under the Plan,
            including the power to determine the eligibility of employees and
            the rights of Participants and other persons entitled to benefits
            under the Plan and their respective benefits, to make factual
            findings and to remedy ambiguities, inconsistencies or omissions of
            whatever kind;

            (d) to
            maintain and keep adequate records concerning the Plan and
            concerning its proceedings and acts in such form and detail as the
            Company may decide;

            (e) to
            direct all payments of benefits under the Plan;

            (f) to
            perform the functions of a "plan administrator", as
            defined in section 3(16)(A) of ERISA, for all purposes of the Plan,
            including for purposes of establishing and implementing procedures
            to determine the qualified status of domestic relations orders (in
            accordance with the requirements of section 206(d)(3)of ERISA) and
            to administer distributions under such qualified orders;

            (g) to
            employ agents, attorneys, accountants or other persons (who may also
            be employed by or represent the Employers) for such purposes as the
            Company considers necessary or desirable to discharge its duties;

            (h) to
            establish a claims procedure in accordance with section 503 of
            ERISA; and

            (i) to
            furnish the Employers, the Investment Committee and the Trustee with
            such information with respect to the Plan as may be required by them
            for tax or other purposes.

          The certificate of an officer of the Company that the Company has taken or
authorized any action shall be conclusive in favor of any person relying on the
certificate.

          13.2
Delegation of Administrative Responsibilities and Powers. In exercising
its authority to control and manage the operation and administration of the
Plan, the Company may delegate all or any part of its responsibilities and
powers to any person or persons selected by it. Any such allocation or
delegation may be revoked at any time.

          13.3
Uniform Rules. In managing the Plan, the Company shall uniformly apply
rules and regulations adopted by it to all persons similarly situated.

          13.4
Information to be Furnished to the Company. The other Employers and
Related Companies shall furnish the Company such data and information as may be
required for it to discharge its duties. The records of the Employers and
Related Companies as to an employee's or Participant's period of employment,
termination of employment and the reason therefor, leave of absence,
reemployment and Eligible Compensation shall be conclusive on all persons unless
the Participant satisfactorily demonstrates that such records are incorrect.
Participants and other persons entitled to benefits under the Plan must furnish
to the Company such evidence, data or information as the Company considers
desirable to carry out the Plan.

          13.5
Company's Decision Final. Any interpretation of the Plan and any decision
on any matter within the discretion of the Company made by the Company (or its
delegate) shall be binding on all persons. A misstatement or other mistake of
fact shall be corrected when it becomes known, and the Company shall make such
adjustment on account thereof as it considers equitable and practicable.

          13.6
Exercise of Company's Duties As Plan Administrator. Notwithstanding any
other provisions of the Plan, the Company shall discharge its duties hereunder
solely in the interests of the Participants and other persons entitled to
benefits under the Plan, and:

            (a) for
            the exclusive purpose of providing benefits to Participants and
            other persons entitled to benefits under the Plan; and

            (b) 
            with the care, skill, prudence and diligence under the circumstances
            then prevailing that a prudent man acting in a like capacity and
            familiar with such matters would use in the conduct of an enterprise
            of a like character and with like aims.

         
13.7
Administrative Expenses. Except as otherwise determined by the Company,
the reasonable expenses of administering the Plan and the fees and expenses
incurred in connection with the collection, administration, management,
investment, protection and distribution of the Plan assets under the Trust shall
be paid directly by the Trust out of Plan assets or, if paid by one or more
Employers, reimbursed by the Trust, to the maximum extent permitted by law, and
shall be allocated to Participant's accounts in accordance with rules
established by the Company in its sole discretion. Expenses associated with
the investment of Plan assets shall include, without limitation, fees paid for
investment advice provided through on-line financial advisors , which
fees shall be charged to the accounts of all Participants.

          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
Employer 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.

          13.9
The Trustee. Title to all assets of the Plan will be held in trust by one
or more trustees appointed by the Company for the uses and purposes set forth
herein. The powers, duties and responsibilities of the trustees are set forth
more fully in one or more trust agreements between the Company and the trustees.

          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.

          13.11
General Powers, Rights and Duties of the Investment Committee.

            (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 1165(e)
                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 480.70(OE),
            (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 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 any matters
            relating to any Participant-directed brokerage accounts, or any
            mutual funds or window options entirely chosen by the Committee.

          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 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.

            (b) 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.

            (c) 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.

            (d) 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.

          13.13
Manner of Action by Investment Committee. In the performance of the
Investment Committee's duties, the following provisions shall apply where the
context admits:

            (a) An
            Investment Committee member, by written instrument, may delegate any
            or all of his rights, powers, duties or discretions to any other
            Committee member, with the consent of the latter.

            (b) The
            Investment Committee may act by meeting or by a written instrument
            signed without meeting and may execute any document by signing one
            document or concurrent documents. Actions of the Investment
            Committee may be communicated by telephone by the Secretary of the
            Investment Committee, a majority of the members of the Investment
            Committee or any member of the Investment Committee designated by a
            majority of the members of the Investment Committee.

            (c) An
            action or decision of a majority of the members of the Investment
            Committee as to a matter shall be as effective as if taken or made
            by all members of the Investment Committee, but, except to the
            extent otherwise expressly provided by law, no member of the
            Investment Committee who dissents from any action or decision of the
            majority of the Investment Committee shall be liable or responsible
            for such action.

            (d) If,
            because of the number qualified to act, there is an even division of
            opinion among the members of the Investment Committee as to any
            matter, a disinterested party selected by the Investment Committee
            shall decide the matter and his decision shall control.

            (e) The
            certificate of the Secretary of the Investment Committee or of a
            majority of the members of the Investment Committee that the
            Investment Committee has taken or authorized any action shall be
            conclusive in favor of any person relying on the certificate.

          13.14
Liabilities and Responsibilities of the Trustee, Investment Committee and
Employers. Any final judgment or decree which may be rendered against the
Plan, the Trustee, the Investment Committee or any other fiduciary with respect
to the Plan which is not predicated upon a breach of fiduciary responsibility
shall be satisfied from the Plan's assets, and not from the individual assets of
the Trustee, the members of the Investment Committee or other fiduciaries. No
Employer shall have any responsibility or liability whatsoever with reference to
the management or conduct of the business of the Plan, or for any act or failure
to act on the part of the Trustee, any member of the Investment Committee, any
Investment Manager or any other fiduciary or their agents and employees, except
that the Company shall be responsible for the acts it performs (or fails to
perform) in its capacity as Plan Administrator (unless any such responsibility
has been delegated to another person in accordance with the provisions of
subsection 13.2).

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

SECTION 14

Amendment and Termination

          14.1
Amendment. While it is expected that the Plan will be continued, either
the Company or a duly authorized committee or officer thereof may terminate the
Plan or amend it from time to time, except that no amendment will reduce a
Participant's interest in the Plan to less than an amount equal to the amount he
would have been entitled to receive if he had resigned from the employ of the
Employers and the Related Companies on the day of the amendment, and no
amendment will eliminate an optional form of benefit with respect to a
Participant except as otherwise permitted by law.

          14.2
Termination. The Plan will terminate as to all of the Employers on any
day specified by the Company upon advance written notice of the termination
given to the Employers. Employees of an Employer shall cease active
participation in the Plan (and will be treated as inactive Participants in
accordance with subsection 3.3) on the first to occur of the following:

            (a) the
            date on which that Employer ceases to be an Employer by appropriate
            action taken by the Company or by such Employer;

        (b) the
        date that Employer is judicially declared bankrupt or insolvent; or

            (c) the
            dissolution, merger, consolidation, reorganization or sale of that
            Employer, or the sale of all or substantially all of the assets of
            an Employer, except that, subject to the provisions of subsection
            14.3, with the consent of the Company, in any such event
            arrangements may be made whereby the Plan will be continued by any
            successor to that Employer or any purchaser of all or substantially
            all of that Employer's assets, in which case the successor or
            purchaser will be substituted for the Employer under the Plan.

          14.3
Merger and Consolidation of the Plan, Transfer of Plan Assets, Acceptance of
Transfers from Other Plans. The Company in its discretion may direct the
Trustee to transfer all or a portion of the assets of this Plan to another
defined contribution plan of the Employers or Related Companies which is
qualified under section 1165(a) of the Code or, in the event of the sale of
stock of an Employer or all or a portion of the assets of an Employer, to a
qualified plan of an employer which is not a Related Company. The Benefits
Executive by written resolution may permit the Plan to accept a transfer of
assets and liabilities to this Plan from another defined contribution plan that
is qualified under section 1165(a) of the Code, may direct the Trustee
accordingly, and may adopt such amendment or Supplement to the Plan as such
Benefits Executive considers necessary to reflect the terms of such transfer,
including provision for any protected rights that may not be eliminated by
reason of such transfer under section 204(g) of ERISA. In the case of any merger
or consolidation with, or transfer of assets and liabilities to or from, any
other plan, provisions shall be made so that each affected Participant in the
Plan on the date thereof (if the Plan or the other plan, as applied to that
Participant, then terminated) would receive a benefit immediately after the
merger, consolidation or transfer which is equal to or greater than the benefit
he would have been entitled to receive immediately prior to the merger,
consolidation or transfer if the Plan or such other plan, as applied to him, had
then terminated.

          14.4
Distribution on Termination and Partial Termination. Upon termination or
partial termination of the Plan, all benefits under the Plan shall continue to
be paid in accordance with Sections 10 and 11 as those sections may be amended
from time to time.

          14.5
Notice of Amendment, Termination or Partial Termination. Affected
Participants will be notified of an amendment, termination or partial
termination of the Plan as required by law.

35

 

	SECTION 1 	General   	
          1

    
	
           
    			
	
          

    	1.1	History, Purpose and Effective Date	1
		1.2	Related Companies and Employers	1
		1.3	Plan Administration, Trust and Fiduciary
      Responsibility	1
		1.4   	Plan
      Year   	
          2

    
		1.5   	Accounting
      Dates   	
           2

    
		1.6   	Applicable
      Laws   	
           2

    
		1.7   	Gender and
      Number   	
             2

    
		1.8   	Notices   	
          2

    
		1.9   	Form of Election and
      Signature   	
           2

    
		1.10   	Evidence   	
          3

    
		1.11   	Action by
      Employers   	
           3

    
		1.12   	Plan
      Supplements   	
          3

    
		1.13   	Defined Terms  	3
	 			
	SECTION 2 	 Eligibility
      Service   	 3
	 			
		2.1   	Year of Eligibility
      Service   	
            3

    
		2.2   	Treatment as New Employee After
      Consecutive One Year Breaks in Service   	
          4

    
		2.3   	Hour of Service	
          4

    
		2.4   	One Year Break in
      Service   	
          5

    
		2.5   	Military
      Absences   	
          5

    
		2.6   	Service With Sears Canada
      Inc.   	
          5

    
		2.7   	Pre-Acquisition
      Service   	
             5

    
	 			
          

    
	SECTION 3	Participation in
      Plan   	 6
	 			
		3.1	Eligibility for
      Participation   	6
	
             

    	
          3.2   

    	
           Commencement of
          Participation   

    	
           6

    
	
             

    	
          3.3   

    	
           Inactive
          Participation   

    	
           6

    
	
             

    	
          3.4   

    	
           Plan Not Contract of
          Employment   

    	
           6

    
	
             

    	
          3.5   

    	
           Leased
          Employees   

    	
           6

    
	
             
    	
    	
    
	
            SECTION 4   

    	
             Pre-Tax, After-Tax and Rollover
            Contributions      

    	
             8

    
	
           
    	
    	
    	
    
	
             

    	
          4.1   

    	
           Pre-Tax
          Contributions   

    	
           8

    
	
             

    	
          4.2   

    	
           After-Tax
          Contributions   

    	
           8

    
	
             

    	
          4.3   

    	
           Total Pre-Tax and After-Tax
          Contributions   

    	
           8

    
	
             

    	
          4.4   

    	
           Payment of Pre-Tax and After-Tax
          Contributions   

    	
           8

    
	
             

    	
          4.5   

    	
           Modification, Discontinuance and
          Resumption of Pre-Tax or After-Tax Contributions   

    	
           9

    
	
             

    	
          4.6   

    	
           Rollover
          Contributions   

    	
           9

    
	
             

    	
          4.7   

    	
           Compensation and Eligible
          Compensation   

    	
           9

    
	
             

    	
          4.8   

    	
           Limitation on Deferrals Taken
          Into Account For Any Plan Year   

    	
           10

    
	
             
    	
    	
    
	
            SECTION 5   

    	
             Employer
            Contributions      

    	
             10

    
	
           
    	
    	
    	
    
	
             

    	
          5.1   

    	
           Amount of Employer
          Contribution   

    	
           10

    
	
             

    	
          5.2   

    	
           Medium of Employer
          Contribution   

    	
           10

    
	
             

    	
          5.3   

    	
           Time of Employer
          Contribution   

    	
           10

    
	
             

    	
          5.4   

    	
           Allocation of Employer
          Contribution To Employers   

    	
           10

    
	
             

    	
          5.5   

    	
           Allocation of Employer
          Contribution Among Participants   

    	
           10

    
	
             

    	
          5.6   

    	
           Match Eligibility
          Date   

    	
           11

    
	
             

    	
          5.7   

    	
           Qualified Matching
          Contributions   

    	
           11

    
	
             

    	
          5.8   

    	
           Limitations on Amount of Employer
          Contributions   

    	
           11

    
	
             

    	
          5.9   

    	
           Payment of Employer
          Contributions   

    	
           11

    
	
             

    	
          5.10   

    	
           Minimum Employer
          Contribution   

    	
           11

    
	
             

    	
          5.11   

    	
           Allocation of Minimum Employer
          Contributions.   

    	
           12

    
	
             
    	
    	
    
	
            SECTION   6

    	
              Investment of the Trust
            Fund      

    	
             13

    
	
           
    	
    	
    	
    
	
             

    	
          6.1   

    	
           Investment
          Funds   

    	
           13

    
	
             

    	
          6.2   

    	
           Investment Fund
          Accounting   

    	
           14

    
	
             

    	
          6.3   

    	
           Investment Fund
          Elections   

    	
           14

    
	
             

    	
          6.4   

    	
           Transfers Between Investment
          Funds   

    	
           14

    
	
             

    	
          6.5   

    	
           Liquidity   

    	
           15

    
	
             

    	
          6.6   

    	
           Voting and Tendering of Common
          Stock   

    	
           15

    
	
             

    	
          6.7   

    	
           Sale of Common Stock to the
          Company   

    	
           16

    
	
             

    	
          6.8   

    	
           Company Stock
          Fund   

    	
           16

    
	
             
    	
    	
    
	
            SECTION 7   

    	
             Plan
            Accounting      

    	
             16

    
	
           
    	
    	
    	
    
	
             

    	
          7.1   

    	
           Participants' Accounts
          1   

    	
          17

    
	
             

    	
          7.2   

    	
           Allocation of Fund Earnings and
          Changes in Value   

    	
           17

    
	
             

    	
          7.3   

    	
           Allocation of
          Contributions   

    	
           18

    
	
             

    	
          7.4   

    	
           Correction of
          Error   

    	
           18

    
	
             

    	
          7.5   

    	
           Statement of Plan
          Interest   

    	
           18

    
	
             
    	
    	
    
	
            SECTION 8   

    	
             Limitations on Compensation,
            Contributions and Allocations      

    	
             19

    
	
           
    	
    	
    	
    
	
             

    	
          8.1   

    	
           Reduction of Contribution
          Rates   

    	
           19

    
	
             

    	
          8.2   

    	
           Annual Limit on 1165(e)
          Deferrals   

    	
           19

    
	
             

    	
          8.3   

    	
           Section 1165(e)
          Testing   

    	
           20

    
	
             

    	
          8.4   

    	
           Correction Under Section 1165(e)
          Test   

    	
           21

    
	
             

    	
          8.5   

    	
           Highly
          Compensated   

    	
           21

    
	
             

    	
          8.6   

    	
           Forfeiture of "Orphan"
          Matching Employer Contributions   

    	
           21

    
	
             
    	
    	
    
	
            SECTION   9

    	
              Vesting and Termination
            Dates      

    	
             21

    
	
           
    	
    	
    	
    
	
             

    	
          9.1   

    	
           Vested Interest   

    	
           21

    
	
             

    	
          9.2   

    	
           Termination of
          Employment   

    	
           22

    
	
             
    	
    	
    
	
            SECTION   10

    	
              Withdrawals While
            Employed      

    	
             22

    
	
           
    	
    	
    	
    
	
             

    	
          10.1   

    	
           Hardship   

    	
           22

    
	
             

    	
          10.2   

    	
           Sources of
          Withdrawals   

    	
           23

    
	
             

    	
          10.3   

    	
           Method of Making Elections,
          Revocations, etc.   

    	
           23

    
	
             
    	
    	
    
	
            SECTION 11   

    	
             Withdrawals After Termination
            of Employment      

    	
             23

    
	
           
    	
    	
    	
    
	
             

    	
          11.1   

    	
           Withdrawals by and Distributions
          to Participants After Termination of Employment   

    	
           23

    
	
             

    	
          11.2   

    	
           Distributions to
          Beneficiaries   

    	
           24

    
	
             

    	
          11.3   

    	
           Limits on Commencement and
          Duration of Distributions   

    	
           24

    
	
             

    	
          11.4   

    	
           Beneficiary
          Designations   

    	
           24

    
	
             

    	
          11.5   

    	
           Distribution Only Upon Separation
          From Service   

    	
           24

    
	
             

    	
          11.6   

    	
           Form of Payment   

    	
           25

    
	
             

    	
          11.7   

    	
           Facility of
          Payment   

    	
           25

    
	
             

    	
          11.8   

    	
           Interests Not
          Transferable   

    	
           25

    
	
             

    	
          11.9   

    	
           Absence of
          Guaranty   

    	
           26

    
	
             

    	
          11.10   

    	
           Missing Participants or
          Beneficiaries   

    	
           26

    
	
             

    	
          11.11   

    	
           Direct
          Rollovers   

    	
           26

    
	
             

    	
          11.12   

    	
           Minimum Required
          Distributions   

    	
           27

    
	
             
    	
    	
    
	
            SECTION   12 

    	
            No Reversion to
            Employers      

    	
             28

    
	
             
    	
    	
    
	
            SECTION   13

    	
             Administration      

    	
             28

    
	
           
    	
    	
    	
    
	
             

    	
          13.1   

    	
           Administrative
          Authority   

    	
           28

    
	
             

    	
          13.2   

    	
           Delegation of Administrative
          Responsibilities and Powers   

    	
           29

    
	
             

    	
          13.3   

    	
           Uniform Rules   

    	
           29

    
	
             

    	
          13.4   

    	
           Information to be Furnished to
          Company   

    	
           29

    
	
             

    	
          13.5   

    	
           Company's Decision
          Final   

    	
           30

    
	
             

    	
          13.6   

    	
           Exercise of Company's Duties As
          Plan Administrator   

    	
           30

    
	
             

    	
          13.7   

    	
           Administrative
          Expenses   

    	
           30

    
	
             

    	
          13.8   

    	
           Indemnification of Individuals
          Acting on Behalf of the Company   

    	
           30

    
	
             

    	
          13.9   

    	
           The Trustee   

    	
           30

    
	
             

    	
          13.10   

    	
           Appointment of Investment
          Committee and Named Fiduciary   

    	
           31

    
	
             

    	
          13.11   

    	
           General Powers, Rights and Duties
          of the Investment Committee   

    	
           31

    
	
             

    	
          13.12   

    	
           General Powers, Rights and Duties
          of the Investment Committee   

    	
           33

    
	
             

    	
          13.13   

    	
           Manner of Action by Investment
          Committee   

    	
           33

    
	
             

    	
          13.14   

    	
           Liabilities and Responsibilities
          of the Trustee, Investment Committee and Employers   

    	
           34

    
	
             

    	
          13.15   

    	
           Cooperation of Names
          Fiduciary   

    	
          34

    
	
             
    	
    	
    
	
            SECTION 14   

    	
            Amendment and
            Termination      

    	
            35

    
	
           
    	
    	
    	
    
	
             

    	
          14.1   

    	
           Amendment   

    	
          35

    
	
             

    	
          14.2   

    	
           Termination   

    	
          35

    
	
             

    	
          14.3   

    	
           Merger and Consolidation of the
          Plan, Transfer of Plan Assets, Acceptance of Transfers from Other
          Plans   

    	
          35

    
	
             

    	
          14.4   

    	
           Distribution on Termination and
          Partial Termination 3   

    	
          36

    
	
             

    	
          14.5   

    	
           Notice of Amendment, Termination
          or Partial Termination   

    	
          36

    

  End of TOC - Do not delete this paragraph!

	
       

      
      INDEX OF DEFINED TERMS

	
      Section
	
       
	
       

      
      Defined Term

	 	 	 
	
      1.5
	
      -
	
      Accounting Date

	
      7.1
	
      -
	
      Accounts

	
      7.1(c)
	
      -
	
      After-Tax Account

	
      4.2
	
      -
	
      After-Tax Contributions

	
      11.4
	
      -
	
      Beneficiary

	
      2.7
	
      -
	
      Benefits Executive

	
      1.1
	
      -
	
      Code

	
      1.1
	
      -
	
      Company

	
      6.1
	
      -
	
      Company Stock Fund

	
      4.7
	
      -
	
      Compensation

	
      2.1
	
      -
	
      Computation Period

	
      8.3
	
      -
	
      Deferral Percentage

	
      11.1(c)
	
      -
	
      Distribution Date

	
      1.1
	
      -
	
      Effective Date

	
      4.7
	
      -
	
      Eligible Compensation

	
      3.1
	
      -
	
      Eligible Employee

	
      1.2
	
      -
	
      Employer

	
      1.2
	
      -
	
      Employers

	
      5.1
	
      -
	
      Employer Contribution

	
      7.1(a)
	
      -
	
      Employer Contribution Account

	
      1.3
	
      -
	
      ERISA

	
      2.1
	
      -
	 
	
      10.1
	
      -
	
      Hardship

	
      8.3
	
      -
	
      Highly Compensated Group Deferral Percentage

	
      2.3
	
      -
	
      Hour of Service

	
      1.3
	
      -
	
      Investment Committee

	
      6.1
	
      -
	
      Investment Funds

	
      13.11(a)-iii
	
      -
	
      Investment Manager

	
      3.5
	
      -
	
      Leased Employee

	
      2.4
	
      -
	
      Maternity or Paternity Absence

	
      5.10
	
      -
	
      Minimum Employer Contribution

	
      8.3
	
      -
	
      Non-highly Compensated Group Deferral Percentage

	
      2.4
	
      -
	
      One Year Break in Service

	
      3.1
	
      -
	
      Participant

	
      2.1
	
      -
	 
	
      1.9
	
      -
	
      Phone System

	
      1.9
	
      -
	
      PIN

	
      1.3
	
      -
	
      Plan Administrator

	
      1.4
	
      -
	
      Plan Year

	
      7.1(b)
	
      -
	
      Pre-Tax Account

	
      4.1(a)
	
      -
	
      Pre-Tax Contribution

	
      7.1(d)
	
      -
	
      Qualified Matching Account

	
      5.7
	
      -
	
      Qualified Matching Contribution

	
      1.3
	
      -
	
      Recordkeeper

	
      1.2
	
      -
	
      Related Company

	
      11.3
	
      -
	
      Required Beginning Date

	
      7.1(e)
	
      -
	
      Rollover Account

	
      4.6
	
      -
	
      Rollover Contribution

	
      11.5(a)
	
      -
	
      separation from service

	
      1.12
	
      -
	
      Supplements

	
      9.2
	
      -
	
      Termination Date

	
      1.3
	
      -
	
      Trust

	
      1.3
	
      -
	
      Trust Agreement

	
      1.3
	
      -
	
      TrusteeNew Page 1

Exhibit 4.2

 

---DEED NUMBER:Seven (7)

----------------DEED OF TRUST--------------- ------

---In the City of San Juan, Puerto Rico, this twenty second
(22nd) day of December, two thousand four (2004).--------

-------------------BEFORE ME ---------------------

-IVELISSE COLLAZO RIVERA, Notary Public in and for the
Commonwealth of Puerto Rico, with residence in San Juan, Puerto Rico and offices
at the Eighth Floor, American International Plaza, 250 Munoz Rivera Avenue,
Hato Rey, Puerto Rico 00918-1818.--------------------------------------

---------------------APPEAR-----------------------

---AS PARTY OF THE FIRST PART: Sears, Roebuck de Puerto
Rico, Inc., a
corporation organized and existing under the laws of Delaware (hereinafter
referred to as the ""Employer""), employer identification
number 66-0233626, acting and represented herein by its authorized
representative Carson Theodore Wells, Jr., also known as Carson T. Wells, Jr.,
social security number ###-##-####, of legal age, married and resident of San
Juan, Puerto Rico, who is duly authorized to appear on behalf of the Employer as
it appears on an Unanimous Written Consent of the Board of Directors executed by the Employer's
Directors on November twenty-nine (29th), two thousand four(2004).-----------------

---AS PARTY OF THE SECOND PART: BANCO POPULAR DE PUERTO
RICO, a banking corporation organized and existing under the laws of the
Commonwealth, appearing in its capacity as Trustee (hereinafter sometimes
referred to as the ""Trustee""), employer identification
number 66-0175278, represented by its Second Vice President, Maryvette
Velazquez Torres, social security number ###-##-####, of legal age, married and
resident of Carolina, Puerto Rico, who is duly authorized to appear on behalf of
the Trustee as it appears on a Certificate of Resolution, executed by its
Assistant Secretary, on August nineteen (19), two thousand four
(2004).---------------------------

----I, the Notary Public, hereby certify that I am personally
acquainted with the natural person appearing on behalf of the party of the
Second part and since I am not personally acquainted by the natural person
appearing on behalf of the party of the First part, I have identified him by
means of his driver's license number 21839677 issued by the State of North
Carolina, United States, in accordance with Article 17(c) of the Notarial Act.
Further, the appearing parties represent to me that they have, and in my
judgment they do have the necessary legal capacity and authority to execute this
deed. Wherefore they freely and voluntarily.
-------------------------------------------STATE------------------------------

---WHEREAS: The Employer has heretofore adopted the
Plan.------------------------------------------------WHEREAS: The
Employer is the Administrator of the Plan; and
-----------------------------------------WHEREAS: Under the provisions of
the plan, funds will from time to time be contributed to the Fund, which
amounts, as and when received by the Trustee, will constitute the principal of
the Fund to be held for the benefit of the Participants and/or their
Beneficiaries; .---------------------

---WHEREAS, the Trustee has agreed to act as trustee
and to hold and administer the funds of the Plan as hereinafter
provided.----------------------

---NOW, THEREFORE, the Employer hereby establishes a
Fund with the Trustee which the Trustee shall hold, manage and administer
without distinction between principal and income upon the terms and conditions
hereinafter set forth.:---------------

---------------------SECTION I -------------------

--------------------DEFINITIONS-------------------

---The following terms when used herein, shall have meanings
as set forth below:----------------------

---Administrator - The Employer shall serve as the
Administrator (i.e., the named fiduciary) as ERISA defines such term, and the
Board shall appoint a person or persons to act as the Employer's agent to
carry out its responsibilities to control the administration of the Plan. The
term Administrator shall also include any Recordkeeper, Agent or Custodian
appointed by the Employer, or their designees.-------------------------Agent -
The agent appointed by the Trustee pursuant to Section four point one (4.1) of
this Agreement.----------------------------------------

---Agent - The agent appointed by the Trustee pursuant
to section four point one (4.1) of this Agreement.

---Agreement - This Agreement together with all
amendments thereto from time to time in effect.--

---Beneficiary - Any person a Participant designates
to receive any payments due under the Plan on the death of the
Participant.---------------------

---Board - The Board of Directors of the Employer or
any similar body that controls the operations of the
Employer.-------------------------------------

---Commingled Trust - A collective investment or
pooled trust fund established under Section Nine Point Eighteen (9.18) of the
Comptroller of the Currency's regulations, or similar regulations of any
Federal or State authority or agency that has jurisdiction over the Trustee, the
Investment Manager or the subject matter of the Trust. ------

---Custodian - The person or entity appointed by the
Trustee at the direction of the Employer pursuant to Section four point one
(4.1) of this Agreement to take custody of all or part of the Trust.
-------------------------------------------

---Declaration of Trust - The document that
establishes any Commingled Trust.-----------------

---Employer-Sears Roebuck and Co. ---Float -
The time period between the date of issuance of a check for payment of benefits
and the cashing of the same. ----------------------------

---ERISA - The Employee Retirement Income Security Act
of nineteen hundred seventy four (1974), all amendments thereto, and regulations
issued from time to time thereunder. -------------------------

---Fiscal Year - The annual accounting period of the
Trust which begins on January first (1st) and ends on December thirty-one (31)
of each year.---

---Fund - A trust fund that consists of cash and
such other property acceptable to the Trustee as shall from time to time, be
paid or delivered to the Trustee and the earnings and profits thereon less the
payments which the Trustee shall have made at the time of
reference.------------------------

----Investment Committee - The committee appointed
by the Employer who has the power to establish the number and types of
investment choices available under the Plan and to appoint an Investment
Manager.------------------------------

---Investment Manager - Any person, firm, or
corporation who is a registered investment adviser under the Investment Advisers
Act of nineteen hundred forty (1940), a bank or an insurance company, who: (a)
has the power to manage, acquire, or dispose of Trust''s assets; and (b)
acknowledges in writing its fiduciary responsibility to the Plan.----------

---Participant - An employee of the Employer, as
defined in the Plan, who has become and continues to be a participant in or
member of such Plan in accordance with the provisions of such Plan.------

---Plan -The Sears Puerto Rico Savings Plan, together
with all amendments thereto from time to time in effect.---

---Puerto Rico Code - The Puerto Rico Internal Revenue Code
of 1994, as amended. ----------------

---Recordkeeper - The person or entity appointed by the
Employer to perform recordkeeping and other administrative services on behalf of
the Plan. ---

---Trust - The Sears Puerto Rico Savings Plan Trust created
pursuant to this deed. -------------------

-------------------SECTION II --------------------

----------------CONCERNING THE FUND -------------

---SECTION TWO POINT ONE (2.1): IN GENERAL: The Trustee
shall be responsible only for the property it receives as Trustee and shall have
no authority to force the Employer to contribute to the Fund and shall not be
responsible for the adequacy of the Fund to meet and discharge any and all
liabilities under the Plan. ---------------------------------

---SECTION TWO POINT TWO (2.2): DISBURSEMENT OF FUNDS:
Trustee shall, from time to time, on the written directions from the
Administrator, Recordkeeper, Agent, Custodian, or their designees, pay out of
the Fund to such persons, in such manner, in such amounts, and for such purposes
as may be specified in the written directions of the Administrator, Recordkeeper,
Agent, Custodian, or their designees (or in accordance with Section 5 hereof).
Upon any such payments, the amount thereof shall no longer constitute a part of
the Fund. Notwithstanding the foregoing, the total amount of any payment (check,
electronic funds transfer or distribution of other assets) shall be reduced to
comply with Puerto Rico and federal income tax withholding requirements pursuant
to Sections six point two (6.2) and six point three (6.3) of this Agreement,
respectively. The Trustee shall consider each such direction a representation
and certification by the Administrator, Recordkeeper, Agent, Custodian, or their
designees, that the directed payment is in conformity with Section Two Point
Three (2.3) hereof. ------------------------

---SECTION TWO POINT THREE (2.3): NON-DIVERSION OF FUNDS:
At no time prior to the satisfaction of all liabilities with respect to the
Participants and their Beneficiaries under this Trust shall any part of the
corpus or income of the Trust be used for, or diverted to, purposes other than
for the exclusive benefit of such Participants or their Beneficiaries, or for
defraying reasonable expenses of administering the Plan and Trust.--------------

---In the event of the termination of the Plan, the
provisions of the first paragraph of this Section notwithstanding, any residual
assets of the Plan may be distributed to the Employer at the direction of the
Administrator, Recordkeeper, Agent, Custodian or their designees, if all
liabilities of the Plan to the Participants and their Beneficiaries have been
satisfied and the distribution does not contravene any provision of
law.---------------------------------------------

---SECTION TWO POINT FOUR (2.4): RETURN OF CONTRIBUTIONS:
In the case of a contribution that is made by the Employer as a result of a
mistake of fact, paragraph Two Point Three (2.3) above shall not prohibit the
return to the Employer, at the written direction of the Investment Committee,
Administrator, Recordkeeper, Agent, Custodian, or their designees, of such
contribution within one (1) year after the payment of the contribution. If the
Employer conditions a contribution, in writing, upon qualification of the Plan
under Section 1165 of the Puerto Rico Code or any successor legislation of
similar nature, and if the Plan does not qualify, then paragraph Two Point Three
(2.3) above shall not prohibit the return to the Employer, at the direction of
the Administrator, Recordkeeper, Agent, Custodian,, or their designees, of such
contribution. Also, in case any contribution made by the Employer is disallowed
as a deduction under Section 1023(n) of the Puerto Rico Code and the regulations
issued thereunder, or any successor legislation of similar nature, then, to the
extent the deduction is disallowed, paragraph Two Point Three (2.3) above shall
not prohibit the return to the Employer, at the written direction of the
Administrator, Recordkeeper, Agent, Custodian,, or their designees, of such
contribution within one (1) year after the disallowance of its
deduction.--------------------- -------------------------------------

-------------------SECTION III -------------------

---THE EMPLOYER, THE ADMINISTRATOR, AND THE
TRUSTEE-------------------------------------------

---SECTION THREE POINT ONE (3.1): THE EMPLOYER: The
Employer shall certify to the Trustee the name(s) and specimen signature(s) of
the person(s) the Administrator appoints to act as the Employer''s agent to
administer the Plan. The Employer shall promptly notify the Trustee, in writing,
of the appointment of a new Administrator. Until the Trustee receives such
written notice, it shall be fully protected in assuming that the Administrator
is unchanged and may act accordingly.-------------

---SECTION THREE POINT TWO (3.2): THE-------------

ADMINISTRATOR: The Administrator shall certify to the
Trustee the names of the persons authorized to represent it before the Trustee
and the Trustee, may act on any direction signed on behalf of the Administrator
which the Trustee reasonably believes in good faith to be genuine, and to have
been executed by the Administrator or by any person whose authority to act on
behalf of the Administrator has been certified to the Trustee. The Trustee,
unless it knows that a direction constitutes a breach of the Administrator''s
fiduciary responsibility with respect to the Plan, shall not be liable in any
way for any payment made pursuant to any direction of the Administrator, but in
the absence of knowledge that any direction constitutes such a breach, the
Trustee shall have no duty to inquire or investigate prior to taking any action
upon any such direction from the Administrator.-----------------

---SECTION THREE POINT THREE (3.3): THE TRUSTEE: The
Trustee may rely upon any certificate, notice, or direction of the Employer,
Investment Committee or Administrator which the Trustee reasonably believes in
good faith to be genuine, and to have been signed by a duly authorized officer
or agent of the Employer, the Investment Committee or the
Administrator.------------------------------------

---SECTION THREE POINT FOUR (3.4): COMMUNICATIONS: The
Investment Manager, the Investment Committee, Administrator, Recordkeeper,
Agent, Custodian, the Trustee, or their designees, and any other persons
responsible for the investment of any portion of the Trust Fund shall establish
such communication procedures, including oral, written and electronic
communication procedures (or any combination of such procedures) as the
Investment Manager, Investment Committee, Administrator, Recordkeeper,
Custodian, Agent, the Trustee, or their designees, and such other persons deem
reasonable and prudent under the circumstances for the orderly administration of
the Fund. The Employer shall designate in writing the individual or individuals
authorized to act on their behalf under this Agreement, the Investment Manager,
Administrator, Recordkeeper, Agent, Custodian, the Investment Committee, or
their designees, which certification shall set forth the name and signature of
each such individual and which shall be accompanied by such other supporting
documents as the Trustee shall deem reasonable under the circumstances. The
Trustee and each other person acting on its behalf shall be entitled to rely
conclusively upon any and all written communications from the Employer,
Administrator, Recordkeeper, Agent, Custodian, the Investment Manager, the
Investment Committee, or any other person responsible for investment of or
Administration of the Fund which the Trustee reasonably believes to be
communicating in accordance with such established procedures, unless the Trustee
reasonably believes that the action or inaction required by the communication
would violate the terms of ERISA, the Puerto Rico Code, the Plan, or this
Agreement. Communications from the Employer, Administrator, Recordkeeper, Agent,
Custodian, the Investment Manager or the Investment Committee to the Trustee
shall be sent to such address as the Trustee shall specify, and such
communications shall be binding upon the Fund and the Trustee, when the Trustee
receives them.--

----------------------SECTION IV -----------------

----ADMINISTRATION AND INVESTMENT OF THE FUND----

---SECTION FOUR POINT ONE (4.1): ADMINISTRATIVE POWERS AND
AUTHORITY OF TRUSTEE: The Trustee shall have the following powers and
authorities:---------

-----(a) Exercise of Owner's Rights - To vote
upon any stocks, bonds, or other securities; to give general or special proxies
or powers of substitution; to exercise any conversion privileges, subscription
rights or other options, and to make any payments incidental thereto; to oppose,
or to consent to, or otherwise participate in corporate reorganizations or other
changes affecting corporate securities, and to delegate discretionary powers,
and to pay any assessments or charges in connection therewith; to abandon any
property it determines to be worthless; and generally to exercise any of the
powers of an owner with respect to stocks, bonds, securities, or other property
held as part of the Fund.--------------------(b) Right to Borrow - To
borrow or raise money for the purposes of the Fund in such amount, and upon such
terms and conditions, as the Trustee in its absolute discretion may deem
advisable; and, for any sums so borrowed, to issue its promissory note as
Trustee, and no persons who lend money to the Trustee shall be bound to see to
the application of the money lent or to inquire into the validity, expediency,
or propriety of any such borrowing. It is intended that the Trustee shall not
have the power to borrow from itself; or any other party in interest (as such
term is defined in ERISA Section Three hyphen Fourteen (3-14) with respect to
the Plan. ---------------------------------(c) Settlement of Claims and Debts
- To settle or compromise any claims, debts, or damages due or owed to or from
the Trust, to commence or defend suits of legal or administrative proceedings,
and to represent the Trust in all suits and legal or administrative proceedings,
except that it will not exercise this power without the consent of the
Administrator if the claim affects an interpretation of a participant's or
his/her beneficiary rights under the Plan or the matter relates solely to the
Trustee.--------------------

---(d) Maintaining Real Estate - To repair, alter,
or improve any building which may be on any real estate that form part of the
Fund or to erect entirely new structures thereon.------------------

---(e) Registration of Investments - To register any
investments held as part of the Fund in its own name or in the name of a nominee
and to hold any investments in bearer form, provided that the books and records
of the Trustee shall at all times show that all such investments are part of the
Fund.----

---(f) Employment of Counsel and Consultants-----

After consulting with the Employer and receiving approval
therefore, to employ suitable legal counsel, consultants, accountants, enrolled
actuaries, and other experts or agents (all of whom may also be advisers to the
Employer), and to pay their reasonable expenses and compensations from the Fund
if such expenses and compensation are determined to be administrative expenses
of the Plan.---------------------------------------------

(g) Execution of Instruments - To make, execute,
acknowledge, and deliver any and all documents of transfer and conveyance and
any and all other instruments that may be necessary or appropriate to carry out
the powers herein granted.-----------------------------------------

---(h) Power to Incorporate - To organize and
incorporate under the laws of any state it may deem advisable one or more
corporations (and to acquire an interest therein) in order to acquire and hold
title to any property or interest in property that the Trustee is authorized to
acquire.--------------

---(i) Pooling of Investments with Other Trusts - To
pool all or any of the Trust Fund, form time to time, with assets that belong to
any other qualified employee benefit trust the Employer creates, or an
affiliated company of the Employer, and to commingle such assets and make joint
or common investments and carry joint accounts on behalf of this Fund and such
other Funds and such other trusts and to allocate undivided shares or interest
in such investments or accounts or any pooled assets of the two or more trusts
in accordance with their respective interests.

---(j) Any Necessary Act - To do all such acts, take
all such proceedings, and exercise all such rights and privileges, although not
specifically mentioned herein, as may be necessary or proper for the
accomplishment of the purpose for which the Trust was
established.----------------------------

----(k) Power to Appoint an Agent - To appoint the
Agent of the Trustee (although the exercise of such authority must be directed
by the Administrator) and to transfer assets under the control of the Trustee to
the Agent for investment purposes subject to the same powers, limitations and
conditions imposed on the Trustee herein.-------------(l) Power to Enter into
Agency Agreements - To enter into one (1) or more agency agreements for
purposes of opening one (1) or more agency accounts and transferring or
depositing therein all or part of the assets held by the Trustee that from time
to time the Administrator, at its direction, may require to be placed in the
agency account for investment purposes. -----------------------------

----(m) Power to Enter into Co-Trustee Agreement - To
enter into one (1) or more co-trustee agreements, with approval of the
committee, which are necessary or appropriate to carry out the powers herein
granted.---------------------------------(n) Power to Appoint a Custodian
- To appoint the Custodian (although the exercise of such authority must be
directed by the Administrator) to take custody of all or part of the Trust.
---------

----(o) Power to enter into Custodial Account Agreements
- To enter into one (1) or more custodial account agreements, with approval of
the Administrator.------------------------------------

 

---SECTION FOUR POINT TWO (4.2): INVESTMENT POWERS AND
AUTHORITY OF THE TRUSTEE: Subject to Section four point one (4.1), the
Trustee shall have the following powers and authority:---------------

-----(a) General Investment Powers - To invest and
reinvest the principal and income of the Fund and keep the Fund invested,
without distinction between principal and income, in such securities or in such
property, real, personal, whenever situated, as the Trustee shall deem
advisable, including, but not limited to stocks, common or preferred, trust and
participation certificates, mutual funds, commingled trusts, bonds and mortgages
(including partial interest in bonds and mortgages or notes and mortgages the
Federal Housing Administration insures), leaseholds on improved and unimproved
real estate, except obligations and/or securities of the Employer or any of its
affiliates, and other evidences of indebtedness or ownership, without liability
for any loss if the Trustee selects and diversifies the investments with the
care, skill, prudence and diligence under the circumstances then prevailing that
a prudent person who acts in like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character and with like aims,
subject to the provisions of ERISA Sections 404 and 406. Without limiting, the
generality of the foregoing, the Trustee shall, as and when the Administrator
directs in writing, invest a portion of the Fund in the insurance, annuity,
and/or any other type of individual or group contracts any qualified insurance
company issues and the Administrator selects and shall deal with such contracts
as and when the Administrator directs in writing.------------------------------

----(b) Power to Participate in a Commingled Trust
- To the extent of the Fund's participation in a commingled trust, the
Declaration of Trust that creates such commingled trust shall constitute a part
of the Plan and of this Agreement, and any such investment in said Commingled
Trust shall be subject to all the provisions of the Declaration of Trust as the
same may be amended or supplemented.

---(c) Purchase of Property - To purchase or
subscribe for any securities or property and to retain the same in the
Fund.--------------------------(d) Sale, Exchange, Conveyance and Transfer of
Property - To sell, exchange, convey, transfer or otherwise dispose of,
any securities or property it holds by private contract or at public auction,
and no person who deals with the Trustee shall be bound to see to the
application of the purchased money or to inquire into the validity, expediency,
or propriety of any such sale or other disposition.---

-----(e) Retention of Cash - To keep such portion of
the Trust in cash or cash balances as the Trustee and the Employer may deem to
be in the best interest of the Trust.----------------------------

---(f) Retention of Acquired Property - To accept and
retain for such time as it may deem advisable any securities or other property
it receives or acquires as Trustee hereunder, whether or not such securities or
other property would normally be purchased as investments
hereunder.---------------

----(g) Mortgage Powers - To renew or extend, or to
participate in the renewal or extension of any mortgage, upon such terms as may
be deemed advisable, and to agree to the reduction in the rate of interest on
any mortgage or to any other modification or change in the terms of any mortgage
or of any guarantee that pertains thereto, in any manner and to any extent that
may be deemed advisable for the protection of the Fund or the preservation of
the value of the investment; to waive any default, whether in the performance of
any covenant or condition of any mortgage or in the performance of any
guarantee, or to enforce any such default, in such manner and to such extent as
may be deemed advisable; to exercise and enforce any and all rights of
foreclosures; to bid on property in foreclosure; to take a deed in lieu of
foreclosure with or without paying a consideration therefore and in connection
therewith to release the obligation on the bond secured by such mortgage; and to
exercise and enforce in any action, suit or proceeding at law or in equity any
rights or remedies in respect to any mortgage or
guarantee.--------------------------------------------(h) Purchase and Sale
of Stock Options - The Trustee is expressly authorized to write and sell
call options under which the holder of the option has the right to purchase
shares of stock the Trustee holds as part of the assets of the Fund, if such
options are traded on and sold through a national securities exchange registered
under the Securities Exchange Act of 1934, as amended, which exchange has been
authorized to provide a market for options contracts pursuant to Rule nine B
hyphen one (9B-1) promulgated under such Act, and so long as the Trustee at all
times, up to and including the time of exercise or expiration of any such
option, holds sufficient stock in the Fund to meet the obligations under such
option if exercised. In addition, the Trustee is expressly authorized to
purchase and acquire call options for the purchase of shares of stock that such
options cover if the options are traded on and purchased through a national
securities exchange as described in the immediately preceding sentence, and so
long as any such option is purchased solely in a closing purchase transaction,
which means the purchase of an exchange traded call option, the effect of which
is to reduce or eliminate the obligations of the Trustee with respect to a stock
option contract or contracts which it has previously written and sold in a
transaction authorized under the immediately preceding sentence.
------------------------------

-----(i) Investments - To invest that part of
the Fund which the Trustee or the Administrator agree should be held in cash or
cash balances in deposits in the banking department of the Trustee which bear a
reasonable rate of interest, including but not limited to, demand deposits,
certificates of deposit, savings certificates, and savings
accounts.----------------------------------------

---SECTION FOUR POINT THREE (4.3): INVESTMENT MANAGER
DIRECTIONS: The Employer will appoint an Investment Committee which may
appoint an Investment Manager to carry out the investment responsibilities
provided in Section Four Point Two (4.2) above. The Trustee shall carry out its
investment responsibilities, as provided in Section Four Point Two (4.2) above,
in respect to all or any part of the Fund, in accordance with the written
instructions the appointed Investment Manager or Investment Committee delivers
to it. If the Employer acting through the Investment Committee has appointed an
Investment Manager pursuant to the ""Designation of Investment
Manager""; or if subsequent to the execution of this Deed the Employer
acting through the Investment Committee appoints the Investment Manager the
Employer shall certify to the Trustee with a written notice of said appointment,
and shall remain in effect until the Employer or Administrator or the Investment
Committee advises the Trustee in writing of the termination of the Investment
Manager's appointment. If the Employer, or the Investment Committee has not
designated an Investment Manager with respect to all or any part of the Fund,
the Trustee shall exercise all powers as set forth in Section Four Point Two
(4.2) hereof. --------SECTION FOUR POINT FOUR (4.4)- SPECIFIC FUNDS,
STOCKS OR ASSETS: Pursuant to the ""Employer's Investment
Directions"" the Employer or the Investment Manager may direct the
Trustee to invest all or any specified portion of the Trust in particular funds
(including mutual funds, common collective or group trust funds), stocks or
assets. In such event, the Trustee shall have no discretion with respect to the
investment of the Trust or such portion of the Trust and shall be responsible
only for executing the instructions of the Employer. The Trustee shall have no
responsibility whatsoever for monitoring any investments the Employer, or the
Investment Manager directs, nor shall the Trustee be required to take any action
with respect to such investments unless the Trustee receives written notice from
the Employer, or the Investment Manager. Further, the Trustee shall incur no
liability whatsoever with respect to such investments (including, but not
limited to, liability for late collection on calls of securities when said calls
are not published in any of the national sources to which the Trustee
subscribes) except for the delay or failure to act after the receipt of timely
written notice of the need for such action from the Employer or the Investment
Manager, or the Trustee's own negligence, willful misconduct, errors,
mistake, violation of any applicable law, breach of this Agreement or the Plan,
bad faith or misconduct of any of its employees.---------------

---If the Plan permits a Participant or a Beneficiary to
direct the investment of his account, the Administrator, Recordkeeper,
Custodian, Agent, the Investment Manager, the Investment Committee, or their
designees, shall direct in writing the Trustee to establish such investment
accounts within the Fund as may be necessary to effectuate such investment
elections. The Administrator, Recordkeeper, Custodian, Agent,the Investment
Manager, Investment Committee, or their designees, in consultation with the
Trustee, shall establish such reasonable rules for said investment elections as
the Trustee deems necessary or appropriate and such rules shall be applied in a
uniform and non-discriminatory manner. The Administrator, Recordkeeper, Agent,
Custodian, Investment Manager, Investment Committee, or their designees, shall
communicate in writing all such investment elections to the Trustee. The
Employer shall designate how accounts shall be invested in the absence of a
proper affirmative direction from the participant or
beneficiary.----------------------------Except as otherwise provided by ERISA,
the Trustee shall have no responsibility whatsoever for any investment decisions
a participant or beneficiary makes or for the investment of any portion of the
Fund which is subject to the direction of a participant or beneficiary.
------------

-------------------SECTION V----------------------

-------------COMPENSATION AND EXPENSES------------

---SECTION FIVE POINT ONE (5.1): TRUSTEE: COMPENSATION AND
OTHER EXPENSES: The expenses the Trustee incurs in the performance of its
duties, including reasonable and necessary fees for legal, recordkeeping, or
consulting services rendered to the Trustee, such compensation to the Trustee as
may be agreed upon in writing from time to time between the Employer and the
Trustee, and all other property charges and disbursements of the Trustee, shall
be paid from the Trust Fund, provided prior written notification is given to the
employer, and that such costs and expenses are reasonable and proper expenses of
the Plan and the Fund as provided ERISA; except that the Trustee and the Employer may agree
in writing that the Employer will pay any such costs and
expenses.-----------------------------------------

The Trustee shall retain earnings on the float attributable
to outstanding benefit checks as part of its overall compensation. However, if
any invoice sent by the Trustee to the Employer is not paid within a period of
sixty (60) days after the date of receipt of the invoice by the Employer, the
Trustee shall be authorized, pursuant to the provisions of ERISA to charge the
unpaid portion of such invoice to the Trust Fund, unless the payment of such
expenses would constitute a ""prohibited transaction""
within the meaning of Section 406 of ERISA, or Section 1409(c) of the Puerto
Rico Code (in which event such expenses must be paid by the
Employer).----------------------------------------

---SECTION FIVE POINT TWO (5.2): INVESTMENT EXPENSES: Any
expenses directly related to the investments of the Fund, such as brokerage
commissions, custody fees, registration charges, etc. shall be paid from the
Fund, except that the Trustee and the Employer may agree in writing that the
Employer will pay any such expenses.-------SECTION FIVE POINT THREE (5.3):
TAXES: All taxes of any kind that may be assessed or levied against or in
respect of the fund shall be paid from the Fund and charged thereto, unless the
Trustee and the Employer agree in writing that the Employer will pay any such
taxes. -----------------------

----SECTION FIVE POINT FOUR (5.4): CUSTODIAL EXPENSES:
Any expenses directly related to custody fees shall be paid from the Fund and
charged thereto, unless the Trustee and the Employer agree in writing that the
Employer will pay any scuh expenses.------------------------------------------

---------------------SECTION VI ------------------

----------MAINTENANCE OF RECORDS AND ACCOUNTS-----

---SECTION SIX POINT ONE (6.1): MAINTENANCE OF RECORDS:
Except as provided below, the Trustee shall keep accurate and detailed accounts
of all its receipts, investments, disbursements, and other transactions under
this Agreement. Notwithstanding the foregoing, if the Administrator has retained
or directed the Trustee to retain and appoint a Recordkeeper, Custodian or
Agent, the Trustee shall only be responsible for maintaining accounts in
reliance on the information provided to the Trustee by the Recordkeeper, the
Custodian or the Agent, or their designees based on a net total amount per fund.
Such person or persons as the Employer shall designate in writing shall be
allowed to inspect the books of accounts that relate to the Fund upon request at
any reasonable time during the business hours of the Trustee. Within sixty (60)
days after the close of each Fiscal Year or the removal or resignation of the
Trustee as provided in Section Seven (7) of this Agreement or the termination of
the Plan or this Agreement, the Trustee shall render to the Employer (and
certify the accuracy of) a written account of all its transactions related to
the Fund during the period from the last previous accounting to the close of the
Fiscal Year or the date of termination of the Plan or this Agreement; such
account shall include a statement of assets and liabilities of the Fund at the
close of the Fiscal Year, and show the current market value of each asset at
that date, together with such additional information in the Trustee's
possession as the Employer may need to comply with the provisions of ERISA
Section 103. -------After the Trustee mails such account, the Employer shall
promptly notify the Trustee in writing, within sixty (60)_days after receipt of
such statement of account, of its approval or disapproval thereof. Such approval
or any statement of account shall constitute an account stated between the
Trustee and the Employer as to all matters embraced therein and shall be binding
upon all persons interested in the Fund to the same extent as if the account had
been settled and allowed in and processed before a court of competent
jurisdiction on due written notice to all persons interested therein or affected
thereby. In case the Employer shall not, within sixty (60) days after the
receipt of any such statement of account, notify the Trustee in writing of its
disapproval of the same, such statement shall constitute an account stated
between the Employer and the Trustee as to all matters embraced therein, with
the same force and effect as if the same had been duly approved in
writing.------------------------------

- SECTION SIX POINT TWO (6.2): PUERTO RICO INCOME TAX
WITHHOLDING AND REPORTING--The Trustee shall be responsible for the
withholding of any Puerto Rico income taxes, preparation, filing or delivery of
Puerto Rico Treasury Department Forms 480.5, 480.6A, 480.6B, 480.6(B)(1), 480.9A
and 480.70(OE) or any other forms which are substituted for those or are
required to be filed by the Puerto Rico Code in connection with any distribution
or payment from the Plan out of the Fund, except to the extent that such
responsibilities are delegated in writing by the Trustee and the Employer and/or
Administrator to the Plan's Recordkeeper, Custodian, Agent, or its designees.
The Trustee, upon written request, shall furnish to the Employer such additional
information under its control as the Employer may reasonably request to prepare
such other reports, tax returns, and forms to be filed with governmental
agencies or delivered to participants and their
beneficiaries.------------------------------------------The Trustee shall
receive in electronic format, the information required to complete Puerto Rico
Treasury Department Forms 480.5, 480.6A, 480.6B, 480.6(B)(1), 480.9A and
480.70(OE), or any other forms which are substituted for those or are required
to be filed by the Puerto Rico Code, including, but not limited to sworn
statement required by the Puerto Rico Code from the participants of the Plan at
the time of distribution, from the Recordkeeper, Custodian, Agent of the Plan or
their designees. Except as otherwise required by applicable law, the Trustee
shall not be responsible for the accuracy or correctness of the information
provided by the Recordkeeper, Custodian, Agent or their designees. The
information provided to the Trustee shall be considered to be a representation
from the Employer and/or Administrator that the information is correct and in
conformity with applicable law. ---

---SECTION SIX POINT THREE (6.3) FEDERAL INCOME TAX
WITHHOLDING AND REPORTING: The Trustee shall be responsible for the
withholding of any federal income taxes, preparation , filing and delivery of
any federal return required to be filed by the United States Code in connection
with any distribution or payment from the Plan out of the Fund, except to the
extent that such responsibilities are delegated in writing by the Trustee and
the Employer and/or Administrator to the Recordkeeper, Custodian, Agent of the
Plan or their designees. The Trustee shall receive in electronic format, the
information required to complete the federal returns required to be filed by the
United States Code as discussed above from the or Recordkeeper, Custodian, Agent
of the Plan or their designees. Except as otherwise required by applicable law,
the Trustee shall not be responsible for the accuracy or correctness of the
information provided by the Recordkeeper, Custodian, Agent, or their designees.
The information provided to the Trustee shall be considered to be a
representation from the Employer and/or Administrator that the information is
correct and in conformity with applicable law. ------- SECTION SIX POINT FOUR
(6.4): RIGHT TO JUDICIAL ACCOUNTING: Nothing contained in this Agreement or
in the Plan shall deprive the Trustee of the right to have a judicial settlement
of its accounts. In any proceeding for a judicial settlement of the Trustee''s
accounts, or for instructions in connection with the Trust, the parties shall be
the Trustee, Employer and the Administrator. If the Trustee so elects, it may
bring in as a party's defendant(s) any other person(s).-----------------

--------------------SECTION VII ------------------

---REMOVAL, RESIGNATION AND APPOINTMENT OF -------

----------------SUCCESSOR TRUSTEE ----------------

---SECTION SEVEN POINT ONE (7.1): REMOVAL OF TRUSTEE:
The Employer may remove the Trustee at any time by written notice provided that
the effective date of the removal and of the appointment of a successor
trustee(s) shall be at least sixty (60) days from the date of said written
notice. The effective date of said removal and appointment may be less than
sixty (60) days if acceptable to the Trustee and the
Employer.------------------------

---SECTION SEVEN POINT TWO (7.2): RESIGNATION OF TRUSTEE:
The Trustee may resign at any time by written notice to the Employer and the
Committee provided that the effective date of the resignation shall be at least
sixty (60) days from the date of said written notice. The effective date of said
resignation may be less than sixty (60) days if acceptable to the Employer and
the Trustee. ------

---SECTION SEVEN POINT THREE (7.3): APPOINTMENT OF
SUCCESSOR TRUSTEE: The Employer, by act of its Committee, may appoint a
successor trustee to act hereunder after the effective date of such removal or
resignation. Until such a successor is appointed or until the effective date of
resignation, whichever is earlier, the Trustee shall have full authority to act
under the terms of this Agreement and the
Plan.-------------------------------------

---SECTION SEVEN POINT FOUR (7.4): POWERS OF SUCCESSOR
TRUSTEE: Each successor Trustee shall have the powers and duties conferred
upon the Trustee in this Agreement and the term ATrustee@
as used in this Agreement shall be deemed to include any successor Trustee(s).-------------------------

---SECTION SEVEN POINT FIVE (7.5): DELIVERY OF ASSETS TO
SUCCESSOR TRUSTEE: The Trustee shall transfer and deliver the Trust to the
successor trustee on the effective date of the successor trustee''s appointment.
Any part of the Fund then held in any Commingled Trust shall be withdrawn
therefrom as of the valuation date (as defined in the Declaration of Trust)
immediately following such notice of removal or resignation and shall be
transferred and delivered to the successor trustee on the effective date of the
successor trustee's appointment or on the earliest date following said
valuation date on which withdrawal may be effected, whichever date is later.
--------------------------

---SECTION SEVEN POINT SIX (7.6): LIABILITY OF TRUSTEE:
When the Trust shall have been transferred and delivered to the successor
trustee and the accounts of the Trustee have been settled as provided in Section
six (6) of this Agreement, the Trustee shall be released and discharged from all
further accountability or liability for the Trust and shall not be responsible
in any way for the further disposition of the Trust or any part thereof, except
for any claims which may arise attributable to any period prior to the transfer
of the Trust.----------------------------------------

------------------SECTION VIII-------------------

----------------IMMUNITY OF TRUSTEE --------------

---SECTION EIGHT POINT ONE (8.1): RELIANCE ON COUNSEL AND
CONSULTANTS OR ACTUARIES: The Trustee may from time to time seek the opinion
of counsel, (who may be counsel for the Employer), and/or consultants,
accountants, and actuaries, except as otherwise provided by ERISA, and shall be
fully protected to act upon such advice. --------SECTION EIGHT POINT TWO
(8.2) - INDEMNIFICATION OF TRUSTEE: The Trustee shall not, except as may be
otherwise provided by ERISA be held responsible for any loss to the Fund, or to
a Participant, or a Beneficiary, resulting from a breach of duty committed by
any other fiduciary or party-in-interest unless the Trustee had knowledge of or
participated in any such breach of duty.. The Trustee shall not be liable for
any act or omission of an Investment Manager in connection with the Investment
Manager=s
discharge of its duties. The Employer agrees to indemnify and to hold the
Trustee harmless from any liability imposed as a result of a claim asserted by
any person or persons under the federal or state law where the Trustee has acted
in good faith or in reliance on the direction or participation of the Employer
or the Administrator or an Investment Manager, Agent, Recordkeeper, or Custodian
duly appointed unless it arises from the Trustee=s
own negligence or willful misconduct, errors, mistake, violation of any
applicable law, bad faith, misconduct of any of its employees, or breach of this
Agreement or the Plan. The Trustee shall not,except as may be required by law,
give any bond or other security for the faithful performance of its duties under
this Agreement. .---------------

---SECTION EIGHT POINT THREE (8.3): DIRECTIONS FROM EMPLOYER:
Except as otherwise herein specifically provided, any action by the Employer
pursuant to any of the provisions of this Agreement shall be evidenced by an
appropriate written authorization of any person or committee to which the Board
has delegated the authority for such action, and the Trustee shall be fully
protected to act in accordance with any such resolution or other authorization,
except in the case of the Trustee's own errors, negligence, willful
misconduct, breach of fiduciary duty, misconduct, violation of any applicable
law, bad faith, or breach of this Agreement or the Plan.------------------------------------

-------------------ARTICLE IX --------------------

------------TERMINATION AND AMENDMENTS -----------

---SECTION NINE POINT ONE (9.1): TERMINATION OF TRUST: This
Agreement and the trust created hereby may be terminated by the Employer, at any
time upon notice in writing to the Trustee, (and upon such termination or upon
the dissolution or liquidation of the Employer, the Fund shall be paid out by
the Trustee, as and when directed by the Administrator (or by any trustee
appointed upon application of the Pension Benefit Guaranty Corporation), and to
the extent directed by the Administrator, shall be used to purchase annuity or
any other contracts issued by any insurance companies selected by the
Administrator.-------------------------------------

---SECTION NINE POINT TWO (9.2): DISCONTINUANCE OF PLAN:
In case the Plan is discontinued in whole or in part or this Trust is revoked or
terminated, the Trustee shall apply or distribute the Fund in accordance with
the written instructions of the Administrator. When the Fund shall have been so
applied or distributed, the Trustee shall, except as otherwise provided by ERISA,
be released and discharged from all further accountability or liability with
respect to the Fund (or that part of the Fund so applied or distributed, if the
Plan is terminated only in part) or any part thereof so applied or distributed.
The Trustee shall not be required to distribute or apply any part of the Fund
until the written approval of the termination has been received from the
Internal Revenue Service and the Puerto Rico Treasury Department.----------

---SECTION NINE POINT THREE (9.3): EMPLOYER

AMENDMENT: The Employer reserves the right at any time to
amend, in whole or in part, any or all of the provisions of this Agreement by
notice thereof in writing delivered to the Trustee, provided that no such
amendment which affects the rights, duties, or responsibilities of the Trustee
may be made without its consent, and provided further, that no amendments shall
divert part of the Fund to any other purpose other than providing benefits to
participants of the Plan and their beneficiaries or defraying reasonable
expenses of administering the Fund. It is intended that this Agreement and the
Plan to which it is related shall comply fully with the provisions of ERISA.
Accordingly, this Agreement may be amended retroactively to its effective date
in order to so comply.-------------

--------------------ARTICLE X--------------------

-------------MISCELLANEOUS PROVISIONS-------------

---SECTION TEN POINT ONE (10.1): INSURANCE--------

CONTRACTS: Any insurance company with whom the Trustee
may enter into any contract shall not be deemed a party to this Agreement. A
written certification by the Trustee as to the occurrence of any event this
Agreement contemplates shall be conclusive evidence thereof and the insurance
company shall be protected by relying upon such certification and shall incur no
liability for so doing. With respect to any action under any such contract, the
insurance company may deal with the Trustee as the sole owner thereof and need
not see that this Agreement authorizes any action of the Trustee. Any change or
action an insurance company makes or takes, respectively, upon the written
direction of the Trustee shall fully discharge the insurance company from all
liability with respect thereto, and it need not see to the distribution or
further application of any money it pays to the Trustee or paid in accordance
with the written direction of the Trustee.-------------------------

---SECTION TEN POINT TWO (10.2): NON-ASSIGNABILITY OF
INTEREST: Except as may be provided in the Plan, a benefit which is payable
out of the Fund to any person (including any Participant or any Beneficiary)
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber, or charge the same shall be
void; and no such benefit shall in any manner be liable for, or subject to, the
debts, contracts, liabilities, engagements, or torts of any such person, nor
shall it be subject to attachment or legal process for or against such person.
---------------------------------

---SECTION TEN POINT THREE (10.3): CONSTRUCTION OF AGREEMENT:
This Agreement and the Fund created hereby shall be construed, administered and
enforced in accordance with the provisions of ERISA, and to the extent not
inconsistent therewith, according to the laws of the Commonwealth of Puerto
Rico. Transfers of funds or other property to the Trustee shall be deemed to
take place in the Commonwealth of Puerto Rico.-----

---SECTION TEN POINT FOUR (10.4): SEVERABILITY: Should
any provisions of this Agreement, or rules, and regulations adopted hereunder be
deemed or held to be unlawful or invalid for any reason, such fact shall not
adversely affect any of the other provisions herein or therein contained unless
such illegality shall make impossible or impractical the functioning of this
Agreement, and, in such case, the appropriate parties shall immediately amend
this Agreement.-----------------------------------

---SECTION TEN POINT FIVE (10.5): TITLES AND HEADINGS:
The titles and headings of the sections in this Agreement are placed herein for
convenience of reference only; in case of any conflict, the text of this
instrument, rather than such titles or headings, shall
control.--------------------------

------------------LEGAL WARNINGS------------------

---I, the Notary, GIVE FAITH, of having given the appearing
parties all necessary and pertinent legal warnings relating to this act,
specifically the following:----------------------------------------

---(a) Of their right to have witnesses present at the
execution of this public deed, which right they waived; b) The substantive
content of this instrument and of its legal effect; (c)The appearing parties
represent that they have understood all legal warnings and the possible legal
consequences of everything explained to them.

--------------------ACCEPTANCE--------------------

---The appearing parties hereby accept, ratify, and confirm
this Deed, and I, the Notary Public, do hereby certify that I have advised them
as to the pertinent legal warnings and of the legal effects of the present
document, as well as of their rights under the Notarial Law of Puerto Rico to
have two witnesses appear herein and read and sign this Deed together with them,
which right they have waived, and they have read this Deed, to which fact I
hereby certify, the said appearing parties approve and ratify its contents and
sign the same before me, and affix their initials on each and every page of this
instrument all before me, the Notary
Public.-------------------------------------------

 

/s/ Carston T. Wells, Jr.

/s/ Maryvette Velazquez Torres

/s/ Ivelisse Collazo Rivera

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