SEARS HOLDINGS PENSION PLAN

SUMMARY PLAN DESCRIPTION FOR

KMART PARTICIPANTS

REVISED EFFECTIVE JANUARY 1, 2017

For information only.

Created by Sears prior to plan termination.

Does not fully reflect PBGC’s benefit guarantees or procedures.

Sears Holdings Pension Plan – Kmart Participants 2017

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TABLE OF CONTENTS

About the Pension Plan ...... 1 Frozen Status...... 1 How The Pension Plan Works...... 1 Participation ...... 1 Company ...... 1 Compensation ...... 1 Credited Service ...... 1 Hour of Employment ...... 1 Vesting Service ...... 1 Break in Service ...... 2 Leave of Absence ...... 2 Retirement Date ...... 2 Spouse ...... 2 Beneficiary...... 2 How Your Benefit Is Determined ...... 2 Career Average Pay Formula ...... 3 Final Average Pay Formula...... 3 Social Security Benefit ...... 3 Cost ...... 3 Points ...... 3 Vesting ...... 3 When You Can Retire ...... 3 Normal Retirement ...... 3 Early Retirement ...... 3 Late Retirement ...... 4 Termination Before Retirement ...... 4 The Amount of Your Benefit ...... 4 Normal Retirement Pension ...... 4 Early Retirement Pension ...... 5 Late Retirement Pension ...... 7 Deferred Vested Pension ...... For information only. 7 Forms of Benefit Payment ...... 7 Normal Form of Benefit Payment if You Are Married ...... 7 Normal Form of Benefit Payment if You Are Single, Divorced or Widowed ...... 7 Optional Forms of Benefit Payment ...... 7 Single Life Annuity ...... 8 50%, 75% or 100% Joint and Survivor Annuity ...... 8 10-Year Certain and Life Option ...... 8 Social Security Leveling ...... 8 Special Joint and SurvivorCreated Annuity by Provisions Sears ...... prior to plan termination. 8 Lump Sum Payments ...... 9 ...... 9 When Benefit Payments Begin ...... 9 Part-Time Status ...... 9 Required Beginning Date ...... 9 Death Benefits ...... 10 Surviving Spouse Benefits ...... 10 DeathDoes Benefits notAfter Yourfully Employment reflect Ends PBGC’s ...... benefit guarantees or procedures. 10

Sears Holdings Pension Plan – Kmart Participants 2017

TABLE OF CONTENTS (cont'd)

If You Leave The Company And Are Re-Employed ...... 11 Your Employment Ends Before You are Vested ...... 11 Your Employment Ends After You are Vested ...... 11 If You are Re-Employed After You Retire ...... 11 Transfers ...... 11 Transfer to an Affiliated Employer Not Covered by the Plan ...... 11 Transfer From an Affiliated Employer Not Covered by the Plan ...... 11 Transfer to an Affiliated Employer Covered by the Plan ...... 11 Coverage Under a Collective Bargaining Agreement ...... 11 Additional Provisions of the Plan ...... 11 Circumstances Under Which Benefits Could be Forfeited, Assigned, Reduced or Lost ...... 11 Associate Contributions to the Plan ...... 12 Agencies That Regulate the Plan ...... 12 Employment Rights not Guaranteed ...... 12 Plan Termination or Amendment ...... 12 Tax Considerations ...... 12 Monthly Payments ...... 12 Lump Sum Payments ...... 13 Mandatory Distributions ...... 13 Maximum Qualified Plan Benefit ...... 13 Pension Benefit Guaranty Corporation ...... 13 Plan Administrator ...... 13 Claims Procedures ...... 14 Applying for Benefits ...... 14 Claim for Benefits ...... 14 Appeal of an Adverse Benefit Determination ...... 14 Right to File Civil Suit ...... 15 Additional Plan Information ...... 15 Statement of ERISA Rights ...... For information only. 15

Created by Sears prior to plan termination.

Does not fully reflect PBGC’s benefit guarantees or procedures.

Sears Holdings Pension Plan – Kmart Participants 2017

ABOUT THE PENSION PLAN HOW THE PENSION PLAN WORKS The Sears Holdings Pension Plan (“Pension Plan” or “Plan”) was The following information will help you understand the key created by the merger of the Kmart Corporation Employee Pension features of the Plan and how they affect you, as a Kmart participant. Plan (“Prior Kmart Plan”) with the Sears Pension Plan (“Prior Sears Plan”) as of January 30, 2008. The Prior Kmart Plan was frozen as PARTICIPATION of January 31, 1996. The Prior Sears Plan was frozen in two phases, Prior to the freezing of the Plan, if you were an eligible associate of but was fully frozen as of December 31, 2005. Therefore, the a participating business group of Kmart or any of its participating Pension Plan is a frozen defined benefit plan. The merged Pension affiliates, were at least age 21 and completed a year of Vesting Plan is sponsored by Sears Holdings Corporation (referred to herein Service, you automatically became a Plan participant as of the first as “Sears Holdings” or “Company”). day of the month after satisfying these requirements. This is your “Participation Date”. As previously noted, no Kmart associate As of December 1, 2016 the Pension Plan was split in to two could become a participant after January 31, 1996. separate pension plans, Sears Holdings Pension Plan 1 (“Plan 1”), which is the continuation of the Pension Plan and Sears Holdings COMPANY Pension Plan 2 (“Plan 2”). All benefits, rights and features of the Company means Sears Holdings Corporation and any affiliate that plan were preserved. Your pension benefit is based on your is a participating employer and whose associates are participants employment with Kmart Corporation and you are a participant in under this Plan. With respect to periods prior to the merger of the either Plan 1 or Plan 2. Your Annual Funding Notice (“Notice”) Prior Kmart Plan and Prior Sears Plan, Company refers to Kmart will indicate whether you are in Plan 1 or Plan 2. Please keep the Holding Corporation. Notice with your important documents. References to “the Pension Plan”, “Plan” or “Plan Document” refer to both Plan 1 and Plan 2 COMPENSATION (as applicable). Compensation, for purposes of determining your pension benefit, is This booklet, called a Summary Plan Description (“SPD”), generally defined as wages, salary, bonuses, and commissions that highlights key features of the Pension Plan with respect to Kmart you receive from the Company. participants. In regard to the Kmart portion of the Plan, there were CREDITED SERVICE no new participants after January 31, 1996. Credited Service (previously referred to as Benefit Service) is used This SPD is effective December 1, 2016. This SPD is a summary to calculate your benefit from the Plan. Prior to the Plan Year that of the legal documents establishing in detail the benefits, rights and started on February 1, 1996, you would earn a year of Credited features of the Plan (referred to as the “Plan Documents”) and of Service for each full Plan Year during which you accumulated the trust agreement (“Trust Agreement”), which provides for the 1,000 or more Hours of Employment. For benefit accrual holding and management of the Plan’s assets. This SPD is not calculation purposes, only Credited Service earned through January intended to and does not alter or modify any provisions of any Plan 31, 1996, is used. However, you continue to earn Credited Service Document or of the Trust Agreement. All questions and issues for purpose of earning eligibility under certain other pension benefit relating to any benefit, right or feature of the Plan will be governed features (as described below in this SPD). For Plan Years prior to by the terms of the Plan Document and/or Trust Agreement, as February 1, 1996, if you worked less than a full Plan Year, you applicable. If there is any conflict between this ForSPD or informationany written earned only. one month of Credited Service for each month you worked, or verbal explanation from the Company or Plan representatives provided the Hours of Employment you accumulated during the and the Plan Document, the Plan Document will govern in all cases. partial Plan Year annualized to 1,000 or more.

All participants and beneficiaries may examine the underlying Plan For the Plan Year that started on February 1, 1996, a participant Document at reasonable times set by the Plan Administrator. If you earned a year of Credited Service (other than for benefit accrual need additional information about the Plan, this SPD tells you how purposes) on an elapsed time basis or, if greater, on the basis of the to obtain that information. participant’s annualized or actual Hours of Employment. And, for Plan Years beginning on or after February 1, 1997, a participant We encourage you to read the CreatedSPD carefully and by to keepSears it with priorearned to yearsplan and monthstermination. of Credited Service (other than for benefit your important documents. Financial security in retirement is accrual purposes) on an elapsed time basis for periods of important, and one of the keys to financial security is planning employment with the Company. ahead. Knowing what benefits you can expect from the Company will help as you plan for retirement and will give you a better idea Under the elapsed time basis for calculating a participant’s service, of what should be your own savings targets. a participant is credited with service for his or her period of employment. Information about the Plan and your pension can be obtained online at https://searspension.ehr.com. If you have pension-related HOUR OF EMPLOYMENT questions, contactDoes the Sears not Holdings fully Pension reflect Service Center PBGC’s by Tobenefit the extent still guarantees earned after January or31, 1996,procedures. you earn an Hour calling 1-800-953-5390 or by sending a letter to P.O. Box 3411, of Employment for each hour that you are directly or indirectly paid Hopkins, MN 55343-2111 or entitled to be paid for work performed for Kmart or its subsidiaries. This includes time for holidays, vacations, illnesses FROZEN STATUS and disabilities, as well as back pay that you may be awarded. No associate earned or earns Hours of Employment for initial The Kmart portion of the Plan was frozen on January 31, 1996, participation purposes or for Credited Service purposes after with no new participants and no additional benefit accruals after January 31, 1996. No associate earns Hours of Employment after that date. incurring a Break in Service (unless rehired and subject to the post- freeze service rules). Sears Holdings Pension Plan – Kmart Participants 1 2017

VESTING SERVICE  The entire length of your leave if your leave is a result of Prior to the Plan Year that started on February 1, 1996, an associate military service in time of war, other emergency, or as earned a year of Vesting Service for each full or partial Plan Year required by law and you return to active employment with during which he or she earned 1,000 or more Hours of the Company within 90 days of being discharged. Employment. If you worked less than a full Plan Year and had less than 1,000 Hours of Employment, you earned one month of Vesting Credited Service earned after January 31, 1996, while on leave will Service for each month you worked, provided the Hours of not be used in the calculation of the amount of the pension benefit Employment you earned during the partial Plan Year annualized to you have earned under the Plan, but will be counted to determine if 1,000 or more. you have sufficient points to receive an unreduced Early Retirement Pension. For the February 1, 1996 Plan Year, a participant earned a year of Vesting Service on the Hours of Employment basis or the elapsed A Leave of Absence means any absence from work that is time basis described above, whichever was greater. For Plan Years authorized under the Company’s standard personnel practices and is beginning on or after February 1, 1997, a participant earned years not treated by the Company as a termination of employment or that and months of Vesting Service on an elapsed time basis for periods is required by law to be treated as an authorized leave of absence, of employment with the Company. including but not limited to leaves under the Family and Medical Leave Act (FMLA) or for qualified military service, and excluding EXAMPLE - Vesting Service prior to February 1, 1996: without limitation a leave under a severance pay plan or policy. In Assume your employment with the Company ends on April 30, any case, service credit shall be provided in accordance with Code and you earned 300 Hours of Employment from February 1 Section 414(u) for qualified military service. through April 30. Your annualized hours are calculated as procedures. follows: If you are collecting Workers' Compensation benefits, then solely for Pension Plan purposes, your employment will be considered (300 hours ÷ 3 months) x 12 months = 1,200 annualized hours or terminated at the end of the 12-month period that began on your Since your annualized hours are over 1,000, you would earn three first day of your Workers’ Compensation-related absence. months of Vesting Service. RETIREMENT DATEtermination. BREAK IN SERVICE only. Under the Plan, your “Retirement Date” is the first date for which Prior to February 1, 1997, you incurred a Break in Service as of the you begin receiving benefits from the Plan and may also be referred February 1 following a Plan Year in which you terminated your to as yourplan “Benefit Commencement Date.” Your Retirement Date is employment with the Company and completed less than 501 Hours always (and can only be) the first day of a month. Also, your of Employment. After January 31, 1997, you incurred a one-year to guarantees period of severance on the first anniversary as of the earlier of your Retirement Date (i.e., your Benefit Commencement Date) cannot termination, retirement, death or the one year anniversary of the occur before you have received from the Recordkeeper the date you are absent from work, subject to the requirements statutorily required retirement election information, ended your regarding maternity or paternity leaves of absence (describedinformation prioremployment with the Company and returned a fully completed below) and Code Section 414(u) regarding qualified military electionbenefit kit. You can request retirement election information at service. least 30 days, and not more than 90 days, prior to your intended For informationBenefit only. Commencement Date. If you are absent from work for an approved leave of absence for Sears SPOUSE maternity or paternity reasons, you will not incur a Break in Service during the first Plan Year that you earn less thanby 501 Hours of Your Spouse is any person to whom you are lawfully married for at Employment. Maternity and paternity reasons include yourPBGC’s least one year as of your Retirement Date or death. A former spouse pregnancy, the birth of your child, adoption of a child, or the care will be treated as a surviving Spouse to the extent provided in any for a child after he or she is born or adopted. Qualified Domestic Relations Order.

BENEFICIARY An absence of less than 12 months followingreflect a termination of employment or Leave of AbsenceCreated will be disregarded by Searsin priorYour to Beneficiary plan termination.is the person or persons (including a trustee or determining whether you have incurred a one year break. Also, if other legal representative) whom you designated as your you are absent because of qualified military service you will begin Beneficiary on your last effective Beneficiary designation form and a one year break on the 91st day followingfully your discharge from to whom any amount payable under the Plan upon your death is such military service, if you do not return to work within 90 days of payable. However, if you are married, your Spouse is deemed to be such discharge. not your Beneficiary for all purposes under the Plan unless you designated otherwise with proper spousal consent. A Beneficiary LEAVE OF ABSENCE designation may be made, revoked or changed online at For Plan Years starting on and after February 1, 1996, if you are on https://searspension.ehr.com or by an instrument signed by you and an approved LeaveDoes of Absence, not you fully would continuereflect to earn PBGC’s Vesting filedbenefit with the Planguarantees Administrator or Recordkeeper or procedures. prior to your Service and Credited Service (other than for benefit accrual death. For purposes of paying death benefits for the remaining purposes) for a period of: period on a 10-Year Certain and Life option, in the absence of a designated beneficiary, the benefit is payable to the participant’s  up to 12 months from the date your leave begins if your estate. If there is not estate open, a Small Estate Affidavit will be leave is a result of an injury or illness; required to pay the benefit. Absent either of these, the death benefit  up to 60 days from the date your leave begins if you are will be paid in the following order (if any): surviving spouse, on a personal leave and you return to active employment children, parents, siblings. with the Company immediately following your leave; or

Sears Holdings Pension Plan – Kmart Participants 2 2017

HOW YOUR BENEFIT IS DETERMINED COST Your pension benefit payable as of your Normal Retirement Date is Your Plan benefits are provided by the Company at no cost to you. determined based on one of two formulas: the Career Average Pay The Company's funding of the Plan’s Trust is determined by an Formula and the Final Average Pay Formula. independent actuary, in accordance with applicable law. Pension benefits are paid from the Trust. CAREER AVERAGE PAY FORMULA POINTS Under the Career Average Pay Formula, your benefit is calculated based on your career Compensation and years of Credited Service Points are used to determine if you have earned certain rights in the through January 31, 1996. event you retire early. Your points are the sum of your age and years of Credited Service on the date when your employment with FINAL AVERAGE PAY FORMULA the Company ends. You do not continue earning points after your Under the Final Average Pay Formula, your benefit is calculated employment with the Company ends. Refer to section titled “The based on the average of your highest Compensation for any five Amount of Your Benefit” for information about when points are Plan Years during which you were employed by the Company important. You should verify your points with the Recordkeeper through January 31, 1996, your Credited Service after age 21 and prior to your retirement/termination. your estimated Social Security Benefit, based on earnings through VESTING January 31, 1996. You must be vested in your Plan benefits to receive a pension EXAMPLE benefit from the Plan. Being vested means you have a non- Assume that the following were your highest five years of forfeitable right to the benefits you have earned as a participant in Compensation: the Plan. With respect to participants who areprocedures. active associates, you Plan Year Compensation are vested after you earn five years of Vestingor Service with the 1991 $20,000 Company. If you terminated employment prior to January 30, 2008, 1992 $21,000 you are subject to the applicable vesting rules in effect under the 1993 $22,100 Prior Kmart Plan as of the date of your employment termination. 1994 $23,400 termination. 1995 $25,000 WHENonly. YOU CAN RETIRE Your Final Average Pay would be determined by adding your After you are vested, the Plan provides that you are entitled to Compensation for the five years ($111,500) and dividing by five. begin receivingplan a benefit under the following conditions: In this example, your Final Average Pay would be $22,300  normal retirement ($111,500 divided by five equals $22,300). to guarantees  early retirement SOCIAL SECURITY BENEFIT  late retirement This is the estimate of your primary Social Security benefit when priorNORMAL RETIREMENT you reach age 65, or when you retire after age 65. Yourinformation estimated You are eligible for a Normal Retirement Pension if you retire from Social Security benefit is used in the calculation of your benefit benefit the Company as of your “Normal Retirement Age” which is under the Final Average Pay formula. The Plan’s estimate of your For informationattained only. as of the later of: Social Security benefit will be based on all of the following assumptions: Sears  The date you reach age 65, or by  The date you reach the fifth anniversary of the date you  You have been continuously covered under the SocialPBGC’s became a participant. Security Act since 1951 or the date you reached age 21, whichever is later. You are eligible to begin receiving your Normal Retirement  Your earnings through the calendar year before the earlier Pension as of your Normal Retirement Date, which is the first day of 1995 or the Plan Year in which reflectyou retire were equal to of the calendar month coincident with or next following the date your highest earnings Createdfor any year of yourby Company Sears prioryou to reach plan your Normal termination. Retirement Age, provided you terminate employment. employment and submit a written application to commence  Your earnings prior to your retirement changed in benefits. However, your Normal Retirement Date cannot occur proportion to the nationalfully average that is determined by before you have received from the Recordkeeper the statutorily the Social Security Administration. required retirement election information. You can request not retirement election information at least 30 days, and not more than If you wish, you may obtain a record of your actual Social Security 90 days, prior to your intended Benefit Commencement Date. earnings from the Social Security Administration and provide it to the Plan Administrator within six months after your employment Benefits payable to a participant beginning at Normal Retirement ends. Your actualDoes Social Security not earningsfully priorreflect to 1996 willPBGC’s then Agebenefit cannot be forfeitedguarantees under ERISA. orHowever, procedures. if a participant be used to calculate the Social Security benefit used under the does not apply for benefits until after age 65, the Plan cannot make Plan's Final Average Pay Formula. retroactive payments back to Normal Retirement Age. The Plan will however, actuarially increase the monthly benefit payment Benefits from the Pension Plan are paid in addition to your Social beginning with the post-65 annuity starting date to ensure that the Security benefits. The amount of your actual Social Security benefit monthly pension benefit is actuarially equivalent to the Normal will be determined and paid by the Social Security Administration. Retirement Pension.

Sears Holdings Pension Plan – Kmart Participants 3 2017

EARLY RETIREMENT THE AMOUNT OF YOUR BENEFIT You are eligible for an Early Retirement Pension if your As noted above, the amount of your pension benefit is determined employment with the Company ends after your “Early Retirement based on one of two formulas that take into account your Age,” which is any date on or after the date you reach age 55, but Compensation and years of Credited Service through January 31, before you reach age 65, and you are vested in your benefit. Your 1996, your age, your years of Vesting Service, and, in some cases, Early Retirement Pension is payable as of your Early Retirement your estimated Social Security benefit. There is also a minimum Date, which is the first day of any calendar month on or after the monthly benefit level. date your reach your Early Retirement Age, provided you are vested (i.e., at least five years of Vesting Service), terminate NORMAL RETIREMENT PENSION employment and submit a written application for benefit Your Normal Retirement Pension will be the largest of the benefit commencement. However, your Early Retirement Date cannot determined under the Career Average Pay Formula, the Final occur before you have received from the Recordkeeper the Average Pay Formula or the minimum benefit. The amounts statutorily required retirement election information. You can determined under the formulas are annual benefit amounts. To request retirement election information at least 30 days, and not determine your monthly benefit, divide the annual benefit by 12. more than 90 days, prior to your intended Benefit Commencement Date. Career Average Pay Formula

LATE RETIREMENT For your service before February 1, 1975: You are eligible to receive a Late Retirement Pension if your [0.75% (.0075) of your Compensation from February 1, 1974, employment with the Company ends after you become eligible for a through January 31, 1975] times [the years of Credited Service Normal Retirement Pension. Your Late Retirement Pension is you had earned from your Participationprocedures. Date to January 31, payable as of your Late Retirement Date, which is the first day of 1975], plus the month coincident with or next following your termination of or employment after your Normal Retirement Date, if you submit a For your service after February 1, 1975: written application for benefit commencement. However, your [1.25% (.0125) of your Compensation for each Plan Year after Late Retirement Date cannot occur before you have received from your Participationtermination. Date that you earn Credited Service after the Recordkeeper the statutorily required retirement election Februaryonly. 1, 1975, through January 31, 1996]. information, nor after April 1 of the calendar year following the calendar year in which you reach age 70½. You can request Final Average Pay Formula retirement election information at least 30 days, and not more than [1.5%plan (.015) of your Final Average Pay] times [your years of 90 days, prior to your intended Benefit Commencement Date. toCredited Serviceguarantees through January 31, 1996, that you earned after age 21 (up to a maximum of 35 years)], minus If you do not return your election information to the Recordkeeper prior to the expiration date for a commencement date on the April 1 [2% (.02) of your estimated Social Security benefit] times of the calendar year following the calendar year in whichinformation you reachprior [your years of Credited Service through January 31, 1996 (up age 70½ you will be deemed to have elected the Qualified Joint and benefitto a maximum of 30 years)]. Survivor Annuity and benefits will automatically start. Once automatic payments start, you will not be ableFor to change information to a Your only. benefit under the Final Average Pay Formula is reduced by a different form of payment. The payment amount willSears assume portion of your estimated Social Security benefit to reflect the that you are married and that you and your Spouse have the Company's substantial contribution to your Social Security benefits. same date of birth. This may affect the monthlyby amount payable during and after your lifetime. You may provide proof ofPBGC’s your Minimum Benefit marital status, i.e., that you are not married, or your Spouse’s date The minimum monthly Normal Retirement Pension that you will of birth after benefits commence however, benefits will not be receive from the Plan is $25.00, even if the benefit you earn as a adjusted if proof is received more than 60 days after your benefit Plan participant is less. commencement date. reflect Created by Sears priorEXAMPLE to plan termination. Determining the Amount of Your Normal Retirement TERMINATION BEFORE RETIREMENT Pension If your employment with the Companyfully ends before you are eligible Assume the following: to retire under the Plan but after you become vested, you will be  You had 20 years of Credited Service on January 31, eligible to receive a Deferrednot Vested Pension. Your vested status is 1996, all of which was earned after January 31, 1975. based on the vesting rules in effect at the time of your termination.  Your Compensation for each year of Credited Service was You are eligible to begin receiving your Deferred Vested Pension $30,000. (Your compensation would have changed each as of your Normal Retirement Date, or as early as your Early year, but we are keeping it simple for purposes of this Retirement DateDoes (subject to not an actuarial fully adjustment reflect for early PBGC’s benefitexample.) guarantees or procedures. distribution) if you submit a written application for benefit  Your Final Average Pay on January 31, 1996, was commencement. However, your Deferred Vested Pension cannot $30,000. commence with respect to a given date before you have received  Your estimated Social Security Benefit is $12,400 per from the Recordkeeper the statutorily required retirement election year. information. You can request retirement election information at  You retire at age 65. least 30 days, and not more than 90 days, prior to your intended Your benefit amount first would be calculated under both Benefit Commencement Date. formulas. Under the Career Average Pay Formula

Sears Holdings Pension Plan – Kmart Participants 4 2017

$30,000.00 Compensation for each year of Credited Service [2% (.02) of your estimated Social Security benefit] times [your x .0125 years of Credited Service through January 31, 1996 (up to a $ 375.00 maximum of 30 years)], minus [5/9ths of 1% (.0056) for each x 20 Years of Credited Service month that you retire before age 65]. $ 7,500.00 Annual benefit from the Plan under the Career Average Pay Formula EXAMPLE ÷12 Determining the Amount of Your Early Retirement Pension if $ 625.00 Monthly benefit from the Plan under the Career You Have 90 or More Points Average Pay Formula Assume the following: Under the Final Average Pay Formula  Your Compensation from February 1, 1974, to January 31, 1975, was $6,000. $30,000.00 Final Average Compensation x .015  Your Credited Service prior to January 31, 1975, $ 450.00 included: x 20 Years of Credited Service earned after age 21 (up to a - 1 years after your Participation Date (used in the Career maximum of 35) Average Pay Formula) $ 9,000.00 - 2 years after your date of hire and after age 21 (used in the Final Average Pay Formula). $12,400.00 Estimated Social Security Benefit  Your Compensation for each year of Credited Service x .02 after January 31, 1975, was $30,000. (Your Compensation $ 248.00 would have changed each year, but we are keeping it x 20 Years of Credited Service (up to a maximum of 30) simple for purposes of this example.)procedures. $ 4,960.00 Social Security offset amount  Your Final Average Pay on January 31, 1996, was $30,000. or $ 9,000.00  You earned 21 years of Credited Service and Vesting - 4,960.00 Social Security offset amount Service from January 31, 1975 to January 31, 1996, for a $ 4,040.00 Annual benefit from the Plan under the Final Average total of 23 years as of January 31, 1996. Pay Formula termination. only. You earn 14 points for the 14 years of Credited Service $4040.00 and Vesting Service from February 1, 1996, to ÷ 12 planJanuary 31, 2010, for a total of 37 years at retirement. $ 336.67 Monthly benefit from the Plan under the Final  Your estimated Social Security Benefit is $13,800 per Average Pay Formula to year. guarantees  You retire at age 58 on February 1, 2010. Under the Minimum Benefit  You have 95 points (37 years of Credited Service plus 58 $ 25.00 Monthly benefit prior years old equals 95). informationYour benefit would be calculated in the following ways: In this example, you would receive the $625.00 monthly benefit benefit under the Career Average Age Formula because it is larger than the Under Method "A" benefit under the Final Average Pay Formula. For information only. Sears $ 6,000.00 Compensation from February 1, 1974, to January 31, EARLY RETIREMENT PENSION 1975 x .0075 If you elect to begin receiving your benefit as an Early Retirement by $ 45.00 Pension, your monthly benefit will depend on your points.PBGC’s x 1 Years of Credited Service after your Participation Date If You Have 90 or More Points $ 45.00

The sum of your age and your years of Credited Service is referred $ 30,000 Compensation for each year of Credited Service after to as "points" that you earn while you are employedreflect by the January 31, 1975 Company. If you have 90 or moreCreated points when yourby employment Sears prior to x .0125plan termination. with the Company ends and you elect to receive your benefit as of $ 375.00 an Early Retirement Date, your Early Retirement Pension will be x 21 Years of Credited Service from after January 31, 1975 the largest of the benefit calculatedfully under Method A, Method B or to January 31, 1996 the minimum benefit. While Credited Service you earn after $ 7,875.00 January 31, 1996 is not usednot to calculate the amount of your benefit, this service is counted in calculating the number of points $ 45.00 Benefit for your years of Credited Service prior to you have when your employment ends. January 31, 1975 Method A + 7,875.00 Benefit for your years of Credited Service from after January 31, 1975 to January 31, 1996 Your Early RetirementDoes Pension not calculated fully inreflect the same way PBGC’s as your benefit guarantees or procedures. $ 7,920.00 Annual benefit under Method "A" Normal Retirement Pension under the Career Average Pay ÷ 12 Formula. $ 660.00 Monthly benefit under Method "A”

Method B Under Method "B" [1.5% (.015) of your Final Average Pay] times [your years of $ 30,000.00 Final Average Pay through January 31, 1996 Credited Service through January 31, 1996, that you earned after x .015 age 21 (up to a maximum of 35 years)], minus $ 450.00 x 23 Years of Credited Service earned after age 21 and Sears Holdings Pension Plan – Kmart Participants 5 2017

through January 31, 1996 (up to a maximum of 35) $ 10,350.00 EXAMPLE Determining the Amount of Your Early Retirement Pension if $ 13,800.00 Estimated Social Security benefit at January 31, You Have Less Than 90 Points 1996 x .02 Assume the following: $ 276.00  $6,000 is the larger of the amounts calculated under the x 23 Years of Credited Service (up to a maximum of 30) Career Average Pay Formula and Final Average Pay $ 6,348.00 Social Security Offset Formula.

$ 6,348.00  Your Final Average Pay is $30,000. x .0056  You earned 16 years of Credited Service after age 21 as of $ 35.55 January 31, 1996. x 84 Number of months that you retire before age 65  You earn 14 points for the 14 years of Credited Service $ 2,986.20 Reduction to Social Security Offset from February 1, 1996, to January 31, 2010, for a total of 30 years at retirement. $ 6,348.00 Normal Social Security Offset  Your estimated Social Security benefit is $11,800 per - 2.986.20 Reduction to Social Security Offset year. $ 3,361.80 Social Security offset amount  You retire at age 57.  You have 87 points (30 years of Credited Service plus 57 $ 10,350.00 years old equals 87). - 3,361.80 procedures. $ 6,988.20 Annual benefit under Method "B" ÷ 12 Under Method "C" or $ 582.35 Monthly benefit under Method "B" $ 60 First 60 months that your retirement age is less than 65 x .005 Under the Minimum Benefit $ 0.30 termination. $ 25.00 Monthly benefit only. 36 Number of months that your retirement age is less than 60 In this example, you would receive the $660.00 benefit under x .0033 Method "A" because it is larger than the monthly benefit $ 0.12plan calculated under Method "B." $to 6,000.00 Theguarantees larger of the amounts calculated under the Career If You Have Less Than 90 Points Average Pay Formula and Final Average Pay Formula If you have less than 90 points when your employment with the x .42 Total Reduction factor for months 60-65 and 59-60 (.30 Company ends, and you elect to receive your benefit as of an Early + .12) Retirement Date, your Early Retirement Pension will beinformation determinedprior $ 2,520.00 The amount your benefit is reduced for early by taking the larger of your Career Average Pay Formula and the benefit retirement with less than 90 points Final Average Pay Formula and recalculating it under Method "C" described below. Then, your Final Average Pay,For estimated information Social $ only.6,000.00 Benefit for your years of Credited Service as of Security benefit and Credited Service through JanuarySears 31, 1996, are January 31, 1996 used to arrive at a benefit under Method "D" described below. You - 2,520.00 will receive the greatest of the benefit determined under Method $ 3,480.00 Annual benefit from the Plan under Method "C" ÷ 12 "C", Method "D" and the minimum benefit by PBGC’s $ 290.00 Monthly benefit from the Plan under Method "C"

Method C Under Method "D" The larger of your benefit calculated under the Career Average Pay $30,000.00 Final Average Compensation through January 31, Formula and the Final Average Pay Formulareflect is reduced by: 1996 [1/2 of 1% (.005) for each Createdof the first 60 months by thatSears your prior to x plan.015 termination. retirement age is less than 65], and $ 450.00 fully x 16 Years of Credited Service earned after age 21 and [1/3 of 1% (.0033) for each of the first 60 months that your through January 31, 1996 retirement age is less than 60]. $ 7,200.00 not Method D $11,800.00 Estimated Social Security benefit at January 31, [1.5% (.015) of your Final Average Pay] times [your years of 1996 Credited Service through January 31, 1996, that you earned x .02 after age 21Does (up to a maximum not fully of 35 years)], reflect minus PBGC’s benefit$ 236.00 guarantees or procedures. x 16 Years of Credited Service through January 31, 1996 [2% (.02) of your estimated Social Security benefits] times (up to a maximum of 30) [your years of Credited Service through January 31, 1996 (up $ 3,776.00 to a maximum of 30 years)]. This amount is then reduced by 5/9ths of 1% (.0056) for each month of Credited Service in $ 3,776.00 excess of 25 years. x .0056 $ 21.15 This amount is then reduced by 2/3rds of 1% (.0067) for each x 0 Months of Credited Service in excess of 25 years month that your points are less than 90. $ 0

Sears Holdings Pension Plan – Kmart Participants 6 2017

FORMS OF BENEFIT PAYMENT $ 3,776.00 - 0 Upon your requesting pension election materials, you will receive $ 3,776.00 Social Security offset amount an explanation of your normal and optional forms of benefit payment. You must elect a form of payment before you commence $ 7,200.00 benefit payments. You can change your election of the form of -3,776.00 benefit payment by providing the Company with written notice of $ 3,424.00 Annual benefit before reduction for early retirement your change any time before your pension starts. You cannot, with less than 90 points however, change the payment method after you begin receiving x .0067 your benefits. $ 22.94 x 36 Number of months less than 90 points NORMAL FORM OF BENEFIT PAYMENT IF YOU ARE MARRIED $ 825.84 The amount your benefit is reduced for early If you are married at the time your pension starts, the normal form retirement with less than 90 points of benefit payment is the 50% Joint and Survivor Annuity form of

payment. Under this method, you will receive a reduced benefit for $ 3,424.00 - 825.84 your lifetime. After your death, your surviving Spouse will receive $ 2,598.16 Annual benefit under Method "D" a benefit for his or her lifetime that is equal to 50% (0.5) of the ÷12 benefit you were receiving, provided you and your Spouse had been $ 216.51 Monthly benefit under Method D" married at least one year at the time of your death.

Under the Minimum Benefit The 50% Joint and Survivor Annuity will provide you with 90% (0.9) of your benefit during your lifetime. Thisprocedures. adjustment factor $ 25.00 Monthly benefit may then be either reduced or increased,or depending on your In this example, you would receive the $290.00 benefit under Spouse's age. If your Spouse is younger than you are, the factor will Method "C" because it is larger than the monthly benefit be reduced 1/2 of 1% (.005) for each full year that your age is more calculated under Method "D." than your Spouse's age. If your Spouse is older than you are, the factor will be increasedtermination. 1/2 of 1% (.005) for each full year (up to a LATE RETIREMENT PENSION maximumonly. of 15 years) that your age is less than your Spouse's age. Your Late Retirement Pension is calculated in the same way as your Normal Retirement Pension. (See "When Benefit Payments EXAMPLEplan Begin" on page 9.) Your years of Vesting Service, years of Credited 50% Joint andguarantees Survivor Annuity Service and your Compensation through January 31, 1996, with the Assumeto the following: Company are the basis for determining your benefit.  Your annual benefit is $10,000.  You are six years and four months older than your DEFERRED VESTED PENSION informationprior Spouse. The Deferred Vested Pension that you receive will be determined in benefitYour benefit would be determined as follows: the same manner as a Normal Retirement Pension. Your years of 6 The number of full years that you are older than Credited Service and Final Average Pay throughFor January information 31, 1996, only.your Spouse. and your years of Vesting Service at the time your employment x .005 with the Company ends are the basis for determining yourSears benefit. 0.03

If you begin receiving your Deferred Vested Pensionby beforePBGC’s age 65, .90 your benefit will be subject to an early retirement reduction factor, - .03 unless you have at least 90 points when your employment with the .87 The percentage of your benefit that you would receive Company ends. The reduction reflects the fact that, by beginning under the 50% Joint and Survivor Annuity based on you payments before age 65, you could be receiving benefits for a and your Spouse's actual ages longer period of time. reflect Created by Sears prior $to 10,000 plan Annual termination. benefit amount before the reduction for this If you are married, your Deferred Vested Pension will be reduced option by 1/40th of 1% (.00025) for each month between the date your x .87 fully $ 8,700.00 Annual benefit from the Plan under this option employment with the Company ends and the earlier of the date you ÷ 12 begin receiving your benefit, die or waive pre-retirement survivor not $ 725.00 Your monthly benefit from the Plan under this coverage. This reduction covers the cost of providing the survivor option for your lifetime benefits described under "Death Benefits" beginning on page 10. x .5 Spouse's portion of your benefit Your benefit will not be reduced if you waive the pre-retirement $ 362.50 Spouse's monthly benefit from the Plan following survivor coverage (with spousal consent). If you waive this your death for his/her lifetime coverage, however,Does your Spouse not will fully not receive reflect a benefit PBGC’s if you benefit guarantees or procedures. die before you begin receiving benefits. In addition, you cannot NORMAL FORM OF BENEFIT PAYMENT IF YOU ARE SINGLE, reinstate the pre-retirement survivor coverage after it has been DIVORCED OR WIDOWED waived, unless you remarry. The only time waived pre-retirement The normal form of benefit payment if you are single, divorced or survivor coverage can be reinstated is if you are remarried and elect widowed when you retire is a Single Life Annuity that is payable the coverage for your new spouse. for your lifetime only. After your death, benefits will not continue to anyone else.

Sears Holdings Pension Plan – Kmart Participants 7 2017

OPTIONAL FORMS OF BENEFIT PAYMENT SOCIAL SECURITY LEVELING You may elect one of the following optional forms of benefit If you begin receiving benefits before you are age 62, you may payment. If you are married, you may elect the Single Life Annuity, elect a Social Security Leveling optional form of payment. Under a Joint and Survivor Annuity, the 10-Year Certain and Life option, this option, you will receive monthly benefits from the Plan that, the Lump Sum option or the Social Security Leveling option. If you when combined with your primary Social Security benefit, will are married, to elect an optional form of benefit payment, you must provide you with a consistent level of income during your waive the normal form in writing and obtain your Spouse’s written retirement. and notarized consent to your election of the optional payment method at least 30 days, but no more than 90 days prior to your This means that the benefit you receive when you retire will be Retirement Date. Spousal consent is not required if you are naming higher than it would be under another option, but will then be your Spouse as the Beneficiary under the 50% Joint and Survivor reduced when you reach age 62, the time when you are eligible to Annuity. begin receiving your early Social Security benefits. This will help ensure that your total retirement income before and after you If you are single, you may elect the Single Life Annuity, the 10- are eligible to begin receiving Social Security benefits remains Year Certain and Life option, the Lump Sum option or the Social relatively level. Security Leveling option. The Joint and Survivor Annuity optional forms of payment are not available to a single participant. Your benefit under this option is calculated using an estimate of your Social Security benefits. If your actual Social Security benefit SINGLE LIFE ANNUITY that you begin receiving at age 62 is either higher or lower than the A Single Life Annuity pays you a monthly benefit for your lifetime, estimate, your benefits under this option will not be adjusted. stopping at your death. If you are married, you may elect the Single procedures. Life Annuity optional form of payment with spousal consent. You You may elect Social Security Leveling in combination with one of must complete a 7-day waiting period before this form of benefit the following available forms of benefitor payment: payment takes effect and you begin receiving benefits.  Single Life Annuity  50% Joint and Survivor Annuity 50%, 75% OR 100%, JOINT AND SURVIVOR ANNUITY  75% Jointtermination. and Survivor Annuity A Joint and Survivor Annuity will provide you with a reduced only. 100% Joint and Survivor Annuity monthly benefit during your lifetime. After your death, your  10-Year Certain and Life surviving Spouse will receive 50%, 75% or 100%, depending on your election, of the monthly benefit you were receiving for your Benefit paymentsplan to your surviving Spouse or other designated lifetime. If you are married, you can only name your Spouse as the Beneficiaryto willguarantees not, however, be leveled. Beneficiary under a Joint and Survivor Annuity option. Note that the availability of Social Security Leveling Payments is 10-YEAR CERTAIN AND LIFE OPTION subject to the funding-based restrictions under the Pension Under the 10-Year Certain and Life option, you will receiveinformation priorProtection Act of 2006. reduced monthly benefits for your lifetime, with payments benefit SPECIAL JOINT AND SURVIVOR ANNUITY PROVISIONS guaranteed for a minimum of 10 years. If you die before receiving payments for a period of 10 years, your designatedFor Beneficiary information will The followingonly. special provisions may apply if you elect a 50%, receive the amount of your monthly benefit for the remainderSears of the 75% or 100% Joint and Survivor Annuity. 10-year period. Your benefit under this option will be reduced, basedby on your age "Pop-up" Provision when you begin receiving benefits. The following chart showsPBGC’s If you are receiving payments under a Joint and Survivor Annuity some examples of how your benefit would be reduced under this optional form of payment, and your Spouse dies before you do, you option: can cancel the Joint and Survivor Annuity and receive payments 10-Year Certain and Life Reduction Factors under the Single Life Annuity, which provides a higher monthly Your Age When You Percent of Your reflectExample: Annual benefit to you for the remainder of your life. This is commonly Begin Receiving BenefitCreated That You Benefitby ThatSears You priorreferred to planto as the "pop-up"termination. feature. You must provide the Company Benefits Will Receive Would Receive If with written notice of your Spouse’s death to "pop-up" your benefit You Earn An to the Single Life Annuity Option. If you notify the Company fully Annual Benefit of within 30 days of your Spouse’s death, your benefit will "pop-up" $10,000 to the Single Life Annuity amount effective on the first day of the 55 Years Old 97.25% $9,725 month following your Spouse’s death. Otherwise, your benefit will 56 Years Old not97.00% $9,700 "pop-up" effective the first day of the month following the date the 57 Years Old 96.75% $9,675 Company receives written notice of your Spouse’s death. You must 58 Years Old 96.25% $9,625 59 Years Old 95.75% $9,575 provide the Company a copy of your Spouse’s death certificate 60 Years Old 95.25% $9,525 before your payment will be changed. 61 Years OldDoes not94.75% fully reflect$9,475 PBGC’s benefit guarantees or procedures. 62 Years Old 94.25% $9,425 If You or Your Spouse Dies Before Benefits Begin 63 Years Old 93.75% $9,375 If you are married, elect a Joint and Survivor Annuity and die 64 Years Old 93.00% $9,300 65 Years Old 92.25% $9,225 before your pension benefits begins, your surviving Spouse will 66 Years Old 91.50% $9,150 instead be entitled to a survivor benefit as described below. 67 Years Old 90.75% $9,075 68 Years Old 89.75% $8,975 If you elect a Joint and Survivor Annuity and your surviving 69 Years Old 88.75% $8,875 Spouse dies before your pension benefits began, this form of 70 Years Old 87.75% $8,775

Sears Holdings Pension Plan – Kmart Participants 8 2017 election will be canceled upon written notice to the Recordkeeper, will automatically be paid to you in the form of a Lump and you will be able to make a new form of payment election. Sum Payment (referred to as a “cash-out”).  If the lump sum value is more than $1,000 but less than or If You Are Divorced Before Benefits Begin equal to $5,000, it will be paid by direct transfer to a If you elect a Joint and Survivor Annuity and you become legally qualified individual retirement plan established on your divorced before your pension benefits begin, your Joint and behalf in accordance with applicable law. In addition to Survivor Annuity will be automatically canceled. If instead, you this lump sum, if you are also eligible for the Special elect a Joint and Survivor Annuity and you become legally divorced Death Benefit, the present value of the Special Death on or after your pension benefits begin, your Joint and Survivor Benefit will automatically be paid by direct transfer to the Annuity will remain in effect. same qualified individual retirement plan established on your behalf in accordance with applicable law. LUMP SUM PAYMENTS What a Lump Sum Payment Is: A Lump Sum Payment is a Effective January 1, 2016, the automatic lump sum single payment equal to the actuarial equivalent present value of the distribution/rollover rule applies to any survivor benefit payable total benefit you could expect to receive over the years of your following your death but only with respect to a benefit that had not retirement. Lump Sum Payments will also include the actuarial commenced prior to your death without regard to whether you were equivalent present value of the special death benefit (described eligible for the Special Death Benefit. below in “Death Benefits After Your Employment Ends” (Special Death Benefit) (if the participant is entitled to the Special Death Also, effective January 1, 2016, if your benefit is automatically Benefit). The applicable interest rate used to calculate a Lump Sum cashed out under the small pension cash-out rule and if you have Payment (including the Special Death Benefit) of your retirement qualified for the Special Death Benefit, the actuarialprocedures. equivalent benefit is based on three segment rates as specified by the IRS for present value of your Special Death Benefit will be automatically the August immediately preceding the year in which the payment paid to you unless you elect to roll overor this benefit. Note that if date occurs. the combined value of the lump sum cash-out and the Special Death Benefit exceeds $1,000, the total value of these amounts will be Who Is Eligible to Choose a Lump Sum Payment: automatically rolledtermination. over to an individual retirement account set up  Participant: A participant may elect a Lump Sum Payment on youronly. behalf without regard to the $5,000 limit unless you elect to only if the participant terminates employment on or after receive a direct payment or make another rollover arrangement. December 28, 2015 and as of the termination date, the participant is both vested and has attained Early or If the lumpplan sum value of your benefit (not including your Special Normal Retirement Age. The amount of the Lump Sum Deathto Benefit) guaranteesis more than $5,000, you can elect to have it paid to Payment (including the Special Death Benefit) will be the you as a Lump Sum Payment only if you meet the eligibility criteria greater of the actuarial equivalent present value of your stated in “Who Is Eligible to Choose a Lump Sum Payment,” retirement benefit (including the Special Death Benefit) above. based on your (i) Normal Retirement Date andinformation (ii) your prior actual payment date, if earlier. Notebenefit that the availability of Special Death Benefits is subject to the funding-based restrictions under the Pension Protection Act of  Surviving Spouse: A participant’s survivingFor Spouseinformation may 2006. only. elect to receive the Qualified Pre-retirement SurvivorSears Annuity or “QPSA” in the form of a Lump Sum Payment, WHEN BENEFIT PAYMENTS BEGIN provided the requirements described inby “Surviving Spouse Your Retirement Date (i.e., your Benefit Commencement Date) Benefits,” below are satisfied. PBGC’s cannot be earlier than the first day of the month following retirement or termination, subject to your age 70½ required beginning date, as Note that the availability of voluntary Lump Sum Payments and described below. In addition, you may select only the first day of the Special Death Benefits is subject to the funding-based restrictions month as the payment date. Further, your Retirement Date cannot under the Pension Protection Act of 2006. occur before you have received from the Recordkeeper the reflect Created by Sears priorstatutorily to plan required termination. retirement election information. SMALL PENSION CASH-OUT If at the time you leave the Company, the lump sum actuarial equivalent present value of your benefitfully is $5,000 or less, your You, your surviving Spouse, or your designated Beneficiary must benefit will be subject to automatic distribution from the Plan. Prior submit an application to the Recordkeeper before benefits will to January 1, 2016, the smallnot pension cash-out rule did not apply to begin. The application must include your marital status, your date you if you were eligible for a Special Death Benefit at the time of of birth and your Spouse's (if any) date of birth. Benefit payments your termination but effective January 1, 2016, the small pension are paid as of the first day of a month. cash-out rule will apply even if you are eligible for the death PART-TIME STATUS benefit. If the smallDoes pension not cash-out fully rule applies, reflect you will PBGC’s be benefit guarantees or procedures. notified about the small pension cash-out and if you do not timely If you continue to work after reaching age 65 and your status is or respond to request the manner of payment it will automatically be changes to part-time, you may elect to begin receiving your benefit. distributed as follows: REQUIRED BEGINNING DATE  If the lump sum value is $1,000 or less, it will automatically be paid to you in the form of a Lump Sum Notwithstanding the foregoing, benefit payments must be paid as of Payment (referred to as a “cash-out”). In addition to this no later than April 1 of the year following the year in which you lump sum, if you are also eligible for the Special Death reach age 70½ (i.e., your required beginning date), unless you Benefit, the present value of the Special Death Benefit reached that age before January 1, 1988. If you are still actively employed with the Company when you reach age 70½, you will

Sears Holdings Pension Plan – Kmart Participants 9 2017 receive your benefits while you continue working. You will be voluntary Lump Sum Payments is subject to the funding-based eligible to select any payment option as if you had left the restrictions under the Pension Protection Act of 2006. Company on December 31 of the year you turned 70½ and began benefit payments on February 1 of the following year. If your EXAMPLE benefits do not begin by your required beginning date, once they A Reduced Vested Pension Benefit with Re-Retirement begin they will be paid retroactively, without interest, to your Survivor Coverage in Effect required beginning date. Assume the following:  Your Normal Retirement Pension is $3,000 a year ($250 DEATH BENEFITS per month)  Your employment ends at age 54, 132 months before you The primary death benefits payable under the Plan are the Qualified begin receiving a benefit at age 65 Pre-retirement Survivor Annuity, described below, and the survivor annuity or life certain benefit payable under an optional form of 132 Number of months between the date your employment payment elected by the participant. However, if you have met certain with the Company ends and the date you retire criteria, an additional death benefit may be payable in the event of x .00025 your death as described below. .033 Charge for pre-retirement survivor coverage

SURVIVING SPOUSE BENEFITS $ 3,000 Normal Retirement Pension QPSA: The Plan provides for a Qualified Pre-retirement Survivor x .033 Annuity (“QPSA”) to be paid to your surviving Spouse if you are $ 99.00 Reduction for pre-retirement survivor coverage vested and you die either while you are actively employed or after procedures. your employment with the Company ends but before you begin $ 3,000 receiving benefits. Your Spouse will receive a monthly benefit - 99 $ 2,901 Annual benefit from the Plan or equal to 50% of the benefit you would have received under the 50% ÷ 12 Joint and Survivor Annuity as if you had ended your employment $ 241.75 Monthly benefit from the Plan on the date of your death and elected to retire on the Retirement termination. Date selected by your Spouse. This monthly benefit will be paid for Noteonly. that the availability of voluntary Lump Sum Payments and your Spouse's lifetime. Special Death Benefits is subject to the funding-based restrictions under the Pension Protection Act of 2006. Availability of Special Your Spouse may begin receiving these survivor benefits on the Death Benefitsplan is also subject to payment of Surviving Spouse first day of the month following your date of death if you were Benefits.to guarantees eligible to retire when you died. Otherwise, benefits will be payable to your Spouse beginning on the first day of any month on or after DEATH BENEFITS AFTER YOUR EMPLOYMENT ENDS your 55th birthday. Your Spouse may choose to begin receiving benefits at a later date, but no later than the date you wouldinformation have priorA determination will be made as of your termination of been eligible to begin receiving your Normal Retirement Pension. employmentbenefit whether your Beneficiary will be eligible for any death Your Spouse may also choose to begin receiving benefits in the benefits from the Plan. Such death benefits will be payable in one form of a lump sum at an earlier date by requestingFor such information date that is lump only. sum, as provided immediately below, if you die after your a first of the month at least 30 days after the report of death. employment with the Company has ended and after you either (a) Sears had at least 90 points or (b) were at least 60 years old and had If you are vested and die while you are actively employed and earned at least 15 years of Vesting Service. eligible to retire, your Spouse's 50% Joint and Survivorby AnnuityPBGC’s monthly benefit will not be reduced for early payment. Number of Months Between Death Benefit as a the End of Your Employment Percentage of Your Fiscal If you are vested and die after your employment ends but before and the Date of Your Death 1995 Compensation (to a you are eligible to start your pension, your Spouse's monthly maximum of $60,000 and benefit will be reduced by 1/40 of 1% (.00025)reflect for each month rounded to the next higher between the date your employmentCreated with the Company by Sears ends and the prior to plan termination.thousand dollars) date of your death. This is the charge for the QPSA. Less than 12 months 50% of your Compensation fully 12 months but less than 24 months 40% of your Compensation Note that the availability of Special Death Benefits is subject to the 24 months but less than 36 months 30% of your Compensation funding-based restrictions under the Pension Protection Act of 2006 36 months but less than 48 months 20% of your Compensation 48 months or more 10% of your Compensation and payment of Surviving Spousenot Benefits.

Lump Sum Option: If a Surviving Spouse becomes eligible to If you are eligible, the minimum death benefit that your Beneficiary receive a QPSA, the Surviving Spouse can elect to receive the will receive is $1,500. If no Beneficiary is named, this death benefit QPSA in the formDoes of a Lump not Sum fullyPayment reflectbut only if either PBGC’s benefit guarantees or procedures. will be paid to the executor or administrator of your estate. If there  The participant died on or after October 1, 2015 or is no estate open a Small Estate Affidavit will be required to pay  Died before October 1, 2015 but the QPSA did not the benefit. Absent either of these the Special Death Benefit will be commence as of October 1, 2015. paid in the following order (if any): surviving spouse, children, Your surviving Spouse can elect to receive immediate payment or parents, siblings or held subject to a future claim. The above defer payment until no later than your Normal Retirement Date. Special Death Benefit is no longer available for certain participants The amount of the Lump Sum Payment will be determined using who terminated employment prior to January 1, 2012 and had not the same actuarial method as described under “Who Is Eligible to retired as of September 17, 2012. In addition, if you terminate Choose a Lump Sum Payment,” above. Note that the availability of employment and elect to receive a Lump Sum Payment (which Sears Holdings Pension Plan – Kmart Participants 10 2017 automatically includes payment of the Special Death Benefit), your IF YOU ARE RE-EMPLOYED AFTER YOU RETIRE designated Beneficiary will no longer receive a Special Death Payment of your benefits will continue if you do not return to work Benefit from the Plan. See Lump Sum Payments section above. If within six months of your termination of employment. In this case, your benefit is cashed out automatically under the small pension you will receive both salary and Plan benefits during your period of cash-out rule (described above in “Small Pension Cash-Out”), the re-employment. If you are reemployed within six months of your actuarial equivalent present value of the Special Death Benefit will termination of employment, your benefit payments will be be automatically paid to you. If the Special Death Benefit is paid to suspended during your period of re-employment. You will be you prior to your death, no further Special Death Benefit will be entitled to resume your benefit payments once you later retire, or, payable from the Plan to your Beneficiary. sooner if you reach age 65, are part-time or switch to part-time status and elect to resume receiving your benefit. Note that the availability of voluntary Lump Sum Payments and Special Death Benefits is subject to the funding-based restrictions TRANSFERS under the Pension Protection Act of 2006. Availability of Special Death Benefits is also subject to payment of Surviving Spouse Your participation in the Plan and rights as a participant will be Benefits. affected in the following ways if you transfer from or to an affiliated employer of the Company depending on whether it is a IF YOU LEAVE THE COMPANY AND ARE participating employer covered under this Plan. RE-EMPLOYED TRANSFER TO AN AFFILIATED EMPLOYER NOT COVERED BY THE If your employment with the Company ends and you are later re- PLAN employed, your status as a participant in the Plan will depend on If you transferred employment to a non-participatingprocedures. employer or the years of Vesting Service that you had earned at the time your business group of the Company prior to the Plan freeze, you original employment ended. stopped earning Credited Service underor the Plan but continue to earn Vesting Service. Your benefit will be based on the Credited YOUR EMPLOYMENT ENDS BEFORE YOU ARE VESTED Service and Compensation that you had earned as of the date of If your employment with the Company ends before you are vested your transfer. Vestingtermination. Service will be credited during the period of in your benefit under the Plan, the Vesting Service and Credited employmentonly. with the non-participating employer. You would have Service that you earned as of the date your original employment begun earning additional Credited Service if you later transferred with the Company ends may be reinstated after you have been re- back to a participating employer prior to the freeze, beginning with employed for 12 consecutive months. the date planof such transfer. guarantees You will become a participant again on the first day of the month TRANSFERto FROM AN AFFILIATED EMPLOYER NOT COVERED BY following your date of rehire if you have not incurred a Break in THE PLAN Service. If you transferred from a non-participating employer to a informationpriorparticipating employer prior to the Plan freeze, in addition to Your Vesting and Credited Service will only be reinstated if you receivingbenefit credit for Eligibility Service and Vesting Service for your are re-employed before whichever of the following two events years of employment with the affiliated company (while it was an occurs last: For informationaffiliate) only. you would have begun receiving Credited Service  You incur five consecutive one-year Breaks In Service. beginning with the date of such transfer.  The February 1 following the Plan Year in whichSears your number of one-year Breaks In Service byequals the years of TRANSFER TO AN AFFILIATED EMPLOYER COVERED BY THE PLAN Vesting Service you had earned at the time yourPBGC’s original If you transfer employment from one participating employer or to employment ended. another participating employer, your benefit will be based on your Your reinstated years of Vesting Service and Credited Service will combined Vesting Service, Credited Service (through January 31, not include time that you were not employed by the Company. 1996) and Compensation (through January 31, 1996).

YOUR EMPLOYMENT ENDS AFTER YOU ARE VESTED Createdreflect by Sears priorCOVERAGE to plan UNDER termination. A COLLECTIVE BARGAINING AGREEMENT If your employment ends after you are vested in your benefit under You will continue to earn Vesting Service, but not Credited the Plan and you are later re-employed by the Company, you will Service, under this Plan if you become covered by a collective become a participant in the Plan onfully the date of rehire. Your years of bargaining agreement between the Company and a third party that Vesting Service and Credited Service that you had earned as of the does not provide for participation under the Plan. date your original employmentnot ended will also be reinstated on the first day of the month following your date of rehire, provided that Note: If you are employed by more than one participating you have not been cashed out under the small pension lump sum employer at the same time, your total service will not be more than rules described in this SPD. If you have been cashed out, in order to if a single employer of the Company employed you. have your prior Doesservice reinstated, not fullyyou would reflect need to repay PBGC’s the benefit guarantees or procedures. cash-out amount plus interest at a rate of 5% compounding annually ADDITIONAL PROVISIONS OF THE PLAN no later than the earlier of (a) the 5th anniversary of your rehire or (b) the day you would have incurred five consecutive one year You should be aware of the following additional provisions of the Breaks In Service. Plan.

Your reinstated years of Vesting Service and Credited Service will CIRCUMSTANCES UNDER WHICH BENEFITS COULD BE not include time that you were not employed by the Company. FORFEITED, ASSIGNED, REDUCED OR LOST The following circumstances could result in your benefits from the Plan either being forfeited, assigned, reduced, or lost.

Sears Holdings Pension Plan – Kmart Participants 11 2017

Break in Service An error in claims processing will not set precedent for future If your employment with the Company terminates before you have benefits. Also, verbal misinformation from a telephone earned five years of Vesting Service, all of the benefits you had representative or manager that goes against the intent of the Plan earned will be forfeited. If you are later re-employed by the cannot supersede this SPD or the Plan Document Company, your years of Vesting Service and Credited Service may Material Misstatements or Omissions be reinstated, depending on the length of your previous service and how long you were gone (as described earlier in this SPD). At all times, it is necessary to provide accurate and complete information. A material misstatement or failure to disclose Assignment of Benefits important information could result in payment of benefits in error to For the protection of your interests and those of your someone who is ineligible for such benefits. beneficiary(ies), the law provides that your benefits under this Plan cannot be assigned and are not subject to garnishment or If this occurs, the Plan Administrator may rescind the benefit, subject attachment, except to the extent permitted by law (including an IRS to appropriate review procedures as required by ERISA. You will be lien) or required by a “Qualified Domestic Relations Order.” obligated to refund to the Plan any benefit payments resulting from the material misstatements or omissions. You will be obligated to Qualified Domestic Relations Order refund such benefit payments to the Plan even if you make an Plans such as this Plan must obey certain court orders, called unintended material misstatement or omission. Qualified Domestic Relations Orders (“QDRO”), which assign a Recovery of Overpayment portion of your benefits to a Spouse, former Spouse, child or dependent. A copy of the Plan's QDRO procedures may be If it should happen that you receive benefits in excess of the amount obtained, free of charge, by contacting the Recordkeeper at 1-855- of benefits to which you are otherwise entitled to receive under the 481-2661 or Plan Administrator. express terms of the Plan, you will be required to return such excess amounts to the Plan. The Plan Administrator may pursue recovery of Incompetence these amounts either by requiring the payee to return the excess to the In the case of a participant’s incompetency, the Plan has a right to Plan, by offsetting the payee’s future benefit payments or by any make benefit payments to: (i) the participant’s legally appointed other method deemed reasonable to the Plan Administrator. guardian if the Plan Administrator receives acceptable written Top Heavy Provisions notice of guardianship; or (ii) the participant’s spouse, child or dependent if the Plan Administrator determines that the participant The Internal Revenue Service has established special rules if a plan is unable to care for his or her affairs. Any payments made in such as this Plan becomes "top heavy." In general, the Plan will accordance with this section will constitute a complete discharge of become top heavy if the value of the benefits of certain key liability for such payments under the Plan, to the extent permitted associates is more than 60% of the value of benefits earned by all by law. covered associates. Key associates are generally the owners of at least 5% of the common stock of Sears Holdings Corporation or Missing Participants and Uncashed Checks Company officers. Top heavy rules are designed to protect the It is important for you, your surviving Spouse or your Beneficiary benefits and rights of associates not considered to be key associates. to maintain a current address with the Plan Administrator and/or It is unlikely that this Plan will become top heavy. If this should Recordkeeper. To update your address, either goFor online information at happen, only. you will receive complete information about any benefit https://searspension.ehr.com or call the Recordkeeper at 1-800-953- adjustments. 5390. If you (your surviving Spouse or Beneficiary) become ASSOCIATE CONTRIBUTIONS TO THE PLAN entitled to a benefit from the Plan and the Plan is unable to locate you, your benefit will be treated as forfeited unless or until you are The Prior Kmart Plan has not accepted associate contributions since later found or come forward, in which case your benefit will be before 1966. Associates who participated in the Plan before 1966 reinstated (without adjustment for interest). If you (your surviving could make their own contributions to the Plan before 1966. If you Spouse or Beneficiary) are issued a benefit check or checks from made contributions, you will have two options when your the Plan and the check is uncashed as of the end of the first Plan employment ends. You can: Year following the year in whichCreated the first check byis mailed Sears to you, prior to planleave your termination. contributions and any interest that these the Plan will assume that you are deceased and stop payment on all contributions have earned in the Plan, in which case you outstanding checks. If you are later found or come forward, before will receive a larger benefit; or your claim for reinstatement of the benefit would have expired  receive a single payment of the contributions and any under applicable federal and state law, your benefit will be interest earned. reinstated (without adjustment for interest). To reduce missing checks, you can sign up to have your payments directly deposited to AGENCIES THAT REGULATE THE PLAN your checking or savings account online at The Plan is subject to the rules, regulations and guidance of the https://searspension.ehr.com or by calling the Recordkeeper at 1-800- Internal Revenue Service, U.S. Department of Labor and Pension 953-5390. Does not fully reflect PBGC’s Benefitbenefit Guaranty guarantees Corporation (PBGC) or and willprocedures. be amended to comply with any changes in these rules, regulations and statutes. Clerical Error A clerical error will not void a benefit that should be in force nor EMPLOYMENT RIGHTS NOT GUARANTEED will it continue a benefit that should have ended or never begun. Neither the establishment of this Plan, nor any provision of or When an error is found, a fair adjustment will be made. However, action taken under this Plan, nor your participation in this Plan clerical and payroll errors not reported by you within 12 months are guarantees you continued employment or gives you any right to be not subject to correction. retained in the employ of the Company or other participating

Sears Holdings Pension Plan – Kmart Participants 12 2017 employer, or alters your at-will employment status or affects or Federal income tax must generally be withheld from a Lump Sum limits in any way the right of the Company or other participating Payment at the rate of 20%. However, as noted above, you or your employer to terminate your employment. If your employment spousal Beneficiary may choose to have the plan directly roll over terminates for any reason, this Plan does not give you any benefit the lump sum amount into an IRA or to another employer eligible or interest except as specifically provided in the Plan. qualified retirement plan to avoid the 20% withholding and 10% early withdrawal penalty. (A non-spousal Beneficiary may instruct PLAN TERMINATION OR AMENDMENT the Plan to roll over all or part of the lump sum distribution directly While the Company intends to continue maintaining the Plan, the to IRA.) The Plan cannot refund any amounts withheld. You may Company explicitly reserves the right to terminate, discontinue, be required by federal law to pay estimated taxes directly to the change, or amend the Plan at any time and for any reason. Internal Revenue Service if the amount withheld is not sufficient.

If the Plan is terminated, all benefits will become 100% vested on MANDATORY DISTRIBUTIONS Plan termination to the extent funded. If the assets of the Plan are As explained in Required Beginning Date above, if you are still not sufficient to cover all benefits, the Plan cannot terminate unless employed with the Company after your required beginning date it satisfies at least one of four statutory tests. Under a distress (i.e., April 1st of the calendar year following the year in which you termination, the provisions of the Employee Retirement Income reach age 70½), Plan rules require that your accrued benefit on Security Act of 1974 (ERISA) specify the priority categories for the December 31 of the year you reach 70½ must begin to be paid to allocation of assets. If the assets in the Plan’s trust fund are not you no later than your required beginning date. If your entire sufficient to provide for all benefits, participants in the remaining accrued benefit is eligible to be paid in the form of an automatic categories will be entitled to benefits only if they are benefits that lump sum cash-out, any portion that is “required” to be paid out is are insured by the Pension Benefit Guaranty Corporation. not eligible for tax-deferred rollover to an IRAprocedures. or another employer’s qualified retirement plan. TAX CONSIDERATIONS or Note: This tax information is based on the Plan’s interpretation of MONTHLY PAYMENTS federal laws. Tax laws and regulations are complex and subject to When benefits are paid on a monthly basis, they are subject to change from time termination.to time. You should consult with a professional federal income tax. State and local taxes may also apply. tax advisoronly. about any distributions from the Plan.

Federal income tax will be withheld from your monthly benefit MAXIMUM QUALIFIED PLAN BENEFIT payments unless you elect not to have withholding apply. If you plan elect not to withhold, you may be required by federal law to pay The Internal Revenueguarantees Service (IRS) places certain limits on the estimated taxes directly to the Internal Revenue Service on a amountto of benefits that can be paid to participants under qualified quarterly basis. Your withholding election can be changed at any retirement plans such as the Pension Plan and on the amount of time online at https://searspension.ehr.com or by calling the compensation that can be recognized under such plans. You will be Recordkeeper at 1-800-953-5390 informationpriornotified if you are affected by the IRS limits. benefit Monthly pension payments are not eligible for rollover to an PENSION BENEFIT GUARANTY CORPORATION individual retirement account or annuity (IRA) Fornor to another information Your only. pension benefits under this Plan are insured by the Pension employer’s qualified retirement plan. Sears Benefit Guaranty Corporation (“PBGC”), a federal insurance agency. If the Plan terminates (ends) without enough money to pay LUMP SUM PAYMENTS by all benefits, the PBGC will step in to pay pension benefits. Most If you receive your benefit as a Lump Sum Payment (includingPBGC’s as people receive all of the pension benefits they would have received an automatic small pension cash-out because the lump sum present under their Plan, but some people may lose certain benefits. The value of your benefit is valued at $5,000 or less), this payment is PBGC guarantee generally covers: (1) normal and early eligible for rollover to an IRA or to the qualified plan of another retirement benefits; (2) disability benefits if you become disabled employer that accepts rollovers. You or yourreflect Beneficiary may before the plan terminates; and (3) certain benefits for your instruct the Plan to roll over allCreated or part of the lump by sum Sears distribution prior survivors. to plan termination. directly to an individual retirement account or annuity (“IRA”) or another employer’s eligible retirement plan. A non-spousal The PBGC guarantee generally does not cover: (1) benefits Beneficiary may instruct the Plan tofully roll over all or part of the lump greater than the maximum guaranteed amount set by law for the sum distribution directly to an inherited IRA. If you (or your year in which the plan terminates; (2) some or all benefit increases Beneficiary) have elected tonot receive the payment directly (instead and new benefits based on plan provisions that have been in place of by a direct rollover), you can still elect to rollover within 60 days for fewer than 5 years at the time the plan terminates; (3) benefits of receipt from the Pension Plan. that are not vested because you have not worked long enough for the company; (4) benefits for which you have not met all of the Any portion of yourDoes lump sumnot payment fully that reflect is not rolled PBGC’sover is requirementsbenefit at guarantees the time the plan terminates; or procedures. (5) certain early subject to ordinary income taxes; and, if you are not at least age 55 retirement payments (such as supplemental benefits that stop when in the calendar year in which you leave the company, a 10% federal you become eligible for Social Security) that result in an early tax penalty may also apply. Please note that, if you are over age retirement monthly benefit greater than your monthly benefit at the 70½ on your payment date, a part or all of your Lump Sum plan’s normal retirement age; and (6) non-pension benefits, such as Payment may not be eligible for rollover and will be subject to health insurance, life insurance, certain death benefits, vacation ordinary income taxes. More information regarding taxation of pay, and severance pay. Even if certain of your benefits are not lump sums will be provided as part of your election kit when you guaranteed, you still may receive some of those benefits from retire. PBGC depending on how much money your plan has and on how much the PBGC collects from employers. Sears Holdings Pension Plan – Kmart Participants 13 2017

CLAIM FOR BENEFITS For more information about the PBGC and the benefits it If a participant or Beneficiary (“claimant”) contacts the Pension guarantees, ask your plan administrator or contact the PBGC’s Service Center and is told that they are not entitled to a benefit Technical Assistance Division, 1200 K Street N.W., Suite 930, under the Plan or they disagree with the benefit that they are told Washington, D.C. 20005-4026 or call 202-326-4000. TTY/TDD they are entitled to, the claimant may submit an official claim for users may call the federal relay service toll-free at 1-800-877-8339 benefits under the Plan in writing to the Pension Service Center and ask to be connected to 202-326-4000. Additional information (acting on behalf of the Plan Administrator). The Pension Service about the PBGC’s pension insurance program is available through Center will review and process the claim and issue a written the PBGC’s Web site on the Internet at http://www.pbgc.gov. response either approving or denying the claim in whole or in part, which response will be issued within 90 days of the date that the PLAN ADMINISTRATOR claim is received. If special circumstances arise and the Pension In accordance with the terms of the Plan, the Chief Executive Service Center (or Plan Administrator) cannot process the claim Officer the Company appoints the members of the SHC within 90 days, the claimant will be notified within the first 90 days Administrative Committee and SHC Investment Committee, each that the review period is being extended for to an additional 90 of which are named fiduciaries to the Plan. days. This notice will indicate any special circumstances for the extension and the date by which the Plan Administrator expects to The SHC Administrative Committee is the statutory Plan render its decision. If the Plan Administrator fails to notify the Administrator, and as such it has the discretionary authority to claimant within the first 90 days, the claim is considered denied and determine eligibility for benefits under the Plan, to determine the the claimant is permitted to proceed to the appeal stage described in amount and form of benefits payable under the Plan, to construe the below. terms of the Plan, and to make factual determinations about all Plan procedures. matters. The decisions of the Plan Administrator or its delegate will If the Pension Service Center (or Plan Administrator)or makes a be final and binding. determination to deny the claimant’s benefits claim in whole or in part, the denial will be in writing and hand-delivered, mailed or sent The Plan Administrator may appoint one or more persons to carry electronically to the claimant and will indicate the following: out the responsibilities for performing certain duties of the Plan  Specific termination.reasons for the denial; Administrator under the terms of the Plan and may seek expert only. Specific Plan references used in making the decision; advice as the Plan Administrator deems reasonably necessary or  If the denial was because specific material or information appropriate with respect to the Plan. The Plan Administrator is planwas not provided, a description of the additional material entitled to rely upon the information and advice furnished by its or information that the claimant must provide in delegate(s) and experts, unless it knows such information and to connectionguarantees with the claim, along with an explanation of advice to be inaccurate or unlawful. why such material or information is necessary; and  An explanation of the application review process and the In carrying out their respective responsibilities under the Plan, the prior time limits applicable to such review procedure including Plan Administrator or its delegate(s) has full discretionaryinformation authority a statement of the claimant’s right to bring civil action to determine eligibility for Plan benefits, to make factual findings benefitunder ERISA Section 502(a) following an adverse benefit and to interpret the terms of the Plan. Any interpretation or determination upon appeal. determination made under such discretionary authorityFor willinformation be only. given full force and effect, unless it can be shown that Searsthe APPEAL OF AN ADVERSE BENEFIT DETERMINATION interpretation or determination was arbitrary and capricious. A claimant who wishes to appeal an adverse benefit determination Benefits under the Plan will be paid only if the Planby Administrator PBGC’s must, within 60 days of receiving the claim denial (or such later decides in its discretion that the applicant is entitled to them under date as may be approved by the SHC Administrative Committee the terms of the Plan. taking into account the nature of the benefit subject to the claim and other attendant circumstances), notify the SHC Administrative Any amendments to the Plan must be authorized by the Company Committee in writing that he or she wishes to appeal the claim or the SHC Administrative Committee, to whichreflect certain denial and have the Administrative Committee conduct a full and amendment authority has been Createddelegated by the byBoard Sears of Directors priorfair to review plan of the adversetermination. benefit determination (which may include of the Company. holding a hearing if deemed necessary by the SHC Administrative fully Committee). The SHC Investment Committee has the discretionary authority to manage and administer the investment-related matters of the Plan. In connection with an adverse benefit determination, the claimant Among its duties and authoritynot is the authority to appoint an may review all relevant documents relating to his or her claim and investment advisor and investment managers to oversee and/or submit issues and comments in writing to the Administrative manage the investment of Plan assets and to monitor the Committee. performance of these investments. Does not fully reflect PBGC’s Anybenefit claimant whoguarantees does not submit an appealor procedures. within 60 days after CLAIMS PROCEDURES receiving an adverse benefit determination (or such later date as approved by the SHC Administrative Committee) is prohibited APPLYING FOR BENEFITS from appealing the adverse benefit determination and is prohibited Apply for benefits by retiring online at https://searspension.ehr.com from bringing a civil action in connection with the claim for or by contacting the Sears Holdings Pension Service Center at 1- benefits (as explained below). 800-953-5390. You will be supplied with all necessary forms. Your completed application must include your marital status, your date of Within 60 days after receiving a written appeal of an adverse birth and your Spouse's (if any) date of birth. benefit determination, the SHC Administrative Committee will

Sears Holdings Pension Plan – Kmart Participants 14 2017 conduct a full and fair review of the record and prepare its decision, Plan Number: Sears Holdings Pension Plan 1 is Plan Number 001 either approving or disapproving the appeal in whole or in part, and Sears Holdings Pension Plan 2 is Plan Number 002. which response will be issued within 60 days of the date that the Plan Year: The Plan Year begins on December 1 and ends on appeal is received. If special circumstances arise and the SHC November 30. Administrative Committee cannot process the claim within 60 days, Effective Date of SPD: This SPD summarizes the major the claimant will be notified within the first 60 days that the review characteristics of the Plan in effect as of December 1, 2016. period is being extended for an additional 60 days. This notice will indicate the special circumstances for the extension and the date by Plan Administrator: The Plan Administrator is the Sears Holdings which the SHC Administrative Committee expects to render its Corporation Administrative Committee. The contact information is: decision. If the SHC Administrative Committee fails to notify the SHC Administrative Committee claimant within the first 60 days, the appeal is considered denied 3333 Beverly Road, Dept. 707BEN and the claimant is permitted to file a civil action. Hoffman Estates, IL 60179 (847) 286-2500 If the SHC Administrative Committee makes an adverse determination upon appeal in whole or in part, the determination Named Fiduciaries: The Named Fiduciaries have the general notice will be in writing and hand-delivered, mailed or sent authority over the administration and operation of the Plan. The electronically to the claimant and will indicate the following: Named Fiduciaries are the Company, the SHC Administrative  Specify reasons for the denial; Committee and the SHC Investment Committee.  Specify Plan references upon which the adverse determination is based; Agent for Service of Legal Process: Legal process may be served  A statement that the claimant is entitled to receive upon on the Plan Administrator at the address shown above or the request and free of charge, reasonable access to, and Trustee at the address shown below. copies of, all documents, records and other information relevant to the claimant’s claim for benefits; and Plan Trustee: The Plan Trustee is:  A statement of the claimant’s right to bring civil action State Street Bank and Trust Company under ERISA Section 502(a). 1200 Crown Colony Drive Quincy, MA 02169 RIGHT TO FILE CIVIL SUIT If you or your Beneficiary (claimant) wishes to bring civil action in Plan Recordkeeper: The Company has contracted with Willis connection with a claim for benefits under the Plan, you must first Towers Watson to fulfill various administrative duties for the Plan. complete each step of the claims procedures described above The contact information is: (including the claim and appeal steps). In addition, any claimant who wishes to bring a civil action after having exhausted the claims Willis Towers Watson procedures set forth above must bring such civil action within six Sears Holdings Pension Service Center months after he or she receives an adverse benefit determination on P.O. Box 3411 appeal. Any claimant who fails to file a civil action within such six Hopkins, MN 55343-2111 months period is barred from filing such an action at any later date. For informationPlan only. Funding ADDITIONAL PLAN INFORMATION The Company's funding of the Plan’s Trust is determined by the Plan’s independent actuary, in accordance with applicable law. This Section of the SPD provides specific information identifying Pension benefits are paid from the Trust. Funding contributions are the Plan and other parties involved with the Plan as required by deposited to the Trust within the timeframe required by applicable law. law.

Plan Name: Sears Holdings Pension Plan 1 or Sears Holdings The Trust is administered by the Plan Trustee in accordance with a Pension Plan 2. (Prior to January 30, 2008, the Plan name was the formal trust agreement between the Company and the Trustee. The Kmart Corporation Employee PensionCreated Plan.) by Sears priorTrust to is maintainedplan termination. for the exclusive benefit of Plan participants and their beneficiaries, except to the extent that the Company may Plan Sponsor: The Plan is sponsored by the Company, which is: use this money to pay the reasonable cost of administering the Plan. Sears Holdings Corporation. (Prior to January 30, 2008, the Plan No assets can be returned to the Company unless the Plan is Sponsor was Kmart Holding Corporation.) The contact information terminated and there are enough assets to pay all benefits earned by is: all participants. Sears Holdings Corporation 3333 Beverly Road, Dept. 707BEN STATEMENT OF ERISA RIGHTS Hoffman Estates, IL 60179 (847) 286-2500 As a participant under a qualified plan you are entitled to certain Does not fully reflect PBGC’s rightsbenefit and protections guarantees under the Employee or Retirementprocedures. Income Type of Plan: The plan is a defined benefit pension plan. This Security Act of 1974 (ERISA). ERISA provides that all plan means that your Plan benefits are based on a specific formula participants shall be entitled to: contained in the Plan Document.  Examine, without charge, at the plan administrator’s Employer Identification Number: office and at other specified locations, such as worksites The EIN for the Company is: 20-1920798. (Prior to January 30, and union halls, all documents governing the plan, 2008, the EIN for the Company was: 38-0729500.) including insurance contracts and collective bargaining agreements, and a copy of the latest annual report (Form

Sears Holdings Pension Plan – Kmart Participants 15 2017

5500 Series) filed by the plan with the U.S. Department of directory or the Division of Technical Assistance and Inquiries, Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration, U.S. Department of Employee Benefits Security Administration. Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. When writing, please include the employer and Plan Number listed  Obtain, upon written request to the plan administrator, above. You may also call the EBSA toll-free at 866-444-EBSA copies of documents governing the operation of the plan, (866-444-3272). You may obtain certain publications about your including insurance contracts and collective bargaining rights and responsibilities under ERISA by calling the publications agreements, and copies of the latest annual report (Form hotline of the Employee Benefits Security Administration. 5500 Series) and updated summary plan description. The administrator may make a reasonable charge for the copies.

 Receive a summary of the plan’s annual financial report. The plan administrator is required by law to furnish each participant with a copy of this summary annual report.

 Obtain a statement telling you whether you have a right to receive a pension at normal retirement age (age 65) and if so, what your benefits would be at normal retirement age if you stop working under the plan now. If you do not have a right to a pension, the statement will tell you how many more years you have to work to get a right to a pension. This statement must be requested in writing.

In addition to creating rights for plan participants ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your plan, called “fiduciaries” of the plan, have a duty to do so prudently and in the interest of you and other plan participants and beneficiaries. No one, including your employer, your union, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a benefit or exercising your rights under ERISA.

If your claim for a benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules. UnderFor ERISA, information there only. are steps you can take to enforce the above rights. For instance, if you request a copy of plan documents or the latest annual report from the plan and do not receive them within 30 days, you may file suit in a Federal court. In such a case, the court may require the plan administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court. In addition, if you disagree with the plan’s decisionCreated or lack thereofby Sears concerning prior to plan termination. the qualified status of a domestic relations order or a medical child support order, you may file suit in Federal court. If it should happen that plan fiduciaries misuse the plan’s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you toDoes pay these notcosts and fully fees, forreflect example, ifPBGC’s it finds benefit guarantees or procedures. your claim is frivolous.

If you have any questions about your plan, you should contact the plan administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the plan administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone

Sears Holdings Pension Plan – Kmart Participants 16 2017

For information only.

Created by Sears prior to plan termination.

Does not fully reflect PBGC’s benefit guarantees or procedures.