Paid Time Off

TABLE OF CONTENTS
Paid Time Off............................................................................................................................................................................. 14-1 Vacation ..................................................................................................................................................................................... 14-1 Your Vacation Allotment................................................................................................................................................ 14-1 Vacation for Newly Hired Associates ............................................................................................................................ 14-1 How You Earn Vacation ................................................................................................................................................ 14-1 Accumulating Vacation.................................................................................................................................................. 14-1 If You Use Too Much Vacation ..................................................................................................................................... 14-1 If You Go on Leave of absence..................................................................................................................................... 14-1 If You Leave the Company............................................................................................................................................ 14-1 National and Designated Holidays .......................................................................................................................................... 14-1 National Holidays .......................................................................................................................................................... 14-1 Designated Holidays ..................................................................................................................................................... 14-2 Personal Days ........................................................................................................................................................................... 14-2 Important Note .......................................................................................................................................................................... 14-2 For More Information................................................................................................................................................................ 14-2

Sears Holdings Benefits Handbook 2008 Full-time Hourly

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PAID TIME OFF

will provide for an automated accumulation of earned vacation and a means to identify vacation earned and not taken. The Like all employers, Sears Holdings recognizes the importance of time projected target date for rolling out the vacation accumulation away from work. Depending on your length of service, you may provision to Kmart store hourly associates is the beginning of qualify for as much as four weeks of vacation and up to 10 holidays 2009 fiscal year. and personal days to use each year.
Please note that certain paid time off provisions may be different for certain associate groups, including associates in California, Montana and North Dakota, associates who work in a Kmart Distribution Center, and associates covered by a collective bargaining agreement. If you are a Sears full-time hourly associate or a Kmart Support Center hourly associate, you can accumulate up to the maximum vacation time shown in the following chart.
Maximum Accumulation

Years of Continuous Service 1 but less than 2 years 2 but less than 7 years 7 but less than 15 years 15 years and over Grandfathered

VACATION
YOUR VACATION ALLOTMENT As a full-time hourly associate, you are entitled to earn vacation each year up to a specified amount. The plan year for vacation is aligned with Sears Holdings fiscal year, which runs from approximately February 1 to January 31. The actual dates are based on the Sears Holdings fiscal year and your payroll schedule. VACATION FOR NEWLY HIRED ASSOCIATES Newly hired associates are eligible for vacation after one year of service. The amount of vacation available after one year is pro-rated based on the number of months remaining in the year. Once you have completed at least one year of service, you can begin to earn vacation. HOW YOU EARN VACATION Full-time hourly associates (includes Sears and Kmart) will earn vacation as set forth in the chart below and according to the average number of hours worked in the previous fiscal year. However, you do not earn any vacation while you are on a leave of absence.
Years of Continuous Service 1 but less than 2 years 2 but less than 7 years 7 but less than 15 years 15 years and over Grandfathered Hours of Vacation Earned for Each Week

FT40
60 hours 120 hours 180 hours 240 hours 300 hours

FT30
53 hours 105 hours 158 hours 210 hours 263 hours

Once you reach the maximum accumulation amount for your years of service, you cant earn or accumulate any additional vacation until you use some of your maximum accumulated time. For example, if your vacation account becomes full in April and you decide not to take a vacation until June, you will not earn or receive any additional vacation hours for May none would be added to your vacation account balance. If you took a week of vacation at the end of June, you could then start to accumulate vacation again for each following week until your vacation account becomes full again. No retroactive adjustments will be made for weeks in which you do not accumulate vacation because you are at the maximum. IF YOU USE TOO MUCH VACATION Company policy does not permit the anticipation of a future years vacation. However, if you find at the end of the year that you mistakenly took more vacation than you earned, the extra vacation taken will be considered part of the following years entitlement. IF YOU GO ON LEAVE OF ABSENCE You may request that earned but unused vacation be paid to you at the time you are placed on leave of absence. You do not earn additional vacation while you are on a leave of absence. IF YOU LEAVE THE COMPANY If you leave the Company and you have taken less vacation than you have earned during the current year, the Company will pay you for your accrued, unused vacation when you leave. If you have taken more vacation than you have earned, you will owe the Company the difference. In this case, to the extent possible, the Company will deduct the amount owed from any final pay or severance allowance to which you may be entitled.

FT40
0.76924 1.53848 2.30772 3.07720 3.84616

FT30
0.67308 1.34617 2.01926 2.69234 3.36539

Annual Equivalent (weeks) 1 2 3 4 5

You begin earning vacation at a higher weekly rate the pay cycle after you reach your 2nd, 7th and 15th service anniversaries. This means that during the year in which one of these anniversary dates occurs, your vacation benefit will be somewhat different than shown in the chart. Its important that you understand that as long as you have at least one year of service, you can take up to 40 hours of your vacation during the year before you actually earn it. However, you may not use a future years vacation. This gives you the flexibility you need to take your vacation when you want tosubject to your managers approval. ACCUMULATING VACATION

NATIONAL AND DESIGNATED HOLIDAYS

You may be eligible for national and designated holidays each year.

Vacation accumulation is currently not available to Kmart store hourly associates. Eligibility for Kmart store hourly associates to accumulate vacation from one year to the next is dependent upon additional automated systems integration and development (unless prohibited by state law). The integration and development
Sears Holdings Benefits Handbook 2008 Full-time Hourly

NATIONAL HOLIDAYS The Company observes six national holidays each year, including New Years Day, Memorial Day (if locally observed by the retail community), Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
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DESIGNATED HOLIDAYS Some units or work locations may observe additional designated holidays. These are days on which the company has authorized nonselling units/work locations to be closed, or locally celebrated holidays on which the District has authorized units/work locations to be closed. Holidays may not be designated in units/work locations that do not close.

PERSONAL DAYS
You are eligible for up to four personal days, to take as you wish, after you complete six months of service with Sears Holdings. If more than six national and designated holidays are observed in your unit/work location, the number of personal days for which you are eligible will be reduced by the number of additional designated holidays observed by your unit/work location. If less than six national and designated holidays are observed in your unit/work location, the number of personal days for which you are eligible will be increased by the number of fewer designated holidays observed by your unit/work location. Once you complete six months of service, you will receive the next allocation of personal days. Personal days are allocated throughout the year as follows: Kmart Full-time Hourly Associates: First day of the fiscal year (about February 1) May 1 August 1 Sears Full-time Hourly Associates: The next day immediately following the last payroll in the current fiscal year May 1 August 1 2 personal days 1 personal day 1 personal day

2 personal days 1 personal day 1 personal day

Personal days not taken by the end of the plan year are forfeited, unless prohibited by state law. The plan year tracks Sears Holdings fiscal year, which runs from approximately February 1 to January 31. The actual dates are based on the Sears Holdings fiscal year and your payroll schedule.

IMPORTANT NOTE
Certain paid time off rules differ for associates in California, Montana and North Dakota, associates who work in a Kmart Distribution Center, and associates covered by a collective bargaining agreement. The Paid Time Off program is a payroll practice that is exempt from welfare benefit plan status under the Employee Retirement Income Security Act of 1974 (ERISA), as amended (ERISA). The fact that a summary of the Paid Time Off program is included in this Handbook should not be construed as making it an ERISA plan.

FOR MORE INFORMATION The following details about your benefit coverage are provided in the Other Information section of this handbook: Contact information for benefit claims administrators and insurance carriers.

Sears Holdings Benefits Handbook 2008 Full-time Hourly

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Paid Time Off