THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Sears Holdings Corporation (SHLD)

3/16/2006 Proxy Information

Mr. Lacy has served as Vice Chairman of Sears Holdings Corporation and as Chairman of Sears Canada Inc. since March 2005. He previously served as Chief Executive Officer of Sears Holdings from March 2005 to September 2005 and Chairman of Sears, Roebuck & Company from December 2000 and President and Chief Executive Officer from December 2000 until March 2005.

Mr. Day joined Sears Holdings Corporation as Executive Vice President and Chief Financial Officer in March 1999 and was Chief Operating Officer and a member of the Office of the Chief Executive from 2000 to 2002.

Our Board of Directors has delegated authority to direct investment of our surplus cash to Edward S. Lampert, subject to various limitations that have been or may be from time to time adopted by the Board of Directors and/or the Finance Committee of the Board of Directors. Mr. Lampert is Chairman of our Board of Directors and our Finance Committee and is the Chairman and Chief Executive Officer of ESL Investments, Inc. (together with its affiliated funds, "ESL"). Neither Mr. Lampert nor ESL will receive compensation for any such investment activities undertaken on our behalf. ESL beneficially owned approximately 41% of our outstanding common stock as of January 31, 2006.

Further, to clarify the expectations that the Board of Directors has with respect to the investment of our surplus cash, the Board has renounced, in accordance with Delaware law, any interest or expectancy of the Company associated with any investment opportunities in securities that may come to the attention of Mr. Lampert or any employee, officer, director or advisor to ESL and its affiliated investment entities who also serves as an officer or director of the Company (each, a "Covered Party") other than (a) investment opportunities that come to such Covered Party's attention directly and exclusively in such Covered Party's capacity as a director, officer or employee of the Company, (b) control investments in companies in the mass merchandising, retailing, commercial appliance distribution, product protection agreements, residential and commercial product installation and repair services and automotive repair and maintenance industries and (c) investment opportunities in companies or assets with a significant role in our company's retailing business, including investment in real estate currently leased by us or in suppliers for which we are a substantial customer representing over 10% of such companies' revenues, but excluding investments of ESL that were existing as of May 23, 2005.

Our company employs certain employees of ESL. William C. Crowley is a director and our Executive Vice President and Chief Financial and Chief Administrative Officer, while continuing his role as President and Chief Operating Officer of ESL. Our Vice President of Business Development and Senior Vice President of Real Estate are also employed by ESL.

Perry Capital LLC is an investment management firm controlled by Perry Corp., which is in turn controlled by Richard C. Perry, one of our Directors. On May 3, 2005, investment affiliates of Perry Capital LLC, through Capital Factors LLC, acquired the business and assets of Capital Factors, Inc. Capital Factors LLC and its predecessor (collectively, "Capital Factors") provide factoring services to companies in various industries, including those that sell into the retail industry. From time to time, Capital Factors has factored receivables (payables of the Company) for certain of our vendors, who sell the receivables to Capital Factors on a nonrecourse basis for collection by Capital Factors. As a result of Capital Factors having provided factoring services to vendors of Sears and Kmart Corporation, amounts were paid to Capital Factors by Sears and Kmart Corporation in respect of payables of those companies aggregating approximately $60 million in 2004 and $15 million in 2005. We expect that Capital Factors will continue to factor receivables for certain of the Company's vendors. We believe that Capital Factors handles more than $3 billion in factoring volume.

From time to time, our pension funds may invest in investment funds for which Perry Corp. or its affiliates act as investment adviser. Perry Corp. is controlled by Richard C. Perry.

9/30/2005 8K Information

On May 3, 2005, investment affiliates of Perry Capital LLC, through Capital Factors LLC, acquired the business and assets of Capital Factors, Inc. Perry Capital LLC is controlled by Perry Corp., which in turn is controlled by Mr. Perry. Capital Factors LLC and its predecessor (collectively, "Capital Factors") provide factoring services to companies in various industries, including those that sell into the retail industry. From time to time, Capital Factors has factored receivables (payables of the Registrant) for certain of the Registrant's vendors, who sell the receivables to Capital Factors on a nonrecourse basis for collection by Capital Factors. As a result of Capital Factors having provided factoring services to vendors of Sears, Roebuck and Co. ("Sears") and Kmart Corporation ("Kmart"), amounts were paid to Capital Factors by Sears and Kmart in respect of payables of those companies aggregating approximately $60 million in 2004 and $12 million in 2005 (through August 2005). The Registrant expects that Capital Factors will continue to factor receivables for certain of the Registrant's vendors. The Registrant believes that Capital Factors handles approximately $3 billion in factoring volume.

9/9/2005 8K Information

Mr. Lacy is Vice Chairman of Sears Holdings Corporation. He previously served as Chief Executive Officer of Sears Holdings thru September 2005 and Chairman of Sears, Roebuck & Company from December 2000 and President and Chief Executive Officer from October 2000 until March 2005.

2/18/2005 S-4/A Information

Mr. Aylwin B. Lewis previously served as President and Chief Executive Officer of KMart Holding Corporation in October 2004 until it was acquired by Sears Holdings Corporation in February 2005.

Mr. Day served as Chief Executive Officer of Kmart Holding Corporation from January 2003 until October 2004, having joined Kmart as President and Chief Operating Officer in March 2002. In March 1999, he joined Sears, Roebuck & Co. as Executive Vice President and Chief Financial Officer and was promoted to Chief Operating Officer and a member of the Office of the Chief Executive.

Following the announcement of the proposed mergers on November 17, 2004, several actions have been filed purporting to challenge the mergers, as follows:

Three cases, styled William Fischer v. Sears, Roebuck & Co., et al. (Case No. 04 CH 19137), City of Dania Beach Police & Firefighters' Retirement System v. Sears, Roebuck & Co., et al. (Case No. 04 CH 19548) and Central Laborers Pension Fund v. Sears, Roebuck & Co., et al. (Case No. 04 CH 19435), have been filed in the Circuit Court of Cook County, Illinois, Chancery Division. These cases assert claims on behalf of a purported class of Sears stockholders against Sears and certain of its officers and directors, together with Kmart, Edward S. Lampert, William C. Crowley and other affiliated entities, related to an alleged breach of fiduciary duty in connection with the mergers. The plaintiffs allege that the mergers favor interested defendants by awarding them disproportionate benefits, and that the defendants failed to take appropriate steps to maximize the value of a merger transaction for Sears stockholders. The complaints seek provisional and permanent injunctive relief; the Fischer complaint also seeks damages. The cases have been reassigned to a single judge and the plaintiffs have filed a consolidated and amended complaint. On February 1, 2005, the court granted the defendants' motion to stay or dismiss these Illinois actions in favor of the pending New York action discussed immediately below.

Accordingly, these actions are stayed pending resolution of the New York actions discussed below. Plaintiffs have filed a notice of appeal of the stay order to the Appellate Court of Illinois—First District.

Two cases, styled Gershon Chanowitz, et al. v. Hall Adams, Jr., et al. (Index No. 04/603903) and Nathan Krantman v. William Bax, et al. (Index 04/603889), have been filed in the Supreme Court of the State of New York, New York County. On February 15, 2005 the Court ordered that the two cases be consolidated as a single action. On February 16, 2005, the plaintiffs filed a superceding consolidated Amended Class Action Complaint. The consolidated complaint asserts claims on behalf of a purported class of Sears stockholders against Sears and certain of its officers and directors for breach of fiduciary duty in connection with the mergers on the grounds that the defendants allegedly failed to take appropriate steps to maximize the value of a merger transaction for Sears stockholders. Plaintiffs also have named Kmart, Edward S. Lampert, and ESL Investments, Inc. as defendants on the ground that they aided and abetted the alleged breaches of fiduciary duty. Additionally, the plaintiffs claim that the defendants have made insufficient and misleading disclosures in connection with the mergers. The complaint seeks provisional and permanent injunctive relief, as well as damages. Also on February 16, 2005, the plaintiffs filed an order to show cause seeking expedited discovery about the appraisal of Sears' real estate. A briefing schedule on the motion has not yet been set.

In addition, one action, styled Maurice Levie v. Sears Roebuck & Co., et al. (C.A. No. 94 C 7643), has been filed in the United States District Court for the Northern District of Illinois. This case asserts claims under the federal securities laws on behalf of a purported class of Sears stockholders against Sears and its Chairman, Chief Executive Officer and President, Alan J. Lacy, for failing to disclose merger discussions with Kmart during the period November 8-16, 2004, and seeks damages. The court has appointed a lead plaintiff and lead counsel, and an amended complaint is due to be filed on or before March 11, 2005.

The lawsuits are in their preliminary stages, and it is impossible to predict their outcome at this time. Each of Sears and Kmart intends to defend itself vigorously in respect of the claims asserted against it.