8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 26, 2005

SEARS HOLDINGS CORPORATION

(Exact name of registrant as specified in charter)

Delaware	000-51217	20-1920798
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

3333 Beverly Road
Hoffman Estates, Illinois	60179
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code: (847) 286-2500

(Former name or former address, if changed since last report): Not Applicable

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 1.01 Entry into a Material Definitive Agreement
	Item 9.01 Financial Statements and Exhibits
SIGNATURES
EXHIBIT INDEX
Registrant's 2005 Senior Executive Long-Term Incentive Program
Registrant's Senior Executive SHC 2005 Annual Incentive Plan Document
Form of Executive Severance/Non-Compete Agreement for Senior Executives of the Registrant
Form of Executive Severance/Non-Compete Agreement for Senior Executives of the Registrant

Section 1 — Registrant’s Business and Operations

Item 1.01 Entry into a Material Definitive Agreement

2005 Senior Executive Long-Term Incentive Program

On April 26, 2005, the Covered Compensation Subcommittee (the “Subcommittee”) of the Compensation Committee (the “Compensation Committee”) of the Registrant’s Board of Directors and the Compensation Committee acted to adopt the Sears Holdings Corporation 2005 Senior Executive Long Term Incentive Program (the “LTIP”), subject to shareholder approval. The LTIP provides for performance-based awards that are designed to vary commensurately with achieved performance.

The following is a brief description of the material terms and conditions of the LTIP. It is qualified in its entirety by reference to the complete text of the LTIP, which is included as Exhibit 10(a) to this Report.

The LTIP provides for the grant of incentive awards to key employees designated by the Subcommittee. The awards represent the right to receive cash or, if permitted by the Subcommittee, at the participant’s election shares of the Registrant’s common stock, if such shares are available under a shareholder approved plan of the Registrant providing for the issuance of shares in satisfaction of LTIP awards, based on LTIP EBITDA (as defined in the LTIP) for the Registrant’s 2005 through 2007 fiscal years. Payouts will range from 50% of the targeted payout at a threshold LTIP EBITDA level established by the Subcommittee to 150% of the targeted payout at a superior LTIP EBITDA level established by the Subcommittee.

Payments of awards will be made as soon as practicable after the Registrant’s LTIP EBITDA results for the Registrant’s 2007 fiscal year are available and the Subcommittee has certified the attainment of the performance goals and the amount to be paid to each participant. In no event will the award paid to any participant exceed $15 million.

The LTIP will be administered by the Subcommittee, which will determine the eligible employees who are to receive awards under the LTIP.

As of the date of this Report, awards under the LTIP have been granted to the Registrant’s executive officers and certain of its other senior executives. Target payouts to executives at or above the Senior Vice President level were based on market and internal comparisons. Target awards to executives at the Vice President level are based on a multiple of base salary.

Senior Executive SHC 2005 Annual Incentive Plan

On April 26, 2005, the Subcommittee and the Compensation Committee acted to adopt the Senior Executive SHC 2005 Annual Incentive Plan (the “AIP”), subject to shareholder approval. They also established performance goals and target bonus levels for 2005 for the Registrant’s executive officers and certain of its other senior executives under the AIP.

The following is a brief description of the material terms and conditions of the AIP. It is qualified in its entirety by reference to the complete text of the AIP, which is included as Exhibit 10(b) to this Report.

The AIP is designed to reward eligible executives for sustained company financial performance. Executives at or above the Senior Vice President level participate in the AIP. Payouts under the AIP will range from 50% of the targeted payout at threshold performance levels to 150% of the targeted payout at maximum/excellence performance levels established by the Subcommittee. Target payouts are calculated as a percentage of base salary determined by position and based on the competitive marketplace. For fiscal 2005, performance levels are determined based on EBITDA, defined on a basis consistent with the LTIP and, in some cases, Merchandise Margin (as defined in the AIP).

The AIP will be administered by the Subcommittee. Earned awards under the Plan will be paid to participants within 75 days after the end of the Registrant’s 2005 fiscal year, provided that the participant is actively employed by the Registrant on the payment date (unless otherwise required by law).

Executive Severance/Non-Compete Agreements

On April 26, 2005, the Compensation Committee adopted two forms of Executive Severance/Non-Compete Agreements (each a “Severance Agreement”, and separately referred to as “Form A Severance Agreement” and “Form B Severance Agreement”). Each Severance Agreement requires the signatory (the “Executive”) to maintain the confidentiality of information concerning the Registrant’s business. The agreements also prohibit the Executive from working for a competitor of the Registrant or hiring any of the Registrant’s employees for one year after his or her employment with the Registrant ends. Under the Severance Agreements, if the Registrant terminates an Executive’s employment without cause (as defined in the Severance Agreements), the Executive will receive the following benefits:

•   Form A Severance Agreement provides for severance equal to one year of annual base pay and the annual target bonus calculated for the year the Executive’s employment with the Registrant ends or, if no target bonus has been set for the year in which the date of termination has occurred, Executive’s target bonus for the year immediately preceding the year in which the date of termination occurred;

•   Form B Severance Agreement provides for severance equal to one year of annual base salary; and

•   Most benefits during the salary continuation period.

All of the above payments will lapse if the Executive is employed by a competitor of the Registrant within one year of termination of active employment.

The foregoing is a brief description of the material terms of the Severance Agreements. It is qualified in its entirety by reference to the complete text of the Severance Agreements, which are included as Exhibits 10(c) and 10(d) to this Report.

Section 9 Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits

(c) Exhibits

Exhibit 10(a) Registrant’s 2005 Senior Executive Long-Term Incentive Program

Exhibit 10(b) Registrant’s Senior Executive SHC 2005 Annual Incentive Plan Document

Exhibit 10(c) Form of Executive Severance/Non-Compete Agreement for Senior Executives of the Registrant

Exhibit 10(d) Form of Executive Severance/Non-Compete Agreement for Senior Executives of the Registrant

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SEARS HOLDINGS CORPORATION
By:	/s/ William K. Phelan
	William K. Phelan
	Vice President and Controller

Date: April 29, 2005

EXHIBIT INDEX

Exhibit No.
10(a)	Registrant’s 2005 Senior Executive Long-Term Incentive Program
10(b)	Registrant’s Senior Executive SHC 2005 Annual Incentive Plan Document*
10(c)	Form of Executive Severance/Non-Compete Agreement for Senior Executives of the Registrant
10(d)	Form of Executive Severance/Non-Compete Agreement for Senior Executives of the Registrant
*	Portions of this exhibit have been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.

EX-10.(A)

Exhibit 10(a)

SEARS HOLDINGS CORPORATION

2005 SENIOR EXECUTIVE LONG-TERM INCENTIVE PROGRAM (LTIP)

SECTION 1

GENERAL

      1.1. Purpose. The Sears Holdings Corporation 2005 Senior Executive Long-Term Incentive Program (the “LTIP”) is a performance-based program. The LTIP is designed to motivate the senior leaders of Sears Holdings Corporation (the “Company”), Sears, Roebuck and Co., Kmart Holding Corporation and their Subsidiaries, to achieve significant, lasting change that successfully positions the Company for future growth. Performance goals under the LTIP align Participants’ financial incentives with the financial goals of the Company. Awards under the LTIP are designed to vary commensurately with achieved performance, and are intended to satisfy the requirements for “performance-based compensation” outlined in regulations issued under Section 162(m) of the Internal Revenue Code (“Code Section 162(m)”).

      1.2. Operation, Administration, and Definitions. The operation and administration of the LTIP, including the Awards made under the LTIP, shall be subject to the provisions of Section 6 (relating to operation and administration). Capitalized terms in the LTIP shall be defined as set forth in the LTIP (including the definitional provisions of Section 9). All Awards hereunder are contingent on shareholder approval of the LTIP, as provided in subsection 3.1.

SECTION 2

PARTICIPATION

      2.1. Eligible Employee. The term “Eligible Employee” means those key employees of the Company or a Subsidiary who are designated as Eligible Employees by the “Committee” (as such term is defined in subsection 6.2 and further described in Section 7). Subject to the terms and conditions of the LTIP, the Committee shall determine and designate, from time to time, from among the Eligible Employees, those persons who shall be granted one or more Awards under the LTIP, and thereby become “Participants” in the LTIP.

      2.2. New Hires. The Committee may designate as Participants those executives whom the Committee determines have been newly hired or promoted into the group of Eligible Employees, provided that the terms and conditions of Awards to such individuals shall be subject to such adjustments as the Committee deems necessary or desirable to qualify such Awards as performance-based compensation for purposes of Code Section 162(m).

SECTION 3

CASH INCENTIVE AWARDS

      3.1. Target Cash Incentive Awards. At one or more meetings of the Committee after April 1, 2005, the Committee may award “Target Cash Incentive Awards” (as such term is defined in subsection 3.1(a) below) to each Participant designated by the Committee at such meeting, in an amount determined by the Committee in its sole discretion. In connection with such Awards, the Committee shall establish “Target LTIP EBITDA”, “Threshold LTIP EBITDA” and “Superior LTIP EBITDA” (each as defined in subsection 3.3 below), provided, however, that Threshold LTIP EBITDA and Superior LTIP EBITDA shall each be expressed as

a percentage of Target LTIP EBITDA. Target Cash Incentive Awards are intended to constitute “performance-based compensation” within the meaning of Code Section 162(m), and the regulations promulgated thereunder, and any Award hereunder shall be contingent on shareholder approval of the LTIP in accordance with Code Section 162(m) and the regulations promulgated thereunder, and no amount shall be paid under any such Award, unless and until shareholder approval of the LTIP has been obtained in accordance with Code Section 162(m) and the regulations thereunder.

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

      (b) A Cash Incentive Award shall generally be satisfied by a distribution in cash to the Participant, provided, however, that, if permitted by the Committee, a Participant may elect, by such deadline as specified under uniform and nondiscriminatory rules established by the Committee, to receive, in lieu of cash and in full satisfaction of such Cash Incentive Award, the number of shares of Company common stock (“Stock”) equal (i) to the cash amount described at paragraph (a) of this subsection 3.1, divided by (ii) the Fair Market value of a share of Stock as of the day immediately preceding the date of distribution, provided that issuance of any shares of Stock in accordance with this subsection 3.1(b) shall be contingent on the availability of shares of Stock under any shareholder-approved plan of the Company providing for the issuance of Stock in satisfaction of the Awards hereunder (which in no event shall be an employee stock purchase plan).

      (c) The Committee may, in its discretion, apply negative discretion to the calculation of, or amount following such calculation of, any Cash Incentive Award, as provided in subsection 6.3 below.

      3.2. Performance Period. The “Performance Period” shall be the Company’s 2005, 2006 and 2007 Fiscal Years (provided that, in the case of an employee who is newly hired or promoted into the group of Eligible Employees after the first day of the Company’s 2005 Fiscal Year, the Performance Period shall be such shorter period as established by the Committee, subject to the requirements of Code Section 162(m)). The amount of the Cash Incentive Award shall be determined at the completion of the Performance Period in accordance with subsection 3.1, above, and subsection 4.1 below.

      3.3. “LTIP EBITDA.”

      (a) LTIP EBITDA. Subject to adjustment, if any, in accordance with paragraph (e) of this subsection 3.3, “LTIP EBITDA” refers to total earnings of the Company and its affiliates and its predecessors, other than Sears Canada (referred to as the “Domestic Company”) for the Performance Period, determined before interest, taxes, depreciation and amortization, and excluding the following items: the effect of purchase

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accounting and changes in accounting methods; gains, losses and costs associated with acquisitions, divestitures and store closures; integration costs that are disclosed as merger related; and bankruptcy-related matters of the predecessor company.

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

      (c) Threshold LTIP EBITDA. Subject to adjustment, if any, in paragraph (e), “Threshold LTIP EBITDA” refers to a level of LTIP EBITDA, for the Performance Period, established by the Committee, which shall be expressed as a percentage of Target LTIP EBITDA and, if exactly achieved, shall generate an AWARD Multiple (described in subsection 3.4, below) of 50 percent.

      (d) Superior LTIP EBITDA. Subject to adjustment, if any, in paragraph (e), “Superior LTIP EBITDA” refers to a level of LTIP EBITDA, for the Performance Period, established by the Committee, which shall be expressed as a percentage of Target LTIP EBITDA, and, if achieved, shall generate an Award Multiple (described in subsection 3.4, below) of 150 percent.

      (e) Adjustments to Target LTIP EBITDA, Threshold LTIP EBITDA and Superior LTIP EBITDA. The LTIP EBITDA incentive targets contemplate that the Domestic Company remains approximately the same size over the period of the LTIP. If, after March 24, 2005, the Domestic Company acquires or divests itself of assets or an entity that has associated EBITDA (measured using the same principles as those described in subsection 3.3(a)) in its last full fiscal year prior to the acquisition or divestiture of greater than or equal to $250,000,000, Target LTIP EBITDA will be increased or decreased, as applicable, by such prior full fiscal year’s EBITDA associated with such entity or assets.

      3.4. “Award Multiple.” The Award Multiple shall be as outlined below:

      (a) if LTIP EBITDA is 100% of Target LTIP EBITDA, the Award Multiple shall be 100%;

      (b) if LTIP EBITDA is equal to Threshold LTIP EBITDA, the Award Multiple shall be 50%;

      (c) if LTIP EBITDA is greater than Threshold LTIP EBITDA, but less than Target LTIP EBITDA, the Award Multiple shall be a whole percentage between 50% and 100%, determined by interpolation on a straight line basis relative to such LTIP EBITDA, Threshold LTIP EBITDA and Target LTIP EBITDA amounts, and rounded down to the nearest whole percentage;

      (d) if LTIP EBITDA is less than Threshold LTIP EBITDA, the Award Multiple shall be 0;

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      (e) if LTIP EBITDA is greater than Target LTIP EBITDA, but less than Superior LTIP EBITDA, the Award Multiple shall be a whole percentage between 100% and 150%, determined by interpolation on a straight line basis relative to such LTIP EBITDA, Target LTIP EBITDA and Superior LTIP EBITDA amounts, and rounded down to the nearest whole percentage; and

      (f) if LTIP EBITDA is greater than or equal to Superior LTIP EBITDA, the Award Multiple shall be 150%.

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

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

SECTION 4

DISTRIBUTION

      4.1. General. Subject to Sections 5 and 6, the shares of Stock or the cash that result from the payout formula described at Section 3 shall be distributed, in a single lump sum, as soon as practicable after the first Committee meeting after the LTIP EBITDA results for the Company’s 2007 Fiscal Year are available to the Committee. Notwithstanding anything herein to the contrary, no distribution shall be made hereunder until after the Committee has certified the attainment of the performance goals and the amount to be paid to each Participant. The date as of which payment is made in accordance with this subsection 4.1 is referred to herein as the “payment date.”

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

SECTION 5

TERMINATION

      5.1. The effect of termination of employment on a Participant’s right to receive a Cash Incentive Award (whether payable in cash or Stock) depends both on the reason for the termination and the point in the performance period that the termination occurs, as described below.

      (a) Voluntary Termination or Involuntary Termination with Cause. In the event that a Participant voluntarily terminates employment (unless the Participant retires (in accordance with the definition of “retires” or “retirement” contained in the written Company Human Resources Policy as in effect from time to time, or with written Committee consent)), or is involuntarily terminated for “poor performance” or with “Cause” (each as defined in the Participant’s Executive Severance/Noncompete Agreement or other employment contract, or if such term does not appear therein, or, if the Participant has no Executive Severance/Noncompete Agreement or other employment

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contract, then as defined in Section 9) prior to the payment date of his or her Award, such Participant shall forfeit all of his Award.

      (b) Retirement, Disability, or Involuntary Termination without Cause. In the event that, prior to the payment date of his or her Award, a Participant (i) retires (as defined in subsection 5.1(a) above), (ii) suffers a permanent and total disability (as defined in the Company written Company Human Resources Policy), or (iii) is involuntarily terminated on account of job elimination (rather than poor performance) and without Cause (as defined in subsection 5.1(a) above), subject to Section 6, below, such individual shall be entitled to a distribution in an amount equal to the Cash Incentive Award that would otherwise be payable to the Participant under subsection 3.1, above, pro-rated though the date of termination in accordance with subsection 5.1(d) below; provided, however, that in no event shall a Participant receive any payment hereunder unless as of his date of termination he had been employed by one or more of the Company, Sears, Roebuck and Co., Kmart Holding Corporation or one of their Subsidiaries, for at least 12 months. A Cash Incentive Award payable under this subsection 5.1(b), whether payable in cash or Stock, shall be distributed in accordance with, and after the Committee meeting described in, subsection 4.1.

      (c) Death. In the event that a Participant dies prior to the payment date for his or her Award, his or her Target Cash Incentive Award shall be prorated through the date of death, in accordance with subsection 5.1(d) below, and, subject to Section 6, below, his or her estate shall be entitled to receive a Cash Incentive Award, equal to his or her prorated Target Cash Incentive Award and payable in cash, provided, however, that in no event shall a payment be made with respect to a deceased Participant hereunder unless as of his date of termination he had been employed by one or more of the Company, Sears, Roebuck and Co., Kmart Holding Corporation or one of their Subsidiaries, for at least 12 months. A cash payment payable under this subsection 5.1(c) shall be distributed as soon as practicable after the date of death.

      (d) All pro rations of the Cash Incentive Award or the Target Cash Incentive Award, as applicable, under this Section 5 are based on a fraction, the numerator of which is the number of full months during the Performance Period in which the Participant was employed by the Company or any Subsidiary, and the denominator of which is the full number of months in the Performance Period.

SECTION 6

OPERATION AND ADMINISTRATION

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

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      6.2. Committee. The LTIP is administered by the Compensation Committee of the Board (the “Committee”), as further described at Section 7. Any determinations by the Committee regarding this LTIP are binding on all Participants. The Committee may make additional changes that it deems appropriate for the effective administration of the LTIP. Subject to subsection 6.3, these changes may not increase the benefits to which Participants may become entitled under the LTIP, nor change the pre-established measures in goals that have been approved.

      6.3. Negative Discretion. Notwithstanding anything in the LTIP to the contrary, prior to the settlement of any Cash Incentive Award, the Committee may reduce the amount of such Award, or the number of shares of Stock or amount of cash to be delivered in connection with such Award.

      6.4. General Restrictions. Delivery of shares of Stock under the LTIP, in satisfaction of a Cash Incentive Award, shall be subject to the following:

      (a) Notwithstanding any other provision of the LTIP, the Company shall have no obligation to deliver any shares of Stock or make any other distribution of benefits under the LTIP unless such delivery or distribution complies with all applicable laws (including, without limitation, the requirements of the Securities Act of 1933), and the applicable requirements of any securities exchange or similar entity.

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

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

      6.6. Settlement of Awards. The obligation to make payments and distributions with respect to Awards may be satisfied through cash payments, the delivery of shares of Stock, or a combination thereof, subject, in the case of settlement in shares, to the terms of the stock plan under which the Stock is issued. Satisfaction of any such obligations under an Award, which is

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sometimes referred to as the “settlement” of the Award, may be subject to such conditions, restrictions and contingencies as the Committee shall determine. Each Subsidiary shall be liable for payment of cash due under the LTIP with respect to any Participant to the extent that such benefits are attributable to the services rendered for that Subsidiary by the Participant. Any disputes relating to liability of a Subsidiary for cash payments shall be resolved by the Committee.

      6.7. Transferability. Except as otherwise provided by the Committee, Awards under the LTIP are not transferable except as designated by the Participant by will or by the laws of descent and distribution.

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

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

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

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

      6.12. Limitation of Implied Rights.

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

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guarantee that the assets of the Company or any Subsidiary shall be sufficient to pay any benefits to any person.

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

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

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

SECTION 7

COMMITTEE

      7.1. Administration. As provided in subsection 6.2, the authority to control and manage the operation and administration of the LTIP shall be vested in the Compensation Committee of the Board of Directors of the Company (the “Committee”).

      7.2. Powers of Committee. The Committee’s administration of the LTIP shall be subject to the following:

      (a) As provided in subsection 2.1 above, the Committee shall have the authority and discretion to determine those key employees who are Eligible Employees, to select from among the Eligible Employees those persons who shall receive Awards.

      (b) Subject to the other provisions of the LTIP, the Committee shall have the authority and discretion to determine the time or times of receipt, to determine the types of Awards, to establish the terms, conditions, restrictions, and other provisions of such Awards, and (subject to the restrictions imposed by Section 8) to amend, cancel, or

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suspend Awards. However (and subject at all times to the requirements of Code Section 162(m)), to the extent that the Committee determines that the restrictions imposed by the LTIP preclude the achievement of the material purposes of the Awards in jurisdictions outside the United States, the Committee shall have the authority and discretion to modify those restrictions as the Committee determines to be necessary or appropriate to conform to applicable requirements or practices of jurisdictions outside of the United States.

      (c) The Committee shall have the authority and discretion to interpret the LTIP, to establish, amend, and rescind any rules and regulations relating to the LTIP, to determine the terms and provisions of any Award Agreement made pursuant to the LTIP, and to make all other determinations that may be necessary or advisable for the administration of the LTIP.

      (d) Any interpretation of the LTIP by the Committee and any decision made by it under the LTIP are final and binding on all persons.

      7.3. Delegation by Committee. Except to the extent prohibited by applicable law or the applicable rules of a securities exchange or similar entity, or as would cause LTIP Awards to not constitute performance-based compensation under Code Section 162(m), the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. The Committee may revoke any such allocation or delegation at any time.

      7.4. Information to be Furnished to Committee. The Company, Sears, Roebuck and Co., Kmart Holding Corporation, and their Subsidiaries, shall furnish the Committee with such data and information as it determines may be required for it to discharge its duties. The records of the Company, Sears Roebuck and Co., Kmart Holding Corporation and their Subsidiaries, as to an employee’s or Participant’s employment, termination of employment, leave of absence, reemployment, and compensation shall be conclusive on all persons unless determined to be incorrect. Participants and other persons entitled to benefits under the LTIP must furnish the Committee such evidence, data or information as the Committee considers desirable to carry out the terms of the LTIP, subject to any applicable privacy laws.

SECTION 8

AMENDMENT AND TERMINATION

      The Board may, at any time, amend or terminate the LTIP, and the Board or the Committee may amend any Award, provided that no amendment or termination may, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary), adversely affect the rights of any Participant or beneficiary under any Award granted under the LTIP prior to the date such amendment is adopted by the Board (or the Committee, if applicable) or if such amendment, without the consent of the shareholders of the Company, would cause the Awards to cease to be deductible under Code Section 162(m). Notwithstanding anything herein to the contrary, (i) no amendment shall be made that would cause the Plan not to comply with the requirements of Code Section 409A or any other applicable law or rule of any applicable securities exchange or similar entity, without

9

Participant consent, and (ii) the LTIP and any Award thereunder may be amended without Participant consent to the extent that the Committee determines such amendment necessary to cause the LTIP or Award to comply with the requirements of Code Section 409A or any other applicable law or rule of any applicable securities exchange or similar entity.

SECTION 9

DEFINED TERMS

      In addition to the other definitions contained herein, the following definitions shall apply:

      (a) Award. The term “Award” means any Cash Incentive Award, whether settled in cash or Stock.

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

      (c) Cause. The term “Cause” shall mean (1) a material failure by a Participant (other than a failure resulting from employee’s incapacity due to a mental or physical disability) to perform the Participant’s duties and responsibilities, which failure is demonstrably willful and deliberate on the Participant’s part, is committed in bad faith or without reasonable belief that such failure is in the best interests of the Company and its affiliates and is not remedied in a reasonable period of time after receipt of written notice from the Company or its affiliate specifying such failure, (2) the commission by the Participant of a felony, or a misdemeanor involving moral turpitude, or (3) dishonesty or willful misconduct in connection with the Participant’s employment.

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

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

      (f) Fiscal Year. The term “Fiscal Year” shall mean the twelve (12) month period beginning on February 1, 2005, and thereafter the twelve (12) month period beginning on the Saturday closest to January 31 of each of calendar year 2006 and 2007.

      (g) Performance-Based Compensation. The term “performance-based compensation” shall have the meaning ascribed to it under Code Section 162(m) and the regulations thereunder.

      (h) Poor Performance. The term “poor performance” shall mean the circumstance in which a Participant receives a below-expectations rating in any primary performance category per the Company performance management system within six months prior to the date that the Participant is terminated.

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      (i) Subsidiary. The term “Subsidiary” means any company during any period in which it is a “subsidiary corporation” (as that term is defined in Section 424(f) of the Code) with respect to the Company

SECTION 10

EXPIRATION OF LTIP

      The LTIP shall expire, subject to earlier termination pursuant to Section 8, on the date on which all Cash Incentive Awards (if any) are paid in full in accordance with the provisions of the LTIP (or, if earlier, on the date that the Committee determines that the LTIP EBITDA is less than Threshold LTIP EBITDA).

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EX-10.(B)

EXHIBIT 10(b)

Senior Executive SHC 2005 Annual Incentive Plan Document

*** Confidential material redacted and separately filed with the Commission.

1

Senior Executive SHC 2005 Annual Incentive Plan Document

2

Senior Executive AIP Components Senior Executive SHC 2005 Annual Incentive Plan Document

*** Confidential material redacted and separately filed with the Commission.

3

Administration Policies Senior Executive SHC 2005 Annual Incentive Plan Document

4

Senior Executive SHC 2005 Annual Incentive Plan Document

5

Senior Executive SHC 2005 Annual Incentive Plan Document Roles and Responsibilities

6 EX-10.(C) 4 c94709exv10wxcy.htm FORM OF EXECUTIVE SEVERANCE/NON-COMPETE AGREEMENT FOR SENIOR EXECUTIVES OF THE REGISTRANT

PRIVILEGED AND CONFIDENTIAL

Exhibit 10(c)

EXECUTIVE SEVERANCE/NON-COMPETE AGREEMENT

      In this Executive Severance/Non-Compete Agreement dated as of ___, 2005 (the “Agreement”), Sears Holdings Corporation and its affiliates and subsidiaries (“Sears”), and ___(“Executive”), intending to be legally bound and for good and valuable consideration, agree as follows:

      1. Severance Benefits.

            (a) Continuation of Compensation. In the event that (x) Executive’s employment is terminated by any Sears entity by which he is employed (the “Company”) for any reason other than Cause (as defined below), death or Disability (as defined below) or (y) Executive’s employment is terminated by Executive for Good Reason (as defined below), subject to the provisions of Sections 6(e) and (f) and 10 herein, the Company shall pay to Executive his annual base salary as in effect immediately prior to the date of termination for a period of one (1) year and Executive’s target bonus for the year in which the date of termination has occurred or, if no target bonus has been set for the year in which the date of termination has occurred, Executive’s target bonus for the year immediately preceding the year in which the date of termination has occurred (the “Target Bonus”). The amount described in Section 1(a) shall be paid in 12 equal annual installments commencing on the date of termination (the “Salary Continuation Period”) except that no payment will be made to Executive prior to the first date that such payment can be made without imposition of tax under Section 409A of the Internal Revenue Code. In addition to the foregoing, a lump sum payment will be made to Executive within ten (10) days following the date of termination in an amount equal to the sum of any accrued base salary through the date of termination to the extent not theretofore paid and any vacation benefits that accrued prior to the date of termination. No vacation will accrue after the date active employment ends. All salary continuation payments and benefits will terminate and forever lapse if Executive is employed by a “Sears Competitor” as defined in Section 6(b) herein.

            (b) Continuation of Benefits. During the Salary Continuation Period, Executive will be entitled to all benefits (other than as specified above) for which Executive was eligible to participate prior to the end of active employment, with the exception of Long-Term Disability and Flexible Spending Accounts. Executive and eligible dependents shall be entitled to continue to participate in the Company’s medical and dental plans in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”).The cost of such COBRA coverage for Executive and his dependents will be subsidized by the Company, so that the Executive will be paying the same premium for medical and dental plan coverage during the Salary Continuation Period as an active employee. However, in the event Executive becomes employed by another employer and is covered by such employer’s health benefits plan or program, the medical and dental benefits provided by the Company hereunder shall be secondary to such employer’s health benefits plan or program in accordance with the terms of the Company’s health benefit plans.

            (c) Long-Term Performance Program. The Long Term Performance Incentive Program grant for any multi-year performance period will be treated at termination of active employment in accordance with the provisions of its respective program document or grant letter.

            (d) Outplacement. From the date of termination pursuant to the first sentence of Section 1(a), Executive will be immediately eligible for outplacement services at the Company’s expense. The Company and Executive will mutually agree on which outplacement firm, among current vendors used by the Company, will provide these services. Such services will be provided for up to one (1) year from the beginning of the Salary Continuation Period or until employment is obtained whichever occurs first.

      2. Definitions. For purposes of this Agreement, the following terms shall have the definitions as set forth below:

            (a) “Cause” shall mean (1) a material breach by Executive (other than a breach resulting from Executive’s incapacity due to a mental or physical disability) of Executive’s duties and responsibilities which breach is demonstrably willful and deliberate on Executive’s part, is committed in bad faith or without reasonable belief that such breach is in the best interests of Sears and is not remedied in a reasonable period of time after receipt of written notice from Sears specifying such breach, (2) the commission by Executive of a felony involving moral turpitude, or (3) dishonesty or willful misconduct in connection with Executive’s employment; and

            (b) “Disability” shall mean disability as defined under the long-term disability plan of Sears applicable to Executive.

            (c) “Good Reason” shall mean, without Executive’s written consent, (i) a reduction of more than 10% in the sum of Executive’s annual base salary and target bonus from those in effect as of the date of this Agreement, (ii) Executive’s mandatory relocation to an office more than 50 miles from the primary location at which Executive is required to perform Executive’s duties immediately prior to the date of this Agreement or (iii) failure of a successor company to assume or fulfill the obligations under this Agreement.

      3. Non-Disparagement. Executive will not take any actions detrimental to the interests of Sears, nor make derogatory statements, either written or oral to any third party, or otherwise publicly disparage Sears, its products, services, or present or former employees, officers or directors, and will not authorize others to make derogatory or disparaging statements on Executive’s behalf.

      4. Intellectual Property Rights. Executive acknowledges that Executive’s development, work or research on any and all inventions or expressions of ideas, patentable or not, hereafter made or conceived solely or jointly within the scope of employment at Sears, provided such invention or expression of an idea relates to the business of Sears, or relates to Sears actual or demonstrably anticipated research or development, or results from any work performed by Executive for or on behalf of Sears, are hereby assigned to Sears, including Executive’s entire rights, title and interest. Executive will promptly disclose such invention or expression of an idea to Executive’s management and will, upon request, promptly execute a specific written assignment of title to Sears. If Executive currently holds any inventions or expressions of an idea, regardless of whether they were published or filed with the U.S. Patent and Trademark Office, or is under contract to not so assign, Executive will list them on the last page of this Agreement.

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      5. Confidentiality. Executive agrees that the existence and terms of the Agreement, including the compensation paid to Executive, and discussions with Sears regarding this Agreement, shall be considered confidential and shall not be disclosed or communicated in any manner except: (a) as required by law or legal process; (b) to Executive’s spouse, domestic partner, or financial/legal advisors, all of whom shall agree to keep such information confidential.

      6. Protective Covenants. Executive acknowledges that this Agreement provides for additional consideration beyond what Sears is otherwise obligated to pay. In consideration of the opportunity for severance benefits and special payments specified above, and other good and valuable consideration, Executive agrees to the following:

(a)	Non-Disclosure and Non-Solicitation. Executive acknowledges that Executive has previously or has simultaneously executed and will continue to be bound by an Executive Non-Disclosure and Non-Solicitation of Employees Agreement, which agreement sets forth, among other things, the definition of Sears Confidential Information and is incorporated by reference herein.
(b)	Non-Competition. Executive acknowledges that as a result of Executive’s position at Sears, Executive has learned or developed, or will learn or develop, Sears Confidential Information and that use or disclosure of such Confidential Information is likely to occur if Executive were to render advice or services to any Sears Competitor.

i.

Therefore, for one (1) year from Executive’s last day of active employment, whether or not Executive receives severance benefits pursuant to Section 1 hereto (“Severance Pay”), Executive will not, directly or indirectly, aid, assist, participate in, consult with, render services for, accept a position with, become employed by, or otherwise enter into any relationship with (other than having a passive ownership interest in or being a customer of) any Sears Competitor.

ii.

For purposes of this Agreement, “Sears Competitor” means

1.	Those companies listed on Appendix A, each of which Executive acknowledges is a Sears Competitor, whether or not it falls within the categories in (2), below, and further acknowledges that this is not an exclusive list of Sears Competitors and is not intended to limit the generality of subsection 6(b)(ii)(2), below, and
2.	Any party (A) engaged in any retail business (whether in a department store, specialty store, discount store, direct marketing, or electronic commerce or other business format), that consists of selling furniture, appliances,

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electronics, hardware, auto parts and/or apparel products, or providing home improvement, product repair and/or home services, with combined annual revenue in excess of $500 million, (B) any vendor with combined annual gross sales of services or merchandise to Sears in excess of $100 million, or (C) a party engaged in any other line of business, in which Sears has commenced business prior to the end of Executive’s active employment, with Sears having annual gross sales in that line of business in excess of $50 million.

iii.	Executive acknowledges that Sears shall have the right to propose modifications to Appendix B periodically to include (1) emergent Competitors in Sears existing lines of business and (2) Competitors in lines of business that are new for Sears with the prior written consent of Executive, which shall not be unreasonably withheld.
iv.	Executive further acknowledges that Sears does business throughout the United States, Puerto Rico and Canada and that this non-compete provision applies in any state of the United States, Puerto Rico or province of Canada in which Sears does business.

            (c) Executive will provide Sears with such information as Sears may from time to time reasonably request to determine Executive’s compliance with this Agreement. Executive authorizes Sears to contact Executive’s future employers and other entities with which Executive has any business relationship to determine Executive’s compliance with this Agreement or to communicate the contents of this Agreement to such employers and entities. Executive releases Sears, its agents and employees, from all liability for any damage arising from any such contacts or communications.

            (d) Executive agrees that the restrictions set forth above are necessary to prevent the use and disclosure of Sears Confidential Information and to otherwise protect the legitimate business interests of Sears. Executive further agrees and acknowledges that the provisions of this Agreement are reasonable.

            (e) Upon the termination of Executive’s employment by either party, Executive will execute a binding General Release and Waiver of claims in a form to be provided by Sears, which is incorporated by reference herein. This General Release and Waiver will be in a form substantially similar to the attached sample. If the General Release and Waiver is not signed or is signed but subsequently revoked, Executive will not receive Severance Pay (if any) or any other benefits due under this Agreement.

            (f) Executive acknowledges that irreparable harm would result from any breach or threatened breach by Executive of the provisions of this Agreement, and monetary damages alone would not provide adequate relief for any such breach. Accordingly, if Executive breaches or threatens to breach this Agreement, Executive consents to injunctive relief in favor of Sears without the necessity of Sears posting bond. Moreover, any award of injunctive relief

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shall not preclude Sears from seeking or recovering any lawful compensatory damages which may have resulted from a breach of this Agreement, including a forfeiture of any payments not yet made and a return of any payments already received by Executive.

            (g) Any waiver, or failure to seek enforcement or remedy for any breach or suspected breach, of any provision of this Agreement by Sears or Executive in any instance shall not be deemed a waiver of such provision in the future,

            (h) Executive may request (i) a waiver of the non-competition provisions of this Agreement or (ii) that the time frame in Section 6(b), above, commence during Executive’s continued employment with Sears, by written request to the Chief Executive Officer of Sears or the equivalent. Such a request will be given reasonable consideration and may be granted, in whole or in part, or denied at Sears’ absolute discretion.

      7. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of any compensation or benefits payable to Executive hereunder; and except as specifically provided in paragraphs (a) and (b) of Section 1 and Sections 6(e) and (f) and 10, such compensation and benefits shall not be reduced whether or not Executive obtains other employment,

      8. Executive agrees, without receiving additional compensation, to fully and completely cooperate with Sears, both during and after the period of active employment, in all investigations, potential litigation or litigation in which Sears is involved or may become involved other than any such investigations, potential litigation or litigation between Sears and Executive. Sears will reimburse Executive for reasonable travel and out-of-pocket expenses incurred in connection with any such investigations, potential litigation or litigation.

      9. Executive agrees that both during and after the period of active employment with Sears, Executive will not voluntarily act as a witness, consultant or expert for any person or party in any action against or involving Sears or any corporate relative of Sears, unless subject to judicial enforcement to appear as a fact witness only.

      10. In the event of a breach by Executive of any of the provisions of this Agreement, including but not limited to the non-disparagement provision (Section 3 herein), and the non-competition provisions (Section 6 herein) of this Agreement, Sears obligation to make salary continuation or any other payments under this Agreement will immediately cease.

      11. If any provision(s) of this Agreement shall be found invalid, illegal, or unenforceable, in whole or in part, then such provision(s) shall be modified or restricted so as to effectuate as nearly as possible in a valid and enforceable way the provisions hereof, or shall be deemed excised from this Agreement, as the case may require, and this Agreement shall be construed and enforced to the maximum extent permitted by law, as if such provision(s) had been originally incorporated herein as so modified or restricted or as if such provision(s) had not been originally incorporated herein, as the case may be.

      12. This Agreement will be governed under the internal laws of the state of Illinois without regard to principles of conflicts of laws. Executive agrees that the state and federal courts located in the state of Illinois shall have exclusive jurisdiction in any action, Suit or

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proceeding based on or arising out of this Agreement, and Executive hereby: (a) submits to the personal jurisdiction of such courts; (b) consents to the service of process in connection with any action, suit, or proceeding against Executive; and (c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction, venue or service of process.

      13. Executive agrees to waive any right to a jury trial on any claim contending that this Agreement or the General Release and Waiver is illegal or unenforceable in whole or in part, and Executive agrees to try any claims brought in a court or tribunal without use of a jury or advisory jury. Further, should any claim arising out of Executive’s employment or termination of employment be found by a court or tribunal of competent jurisdiction to not be released by the General Release and Waiver, Executive agrees to try such claim to the court or tribunal without use of a jury or advisory jury.

      14. This Agreement does not constitute a contract of employment, and Executive acknowledges that Executive’s employment with Sears is terminable “at-will” by either party with or without cause and with or without notice.

      15. If any provision of this Agreement conflicts with any other agreement, policy, plan, practice or other Sears document, then the provisions of this Agreement will control. Executive shall not be eligible for any benefits under the Sears Transition Pay Plan or any successor severance plan or program. This Agreement will supersede any prior agreement between between Executive and Sears with respect to the subject matter contained herein (with the exception of the Executive Non-Disclosure and Non-Solicitation of Employees Agreement dated ___, 200 _) and may be amended only by a writing signed by an authorized officer of Sears.

      16. All compensation paid or provided to Executive under this Agreement shall be subject to any applicable federal, state or local income and employment tax withholding requirements.

      17. Sears may assign its rights under this Agreement to any successor in interest, whether by merger, consolidation, sale of assets, or otherwise. This Agreement shall be binding whether it is between Sears and Executive or between any successor or assignee of Sears or affiliate thereof and Executive.

      18. This Agreement may be executed in one or more counterparts, which together shall constitute a valid and binding agreement.

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      IN WITNESS WHEREOF, Executive and Sears, by its duly authorized representative, have executed this Agreement effective as of the date set forth below.

	SEARS HOLDINGS CORPORATION
	BY:
EXECUTIVE
Date	Date

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NOTICE: YOU MAY CONSIDER THIS GENERAL RELEASE AND WAIVER FOR UP TO TWENTY-ONE (21) DAYS. IF YOU DECIDE TO SIGN IT, YOU MAY REVOKE THE GENERAL RELEASE AND WAIVER WITHIN SEVEN (7) DAYS AFTER SIGNING. ANY REVOCATION WITHIN THIS PERIOD MUST BE IMMEDIATELY SUBMITTED IN WRITING TO GENERAL COUNSEL, SEARS HOLDINGS CORPORATION, 3333 BEVERLY ROAD, HOFFMAN ESTATES, IL 60179. YOU MAY WISH TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS DOCUMENT.

GENERAL RELEASE AND WAIVER

      In consideration for the benefits that I will receive under the attached Executive Severance/Non-Compete Agreement, I and any person acting by, through, or under me hereby release, waive, and forever discharge Sears Holdings Corporation, its current and former agents, subsidiaries, affiliates, employees, officers, shareholders, successors, and assigns (“Sears”) from any and all liability, actions, charges, causes of action, demands, damages, or claims for relief or remuneration of any kind whatsoever, whether known or unknown at this time, arising out of, or connected with, my employment with Sears and the termination of my employment, including, but not limited to, all matters in law, in equity, in contract (oral or written, express or implied), or in tort, or pursuant to statute, including any claim for age or other typos of discrimination under the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, or other federal, state, or local law or ordinance, to the fullest extent permitted under the law, including the Employee Retirement Income Security Act. This General Release and Waiver does not apply to any claims or rights that may arise after the date that I signed this General Release and Waiver. I understand that Sears is not admitting to any violation of my rights or any duty or obligation owed to me.

      Excluded from this General Release and Waiver are my claims which cannot be waived by law, including but not limited to (1) the right to file a charge with or participate in an investigation conducted by certain government agencies, (2) any rights or claims to benefits accrued under benefit plans maintained by Sears pursuant to ERISA, and (3) any claims that cannot be waived under the Fair Labor Standards Act or Family and Medical Leave Act. I do, however, waive my right to any monetary recovery should any agency pursue any claims on my behalf. I represent and warrant that I have not filed any complaint, charge, or lawsuit against Sears with any governmental agency and/or any court.

      In addition, I agree never to sue Sears in any forum for any claim covered by this General Release and Waiver except that I may bring a claim under the ADEA to challenge this General Release and Waiver. If I violate this General Release and Waiver by suing Sears, other than under ADEA, I shall be liable to Sears for its reasonable attorney’s fees and other litigation costs and expenses incurred in defending against such a suit.

      I have read this General Release and Waiver and I understand its legal and binding effect. I am acting voluntarily and of my own free will in executing this General Release and Waiver.

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      I have had the opportunity to seek, and I was advised in writing to seek, legal counsel prior to signing this General Release and Waiver.

      I was given at least twenty-one (21) days to consider signing this General Release and Waiver. Any immaterial modification of this General Release and Waiver does not restart the twenty-one (21) day consideration period.

      I understand that, if I sign the General Release and Waiver, I can change my mind and revoke it within seven (7) days after signing it by notifying the General Counsel of Sears in writing at Sears Holdings Corporation, 3333 Beverly Road, Hoffman Estates, Illinois 60179. I understand that this General Release and Waiver will not be effective until after this seven (7) day revocation period has expired.

Date:	SAMPLE ONLY — DO NOT SIGN	Signed by:	SAMPLE ONLY — DO NOT SIGN
		Witness by:

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Executive: Date:                     , 2005

Appendix A
to Executive Severance/Non-Compete Agreement

      In addition to all companies otherwise meeting the definition of “Sears Competitor” in Section 6(b)(ii)(2) of the Executive Severance/Non-Compete Agreement to which this Appendix A is attached, the following companies are “Sears Competitors” for purposes of that Section 6(b)(i):

Retail
Department Stores
Dillard’s, Inc.
Federated Department Stores, Inc.
J. C. Penney Company, Inc.
Kohls’ Corporation
The May Department Stores Company
Mervyn’s
Saks Incorporated

Discount Stores
Kohl’s Corporation
Target Corporation
Wal-Mart Stores, Inc.

Specialty Stores
AutoZone, Inc.
Bed Bath & Beyond Inc.
Best Buy Co., Inc.
CarMax, Inc.
Circuit City Stores, Inc.
CompUSA Inc. (eliminate hyphen)
Finlay Enterprises, Inc. (Jewelry)
Gap Inc.
Limited Brands, Inc.
Linens ‘n Things, Inc.
Office Depot, Inc.
The Pep Boys – Manny, Moe & Jack
Pier 1 Imports, Inc.
Tandy Brands Accessories, Inc.
Zale Corporation

Home/Product Services
Ace Hardware Corporation
TruServe Corporation
Lowe’s Companies, Inc.
Menard, Inc.
The Home Depot, Inc.

Other
Maytag Corporation
Whirlpool Corporation
The ServiceMaster Company

EX-10.(C)

exv10wxcy

EX-10.(D)

PRIVILEGED AND CONFIDENTIAL

Exhibit 10(d)

EXECUTIVE SEVERANCE/NON-COMPETE AGREEMENT

      In this Executive Severance/Non-Compete Agreement dated as of ___, 2005 (the “Agreement”), Sears Holdings Corporation and its affiliates and subsidiaries (“Sears”), and ___(“Executive”), intending to be legally bound and for good and valuable consideration, agree as follows:

      1. Severance Benefits.

            (a) Continuation of Compensation. In the event that (x) Executive’s employment is terminated by any Sears entity by which he is employed (the “Company”) for any reason other than Cause (as defined below), death or Disability (as defined below) or (y) Executive’s employment is terminated by Executive for Good Reason (as defined below), subject to the provisions of Sections 6(e) and (f) and 10 herein, the Company shall pay to Executive his annual base salary as in effect immediately prior to the date of termination for a period of one (1) year. The amount described in Section 1(a) shall be paid in 12 equal annual installments commencing on the date of termination (the “Salary Continuation Period”) except that no payment will be made to Executive prior to the first date that such payment can be made without imposition of tax under Section 409A of the Internal Revenue Code. In addition to the foregoing, a lump sum payment will be made to Executive within ten (10) days following the date of termination in an amount equal to the sum of any accrued base salary through the date of termination to the extent not theretofore paid and any vacation benefits that accrued prior to the date of termination. No vacation will accrue after the date active employment ends. All salary continuation payments and benefits will terminate and forever lapse if Executive is employed by a “Sears Competitor” as defined in Section 6(b) herein.

            (b) Continuation of Benefits. During the Salary Continuation Period, Executive will be entitled to all benefits (other than as specified above) for which Executive was eligible to participate prior to the end of active employment, with the exception of Long-Term Disability and Flexible Spending Accounts. Executive and eligible dependents shall be entitled to continue to participate in the Company’s medical and dental plans in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”).The cost of such COBRA coverage for Executive and his dependents will be subsidized by the Company, so that the Executive will be paying the same premium for medical and dental plan coverage during the Salary Continuation Period as an active employee. However, in the event Executive becomes employed by another employer and is covered by such employer’s health benefits plan or program, the medical and dental benefits provided by the Company hereunder shall be secondary to such employer’s health benefits plan or program in accordance with the terms of the Company’s health benefit plans.

            (c) Long-Term Performance Program. The Long Term Performance Incentive Program grant for any multi-year performance period will be treated at termination of active employment in accordance with the provisions of its respective program document or grant letter.

            (d) Outplacement. From the date of termination pursuant to the first sentence of Section 1(a), Executive will be immediately eligible for outplacement services at the

Company’s expense. The Company and Executive will mutually agree on which outplacement firm, among current vendors used by the Company, will provide these services. Such services will be provided for up to one (1) year from the beginning of the Salary Continuation Period or until employment is obtained, whichever occurs first.

      2. Definitions. For purposes of this Agreement, the following terms shall have the definitions as set forth below:

            (a) “Cause” shall mean (1) a material breach by Executive (other than a breach resulting from Executive’s incapacity due to a mental or physical disability) of Executive’s duties and responsibilities which breach is demonstrably willful and deliberate on Executive’s part, is committed in bad faith or without reasonable belief that such breach is in the best interests of Sears and is not remedied in a reasonable period of time after receipt of written notice from Sears specifying such breach, (2) the commission by Executive of a felony involving moral turpitude, or (3) dishonesty or willful misconduct in connection with Executive’s employment; and

            (b) “Disability” shall mean disability as defined under the long-term disability plan of Sears applicable to Executive.

            (c) “Good Reason” shall mean, without Executive’s written consent, (i) a reduction of more than 10% in the sum of Executive’s annual base salary and target bonus from those in effect as of the date of this Agreement, (ii) Executive’s mandatory relocation to an office more than 50 miles from the primary location at which Executive is required to perform Executive’s duties immediately prior to the date of this Agreement or (iii) failure of a successor company to assume or fulfill the obligations under this Agreement.

      3. Non-Disparagement. Executive will not take any actions detrimental to the interests of Sears, nor make derogatory statements, either written or oral to any third party, or otherwise publicly disparage Sears, its products, services, or present or former employees, officers or directors, and will not authorize others to make derogatory or disparaging statements on Executive’s behalf.

      4. Intellectual Property Rights. Executive acknowledges that Executive’s development, work or research on any and all inventions or expressions of ideas, patentable or not, hereafter made or conceived solely or jointly within the scope of employment at Sears, provided such invention or expression of an idea relates to the business of Sears, or relates to Sears actual or demonstrably anticipated research or development, or results from any work performed by Executive for or on behalf of Sears, are hereby assigned to Sears, including Executive’s entire rights, title and interest. Executive will promptly disclose such invention or expression of an idea to Executive’s management and will, upon request, promptly execute a specific written assignment of title to Sears. If Executive currently holds any inventions or expressions of an idea, regardless of whether they were published or filed with the U.S. Patent and Trademark Office, or is under contract to not so assign, Executive will list them on the last page of this Agreement.

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      5. Confidentiality. Executive agrees that the existence and terms of the Agreement, including the compensation paid to Executive, and discussions with Sears regarding this Agreement, shall be considered confidential and shall not be disclosed or communicated in any manner except: (a) as required by law or legal process; (b) to Executive’s spouse, domestic partner, or financial/legal advisors, all of whom shall agree to keep such information confidential.

      6. Protective Covenants. Executive acknowledges that this Agreement provides for additional consideration beyond what Sears is otherwise obligated to pay. In consideration of the opportunity for severance benefits and special payments specified above, and other good and valuable consideration, Executive agrees to the following:

(a)	Non-Disclosure and Non-Solicitation. Executive acknowledges that Executive has previously or has simultaneously executed and will continue to be bound by an Executive Non-Disclosure and Non-Solicitation of Employees Agreement, which agreement sets forth, among other things, the definition of Sears Confidential Information and is incorporated by reference herein.
(b)	Non-Competition. Executive acknowledges that as a result of Executive’s position at Sears, Executive has learned or developed, or will learn or develop, Sears Confidential Information and that use or disclosure of such Confidential Information is likely to occur if Executive were to render advice or services to any Sears Competitor.

i.

Therefore, for one (1) year from Executive’s last day of active employment, whether or not Executive receives severance benefits pursuant to Section 1 hereto (“Severance Pay”), Executive will not, directly or indirectly, aid, assist, participate in, consult with, render services for, accept a position with, become employed by, or otherwise enter into any relationship with (other than having a passive ownership interest in or being a customer of) any Sears Competitor.

ii.

For purposes of this Agreement, “Sears Competitor” means

1.	Those companies listed on Appendix A, each of which Executive acknowledges is a Sears Competitor, whether or not it falls within the categories in (2), below, and further acknowledges that this is not an exclusive list of Sears Competitors and is not intended to limit the generality of subsection 6(b)(ii)(2), below, and
2.	Any party (A) engaged in any retail business (whether in a department store, specialty store, discount store, direct marketing, or electronic commerce or other business format), that consists of selling furniture, appliances,

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electronics, hardware, auto parts and/or apparel products, or providing home improvement, product repair and/or home services, with combined annual revenue in excess of $500 million, (B) any vendor with combined annual gross sales of services or merchandise to Sears in excess of $100 million, or (C) a party engaged in any other line of business, in which Sears has commenced business prior to the end of Executive’s active employment, with Sears having annual gross sales in that line of business in excess of $50 million.

iii.	Executive acknowledges that Sears shall have the right to propose modifications to Appendix B periodically to include (1) emergent Competitors in Sears existing lines of business and (2) Competitors in lines of business that are new for Sears with the prior written consent of Executive, which shall not be unreasonably withheld.
iv.	Executive further acknowledges that Sears does business throughout the United States, Puerto Rico and Canada and that this non-compete provision applies in any state of the United States, Puerto Rico or province of Canada in which Sears does business.

            (c) Executive will provide Sears with such information as Sears may from time to time reasonably request to determine Executive’s compliance with this Agreement. Executive authorizes Sears to contact Executive’s future employers and other entities with which Executive has any business relationship to determine Executive’s compliance with this Agreement or to communicate the contents of this Agreement to such employers and entities. Executive releases Sears, its agents and employees, from all liability for any damage arising from any such contacts or communications.

            (d) Executive agrees that the restrictions set forth above are necessary to prevent the use and disclosure of Sears Confidential Information and to otherwise protect the legitimate business interests of Sears. Executive further agrees and acknowledges that the provisions of this Agreement are reasonable.

            (e) Upon the termination of Executive’s employment by either party, Executive will execute a binding General Release and Waiver of claims in a form to be provided by Sears, which is incorporated by reference herein. This General Release and Waiver will be in a form substantially similar to the attached sample. If the General Release and Waiver is not signed or is signed but subsequently revoked, Executive will not receive Severance Pay (if any) or any other benefits due under this Agreement.

            (f) Executive acknowledges that irreparable harm would result from any breach or threatened breach by Executive of the provisions of this Agreement, and monetary damages alone would not provide adequate relief for any such breach. Accordingly, if Executive breaches or threatens to breach this Agreement, Executive consents to injunctive relief in favor of Sears without the necessity of Sears posting bond. Moreover, any award of injunctive relief

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shall not preclude Sears from seeking or recovering any lawful compensatory damages which may have resulted from a breach of this Agreement, including a forfeiture of any payments not yet made and a return of any payments already received by Executive.

            (g) Any waiver, or failure to seek enforcement or remedy for any breach or suspected breach, of any provision of this Agreement by Sears or Executive in any instance shall not be deemed a waiver of such provision in the future,

            (h) Executive may request (i) a waiver of the non-competition provisions of this Agreement or (ii) that the time frame in Section 6(b), above, commence during Executive’s continued employment with Sears, by written request to the Chief Executive Officer of Sears or the equivalent. Such a request will be given reasonable consideration and may be granted, in whole or in part, or denied at Sears’ absolute discretion.

      7. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of any compensation or benefits payable to Executive hereunder; and except as specifically provided in paragraphs (a) and (b) of Section 1 and Sections 6(e) and (f) and 10, such compensation and benefits shall not be reduced whether or not Executive obtains other employment,

      8. Executive agrees, without receiving additional compensation, to fully and completely cooperate with Sears, both during and after the period of active employment, in all investigations, potential litigation or litigation in which Sears is involved or may become involved other than any such investigations, potential litigation or litigation between Sears and Executive. Sears will reimburse Executive for reasonable travel and out-of-pocket expenses incurred in connection with any such investigations, potential litigation or litigation.

      9. Executive agrees that both during and after the period of active employment with Sears, Executive will not voluntarily act as a witness, consultant or expert for any person or party in any action against or involving Sears or any corporate relative of Sears, unless subject to judicial enforcement to appear as a fact witness only.

      10. In the event of a breach by Executive of any of the provisions of this Agreement, including but not limited to the non-disparagement provision (Section 3 herein), and the non-competition provisions (Section 6 herein) of this Agreement, Sears obligation to make salary continuation or any other payments under this Agreement will immediately cease.

      11. If any provision(s) of this Agreement shall be found invalid, illegal, or unenforceable, in whole or in part, then such provision(s) shall be modified or restricted so as to effectuate as nearly as possible in a valid and enforceable way the provisions hereof, or shall be deemed excised from this Agreement, as the case may require, and this Agreement shall be construed and enforced to the maximum extent permitted by law, as if such provision(s) had been originally incorporated herein as so modified or restricted or as if such provision(s) had not been originally incorporated herein, as the case may be.

      12. This Agreement will be governed under the internal laws of the state of Illinois without regard to principles of conflicts of laws. Executive agrees that the state and federal courts located in the state of Illinois shall have exclusive jurisdiction in any action, Suit or

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proceeding based on or arising out of this Agreement, and Executive hereby: (a) submits to the personal jurisdiction of such courts; (b) consents to the service of process in connection with any action, suit, or proceeding against Executive; and (c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction, venue or service of process.

      13. Executive agrees to waive any right to a jury trial on any claim contending that this Agreement or the General Release and Waiver is illegal or unenforceable in whole or in part, and Executive agrees to try any claims brought in a court or tribunal without use of a jury or advisory jury. Further, should any claim arising out of Executive’s employment or termination of employment be found by a court or tribunal of competent jurisdiction to not be released by the General Release and Waiver, Executive agrees to try such claim to the court or tribunal without use of a jury or advisory jury.

      14. This Agreement does not constitute a contract of employment, and Executive acknowledges that Executive’s employment with Sears is terminable “at-will” by either party with or without cause and with or without notice.

      15. If any provision of this Agreement conflicts with any other agreement, policy, plan, practice or other Sears document, then the provisions of this Agreement will control. Executive shall not be eligible for any benefits under the Sears Transition Pay Plan or any successor severance plan or program. This Agreement will supersede any prior agreement between between Executive and Sears with respect to the subject matter contained herein (with the exception of the Executive Non-Disclosure and Non-Solicitation of Employees Agreement dated ___, 200 _) and may be amended only by a writing signed by an authorized officer of Sears.

      16. All compensation paid or provided to Executive under this Agreement shall be subject to any applicable federal, state or local income and employment tax withholding requirements.

      17. Sears may assign its rights under this Agreement to any successor in interest, whether by merger, consolidation, sale of assets, or otherwise. This Agreement shall be binding whether it is between Sears and Executive or between any successor or assignee of Sears or affiliate thereof and Executive.

      18. This Agreement may be executed in one or more counterparts, which together shall constitute a valid and binding agreement.

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      IN WITNESS WHEREOF, Executive and Sears, by its duly authorized representative, have executed this Agreement effective as of the date set forth below.

	SEARS HOLDINGS CORPORATION
	BY:
EXECUTIVE
Date	Date

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NOTICE: YOU MAY CONSIDER THIS GENERAL RELEASE AND WAIVER FOR UP TO TWENTY-ONE (21) DAYS. IF YOU DECIDE TO SIGN IT, YOU MAY REVOKE THE GENERAL RELEASE AND WAIVER WITHIN SEVEN (7) DAYS AFTER SIGNING. ANY REVOCATION WITHIN THIS PERIOD MUST BE IMMEDIATELY SUBMITTED IN WRITING TO GENERAL COUNSEL, SEARS HOLDINGS CORPORATION, 3333 BEVERLY ROAD, HOFFMAN ESTATES, IL 60179. YOU MAY WISH TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS DOCUMENT.

GENERAL RELEASE AND WAIVER

      In consideration for the benefits that I will receive under the attached Executive Severance/Non-Compete Agreement, I and any person acting by, through, or under me hereby release, waive, and forever discharge Sears Holdings Corporation, its current and former agents, subsidiaries, affiliates, employees, officers, shareholders, successors, and assigns (“Sears”) from any and all liability, actions, charges, causes of action, demands, damages, or claims for relief or remuneration of any kind whatsoever, whether known or unknown at this time, arising out of, or connected with, my employment with Sears and the termination of my employment, including, but not limited to, all matters in law, in equity, in contract (oral or written, express or implied), or in tort, or pursuant to statute, including any claim for age or other typos of discrimination under the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, or other federal, state, or local law or ordinance, to the fullest extent permitted under the law, including the Employee Retirement Income Security Act. This General Release and Waiver does not apply to any claims or rights that may arise after the date that I signed this General Release and Waiver. I understand that Sears is not admitting to any violation of my rights or any duty or obligation owed to me.

      Excluded from this General Release and Waiver are my claims which cannot be waived by law, including but not limited to (1) the right to file a charge with or participate in an investigation conducted by certain government agencies, (2) any rights or claims to benefits accrued under benefit plans maintained by Sears pursuant to ERISA, and (3) any claims that cannot be waived under the Fair Labor Standards Act or Family and Medical Leave Act. I do, however, waive my right to any monetary recovery should any agency pursue any claims on my behalf. I represent and warrant that I have not filed any complaint, charge, or lawsuit against Sears with any governmental agency and/or any court.

      In addition, I agree never to sue Sears in any forum for any claim covered by this General Release and Waiver except that I may bring a claim under the ADEA to challenge this General Release and Waiver. If I violate this General Release and Waiver by suing Sears, other than under ADEA, I shall be liable to Sears for its reasonable attorney’s fees and other litigation costs and expenses incurred in defending against such a suit.

      I have read this General Release and Waiver and I understand its legal and binding effect. I am acting voluntarily and of my own free will in executing this General Release and Waiver.

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      I have had the opportunity to seek, and I was advised in writing to seek, legal counsel prior to signing this General Release and Waiver.

      I was given at least twenty-one (21) days to consider signing this General Release and Waiver. Any immaterial modification of this General Release and Waiver does not restart the twenty-one (21) day consideration period.

      I understand that, if I sign the General Release and Waiver, I can change my mind and revoke it within seven (7) days after signing it by notifying the General Counsel of Sears in writing at Sears Holdings Corporation, 3333 Beverly Road, Hoffman Estates, Illinois 60179. I understand that this General Release and Waiver will not be effective until after this seven (7) day revocation period has expired.

Date:	SAMPLE ONLY — DO NOT SIGN	Signed by:	SAMPLE ONLY — DO NOT SIGN
		Witness by:

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Executive: Date:                     , 2005

Appendix A
to Executive Severance/Non-Compete Agreement

      In addition to all companies otherwise meeting the definition of “Sears Competitor” in Section 6(b)(ii)(2) of the Executive Severance/Non-Compete Agreement to which this Appendix A is attached, the following companies are “Sears Competitors” for purposes of that Section 6(b)(i):

Retail
Department Stores
Dillard’s, Inc.
Federated Department Stores, Inc.
J. C. Penney Company, Inc.
Kohls’ Corporation
The May Department Stores Company
Mervyn’s
Saks Incorporated

Discount Stores
Kohl’s Corporation
Target Corporation
Wal-Mart Stores, Inc.

Specialty Stores
AutoZone, Inc.
Bed Bath & Beyond Inc.
Best Buy Co., Inc.
CarMax, Inc.
Circuit City Stores, Inc.
CompUSA Inc. (eliminate hyphen)
Finlay Enterprises, Inc. (Jewelry)
Gap Inc.
Limited Brands, Inc.
Linens ‘n Things, Inc.
Office Depot, Inc.
The Pep Boys – Manny, Moe & Jack
Pier 1 Imports, Inc.
Tandy Brands Accessories, Inc.
Zale Corporation

Home/Product Services
Ace Hardware Corporation
TruServe Corporation
Lowe’s Companies, Inc.
Menard, Inc.
The Home Depot, Inc.

Other
Maytag Corporation
Whirlpool Corporation
The ServiceMaster Company