Amended and Restated Non-Compete/Severance Agmt



 



EXHIBIT 10(a)



*** Certain portions of this exhibit have been omitted pursuant to a
request for confidential treatment. The omitted portions have been
filed separately with the Securities and Exchange Commission.


AMENDED AND RESTATED NON-COMPETE/SEVERANCE

AGREEMENT



          Sears, Roebuck and Co. (the “Company”), including its subsidiaries
(collectively referred to as “Sears”), and Paul J. Liska (“Executive”),
intending to be legally bound and for good and valuable consideration, agree as
follows:


          1) Severance Pay — Sale of Credit Business. Sears is evaluating
strategic alternatives for its Credit Business (as defined in Appendix A).
Among the potential outcomes of this process are a Full Sale (as defined in
Appendix A), a Partial Sale (as defined in Appendix A) or No Sale (as defined
in Appendix A). In the event that a Full Sale or a Partial Sale is
consummated, Executive’s employment with Sears will continue through the date
that is the later of (i) six months following consummation of the Full Sale or
the Partial Sale, as applicable, and (ii) June 30, 2004 (the later of such
dates, the “End Date”), at which time Executive’s employment with Sears will
terminate and Executive will receive, commencing on the date of termination,
the Severance Pay (as defined below). In addition, Executive may request to
resign from Sears prior to the End Date. Sears in its sole discretion may
approve this request. If Sears so approves the request, Executive will
receive, commencing on the day following his resignation, the Severance Pay.


          2) Transaction Incentive Payment — Full Sale of Credit Business. In the
event that a Full Sale is consummated and Executive remains employed by Sears
through the consummation of the Full Sale, Sears shall pay Executive the
Transaction Incentive Payment. Fifty percent of the Transaction Incentive
Payment shall be paid to Executive within 30 days following the date on which
the Full Sale occurs (the “Sale Date”) and the remainder of the Transaction
Incentive Payment shall be paid to Executive on the date that is six months
following the Sale Date. In light of Executive’s opportunity to earn the
Transaction Incentive Payment, Executive shall not be entitled to earn an
annual bonus with respect to calendar year 2003 under any of the Company’s
annual bonus plans.


          3) Partial Sale or No Sale of Credit Business. [***].


          4) Severance Benefits. (a) Should Executive’s employment with Sears be
terminated by Sears for any reason other than Cause (as defined below), death,


 









 



total and permanent disability, or retirement at or after age 65, and
other than a Change of Control Termination (as defined below), Sears shall
continue to pay Executive, for two years following Executive’s termination of
employment, in equal installments in accordance with Sears’ payroll practices,
an amount (the “Severance Pay”) equal to product of (1) two and (2) the sum of
(a) Executive’s annual base salary and (b) Executive’s annual bonus target for
the year in which the date of termination occurs and, if no such target has
been set, the annual bonus target for the prior fiscal year (the “Target
Bonus”). For the one-year period immediately following the second anniversary
of such termination of employment, Sears shall continue to pay Executive, in
equal installments in accordance with Sears’ payroll practices, Executive’s
annual base salary, provided that in lieu of receiving the installments during
such one-year period, Executive may elect to receive such amounts in a lump sum
by providing Sears with written notice of his desire to receive such payments
in a lump sum prior to the end of the calendar year preceding the year during
which such second anniversary shall occur.


          b) During the period that Executive is receiving Severance Pay, Executive
will be placed on a leave of absence status and entitled to all benefits for
which Executive is eligible to participate, including continued pension
vesting. Vested options will expire in accordance with their respective grant
letters.


          c) Should Executive’s employment be terminated by Sears for a reason other
than for Cause (as defined below), all of Executive’s stock options and
restricted stock shall continue to vest during the period that Executive is
receiving Severance Pay and to the extent unvested at the end of the period
that Executive is receiving Severance Pay shall vest in full at that time. The
applicable award agreements for the stock options and restricted stock referred
to in this Section 4(c) are hereby amended to the extent necessary to implement
this Section 4(c).


          d) Should Executive’s employment be terminated by Sears for a reason other
than for Cause (as defined below), Executive shall receive a cash lump sum
payment at the end of the period that Executive is receiving Severance Pay
equivalent to the pension benefit that would have accrued under the Sears
Pension Plan from date of hire through the date that the Severance Pay period
ends. The amount of this lump sum payment will be calculated by using the
Sears Pension Plan benefit formula in effect as of the date that the Severance
Pay period ends.


          e) For purposes of this Agreement, it would be considered an termination
of Executive’s employment other than for Cause, death or total and permanent
disability if Executive becomes a direct report to someone other than the Chief
Executive Officer.


          5) Change of Control. Sears shall pay to Executive the severance
described in paragraph 6, and Executive shall be entitled to participate in the
benefits described in paragraph 6, if Executive’s employment is terminated
under the circumstances described below (a “Change of Control Termination”):


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          a) Executive’s employment with Sears and all of its subsidiaries is
terminated:


          i) On the day of, or within 24 months after, occurrence of a Change
of Control, as such term is defined in Appendix A; or


          ii) Prior to a Change of Control but at the request of any third
party participating in or causing the Change of Control; or


          iii) Otherwise in connection with or in anticipation of a Change of
Control; and


          b) Executive’s termination of employment was not


          i) On account of Executive’s death or total and permanent
disability;


          ii) For Cause (as defined below); or


          iii) On account of Executive’s retirement, or Executive’s
resignation other than for Good Reason (as defined below).


          For the purpose of this Agreement, (a) “Cause” shall mean (1) a material
breach by Executive of those duties and responsibilities that do not differ in
any material respect from Executive’s duties and responsibilities during the
90-day period immediately prior to termination of employment, 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) “Good Reason”
shall mean (1) a significant reduction in Executive’s responsibilities, title,
annual base salary, or Executive’s mandatory relocation to an office more than
20 miles from the Chicago, Illinois metropolitan area, and which reduction in
responsibilities, title, annual base salary or relocation is not remedied
within two weeks after Executive specifies that “Good Reason” exists for
purposes of this Agreement.


          6) Change of Control Severance Pay. In the event of a Change of Control
Termination, Sears shall pay Executive in a lump sum within 30 days following
such Change of Control Termination an amount equal to the sum of (i) to the
extent not theretofore paid or provided, any of Executive’s accrued but unpaid
base salary through the date of termination, (ii) an amount equal to the
product of (a) the Target Bonus and (b) a fraction, the numerator of which is
the number of days in the fiscal year through the date of termination and the
denominator of which is 365, and (iii) the product of (a) two and (b)
Executive’s annual base salary and the Target Bonus. For two years following


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the Change of Control Termination, Executive will be placed on a leave of
absence status and entitled to all benefits for which Executive is eligible to
participate.


          7) Gross-Up Payment. (a) Anything in this Agreement to the contrary
notwithstanding and except as set forth below, in the event it shall be
determined that any Payment (as defined in Appendix A) would be subject to the
Excise Tax (as defined in Appendix A), then Executive shall be entitled to
receive an additional payment (the “Gross-Up Payment”) in an amount such that,
after payment by Executive of all taxes (and any interest or penalties imposed
with respect to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, subject to paragraph 7(e), Executive retains
an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. The Company’s obligation to make Gross-Up Payments under this
paragraph 7 shall not be conditioned upon Executive’s termination of
employment.


          b) Subject to the provisions of paragraph 7(c), all determinations
required to be made under this paragraph 7, including whether and when a
Gross-Up Payment is required, the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
a nationally recognized certified public accounting firm as may be selected by
the Company and subsequently approved by Executive, which approval may not be
unreasonably withheld (the “Accounting Firm”). The Accounting Firm shall
provide detailed supporting calculations both to the Company and Executive
within 15 business days of the receipt of notice from Executive that there has
been a Payment or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change of Control, Executive may
appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this paragraph 7, shall be paid by the Company to Executive within
15 days of the receipt of the Accounting Firm’s determination. Any
determination by the Accounting Firm shall be binding upon the Company and
Executive. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments that will not have been made
by the Company should have been made (the “Underpayment”), consistent with the
calculations required to be made hereunder. In the event the Company exhausts
its remedies pursuant to paragraph 7(c) and Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of Executive.


          c) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the


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Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable, but no later than 10 business days after Executive is informed
in writing of such claim. The Executive shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid.
The Executive shall not pay such claim prior to the expiration of the 30-day
period following the date on which Executive gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies Executive in writing
prior to the expiration of such period that the Company desires to contest such
claim, Executive shall:


          i) give the Company any information reasonably requested by the
Company relating to such claim,


          ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by the Company,


          iii) cooperate with the Company in good faith in order effectively
to contest such claim, and


          iv) permit the Company to participate in any proceedings relating to
such claim;


provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest, and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this paragraph
7(c), the Company shall control all proceedings taken in connection with such
contest, and, at its sole discretion, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the
applicable taxing authority in respect of such claim and may, at its sole
discretion, either pay the tax claimed to the appropriate taxing authority on
behalf of Executive and direct Executive to sue for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that, if the Company pays such claim and directs
Executive to sue for a refund, the Company shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties) imposed with respect to such payment or with respect to
any imputed income in connection with such payment; and provided, further, that
any extension of the statute of limitations relating to payment of taxes for
the taxable year of Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Company’s control of the contest shall be limited to issues with respect to
which the


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Gross-Up Payment would be payable hereunder, and Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.


          d) If, after the receipt by Executive of a Gross-Up Payment or payment by
the Company of an amount on Executive’s behalf pursuant to paragraph 7(c),
Executive becomes entitled to receive any refund with respect to the Excise Tax
to which such Gross-Up Payment relates or with respect to such claim, Executive
shall (subject to the Company’s complying with the requirements of paragraph
7(c), if applicable) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto). If, after payment by the Company of an amount on Executive’s behalf
pursuant to paragraph 7(c), a determination is made that Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify Executive in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after such determination, then the amount of
such payment shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.


          e) Notwithstanding any other provision of this paragraph 7, the Company
may, in its sole discretion, withhold and pay over to the Internal Revenue
Service or any other applicable taxing authority, for the benefit of Executive,
all or any portion of any Gross-Up Payment, and Executive hereby consents to
such withholding.


          8) Protective Covenants. Executive acknowledges that the above
consideration, absent this Agreement, is beyond what Sears is obligated to pay.
Executive further acknowledges that benefits payable to Executive under Sears
Long-Term Incentive Plan and any special grants of restricted stock or stock
options for retention purposes are contingent on Executive’s signing of this
Agreement, and that such benefits constitute additional consideration beyond
what Sears is obligated to pay. In consideration of the opportunity for
severance benefits and Long-Term Incentive Plan payments specified above, and
other good and valuable consideration, Executive agrees to the following:


          a) The confidential and proprietary information and trade secrets of Sears
are among its most valuable assets and include but are not limited to its
customer and vendor lists, databases, computer programs, frameworks, models,
its marketing programs, its sales, financial, marketing, training and technical
information, and any other information, whether communicated orally,
electronically, in writing or in other tangible forms concerning how Sears
creates, develops, acquires or maintains its products and its marketing plans,
targets its potential customers and operates its retail and other businesses.
Sears has invested, and continues to invest, considerable amounts of time and
money in obtaining and developing the goodwill of its customers, its other
external relationships, its data systems and data bases, and all the
information described above (hereinafter collectively referred to as “Sears
Confidential Information”). Any misappropriation or unauthorized disclosure of
Sears Confidential Information in any


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form would irreparably harm Sears. Executive will not, except as Sears
may otherwise consent or direct in writing, reveal or disclose, sell, use,
lecture upon or publish any Sears Confidential Information. Executive’s
obligation under this paragraph will cease as to any information which has
become publicly known through a source other than Executive.


          b) For a period of two years from Executive’s last day of active
employment, whether or not severance is payable, Executive shall not, directly
or indirectly (through another business or person), engage in the following
activities or assist others in such activities, anywhere in the United States
or in any other jurisdiction outside of the United States in which Sears
conducts or plans to conduct its business:


       i) Hiring, recruiting, or attempting to recruit for any person or
business entity that is a Competitor (as defined below) of Sears, any
person employed by Sears; and,


       ii) Being employed by, being connected to, or consulting for any
person who or business entity which is a Competitor of Sears business of
planned business at the time of the termination of Executive’s active
employment with Sears.


          The provisions of paragraph 8(b) will apply should Executive’s employment
be terminated by either party for any reason (including but not limited to
resignation or retirement); provided, however, that the provisions of paragraph
8(b)(ii) will not apply should Executive’s employment be terminated due to a
Change of Control Termination.


          c) For the purposes of this Agreement, “Competitor” shall be defined as
any business and any branch, office or operation thereof, which is in material
competition with Sears, including without limitation, any direct marketing,
credit card, or electronic commerce business or retail department, specialty,
discount, home furnishings, appliance, electronics, hardware, home improvement
or home services, auto parts/service or apparel business with annual gross
sales in excess of $500 million, and any vendor with annual gross sales of
services or merchandise to Sears in excess of $100 million; provided, however,
in no event shall the entity that purchases the Business pursuant to a Sale be
considered a Competitor in the event that Executive’s employment is transferred
to such entity in connection with the Sale.


          d) Executive will provide Sears with such information as Sears may from
time to time request to determine Executive’s compliance with this Agreement.
Executive authorizes Sears to contact Executive’s future employers and other
entities with whom Executive has any sort of business relationship to determine
Executive’s compliance with this Agreement or to communicate the contents of
this Agreement to such employers and entities. However, Sears agrees to
provide Executive with reasonable notice before initiating such contact.


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          e) 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. The provisions of this Agreement are
reasonable.


          f) Upon the termination of Executive’s employment by either party,
Executive will, if requested by Sears, execute a mutually agreeable binding
general waiver and release of claims in a form provided by Sears.


          g) Irreparable harm would result from any breach by Executive of the
noncompetition and confidential information provisions of this Agreement, and
monetary damages alone would not provide adequate relief for any such breach.
Accordingly, if Executive breaches this Agreement, injunction relief in favor
of Sears is proper. Moreover, any award of injunctive relief 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 made and a return of any payments already received.


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


          i) Executive may request (a) a waiver of the non-competition provisions of
this Agreement or (b) that the time frame in paragraph 8(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 waiver will not be
unreasonably withheld.


          9) Savings Clause. 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 deemed to be modified or restricted to the extent and in the manner
necessary to render the same valid and enforceable, 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.


          10) Miscellaneous. The Agreement will be governed under the 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 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.
Sears may assign its rights under this Agreement to any successor in interest
or


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successor to the Credit Business, whether by means of a Sale, 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 and Executive.


          11) Tax Withholding. Notwithstanding any other provision of this
Agreement, Sears may withhold from any amounts payable under this Agreement, or
any other benefits received pursuant hereto, such minimum Federal, state and/or
local taxes as shall be required to be withheld under any applicable law or
regulation.


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          IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and delivered by its duly authorized officer and Executive has executed and
delivered this Agreement.



	 	 
	 	SEARS, ROEBUCK AND CO
	 
	 	/s/ Greg A. Lee 5/21/03

By: Greg A. Lee

Title: SVP HR
	 
	 	/s/ Paul J. Liska

Executive
	 
	 	Date: 5/17/03





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May 1, 2003 Appendix A



Certain Definitions



          A “Change of Control” shall mean:


          a) The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) (a “Person”) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding common shares of the Company (the “Outstanding
Company Common Shares”) or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”); provided,
however, that the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion privilege); (ii) any
acquisition by the Company or any of its subsidiaries; (iii) any acquisition by
any employee benefit plan (or any related trust) sponsored or maintained by the
Company or any of its subsidiaries; or (iv) any acquisition by any corporation
pursuant to a reorganization, merger or consolidation, if, following such
reorganization, merger or consolidation the conditions described in clauses
(i), (ii), and (iii) of (c) below are satisfied; or


          b) Individuals who, as of the date hereof constitute the Board of
Directors of the Company (the “Board”) (as of the date hereof the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or


          c) Approval by the shareholders of the Company of a “Business
Combination,” which shall mean a reorganization, merger or consolidation, in
each case, unless, following such reorganization, merger or consolidation (i)
more than 60% of, respectively, the then outstanding common shares of the
corporation resulting from such reorganization, merger or consolidation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the


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Outstanding Company Common Shares and Outstanding Company Voting
Securities immediately prior to such reorganization, merger or consolidation in
substantially the same proportions as their ownership, immediately prior to
such reorganization, merger or consolidation, of the Outstanding Company Common
Shares and Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding the Company, any of its subsidiaries, any employee benefit
plan (or related trust) sponsored or maintained by the Company, any of its
subsidiaries or such corporation resulting from such reorganization, merger or
consolidation, and any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or indirectly, 20% or more of
the Outstanding Company Common Shares or Outstanding Company Voting Securities,
as the case may be) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding common shares of the corporation resulting
from such reorganization, merger or consolidation or the combined voting power
of the then outstanding voting securities of such corporation entitled to vote
generally in the election of directors and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such
reorganization, merger or consolidation were members of the Incumbent Board at
the time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or


          d) Approval by the shareholder of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) the sale or other disposition
of all or substantially all of the assets of the Company, other than to a
corporation, with respect to which following such sale or other disposition,
(A) more than 60% of, respectively, the then outstanding common shares of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Shares and Outstanding
Company Voting Securities immediately prior to such sale or other disposition
in substantially the same proportion as their ownership, immediately prior to
such sale or other disposition, of the Outstanding Company Common Shares and
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding the Company, any of its subsidiaries, and any employee benefit plan
(or related trust ) sponsored or maintained by the Company, any of its
subsidiaries or such corporation and any Person beneficially owning,
immediately prior to such sale or other disposition, directly or indirectly,
20% or more of the Outstanding Company Common Shares or Outstanding Company
Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding common shares of
such corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors and (C) at least a majority of the members of the board of directors
of such corporation were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the Board providing for such
sale or other disposition of assets of the Company.


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          For purposes of the foregoing definition of “Change of Control,” a
“subsidiary” of the Company shall mean any corporation in which the Company,
directly or indirectly, holds a majority of the voting power of such
corporation’s outstanding shares of capital stock.


          “Code” means the Internal Revenue Code of 1986, as amended.


          “Credit Business” means Sears’ Credit and Financial Products Business as
described in the Offering Memorandum dated as of May 2003 (the “Business”).


          “Excise Tax” means the excise tax imposed by Section 4999 of the Code,
together with any interest or penalties imposed with respect to such excise
tax.


          “Fair Market Value” means the average of the high and low trading prices
of the Company’s common stock on the New York Stock Exchange Composite Tape.


          “Full Sale” means a sale or other disposition, in each case to a third
party, of all or substantially all of the Credit Business, including all or
substantially all of each of the Sears’ Private Label Business and the Sears’
MasterCard Business; provided, that the term “Full Sale” shall include a sale
or other disposition in which a third party owns, directly or indirectly, after
such sale or other disposition, a majority of the voting or economic interests
(or common economic interests) in the entire Credit Business.


          “Net Transaction Value” means, [***].


          “No Sale” means that the Board, a designated committee of Board members or
a designated Board member announces that the Board no longer wishes to pursue a
Full Sale or Partial Sale of the Credit Business.


          “Partial Sale” means a sale or other disposition, in each case to a third
party, of (1) all or substantially all of Sears’ Private Label Business or (2)
all or substantially all of Sears’ MasterCard Business, other than any such
sale or disposition that would constitute a Full Sale.


          A “Payment” means any payment or distribution in the nature of
compensation (within the meaning of Section 280G(b)(2) of the Code) to or for
the benefit of Executive, whether paid or payable pursuant to this Agreement or
otherwise.


          “Sale” means a Full Sale or a Partial Sale.


          “Transaction Incentive Payment” [***].


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Amendment to Amended and Restated Non-Compete/Severance Agreement



The AMENDED AND RESTATED NON-COMPETE/SEVERANCE AGREEMENT between Paul Liska and
Sears, Roebuck and Co. and dated May 17, 2003 (the “Agreement”) is hereby
amended as follows:


1. The definition of “Net Transaction Value” on Exhibit A to the Agreement
shall be replaced and superseded in its entirety as follows:


[***]


2. Except as explicitly set forth herein, the Agreement will remain in full
force and effect.


          IN WITNESS WHEREOF, the parties hereto have executed this Amendment.



	 	 
	 	SEARS, ROEBUCK AND CO
	 
	 	/s/ Michele A. Carlin

Signature
	 
	 	Michele A. Carlin

Printed Name
	 
	 	VP, Compensation

Title
	 
	 	June 18, 2003

Date





Acknowledged and Accepted:


/s/ Paul J. Liska

Signature


Paul J. Liska

Printed Name


6/18/03

Date