Exhibit 10

 

SEARS, ROEBUCK AND CO.

3333 BEVERLY ROAD

HOFFMAN ESTATES, IL 60179

**GREGA. LEE    **Senior Vice PresidentHuman Resources  847-286-0558     Fax 847-286-3258   

November 26, 2001
 

Ms. Kathryn Bufano65 Comstock Hill RoadNorwalk, CT 06850

Dear Kathy,

This letter will confirm our offer of employment to join Sears, Roebuck andCo. as Executive Vice President - Softlines, reporting to Alan J. Lacy, Chairmanand CEO, Sears, Roebuck and Co. Your start date will be determined.

Your compensation package will consist of the following:
-  Annual base salary of $500,000,    with periodic increases based upon performance.Sign-on bonus of $100,000, net    of applicable taxes.One-time relocation transition    payment of $50,000, net of applicable taxes.Participation in the Sears    Annual Incentive Plan. Your annual incentive opportunity will equate to a    bonus target equal to 85% of base salary, amounting to $425,000 on an    annualized basis. The annual incentive performance objective for your    position will be based on a combination of earnings per share and business    financial performance as well as the successful implementation of the    Full-line store strategy.Performance goals for Sears are    based on improvement over prior year results. We will guarantee a minimum    Annual Incentive Plan award for 2001 of $425,000, payable by March 15,    2002. In addition, we will guarantee a minimum Annual Incentive Plan award    for 2002 of 75% of your annual bonus target, payable by March 15, 2003. For    the 2002 incentive payable in 2003, you will receive the calculated award if    this result exceeds the guarantee amount.50,000 non-qualified stock options that will vest in three equal annual    installments from the date of grant and will include a reload feature. This    grant represents an acceleration of the 2002 annual stock option grant. You    will be eligible for annual stock option grants commensurate with your    position.
-  16,666 options will vest one      year from the date of grant16,666 options will vest two      years from the date of grant16,668 options will vest three      years from the date of grant-  25,000 shares    of restricted stock that will cliff vest three years from the date of the    grant.35,000 performance shares    granted as part of the Sears Long-Term Performance Incentive Program (LTPIP).    The Sears Board of Directors recently approved the terms and provisions of    the LTPIP, which will reward senior-level executives for achievement of    specified goals. The addendum to this letter provides a more detailed    description of the program and potential rewards.You will participate in all    retirement and welfare programs on a basis no less favorable than other    executives at your level, in accordance with the applicable terms of those    programs.Pension will commence at your    employment date. A service enhancement to your pension benefit will be    provided through the non-qualified pension plan. The service enhancement    will be accrued to you as a 2-year for 1-year of service credit for 10 years    or your termination of active service, whichever is sooner. At age 65, the    estimated value of your Sears pension would equal a lump sum of    approximately $4.0 million, while the enhancement would equal an additional    lump sum of approximately $2.36 million.You will be asked to sign an    Executive Severance / Non-Compete Agreement and an Executive Non-Disclosure    and Non-Solicitation of Employees Agreement as a condition of your    participation in the Long-Term Performance Incentive Program. If you are    involuntarily terminated from Sears for any reason other than cause, death,    total and permanent disability, resignation, or retirement after age 65, you    will receive two years of pay continuation (i.e., base salary and target    annual bonus). If you are terminated following a change-in-control, you will    receive the aforementioned severance benefit in an undiscounted lump-sum    payment. In consideration for these severance terms, you agree not to    disclose confidential information and not to solicit employees. You would    also agree not to aid, assist or render services for any 'Competitor'    (as defined in the agreement) for one year following termination of    employment. Should you be involuntarily terminated for a reason other than    for Cause (as defined in the agreement) before the first anniversary of your    service with Sears, the following would occur:-  The 25,000 shares of restricted      stock granted to you at the time of your hire would fully vest at the end      of your two-year severance period.You would receive a cash      payment within 30 days of the end of the two-year salary continuation      period equivalent in value to the product of the 16,666 options that would      not otherwise vest during the salary continuation period times the option      'spread' (the positive difference between the fair market value on the      last day of the salary continuation period and the exercise price of the      option grant).-  The above is contingent upon    your satisfactorily passing a pre-employment drug test and approval by the    Compensation Committee of the Sears, Roebuck and Co. Board of Directors.You will be eligible for    relocation assistance benefits that are typically provided to an executive    at your level and in accordance with the terms of the relocation program, to    include reimbursement for temporary living expenses and the purchase of your    home, if required.
Sincerely,

/s/Greg A. Lee

 

Accepted /s/Kathryn Bufano          Date 11/29/01

cc: Alan J. Lacy