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**Sears, Roebuck and Co.****Term Sheet - Senior Vice President of Human Resources**

1. Base Salary: Initial base salary of $425,000, which will bereviewed at least annually and at the same time other senior executives'base salaries are reviewed.
2. Annual Bonus: You will be eligible for an annual performancebonus under the Sears, Roebuck and Co. annual incentive plan. You willhave a target annual bonus opportunity equal to 85% of your base salary,or $361,250. Under the current plan, bonus payouts can range from zeroto 230% of target. The bonus payouts are 100% funded based on the attainmentof corporate earnings per share goals. A participant earns 80% of his orher bonus based on achievement of these goals. Individual performance isutilized to determine what portion of the remaining 20% of the bonus participantshave earned. Sears will guarantee a minimum bonus for the 2001 plan yearequal to your target bonus, provided you are still employed by Sears onthe date of payment.
Participants can elect to receive all or a portion of their annual bonusin the form of restricted stock, which vests in three equal annual installments.Participants electing restricted stock receive a 20% premium on the portionof their bonus received in restricted shares. The premium vests at theend of three years.
3. Long-term Incentives - General Information:a) You will be eligible to participate in Sears 2000 Employees StockPlan. The grant date value of your awards is at the discretion of the CompensationCommittee, but an executive at your level is eligible for awards equalto 125% of base salary.
b) Approximately 70% of your long-term incentive opportunity will beprovided in Sears' stock options and 30% will be provided through the Long-TermPerformance Plan.4. Stock Options:a) The number of Sears stock options is based on the Black-Scholesvalue of the stock options on the date of grant. Sears stock options aregranted with an exercise price equal to the fair market value of Searsstock on the date of grant and vest in equal annual installments over athree-year period commencing on the first anniversary of the date of grant.There is a reload feature for shares tendered to cover the exercise priceand taxes due upon exercise.
b) The aggregate value of your annual stock option award will be 87.5%of base salary (i.e., 70% of 125%), or approximately $372,000. Based ona stock price of $32.00 and a Black-Scholes value of $10.79, we estimatethat the 2001 award would consist of 34,500 stock options. Adjustmentsto the number of stock options granted will be made if the price of Searsstock and/or the Black-Scholes value of a Sears stock option on the dateof grant is materially different.5. Long-Term Performance Plana) You will be eligible to participate in the Long-Term PerformancePlan for the 1999-2001 performance period. Payouts are based on Sears'total shareholder return, Sears Value Added (i.e., economic value added),customer satisfaction, customer loyalty and the results of an employeeattitude survey. Grants are typically made every two years. The next performancecycle is expected to commence in early 2001.
b) Your target opportunity for the 1999-2001 performance period willbe 37.5% of base salary (i.e., 30% of 125%), or approximately $160,000.Sears will guarantee a minimum payout for the 1999-2001 performance periodequal to your target opportunity, provided you are still employed on thedate of payment.
c) Payouts under the Long-Term Performance Plan can range from zeroto 150% of the target amount, based on performance. Participants receivecash payouts but can defer awards under the Sears Deferred CompensationPlan.6. Sign-On Cash and Equity Awards: In addition to the above, youwill receive a sign-on award, on your hire date, consisting of the following:a) A sign-on cash bonus of $100,000.
b) A 'make-whole' cash payment in respect of any forfeited payouts fromthe (i) Whirlpool annual bonus plan for 2000 and (ii) the Whirlpool ExecutiveStock Appreciation and Performance Program for the 1998 - 2000 performanceperiod.
c) 50,000 Sears stock options. These options will have an exercise priceequal to the fair market value on the date of grant (your date of hire)and will vest in equal annual installments over a three-year period commencingon the first anniversary of your date of hire. Based on a $10.79 Black-Scholesvalue, the estimated grant date value is $540,000.
d) 35,000 shares of restricted stock. These shares will vest on thethird anniversary of your date of hire. Based on a $32.00 stock price,the value of the award is $1,120,000.7. Employee Benefits: You will participate in all retirement, welfare,and perquisite programs on a basis no less favorable than other executivesat your level, in accordance with the applicable terms of those programs.
8. SERP Benefit: You will receive two years of credited servicefor each year of credited service you complete with Sears, through age61 (i.e., up to 20 years of credited service). We estimate the value ofthe increased service credit to be worth $1.1 million at age 61. The presentvalue of this benefit enhancement is $520,000.
9. Severance Benefits and Non-Compete Agreement: You will beasked to sign an Executive Severance/Non-Compete Agreement. If you areinvoluntarily 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 targetbonus). If you are terminated following a change-in-control, you will receivethe aforementioned severance benefit in an undiscounted lump-sum payment.
Under the Non-Compete Agreement, you would agree not to disclose confidentialinformation and not to solicit employees. You would also agree not to aid,assist or render services for any 'Competitor' for one-year following terminationof employment. A 'Competitor' means (i) a party engaged in any direct marketingor electronic commerce business or retail, department, specialty, discount,furniture, appliance, electronics, hardware, home improvement, home services,auto parts, auto service, and/or apparel business with combined annualgross sales in excess of $500 million, (ii) a party engaged in any otherline of business in which Sears commences business prior to the terminationof your employment with Sears having combined annual gross sales in thatline of business in excess of $50 million, (iii) any vendor with combinedannual gross sales of services or merchandise to Sears in excess of $100million.
10. Relocation Assistance. You will be eligible for relocationassistance benefits that are typically provided to an executive at yourlevel and in accordance with the terms of that program. It is our understandingthat you will not require assistance with the sale of your existing personalresidence in Michigan.
11. Start Date: You will commence employment with Sears no laterthan TBD.     /s/ Alan Lacy      Alan Lacy      President and CEO12/8/00 Date/s/ Greg A. Lee      Greg Lee12/8/00 Date    

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