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) June 20, 1995
SEARS, ROEBUCK AND CO.
(Exact name of registrant as specified in charter)
New York 1-416 36-1750680
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
Sears Tower, Chicago, Illinois 60684
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 875-2500
<PAGE>
Item 5. Other Events.
On June 20, 1995, the Board of Directors of the Registrant declared a
special dividend to its common shareholders of approximately 0.93 shares
of The Allstate Corporation's common stock for each Sears common share
held on the record date for the distribution. In this connection, the
Registrant issued the press release attached hereto as Exhibit 99 and
the letter and booklet to its shareholders filed as exhibits 20(a) and
20(b) to this report, which exhibits are incorporated herein by
reference.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
The Exhibit Index on page E-1 is incorporated herein by
reference.
<PAGE>
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, ROEBUCK AND CO.
Date: June 20, 1995 By: /S/ DAVID SHUTE
DAVID SHUTE
Senior Vice President, General
Counsel and Secretary
<PAGE>
EXHIBITS
10(a) Employment Agreement between Sears, Roebuck and Co. and John H.
Costello, dated April 1, 1993.
10(b) Employment Agreement between Sears, Roebuck and Co. and Robert
L. Mettler, dated February 1, 1993.
10(c) Letter from Sears, Roebuck and Co. to Russell S. Davis dated
May 18, 1990, relating to employment.
10(d) Letter from Sears, Roebuck and Co. to Alan J. Lacy dated
December 14, 1994 relating to employment.
10(e) Letter from Sears, Roebuck and Co. to William G. Pagonis dated
August 25, 1993, relating to employment.
10(f) Letter from Sears, Roebuck and Co. to Anthony J. Rucci dated
September 21, 1993, relating to employment.
20(a) Letter distributed to Sears, Roebuck and Co. common
shareholders dated June 20, 1995.
20(b) Booklet distributed to Sears, Roebuck and Co. common
shareholders containing Questions and Answers and Information Statement
Concerning the Distribution of 360,500,000 Shares of The Allstate
Corporation Common Stock (Par Value $.01 per Share) by Sears, Roebuck
and Co., dated June 20, 1995.
99. Sears, Roebuck and Co. press release dated June 20, 1995.
E-1
Exhibit 10(a)
EMPLOYMENT AGREEMENT
Between
SEARS, ROEBUCK AND CO.
and
JOHN COSTELLO<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of the date of execution hereof, is
made by and between SEARS, ROEBUCK AND CO., a New York corporation
having its principal place of business in Chicago, Illinois (the
"Company"), and John Costello, a resident of the State of Illinois
(the "Executive").
The Company desires to obtain the services of the Executive,
and the Executive is willing to render such services, in accordance
with the terms hereinafter set forth; and
The Board of Directors of the Company by appropriate
resolutions authorized the employment of the Executive as provided
for in this Agreement.
Accordingly, the Company and the Executive agree as follows:
ARTICLE I
Duties
1.1 Duties. The Company hereby employs the Executive as
Senior Executive Vice President and General Manager, Marketing
Division with the senior direct responsibility for such Division,
and with such additional duties as are appropriate for an executive
officer as are assigned from time to time by the Board of Directors
of the Company (the "Board"), the Chief Executive Officer of the
Company, and/or the Chief Executive Officer of the Sears
Merchandise Group. The Executive shall report to the Chief
Executive Officer of the Sears Merchandise Group. The Executive's
duties are to be performed primarily at the Company's offices
located in the Chicago, Illinois metropolitan area. During the
Executive's employment with the Company during the Contract Term,
and excluding any periods of vacation or sick leave to which the
Executive is entitled, the Executive agrees to devote the
Executive's full attention and time to the business and affairs of
the Company and, to the extent necessary to discharge the duties
assigned to the Executive hereunder, to use his best efforts to
perform such duties faithfully and efficiently.
1.2 Other Activities. It shall not be a violation of this
Agreement for the Executive to (a) serve on corporate, civic or
charitable boards or committees, (b) deliver lectures, fulfill
speaking engagements or teach at educational institutions or (c)
manage personal investments, so long as such activities are
consistent with the policies of the Company (as from time to time
amended) and do not significantly interfere with the performance of
the Executive's duties in accordance with this Agreement. The
Executive shall be entitled to retain all fees, royalties and other
compensation derived from such activities in addition to the
compensation and other benefits payable to him under this
Agreement. Except as provided in Section 7.2(b), this Agreement
shall not be construed to prevent the Executive from investing his
personal funds in any lawful form or manner he may choose.
ARTICLE II
Term of Agreement
2.1 Term. The term ("Contract Term") of this Agreement
shall commence on April 1, 1993 and end on March 31, 1996.
ARTICLE III
Compensation
3.1 Base Salary. During the Executive's employment with the
Company during the Contract Term, the Company shall pay or cause to
be paid to the Executive in cash in accordance with the normal
payroll practices of the Company for peer executives, in
installments not less frequently than monthly, an annual base
salary ("Annual Base Salary") at a rate of $450,000 for each year
of the Contract Term. Such Annual Base Salary shall be reviewed
annually and may be increased by the Company from time to time in
accordance with the Company's policies and procedures for peer
executives.
3.2 Annual Incentive Bonus. The Company shall pay or cause
to be paid to the Executive an annual cash bonus ("Incentive
Bonus") in accordance with any annual incentive bonus plan for peer
executives which has been approved by the Board, and determined
based upon a target bonus amount under such plan equal to 60% of
the Executive's Annual Base Salary, provided that the amount of
such Incentive Bonus shall not be less than $200,000 for the
calendar year ending December 31, 1993, provided that the Executive
is employed by the Company on such date.
3.3 Payment Upon Signing the Agreement. As soon as possible
after April 1, 1993, but not later than May 1, 1993, the Company
shall provide to the Executive
(a) a payment in lieu of perquisites consisting of
$50,000 in cash payable in a lump sum; and
(b) a signing bonus of $50,000.
3.4 Long-Term Incentive Bonus. The Executive shall
participate in the Company's Long-Term Incentive Compensation Plan
for the cycle commencing in 1993 and ending in 1995, based upon a
target award under such Plan equal to 125% of the sum of (i) a
prorated amount of the Executive's 1993 Annual Base Salary for the
portion of the 1993 calendar year during which the Executive is
employed hereunder, (ii) the full amount of the Executive's 1994
Annual Base Salary, and (iii) one-half of the Executive's 1995
Annual Base Salary. With respect to the stock component of such
Long-Term Incentive Compensation Plan, the Executive shall be
entitled to participate in any grants of stock options made by the
Compensation Committee of the Company pursuant to the Long-Term
Incentive Compensation Plan.
3.5 Stock Options.
(a) Grant of Stock Option. As soon as possible after
April 1, 1993, but not later than May 1, 1993, the Company shall
grant to the Executive nonqualified options to purchase 41,547
shares of the Company's common stock (the "Initial Stock Option").
Subject to Sections 3.5(c) and (d), the Initial Stock Option
granted under this Section 3.5(a) shall be exercisable as follows:
Date Number of Shares Subject to Initial
Stock Option Becoming Exercisable
April 1, 1994 13,849
April 1, 1995 13,849
April 1, 1996 13,849
(b) Exercise Price. The exercise price of the Initial
Stock Option shall be the mean (adjusted to the next higher cent
to eliminate any fractional cents) between the high and low
reported prices per share of the Company's common stock as
reported in a summary of composite transactions for stocks listed
on the New York Stock Exchange on the date of grant ("Fair Market
Value").
(c) Termination of Options. Notwithstanding any
other provision hereof to the contrary, the Initial Stock Option
shall not be exercisable after March 31, 2005, or such earlier date
as determined pursuant to the terms of the 1990 Employees Stock
Plan.
(d) Terms of Plan Apply. Except as otherwise
specified herein, all stock options granted under this Section
3.5 shall be subject to the terms of the 1990 Employees Stock Plan.
3.6 Restricted Stock.
(a) Initial Grant. As soon as possible after April
1, 1993, but not later than May 1, 1993, the Company shall grant to
the Executive 14,100 shares ("Initial Restricted Stock") of the
Company's common stock. Except as provided in Section 3.6(b), the
Initial Restricted Stock shall vest as follows if the Executive
has remained continuously employed (including any periods of sick
leave to which the Executive is entitled) with the Company through
the date indicated:
Number of
Date Shares Vesting
April 1, 1994 4,700
April 1, 1995 4,700
April 1, 1996 4,700
(b) Forfeiture and Vesting.
(1) If the Executive's employment is terminated
by the Company for Cause or voluntarily by the Executive, any
unvested shares of Initial Restricted Stock shall be forfeited.
(2) In the event the Executive's employment is
terminated by the Company other than for Cause, or the Executive's
employment is terminated due to death or disability, a number of
unvested shares of Initial Restricted Stock shall be vested on the
Date of Termination which is equal to:
(i) if the Date of Termination occurs on or after
April 1, 1993 but before April 1, 1994, the product of (A) 4,700,
multiplied by (B) a fraction (not in excess of one), the numerator
of which is the number of months (or fractions of months) in the
period commencing on April 1, 1993 and ending on the Date of
Termination, and the denominator of which is 12;
and
(ii) if the Date of Termination occurs on or
after April 1, 1994 but before April 1, 1995, the product of (A)
4,700, multiplied by (B) a fraction (not in excess of one), the
numerator of which is the number of months (or fractions of months)
in the period commencing on April 1, 1994, and ending on the Date
of Termination, and the denominator of which is 12; and
(iii) if the Date of Termination occurs on or
after April 1, 1995 but before April 1, 1996, the product of (A)
4,700, multiplied by (B) a fraction (not in excess of one), the
numerator of which is the number of months (or fractions of months)
in the period commencing on April 1, 1995, and ending on the Date
of Termination, and the denominator of which is 12.
(c) Stock Transfer. Prior to the vesting of the Initial
Restricted Stock pursuant to this Section 3.6, the Executive shall
not sell, assign, pledge, give, bequeath, negotiate, hypothecate,
encumber or otherwise transfer, with or without consideration,
voluntarily or involuntarily any shares of Initial Restricted Stock
except in accordance with the provisions of this Agreement or with
the written consent of the Company. Any other attempted transfer
shall be null and void.
(d) Terms of Plan Apply. The Initial Restricted
Stock, except as otherwise specified herein, shall be subject to
the terms of the 1990 Employees Stock Plan.
3.7 Supplemental Retirement Benefit.
(a) Supplemental Retirement Benefit Under the
Nonqualified Plan Maintained by the Company. The Executive shall
be entitled to participate in the Sears, Roebuck and Co.
Supplemental Retirement Income Plan ("Supplemental Plan") under the
terms and conditions thereof.
(b) Additional Past-Service Pension. The Executive
shall be entitled to an additional retirement benefit (the
"Additional Past-Service Pension") from the Company that shall be
equal to the vested portion (as determined under Section 3.7(c)) of
the excess of (1) the aggregate pension benefit that the Executive
would receive under the Sears Pension Plan ("Pension Plan") and the
Supplemental Plan if he were credited with an additional ten years
of service under such Plans solely for purposes of benefit accrual
(but not for purposes of vesting nor for purposes of determining
eligibility for early retirement subsidies), over (2) the aggregate
pension benefit that the Executive actually receives under the
Pension Plan and Supplemental Plan.
(c) Vesting of Additional Past-Service Pension.
(1) The Additional Past-Service Pension shall
be fully vested if the Executive has remained continuously employed
(including any periods of sick leave to which the Executive is
entitled) with the Company through March 31, 1998.
(2) If the Executive's employment is terminated
by the Company for Cause or voluntarily by the Executive prior to
March 31, 1998, the Additional Past-Service Pension shall be
forfeited in its entirety.
(3) In the event the Executive's employment is
terminated by the Company other than for Cause, or the Executive's
employment is terminated due to death or disability, prior to March
31, 1998, the Executive shall be vested in a portion of the
Additional Past-Service Pension Benefit in accordance with the
following schedule.
Date of Termination Vesting Percentage
March 31, 1994 20%
March 31, 1995 40%
March 31, 1996 60%
March 31, 1997 80%
(d) Time and Manner of Payment of the Additional
Past-Service Pension. The Additional Past-Service Pension shall be
payable in the same form and at the same time as the Executive's
benefits under the Pension Plan.
ARTICLE IV
Other Benefits
4.1 Incentive, Savings and Retirement Plans. During the
Executive's employment with the Company during the Contract Term,
the Executive shall be entitled to participate in all incentive
(including long-term incentives), savings and retirement plans,
practices, policies and programs applicable to other peer
executives of the Company.
4.2 Welfare Benefits. During the Executive's employment
with the Company during the Contract Term, the Executive and/or the
Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the
Company (including, and without limitation except as otherwise
provided herein, medical, prescription, disability, group universal
life, and travel accident insurance plans and programs and
excluding during the Contract Term any severance or salary
continuation plan, practice, policy or program) and applicable to
other peer executives of the Company.
4.3 Fringe Benefits. During the Executive's employment with
the Company during the Contract Term, the Executive shall be
entitled to fringe benefits applicable to other peer executives of
the Company.
4.4 Expenses. During the Executive's employment with the
Company during the Contract Term, the Executive shall be entitled
to receive prompt reimbursement for all reasonable employment-
related expenses incurred by the Executive upon the Company's
receipt of accounting in accordance with practices, policies and
procedures applicable to peer executives of the Company.
4.5 Office and Support Staff. During the Executive's
employment with the Company during the Contract Term, the Executive
shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to personal secretarial and
other assistance, provided with respect to other peer executives of
the Company.
4.6 Vacation. During the Executive's employment with the
Company during the Contract Term, the Executive shall be entitled
to paid vacation time (but not less than three weeks per year) in
accordance with the plans, practices, policies, and programs
applicable to other peer executives of the Company.
ARTICLE V
Termination of Employment
5.1 Termination of Employment for Cause or Voluntary
Termination. If the Company terminates the Executive's employment
for Cause or the Executive voluntarily terminates employment, the
Company's obligations under this Agreement shall terminate, except
that the Company shall pay within 30 days after the Date of
Termination to the Executive that portion of the Executive's Annual
Base Salary which is accrued but unpaid as of such Date of
Termination.
5.2 Termination of Employment Upon Death or By The Company
Because Of Disability.
(a) If the Executive's employment with the Company is
terminated on account of his death or if the Company terminates the
Executive's employment on account of disability, the Company's
obligations under this Agreement shall terminate except that the
Company shall pay within 30 days after the Date of Termination to
the Executive (1) that portion of the Executive's Annual Base
Salary which is accrued but unpaid as of such Date of Termination
and (2) if such termination occurrs in calendar year 1993, a
portion of the amount of the guaranteed Incentive Bonus (as set
forth in Section 3.2) to which the Executive would have been
entitled if he had been employed by the Company on December 31,
1993, equal to such amount, multiplied by a fraction, the numerator
of which is the number of days which have elapsed in such calendar
year commencing with April 1, 1993 through the Date of Termination,
and the denominator of which is 275. The decision regarding
whether the Executive's employment by the Company shall be
terminated on account of disability is at the sole option of the
Company.
(b) For purposes of this Agreement, "disability"
means any medically determinable physical or mental impairment that
can be expected to last for a continuous period of not less than
six months and that renders the Executive unable to perform the
duties required of him under this Agreement. If there is any
dispute between the parties as to the Executive's physical or
mental impairment pursuant to the provisions hereof, the date of
the determination of disability shall be the date on which the
Executive is certified as having incurred a disability by a
physician acceptable to the Company.
5.3 Termination of Executive's Employment By the Company
Other Than For Cause. If, during the Contract Term, the Company
terminates the Executive's employment other than for Cause, the
Company's obligations under this Agreement shall terminate, except
that the Executive shall be entitled to the following payments
under this Agreement (at the times the Executive would have been
entitled to receive such amounts had his employment not been so
terminated), to the extent not already paid, but to no other
payments by the Company except as provided in Section 5.4: (1) the
amounts of (A) his Annual Base Salary as if he had remained
employed by the Company until the end of the Contract Term, (B) the
Incentive Bonus guaranteed in Section 3.2 as if he had remained
employed up to and including December 31, 1993, and (C) any other
such benefit which the Agreement specifically provides is vested or
payable upon the termination of the Executive's employment by the
Company other than for Cause.
5.4 Other Termination Benefits. In addition to any amounts
or benefits payable upon termination of employment hereunder and
except as otherwise provided herein, the Executive shall be
entitled to any payments or benefits explicitly provided under the
terms of any plan, policy or program of the Company (excluding
during the Contract Term any severance or salary continuation plan,
practice, policy or program) or as otherwise required by applicable
law.
ARTICLE VI
Certain Definitions
6.1 "Cause" means (a) the Executive's committing any felony
or other crime involving dishonesty; (b) the Executive's engaging
in any serious misconduct in the course of the Executive's
employment (excluding any action taken in good faith by the
Executive in connection with his duties hereunder reasonably
believed by the Executive in good faith to be in, and not opposed
to, the best interest of the Company, without intent of the
Executive to gain therefrom, directly or indirectly, a profit); (c)
the Executive's habitual neglect of the Executive's duties (other
than on account of disability); or (d) a material breach of this
Agreement by the Executive, provided that, if such breach is both
inadvertent and nonrecurring, the Executive received written notice
from the Company of such breach and failed to fully cure such
breach within 15 days after receiving such notice.
6.2 "Date of Termination" means the date as of which the
Executive's employment with the Company is terminated by the
Company or by the Executive for any reason including, but not
limited to, death or disability.
ARTICLE VII
Trade Secrets, Confidential and Proprietary
usiness Information
7.1 Protected Information.
(a) Definition of Protected Information. The Company
has advised the Executive and the Executive acknowledges that it
is the policy of the Company to maintain as secret and confidential
all Protected Information (as defined below), and that Protected
Information has been and will be developed at substantial cost and
effort to the Company. "Protected Information" means trade
secrets, confidential and proprietary business information of the
Company, any information of the Company other than information
which has entered the public domain (unless such information
entered the public domain through the efforts of or on account of
the Executive), and all valuable and unique information and
techniques acquired, developed or used by the Company relating to
its business, operations, employees and customers, which give the
Company a competitive advantage over those who do not know the
information and techniques and which are protected by the Company
from unauthorized disclosure.
(b) Acknowledgment. The Executive acknowledges that
the Executive will acquire Protected Information with respect to
the Company and its successors in interest, which information is a
valuable, special and unique asset of the Company's business and
operations and that disclosure of such Protected Information would
cause irreparable damage to the Company.
(c) No Disclosure or Use. The Executive shall not
use in any manner, either during or after any termination of
employment with the Company, any Protected Information other than
for the exclusive benefit of the Company. The Executive shall not,
directly or indirectly, divulge, furnish or make accessible to any
person, firm, corporation, association or other entity, either
during or after any termination of employment with the Company, any
Protected Information except (i) in furtherance of the regular
course of the Executive's duties under this Agreement, (ii) to the
extent the Protected Information has been publicly announced by the
Company (excluding any unauthorized release by the Executive), or
(iii) as may be required by order or subpoena of any court of
administrative agency of the United States or any state or
political subdivision thereof; provided, however, that the
Executive shall use his best efforts to give the Company notice of
any such order or subpoena at the earliest practical date and shall
to the maximum extent permitted by such order or subpoena, and
applicable law, defer compliance with such order or subpoena until
the Company has had every reasonable opportunity to contest such
order or subpoena by appropriate proceedings. The Executive shall
reasonably cooperate with any such contest proceeding brought by
the Company.
7.2 Non-Competition.
(a) The Executive agrees that the Executive shall not
during the Executive's employment with the Company, and, if the
Executive's employment is terminated, thereafter for the remainder
of the Contract Term, directly or indirectly, in any capacity,
engage or participate in, or become employed by or render advisory
or consulting or other services in connection with any Prohibited
Business as defined in Section 7.2(c) without the written consent
of the Company.
(b) The Executive agrees that the Executive shall not
during the Executive's employment with the Company, and, if the
Executive's employment is terminated, thereafter for the remainder
of the Contract Term, make any financial investment, whether in
the form of equity or debt, or own any interest, directly or
indirectly, in any Prohibited Business. Nothing in this Section
7.2 shall, however, restrict the Executive from making any
investment in any company whose stock is listed on an American
securities exchange or actively traded in the over-the-counter
market and has sales in excess of $500 million; provided that (i)
such investment does not give the Executive the right or ability to
control or influence the policy decisions of any Prohibited
Business, and (ii) such investment does not create a conflict of
interest between the Executive's duties hereunder and the
Executive's interest in such investment.
(c) For the purpose of this Section 7.2, "Prohibited
Business" shall be defined as any business and any branch, office
or operation thereof, which is in material competition with the
Company, including, without limitation, any retail department,
specialty, furniture or clothing store business.
7.3 Undertaking Regarding Employees and Agents. From the
date hereof until two (2) years after the Date of Termination, the
Executive shall not, directly or indirectly (a) induce or encourage
any employee or agent of the Company or its successors in interest
to leave their employment or to terminate or limit their
relationship with the Company or its successors in interest; or (b)
employ, hire, solicit or cause to be employed or hired or solicited
(other than by the Company or its successors in interest), or
establish a business with, or encourage others to hire or solicit,
any person who within two (2) years prior thereto was an employee
or agent of the Company or its successors in interest.
7.4 Disclosure of Protected Information to Company. The
Executive agrees to promptly disclose to the Company all Protected
Information developed in whole or in part by the Executive during
the Executive's employment with the Company and which relate to the
Company's business. Such Protected Information is, and shall
remain, the exclusive property of the Company. All writings
created during the Executive's employment with the Company
(excluding writings unrelated to the Company's business) are
considered to be "works-for-hire" for the benefit of the Company
and the Company shall own all rights in such writings.
7.5 Survival of Undertakings and Injunctive Relief.
(a) Survival of Sections 7.1, 7.2, 7.3 and 7.4. The
provisions of Section 7.1, 7.2, 7.3 and 7.4 shall survive the
termination of the Executive's employment with the Company
irrespective of the reasons therefor.
(b) Injunctive Relief. The Executive acknowledges and
agrees that the restrictions imposed upon the Executive by
Sections 7.1, 7.2, 7.3 and 7.4 and the purpose of such restrictions
are reasonable and are designed to protect the Protected
Information and the continued success of the Company without unduly
restricting Executive's future employment by others. Furthermore,
Executive acknowledges that, in view of the Protected Information
which Executive has or will acquire or has or will have access to
and in view of the necessity of the restrictions contained in
Sections 7.1, 7.2, 7.3 and 7.4, any violation of any provision of
Sections 7.1, 7.2, 7.3 and 7.4 hereof would cause irreparable
injury to the Company and its successors in interest with respect
to the resulting disruption in their operations. By reason of the
foregoing, the Executive consents and the Executive and the Company
agree that if the Executive violates any of the provisions of
Sections 7.1, 7.2, 7.3 or 7.4 of this Agreement, the Company and
its successors in interest as the case may be, shall be entitled,
in addition to any other remedies that they may have, including
money damages, to an injunction to be issued by a court of
competent jurisdiction, restraining the Executive from committing
or continuing any violation of such Sections of this Agreement.
ARTICLE VIII
Miscellaneous
8.1 Assignment, Successors. The Company may freely assign
its respective rights and obligations under this Agreement to a
successor of the Company's business, without the prior written
consent of the Executive. This Agreement shall be binding upon and
inure to the benefit of the Executive and the Executive's estate
and the Company and any assignee of or successor to the Company.
8.2 Beneficiary. Except as otherwise provided herein, if
the Executive dies prior to receiving all amounts hereunder, such
amounts shall be paid in a lump sum payment to the beneficiary
designated in writing by the Executive ("Beneficiary") and if no
such Beneficiary is designated, to the Executive's estate.
8.3 Nonalienation of Benefits. Benefits payable under this
Agreement shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance,
charge, garnishment, execution or levy of any kind, either
voluntary or involuntary, prior to actually being received by the
Executive, and any such attempt to dispose of any right to benefits
payable hereunder shall be void.
8.4 Severability. If all or any part of this Agreement is
declared by any court or governmental authority to be unlawful or
invalid, such unlawfulness or invalidity shall not serve to
invalidate any portion of this Agreement not declared to be
unlawful or invalid. Any paragraph or part of a paragraph so
declared to be unlawful or invalid shall, if possible, be construed
in a manner which will give effect to the terms of such paragraph
or part of a paragraph to the fullest extent possible while
remaining lawful and valid.
8.5 Amendment and Waiver. This Agreement shall not be
altered, amended or modified except by written instrument executed
by the Company and the Executive. A waiver of any term, covenant,
agreement or condition contained in this Agreement shall not be
deemed a waiver of any other term, covenant, agreement or
condition, and any waiver of any default in any such term,
covenant, agreement or condition shall not be deemed a waiver of
any later default thereof or of any other term, covenant, agreement
or condition.
8.6 Notices. All notices and other communications hereunder
shall be in writing and delivered by hand or by first class
registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Company: Sears, Roebuck and Co.
Sears Tower, 68th Floor
Chicago, Illinois 60606
Attn: General Counsel
If to the Executive: Mr. John Costello
1414 Kathryn Lane
Lake Forest, Illinois 60045
Either party may from time to time designate a new address by
notice given in accordance with this Section. Notice and
communications shall be effective when actually received by the
addressee.
8.7 Counterpart Originals. This Agreement may be executed
in several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the same
instrument.
8.8 Entire Agreement. This Agreement forms the entire
agreement between the parties hereto with respect to any severance
payment and with respect to the subject matter contained in the
Agreement. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this
Agreement.
8.9 Employee Benefit Plans As Amended. Any reference to
any plan, practice, policy or program contained herein shall,
except as otherwise specifically provided herein, mean such plan,
practice, policy or program as amended from time to time.
8.10 Applicable Law. The provisions of this Agreement shall
be interpreted and construed in accordance with the laws of the
state of Illinois, without regard to its choice of law principles.
IN WITNESS WHEREOF, the parties have executed this Agreement
on this 1st day of April, 1993.
SEARS, ROEBUCK AND CO.
By: /S/ Arthur C. Martinez
ARTHUR C. MARTINEZ,
Chairman and Chief Executive
Officer of the Sears Merchandise Group
/S/ John Costello
JOHN COSTELLO
Exhibit 10(b)
EMPLOYMENT AGREEMENT
Between
SEARS, ROEBUCK AND CO.
and
ROBERT L. METTLER<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of the date of execution hereof, is
made by and between SEARS, ROEBUCK AND CO., a New York corporation
having its principal place of business in Chicago, Illinois (the
"Company"), and Robert L. Mettler, a resident of the State of
California (the "Executive").
The Company desires to obtain the services of the Executive,
and the Executive is willing to render such services, in accordance
with the terms hereinafter set forth; and
The Board of Directors of the Company by appropriate
resolutions authorized the employment of the Executive as provided
for in this Agreement.
Accordingly, the Company and the Executive agree as follows:
ARTICLE I
Duties
1.1 Duties. The Company hereby employs the Executive as
President, Sears Apparel Group with the senior direct
responsibility for such Group, and with such additional duties as
are appropriate for an executive officer as are assigned from time
to time by the Board of Directors of the Company (the "Board"), the
Chief Executive Officer of the Company, and/or the Chief Executive
Officer of the Sears Merchandise Group. The Executive shall report
to the Chief Executive Officer of the Sears Merchandise Group. The
Executive's duties are to be performed primarily at the Company's
offices located in the Chicago, Illinois metropolitan area. During
the Executive's employment with the Company during the Contract
Term, and excluding any periods of vacation or sick leave to which
the Executive is entitled, the Executive agrees to devote the
Executive's full attention and time to the business and affairs of
the Company and, to the extent necessary to discharge the duties
assigned to the Executive hereunder, to use his best efforts to
perform such duties faithfully and efficiently.
1.2 Other Activities. It shall not be a violation of this
Agreement for the Executive to (a) serve on corporate, civic or
charitable boards or committees, (b) deliver lectures, fulfill
speaking engagements or teach at educational institutions or (c)
manage personal investments, so long as such activities are
consistent with the policies of the Company (as from time to time
amended) and do not significantly interfere with the performance of
the Executive's duties in accordance with this Agreement. The
Executive shall be entitled to retain all fees, royalties and other
compensation derived from such activities in addition to the
compensation and other benefits payable to him under this
Agreement. Except as provided in Section 7.2(b), this Agreement
shall not be construed to prevent the Executive from investing his
personal funds in any lawful form or manner he may choose.
ARTICLE II
Term of Agreement
2.1 Term. The term ("Contract Term") of this Agreement
shall commence on February 15, 1993 and end on February 14, 1996.
ARTICLE III
Compensation
3.1 Base Salary. During the Executive's employment with the
Company during the Contract Term, the Company shall pay or cause to
be paid to the Executive in cash in accordance with the normal
payroll practices of the Company for peer executives, in
installments not less frequently than monthly, an annual base
salary ("Annual Base Salary") at a rate of $600,000 for each year
of the Contract Term. Such Annual Base Salary shall be reviewed
annually and may be increased by the Company
from time to time in accordance with the Company's policies and
procedures for peer executives.
3.2 Annual Incentive Bonus. The Company shall pay or cause
to be paid to the Executive an annual cash bonus ("Incentive
Bonus") in accordance with any annual incentive bonus plan for peer
executives which has been approved by the Board, and determined
based upon a target bonus amount under such plan equal to 60% of
the Executive's Annual Base Salary, provided that the amount of
such Incentive Bonus shall not be less than:
(a) $360,000 for the calendar year ending December
31, 1993, provided that the Executive is employed by the Company on
such date; and
(b) $200,000 for the calendar year ending December
31, 1994, provided that the Executive is employed by the Company on
such date.
3.3 Payment Upon Signing the Agreement. As soon as possible
after February 15, 1993, but not later than March 15, 1993, the
Company shall provide to the Executive a payment in lieu of
perquisites consisting of $250,000 in cash payable in a lump sum.
3.4 Long-Term Incentive Bonus. The Executive shall
participate in the Company's Long-Term Incentive Compensation Plan
for the cycle commencing in 1993 and ending in 1995, based upon a
target award under such Plan equal to 125% of the sum of (i) the
full amount of the Executive's 1993 Annual Base Salary, (ii) the
full amount of the Executive's 1994 Annual Base Salary, and (iii)
one-half of the Executive's 1995 Annual Base Salary. With respect
to the stock component of such Long-Term Incentive Compensation
Plan, the Executive shall be entitled to participate in any grants
of stock options made by the Compensation Committee of the Company
pursuant to the Long-Term Incentive Compensation Plan.
3.5 Stock Options.
(a) Grant of Stock Options. As soon as possible
after February 15, 1993, but not later than March 15, 1993, the
Company shall grant to the Executive nonqualified options to
purchase 40,000 shares of the Company's common stock (the "Initial
Stock Options"). Subject to Sections 3.5(c) and (d), the Initial
Stock Options granted under this Section 3.5(a) shall be
exercisable in one or more installments, at the discretion of the
Executive, on or after February 14, 1998.
(b) Exercise Price. The exercise price of the
Initial Stock Options shall be the mean (adjusted to the next
higher cent to eliminate any fractional cents) between the high and
low reported prices per share of the Company's common stock as
reported in a summary of composite transactions for stocks listed
on the New York Stock Exchange on the date of grant ("Fair Market
Value").
(c) Vesting of Options.
(1) If, prior to February 14, 1998, the Executive's
employment is terminated by the Company for Cause or voluntarily by
the Executive, the Initial Stock Options shall be forfeited, and
(2) If, prior to February 14, 1998, the Company
terminates the Executive's employment other than for Cause, or the
Executive's employment is terminated due to death or disability, a
number of Initial Stock Options shall be fully vested immediately
which is equal to (A) the product of the number of Initial Stock
Options, multiplied by (B) a fraction (not in excess of one), the
numerator of which is the number of months (or fractions of
months) in the period commencing on February 15, 1993, and ending
on the Date of Termination, and the denominator of which is 60,
which vested options shall be exercisable (i) for a period of three
months following such Date of Termination in the case of
termination other than for Cause and other than due to death,
disability or retirement, or (ii) for a period of two years
following such Date of Termination in the case of termination due
to death, disability or retirement.
(d) Termination of Options. Notwithstanding any other
provision hereof to the contrary, the Initial Stock Options shall
not be exercisable after February 14, 2005, or such earlier date as
determined pursuant to the terms of the 1990 Employees Stock Plan.
(e) Terms of Plan Apply. Except as otherwise specified
herein, all stock options granted under this Section 3.5 shall be
subject to the terms of the 1990 Employees Stock Plan.
3.6 Restricted Stock.
(a) Initial Grant. As soon as possible after
February 15, 1993, but not later than March 15, 1993, the Company
shall grant to the Executive 20,000 shares ("Initial Restricted
Stock") of the Company's common stock. Except as provided in
Section 3.6(b), the Initial Restricted Stock shall vest as follows
if the Executive has remained continuously employed (including any
periods of sick leave to which the Executive is entitled) with the
Company through the date indicated:
Number of
Date Shares Vesting
Date of Grant 5,000
February 14, 1994 6,000
February 14, 1995 9,000
(b) Forfeiture and Vesting.
(1) If the Executive's employment is terminated
by the Company for Cause or voluntarily by the Executive, any
unvested shares of Initial Restricted Stock shall be forfeited.
(2) In the event the Executive's employment is
terminated by the Company other than for Cause, or the Executive's
employment is terminated due to death or disability, a number of
unvested shares of Initial Restricted Stock shall be vested on the
Date of Termination which is equal to:
(i) if the Date of Termination occurs on or after
February 15, 1993 but before February 15, 1994, the product of (A)
6,000, multiplied by (B) a fraction (not in excess of one), the
numerator of which is the number of months (or fractions of
months) in the period commencing on February 15, 1993 and ending
on the Date of Termination, and the denominator of which is 12; and
(ii) if the Date of Termination occurs on or
after February 15, 1994 but before February 15, 1995, the product
of (A) 9,000, multiplied by (B) a fraction (not in excess of one),
the numerator of which is the number of months (or fractions of
months) in the period commencing on February 15, 1994, and ending
on the Date of Termination, and the denominator of which is 12.
(c) Stock Transfer. Prior to the vesting of the Initial
Restricted Stock pursuant to this Section 3.6, the Executive shall
not sell, assign, pledge, give, bequeath, negotiate, hypothecate,
encumber or otherwise transfer, with or without consideration,
voluntarily or involuntarily any shares of Initial Restricted Stock
except in accordance with the provisions of this Agreement or with
the written consent of the Company. Any other attempted transfer
shall be null and void.
(d) Terms of Plan Apply. The Initial Restricted
Stock, except as otherwise specified herein, shall be subject to
the terms of the 1990 Employees Stock Plan.
3.7 Supplemental Retirement Benefit.
(a) Supplemental Retirement Benefit Under the
Nonqualified Plan Maintained by the Company. The Executive shall
be entitled to participate in the Sears, Roebuck and Co.
Supplemental Retirement Income Plan ("Supplemental Plan") under the
terms and conditions thereof.
(b) Additional Past-Service Pension. The Executive
shall be entitled to an additional retirement benefit (the
"Additional Past-Service Pension") from the Company that shall be
equal to the vested portion (as determined under Section 3.7(c)) of
the excess of (1) the aggregate pension benefit that the Executive
would receive under the Sears Pension Plan ("Pension Plan") and the
Supplemental Plan if he were credited with an additional six years
of service under such Plans solely for purposes of benefit accrual
(but not for purposes of vesting nor for purposes of determining
eligibility for early retirement subsidies), over (2) the aggregate
pension benefit that the Executive actually receives under the
Pension Plan and Supplemental Plan.
(c) Vesting of Additional Past-Service Pension.
(1) The Additional Past-Service Pension shall vest in
accordance with the following schedule if the Executive has
remained continuously employed (including any periods of sick leave
to which the Executive is entitled) with the Company through the
date indicated:
Date of Termination Vesting Percentage
February 14, 1998 50%
February 14, 1999 60%
February 14, 2000 70%
February 14, 2001 80%
February 14, 2002 90%
February 14, 2003 100%
(2) If the Executive's employment is terminated
by the Company for Cause or voluntarily by the Executive prior to
February 14, 1998, the Additional Past-Service Pension shall be
forfeited in its entirety.
(3) In the event the Executive's employment is
terminated by the Company other than for Cause, or the Executive's
employment is terminated due to death or disability, prior to
February 14, 1998, the Executive shall be vested in a portion of
the Additional Past-Service Pension Benefit in accordance with the
following schedule.
Date of Termination Vesting Percentage
February 14, 1994 10%
February 14, 1995 20%
February 14, 1996 30%
February 14, 1997 40%
(d) Time and Manner of Payment of the Additional
Past-Service Pension. The Additional Past-Service Pension shall be
payable in the same form and at the same time as the Executive's
benefits under the Pension Plan.
3.8 Minimum Aggregate Pension Benefits.
(a) Minimum Benefit After Ten Years of Service. If
the Executive remains continuously employed (including any periods
of sick leave to which the Executive is entitled) with the Company
through February 14, 2003, the Executive shall be entitled to an
additional retirement benefit (the "Minimum Pension Supplement")
from the Company, payable monthly in the form of a single life
annuity commencing at the date the Executive attains age 65 or
retires from the Company, whichever is later, in an amount equal to
one-twelfth (1/12th) of the excess, if any, of (1) $125,000, over
(2) the aggregate annual pension benefit that the Executive is
entitled to receive, payable in the form of a single life annuity
commencing at the date the Executive attains age 65 or retires from
the Company, whichever is later, under the Pension Plan and the
Supplemental Plan and also including the Additional Past-Service
Pension determined under Section 3.7(b).
(b) Termination of Employment Other Than for Cause or
By Reason of Death or Disability. If prior to February 14, 2003,
the Company terminates the Executive's employment other than for
Cause, or the Executive's employment is terminated due to death or
disability, the Executive shall be entitled to a Minimum Pension
Supplement determined in accordance with Section 3.8(a) by
substituting for "$125,000" in clause (1) thereof, the following:
"an amount equal to $125,000 multiplied by a fraction (not in
excess of one), the numerator of which is the number of months (or
fractions of months) in the period commencing on February 15, 1993,
and ending on the Date of Termination, and the denominator of which
is 120."
ARTICLE IV
Other Benefits
4.1 Incentive, Savings and Retirement Plans. During the
Executive's employment with the Company during the Contract Term,
the Executive shall be entitled to participate in all incentive
(including long-term incentives), savings and retirement plans,
practices, policies and programs applicable to other peer
executives of the Company.
4.2 Welfare Benefits. During the Executive's employment
with the Company during the Contract Term, the Executive and/or the
Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the
Company (including, and without limitation except as otherwise
provided herein, medical, prescription, disability, group life, and
travel accident insurance plans and programs and excluding during
the Contract Term any severance or salary continuation plan,
practice, policy or program) and applicable to other peer
executives of the Company.
4.3 Fringe Benefits. During the Executive's employment with
the Company during the Contract Term, the Executive shall be
entitled to fringe benefits applicable to other peer executives of
the Company, including but not limited to the Sears Relocation
Policies, Procedures and Guidelines ("Moving Policy"); provided
that the Executive shall be entitled to the Coldwell Banker
Relocation Management Services provided under the Moving Policy at
his election for a period commencing February 15, 1993 and ending
no later than August 14, 1993, and further provided that, to the
extent not otherwise provided by this Section 4.3, the Company
shall reimburse the Executive for Temporary Living Expenses.
Temporary Living Expenses shall consist of the following reasonable
expenses actually incurred by the Executive and his spouse for the
period commencing February 15, 1993 and ending August 14, 1993: (1)
travel on a bi-weekly basis between California and Chicago,
Illinois, and (2) until such time as the Executive's California
residence is sold (but not after August 14, 1993), the cost of
lodging in a hotel or rental unit and other incidental related
expenses.
4.4 Expenses. During the Executive's employment with the
Company during the Contract Term, the Executive shall be entitled
to receive prompt reimbursement for all reasonable employment-
related expenses incurred by the Executive upon the Company's
receipt of accountings in accordance with practices, policies and
procedures applicable to peer executives of the Company.
4.5 Office and Support Staff. During the Executive's
employment with the Company during the Contract Term, the Executive
shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to personal secretarial and
other assistance, provided with respect to other peer executives of
the Company.
4.6 Vacation. During the Executive's employment with the
Company during the Contract Term, the Executive shall be entitled
to paid vacation time (but not less than three weeks per year) in
accordance with the plans, practices, policies, and programs
applicable to other peer executives of the Company.
ARTICLE V
Termination of Employment
5.1 Termination of Employment for Cause or Voluntary
Termination. If the Company terminates the Executive's employment
for Cause or the Executive voluntarily terminates employment, the
Company's obligations under this Agreement shall terminate, except
that the Company shall pay within 30 days after the Date of
Termination to the Executive that portion of the Executive's Annual
Base Salary which is accrued but unpaid as of such Date of
Termination.
5.2 Termination of Employment Upon Death or By The Company
Because Of Disability.
(a) If the Executive's employment with the Company is
terminated on account of his death or if the Company terminates the
Executive's employment on account of disability, the Company's
obligations under this Agreement shall terminate except that the
Company shall pay within 30 days after the Date of Termination to
the Executive (1) that portion of the Executive's Annual Base
Salary which is accrued but unpaid as of such Date of Termination
and (2) a portion of the amount of the guaranteed Incentive Bonus
(as set forth in Section 3.2(a) or (b)) to which the Executive
would have been entitled if he had been employed by the Company on
December 31 of the calendar year in which his death occurred or in
which the Company terminated his employment on account of
disability, equal to such amount, multiplied by a fraction, the
numerator of which is the number of days which have elapsed in such
calendar year (commencing with February 15, 1993 in the case of
calendar year 1993) through the Date of Termination, and the
denominator of which is 320 in 1993 and 365 in 1994. The decision
regarding whether the Executive's employment by the Company shall
be terminated on account of disability is at the sole option of the
Company.
(b) For purposes of this Agreement, "disability" means
any medically determinable physical or mental impairment that can
be expected to last for a continuous period of not less than six
months and that renders the Executive unable to perform the duties
required of him under this Agreement. If there is any dispute
between the parties as to the Executive's physical or mental
impairment pursuant to the provisions hereof, the date of the
determination of disability shall be the date on which the
Executive is certified as having incurred a disability by a
physician acceptable to the Company. (c) Solely for
purposes of the Executive's right to vest in the Initial Stock
Options as set forth in Section 3.5, a termination of the
Executive's employment on account of death or by the Company
because of disability shall include any such termination which
occurs subsequent to the end of the Contract Term.
5.3 Termination of Executive's Employment By the Company
Other Than For Cause.
(a) If, during the Contract Term, the Company
terminates the Executive's employment other than for Cause, the
Company's obligations under this Agreement shall terminate, except
that the Executive shall be entitled to the following payments
under this Agreement (at the times the Executive would have been
entitled to receive such amounts had his employment not been so
terminated), to the extent not already paid, but to no other
payments by the Company except as provided in Section 5.4: (1) the
amounts of (A) his Annual Base Salary as if he had remained
employed by the Company until the end of the Contract Term, (B) the
Incentive Bonus guaranteed in Section 3.2(a) and (b) as if he had
remained employed up to and including December 31, 1994, and (C)
any other such benefit which the Agreement specifically provides is
vested or payable upon the termination of the Executive's
employment by the Company other than for Cause. (b)
Solely for purposes of the Executive's right to vest in the Initial
Stock Options as set forth in Section 3.5, a termination of the
Executive's employment other than for Cause shall include any such
termination which occurs subsequent to the end of the Contract
Term.
5.4 Other Termination Benefits. In addition to any amounts
or benefits payable upon termination of employment hereunder and
except as otherwise provided herein, the Executive shall be
entitled to any payments or benefits explicitly provided under the
terms of any plan, policy or program of the Company (excluding
during the Contract Term any severance or salary continuation plan,
practice, policy or program) or as otherwise required by applicable
law.
ARTICLE VI
Certain Definitions
6.1 "Cause" means (a) the Executive's committing any felony
or other crime involving dishonesty; (b) the Executive's engaging
in any serious misconduct in the course of the Executive's
employment (excluding any action taken in good faith by the
Executive in connection with his duties hereunder reasonably
believed by the Executive in good faith to be in, and not opposed
to, the best interest of the Company, without intent of the
Executive to gain therefrom, directly or indirectly, a profit); (c)
the Executive's habitual neglect of the Executive's duties (other
than on account of disability); or (d) a material breach of this
Agreement by the Executive, provided that, if such breach is both
inadvertent and nonrecurring, the Executive received written notice
from the Company of such breach and failed to fully cure such
breach within 15 days after receiving such notice.
6.2 "Date of Termination" means the date as of which the
Executive's employment with the Company is terminated by the
Company or by the Executive for any reason including, but not
limited to, death or disability.
ARTICLE VII
Trade Secrets, Confidential and Proprietary
Business Information
7.1 Protected Information.
(a) Definition of Protected Information. The Company
has advised the Executive and the Executive acknowledges that it is
the policy of the Company to maintain as secret and confidential
all Protected Information (as defined below), and that Protected
Information has been and will be developed at substantial cost an
deffort to the Company. "Protected Information" means trade
secrets, confidential and proprietary business information of the
Company, any information of the Company other than information
which has entered the public domain (unless such information
entered the public domain through the efforts of or on account of
the Executive), and all valuable and unique information and
techniques acquired, developed or used by the Company relating to
its business, operations, employees and customers, which give the
Company a competitive advantage over those who do not know the
information and techniques and which are protected by the Company
from unauthorized disclosure.
(b) Acknowledgment. The Executive acknowledges that
the Executive will acquire Protected Information with respect to
the Company and its successors in interest, which information is a
valuable, special and unique asset of the Company's business and
operations and that disclosure of such Protected Information would
cause irreparable damage to the Company.
(c) No Disclosure or Use. The Executive shall not
use in any manner, either during or after any termination of
employment with the Company, any Protected Information other than
for the exclusive benefit of the Company. The Executive shall not,
directly or indirectly, divulge, furnish or make accessible to any
person, firm, corporation, association or other entity, either
during or after any termination of employment with the Company, any
Protected Information except (i) in furtherance of the regular
course of the Executive's duties under this Agreement or (ii) as
may be required by order or subpoena of any court of administrative
agency of the United States or any state or political subdivision
thereof; provided, however, that the Executive shall use his best
efforts to give the Company notice of any such order or subpoena at
the earliest practical date and shall to the maximum extent
permitted by such order or subpoena, and applicable law, defer
compliance with such order or subpoena until the Company has had
every reasonable opportunity to contest such order or subpoena by
appropriate proceedings. The Executive shall reasonably cooperate
with any such contest proceeding brought by the Company.
7.2 Non-Competition.
(a) The Executive agrees that the Executive shall not
during the Executive's employment with the Company, and, if the
Executive's employment is terminated, thereafter for the remainder
of the Contract Term, directly or indirectly, in any capacity,
engage or participate in, or become employed by or render advisory
or consulting or other services in connection with any Prohibited
Business as defined in Section 7.2(c) without the written consent
of the Company.
(b) The Executive agrees that the Executive shall not
during the Executive's employment with the Company, and, if the
Executive's employment is terminated, thereafter for the remainder
of the Contract Term, make any financial investment, whether in the
form of equity or debt, or own any interest, directly or
indirectly, in any Prohibited Business. Nothing in this Section
7.2 shall, however, restrict the Executive from making any
investment in any company whose stock is listed on an American
securities exchange or actively traded in the over-the-counter
market and has sales in excess of $500 million; provided that (i)
such investment does not give the Executive the right or ability to
control or influence the policy decisions of any Prohibited
Business, and (ii) such investment does not create a conflict of
interest between the Executive's duties hereunder and the
Executive's interest in such investment.
(c) For the purpose of this Section 7.2, "Prohibited
Business" shall be defined as any business and any branch, office
or operation thereof, which is in material competition with the
Company, including, without limitation, any retail department,
specialty, furniture or clothing store business. 7.3
Undertaking Regarding Employees and Agents. From the date hereof
until two (2) years after the Date of Termination, the Executive
shall not, directly or indirectly (a) induce or encourage any
employee or agent of the Company or its successors in interest to
leave their employment or to terminate or limit their relationship
with the Company or its successors in interest; or (b) employ,
hire, solicit or cause to be employed or hired or solicited (other
than by the Company or its successors in interest), or establish a
business with, or encourage others to hire or solicit, any person
who within two (2) years prior thereto was an employee or agent of
the Company or its successors in interest.
7.4 Disclosure of Protected Information to Company. The
Executive agrees to promptly disclose to the Company all Protected
Information developed in whole or in part by the Executive during
the Executive's employment with the Company and which relate to the
Company's business. Such Protected Information is, and shall
remain, the exclusive property of the Company. All writings
created during the Executive's employment with the Company
(excluding writings unrelated to the Company's business) are
considered to be "works-for-hire" for the benefit of the Company
and the Company shall own all rights in such writings.
7.5 Survival of Undertakings and Injunctive Relief.
(a) Survival of Sections 7.1, 7.2, 7.3 and 7.4. The
provisions of Section 7.1, 7.2, 7.3 and 7.4 shall survive the
termination of the Executive's employment with the Company
irrespective of the reasons therefor.
(b) Injunctive Relief. The Executive acknowledges
and agrees that the restrictions imposed upon the Executive by
Sections 7.1, 7.2, 7.3 and 7.4 and the purpose of such restrictions
are reasonable and are designed to protect the Protected
Information and the continued success of the Company without unduly
restricting Executive's future employment by others. Furthermore,
Executive acknowledges that, in view of the Protected Information
which Executive has or will acquire or has or will have access to
and in view of the necessity of the restrictions contained in
Sections 7.1, 7.2, 7.3 and 7.4, any violation of any provision of
Sections 7.1, 7.2, 7.3 and 7.4 hereof would cause irreparable
injury to the Company and its successors in interest with respect
to the resulting disruption in their operations. By reason of the
foregoing, the Executive consents and the Executive and the Company
agree that if the Executive violates any of the provisions of
Sections 7.1, 7.2, 7.3 or 7.4 of this Agreement, the Company and
its successors in interest as the case may be, shall be entitled,
in addition to any other remedies that they may have, including
money damages, to an injunction to be issued by a court of
competent jurisdiction, restraining the Executive from committing
or continuing any violation of such Sections of this Agreement.
ARTICLE VIII
Miscellaneous
8.1 Assignment, Successors. The Company may freely assign
its respective rights and obligations under this Agreement to a
successor of the Company's business, without the prior written
consent of the Executive. This Agreement shall be binding upon and
inure to the benefit of the Executive and the Executive's estate
and the Company and any assignee of or successor to the Company.
8.2 Beneficiary. Except as otherwise provided herein, if
the Executive dies prior to receiving all amounts hereunder, such
amounts shall be paid in a lump sum payment to the beneficiary
designated in writing by the Executive ("Beneficiary") and if no
such Beneficiary is designated, to the Executive's estate.
8.3 Nonalienation of Benefits. Benefits payable under this
Agreement shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance,
charge, garnishment, execution or levy of any kind, either
voluntary or involuntary, prior to actually being received by the
Executive, and any such attempt to dispose of any right to benefits
payable hereunder shall be void.
8.4 Severability. If all or any part of this Agreement is
declared by any court or governmental authority to be unlawful or
invalid, such unlawfulness or invalidity shall not serve to
invalidate any portion of this Agreement not declared to be
unlawful or invalid. Any paragraph or part of a paragraph so
declared to be unlawful or invalid shall, if possible, be construed
in a manner which will give effect to the terms of such paragraph
or part of a paragraph to the fullest extent possible while
remaining lawful and valid.
8.5 Amendment and Waiver. This Agreement shall not be
altered, amended or modified except by written instrument executed
by the Company and the Executive. A waiver of any term, covenant,
agreement or condition contained in this Agreement shall not be
deemed a waiver of any other term, covenant, agreement or
condition, and any waiver of any default in any such term,
covenant, agreement or condition shall not be deemed a waiver of
any later default thereof or of any other term, covenant, agreement
or condition.
8.6 Notices. All notices and other communications hereunder
shall be in writing and delivered by hand or by first class
registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Company: Sears, Roebuck and Co.
Sears Tower, 68th Floor
Chicago, Illinois 60606
Attn: General Counsel
If to the Executive: Mr. Robert L. Mettler
11967 Pinnacle Place
Beverly Hills, California 90210
Either party may from time to time designate a new address by
notice given in accordance with this Section. Notice and
communications shall be effective when actually received by the
addressee.
8.7 Counterpart Originals. This Agreement may be executed
in several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the same
instrument.
8.8 Entire Agreement. This Agreement forms the entire
agreement between the parties hereto with respect to any severance
payment and with respect to the subject matter contained in the
Agreement. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this
Agreement.
8.9 Employee Benefit Plans As Amended. Any reference to any
plan, practice, policy or program contained herein shall, except as
otherwise specifically provided herein, mean such plan, practice,
policy or program as amended from time to time.
8.10 Continued Employment. Not later than February 15, 1995,
the Company shall notify the Executive either that (i) the Company
expects that the Executive's employment with the Company will be
continued following the end of the Contract Term, or (ii) the
Company is unable to formulate any expectation regarding whether
the Executive's employment with the Company will be continued
following the end of the Contract Term, provided however that such
notice, or the failure to give such notice, shall not result in any
obligation on the part of the Company regarding employment of the
Executive either during or following the end of the Contract Term.
8.11 Applicable Law. The provisions of this Agreement shall
be interpreted and construed in accordance with the laws of state
of Illinois, without regard to its choice of law principles.
IN WITNESS WHEREOF, the parties have executed this Agreement
on this 1st day of February, 1993.
SEARS, ROEBUCK AND CO.
By: /S/ Arthur C. Martinez
ARTHUR C. MARTINEZ,
Chairman and Chief
Executive Officer of the
Sears Merchandise Group
/S/ Robert L. Mettler
ROBERT L. METTLER
SEARS, ROEBUCK AND CO.
Sears Tower
Chicago, Illinois 60684
May 18, 1990
EDWARD A. BRENNAN
Chairman of the Board
Mr. Russell Davis
611 South Chardonnay Ridge
Cincinnati, Ohio 45226
Dear Russell:
The purpose of this letter is to confirm our agreement concerning
your employment effective June 1, 1990.
Sears, Roebuck and Co. ("Sears") has agreed to employ you and you
have agreed to serve in a position which we have designated
(tentatively, subject to approval by the Board of Directors) a
Senior Vice President and Chief Financial Officer, and you will
report to the Chairman and CEO of the Merchandise Group.
The position will have such duties, responsibility and authority as
shall be established by the Board of Directors and as the Chairman
and CEO of the Merchandise Group shall direct from time-to-time.
During your continued employment, you shall devote your time and
efforts exclusively to the business and affairs of Sears and do
your utmost to promote its interest. In that connection, you will
observe and conform to the Merchandise Group Code of Conduct Policy
Statement as in effect from time-to-time during your employment.
A copy of the statement currently in effect is appended to this
agreement, designated Exhibit A, and made a part hereof.
During your employment, Sears agrees to pay to you for your
services and you agree to accept as full compensation for them:
(a) An initial base salary at an annual rate of at least
$350,000.00, payable monthly in arrears.
(b) An annual bonus opportunity (as such term is defined and
used throughout Sears Executive Compensation Plans) of fifty
percent (50%) of the base salary established above, provided
<PAGE>
Mr. Russell Davis
Page 2
May 18, 1990
however that Sears guarantees to you for one and one-half
years, an annual bonus of at least $175,000.00 per year,
payable at such time as other officer bonuses are paid in
February of 1991 and 1992. The guaranteed bonus for 1990
will be 7/12ths of $175,000.00.
(c) A Long-Term Incentive Compensation Program opportunity (as
such term is defined and used from time-to-time in the then
current Sears Executive Compensation Plan) of eighty percent
(80%) of base salary. This program includes a cash plan as
well as stock options and restricted stock grants.
(d) Upon reporting for work, a one-time cash payment of
$100,000.00 which is compensation subject to appropriate tax
withholdings.
(e) Relocation assistance in the form of reimbursements for
expenses incidental to the sale of your current residence,
expenses for moving your household goods to a new location,
closing costs for your new residence, and possible purchase
of your current residence if you elect this option.
(f) An immediate vacation entitlement of 4 weeks.
In addition to the foregoing, you shall, during the course of your
employment, be entitled to participate in any group medical plan,
group life insurance plan, pension plans, profit sharing plan or
any other benefit plan adopted by Sears for the benefit of its
officers.
In recognition of your concern regarding your retirement security,
Sears will provide a special, non-qualified benefit which
supplements the regular pension benefits you can earn from the
Sears Pension Plan and Supplemental Retirement Income Plan. Simply
stated, this special arrangement provides the following:
If you stay with Sears through 12/31/95, you will receive
double credit for your entire service to that point. If you
terminate prior to that date, regular service credit applies
and no special benefits accrue. Any service credit earned
past 12/31/95 will be at the regular rate provided by the
Plan.
<PAGE>
Mr. Russell Davis
Page 3
May 18, 1990
If your employment is terminated by Sears without cause prior to
your having attained 3 years of service, you will receive base
salary and annual bonus payments through the date which would have
been your third anniversary at not less than a salary of
$350,000.00 per year and bonus of $175,000.00 par year.
If this letter correctly states our understanding, please sign
below. We welcome you to Sears and look forward to working together
to achieve our goals.
/s/Edward A. Brennan
E. A. Brennan
/s/RUSSELL DAVIS
Russell Davis
enc.
<PAGE>
SEARS MERCHANDISE GROUP
3333 Beverly Road
Hoffman Estates, IL 60179
December 14, 1994
ARTHUR C. MARTINEZ
Chairman and Chief
Executive Officer
708 - 286 - 1702
Fax 708 - 286 - 1483
Mr. Alan Lacy
839 Lake Ave
Greenwich CT 06831
Dear Alan:
I am happy to formally advise you that the Board of Directors has
elected you Senior Vice President - Finance for the Sears
Merchandise Group effective December 15, 1994. Welcome to the Sears
Team! In this position, you will be reporting to Russ Davis,
Executive Vice President and Chief Financial Officer.
This letter will serve as a final confirmation of the compensation
package we agreed upon.
Your compensation package will consist of the following:
- Annual base salary of $425,000, with periodic increases
based on performance.
- Participation in the Sears Annual Incentive Plan with a
bonus target of 60% of your base salary. Based on your
salary, the initial bonus target amounts to $255,000
pro-rata. The annual incentive performance objective for
your position is based on achievement of net income
goals for Sears Merchandise Group. For 1995, the plan
pays for performance above the threshold objective as
follows:
-- Threshold (82% of performance objective) pays 25% of
target
-- Intermediate (91% of performance objective) pays 75%
of target
-- Target (100% of performance objective) pays 100% of
target
-- Maximum (130% of performance objective) pays 230% of
target
We will guarantee a minimum bonus of $255,000 for 1995.
<PAGE>
Mr. Alan Lacy
December 14, 1994
Page 2
- Participation in the Sears Long-Term Incentive Plan
with a potential incentive target of 125% of base pay
pro-rata. Initially, 62.5% of your long-term
incentive will be paid in Sears stock options and 62.5%
in cash. The cash incentive is currently based on Sears
Merchandise Group net income and return on average
equity.
- Sign-on bonus of $100,000, payable within 30 days
following the beginning of your employment at Sears.
- 10,000 shares of Restricted Stock with the following
anticipated vesting schedule:
1/96 - 3,333 shares
1/97 - 3,333 shares
1/98 - 3,334 shares
- 20,000 Non-qualified Stock Options which will vest in
equal increments over a three year period.
- Participation in standard Company benefits commensurate
with your position. Your annual vacation will be three
weeks.
- Relocation assistance in accordance with Sears
Relocation Policy which includes a $10,000 moving
allowance, reimbursement for temporary living,
reimbursement for home visits and house hunting, a home
purchase program available through Coldwell Baker
Relocation and reimbursement of customary closing costs
for your new residence.
- We've agreed to extend temporary living
reimbursement through June 30, 1995.
- We've agreed to provide round-trip travel
reimbursement between Chicago and Greenwich
from December 15, 1994 through June
30,1995. Reimbursement is limited to a
maximum of $10,000 over the six and one
half-month period.
- Payment of COBRA premiums under the Philip Morris
Medical Plan for up to eighteen months.
<PAGE>
Mr. Alan Lacy
December 14,1994
Page 3
- Nothing contained in this letter shall limit the right
of you or Sears to terminate your employment with or
without cause at any time. However;
- in the event that Sears should terminate you, other
than for cause during your first three years of
employment, you will receive one and one-half year's
base salary and a pro rata share of your annual
incentive. This will constitute the entire damages you
can claim against Sears.
- in the event that you should initiate the termination
of your employment prior to July 1, 1996, due to our
failure to promote you to Executive VP/CFO, you will
receive one year's base salary and a pro-rata share of
your annual incentive.
Alan, we have great confidence in your ability to significantly
contribute to the future success of Sears. I look forward to
working with you to build that success.
Sincerely,
/s/ ARTHUR C. MARTINEZ
cc: A. J. Rucci
<PAGE>
SEARS MERCHANDISE GROUP
3333 Beverly Road
Hoffman Estates, IL 60179
August 25, 1993
ARTHUR C. MARTINEZ
Chairman and Chief
Executive Officer
708 - 286 - 1702
Fax 708 - 286 - 1483
General William G. Pagonis
21st TAACOM
Panzer Kaserne
Mannheimer Strasse
67657 Kaiser Slautern
Germany
Dear Gus:
This is to confirm our offer to you to join Sears Merchandise Group
as Senior Vice President-Logistics. In this position you will be
reporting to me. Your date of hire will be December 1, 1993.
Your compensation package will consist of the following:
- Annual base salary of $275,000. You will be paid twice
a month with periodic increases based on performance.
- Participation in Sears Annual Incentive Plan with a
guaranteed 1993 bonus at 60% of base pay pro-rata.
Your 1994 annual bonus will be guaranteed at 60% of
your base salary. The annual incentive targets will be
based on one-half of Sears net income performance and
one-half of Sears Logistics Services net income goals.
- Participation in the Sears Long-Term Incentive Plan
with a potential incentive target of 125% of base pay
pro-rata. Initially, 62.5% of your long-term
incentive will be paid in Sears stock options and
62.5% in cash. The cash piece is based on Sears
Merchandise Group net income and return on average
equity. A sample illustration of the Long-Term
Incentive Plan is attached.
- Sign-on bonus of $125,000, payable upon your acceptance
of this offer.
- 8,000 shares of Restricted Stock with the following
vesting schedule:
12/94 - 2,000 shares
12/95 - 2,000 shares
12/96 - 2,000 shares
12/97 - 2,000 shares
<PAGE>
General William G. Pagonis
August 25, 1993
Page 2
- 6,300 Non-qualified Stock Options with a grant date of
December 1, 1993, that will vest one-third per year
over a three-year period beginning December 1, 1994.
- Participation in standard Company benefits commensurate
with your position. Your annual vacation will be three
weeks.
- Relocation assistance in accordance with Sears
Relocation Policy from point of entry to the United
States including a $100,000 moving allowance,
reimbursement for temporary living, reimbursement for
home visits and house hunting, a home purchase program
available through Coldwell Banker Relocation and
reimbursement of customary closing costs for your new
residence.
Nothing contained in this letter shall limit the right of you or
Sears to terminate your employment with or without cause at any
time. However, in the event that Sears should terminate you other
than for cause during your first three years of employment, you
will receive one and one-half years base salary and a pro-rata
share of your annual incentive. This will constitute the entire
damages you can claim against Sears.
This offer of employment is also contingent upon your
satisfactorily passing a pre-employment drug test which can be
taken prior to your reporting to work at Hoffman Estates.
We have great confidence in your ability to significantly
contribute to the future success of Sears. I look forward to
working with you to build that success.
Sincerely,
/s/ARTHUR C. MARTINEZ
Att.
cc: W. F. Cooper
<PAGE>
SEARS MERCHANDISE GROUP
3333 Beverly Road
Hoffman Estates, IL 60179
September 21, 1993
ARTHUR C. MARTINEZ
Chairman and Chief
Executive Officer
708 - 286 - 1702
Fax 708 - 286 - 1483
Mr. Anthony J. Rucci
275 Beech Street
Highland Park, IL 60035
Dear Tony:
This is to confirm our offer to you to join Sears Merchandise Group
as Executive Vice President-Administration. In this position you
will be reporting to me.
Your compensation package will consist of the following:
- Annual base salary of $350,000. You will be paid twice
a month with periodic increases based on performance.
- Participation in Sears Annual Incentive Plan with a
guaranteed 1993 bonus at 60% of base pay pro-rata.
Your 1994 annual bonus will be guaranteed at 60% of
your base salary. The annual incentive targets will be
based on Sears Merchandise Group net income
performance.
- Participation in the Sears Long-Term Incentive Plan
with a potential incentive target of 125% of base pay
pro-rata. Initially, 62.5% of your long-term incentive
will be paid in Sears stock options and 62.5% in cash.
The cash piece is based on Sears Merchandise Group net
income and return on average equity.
- 10,000 shares of Restricted Stock with the following
vesting schedule:
12/94 - 3,333 shares
12/95 - 3,333 shares
12/96 - 3,334 shares
<PAGE>
Mr. Anthony Rucci
September 21, 1993
Page 2
- Participation in standard Company benefits commensurate
with your position. Your annual vacation will be three
weeks.
Nothing contained in this letter shall limit the right of you or
Sears to terminate your employment with or without cause at any
time. However, in the event that Sears should terminate you other
than for cause during your first three years of employment, you
will receive one and one-half years base salary and a pro-rata
share of your annual incentive, and any restricted shares not yet
vested shall become vested. This will constitute the entire
damages you can claim against Sears.
Should you determine to move your personal residence closer to
Hoffman Estates in the next twelve months, we will re-discuss at
that time an appropriate package of assistance.
This offer of employment is also contingent upon your
satisfactorily passing a pre-employment drug test which can be
taken prior to your reporting to work at Hoffman Estates.
We have great confidence in your ability to significantly
contribute to the future success of Sears. I look forward to
working with you to build that success.
Sincerely,
/s/ARTHUR C. MARTINEZ
<PAGE>
Exhibit 20(a)
SEARS, ROEBUCK AND CO.
SEARS TOWER
CHICAGO, ILLINOIS 60684
June 20, 1995
Dear Sears Shareholder:
We are pleased to provide you the attached Questions & Answers and
Information Statement in connection with the special stock dividend
declared today by your Board of Directors. The dividend consists of
all common stock of The Allstate Corporation owned by Sears. As
explained in the Information Statement, Sears common shareholders
of record as of the close of business on June 30, 1995 will receive
approximately 0.93 of a share of Allstate common stock for each
Sears common share.
Sears shareholders of record on June 30, 1995 will automatically
receive the stock dividend and do not need to take any further
action. Stock certificates for whole shares of The Allstate
Corporation will be mailed on or about July 12, 1995. Cash payments
for fractional shares will be made as explained in the Information
Statement. If you are a Sears or Allstate Savings and Profit
Sharing Fund participant, you will have Allstate shares credited
directly to your Fund account.
Sears has received a ruling from the Internal Revenue Service to
the effect that Sears common shareholders will not recognize a gain
or a loss or any taxable income for Federal income tax purposes
from the dividend, except to the extent of cash received instead of
fractional shares.
If you have questions, please use our toll-free number:
1-800-732-7780 (1-800-SEARS80), Monday through Friday, 8 a.m. - 8
p.m. (Central Time).
As a shareholder of The Allstate Corporation, you will have a
direct stake in one of America's premier insurance organizations.
Allstate provides a broad range of nationally marketed auto, home,
and life insurance products, with a primary focus on individual
customers. Its brand name and ``You're In Good Hands'' marketing
theme have helped to make it one of America's most recognized and
successful insurance franchises.
Sears takes great pride in the success of The Allstate Corporation.
We are pleased that Sears shareholders will have the opportunity to
participate directly in its future growth.
Sincerely,
[SIGNATURE] [SIGNATURE]
Edward A. Brennan Jerry D. Choate
Chairman of the Board and Chairman of the Board and Chief
Executive Officer Chief Executive Officer
Sears, Roebuck and Co. The Allstate Corporation
Exhibit 20(b)
QUESTIONS AND ANSWERS
SEARS, ROEBUCK AND CO.
Spin-off of Common Stock of
THE ALLSTATE CORPORATION
1. What will I receive as a result of the Allstate spin-off?
Sears shareholders of record on June 30, 1995 will automatically
receive a dividend of approximately 0.93 of a share of The Allstate
Corporation (``Allstate'') common stock for each Sears common share
they own. For example, if you own 100 Sears common shares on June
30, 1995, you will receive approximately 93 shares of Allstate
stock.
2. What will happen if my Allstate stock dividend would yield both
whole shares and a fraction of a share (a fractional share)?
Your Allstate fractional share will be aggregated with other
fractional shares and purchased by Allstate. You will receive a
check for the sales price of the fractional share. Your check will
be mailed with your Allstate stock certificate.
3. When will I receive my Allstate shares?
If you hold your Sears shares in your own name or in Sears Dividend
Reinvestment and Share Purchase Plan, your Allstate stock
certificate will be mailed to you on or about July 12, 1995. You
should allow several days for the mailing to reach you.
4. What if I hold my Sears shares through my stockbroker, bank, or
other nominee?
If you hold your Sears shares through your stockbroker, bank, or
some other nominee, you are probably not a shareholder of record
and your receipt of Allstate stock depends on your arrangements
with the nominee that holds your Sears shares for you. Sears
anticipates that stockbrokers and banks generally will credit their
customers' accounts with Allstate stock about July 12, 1995, but
you should check with your stockbroker, bank, or other nominee.
5. If I am a participant in the Sears or Allstate Savings and
Profit Sharing Fund, how will the spin-off dividend be distributed
on shares in my Fund account?
Your Profit Sharing account will be credited with a number of whole
and fractional Allstate shares equal to the number of Sears shares
in your account on June 30, 1995 multiplied by approximately 0.93.
(You will not receive an Allstate stock certificate or a check for
the price of a fractional share.) You should receive more
information in early August.
6. How much is a share of Allstate stock worth?
Allstate stock is listed on the New York Stock Exchange under the
symbol ``ALL''. The closing price as reported on the New York Stock
Exchange Composite Tape on June 16, 1995 was $30.
7. How will the spin-off affect the market price of my Sears
shares?
When the spin-off occurs, the market price of Sears common shares
will decrease. The decrease should be roughly equivalent to 0.93
times the per share price of Allstate stock. For example, if the
Allstate stock price just before the spin-off is $30 per share (its
closing price on June 16, 1995), it would be expected that the
Sears stock price would decrease by about $28 (the approximate
market value of 0.93 of a share of Allstate stock). Together, the
market value of your Sears shares and the Allstate shares that you
receive in the spin-off should add up to approximately the price of
your Sears shares just before the spin-off, subject to market
factors.
8. What if I want to sell my Sears shares or my Allstate shares?
You should consult your own financial advisors, such as your
stockbroker, bank, or tax advisor. Sears does not make
recommendations about holding or selling Sears shares or Allstate
shares.
If you decide to sell, you should make sure your stockbroker or
bank understands whether you want to sell your Sears shares or your
Allstate shares, or both. Until about July 12, 1995, stock exchange
practices should generally allow you to sell your Sears shares
either together with the right to the Allstate spin-off dividend
(under the trading symbol ``S'') or without the right to the
Allstate spin-off dividend (under the trading symbol ``S-wi''). If
you sell your Sears shares with the right to the Allstate dividend,
you (or your broker or bank) may be required to deliver to your
buyer the Allstate shares you receive in the spin-off. You should
also be able to sell your right to the Allstate spin-off dividend
shares (under the trading symbol ``ALL-wi'') without selling your
Sears shares.
Sales of Sears shares with the right to the Allstate spin-off
dividend should generally settle in the new three business day
settlement period, but stock exchange practices may provide for
later settlement if you sell your Sears shares without the right to
the Allstate dividend, or if you sell your Allstate dividend shares
without selling your Sears shares. Check with your broker or bank.
Beginning about July 13, 1995, you should only be able to sell your
Sears shares without the right to the Allstate spin-off dividend.
Once again, check with your broker or bank.
9. How will the spin-off affect the dividends I currently receive
on my Sears shares?
If you keep your Allstate shares after the spin-off, the total of
the dividends you receive on your Sears shares and the Allstate
shares should exceed the dividends you currently receive on your
Sears shares alone. It is currently expected that, after the spin-
off, Sears will pay a quarterly dividend of $.23 per share and that
Allstate will pay a quarterly dividend of $.19-1/2 per share.
For example, if you own 100 Sears common shares on the record date
for the spin-off, after the spin-off you will own both 100 Sears
common shares and approximately 93 shares of Allstate stock. Based
on these amounts, you would receive $23 from Sears and
approximately $18 from Allstate, for a total of approximately $41
a quarter. This would represent an increase from the recent Sears
quarterly dividend rate of $0.40 per share (or $40 on 100 Sears
shares).
As with any company, the declaration and payment of dividends are
subject to the discretion of the respective Boards of Directors of
Sears and Allstate and will depend on various factors.
10. Do I have to pay taxes on the Allstate stock that I receive?
Sears has received a ruling from the Internal Revenue Service that
Sears shareholders will not recognize a taxable gain or loss when
receiving whole shares of Allstate stock. Cash received instead of
a fractional share will be treated as proceeds from the redemption
of the fractional share and may be taxable. In addition, you may
have to pay taxes if you sell your Allstate shares. If you have any
questions, please consult your tax advisor.
11. Will there be any change in the federal tax basis of my Sears
common shares as a result of the spin-off?
Yes. You will receive information with your Allstate stock
certificate that will help you calculate the adjusted tax basis for
your Sears shares, as well as the tax basis for your Allstate
shares.
12. For more information, whom should I call?
You should call Sears Shareholder Services at 1-800-732-7780
(1-800-SEARS80), Monday through Friday, 8 a.m. - 8 p.m. (Central
Time). If you hold Sears shares in your own name and you do not
receive your Allstate stock certificate or your check instead of a
fractional share, please call Harris Trust and Savings Bank,
Shareholder Services Division at 1-800-670-7744.
<PAGE>
INFORMATION STATEMENT
Concerning the Distribution of
360,500,000 Shares
of
The Allstate Corporation
Common Stock
(Par Value $.01 per Share)
By
Sears, Roebuck and Co.
This Information Statement is being furnished by Sears, Roebuck and
Co. (``Sears'') in connection with the distribution (the
``Distribution'') to Sears common shareholders of approximately
0.93 of a share of the common stock of The Allstate Corporation
(``Allstate'') for each Sears common share owned on the Record Date
(as defined below). The Distribution will result in approximately
80.3% of the outstanding shares of Allstate common stock being
distributed to Sears common shareholders. The remaining shares of
Allstate common stock were sold to the public by Allstate in June,
1993.
Certificates for Allstate common stock will be mailed on or about
July 12, 1995 to Sears common shareholders of record at the close
of business on June 30, 1995 (the ``Record Date''). No
consideration will be paid by Sears shareholders for shares of
Allstate common stock. As a result of the Distribution, Allstate
will cease to be a subsidiary of Sears and Sears will not own any
shares of Allstate common stock.
Allstate common stock is listed on the New York and Chicago Stock
Exchanges. The Allstate common stock received in the Distribution
will be freely tradeable by nonaffiliates of Allstate. See ``The
Distribution-Market for Allstate Common Stock.''
Sears has received a ruling from the Internal Revenue Service to
the effect that the Distribution is not taxable for federal income
tax purposes to Sears and its shareholders. See ``The Distribution-
Federal Income Tax Consequences.''
The date of this Information Statement is June 20, 1995
THE DISTRIBUTION
On June 20, 1995, the Board of Directors of Sears declared a
distribution (the ``Distribution'') to Sears common shareholders of
360,500,000 shares of the common stock of The Allstate Corporation
(``Allstate'') on the basis of approximately 0.93 of a share of
Allstate common stock for each Sears common share outstanding on
June 30, 1995 (the ``Record Date''). The actual fraction of an
Allstate share that will be distributed for each Sears common share
will equal 360,500,000 (the number of shares of Allstate common
stock owned by Sears) divided by the number of Sears common shares
outstanding on the Record Date. No consideration will be paid by
Sears common shareholders for such shares of Allstate common stock.
Shareholders of Sears or Allstate with questions relating to the
Distribution should call 1-800-732-7780 (1-800-SEARS80), Monday
through Friday, 8 a.m. - 8 p.m. (Central Time).
Manner of Effecting the Distribution
Sears will effect the Distribution on June 30, 1995 (the
``Distribution Date'') by delivering shares of Allstate common
stock to Harris Trust and Savings Bank, as the distribution agent
(the ``Distribution Agent''), for distribution to the Sears common
shareholders of record on the Record Date. Certificates for
Allstate common stock will be mailed to Sears common shareholders
on or about July 12, 1995.
No certificates representing fractional shares of Allstate common
stock will be issued as part of the Distribution. The Distribution
Agent will aggregate fractional shares into whole shares, and will
sell them to Allstate at a market price on behalf of holders who
otherwise would be entitled to receive a fractional share. Such
holders will receive a cash payment in the amount of their pro rata
share of the total sale proceeds. Such sale is expected to be made
as of June 30, 1995. See ``Federal Income Tax Consequences.''
Sears and Allstate Savings and Profit Sharing Fund participants
will have whole and fractional shares credited to their plan
accounts.
Federal Income Tax Consequences
General. The Internal Revenue Service has ruled that, for federal
income tax purposes, the Distribution will qualify as tax-free
under Section 355 of the Internal Revenue Code of 1986 (the
``Code''), and that, accordingly, (i) Sears shareholders will not
recognize gain or loss by reason of the receipt of whole shares of
Allstate common stock in the Distribution and (ii) Sears will not
recognize gain or loss by reason of the Distribution. A shareholder
who receives cash in lieu of a fractional share will recognize gain
or loss equal to the difference between the cash received and the
amount of tax basis allocable to such fractional share.
The Distribution, although tax-free when made, could be rendered
taxable as a result of subsequent actions or events. In that event,
taxable gain would be recognized by the consolidated group of which
Sears is the parent, and each shareholder receiving Allstate common
stock in the Distribution would be treated as having received a
taxable dividend.
Additional Information. Additional information will be sent to
shareholders shortly after the Distribution Date concerning (1) the
calculation of the new tax basis of their Sears common shares and
Allstate common stock, (2) the tax treatment of cash received in
lieu of fractional shares, and (3) the holding period of the
Allstate common stock received by a Sears shareholder.
Summary Only. The summary of federal income tax consequences set
forth above is for general information only and may not be
applicable to shareholders who are not citizens or residents of the
United States or who are otherwise subject to special treatment
under the Code. All shareholders should consult their own tax
advisors as to the particular tax consequences of the Distribution
to them, including the state, local, and (if applicable) foreign
tax consequences.
Market for Allstate Common Stock
Allstate common stock is listed on the New York and Chicago Stock
Exchanges under the symbol ALL. Shares of Allstate common stock
distributed to Sears shareholders will be freely transferable,
except for shares received by persons who may be deemed to be
``affiliates'' of Allstate under the Securities Act of 1933.
The following table sets forth for the periods indicated the high
and low sale prices of Allstate common stock as reported on the New
York Stock Exchange Composite Tape.
High Low
First Quarter, 1995 $29 $23-1/2
Second Quarter, 1995
(through June 16) $31-5/8 $28-1/8
INFORMATION ABOUT SEARS
Following the Distribution, Sears will not hold any shares of
Allstate common stock. Sears will continue to be a publicly-held
corporation whose common shares are traded on the New York,
Chicago, and Pacific Stock Exchanges in the United States and on
the following foreign stock exchanges: London, England; Basel,
Geneva, Lausanne, and Zurich, Switzerland; Amsterdam, The
Netherlands; Tokyo, Japan; and Frankfurt, Germany.
Sears originated from an enterprise established in 1886. It was
incorporated under the laws of New York in 1906. Its general
offices are located at Sears Tower, Chicago, Illinois 60684.
Following the Distribution, Sears and its consolidated subsidiaries
(the ``Company'') will conduct domestic and international
merchandising operations. The Company, a multi-line retailer, is
among the largest retailers in the world, on the basis of sales of
merchandise and services.
INFORMATION ABOUT ALLSTATE
Allstate is a leading U.S. property-liability and life insurer.
Allstate is the country's second largest property-liability insurer
on the basis of 1993 statutory premiums earned and is a major life
insurer as well. (Source: A.M. Best.) Allstate has more than 20
million customers, and its name and the ``You're in Good Hands''
service marks are widely recognized. Allstate's primary business is
the sale of private passenger automobile and homeowners insurance.
Allstate also sells life insurance, annuity and group pension
products, and selected commercial property and casualty coverages.
Allstate markets its products through a variety of distribution
channels, with the core of its distribution system being a broad-
based network of approximately 14,500 full-time Allstate agents in
the United States and Canada.
Allstate's principal executive offices are located at 2775 Sanders
Road, Northbrook, Illinois, 60062-7127.
DIVIDENDS
Allstate has declared a cash dividend for the second quarter of
1995 of $.19-1/2 per share of Allstate common stock payable on June
29, 1995 to stockholders of record on June 8, 1995. Because the
record date for such cash dividend precedes the Distribution Date,
Sears common shareholders will not receive this quarterly cash
dividend, but such holders who remain as Allstate stockholders
after the Distribution Date will be eligible to receive subsequent
Allstate dividends.
Allstate currently intends to continue to pay dividends. The
payment and amount of dividends are, however, subject to the
discretion of its Board of Directors and will depend upon
Allstate's results of operations, financial condition, cash
requirements, future prospects, regulatory restrictions on the
payment of dividends by insurance companies, and other factors
deemed relevant by its Board of Directors.
Sears has declared a dividend for the second quarter of 1995 of
$.40 per common share, payable on July 3, 1995 to common
shareholders of record on May 31, 1995. Sears anticipates that its
quarterly dividend will be reduced to $.23 per common share
effective for the dividend for the third quarter of 1995.
Sears currently intends to continue paying dividends. The payment
and amount of dividends are, however, subject to the discretion of
its Board of Directors and will depend on Sears results of
operations, financial condition, cash requirements, future
prospects, and other factors deemed relevant by its Board of
Directors.
ADDITIONAL INFORMATION
The Allstate common stock is registered under the Securities
Exchange Act of 1934 (the ``Exchange Act''). Allstate and Sears are
each subject to the reporting requirements of the Exchange Act, and
in accordance therewith have filed registration statements, reports
and other information (collectively, the ``SEC Reports'') with the
Securities and Exchange Commission (the ``SEC''). For further
information pertaining to Allstate (including financial statements
and other financial information), its common stock and related
matters, Sears shareholders are urged to read Allstate's SEC
Reports.
The SEC Reports can be inspected and copied at the public reference
facilities of the SEC at 450 Fifth Street, N.W., Washington, D.C.;
7 World Trade Center, Suite 1300, New York, New York; and 500 West
Madison Street, Suite 1400, Chicago, Illinois. Copies of such
material also can be obtained at prescribed rates from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Washington,
D.C. 20549. The SEC Reports can also be inspected at the New York
Stock Exchange, 20 Broad Street, New York, New York; at the Chicago
Stock Exchange, 440 South LaSalle Street, Chicago, Illinois; and,
in the case of Sears SEC Reports, at the Pacific Stock Exchange,
301 Pine Street, San Francisco, California.
Exhibit 99
News from
SEARS, ROEBUCK AND CO.
CONTACT
Gerald E. Buldak
(312) 875-9032
FOR IMMEDIATE RELEASE
June 20, 1995
SEARS BOARD APPROVES ALLSTATE SPIN-OFF;
DECLARES TAX-FREE DIVIDEND TO SHAREHOLDERS
CHICAGO--The Board of Directors of Sears, Roebuck and Co. today gave its
final approval of the spin-off of Sears 80.3 percent ownership of The Allstate
Corporation by declaring a special tax-free dividend. The dividend is payable
on June 30, 1995 to all Sears common shareholders of record on that date.
The 360.5 million Allstate shares to be spun-off that are owned by Sears
are valued at $11.1 billion, based on yesterday's closing price of Allstate
shares. This makes Allstate the largest company to be spun-off in U.S.
history. Sears shareholders will receive approximately .93 of an Allstate
share for every Sears common share they own. For example, a Sears shareholder
who owns 100 common shares on June 30, 1995 will receive about 93 common
shares of Allstate as a tax-free dividend. Sears said that the Internal
Revenue Service has ruled that the spin-off is tax-free.
"Our spin-off of Allstate in a tax-free dividend continues the numerous
actions we have taken in recent years to unlock the enormous value of our
businesses directly to our shareholders," said Edward A. Brennan, chairman and
chief executive officer of Sears.
"I am very proud of what we have accomplished and delivered to our
shareholders. Since 1990 Sears stock value, including the effect of the Dean
Witter spin-off dividend, has risen from $22 per share to more than $70 today,
and market capitalization has grown from $7.5 billion to $28 billion," Brennan
continued.
"We have built Allstate and Sears into solid American
franchises, and I am confident that when evaluated by the financial community as
independent, focused companies, they will be in a position to develop even
greater value for our shareholders," Brennan added.
Sears shareholders who have questions about the Allstate spin-off may call,
toll-free, at 1-800-732-7780 (1-800-SEARS80), Monday through Friday,
8 a.m.-8 p.m. (Central Time.)
