SEARS HOLDINGS
CORPORATION
RESTRICTED SHARE
AGREEMENT
RESTRICTED SHARE AGREEMENT, entered into as of March 28, 2005,
between Sears Holdings Corporation, a Delaware corporation (the
“Company”), and Alan J. Lacy (the
“Executive”);
WHEREAS, Sears, Roebuck & Co., a New York corporation, and
Kmart Holding Corporation, a Delaware corporation, and the
Executive have entered into an employment agreement dated as of the
16th day of November, 2004 (the “Employment
Agreement”), which has been assumed by the Company, pursuant
to which, among other things, the Company has determined that, as
an inducement material to the Executive’s agreement to enter
into employment with the Company, in satisfaction of certain of the
Company’s obligations under Section 3(b)(iii) of the
Employment Agreement, and subject to the restrictions stated below,
the Executive should be granted shares of the Company’s
common stock, par value $.01 (the “Common
Stock”);
WHEREAS, the Company desires to grant the Executive 75,000 shares
of restricted Common Stock (the “Restricted
Shares”);
NOW,
THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties
hereto do hereby agree as follows:
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1.
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Capitalized
Terms. Capitalized terms
not defined herein shall have the definitions ascribed to such
terms in the Employment Agreement.
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2.
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Grant. Pursuant to Section 3(b)(iii) of the
Employment Agreement, the Executive is hereby granted, effective as
of March 28, 2005 (the “Grant Date”) and subject
to the terms and conditions of this Agreement, 75,000 Restricted
Shares.
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3.
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Equity
Plan. At such time, if
any, as the Company shall have adopted (and, if required, there
shall have been approved by the Company’s shareholders) an
equity incentive plan under which restricted shares of Common Stock
may be granted (the “Plan”), the Restricted Shares and
this Agreement shall be subject to the terms of such Plan, to the
extent the terms of such Plan are not inconsistent with the terms
of this Agreement and the applicable provisions of the Employment
Agreement.
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4.
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Issuance of
Stock. The Restricted
Shares shall be held in the custody of the Company or its designee
for the Executive’s benefit. The Restricted Shares shall be
subject to the restrictions described herein. The Restricted Shares
shall bear appropriate legends with respect to the restrictions
described herein.
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5.
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Vesting.
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(a)
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The Restricted
Shares shall vest in full and become free of restrictions on
June 30, 2006, provided that the Executive is employed by or
rendering services to the Company or a subsidiary or affiliate
thereof as of each such date.
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(b)
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Notwithstanding
the foregoing, any unvested Restricted Shares shall immediately
vest in full, and become free of restriction upon the
Executive’s termination of employment (i) by the Company
without Cause, (ii) by the Executive for Good Reason, or
(iii) by reason of the Executive’s death or
Disability.
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(a)
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No portion of
the Restricted Shares or rights granted hereunder may be sold,
transferred, assigned, pledged or otherwise encumbered or disposed
of by the Executive until such portion of the Restricted Shares
becomes vested in accordance with Section 3 of this Agreement,
and any purported sale, transfer, assignment, pledge, encumbrance
or disposition shall be void and unenforceable against the Company.
The period of time between the Grant Date and the date all
Restricted Shares become vested is referred to herein as the
“Restriction Period.”
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(b)
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If the
Executive’s employment with the Company terminates for any
reason which does not result in vesting of the Restricted Shares as
provided in Section 3 above, the balance of the Restricted
Shares subject to the provisions of this Agreement which have not
vested at the time of the Executive’s termination of
employment shall be forfeited by the Executive, and ownership
transferred back to the Company.
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7.
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Executive
Shareholder Rights. During the Restriction Period, the Executive
shall have all the rights of a shareholder with respect to the
Restricted Shares except for the right to transfer the Restricted
Shares, as set forth in Section 4 of this Agreement.
Accordingly, the Executive shall have the right to vote the
Restricted Shares and to receive any cash dividends paid to or made
with respect to the Restricted Shares, provided, however, that
dividends paid, if any, with respect to that Restricted Shares
which has not vested at the time of the dividend payment shall be
held in the custody of the Company and shall be subject to the same
restrictions that apply to the corresponding Restricted Shares;
provided, further, that if such a restriction on dividends would be
subject to the tax imposed under the provisions of
Section 409A of the Code, su
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