Section 1 -

Registrant's Business and Operations

Item 1.01.

Entry into a Material Definitive Agreement.

On November 8, 2005, the Compensation Committee (the "Compensation Committee") of the Registrant's Board of Directors adopted two revised forms of Executive Severance/Non-Compete Agreements (each a "Severance Agreement", and separately referred to as "Form A Severance Agreement" and "Form B Severance Agreement").  
The revised Severance Agreements are substantially the same as the forms of Executive Severance/Non-Compete Agreements filed by the Registrant as exhibits to its Current Report on Form 8-K filed with the Securities and Exchange Commission on April 29, 2005, except the revised Severance Agreements provide for a reduction in the Registrant's obligation to pay severance to the extent that the signatory (the "Executive") earns income from a subsequent employer during the salary continuation period, as described below.  
Each Severance Agreement requires the Executive to maintain the confidentiality of information concerning the Registrant's business.  The Severance Agreements also prohibit the Executive from working for a competitor of the Registrant, or hiring any of the Registrant's employees, for one year after his or her employment with the Registrant ends.  Under the Severance Agreements, if the Registrant terminates an Executive's employment without cause (as defined in the Severance Agreements), the Executive will receive the following benefits:


Form A Severance Agreement provides for severance equal to one year of annual base salary and the annual target bonus calculated for the year the Executive's employment with the Registrant ends or, if no target bonus has yet been set for the year in which the date of termination has occurred, Executive's target bonus for the year immediately preceding the year in which the date of termination occurred;
Form B Severance Agreement provides for severance equal to one year of annual base salary; and 
Most benefits during the salary continuation period.
The Registrant's obligation to make the severance payments described above will be reduced on a dollar-for-dollar basis (but not below zero) to the extent that the Executive earns fees, salary or wages from a subsequent employer (including from self-employment) during the salary continuation period.  All severance payments and benefits will lapse if the Executive is employed by a competitor of the Registrant within one year of termination of active employment.

The foregoing is a brief description of the material terms of the Severance Agreements. It is qualified in its entirety by reference to the complete text of the Severance Agreements, which will be filed as exhibits to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended October 29, 2005.

SEARS HOLDINGS CORPORATION

By:

William K. Phelan

Vice President and Controller

Date: November 15, 2005