Exhibit 10.2
Execution Copy

Amendment No. 1 to Separation Agreement
Dated: December 9th, 2013
This Amendment No. 1 (“Amendment”), to that certain Separation Agreement (the
“Agreement”) between Sears Holdings Corporation, a Delaware corporation
(“SHLD”), and Sears Hometown and Outlet Stores, Inc., a Delaware corporation
(“SHO”), is made by the parties thereto and is retroactive to November 30th,
2013 (the “Amendment Date”). Capitalized terms used but not otherwise defined
herein have the meanings ascribed to such terms in the Agreement.
Whereas, the parties have determined that it is in both parties interest to
amend the Separation Agreement and certain of the Ancillary Agreements thereto
in connection with certain disputes that have arisen between the parties.
NOW, THEREFORE, in consideration of the above premises and the mutual covenants
and other good and valuable consideration contained herein, the parties agree as
follows:

1.
Amendments. As of the Amendment Date, the Agreement shall be modified as set
forth below:

a.
Ancillary Agreements. The definition of “Ancillary Agreements” in Section 1.1 of
the Agreement is amended by adding a new subsection (viii) as follows:

“(vii)    the “Retail Establishment Agreement; and

(viii)    the Supplemental Agreement.

b.
Additional Cooperation. A new Section 12.2 is added to the Agreement as follows:

“12.2    Additional Cooperation. The parties agree to further cooperate with
each other as follows (including, where applicable, causing their Affiliates to
provide such cooperation):

(a)    Subleasing by SHO and its Affiliates. For each lease or sublease to SHO
granted by SHLD’s Affiliates that require SHLD’s Affiliates’ consent to
sublease, SHLD’s Affiliate will not unreasonably withhold or delay their consent
to subleases by SHO to its dealers and franchises. For each such request, SHO
will pay SHLD a $2,500 per-sublease consent fee. SHLD’s Affiliates’ may not
withhold its consent to a sublease due to the proximity of such location to a
Sears FLS (unless such location is in violation of the proximity restrictions
contained in the parties’ Merchandising Agreement).”

(b)    Sears Canada. SHO is permitted to hold direct discussions with Sears
Canada about business opportunities (thru October 31, 2018). The rights of Sears
Canada’s shareholders will not be affected. For clarity, the parties note that
this provision does not grant SHO any additional rights under the parties’
Ancillary Agreements.

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Exhibit 10.2
Execution Copy

(c)    Caribbean. SHO and SHC will negotiate in good faith with respect to SHO’s
proposals from time to time to conduct its dealer and franchise business in the
Caribbean region; provided that neither party is obligated to enter into a
definitive agreement. SHO acknowledges that SHC has existing contractual
obligations and rights in effect with counterparties conducting business in the
region. For clarity, the parties note that this provision does not grant SHO any
additional rights under the parties’ Ancillary Agreements.

(d)     Additional Businesses. SHO may own, establish, acquire, and operate
businesses (each a “New SHO Business”) that do not: (i) use the “Sears” name,
and (ii) that is not a Seller Competitor. SHLD’s Affiliates will not be
obligated to supply merchandise or provide services for any New SHO Businesses
(under the Ancillary Agreements and SHO and its Affiliates will not be obligated
to accept performance from SHLD’s Affiliates under the Ancillary Agreements),
but upon SHO’s request, SHLD Affiliates and SHO will negotiate in good faith,
regarding SHLD’s Affiliates continuing to, on commercially reasonable terms,
supply merchandise and to provide services for New SHO Businesses permitted
under this subsection (d); provided that neither party is obligated to enter
into a definitive agreement.

(e)     Ground Leases. SHO is the owner of certain buildings on land leased by a
SHLD Affiliate at the following locations: (x) Portage, IN; (y) O’Fallon, MO;
and (z) Shelton, CT (the “SHLD Ground Leases”). With respect to each location,
SHLD’s Affiliates have authorized SHO to speak with the landlord on the SHLD
Ground Lease regarding (1) the cancellation of the SHLD Ground Lease for the
location, at no charge or liability to SHLD and (2) the execution and delivery
of a new ground lease for the location between the landlord and SHO, at no
charge to SHLD (each new lease, a “New Ground Lease”). SHO will use commercially
reasonable efforts to enter into a New Ground Lease for each location on the
foregoing terms, and if, with respect to a location, SHO and the Landlord enter
into a New Ground Lease; SHLD will consent to the cancelation of the existing
SHLD Ground Lease; provided that it is at no cost to SHLD. Subject to the next
sentence, if with respect to a location SHO has complied with the preceding
sentence but the Landlord for the location is unwilling to enter into a New
Ground Lease with SHO and/or cancel the existing SHLD Ground Lease, the
applicable SHLD Affiliate will assign the SHLD Ground Lease for the location to
SHO provided that either a landlord’s consent is not required or SHO has
obtained such consent at its sole cost and expense. With respect to each such
assignment, SHLD Affiliate’s will not be obligated to (i) pay any amount in
connection with such assignment (other than amounts which SHO agrees in advance
and in writing to pre-fund to such SHLD Affiliate for payment to the landlord or
applicable third parties) or (ii) incur any other additional liability or any
ongoing liability (except remaining liable as tenant on the SHLD Ground Lease)
in connection such assignment. If SHLD’s Affiliates remain liable as tenant or
otherwise with respect to an SHLD Ground Lease that is assigned to SHO, SHO will
provide SHLD’s Affiliates with an indemnification agreement containing
commercially reasonable terms and conditions.

(f)     Norristown. SHLD and SHO will enter a lease to zero out rent back to the
Effective Date and SHO will have responsibility under that lease for the upkeep
of the

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Exhibit 10.2
Execution Copy

Norristown property. In addition, upon SHO’s request, SHLD will convey to SHO,
via a quit-claim deed, title to the buildings, structures, and improvements
(that includes all existing easements and development rights, to the extent they
exist) associated with the Norristown estate for years; in which case SHO will
be liable for all costs associated with transferring such property to SHO (e.g.
transfer taxes) and SHO will within 5 days reimburse SHLD for any such costs pay
by SHLD.\

(g) HVAC, Utilities, and Related Matters Regarding Certain SHO-SHLD
Leases/Subleases. SHO’s obligations under the leases and subleases from SHLD’s
Affiliates listed on Schedule 12.2(g) regarding HVAC, utilities, taxes,
insurance, and similar items (such as roofs, other structural matters, parking
lot repairs, and storm drains) will reflect the following resolution of these
matters (which resolutions are reflected in the four recently executed TGI
leases):

(1)SHO will have no responsibility for CAM, taxes, and insurance, which will be
included in the existing basic rent.

(2)SHO will be responsible for utilities (gas, water, electric, sewer) based on
the percent of building being leased/subleased by SHO (assumes co-tenant is
similar user). For example, if SHO occupies 30,000 sf of a 100,000 sf building,
SHO will pay 30% of total utility expense. If SHO occupies all of a building SHO
will pay 100% of the total utility expense.

(3)SHLD’s Affiliates will have sole responsibility for maintenance, repair and
replacement of roofs, building structures, sprinkler systems, parking lots,
storm drains, common areas, and similar obligations.

(4)SHO will be responsible for maintenance, repair, and replacement of the HVAC
units directly serving the area it occupies subject to an annual, per location,
cap on such charges of $15,000 (“Annual HVAC Cap”). Expenses in excess of the
Annual HVAC Cap will be reimbursed by SHLD Affiliates and amortized over the
remaining years of lease (but no less than 3 years) and will be paid as
additional rent up to the Annual HVAC CAP in years when HVAC service does not
exceed the cap.  SHO will have no obligation to pay outstanding amortized
amounts at lease/sublease termination. For example, if a property on Schedule
12.2(h): (i) SHLD had 3 years left on its lease (2014-2016) and (iii) that
property needed a single 30K HVAC repair in 2014on an HVAC unit directly serving
the area occupied by SHO, then SHO’s rent would be increased by $15K in 2014,
and by $7.5K in 2015 and 2016 to cover the repair.

(h)     Changes Affecting accounting entries. Each party agrees that prior to
changing an established practice for entering accounting entries that affect the
other party’s accounts (e.g., due to a change in such party’s interpretation of
an Ancillary Agreement),

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Exhibit 10.2
Execution Copy

such party will notify the other party in writing of such change in accordance
with the notice provisions of the Services Agreement.

(i)     Reporting. In the event of a Dispute, each party agrees that it will,
upon reasonable request of the other party, provide specific information
requested which is necessary to confirm whether such party is in conformance
with this Agreement with respect to such disputed matter; provided that neither
party will be required to produce information: (1) that cannot be readably
obtained without incurring significant expense or (2) is protectable from
discovery because it is legally privileged or constitutes attorney client work
product.”

c.
Schedule 12.2(g). A new Schedule 12.2(g) is added to the Agreement as set forth
on Appendix #1 hereto:

2.
Condition Precedent. It is a condition precedent to the effectiveness of this
Amendment that the parties (or their Affiliates, as applicable) also execute
(collectively the “Related Amendments”): (a) that certain Amendment #2 to
Merchandising Agreement, (b) that certain Amendment No. 1 to Services Agreement,
(c) that certain Amendment No. 1 to Store License Agreement (Outlet), and (d)
that certain Supplemental Agreement.

3.
No Other Amendments. Except as expressly amended herein, the Agreement and the
Ancillary Agreements shall continue in full force and effect, in accordance with
its terms, without any waiver, amendment or other modification of any provision
thereof, including the parties’ choice of Illinois law (pursuant to Section
14.10(a) of the Agreement) which also applies to this Amendment.

Signature Page Follows

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Exhibit 10.2
Execution Copy

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date set forth below by their respective officers thereunto duly
authorized.

SEARS HOLDINGS CORPORATION
By:     /s/ RONALD BOIRE
Ronald Boire
Executive Vice President, Chief Merchandising Officer and President, Sears
Full-Line Stores & Kmart Formats
December 9, 2013
SEARS HOMETOWN AND OUTLET STORES, INC.
By:     /s/ W.BRUCE JOHNSON
W. Bruce Johnson
Chief Executive Officer and President
Date: December 9, 2013

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Exhibit 10.2
Execution Copy

Appendix #1
Schedule 12.2(g)
Leases/Subleases Between SHLD Affiliates and SHO

Property Name
Format
Lease Type
West Babylon NY
OUT
Sublease
West Covina CA
OUT
Sublease
Tampa FL
OUT
Sublease
Tucson AZ
OUT
Sublease
Holyoke MA
OUT
Lease
North Miami Beach FL
OUT
Sublease
Cudahy WI
OUT
Sublease
Bridgeview IL
OUT
Sublease
Chesapeake VA
OUT
Sublease
Englewood CO
OUT
Sublease
Henderson NV
OUT
Lease
Bloomfield MI
OUT
Sublease
Raleigh NC
OUT
Lease
Greensboro NC
OUT
Lease
El Monte CA
OUT
Sublease
Concord NC
OUT
Lease
Norfolk VA
OUT
Lease
Pittsburgh PA ORDC
OUT
Lease
Pearl City HI ORDC
OUT
Sublease
Cupey Bajo PR ORC
OUT
Lease
San Diego CA ORDC
OUT
Lease
Nashville TN ORDC
OUT
Lease
Santa Ana CA ORDC
OUT
Lease
Jacksonville FL
OUT
Lease
Shoreline WA
OUT
Lease
Hendersonville TN
OUT
Sublease
Minneapolis MN
OUT
Lease
St.Petersburg FL ORDC
OUT
Lease
Melrose Park IL ORDC
OUT
Lease
Tucker GA ORDC
OUT
Lease
Winter Park FL ORDC
OUT
Lease
Richmond VA ORDC
OUT
Lease
Sacramento CA ORDC
OUT
Sublease
Sparks NV
OUT
Lease
Hayward CA
OUT
Sublease
Houston TX ORDC
OUT
Lease
Wauwatosa WI
OUT
Sublease

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