Exhibit 10.1

September 14, 2016

Mr. Will Powell

Chief Executive Officer and President

Sears Hometown and Outlet Stores, Inc.

Dear Will:

Retention Agreement

We consider your continued service and dedication to Sears Hometown and Outlet
Stores, Inc. (the “Company” or “we”) as Chief Executive Officer and President to
be important to our business. We are pleased to offer you a salary increase and
a cash retention award, as provided in this Retention Agreement, to which we and
you agree.

1. Your annual base salary will increase to $750,000 effective September 15,
2016.

2. In recognition of your continued, uninterrupted service with the Company from
the date of this Retention Agreement, we offer you, and you accept, a cash
retention award in the total amount of $750,000 less all applicable withholdings
and deductions required by law (the “Retention Award”). Subject to the next
sentences of this paragraph and to the other paragraphs of this Retention
Agreement, the Retention Award will vest in three installments. The first
installment of the Retention Award will vest and become payable to you in cash
as soon as administratively possible following April 15, 2018 (the “2018
Installment”), the second installment of the Retention Award will vest and
become payable to you in cash as soon as administratively possible following
April 15, 2019 (the “2019 Installment”), and the third installment of the
Retention Award will vest and become payable to you as soon as administratively
possible following April 15, 2020 (the “2020 Installment,” and together with the
2018 Installment and the 2019 Installment the “Installments”). If an Event
Vesting Date occurs, each of the Installments that is unpaid as of the Event
Vesting Date will become immediately payable to you in cash as soon as
administratively possible following the Event Vesting Date. “Event Vesting Date”
means the earliest of the following dates: (a) the date on which the Company
terminates your employment without Cause, (b) the date on which you terminate
your employment with the Company for Good Reason, or (c) the date on which you
notify the Company in writing that a Change Event has occurred. “Cause” means
(i) a material breach by you (other than a breach resulting from your incapacity
due to a disability as reasonably determined by the Company) of your duties and
responsibilities, which breach is demonstrably willful and deliberate on your
part, is committed in bad faith or without reasonable belief that such breach is
in the best interests of the Company, and is not remedied by you in a reasonable
period of time after receipt of written notice from the Company specifying the
breach, (ii) the commission by you of a felony involving moral turpitude, or
(iii) your dishonesty or willful misconduct in connection with your employment
with the Company. “Good Reason” means that, without your written consent,
(y) your annual base salary in effect on the date of, and giving effect to, this
Retention Agreement is reduced by ten percent or more, or (z) your place of
employment is relocated by the Company to a business location that is more than
fifty miles from the Company’s offices located at 5500 Trillium Boulevard,
Hoffman Estates, Illinois. “Change Event” means that (1) without your consent
you no longer report solely to the Company’s Board of Directors or (2) the
Company experiences, or without your consent you experience, an action or event
(other than termination of your employment by you or the Company in either
circumstance for any reason) that, with or without the passage of time,
reasonably would be deemed to be, or reasonably would be deemed to result in, a
reduction in your duties, responsibilities, or status as the Company’s Chief
Executive Officer and President.

3. Subject to the next sentences of this paragraph, you will receive the
Installments in accordance with, and subject to, paragraph 2 if all of the
following eligibility conditions are satisfied as of the payment dates specified
in paragraph 2: (a) you have executed this Retention Agreement and delivered it
to the Company and (b) until April 15, 2018 with respect to the 2018
Installment, until April 15, 2019 with respect to the 2019 Installment, and
until April 15, 2020 with respect to the 2020 Installment, you have continuously
served as a full-time employee of the Company. If the Company makes any payment
to you in accordance with its Annual Incentive Plan (“AIP”) (including without
limitation in accordance with Section 1.a.2 or Section 1.a.3 of your Amended and
Restated Executive Severance Agreement dated July 1, 2015 (your “Severance
Agreement”)), then (x) for the Company’s 2017 fiscal year, the 2018 Installment
will be reduced by the amount of the 2017 AIP payment, (y) for the

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Company’s 2018 fiscal year, the 2019 Installment will be reduced by the amount
of the 2018 AIP payment, and (z) for the Company’s 2019 fiscal year, the 2020
Installment will be reduced by the amount of the 2019 AIP payment. If you die or
experience a Disability (as defined in your Severance Agreement) before you have
received all of the Installments, your estate or personal representative (if
your death occurs) or you (if your Disability occurs) will receive an amount
equal to the total dollar amount of the Installments that are unpaid as of the
date of your death or Disability multiplied by a fraction the numerator of which
is the number of days after January 29, 2017 that your death or Disability
occurs (but not more than 1,095) and the denominator of which is 1,095, and you
will cease to be entitled to receive the unpaid Installments.

4. Your employment with the Company and its wholly owned subsidiaries remains
at-will, meaning that you and the Company may terminate your employment at any
time with or without Cause and with or without notice to you. Neither this
Retention Agreement nor the Retention Award has any effect on the at-will nature
of your employment.

5. This Retention Agreement contains all of the agreements, understandings, and
representations between the Company and you relating to the subject matter of
this Retention Agreement. This Retention Agreement supersedes all prior and
contemporaneous written and oral understandings, discussions, agreements,
representations, and warranties with respect to the subject matter.

6. This Retention Agreement may not be amended or modified except in writing
signed by the Company and you. This Retention Agreement, for all purposes, will
be construed in accordance with the laws of Illinois without regard to
conflicts-of-law principles.

7. This Retention Agreement is intended to comply with, or be exempt from,
Section 409A of the Internal Revenue Code of 1986, as amended, and will be
construed and administered in accordance with Section 409A.

 

SEARS HOMETOWN AND OUTLET

STORES, INC.

By:   /s/ CHARLES J. HANSEN   Charles. J. Hansen  

Vice President, General Counsel, and

Secretary

 

Agreed to and accepted:

/s/ WILL POWELL

Will Powell

 

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