Document:

Long-Term Incentive Program

 Exhibit 10.13 
 SEARS HOMETOWN AND OUTLET STORES, INC.  
 LONG-TERM INCENTIVE
PROGRAM 
 SECTION 1 
 GENERAL 
 1.1. Purpose. The Sears Hometown and Outlet
Stores, Inc. Long-Term Incentive Program (“LTIP”) is a performance-based program. The LTIP is designed to motivate the executive leadership of Sears Hometown and Outlet Stores, Inc. (“Company”) and the participating Subsidiaries
(as defined in Section 8) to achieve significant, lasting change that successfully positions the Company for future growth. Performance goals under the LTIP align Participants’ financial incentives with the financial goals of the Company.
Awards (as defined in Section 8) under the LTIP are designed to vary commensurately with achieved performance. Both (a) Awards not structured to satisfy the requirements for “performance-based compensation” under
Section 162(m) of the Code, and (b) Section 162(m) Awards, which are structured to satisfy such requirements, may be issued under the LTIP. The effective date of the LTIP document is the Rights Closing Date as defined in the
Separation Agreement by and between Sears Holdings Corporation (“Sears Holdings”) and the Company (“Effective Date”). For purposes of this document, the term Effective Date shall also refer to the effective date of a long-term
incentive program established in the future by the Compensation Committee under the LTIP. 
 1.2. Operation,
Administration, and Definitions. The operation and administration of the LTIP, including the Awards made under the LTIP, shall be subject to the provisions of Section 6 (relating to operation and administration). Capitalized terms in
the LTIP shall be defined as set forth in the LTIP (including as defined in Section 8). The LTIP is established under, and constitutes a part of, the Sears Hometown and Outlet Stores, Inc. Umbrella Incentive Program (“UIP”).

 SECTION 2 
 PARTICIPATION 
 2.1. Eligible Employee. Except as
provided herein, “Eligible Employee” means as to any Performance Period an employee of the Company or a participating Subsidiary, who is designated by the Compensation Committee or Senior Corporate Compensation Executive as eligible to
participate in an LTIP as of such Performance Period. The Senior Corporate Compensation Executive shall make eligibility determinations under this Section 2 with respect to all Eligible Employees other than those who are Executives for whom
compensation matters are under the purview of the Compensation Committee (as defined in Section 8), and the Compensation Committee shall make eligibility determinations with respect to all Executives. Once designated as eligible to participant,
an Eligible Employee shall become a “Participant” in the applicable LTIP. 
 2.2. New Hires and Promotions to
Eligible Employee Status. The Compensation Committee or Senior Corporate Compensation Executive, as applicable, may designate as Participants those employees whom the Compensation Committee or Senior Corporate Compensation Executive, as
applicable, determines have been newly hired or promoted into the group of Eligible Employees identified in subsection 2.1 above. The Award of any Participant who was hired or promoted after the first day of the Performance Period (as described in

 
subsection 3.2) shall be subject to a fraction, the numerator of which is the number of full days remaining in the Performance Period beginning with the Participant’s date of hire or
promotion, as applicable, and the denominator is the number of full days in the Performance Period. 
 2.3. Demotions from
Eligible Employee Status. If a Participant is demoted below a position of divisional vice president (or equivalent), as of the date of such demotion, the individual will no longer be a Participant, will be deemed to have forfeited any
unvested portion of his or her Award, and will receive no LTIP distribution under Section 4. 
 2.4. Other Changes in
Status 
 (a) If a Participant is promoted or transferred after the Effective Date of the LTIP for a
particular Performance Period, the Compensation Committee or Senior Corporate Compensation Executive, as applicable, may make a second Target Incentive Award (as defined in subsection 3.1) to such individual and the total amount payable to such
individual shall be based on a pro-ration, whereby the Target Incentive Award for the new position will apply to the remainder of the Performance Period and the Target Incentive Award for the immediately preceding long-term incentive-eligible
position, if applicable, will apply to the portion of the Performance Period immediately preceding the effective date of the promotion. 
 (b) If a Participant is demoted after the Effective Date of the LTIP for a particular Performance Period, but is still an Eligible Employee, the Compensation Committee or Senior Corporate Compensation
Executive, as applicable, may make a second Target Incentive Award to such individual and the total Award for such an individual shall be based on a pro-ration, whereby the Target Incentive Award for the new position will apply only to the remainder
of the Performance Period and the Target Incentive Award for the immediately preceding position will apply only to the portion of the Performance Period immediately preceding the effective date of the demotion, and in either case an Award will only
be paid if the Target for the full Performance Period is met. 
 SECTION 3 

LTIP INCENTIVE AWARDS 
 3.1. Target Incentive Awards. As of and after the applicable Effective Date, the Compensation Committee or Senior Corporate Compensation Executive, as applicable, may award “Target
Incentive Awards” (as defined in subsection 3.1(a) below) to each Participant designated by the Compensation Committee or Senior Corporate Compensation Executive, as applicable, in an amount determined by the applicable entity in its sole
discretion. In connection with such Awards, the Compensation Committee or Senior Corporate Compensation Executive, as applicable, shall establish a “Target” and “Threshold”, as well as applicable award levels at the Target and
Threshold achievement levels, under each objective performance goal or plan established under subsection 3.3 below; provided, however, that Threshold shall be expressed as a percentage of Target. The Senior Corporate Compensation Executive shall
make the determinations referred to in this Section 3 with respect to all Participants other than those who are Executives for whom compensation matters are under the purview of the Compensation Committee. 

  
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 (a) A Target Incentive Award shall, at the date of grant, consist of a
commitment by the Company to distribute, at the time specified in, and in accordance with the provisions of, Section 4 below, a designated amount based on a target level of performance. 

(b) An “LTIP Incentive Award” refers to a percentage of a Participant’s Target Incentive Award payable on
the payment date (as defined in subsection 4.1 below), if any, based on the actual performance relative to the objective performance goals during the Performance Period, subject to approval of the final award amount by the Compensation Committee or
Senior Corporate Compensation Executive, as applicable, and to the provisions of subsection 6.4 
 3.2. Performance
Period. The “Performance Period” refers to the applicable Fiscal Years (as defined in Section 8) as determined by the Compensation Committee with respect to which an Award may be granted under the LTIP. The Compensation
Committee shall determine the Fiscal Years that shall constitute the Performance Period for each long-term incentive program established under the LTIP; provided that, in the case of an employee who is newly hired or promoted into the group of
Eligible Employees after the Effective Date, the Performance Period shall be such shorter period as established by the Compensation Committee or Senior Corporate Compensation Executive, if applicable. The amount of the LTIP Incentive Award shall be
determined at the completion of the Performance Period in accordance with subsection 3.1 above and subsection 4.1 below. 
 3.3.
Financial Goals and Performance. For each Performance Period, the Compensation Committee or Senior Corporate Compensation Executive shall establish in writing one or more performance plans that includes one or more objective
performance goals and the required levels of performance as described in this Section 3.3. The Compensation Committee or Senior Corporate Compensation Executive, as applicable, shall determine the level of performance for each performance plan,
the performance plan to apply to each business unit, and which performance plan applies to each Participant. 

(a) Goals. Except as otherwise approved by the Compensation Committee or Senior Corporate Compensation Executive,
as applicable, with respect to a Performance Period, the performance goals shall be based upon one or more of the performance measures identified in the UIP. 
 (b) Performance. Except as otherwise approved by the Compensation Committee or Senior Corporate Compensation Executive, as applicable, with respect to a Performance Period, the following concepts
shall apply: 
 (i) Achievement of Target. With respect to each Performance Period, the Compensation
Committee or Senior Corporate Compensation Executive, as applicable, shall establish a target level of achievement for each performance goal (“Target”). If achieved, payout of Awards to which that performance goal applies shall be at 100%.

 (ii) Achievement of Threshold. With respect to each Performance Period, the Compensation Committee or
Senior Corporate Compensation Executive, as applicable, shall establish a threshold level of achievement that 

  
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must be met with respect to a performance goal before any portion of an Award to which the performance goal applies is payable (“Threshold”). If achieved, payout of Awards to which that
performance goal applies shall be at a specified percentage established in writing at the same time and manner as the Threshold achievement level is established. 

(iii) Achievement Between Threshold and Target. In the event achievement of a performance goal falls between
Threshold and Target with respect to a Performance Period, the Compensation Committee or Senior Corporate Compensation Executive, as applicable, may establish a formula for determining payout levels between these two points in writing at the same
time and manner as the achievement levels are established. 
 (iv) Payout Above Target. In the event
achievement of a performance goal exceeds the Target with respect to a Performance Period, the Compensation Committee or Senior Corporate Compensation Executive, as applicable, may establish a formula for determining payout levels above Target in
writing at the same time and manner as the Target achievement level is established. The Compensation Committee or Senior Corporate Compensation Executive, as applicable, also may provide for a maximum payout level or no maximum. 

3.4. Awards Subject to Code Section 162(m). 

(a) General Rules. 
 (i) Notwithstanding anything in the LTIP to the contrary, this subsection 3.4 will apply to all Section 162(m) Awards. To the extent there is a conflict between the rules of this subsection 3.4 and
any other section in the LTIP, the terms of this subsection 3.4 will control. 
 (ii) In no event will positive
discretion be applied, by the Compensation Committee or Senior Corporate Compensation Executive, to any Section 162(m) Award with respect to a Performance Period or as of the payment date (as defined under subsection 4.1). 

(iii) To the extent that an Executive experiences a promotion or other change in status, no adjustment to a
Section 162(m) Award shall be made if such adjustment would not otherwise meet the requirements of Code Section 162(m). 
 (b) Performance Measures. Section 162(m) Awards shall use the performance measures established under the UIP. As provided in the UIP, at the time of establishing the performance goals, the
Compensation Committee may exclude the effects of extraordinary items in a manner that satisfies the requirements of Code Section 162(m). 
 (c) Establishment of Performance Goals. Section 162(m) Awards shall have the applicable objective performance goals and any particulars or components established in writing and approved by the
Compensation Committee by the deadline established in the UIP in accordance with Code Section 162(m). 

  
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 (d) Attainment of Performance Goals. Distributions under
Section 162(m) Awards shall not be made until the Compensation Committee has determined, and certifies in writing, that the performance goals have been satisfied. 
 3.5. Limitation on Individual Awards. Notwithstanding anything herein to the contrary, the total LTIP Incentive Award paid to any Participant for a Performance Period pursuant to the LTIP
shall in no event exceed $20 million. 
 3.6. Additional Requirements. All LTIP Incentive Awards awarded under the
LTIP (and any Stock, as defined in Section 4.2, or cash otherwise distributable pursuant thereto) are subject to the provisions of Sections 4, 5 and 6. 
 3.7. Reimbursement of Excess Awards. If Company’s financial statements or approved performance measures under the LTIP are the subject of a restatement due to error or misconduct, to
the extent permitted by governing law, in all appropriate cases, the Company will seek reimbursement of Excess Awards paid under the LTIP to Executives (and any other Participant who is determined to have known of or been involved in any such
misconduct) for the relevant performance period(s). For purposes of the LTIP, an “Excess Award” means the positive difference, if any, between (a) the LTIP Incentive Award paid to an Executive and (b) the LTIP Incentive
Award that would have been paid to the Executive, had the Award been calculated based on the Company’s financial statements or performance measures as restated. The Company will not be required to award Participants, including Executives,
an additional LTIP payment should the restated financial statements or performance measures result in a higher LTIP Incentive Award. 
 SECTION 4 
 DISTRIBUTION 

4.1. Time of Payment. Subject to Sections 5 and 6, the cash or shares of Stock, if any, that result
from the payout formula described at Section 3 shall be distributed, in a single lump sum, as soon as practicable after the Compensation Committee or Senior Corporate Compensation Executive, as appropriate has determined and approved the amount
to be paid to each Participant, which shall in no event be later than the date that is the 15th day of the third month following the last day of the relevant Performance Period. Notwithstanding anything herein to the contrary, such distributions shall be made no later than required by Code
Section 409A to avoid treatment of the LTIP as a deferred compensation plan under Code Section 409A. The date as of which payment is made in accordance with this subsection 4.1 is referred to herein as the “payment date.”

 4.2. Form of Payment. An LTIP Incentive Award shall generally be satisfied by a distribution in cash to the
Participant, provided, however, that, at the discretion of the Compensation Committee, the Company may elect, by such deadline as specified under uniform and nondiscriminatory rules established by the Compensation Committee, to satisfy such LTIP
Incentive Award by payment of shares of Company common stock (“Stock”) in lieu of cash, or a combination of cash and shares of Stock. The number of shares of Stock shall be equal to (i) the amount of the Award to be paid in stock in
accordance with this subsection 4.2, divided by (ii) the fair market value of a share of Stock as evidenced by its closing price, on the principal securities exchange or market on which the shares are then listed or admitted, on the business
day immediately preceding the date of distribution or, if the Stock is not traded on that date, on 

  
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the next preceding date on which Stock was traded; provided that issuance of any shares of Stock in accordance with this subsection 4.2 shall be contingent on the availability of shares of Stock
under any shareholder-approved plan of the Company providing for the issuance of Stock in satisfaction of the Awards hereunder (which in no event shall be an employee stock purchase plan). 

SECTION 5 

TERMINATION OF EMPLOYMENT 
 The effect of termination of employment on a Participant’s right to receive a LTIP Incentive Award (whether payable in cash or Stock) depends on the reason for the termination, as described below.

 5.1. Termination of Employment. 

(a) Voluntary Termination or Involuntary Termination. In the event that a Participant (i) voluntarily
terminates employment (for any reason other than due to permanent and total disability, as defined in the Company’s long-term disability program, regardless of whether the Participant is covered by such program) or (ii) is involuntarily
terminated for any reason (other than death) prior to the payment date (as defined in subsection 4.1 above) of his or her Award, such Participant shall forfeit all of his or her Award. 

(b) Disability. In the event that, prior to the payment date (as defined in subsection 4.1 above) of his or
her Award, a Participant suffers a permanent and total disability (as defined in the Company’s long term disability program, regardless of whether the Participant is covered by such program) while employed by the Company or a Subsidiary,
resulting in termination or retirement, subject to Section 6 below, such individual shall be entitled to receive a LTIP Incentive Award, equal to his or her Target Incentive Award, if any, that would otherwise be payable to the Participant
under subsection 3.1 above, pro-rated through the date of termination in accordance with subsection 5.2 below; provided, however, that in no event shall a Participant receive any payment hereunder unless (i) the applicable performance measure
(under subsection 3.3) for the period from the inception of the Performance Period through the last completed full month that occurs on or preceding the Participant’s date of termination is equal to or greater than the Target for that
performance measure, pro-rated through the date of termination in accordance with subsection 5.2 below, (ii) the applicable performance measure is equal to or greater than the applicable Target for the Performance Period, and (iii) as of
his date of termination, the Participant had been employed by one or more of the Company or a Subsidiary, for at least twelve (12) months of the Performance Period applicable to such individual. 

(c) Death. In the event that a Participant dies while employed by the Company or a Subsidiary and prior to
the payment date for his or her Award, his or her Target Incentive Award shall be pro-rated through the date of death, in accordance with subsection 5.2 below, and, subject to Section 6 below, his or her estate shall be entitled to receive a
LTIP Incentive Award, equal to his or her prorated Target Incentive Award and payable in cash; provided, however, that in no event shall a payment be made with respect to a deceased Participant hereunder unless as of his date of death, (i) the

  
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applicable performance measure (under subsection 3.3) for the period from the inception of the Performance Period through the last completed full month that occurs on or preceding the
Participant’s date of death is equal to or greater than the Target for that performance measure, prorated through the date of death in accordance with subsection 5.2 below, (ii) the applicable performance measure is equal to or greater
than the Target for that performance measure for the Performance Period, and (iii) he had been employed by one or more of the Company or a Subsidiary, for at least twelve (12) months of the Performance Period applicable to such individual.

 5.2. Pro-rations. Any pro-ration of a LTIP Incentive Award, Target Incentive Award, or Target performance
measure, as applicable, under this Section 5 shall be based on a fraction, the numerator of which is the number of full months during the Performance Period in which the Participant was a Participant in the LTIP, and the denominator of which is
the full number of months in the Performance Period, as adjusted in Section 2, if applicable. Notwithstanding anything herein to the contrary, with respect to the 2012 fiscal year, a Participant’s continuous period of participation under
the Sears Holdings Corporation Long-Term Incentive Plan for the 2012 fiscal year immediately prior to the Rights Closing Date shall be taken into account. 
 SECTION 6 
 OPERATION AND ADMINISTRATION 

6.1. Compensation Committee and Senior Corporate Compensation Executive. The authority to control and manage the operation
and administration of the LTIP shall be vested in the Compensation Committee and the Senior Corporate Compensation Executive, as provided herein. 
 (a) Compensation Committee. Notwithstanding paragraph (b) immediately below, the Compensation Committee: 

(i) Shall approve the Target Incentive Award and the Awards for Participants who are Executives under its purview;

 (ii) With respect to Participants who are Executives, shall have the authority and discretion to establish
the terms, conditions, restrictions, and other provisions of such Awards, and (subject to the restrictions imposed by subsection 6.4 and Section 7) to amend, cancel, or suspend Awards; provided, however (and subject to the requirements of Code
Section 162(m), if applicable) that to the extent the Compensation Committee determines that the restrictions imposed by the LTIP preclude the achievement of the material purposes of the Awards in jurisdictions outside the United States, the
Compensation Committee shall have the authority and discretion to modify those restrictions as the Compensation Committee determines to be necessary or appropriate to conform to applicable requirements or practices of jurisdictions outside of the
United States; 
 (iii) May make additional changes that it deems appropriate for the effective administration
of the LTIP, subject to subsection 6.4 and provided that these changes may not increase the benefits to which Participants may become entitled under the LTIP, nor change the pre-established measures or goals that have been approved except as
explicitly provided in the LTIP; and 

  
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 (iv) Shall be responsible for all other duties and responsibilities
allocated to the Compensation Committee under the terms and conditions of the LTIP. 
 (b) Senior Corporate
Compensation Executive. Except as provided in paragraph (a) immediately above, the Senior Corporate Compensation Executive: 
 (i) Shall determine the Target Incentive Award and the Awards for Participants other than Executives under the purview of the Compensation Committee; 

(ii) Notwithstanding paragraph (a) above, shall have the authority and discretion to establish the terms,
conditions, restrictions, and other provisions of such Awards, and (subject to the restrictions imposed by subsection 6.4 and Section 7) to amend, cancel, or suspend Awards; 

(iii) Shall have the authority to control and manage the operation and administration of the LTIP with respect to all
Participants, subject to the direction of the Compensation Committee with respect to Executives, except as otherwise provided in this LTIP; 
 (iv) Shall be responsible for the day-to-day administration of the LTIP except as otherwise provided in this LTIP; and 

(v) Shall be responsible for all other duties and responsibilities allocated to the Senior Corporate Compensation
Executive under the terms and conditions of the LTIP. 
 (c) The Compensation Committee and the Senior Corporate
Compensation Executive, as appropriate, shall have the authority and discretion to interpret the LTIP, to establish, amend, and rescind any rules and regulations relating to the LTIP and to make all other determinations that may be necessary or
advisable for the administration of the LTIP. 
 (d) Any determinations by the Compensation Committee or the
Senior Corporate Compensation Executive, as applicable, regarding this LTIP are binding on the applicable Participants. 
 6.2.
Source of Awards. In the case of Awards under the LTIP that are settled in shares of Stock, such shares shall be distributed under a stock plan adopted by the Company and approved by the shareholders thereof that provides for the
issuance of Stock in satisfaction of Awards hereunder, (which in no event shall be an employee stock purchase plan.) In the event of any conflict between this document and such stock plan, the provisions of the stock plan shall govern. 

6.3. Delegation by Compensation Committee. Except to the extent prohibited by applicable law or the applicable rules of a
securities exchange or similar entity, or as would cause Section 162(m) Awards to not satisfy the requirements for performance-based compensation under Code Section 162(m), the Compensation Committee may allocate all or any

  
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portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. The
Compensation Committee may revoke any such allocation or delegation at any time. 
 6.4. Negative Discretion.
Notwithstanding anything in the LTIP to the contrary, prior to the settlement of any LTIP Incentive Award, the Compensation Committee (or the Senior Corporate Compensation Executive with respect to Participants who are not under the purview of the
Compensation Committee) may (a) reduce the amount of such Award, or the number of shares of Stock or amount of cash to be delivered in connection with such Award, and (b) with respect to Awards that are not Section 162(m) Awards, may
change the pre-established measures in goals that have been approved for such Award and increase the amount of such Award or the number of shares of stock or amount of cash to be delivered in connection with such Award. 

6.5. General Restrictions. Delivery of shares of Stock under the LTIP, in satisfaction of a LTIP Incentive Award, shall be
subject to the following: 
 (a) Notwithstanding any other provision of the LTIP, the Company shall have no
obligation to deliver any shares of Stock or make any other distribution of benefits under the LTIP unless such delivery or distribution complies with all applicable laws (including, without limitation, the requirements of the Securities Act of
1933), and the applicable requirements of any securities exchange or similar entity. 
 (b) To the extent that
the LTIP provides for issuance of Stock certificates to reflect the issuance of shares of Stock, the issuance may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any exchange or
similar entity. 
 6.6. Tax Withholding. All distributions under the LTIP are subject to withholding of all
applicable taxes. In the case of Awards under the LTIP that are settled in shares of Stock, if any, the Compensation Committee or Senior Corporate Compensation Executive, as applicable, may condition the delivery of any shares or other benefits
under the LTIP on satisfaction of the applicable withholding obligations. To the extent permitted by the Compensation Committee or Senior Corporate Compensation Executive, as applicable, such withholding obligations may be satisfied:
(a) through cash payment by the Participant; (b) through the surrender of shares of Stock which the Participant already owns (provided, however, that to the extent shares described in this paragraph (b) are used to satisfy more than
the minimum statutory withholding obligation, as described below, then, except as otherwise provided by the Compensation Committee or Senior Corporate Compensation Executive, as applicable, payments made with shares of Stock in accordance with this
paragraph (b) shall be limited to shares held by the Participant for not less than six months prior to the payment date (or such other period of time as the Company’s accountants may require)); or (c) through the surrender of shares
of Stock to which the Participant is otherwise entitled under the LTIP, provided, however, that such shares under this paragraph (c) may be used to satisfy not more than the Company’s minimum statutory withholding obligation (based on
minimum statutory withholding rates for Federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income). 
 6.7. Settlement of Awards. The obligation to make payments and distributions with respect to Awards may be satisfied through cash payments, the delivery of shares of Stock, or a combination
thereof, as provided under subsections 4.1 and 4.2, subject, in the case of settlement 

  
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in shares, to the terms of the stock plan under which the Stock is issued. Satisfaction of any such obligations under an Award, which is sometimes referred to as the “settlement” of the
Award, may be subject to such conditions, restrictions and contingencies as the Compensation Committee or Senior Corporate Compensation Executive, as applicable, shall determine. Each Subsidiary shall be liable for payment of an Award due under the
LTIP with respect to any Participant to the extent that such benefits are attributable to the services rendered for that Subsidiary by the Participant. Any disputes relating to liability of a Subsidiary for payment of an Award shall be resolved by
the Compensation Committee or Senior Corporate Compensation Executive, as applicable. 
 6.8. Transferability.
Except as otherwise provided by the Compensation Committee, Awards under the LTIP are not transferable except as designated by the Participant by will or by the laws of descent and distribution (including Awards originally determined by the Senior
Corporate Compensation Executive). 
 6.9. Form and Time of Elections. Unless otherwise specified herein, each
election required or permitted to be made by any Participant or other person entitled to benefits under the LTIP, and any permitted modification, or revocation thereof, shall be in writing filed with the Compensation Committee or Senior Corporate
Compensation Executive, as applicable, at such times, in such form, and subject to such restrictions and limitations, not inconsistent with the terms of the LTIP, as the Compensation Committee or Senior Corporate Compensation Executive, as
applicable, shall require. 
 6.10. Agreement With Company. Any Award under the LTIP shall be subject to such
terms and conditions, not inconsistent with the LTIP, as the Compensation Committee or Senior Corporate Compensation Executive, as applicable, shall, in its sole discretion, prescribe. The terms and conditions of any Award to any Participant shall
be reflected in such form of written (including electronic) document as is determined by the Compensation Committee. A copy of such document shall be provided to the Participant, and the Compensation Committee or Senior Corporate Compensation
Executive, as applicable, may, but need not, require that the Participant sign a copy of such document. Such document is referred to as an “Award Agreement” regardless of whether any Participant signature is required. 

6.11. Action by Company or Subsidiary. Any action required or permitted to be taken under the LTIP by the Company or any
Subsidiary, if any, of the foregoing shall be by resolution of its board of directors, or by action of one or more members of the board of directors of such company (including a committee of the board) who are duly authorized to act for such board
with respect to the applicable action, or (except to the extent prohibited by applicable law or applicable rules of any securities exchange or similar entity) by a duly authorized officer of such company. 

6.12. Gender and Number. Where the context admits, words in any gender shall include any other gender, words in the
singular shall include the plural and the plural shall include the singular. 
 6.13. Limitation of Implied
Rights. 
 (a) Neither a Participant nor any other person shall, by reason of participation in the LTIP,
acquire any right in or title to any assets, funds or property of the Company 

  
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or any Subsidiary whatsoever, including, without limitation, any specific funds, assets, or other property which the Company or any Subsidiary, in its sole discretion, may set aside in
anticipation of a liability under the LTIP. A Participant shall have only a contractual right to the cash or Stock, if any, payable under the LTIP, unsecured by any assets of the Company or any Subsidiary, and nothing contained in the LTIP shall
constitute a guarantee that the assets of the Company or any Subsidiary shall be sufficient to pay any benefits to any person. 
 (b) The LTIP does not constitute a contract of employment, and selection as a Participant shall not give any participating employee the right to be retained in the employ of the Company or any Subsidiary,
nor any right or claim to any benefit under the LTIP, unless such right or claim has specifically accrued under the terms of the LTIP. Except as otherwise provided in the LTIP, no Award under the LTIP shall confer upon the holder thereof any rights
as a shareholder of the Company prior to the date on which the individual fulfills all conditions for receipt of such rights. 

6.14. Evidence. Evidence required of anyone under the LTIP may be by certificate, affidavit, document or other information,
which the person charged with acting on such evidence considers pertinent and reliable, and which has been signed, made or presented by the proper party or parties. 
 6.15. Information to be Furnished to the Compensation Committee or Senior Corporate Compensation Executive. The Company and the Subsidiaries shall furnish the Compensation Committee or
Senior Corporate Compensation Executive, as applicable, with such data and information as it determines may be required for it to discharge its duties. The records of the Company and the Subsidiaries, as to an employee’s or Participant’s
employment, termination of employment, leave of absence, reemployment, and compensation shall be conclusive on all persons unless determined to be incorrect. Participants and other persons entitled to benefits under the LTIP must furnish the
Compensation Committee or Senior Corporate Compensation Executive, as applicable, such evidence, data or information as such entity considers desirable to carry out the terms of the LTIP, subject to any applicable privacy laws. 

6.16. Corporate Transaction. In the event of a corporate transaction involving the Company (including without limitation,
any Stock dividend, Stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, sale of assets or subsidiaries, combination or exchange of shares), the Compensation Committee may adjust
Awards to preserve but in no event increase the benefits or potential benefits of the Awards (including Awards originally determined by the Senior Corporate Compensation Executive); provided, however, that no such adjustment may be made to the
extent such adjustment would cause Section 162(m) Awards to cease to qualify as “performance-based compensation” under Code Section 162(m). Actions permitted under the preceding sentence by the Compensation Committee may include
any adjustments that the Compensation Committee determines to be equitable (which may include, without limitation, (a) replacement of Awards with other Awards which the Compensation Committee determines have comparable value and which are based
on stock of a company resulting from the transaction, and (b) cancellation of the Award in return for cash payment of the current value of the Award, determined as though the Award is fully vested at the time of the payment.) 

  
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 6.17. Governing Law. The LTIP will be governed under the internal laws of the
state of Illinois without regard to principles of conflicts of laws. The state and federal courts located in the state of Illinois shall have exclusive jurisdiction in any action, lawsuit or proceeding based on or arising out of the LTIP.

 6.18. Severability. If any provision(s) of the LTIP shall be found invalid, illegal, or unenforceable, in whole
or in part, then such provision(s) shall be modified or restricted so as to effectuate as nearly as possible in a valid and enforceable way the provisions hereof, or shall be deemed excised from the LTIP, as the case may require, and the LTIP shall
be construed and enforced to the maximum extent permitted by law, as if such provision(s) had been originally incorporated herein as so modified or restricted or as if such provision(s) had not been originally incorporated herein, as the case may
be. 
 SECTION 7 
 AMENDMENT AND TERMINATION 
 The Board or Compensation Committee may,
at any time, amend or terminate the LTIP, or any Award, provided that no amendment or termination may, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary),
adversely affect the rights of any Participant or beneficiary under any Award granted under the LTIP prior to the date such amendment is adopted by the Board or the Compensation Committee, if applicable. No amendment shall be made that would cause
the LTIP not to comply with the requirements of any applicable law or rule of any applicable securities exchange or similar entity, or cause Participants to experience adverse tax consequences under Code Section 409A. The LTIP and any Award
thereunder may be amended without Participant consent to the extent that the Compensation Committee determines such amendment necessary to cause the LTIP or Award to comply with any applicable law or rule of any applicable securities exchange or
similar entity, or to prevent adverse tax consequences under Code Section 409A for Participants. 
 SECTION 8

 DEFINED TERMS 
 8.1. Each capitalized term in the LTIP is defined where it first appears herein or in this Section 8. In addition to the terms previously defined previously in the LTIP, the following definitions
shall apply: 
 (a) Award. The term “Award” or “Awards” means any LTIP Incentive
Award(s), whether settled in cash or Stock. 
 (b) Board. The term “Board” means the Board of
Directors of the Company. 
 (c) Code. The term “Code” means the Internal Revenue Code of 1986,
as amended. A reference to any provision of the Code shall include reference to any successor provision of the Code (and the regulations issued thereunder). 
 (d) Compensation Committee. The term “Compensation Committee” refers to the Compensation Committee of the Board of Directors of Sears Hometown and Outlet Stores, Inc. 

  
 12 

 (e) Executive. The term “Executive” refers to any employee
of the Company or a participating Subsidiary who holds a position of senior vice president or higher of Sears Hometown and Outlet Stores, Inc. (not of any subsidiary or affiliate) or any employee who is an officer under Section 16(b) of the
Securities and Exchange Act of 1934 with respect to Sears Hometown and Outlet Stores, Inc. 
 (f) Fiscal
Year. The capitalized term “Fiscal Year” refers to the fiscal year of the Company. 
 (g)
Section 162(m) Award. The term “Section 162(m) Award” refers to any Award that is designated by the Compensation Committee as intended to meet the requirements for “performance-based compensation” under Code
Section 162(m). 
 (h) Senior Corporate Compensation Executive. The term “Senior Corporate
Compensation Executive” refers to the most senior human resources and compensation executive (or equivalent) or if he or she has explicitly delegated his or her duties with respect to the LTIP, as provided herein, then the Senior Corporate
Compensation Executive shall refer to such authorized representative to whom the duties of administering the LTIP have been delegated. 
 (i) Subsidiary. The term “Subsidiary” or “Subsidiaries” refers to any company during any period in which it is a “subsidiary corporation” (as that term is defined in
Section 424(f) of the Code) with respect to the Company. 
 SECTION 9 

EXPIRATION OF LTIP 
 A payment obligation under the LTIP with respect to a specific Performance Period shall expire, subject to earlier termination pursuant to Section 7, on the date on which all LTIP Incentive Awards
(if any) for the Performance Period are paid in full or would have been payable in accordance with the provisions of the LTIP (or, if earlier, on the date that the Compensation Committee determines that the results are less than the Thresholds for
the performance measures) with respect to such Performance Period. Notwithstanding this Section 9, the Company’s right to reimbursement under Section 3.7 will continue to survive after the expiration of the LTIP. 

  
 132012 Stock Plan

 Exhibit 10.14 
 SEARS HOMETOWN AND OUTLET STORES, INC. 
 2012 STOCK PLAN

 SECTION 1. BACKGROUND AND PURPOSE 
 The name of this Plan is the Sears Hometown and Outlet Stores, Inc. 2012 Stock Plan. The purpose of this Plan is to promote the interests of the Company and its Subsidiaries through grants to Eligible
Individuals of Restricted Stock, Stock Units, Options, and Stock Appreciation Rights in order (1) to attract and retain the services of Eligible Individuals, (2) to provide an additional incentive to each Eligible Individual to work to
increase the value of Stock and (3) to provide each Eligible Individual with a stake in the future of the Company which corresponds to the stake of each Company shareholder. 
 SECTION 2. DEFINITIONS 
 Each term set forth in this Section 2
shall have the meaning set forth opposite such term for purposes of this Plan and, for purposes of such definitions, the singular shall include the plural and the plural shall include the singular. 

2.1. Board shall mean the Board of Directors of the Company. 

2.2. Code shall mean the Internal Revenue Code of 1986, as amended. 

2.3. Committee shall mean a Committee of the Board to which the responsibility to administer this Plan is delegated by the Board
and which shall consist of at least two members of the Board, each of whom shall be a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act and each of whom shall be an “outside director” for purposes of
Code Section 162(m). 
 2.4. Company shall mean Sears Hometown and Outlet Stores, Inc., a Delaware corporation, and
any successor to such corporation. 
 2.5. Eligible Individual shall mean a key employee of or other individual
performing services for the Company or a Subsidiary, as determined and designated by the Committee. An award may be granted to an employee or other individual performing services, in connection with hiring, retention or otherwise, prior to the date
the employee or service provider first performs service for the Company or the Subsidiaries, provided such award shall not become vested prior to the date the employee or other service provider first performs such service. Notwithstanding the above,
for purposes of ISOs, Eligible Individual shall be limited to a key employee of the Company or a Subsidiary, as determined and designated by the Committee. 
 2.6. Exchange Act shall mean the Securities Exchange Act of 1934, as amended. 
 2.7. Fair Market Value shall mean, for any given date, the fair market value of the Stock as of such date, as determined by the Committee on a basis consistently applied based on actual
transactions in Stock on the exchange on which the Stock generally has the greatest trading volume. 

 2.8. ISO shall mean an Option granted under Section 8 to purchase Stock and
evidenced by an Option Agreement which provides that the Option is intended to satisfy the requirements for an incentive stock option under Code Section 422. 
 2.9. NQO shall mean an Option granted under Section 8 to purchase Stock and evidenced by an Option Agreement which provides that the Option shall not be treated as an incentive stock option
under Code Section 422. 
 2.10. Option shall mean an ISO or a NQO. 

2.11. Option Agreement shall mean the written agreement or instrument which sets forth the terms of an Option granted to an
Eligible Individual under this Plan. 
 2.12. Option Price shall mean the price which shall be paid to purchase one share
of Stock upon the exercise of an Option granted under this Plan. 
 2.13. Performance Period shall mean the period
selected by the Committee during which performance is measured for purpose of determining the extent to which an award of SARs, Options, Restricted Stock, or Stock Units has been earned. 

2.14. Plan shall mean this Sears Hometown and Outlet Stores, Inc. 2012 Stock Plan, as amended from time to time. 

2.15. Restricted Stock shall mean Stock granted to an Eligible Individual pursuant to Section 7. 

2.17. SAR Agreement shall mean the written agreement or instrument which sets forth the terms of a SAR granted to an Eligible
Individual under this Plan. 
 2.18. SAR Share Value shall mean the figure which is set forth in each SAR Agreement and
which is no less than the Fair Market Value of a share of Stock on the date the related SAR is granted. 
 2.19. Stock
shall mean the common stock of the Company, par value $0.01 per share. 
 2.20. Stock Agreement shall mean the written
agreement or instrument which sets forth the terms of a Restricted Stock grant or Stock Unit grant to an Eligible Individual under this Plan. 
 2.21. Stock Appreciation Right or SAR shall mean a right which is granted pursuant to the terms of Section 8 to the appreciation in the Fair Market Value of a share of Stock in excess of the
SAR Share Value for such a share. 
 2.22. Stock Unit shall mean a right granted to an Eligible Individual pursuant to
Section 7 to receive a payment in cash or shares based on the Fair Market Value of the number of shares of Stock described in such grant. 

  
 2 

 2.23. Subsidiary shall mean any corporation which is a subsidiary corporation
(within the meaning of Code Section 424(f)) of the Company. 
 SECTION 3. SHARES RESERVED UNDER PLAN 

3.1. Shares. There shall be reserved for issuance under this Plan 4,000,000 shares of Stock. 

3.2. Share Counting. The shares of Stock described in Section 3.1 shall be reserved to the extent that the Company deems
appropriate from authorized but unissued shares of Stock and from shares of Stock which have been reacquired by the Company. Furthermore, any shares of Stock issued pursuant to a Restricted Stock grant which are forfeited thereafter shall again
become available for issuance under this Plan. The gross number of shares of Stock covered by a Stock Unit shall not again become available under Section 3.1 for issuance under this Plan; provided, however, if a Stock Unit is forfeited or
settled in cash, the related shares of Stock shall again become available for issuance under this Plan. The gross number of shares of Stock covered by an Option or SAR, to the extent it is exercised, shall not again become available under
Section 3.1 for issuance under this Plan; provided, however, if an Option or SAR is forfeited or settled in cash, if applicable, the related shares of Stock shall again become available for issuance under this Plan. Any shares of Stock which
are (a) tendered to the Company to pay the Option Price of an Option, (b) tendered to the Company in satisfaction of any condition to a grant of Restricted Stock, or (c) used to satisfy a withholding obligation under
Section 14.4, shall again become available under Section 3.1 for issuance under this Plan. 
 3.3. Use of
Proceeds. The proceeds which the Company receives from the sale of any shares of Stock under this Plan shall be used for general corporate purposes and shall be added to the general funds of the Company. 

SECTION 4. EFFECTIVE DATE 
 Subject to the shareholders of the Company approving the adoption of this Plan, this Plan shall become effective on the Rights Closing Date as defined in the Separation Agreement by and between Sears
Holdings Corporation (“Sears Holdings”) and the Company. 
 SECTION 5. PLAN ADMINISTRATION 

5.1. Authority of Committee. The Plan shall be administered by the Committee. Except as limited by law, or by the Articles of
Incorporation or Bylaws of the Company, and subject to the provisions of this Plan, the Committee shall have full power, authority, and sole and exclusive discretion to construe, interpret and administer this Plan, including without limitation, the
power and authority to make determinations relating to Plan grants and correct mistakes in Stock, Option, or SAR Agreements, and to take such other action in the administration and operation of this Plan as

  
 3 

 
the Committee deems equitable under the circumstances. The Committee, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan, in a manner and to the extent
it shall deem necessary or expedient to make the Plan fully effective. In addition, the Committee shall have full and exclusive power to adopt such rules, regulations and guidelines for carrying out the Plan as it may deem necessary or proper, all
of which power shall be executed in the best interests of the Company and in keeping with the objectives of the Plan. This power includes, but is not limited to, selecting award recipients and establishing all award terms and conditions. 

5.2. Amendment of Awards. The Committee, in its sole discretion, may amend any outstanding award at any time in any manner not
inconsistent with the terms of the Plan, provided that no outstanding, vested award may be amended without the grantee’s consent if the amendment would have a materially adverse effect on the grantee’s rights under the award.
Notwithstanding the foregoing, the Committee, in its sole discretion, may amend an award if it determines such amendment is necessary or advisable for the Company to comply with applicable law (including Code Section 409A), regulation, rule, or
accounting standard. 
 5.3. Delegation. To the extent permitted by applicable law, the Committee may delegate its
authority as identified herein to one or more officers of the Company, including without limitation the authority to approve grants to Eligible Individuals other than any of the Company’s officers. To the extent that the Committee delegates its
authority to make grants as provided by this Section 5.3, all references in the Plan to the Committee’s authority to make grants and determinations with respect thereto shall be deemed to include the Committee’s delegate(s). Any such
delegate shall serve at the pleasure of, and may be removed at any time by, the Committee. 
 5.4. Decisions Binding. In
making any determination or in taking or not taking any action under the Plan, the Committee or its delegate(s) may obtain and may rely on the advice of experts, including employees of and professional advisors to the Company. Any action taken by,
or inaction of, the Committee or its delegate(s) relating to or pursuant to the Plan shall be within the absolute discretion of the Committee or its delegate. Such action or inaction of the Committee or its delegate(s) shall be conclusive and
binding on the Company, on each affected Eligible Individual and on each other person directly or indirectly affected by such action. 

SECTION 6. ELIGIBILITY 
 Eligible Individuals shall be eligible for the grant of awards under this Plan. 
 SECTION
7. RESTRICTED STOCK AND STOCK UNITS 
 7.1. Committee Action. 

(a) General. The Committee acting in its absolute discretion shall have the right to grant Restricted Stock and
Stock Units to Eligible Individuals from time to time. 
 (b) Limitations. No Restricted Stock and Stock
Unit grants in any combination may be made to an Eligible Individual in any calendar year with respect to more than 100,000 shares of Stock. Each Restricted Stock grant and each Stock Unit grant shall be evidenced by a Stock Agreement. 

  
 4 

 7.2. Forfeiture Conditions. The Committee may make a Restricted Stock or Stock Unit
grant subject to one or more employment, performance or other forfeiture conditions which the Committee acting in its absolute discretion deems appropriate under the circumstances, and the related Stock Agreement shall set forth each such forfeiture
condition and the deadline for satisfying each such forfeiture condition. When a Stock certificate is issued for shares of Restricted Stock, such certificate shall be issued subject to (i) the conditions, if any, described in this
Section 7.2 and Section 9 to, or for the benefit of, the Eligible Individual and (ii) a stock power in favor of the Company in order for the Company to effect any forfeitures of such Restricted Stock. 

7.3. Rights Under Awards. 
 (a) Cash Dividends. Each Stock Agreement which evidences a Restricted Stock grant shall state whether the Eligible Individual shall have a right to receive any cash dividends which are paid after
any shares of Restricted Stock are issued to him or her and before the first day that the Eligible Individual’s interest in such Stock is forfeited. If such a Stock Agreement provides that an Eligible Individual has no right to receive a cash
dividend when paid, such agreement shall set forth the conditions, if any, under which the Eligible Individual will be eligible to receive one, or more than one, payment in the future to compensate the Eligible Individual for the fact that he or she
had no right to receive any cash dividends on his or her Restricted Stock when such dividends were paid. If such a Stock Agreement calls for any such payments to be made, the Company shall make such payments from the Company’s general assets,
and the Eligible Individual shall be no more than a general and unsecured creditor of the Company with respect to such payments. Unless otherwise set forth in the Stock Agreement which evidences a Stock Unit grant, if a cash dividend is paid on the
shares of Stock described in a Stock Unit grant, such cash dividend shall be treated as reinvested in shares of Stock and shall increase the number of shares of Stock described in such Stock Unit grant. 

(b) Stock and Other Dividends. Unless otherwise provided in the related Stock Agreement, and subject to such rules
as the Committee shall adopt with respect to each dividend, if a Stock dividend is declared on a share of Restricted Stock, such Stock dividend shall be treated as part of the grant of the related Restricted Stock, and an Eligible Individual’s
interest in such Stock dividend shall be forfeited or shall become nonforfeitable at the same time as the Stock with respect to which the Stock dividend was paid is forfeited or becomes nonforfeitable. Unless otherwise set forth in the Stock
Agreement which evidences a Stock Unit grant, and subject to such rules as the Committee shall adopt with respect to each dividend, if a Stock dividend is declared on any shares of Stock described in a Stock Unit grant, such dividend shall increase
the number of shares of Stock described in such Stock Unit grant. If a dividend is paid on a share of Restricted Stock or on a share of Stock described in a Stock Unit grant other than in cash or Stock, the disposition of such dividend with respect
to such Restricted Stock grant and the treatment of such dividend with respect to such Stock Unit grant shall be effected in accordance with the terms of the related Stock Agreement or such rules as the Committee shall adopt with respect to each
such dividend. 

  
 5 

 (c) Voting Rights. An Eligible Individual shall have the right to
vote shares of Restricted Stock unless otherwise provided in the related Stock Agreement. An Eligible Individual receiving a Stock Unit grant shall not possess any voting rights with respect to such Stock Units. 

(d) Effect of Termination. In the discretion of the Committee, a Stock Agreement may provide for vesting, payment,
or other applicable terms after the Eligible Individual ceases to be employed or provide services to the Company or Subsidiary for any reason whatsoever, including death or disability. 

(e) Nontransferability. No Restricted Stock grant and no shares issued pursuant to a Restricted Stock grant shall
be transferable by an Eligible Individual other than by will or by the laws of descent and distribution before an Eligible Individual’s interest in such shares have become completely nonforfeitable, and no interests in a Stock Unit grant shall
be transferable other than by will or the laws of descent and distribution, except as otherwise provided in the related Stock Agreement. 
 (f) Creditor Status. An Eligible Individual to whom a Stock Unit is granted shall be no more than a general and unsecured creditor of the Company with respect to any payment due under such grant.

 7.4. Satisfaction of Forfeiture Conditions. A share of Stock shall cease to be Restricted Stock at such time as an
Eligible Individual’s interest in such Stock becomes nonforfeitable under this Plan and the terms of the related Stock Agreement. Upon vesting of a Stock Unit, the Eligible Individual shall receive payment in cash or Stock in accordance with
the terms of the related Stock Agreement. 
 SECTION 8. OPTIONS AND SARs 

8.1. Options. The Committee acting in its absolute discretion shall have the right to grant Options to purchase shares of Stock to
Eligible Individuals from time to time, and Options may be granted for any reason the Committee deems appropriate under the circumstances. Each grant of an Option shall be evidenced by an Option Agreement, and each Option Agreement shall set forth
whether the Option is an ISO or a NQO and shall set forth such other terms and conditions, including any performance-based vesting conditions, of such grant, as the Committee acting in its absolute discretion deems consistent with the terms of this
Plan. 
 8.2. ISO Rules. Notwithstanding anything in this Plan to the contrary, no term of this Plan relating to ISOs
shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be so exercised, so as to disqualify the Plan or any ISO under Code Section 422. The aggregate Fair Market Value of ISOs granted to an
Eligible Individual under this Plan and incentive stock options granted to such Eligible Individual under any other stock option plan adopted by the 

  
 6 

 
Company or a Subsidiary which first become exercisable in any calendar year shall not exceed $100,000. Such Fair Market Value figure shall be determined by the Committee on the date the ISO or
other incentive stock option is granted, and the Committee shall interpret and administer the limitation set forth in this Section 8.2 in accordance with Code Section 422(d). 

8.3. Option Price, Exercise Period and No Dividend Equivalents. 

(a) Option Price. The Option Price for each share of Stock subject to an Option shall be no less than the Fair
Market Value of a share of Stock on the date the Option is granted. The Option Price shall be payable in full upon the exercise of any Option. Except in accordance with the provisions of Section 12, the Committee shall not, absent the approval
of the Company’s shareholders, take any action, whether through amendment, cancellation, replacement grants, exchanges or any other means, to directly or indirectly reduce the Option Price of any outstanding Option. 

(b) Exercise Period. Each Option granted under this Plan shall be exercisable in whole or in part at such time or
times as set forth in the related Option Agreement, but no Option Agreement shall make an Option exercisable before the date such Option is granted or on or after the date which is the tenth anniversary of the date such Option is granted. In the
discretion of the Committee, an Option Agreement may provide for the exercise of an Option after the Eligible Individual ceases to be employed or provide services to the Company or a Subsidiary for any reason whatsoever, including death or
disability. 
 (c) No Dividend Equivalents. In no event shall any Option or Option Agreement granted
under the Plan include any right to receive dividend equivalents with respect to such award. 
 8.4. Method of Exercise.

 (a) Committee Rules. An Option may be exercised as provided in this Section 8.4 pursuant to
procedures (including, without limitation, procedures restricting the frequency or method of exercise) as shall be established by the Committee or its delegate from time to time for the exercise of Options. 

(b) Notice and Payment. An Option shall be exercised by delivering to the Committee or its delegate during the
period in which such Option is exercisable, (1) written notice of exercise in a form acceptable to the Committee indicating the specific number of shares of Stock subject to the Option which are being exercised and (2) payment in full of
the Option Price for such specific number of shares. An Option Agreement, at the discretion of the Committee, may provide for the payment of the Option Price by any of the following means: 

(1) in cash, electronic funds transfer or a check acceptable to the Committee; 

  
 7 

 (2) in Stock which has been held by the Eligible Individual for a period
acceptable to the Committee and which Stock is otherwise acceptable to the Committee, provided that the Committee may impose whatever restrictions it deems necessary or desirable with respect to such method of payment; 

(3) through a broker-facilitated cashless exercise procedure acceptable to the Committee; or 

(4) in any combination of the methods described in this Section 8.4(b) which is acceptable to the Committee.

 Any payment made in Stock shall be treated as equal to the Fair Market Value of such Stock on the date the properly endorsed
stock certificate for such Stock is delivered to the Committee (or to its delegate) or, if payment is effected through a certification of ownership of Stock in lieu of a stock certificate, on the date the Option is exercised. 

(c) Restrictions. The Committee may from time to time establish procedures for restricting the exercise of Options
on any given date as the result of excessive volume of exercise requests or any other problem in the established system for processing Option exercise requests or for any other reason the Committee or its delegate deems appropriate or necessary.

 8.5. SARs. 
 (a) SARs and SAR Share Value. 
 (1) The Committee acting in
its absolute discretion may grant an Eligible Individual a SAR which will give the Eligible Individual the right to the appreciation in one, or more than one, share of Stock, and any such appreciation shall be measured from the related SAR Share
Value; provided, however, in no event shall the SAR Share Value be less than the Fair Market Value of a share of Stock on the date such SAR is granted. The Committee shall have the right to make any such grant subject to such additional terms,
including performance-based vesting provisions, as the Committee deems appropriate and such terms shall be set forth in the related SAR Agreement. 
 (2) Each SAR granted under this Plan shall be exercisable in whole or in part at such time or times as set forth in the related SAR Agreement, but no SAR Agreement shall make a SAR exercisable before the
date such SAR is granted or on or after the date which is the tenth anniversary of the date such SAR is granted. In the discretion of the Committee, a SAR Agreement may provide for the exercise of a SAR after the Eligible Individual ceases to be
employed or provide services to the Company or Subsidiary for any reason whatsoever, including death or disability. 

  
 8 

 (3) Except in accordance with the provisions of Section 12, the
Committee shall not, absent the approval of the Company’s shareholders, take any action, whether through amendment, cancellation, replacement grants, exchanges or any other means, to directly or indirectly reduce the SAR Share Value of any
outstanding SAR. 
 (b) Procedure. The exercise of a SAR shall be effected by the delivery of the related
SAR Agreement to the Committee together with a statement signed by the Eligible Individual which specifies the number of shares of Stock as to which the Eligible Individual exercises his or her SAR. 

(c) Payment. An Eligible Individual who exercises his or her SAR will receive a payment in cash or in Stock, or in
a combination of cash and Stock, equal in amount to (i) the number of shares of Stock with respect to which, the SAR is exercised times (ii) the excess of the Fair Market Value of a share of Stock on the exercise date over the applicable
SAR Share Value. The Committee acting in its absolute discretion shall determine the form of such payment. Any cash payment shall be made from the Company’s general assets, and an Eligible Individual shall be no more than a general and
unsecured creditor of the Company with respect to such payment. 
 (d) No Dividend Equivalents. In no
event shall any SAR or SAR Agreement granted under the Plan include any right to receive dividend equivalents with respect to such award. 
 8.6. Nontransferability. Except to the extent the Committee deems permissible and consistent with the best interests of the Company, no Option or SAR shall be transferable by an Eligible Individual
other than by will or by the laws of descent and distribution, and any grant by the Committee of a request by an Eligible Individual for any transfer (other than a transfer by will or by the laws of descent and distribution) of an Option or SAR
shall be conditioned on the transfer not being made for value or consideration. Any such Option or SAR granted under this Plan shall be exercisable during an Eligible Individual’s lifetime, as the case may be, only by (subject to the first
sentence in this Section 8.6) the Eligible Individual, provided that in the event an Eligible Individual is incapacitated and unable to exercise such Eligible Individual’s Option or SAR, such Eligible Individual’s legal guardian or
legal representative whom the Committee deems appropriate based on all applicable facts and circumstances presented to the Committee may exercise such Eligible Individual’s Option or SAR, in accordance with the provisions of this Plan and the
applicable Option or SAR Agreement. The person or persons to whom an Option or SAR is transferred by will or by the laws of descent and distribution (or pursuant to the first sentence of this Section 8.6) thereafter shall be treated as the
Eligible Individual under this Plan. 
 8.7. Share Limitation. An Eligible Individual may not be granted in any calendar
year Options, or SARs, or one or more Options and SARs in any combination which in the aggregate relate to more than 300,000 shares of Stock. 

  
 9 

 SECTION 9. PERFORMANCE-BASED AWARDS 

9.1 Establishment of Performance Goals. If, at the time of grant, the Committee intends an award to qualify as “performance
based compensation” within the meaning of Code Section 162(m)(4), the Committee must establish in writing, objective performance goals for the applicable Performance Period no later than ninety (90) days after the Performance Period
begins (but in no event after twenty-five percent (25%) of the Performance Period has elapsed), and while the outcome as to the performance goals is substantially uncertain. Such performance goals established by the Committee may be with
respect to corporate performance, operating group or sub-group performance, individual company performance, other group or individual performance, or division performance, and shall be based on one or more of the criteria described in
Section 9.2. 
 9.2 Performance Measures. A performance goal may be based on any one or more or any combination (in
any relative proportion) of the following: share price, market share, cash flow, revenue, revenue growth, earnings per share, operating earnings per share, operating earnings, earnings before interest, taxes, depreciation and amortization, return on
equity, return on assets, return on investment, net income, net income per share, economic value added, market value added, store sales growth, customer satisfaction performance goals measured by independent customer satisfaction surveys and
employee opinion survey results measured by an independent firm, and strategic business objectives, consisting of one or more objectives based on meeting specific cost or profit targets or margins, business expansion goals and goals relating to
acquisitions or divestitures. Each goal, with respect to a performance period, may be expressed on an absolute and/or relative basis, may be based on the Company as a whole or on any one or more business units of the Company, or its Subsidiaries,
and may be based on or otherwise employ comparisons based on internal targets, the past performance of the Company or of any one or more business units of the Company or its Subsidiaries, and/or the past or current performance of other companies, or
an index. 
 9.3 Certification of Performance. A Participant otherwise entitled to receive an award intended to meet the
requirements of performance-based compensation under Code Section 162(m) and the regulations thereunder for any Performance Period shall not receive a settlement of the award until the Committee has determined that the applicable performance
goal(s) have been attained. To the extent that the Committee exercises discretion in making the determination required by this subsection, such exercise of discretion may not result in an increase in the amount of the payment with respect to such
award. 
 9.4 Extraordinary Items. In establishing any performance goals, the Committee may, no later than the date such
performance goals are established in accordance with Section 9.1, provide for the exclusion of the effects of the following items, to the extent identified in the audited financial statements of the Company, including footnotes, or in the
Management Discussion and Analysis of Financial Condition and Results of Operations accompanying such financial statements: (a) asset write-downs; (b) litigation or claim judgments or settlements; (c) extraordinary, unusual, and/or
nonrecurring items of gain or loss; (d) gains or losses on acquisitions or divestitures or store closings; (e) noncapital, purchase accounting items; (f) changes in tax or accounting principles, regulations or laws; (g) mergers
or acquisitions; (h) integration costs disclosed as merger related; (i) accruals for reorganization or restructuring programs; (j) investment income or loss; (k) foreign 

  
 10 

 
exchange gains and losses; and (l) tax valuation allowances and/or tax claim judgment or settlements. To the extent the exclusion of any item affects awards intended to constitute
performance-based compensation under Code Section 162(m), such exclusion shall be specified in a manner that satisfies the requirements of Code Section 162(m) and the regulations thereunder, including without limitation the requirement
that performance goals be objectively determinable. 
 SECTION 10. SECURITIES REGISTRATION 

For Stock issued pursuant to this Plan, the Company at its expense shall take such action as it deems necessary or appropriate to register
the original issuance of such Stock to an Eligible Individual under the Securities Act of 1933, as amended, or under any other applicable securities laws or to qualify such Stock for an exemption under any such laws prior to the issuance of such
Stock to an Eligible Individual; however, the Company shall have no obligation whatsoever to take any such action in connection with the transfer, resale or other disposition of such Stock by an Eligible Individual. 

SECTION 11. LIFE OF PLAN 
 No award shall be granted under this Plan on or after the earlier of: 
 (1) the tenth (10th) anniversary of the date the Company adopts this Plan, in which event this Plan otherwise thereafter shall continue in effect until all Options and SARs have been exercised in full or no longer are
exercisable and all Restricted Stock and Stock Unit grants under this Plan have been forfeited or the forfeiture conditions on the related Stock or cash payments have been satisfied in full, or 

(2) the date on which all of the Stock reserved under Section 3 has been issued or is no longer available for use
under this Plan and all cash payments due under any Stock Unit grants have been paid or forfeited, in which event this Plan also shall terminate on such date. 
 SECTION 12. ADJUSTMENT 
 12.1. Corporate Transactions. The
number, kind or class (or any combination thereof) of shares of Stock reserved under Section 3, the grant limitations described in Section 7.1(b) and Section 8.7, the number, kind or class (or any combination thereof) of shares of
Stock subject to Options and SARs granted under this Plan and the applicable Option Price and SAR Share Value as well as the number, kind or class of shares of Stock subject to Restricted Stock and Stock Unit grants under this Plan shall be adjusted
by the Committee in an equitable manner to reflect any corporate transaction resulting in a change in the capitalization of the Company. For purposes of this paragraph a corporate transaction includes without limitation any dividend (other than a
cash dividend that is not an extraordinary cash dividend) or other distribution (whether in the form of cash, Stock, securities of a subsidiary of the Company, other securities or other property), recapitalization, stock split, reverse stock split,
combination of shares, reorganization, merger, consolidation, acquisition, split-up, spin-off, combination, repurchase or exchange of Stock or other securities of the Company, issuance of warrants or other rights to purchase Stock or other
securities 

  
 11 

 
of the Company, or other similar corporate transaction. Notwithstanding anything in this paragraph to the contrary, an adjustment to an Option or SAR under this paragraph shall be made in a
manner that will not result in the grant of a new Option or SAR under Code Section 409A or cause the Option or SAR to fail to be exempt from Code Section 409A. 
 12.2. General. If any adjustment under this Section 12 would create a fractional share of Stock or a right to acquire a fractional share of Stock, such fractional share shall be disregarded
and the number of shares of Stock reserved under this Plan and the number subject to any grant shall be the next lower number of shares of Stock, rounding all fractions downward. Any adjustment made under this Section 12 by the Board shall be
conclusive and binding on all affected persons. 
 SECTION 13. AMENDMENT OR TERMINATION 

The Board or the Committee may at any time in its sole discretion, for any reason whatsoever, terminate or suspend the Plan, and from time
to time may amend or modify the Plan; provided that without the approval of shareholders of the Company, no amendment or modification to the Plan may materially modify the Plan in any way that would require shareholder approval under any regulatory
requirement that the Committee determines to be applicable, including without limitation, the rules of any exchange. No amendment, modification, suspension or termination of the Plan shall have a materially adverse effect on any vested and
outstanding award on the date of such amendment, modification, suspension or termination, without the consent of the affected grantee. Notwithstanding the foregoing, no Eligible Individual consent shall be needed for an amendment, modification, or
termination of the Plan if the Committee determines such amendment, modification, or termination is necessary or advisable for the Company to comply with applicable law (including Code Section 409A), regulation, rule, or accounting standard.
Suspension or termination of the Plan shall not affect the Committee’s ability to exercise the powers granted to it with respect to awards under this Plan prior to the date of such suspension or termination. 

SECTION 14. MISCELLANEOUS 
 14.1. Shareholder Rights. No Eligible Individual shall have any rights as a shareholder of the Company as a result of the grant of an Option or SAR under this Plan or his or her exercise of such
Option or SAR pending the actual delivery of any Stock subject to such Option or SAR to such Eligible Individual. Except as otherwise provided in this Plan, an Eligible Individual’s rights as a shareholder in the shares of Stock related to a
Restricted Stock grant shall be set forth in the related Stock Agreement. 
 14.2. No Contract of Employment or Contract for
Services. The grant of an award to an Eligible Individual under this Plan shall not constitute a contract of employment or contract for the performance of services or an agreement to continue his or her status as an Eligible Individual and shall
not confer on an Eligible Individual any rights in addition to those rights, if any, expressly set forth in any Stock, Option or SAR Agreement. 
 14.3. Coordination with Corporate Policies. Shares of Stock and cash acquired by an Eligible Individual under this Plan shall be subject to share retention, forfeiture, and clawback policies
established by the Company in accordance with the terms of such policies. 

  
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 14.4. Withholding. The exercise of any Option or SAR granted under this Plan and the
acceptance of a Restricted Stock or Stock Unit grant shall constitute an Eligible Individual’s full and complete consent to whatever action the Committee deems necessary to satisfy the minimum tax withholding requirements, if any, which the
Committee acting in its discretion deems applicable. The Committee shall have the right to satisfy tax withholding requirements, if any, through a reduction in the number of shares of Stock actually transferred pursuant to an award. 

14.5 Compliance with Code Section 409A. To the extent that amounts payable under this Plan are subject to Code
Section 409A, the Plan is intended to comply with Code Section 409A and official guidance issued thereunder. Notwithstanding anything herein to the contrary, the Plan shall be interpreted, operated and administered in a manner consistent
with this intention. 
 14.6 Requirements of Law. The granting of awards and the issuance of Stock under the Plan shall
be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. 
 14.7 Indemnification. Each person who is or shall have been a member of the Committee and each delegate of such Committee shall be indemnified and held harmless by the Company against and
from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be made a party or in which he or she may be
involved in by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in
any such action, suit, or proceeding against him or her, provided that the Company is given an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it personally. Such foregoing right of
indemnification shall not apply in circumstances involving such person’s bad faith or willful misconduct. The foregoing right of indemnification shall not be exclusive and shall be independent of any other rights of indemnification to
which such persons may be entitled under the Company’s Articles of Incorporation or By-laws, by contract, as a matter of law, or otherwise. 
 14.8 Headings and Captions. The headings and captions here are provided for reference and convenience only, shall not be considered part of this Plan, and shall not be employed in the construction
of this Plan. 
 14.9 Governing Law. This Plan shall be construed under the laws of the State of Illinois
(excluding its choice-of-law rules) to the extent not superseded by federal law.  
 14.10 Invalid Provisions. In
the event any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid
provision had not been included. 

  
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 14.11 Conflicts. In the event of a conflict between the terms of this Plan and any
Stock, Option or SAR Agreement, the terms of the Plan shall prevail. 
 14.12 Successors. All obligations of the Company
under the Plan with respect to awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the Company. 
 14.13 Deferral of Awards. The Committee may, in a
Stock Agreement or otherwise, establish procedures for the deferral of Stock or cash deliverable upon settlement, vesting or other events with respect to Restricted Stock or Stock Units. Notwithstanding anything herein to the contrary, in no event
will any deferral of Stock or any other payment with respect to any award granted under the Plan be allowed if the Committee determines, in its sole discretion, that the deferral would result in the imposition of the additional tax under Code
Section 409A. 
 14.14 Employees in Foreign Jurisdictions. Notwithstanding any provision of this Plan to the
contrary, in order to achieve the purposes of this Plan or to comply with provisions of the laws in countries outside the United Sates in which the Company operates or has employees, the Committee, in its sole discretion, shall have the power and
authority to (i) determine which Eligible Individuals (if any) employed by the Company outside the United States should participate in the Plan, (ii) modify the terms and conditions of any awards made to such Eligible Individuals, and
(iii) establish sub-plans and other award terms, conditions and procedures to the extent such actions may be necessary or advisable to comply with provisions of the laws in such countries outside the United States in order to assure the
lawfulness, validity and effectiveness of awards granted under this Plan. 

  
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