Document:

Executive Severance Agreement

 Exhibit 10.17 
 EXECUTIVE SEVERANCE AGREEMENT 
 By this Executive Severance Agreement dated
and effective as of August 6, 2012 (“Agreement”), Sears Holdings Corporation and its affiliates and subsidiaries (“Sears”), and Steven D. Barnhart (“Executive”), intending to be legally bound, and for good and
valuable consideration, agree as follows: 
 1. Effect of Severance. 

(a) Severance Benefits. If Executive is involuntarily terminated without “Cause” or Executive voluntarily
terminates Executive’s employment for “Good Reason” (as such terms are defined in Section 2 below), Executive shall be entitled to the benefits described in subsection (i), (ii) and (iii) below (collectively referred to
herein as “Severance Benefits”). Executive shall not be entitled to the Severance Benefits if Executive’s employment terminates for any other reason, including due to death or “Disability” (as defined in Section 2
below). Executive shall also not be entitled to Severance Benefits if Executive does not meet all of the other requirements under this Agreement, including under subsection 4(g). 

i. Continuation of Salary. 

1. Sears, the appropriate “Sears Affiliate” (as defined in Section 2 below) or Sears Hometown and Outlet
Stores, Inc. (“SHO”) if such termination occurs post-Spin-off, shall pay Executive cash severance (“Salary Continuation”) equal to: 
 A. In the event Executive’s termination of employment (“Date of Termination”) is due to the Good Reason provided for under subsection 2(c)(iii) below, Executive’s annual base salary
rate as of the Date of Termination plus an amount equivalent to Executive’s target bonus for the year in which the Date of Termination occurs; 
 B. In the event Executive’s Date of Termination occurs before the completion of the first anniversary of the effective date of the Spin-off (as such term is defined in subsection 2(c)(iii) below),
Executive’s annual based salary plus an amount equivalent to Executive’s target bonus for the year in which the Date of Termination occurs; or 
 B. In the event Executive’s Date of Termination occurs for any other reason or at any other time and entitles Executive to Severance Benefits under this Agreement, Executive’s annual base salary
rate as of the Date of Termination. 
 Subject to subsection (a)(i)(2) below, payment of such Salary Continuation shall commence
on Executive’s “Separation from Service” (as defined in Section 2 below) and shall be paid in substantially equal installments on each regular salary payroll date for a period of twelve (12) months following Date of
Termination (“Salary Continuation Period”), except as otherwise provided in this Agreement. 

 Notwithstanding the foregoing, the Sears or Sears Affiliate obligations
under this subsection (a)(i)(1) shall be reduced on a dollar-for-dollar basis (but not below zero), by the amount, if any, of fees, salary or wages that Executive earns from a subsequent employer (including those arising from self-employment) during
the Salary Continuation Period, other than any approved external director fees that Executive is otherwise receiving and/or earning as of such Date of Termination. For avoidance of doubt, Executive shall not be obligated to seek affirmatively or
accept an employment, contractor, consulting or other arrangement in order to mitigate Salary Continuation. Further, to the extent Executive does not execute and timely submit the General Release and Waiver (in accordance with subsection 4(g) below)
by the deadline specified therein, Salary Continuation payments shall terminate and forever lapse, and Executive shall be required to reimburse Sears for any portion of the Salary Continuation paid during the Salary Continuation Period. 

2. Notwithstanding anything in this subsection (a)(i) to the contrary, if the Salary Continuation payable to Executive in
accordance with subsection (a)(i)(1) above during the first six (6) months after Executive’s Separation from Service would exceed the “Section 409A Threshold” and if as of the date of the Separation from Service Executive is a
“Specified Employee” (as such terms are defined in Section 2 below), then, payment shall be made to Executive on each regular salary payroll date during the first six (6) months of the Salary Continuation Period until the
aggregate amount received equals the Section 409A Threshold. Any portion of the Salary Continuation in excess of the Section 409A Threshold that would otherwise be paid during such first six (6) months or any portion of the Salary
Continuation that is otherwise subject to Section 409A, shall instead be paid to Executive in a lump sum payment on the date that is six (6) months and one (1) day after the date of Executive’s Separation from Service.

 3. All Salary Continuation payments (described under this subsection (a)(i)) will terminate and forever lapse
if Executive is employed by a “Sears Competitor” or “Sears Vendor” (as such terms are defined in subsection 4(c)(ii) and 4(d)(ii) herein, respectively) during the Salary Continuation Period or in the event of Executive’s
breach (in accordance with Section 10 below), and Executive shall be required to reimburse Sears for any portion of the Salary Continuation paid during the Salary Continuation Period. 

  
 August 2012

  
 2 

 ii. Continuation of Benefits. 

1. During the Salary Continuation Period, Executive will be entitled to participate in all benefit
plans and programs (except as specified in this subsection (a)(ii)), as an active associate, in which Executive was eligible to participate on the Date of Termination (subject to the terms and conditions and continued availability of such plans and
programs); provided, however, that Executive will not be eligible to participate in the long-term disability plan (as of the 15th day following the Date of Termination), health care flexible spending account (except on an after-tax basis and only
through the earlier of the end of Salary Continuation Period or the calendar year in which the Separation from Service occurs), Sears paid life insurance and the Sears Holdings 401(k) Savings Plan (or any other defined contribution plan sponsored by
Sears or a Sears Affiliate) during the Salary Continuation Period. Executive and Executive’s eligible dependents shall be entitled to continue to participate, as active participants, in Sears medical and dental plans (subject to the terms and
conditions and continued availability of such plans) during the Salary Continuation Period. 
 2. If Executive
does not timely execute and submit the General Release and Waiver (in accordance with subsection 4(g) herein) by the deadline specified therein, Executive shall be required to reimburse Sears for the portion of the cost for the benefits referred to
under subsection (a)(ii)(1) immediately above paid by Sears during the Salary Continuation Period, and Executive shall instead be eligible for COBRA continuation coverage under the Sears medical and dental plans as of Executive’s Date of
Termination. 
 3. Subject to subsection (a)(ii)(4) immediately below, in the event Executive provides services
to another employer and is covered by such employer’s health benefits plan or program, the medical and dental benefits provided by Sears hereunder shall be secondary to such employer’s health benefits plan or program in accordance with the
terms of the Sears health benefit plans. 
 4. All of the benefits described in this subsection (a)(ii) will
terminate and forever lapse if Executive is employed by a Sears Competitor or Sears Vendor during the Salary Continuation Period or in the event of Executive’s breach (in accordance with Section 10 below), and Executive shall be required
to reimburse Sears for any portion of the cost for the benefits referred to under subsection (a)(ii)(1) immediately above paid by Sears during the Salary Continuation Period, and Executive shall instead be eligible for COBRA continuation coverage
under the Sears medical and dental plans as of Executive’s Severance from Service date. 
 iii.
Outplacement. As of Executive’s Separation from Service, Executive will be immediately eligible for reasonable outplacement services at the expense of Sears or the appropriate Sears Affiliate. Sears and Executive will mutually agree on
which outplacement firm, among current vendors used by Sears, will provide these services. Such services will be provided for up to twelve (12) months from the Separation from Service or until employment is obtained, whichever occurs first.
Outplacement benefits described in this subsection (a)(iii) will terminate and forever lapse if Executive is employed by a Sears Competitor or Sears Vendor or in the event of Executive’s breach (in accordance with Section 10 below).

  
 August 2012

  
 3 

 iv. Other. 

1 In addition to the foregoing Severance Benefits, a lump sum payment will be made to Executive within ten
(10) business days following the Date of Termination in an amount equal to the sum of any base salary and any vacation benefits that have accrued through the Date of Termination to the extent not already paid. No vacation will accrue during the
Salary Continuation Period. 
 2. Notwithstanding the foregoing and anything herein to the contrary, in the
event of Executive’s death during the Salary Continuation Period, any unpaid portion of the Salary Continuation payable in accordance with subsection (a)(i) above shall be paid in a lump sum, within sixty (60) days of death (and no later
than amounts would have been paid absent death), to Executive’s estate, and any eligible dependents who are covered dependents as of the date of death shall incur a qualifying event under COBRA as a result of such death. 

(b) Impact of Termination on Certain Other Plans/Programs. 

i. Annual Incentive Plan. Upon Executive’s Date of Termination, Executive’s entitlement to any award
under the applicable annual incentive plan (“AIP”) sponsored by Sears, shall be determined in accordance with the terms and conditions of the AIP document regarding termination of employment. 

ii. Long-Term Incentive Program(s). Upon Executive’s Date of Termination, Executive’s entitlement to any
award granted to Executive under a long-term incentive program (“LTIP”) sponsored by Sears, shall be determined in accordance with the terms and conditions of the award letter and the LTIP document regarding termination of employment.

 iii. Stock Plan. Upon Executive’s Date of Termination, Executive’s entitlement to any
unvested options, restricted stock or other equity award granted to Executive under a stock plan sponsored by Sears shall be determined in accordance with the terms and conditions of the applicable award agreement and the stock plan document
regarding termination of employment. 
 (c) Post-Termination Forfeiture of Severance Benefits. If Sears
determines after Executive’s Date of Termination that Executive engaged in activity during employment with Sears that Sears determines constituted Cause, Executive shall immediately cease to be eligible for Severance Benefits and shall be
required to reimburse Sears for any portion of the Salary Continuation paid to Executive and for the cost of other Severance Benefits received by Executive during the Salary Continuation Period. 

  
 August 2012

  
 4 

 2. Definitions. For purposes of this Agreement, each capitalized term in this
Agreement is either defined in the section, exhibit or appendix in which it first appears or in this Section 2. The following capitalized terms shall have the definitions as set forth below: 

(a) “Cause” shall mean (i) a material breach by Executive (other than a breach resulting from
Executive’s incapacity due to a Disability) of Executive’s duties and responsibilities which breach is demonstrably willful and deliberate on Executive’s part, is committed in bad faith or without reasonable belief that such breach is
in the best interests of Sears or the Sears Affiliates and is not remedied in a reasonable period of time after receipt of written notice from Sears specifying such breach; (ii) the commission by Executive of a felony; or (iii) dishonesty
or willful misconduct in connection with Executive’s employment. 
 (b) “Disability” shall
mean disability as defined under the Sears long-term disability plan (regardless of whether the Executive is a participant under such plan). 
 (c) “Good Reason” shall mean, without Executive’s written consent, (i) a reduction of more than ten percent (10%) in the sum of Executive’s annual base salary and
target AIP bonus from those in effect as of the date of this Agreement; (ii) Executive’s mandatory relocation to an office more than fifty (50) miles from the primary location at which Executive is required to perform Executive’s
duties immediately prior to the date of this Agreement; (iii) the spin-off by Sears Holdings Corporation of SHO (“Spin-off”) is not completed within twelve (12) months of your date of hire (in which case, if you termination your
employment for this Good Reason you will be entitled to the special Severance Benefits provided for under subsection 1(a)(i)(1)), or (iv) any other action or inaction that constitutes a material breach of the terms of this Agreement, including
failure of a successor company to assume or fulfill the obligations under this Agreement. In each case, Executive must provide Sears with written notice of the facts giving rise to a claim that “Good Reason” exists for purposes of
this Agreement, within thirty (30) days of the initial existence of such Good Reason event, and Sears shall have a right to remedy such event within sixty (60) days after receipt of Executive’s written notice (“the
sixty (60) day period”). If Sears remedies the Good Reason event within the sixty (60) day period, the Good Reason event (and Executive’s right to receive any benefit under this Agreement on account of
termination of employment for Good Reason) shall cease to exist. If Sears does not remedy the Good Reason event within the sixty (60) day period, and Executive does not incur a termination of employment within thirty
(30) days following the earlier of: (y) the date Sears notifies Executive that it does not intend to remedy the Good Reason or does not agree that there has been a Good Reason event, or (z) the expiration of the sixty
(60) day period, the Good Reason event (or any claim of Good Reason) shall cease to exist. Notwithstanding the foregoing, if Executive fails to provide written notice to Sears of the facts giving rise to a claim of Good Reason within
thirty (30) days of the initial existence of such Good Reason event, the Good Reason event (and Executive’s right to receive any benefit under this Agreement on account of termination of employment for Good
Reason) shall cease to exist as of the thirty-first (31st) day following the later of its occurrence or Executive’s knowledge thereof. 
 (d) “Sears Affiliate” shall mean any person with whom Sears is considered to be a single employer under Code Section 414 (b) and all persons with whom Sears would be considered
a single employer under Code Section 414 (c), substituting “50%” for the “80%” standard that would otherwise apply. 

  
 August 2012

  
 5 

 (e) “Section 409A Threshold” shall mean an amount equal to
two times the lesser of (i) Executive’s base salary for services provided to Sears and any Sears Affiliate as an employee for the calendar year preceding the calendar year in which Executive has a Separation from Service; or (ii) the
maximum amount that may be taken into account under a qualified plan in accordance with Code Section 401(a)(17) for the calendar year in which the Executive has a Separation from Service. In all events, this amount shall be limited to the
amount specified under Treasury Regulation Section 1.409A-1(b)(9)(iii)(A) or any successor thereto. 
 (f)
“Separation from Service” shall mean a “separation from service” with Sears (including any Sears Affiliate) within the meaning of Code Section 409A (and regulations issued thereunder). Notwithstanding anything herein
to the contrary, the fact that Executive is treated as having incurred a Separation from Service under Code Section 409A and the terms of this Agreement shall not be determinative, or in any way affect the analysis, of whether Executive has
retired, terminated employment, separated from service, incurred a severance from employment or become entitled to a distribution, under the terms of any retirement plan (including pension plans and 401(k) savings plans) maintained by Sears
(including by a Sears Affiliate). 
 (g) “Specified Employee” shall mean a “specified
employee” under Code Section 409A (and regulations issued thereunder), which shall be determined in accordance with the provisions of Supplement A to the Supplemental Retirement Income Plan (as amended and restated effective
January 1, 2008). 
 3. Intellectual Property Rights. Executive acknowledges that Executive’s development, work
or research on any and all inventions or expressions of ideas, that may or may not be eligible for patent, copyright, trademark or trade secret protection, hereafter made or conceived solely or jointly within the scope of employment at Sears or any
Sears Affiliate, provided such invention or expression of an idea relates to the business of Sears or any Sears Affiliate, or relates to actual or demonstrably anticipated research or development of Sears or any Sears Affiliate, or results from any
work performed by Executive for or on behalf of Sears or any Sears Affiliate, are hereby assigned to Sears, including Executive’s entire rights, title and interest. Executive will promptly disclose such invention or expression of an idea to
Executive’s management and will, upon request, promptly execute a specific written assignment of title to Sears. If Executive currently holds any inventions or expressions of an idea, regardless of whether they were published or filed with the
U.S. Patent and Trademark Office or the U.S. Copyright Office, or is under contract to not so assign, Executive will list them on the last page of this Agreement. 
 4. Protective Covenants. Executive acknowledges that this Agreement provides for additional consideration beyond what Sears or any Sears Affiliate is otherwise obligated to pay. In consideration of
the opportunity for the Severance Benefits, and other good and valuable consideration, Executive agrees to the following: 

  
 August 2012

  
 6 

 (a) Non-Disclosure of Sears Confidential Information. Executive
acknowledges and agrees to be bound by the following, whether or not Executive receives any Severance Benefits under this Agreement: 
 i. Non-Disclosure. 
 1. Executive will not, during the term
of Executive’s employment with Sears or any Sears Affiliate or thereafter, and other than in the performance of his duties and obligations during his employment with Sears or as required by law or legal process, and except as Sears may
otherwise consent or direct in writing, reveal or disclose, sell, use, lecture upon or publish any “Sears Confidential Information” (as defined in subsection 4(a)(ii) below) until such time as the information becomes publicly known other
than as a result of its disclosure, directly or indirectly, by Executive; and 
 2. Executive understands that
if Executive possesses any proprietary information of another person or company as a result of prior employment or otherwise, Sears expects and requires that Executive will honor any and all legal obligations that Executive has to that person or
company with respect to proprietary information, and Executive will refrain from any unauthorized use or disclosure of such information. 
 ii. Sears Confidential Information. For purposes of this Agreement, “Sears Confidential Information” means trade secrets and non-public information which Sears or any Sears Affiliate
designates as being confidential or which, under the circumstances, should be treated as confidential, including, without limitation, any information received in confidence or developed by Sears or any Sears Affiliate, its long and short term goals,
vendor and supply agreements, databases, methods, programs, techniques, business information, financial information, marketing and business plans, proprietary software, personnel information and files, client information, pricing, and other
information relating to the business of Sears or any Sears Affiliate that is not known generally to the public or in the industry. 
 iii. Return of Sears Property. All documents and other property that relate to the business of Sears or any Sears Affiliate are the exclusive property of Sears, even if Executive authored or
created them. Executive agrees to return all such documents and tangible property to Sears upon termination of employment or at such earlier time as Sears may request Executive to do so. 

iv. Conflict of Interest. During Executive’s employment with Sears or any Sears Affiliate and during any
Salary Continuation Period, except as may be approved in writing by Sears, neither Executive nor members of Executive’s immediate family (which shall refer to Executive, any spouse or any child) will have financial investments or other
interests or relationships with Sears’ or any Sears Affiliate’s customers, suppliers or competitors which might impair Executive’s independence of judgment on behalf of the Company. Also during Executive’s employment with Sears
or any Sears Affiliate and during any Salary 

  
 August 2012

  
 7 

 
Continuation Period, Executive agrees further not to engage in any activity in competition with Sears or any Sears Affiliate and will avoid any outside activity that could adversely affect the
independence and objectivity of Executive’s judgment, interfere with the timely and effective performance of Executive’s duties and responsibilities to Sears or any Sears Affiliate, discredit Sears or any Sears Affiliate or otherwise
conflict with the best interests of Sears or any Sears Affiliate. 
 (b) Non-Solicitation of Employees.
During Executive’s employment with Sears or any Sears Affiliate and for twelve (12) months following Executive’s Date of Termination, whether or not Executive receives any Severance Benefits under this Agreement, Executive will not,
directly or indirectly, solicit or encourage any person to leave her/his employment with Sears or any Sears Affiliate or assist in any way with the hiring of any Sears or any Sears Affiliate employee by any future employer or other entity.

 (c) Non-Competition. Executive acknowledges that as a result of Executive’s position at Sears or
any Sears Affiliate, Executive has learned or developed, or will learn or develop, Sears Confidential Information and that use or disclosure of Sears Confidential Information is likely to occur if Executive were to render advice or services to any
Sears Competitor. 
 i. Therefore, for twelve (12) months following Executive’s Date of Termination,
whether or not Executive receives any Severance Benefits under this Agreement, Executive will not, directly or indirectly, aid, assist, participate in, consult with, render services for, accept a position with, become employed by, or otherwise enter
into any relationship with (other than having a passive ownership interest in or being a customer of) any Sears Competitor. 
 ii. For purposes of this Agreement, “Sears Competitor” means: 
 1. Those companies listed on Appendix A, each of which Executive acknowledges is a Sears Competitor, whether or not it falls within the categories in subsection (ii)(2) immediately below, and
further acknowledges that this is not an exclusive list of Sears Competitors and is not intended to limit the generality of subsection (ii)(2) immediately below; and 

2. Any party (A) engaged in any retail business (whether in a department store, specialty store, discount store,
direct marketing, or electronic commerce or other business format), that consists of selling furniture, appliances, electronics, hardware, lawn/garden, auto parts, food/consumables, toys, seasonal, fitness/sporting goods, apparel and/or pharmacy
products, or providing home improvement, product repair and/or home services, with combined annual revenue in excess of $1 billion, or (B) a party engaged in any other line of business, in which Sears (including any Sears Affiliate) has
commenced business prior to the end of Executive’s employment, having annual gross sales in that line of business in excess of $100 million. 

  
 August 2012

  
 8 

 iii. Executive acknowledges that Sears shall have the right to propose
modifications to Appendix A periodically to include (1) emergent Competitors in Sears existing lines of business and (2) Competitors in lines of business that are new for Sears, in each case, with the prior written consent of
Executive, which consent shall not be unreasonably withheld. 
 iv. Executive further acknowledges that Sears (or
Sears Affiliates) does business throughout the United States, Puerto Rico, U.S. Virgin Islands, Guam and Canada and that this non-compete provision applies in any state or province (as applicable) of the United States, Puerto Rico, U.S. Virgin
Islands, Guam and Canada, in which Sears does business. 
 (d) Restriction on Post-Employment Affiliation with
Sears Vendors. Executive acknowledges that as a result of Executive’s position at Sears or any Sears Affiliate, Executive has learned or developed, or will learn or develop, Sears Confidential Information and that use or disclosure of Sears
Confidential Information is likely to occur if Executive were to render advice or services to any “Sears Vendor” (as defined herein). 
 i. Therefore, for twelve (12) months from Executive’s Date of Termination, whether or not Executive receives any Severance Benefits under this Agreement, Executive will not, directly or
indirectly, aid, assist, participate in, consult with, render services for, accept a position with, become employed by, or otherwise enter into any relationship with (other than having a passive ownership interest in or being a customer of) any
Sears Vendor. 
 ii. For purposes of this Agreement, “Sears Vendor” means, the vendors, if any, listed
in Appendix A as well as any vendor with combined annual gross sales of services or merchandise to Sears in excess of $200 million. 
 (e) Compliance with Protective Covenants. Executive will provide Sears with such information as Sears may from time to time reasonably request to determine Executive’s compliance with this
Section 4. Executive authorizes Sears to contact Executive’s future employers and other entities with which Executive has any business relationship to determine Executive’s compliance with this Agreement or to communicate the contents
of this Agreement to such employers and entities. Executive releases Sears, Sears Affiliates, their agents and employees, from all liability for any damage arising from any such contacts or communications. 

(f) Necessity and Reasonableness. Executive agrees that the restrictions set forth herein are necessary to prevent
the use and disclosure of Sears Confidential Information and to otherwise protect the legitimate business interests of Sears and Sears Affiliates. Executive further agrees and acknowledges that the provisions of this Agreement are reasonable.

 (g) General Release and Waiver. Upon Executive’s Date of Termination (whether initiated by Sears
or Executive in accordance with subsection 1(a) above) potentially entitling Executive to Severance Benefits, Executive will execute a binding general release and waiver of claims in a form to be provided by Sears (“General Release and
Waiver”), which is incorporated by reference under this Agreement. This General 

  
 August 2012

  
 9 

 
Release and Waiver will be in a form substantially similar to the attached sample. If the General Release and Waiver is not signed within the time required by the waiver or is signed but
subsequently revoked, Executive will not continue to receive any Severance Benefits otherwise payable under subsection 1(a) above. Further, Executive shall be obligated to reimburse Sears for any portion of (i) the Salary Continuation paid
during the Salary Continuation Period under subsection (1)(a)(i) herein, and (ii) the cost for the benefits provided during the Salary Continuation Period under subsection (1)(a)(ii) herein. A sample of this General Release and Waiver
is provided as Exhibit A to this Agreement. 
 (h) Exception Request. Notwithstanding the
foregoing, Executive may request a waiver or a specific exception to the non-competition provisions of this Agreement by written request to the Vice President, Talent & Human Capital Services or Senior Vice President, General Counsel and
Corporate Secretary (or the equivalent) of Sears. Such a request will be given reasonable consideration and may be granted, in whole or in part, or denied at Sears’ absolute discretion. 

5. Irreparable Harm. Executive acknowledges that irreparable harm would result from any breach by Executive of the provisions of
this Agreement, including without limitation subsections 4(a), 4(b), 4(c) and 4(d), and that monetary damages alone would not provide adequate relief for any such breach. Accordingly, if Executive breaches or threatens to breach this Agreement,
Executive consents to injunctive relief in favor of Sears without the necessity of Sears posting a bond. Moreover, any award of injunctive relief shall not preclude Sears from seeking or recovering any lawful compensatory damages which may have
resulted from a breach of this Agreement, including a forfeiture of any future payments and a return of any payments and benefits already received by Executive. 
 6. Non-Disparagement. Executive will not take any actions that would reasonably be expected to be detrimental to the interests of Sears or any Sears Affiliate, nor make derogatory statements,
either written or oral to any third party, or otherwise publicly disparage Sears or any Sears Affiliate, its products, services, or present or former employees, officers or directors, and will not authorize others to make derogatory or disparaging
statements on Executive’s behalf. Sears shall not authorize and shall take reasonable measures to prevent its present or former officers and directors from making derogatory or disparaging statements regarding Executive to any third party. This
provision does not and is not intended to preclude Executive from entering into any relationship with a Sears Competitor or Sears Vendor after such relationship is permissible under subsection 4(c) or 4(d), respectively, nor does it preclude
Executive from providing truthful testimony in response to legal process or governmental inquiry. 
 7. Cooperation.
Executive agrees, without receiving additional compensation, to fully and completely cooperate with Sears, both during and after the period of employment with Sears or any Sears Affiliate (including any Salary Continuation Period), with respect to
matters that relate to Executive’s period of employment, in all investigations, potential litigation or litigation in which Sears is involved or may become involved other than any such investigations, potential litigation or litigation between
Sears and Executive. Sears will reimburse Executive for reasonable travel and out-of-pocket expenses incurred in connection with any such investigations, potential litigation or litigation. 

  
 August 2012

  
 10 

 8. Future Enforcement or Remedy. Any waiver, or failure to seek enforcement or remedy
for any breach or suspected breach, of any provision of this Agreement by Sears or Executive in any instance shall not be deemed a waiver of such provision in the future. 
 9. Acting as Witness. Executive agrees that both during and after the period of employment with Sears or any Sears Affiliate (including any Salary Continuation Period), Executive will not
voluntarily act as a witness, consultant or expert for any person or party in any action against or involving Sears or any Sears Affiliate or corporate relative of Sears, unless subject to judicial enforcement to appear as a fact witness only.

 10. Breach by Executive. In the event of a breach by Executive of any of the provisions of this Agreement, including
without limitation the non-competition provisions (Section 4) and the non-disparagement provision (Section 6) of this Agreement, the obligation of Sears or any Sears Affiliate to pay Salary Continuation or to provide other Severance Benefits under
this Agreement will immediately cease and any Salary Continuation payments already received and the value of any other Severance Benefits already received will be returned by Executive to Sears. Further, Executive agrees that Sears shall be entitled
to recovery of its attorneys’ fees incurred as a result of any attempt to redress a breach by Executive or to enforce its rights and protect its interests under the Agreement, provided that Sears prevails in any such action. 

11. Severability. If any provision(s) of this Agreement 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 this Agreement, as the case may require, and this Agreement 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. 
 12. Governing Law. This Agreement will be governed under the internal laws of the state of Illinois without regard
to principles of conflicts of laws. Executive agrees that 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 this Agreement, and Executive
hereby: (a) submits to the personal jurisdiction of such courts; (b) consents to the service of process in connection with any action, suit, or proceeding against Executive; and (c) waives any other requirement (whether imposed by
statute, rule of court, or otherwise) with respect to personal jurisdiction, venue or service of process. 
 13. Right to
Jury. Executive agrees to waive any right to a jury trial on any claim contending that this Agreement or the General Release and Waiver is illegal or unenforceable in whole or in part, and Executive agrees to try any claims brought in a court or
tribunal without use of a jury or advisory jury. Further, should any claim arising out of Executive’s employment, termination of employment or Salary Continuation Period (if any) be found by a court or tribunal of competent jurisdiction to not
be released by the General Release and Waiver, Executive agrees to try such claim to the court or tribunal without use of a jury or advisory jury. 
 14. Employment-at-Will. This Agreement does not constitute a contract of employment, and Executive acknowledges that Executive’s employment with Sears or any Sears Affiliate is terminable
“at-will” by either party with or without cause and with or without notice. 

  
 August 2012

  
 11 

 15. Other Plans, Programs, Policies and Practices. If any provision of this Agreement
conflicts with any other plan, programs, policy, practice or other Sears document, then the provisions of this Agreement will control, except as otherwise precluded by law. Executive shall not be eligible for any benefits under the Sears Holdings
Corporation Master Transition Pay Plan or any successor severance plan or program. 
 16. Entire Agreement. This
Agreement, including any exhibits or appendices hereto, contains and comprises the entire understanding and agreement between Executive and Sears (including any Sears Affiliate) and fully supersedes any and all prior agreements or understandings
between Executive and Sears with respect to the subject matter contained herein, and may be amended only by a writing signed by the Chief Executive Officer, Vice President, Talent & Human Capital Services or Senior Vice President, General
Counsel and Corporate Secretary (or equivalent) of Sears. 
 17. Confidentiality. Executive agrees that the existence and
terms of the Agreement, including any compensation paid to Executive, and discussions with Sears (including any Sears Affiliate) regarding this Agreement, shall be considered confidential and shall not be disclosed or communicated in any manner
except: (a) as required by law or legal process; (b) to Executive’s spouse or domestic partner, or (c) to Executive’s financial/legal advisors, all of whom shall agree to keep such information confidential. 

18. Tax Withholding. Any compensation paid or provided to Executive under this Agreement shall be subject to any applicable
federal, state or local income and employment tax withholding requirements. 
 19. Notices. All notices and other
communications hereunder shall be in writing and shall be given by hand delivery to the other parties or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: 

 

			
	If to the Executive:	  	At the most recent address on file at Sears.
		
	If to Sears:	  	Sears Holdings Corporation
		  	3333 Beverly Road
		  	Hoffman Estates, Illinois 60179
		  	 Attention to both:    Vice President, Talent & Human Capital Services

		  	 Senior Vice President, General Counsel and Corporate Secretary

		
	If post-Spin-off:	  	Sears Hometown and Outlet Stores, Inc.
		  	3333 Beverly Road
		  	Hoffman Estates, Illinois 60179
		  	 Attention to both:    Chief Executive Officer

 20. Assignment. Sears may assign its rights under this Agreement to any successor in interest,
whether by merger, consolidation, sale of assets, or otherwise. This Agreement shall be binding whether it is between Sears and Executive or between any successor or assignee of Sears or affiliate thereof and Executive. In the event of the Spin-off
(as defined in subsection 2(c)(iii) above) and in accordance with the agreements governing the Spin-off, Sears Holdings Corporation will assign and SHO will assume this Agreement. 

  
 August 2012

  
 12 

 21. Section 409A Compliance. To the extent that a payment or benefit under this
Agreement is subject to Code Section 409A, it is intended that this Agreement as applied to that payment or benefit comply with the requirements of Code Section 409A, and the Agreement shall be administered and interpreted consistent with
this intent. 
 22. Counterparts. This Agreement may be executed in one or more counterparts, which together shall
constitute a valid and binding agreement. 
 IN WITNESS WHEREOF, Executive and Sears, by its duly authorized representative,
have executed this Agreement on the dates stated below, effective as of the date first set forth above. 
  

							
	EXECUTIVE	 		 	SEARS HOLDINGS CORPORATION
				
	/s/ Steven D. Barnhart	 		 	BY:	 	/s/ Dean Carter
	Steven D. Barnhart	 		 		 	
			
	August 6, 2012	 		 	August 8, 2012
	Date	 		 	Date	 	

  
 August 2012

  
 13 

 EXHIBIT A 
 NOTICE: YOU MAY CONSIDER THIS GENERAL RELEASE AND WAIVER FOR UP TO TWENTY-ONE (21) DAYS. YOU MAY NOT SIGN IT UNTIL ON OR AFTER YOUR LAST DAY OF WORK. IF YOU DECIDE TO SIGN IT, YOU MAY REVOKE THE
GENERAL RELEASE AND WAIVER WITHIN SEVEN (7) DAYS AFTER SIGNING. ANY REVOCATION WITHIN THIS PERIOD MUST BE IMMEDIATELY SUBMITTED IN WRITING TO GENERAL COUNSEL, SEARS HOLDINGS CORPORATION, 3333 BEVERLY ROAD, HOFFMAN ESTATES, IL 60179. YOU
MAY WISH TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS DOCUMENT. 
 GENERAL RELEASE AND WAIVER 

In consideration for the benefits that I will receive under the attached Executive Severance Agreement, I, and any person acting by,
through, or under me hereby release Sears Holdings Corporation, its current and former agents, subsidiaries, affiliates, employees, officers, stockholders, successors, and assigns (“Sears”), including for avoidance of doubt Sears Hometown
and Outlet Stores, Inc., from any and all claims arising out of my employment or the termination thereof. This General Release and Waiver is to be broadly construed to encompass all claims of any kind or character whatsoever, whether known or
unknown, based upon any matter occurring prior to my execution of this General Release and Waiver and including, but without limiting the generality of the foregoing, any and all claims under the Age Discrimination in Employment Act
(“ADEA”), Title VII of the Civil Rights Act of 1964, Section 1981 of the Civil Rights Act of 1866, the Americans with Disabilities Act (“ADA”), the Employee Retirement Income Security Act (“ERISA”), the Worker
Adjustment and Retraining Notification Act (“WARN”), the Family and Medical Leave Act (“FMLA”) and any other federal, state or local constitution, statute, regulation, or ordinance, and any and all common law claims including,
but not limited to, claims for wrongful or retaliatory discharge, intentional infliction of emotional distress, negligence, defamation, invasion of privacy, and breach of contract. This General Release and Waiver does not apply to any claims or
rights that may arise after the date that I signed this General Release and Waiver. I understand that Sears is not admitting to any violation of my rights or any duty or obligation owed to me. 

Excluded from this General Release and Waiver are any claims which cannot be waived by law, including but not limited to (1) the
right to file a charge with or participate in an investigation conducted by certain government agencies, and (2) any rights or claims to benefits accrued under benefit plans maintained by Sears pursuant to ERISA. I do, however, waive my right
to any monetary recovery should any agency or other third party pursue any claims on my behalf. I represent and warrant that I have not filed any complaint, charge, or lawsuit against Sears with any governmental agency and/or any court. 

I have read this General Release and Waiver and I understand its legal and binding effect. I am acting voluntarily and of my own free
will in executing this General Release and Waiver. 
 I have had the opportunity to seek, and I was advised in writing to seek,
legal counsel prior to signing this General Release and Waiver. 

  
 Page 1 of 2

 Return both pages of the signed General Release and Waiver 

 GENERAL RELEASE AND WAIVER (continued) 

 

 I was given at least twenty-one (21) days to consider signing this General Release
and Waiver. Any immaterial modification of this General Release and Waiver does not restart the twenty-one (21) day consideration period. 
 I understand that, if I sign the General Release and Waiver, I can change my mind and revoke it within seven (7) days after signing it by notifying the General Counsel of Sears in writing at Sears
Holdings Corporation, 3333 Beverly Road, Hoffman Estates, Illinois 60179. I understand that this General Release and Waiver will not be effective until after this seven (7) day revocation period has expired. 

 

							
	Date: SAMPLE ONLY - DO NOT DATE	 		 	Signed by:	 	SAMPLE ONLY - DO NOT SIGN
				
		 		 	Witness by:	 	SAMPLE ONLY - DO NOT SIGN

  
 Page 2 of 2

 Return both pages of the signed General Release and WaiverW. Bruce Johnson Offer Letter

 Exhibit 10.18 

 

			
	 Sears Holdings Management Corporation
 3333 Beverly Road
 Hoffman Estates, IL 60179
	 	 Sears Hometown and Outlet Stores, Inc.
 3333 Beverly Road
 Hoffman Estates, IL 60179

 August 28, 2012 
 Mr. William Bruce Johnson 
 1310 N Astor Street 

Chicago, IL 60610 
 Dear Bruce, 

On behalf of Sears Hometown and Outlet Stores, Inc. (“SHO”), we are pleased to extend to you our offer to be Chief Executive Officer and
President of SHO. This letter restates and amends the terms of the August 20, 2012 offer letter, to which amendments you, SHO and Sears Holdings Corporation (“SHC”) have mutually hereby agreed. This restated offer letter is contingent
upon the completion of SHC’s spin-off of SHO (“Spin-off”) and subject to the additional contingency listed below. 
 The key
elements of your employment and compensation package are as follows: 
  

	•	 	 Upon the Spin-off, you will be transferred to and become an employee of SHO. 

 

	•	 	 Annual Base Salary—$1,000,000. 

  

	•	 	 Annual Incentive Plans 

  

	 	•	 	 With respect to your participation under the Sears Holdings Corporation Annual Incentive Plan (“SHC AIP) for the 2012 fiscal year, upon the
Spin-off your participation in the 2012 SHC AIP will transition to a new annual incentive plan sponsored by SHO as follows: 

  

	 	•	 	 For the 1st and 2nd
fiscal quarters of 2012, the portion of your target incentive award that is based on the quarterly SHC EBITDA measure (25%) will be determined based on year-to-date results. The performance at the end of these two quarters will be compared to
the plan goals and if any payout has been earned, it will be paid to you by SHO under the new Sears Hometown and Outlet Stores, Inc. Annual Incentive Plan (“SHO AIP”) in April 2013, provided that you are actively employed by SHO as of the
payment date. The SHC EBITDA gate will continue to need to be attained before any payout is earned. The quarterly SHC EBITDA measure will not be a component of your 2012 annual incentive for the 3rd and 4th fiscal quarters of 2012. Instead, the 25% weighted incentive based on the quarterly SHC EBITDA measure for the
3rd and 4th fiscal quarters of 2012 will be converted to a new measure of SHO
EBITDA under the 2012 SHO AIP. 

  

	 	•	 	 For the performance period prior to the date of the Spin-off and with respect to the annual portion of your target incentive that is currently based on
the Auto, Hometown, and Outlet BOPs (75%), the 40% weight based on the Hometown and Outlet BOPs will be converted to a new measure of SHO EBITDA under the 2012 SHO AIP. The 35% weight based on Auto BOP, will be based on year-to-date results at the
time of Spin-off and will apply to the full 2012 fiscal year. 

 William A. Powell 
 August 28, 2012 
  Page
 2
 
  

	 	•	 	 The liability for any of the above incentive payments will be assigned and assumed by SHO upon the Spin-off. Accruals relating to the annual measures
will be transferred upon the Spin-off and accruals relating to the quarterly SHC EBITDA measure will not be transferred until a determination has been made that the SHC EBITDA has been attained. 

 

	 	•	 	 You will be eligible to participate in the Sears Hometown and Outlet Stores, Inc. Annual Incentive Plan (SHO AIP) with an annual incentive
opportunity of 100% of your base salary following fiscal 2012. For the period between the effective date of the Spin-off and the end of fiscal 2012, your target annual incentive will be 65% of your base salary applicable to the period and will
be based on a SHO EBITDA after the Spin-off. 

  

	 	•	 	 SHO AIP EBITDA targets and thresholds will be based on the valuation and profit conversion of combined SHC HTS and Outlet BOPs. Final 2012 targets and
thresholds for the SHO AIP will be approved by SHO Board of Directors. 

  

	 	•	 	 Any incentive payable under the SHO AIP with respect to a fiscal year will be paid by April 15th of the following fiscal year, provided
that you are actively employed by SHO as of the payment date. Payouts will be pro-rated pending actual date of Spin-off. Further details regarding your 2012 SHO AIP target award will be provided to you following the approval of the 2012 SHO AIP.

  

	•	 	 Long-Term Incentive Plans 

  

	 	•	 	 Participation in the Sears Hometown and Outlet Stores, Inc. Long-Term Incentive Program (“SHO LTIP”). You will first become eligible
to participate in a SHO LTIP starting with the 2012 SHO LTIP with a target incentive percentage of 200% of base salary (at the time of the LTIP award) when finalized and approved. 2012 targets and thresholds under the SHO LTIP will be based on SHO
3-year valuation and profit projections and approved by the SHO Board of Directors. Further details regarding your 2012 target award under the SHO LTIP will be provided to you following the approval of the 2012 SHO LTIP. SHO, like SHC, intends to
provide annual LTIP awards to its executives. 

  

	 	•	 	 With respect to your participation in the outstanding Sears Holdings Corporation Long-Term Incentive Programs (“SHC LTIPs”), you
currently participate in the 2010 and 2011 SHC LTIPs with a target incentive percentage of 200% of base salary (at the time of the LTIP award) under each. Upon the Spin-off, your participant in these programs will transition as follows:

  

	 	•	 	 Your participation under 2010 and 2011 SHC LTIPs will be closed out as of the effective date of the Spin-off and any incentive that may become payable
(as explained below) will be payable under the SHO LTIP. The accruals and liability for these payments will be assigned to and assumed by SHO upon the Spin-off. 

 

	 	•	 	 For the 2010 SHC LTIP, performance to date from fiscal year 2010 through the 2nd fiscal quarter end of 2012 will be determined and based on year-to-date results. If any incentive has been earned, it
will be payable to you under the SHO LTIP in April 2013, in accordance with the terms of the SHO LTIP (which will have terms substantially similar to the SHC LTIP), as long as you are actively employed by SHC or SHO, as applicable, as of the payment
date. 

  

	 	•	 	 For the 2011 SHC LTIP, performance to date from fiscal year 2011 through the 2nd fiscal quarter end of 2012 will be determined and based on year-to-date results. If any incentive has been earned, it
will be payable to you under the SHO LTIPT in April 2014, in accordance with the terms of the SHO LTIP (which will have terms substantially similar to the SHC LTIP), as long as you are actively employed by SHC or SHO, as applicable, as of the
payment date. 

 William A. Powell 
 August 28, 2012 
  Page
 3
 
  

	 	•	 	 Any payout of these amounts will be pro-rated based on the number of eligible days worked at SHC and SHO, as applicable, during the performance period
for each LTIP. 

  

	•	 	 Unvested Restricted Stock and Cash Awards 

  

	 	•	 	 Prior to effective date of the Spin-off, you received the following restricted stock (“RS”) and cash awards from SHC that are currently
unvested. 

  

																									
	 	  	 	 	  	 	 	  	 	 	  	RS Award	 	  	RS Current	 	  	 	 
	 	  	 	 	  	RS Grant	 	  	Shares	 	  	Value (at	 	  	Value	 	  	 	 
	 Grant Date
	  	Vest Date	 	  	Value/Share	 	  	Granted	 	  	grant)	 	  	($55/share)	 	  	Cash Rights	 
	 04/06/2010
	  	 	04/06/2013	  	  	$	108	  	  	 	10,000	  	  	$	1,079,100	  	  	$	550,000	  	  	$	9,289	  
	 04/06/2010
	  	 	04/06/2014	  	  	$	108	  	  	 	10,000	  	  	$	1,079,100	  	  	$	550,000	  	  	$	9,289	  

  

	 	•	 	 Because under their terms these awards would forfeit upon the Spin-off, these awards will be transitioned as follows: 

 

	 	•	 	 In place of your forfeited RS awards, upon the effective date of the Spin-off, you will receive an equivalent cash retention award from SHO, which will
continue under the same (remaining) vesting schedule as the award it is replacing. Equivalent value will be determined based upon the market closing price of SHC shares on the day before the effective date of the Spin-off. That closing price will be
multiplied by the number of shares for each award to arrive at the dollar value of the cash retention award. 

  

	 	•	 	 In place of your Cash Rights identified in the chart above (issued in connection with the Spin-off of Orchard Supply Hardware Stores Corporation), and
any cash awards issued with respect to your unvested RS awards in connection with this Spin-off, you will receive cash retention awards from SHO, equal to the same amount as these awards and subject to the same (remaining) vesting schedule as the
awards they are replacing. 

  

	 	•	 	 Each of these cash retention awards will be payable by SHO, provided you remain employed by SHO through the vesting date for the applicable award.
Notwithstanding the foregoing, with respect to the remaining shares of restricted stock you were granted on April 6, 2010 (which grant vests on a graduated basis;
 1/4 on each of the first four anniversaries of the grant date), if your employment is involuntarily terminated (other than for Cause, death or Disability, as such capitalized terms are defined in the
Executive Severance Agreement, referred to below), as of such termination date you will be deemed to have vested in any portion of the replacement cash retention awards that replace this restricted stock grant and that you were scheduled to vest
during the fifteen (15) months immediately following such termination date . 

  

	•	 	 Executive Severance Agreement 

  

	 	•	 	 Your current Executive Severance Agreement (“Agreement”) with SHC will be assigned to and assumed by SHO effective as of the Spin-off in
accordance with Section 20 of the Agreement. Therefore, if post-Spin-off your employment with SHO is terminated by SHO (other than for Cause, death or Disability) or by you for Good Reason (as such capitalized terms are defined in the
Agreement), you will receive twelve (12) months of salary continuation, based on your base salary at the time of termination plus a target bonus (equivalent to your target bonus for the year of termination or if such target bonus has not been
set, equivalent to the target bonus for 

 William Bruce Johnson 
 August 28, 2012 
  Page
 4
 
  

	 	 
the year immediately preceding the year of termination), subject to mitigation. Under the Agreement, you agree, among other things, not to disclose confidential information and for twelve
(12) months following termination of employment not to solicit employees. You also agree not to aid, assist or render services for any “Sears Competitor” or “Sears Vendor” (as such terms are defined in the Agreement) for
twelve (12) months following termination of employment. The non-disclosure, non-solicitation, non-compete and non-affiliation provisions apply regardless of whether you are eligible for severance benefits under this Agreement. A copy of
your fully executed Agreement is enclosed for your information. 

  

	 	•	 	 Other 

  

	 	•	 	 Upon the Spin-off, SHO will assume and continue to provide you with the use of company-furnished ground transportation for travel between your
residence in the Chicago metropolitan area and SHO’s corporate headquarters in Hoffman Estates, Illinois consistent with the ground transportation benefit you were awarded by the Compensation Committee of the Board of Directors of SHC as
outlined in a letter dated April 5, 2010. The aggregate incremental cost will continue to be imputed income to you and you will be responsible for any related taxes. Upon the transfer of your employment from SRC to SHO, SHO will assume and
continue to provide this benefit. 

  

	 	•	 	 On a fiscal year basis, you will continue to be eligible to receive four (4) weeks paid vacation. Added to this, you will qualify for six
(6) paid National Holidays each year. You also will be eligible for up to four (4) personal days per year. 

  

	 	•	 	 Upon the Spin-off, you will continue to be eligible to participate in all retirement, health and welfare programs made available or sponsored by SHO on
a basis no less favorable than other SHO executives at your level, in accordance with the applicable terms, conditions and availability of those programs. These benefits will be provided under SHC benefit programs during a benefits transition
period, and thereafter SHO intends to sponsor or make available substantially similarly benefit programs. 

 Bruce, we are
excited about the important contributions you will make to this new independent, public company upon the Spin-off and look forward to your acceptance of our restated offer. If you need additional information or clarification, please call.

 This restated offer will expire if not accepted within one week from the date of this letter. 

Sincerely, 
  

					
	Sears Holdings Management Corporation	  		  	Sears Hometown and Outlet Stores, Inc.
			
	 /s/ Dean Carter
	  		  	 /s/ Robert A Riecker

	 Dean Carter
	  		  	Robert A Riecker
	 Chief Human Resources Officer, SHMC
	  		  	Interim Financial Officer
			
	 Enclosure
	  		  	
			
	 Accepted:
	  		  	
			
	/s/ W. Bruce Johnson	  		  	8/28/12
	 William Bruce Johnson
	  		  	Date

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00207-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00207-of-00352.parquet"}]]