Document:

Form of Retail Establishment Agreement

 Exhibit 10.8 
 Execution Copy 
 THE USE OF THE FOLLOWING NOTATION IN THIS EXHIBIT
INDICATES THAT A CONFIDENTIAL PORTION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION: [***]. 

Shop Your Way Rewards Retail Establishment Agreement 
 Between 
 Sears Holdings Management Corporation 

And 

Sears Hometown and Outlet Stores, Inc.
 August 8, 2012 

 Execution Copy 

Table of Contents 
  

									
	 I.
	  	 Definitions.
	  	 	1	  
			
	 II.
	  	 Term.
	  	 	1	  
			
	 III.
	  	 The Program.
	  	 	1	  
			
	 IV.
	  	 Program Authorizations; Program is Exclusive.
	  	 	2	  
			
	 V.
	  	 Transaction Information.
	  	 	2	  
			
	 VI.
	  	 Points.
	  	 	3	  
		  	A.	    	 Issuance of Points.
	  	 	3	  
		  	B.	    	 Bonus Point Offers.
	  	 	3	  
		  	C.	    	 Points Issuance Fee.
	  	 	3	  
		  	D.	    	 Redemption of Points.
	  	 	3	  
		  	E.	    	 Reimbursement Upon Redemption.
	  	 	3	  
		  	F.	    	 Expiration of Points.
	  	 	4	  
		  	G.	    	 Reconciliation and Payment.
	  	 	4	  
		  	H.	    	 Differentiation.
	  	 	4	  
		  	I.	    	 Permits and Taxes.
	  	 	4	  
			
	 VII.
	  	 Services; Marketing.
	  	 	4	  
		  	A.	    	 Marketing by SHMC for SHO.
	  	 	4	  
		  	B.	    	 SHMC’s Other Marketing.
	  	 	5	  
		  	C.	    	 SHO Email Obligation.
	  	 	5	  
			
	 VIII.
	  	 License to Use Marks
	  	 	6	  
		  	A.	    	 SHMC Marks.
	  	 	6	  
		  	B.	    	 SHO Marks.
	  	 	6	  
		  	C.	    	 Injunctive Relief.
	  	 	6	  
			
	 IX.
	  	 Enrollment of New Members.
	  	 	6	  
			
	 X.
	  	 Ownership of Data.
	  	 	7	  
			
	 XI.
	  	 Confidentiality.
	  	 	7	  
		  	A.	    	 Confidential Business Information.
	  	 	7	  
		  	B.	    	 Exceptions.
	  	 	7	  
		  	C.	    	 Confidential Personal Information.
	  	 	8	  
		  	D.	    	 Data Security.
	  	 	8	  
		  	E.	    	 Unauthorized Use or Disclosure of Confidential Information.
	  	 	8	  
		  	F.	    	 Return of Confidential Information.
	  	 	8	  
		  	G.	    	 Publicity.
	  	 	9	  

  
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	 XII.
	  	 Termination.
	  	 	9	  
		  	 A.
	    	 General.
	  	 	9	  
		  	B.	    	 Termination for Convenience.
	  	 	9	  
		  	C.	    	 Termination in Response to a Termination of another Agreement.
	  	 	9	  
		  	D.	    	 Obligations at Termination or Expiration.
	  	 	10	  
			
	 XIII.
	  	 Books and Records; Audits.
	  	 	10	  
			
	 XIV.
	  	 SYW Operating Committee; Dispute Resolution.
	  	 	10	  
		  	A.	    	 SYW Operating Committee.
	  	 	10	  
		  	B.	    	 Dispute Resolution.
	  	 	11	  
			
	 XV.
	  	 Representations and Warranties; Covenants of SHO.
	  	 	12	  
		  	A.	    	 Representations and Warranties of SHO.
	  	 	12	  
		  	B.	    	 Representations of SHMC.
	  	 	14	  
		  	C.	    	 Covenants of SHO.
	  	 	15	  
		  	D.	    	 Covenants of SHMC.
	  	 	16	  
			
	 XVI.
	  	 Indemnification.
	  	 	16	  
		  	A.	    	 SHO Indemnification of SHMC.
	  	 	16	  
		  	B.	    	 SHMC’s Indemnification of SHO.
	  	 	17	  
		  	C.	    	 Procedures.
	  	 	18	  
		  	D.	    	 Notice and Additional Rights and Limitations.
	  	 	19	  
			
	 XVII.
	  	 Disclaimer.
	  	 	19	  
			
	 XVIII.
	  	 Exclusion of Consequential Damages; Limitation of Liability.
	  	 	19	  
			
	 XIX.
	  	 Force Majeure.
	  	 	19	  
			
	 XX.
	  	 Notice.
	  	 	20	  
			
	 XXI.
	  	 Relationship of Parties.
	  	 	20	  
			
	 XXII.
	  	 Expenses.
	  	 	20	  
			
	 XXIII.
	  	 No Third Party Beneficiaries.
	  	 	20	  
			
	 XXIV.
	  	 Severability.
	  	 	20	  
			
	 XXV.
	  	 No Waiver.
	  	 	21	  
			
	 XXVI.
	  	 Cumulative Rights.
	  	 	21	  
			
	 XXVII.
	  	 Construction.
	  	 	21	  
			
	 XXVIII.
	  	 Further Assurances.
	  	 	21	  

  
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	 XXIX.
	  	 Survival.
	  	 	21	  
			
	 XXX.
	  	 Entire Agreement; Modifications.
	  	 	21	  
			
	 XXXI.
	  	 Glossary.
	  	 	22	  
			
	 XXXII.
	  	 Assignment.
	  	 	23	  
			
	 XXXIII.
	  	 Counterparts.
	  	 	23	  
			
	 XXXIV.
	  	 Good Faith and Fair Dealing.
	  	 	23	  
			
	 XXXV.
	  	 Condition Precedent to the Effectiveness of this Agreement.
	  	 	23	  
			
	 XXXVI.
	  	 Governing Law; Jurisdiction; Waiver of Jury Trial.
	  	 	24	  
		  	A.	    	 Governing Law.
	  	 	24	  
		  	B.	    	 Jurisdiction.
	  	 	24	  
		  	C.	    	 Waiver of Jury Trial.
	  	 	24	  

 Appendices 
  

							
	 Appendix R.B
	    	 Program Terms and Conditions
	  	 	26	  
			
	 Appendix II
	    	 Effective Date
	  	 	34	  
			
	 Appendix VI.C
	    	 Points Issuance Fee
	  	 	35	  
			
	 Appendix VI.E
	    	 Reimbursement for Points Redemption
	  	 	40	  
			
	 Appendix VII.A.1
	    	 Marketing Services Rate Card and Email Support Schedule
	  	 	41	  
			
	 Appendix XIII.A
	    	 SYW Operating Committee
	  	 	45	  

  
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Shop Your Way Rewards Retail Establishment Agreement 
 August 8, 2012 
 This Shop Your Way Rewards Retail Establishment Agreement
(this “Agreement”) is between Sears Holdings Management Corporation (“SHMC”) and Sears Hometown and Outlet Stores, Inc. (“SHO”). Each party to this Agreement is sometimes referred
to herein as a “Party” and collectively as the “Parties.” 
 Recitals 

A. SHMC maintains a rewards Program known as the Shop Your Way RewardsSM Program (the “Program”). The Program provides members with rewards points associated with purchases
of merchandise and services at participating retail establishments, which points may be redeemed for merchandise or services at selected establishments; and 
 B. SHO wishes to enroll in the Program so that SHO’s customers who are Program members may earn and redeem Points with respect to merchandise at SHO’s stores and websites all in accordance with
the “Terms and Conditions of the ShopYourWay Rewards Program” in effect from time to time. The Terms and Conditions in effect as of the Effective Date are attached to this Agreement as Appendix R.B (as from time to time amended and
interpreted by SHMC the “Program Terms and Conditions”). 
 Terms and Conditions 

In consideration of the mutual covenants and promises in this Agreement and other good and valuable consideration, the receipt and sufficiency of which
each Party acknowledges, the Parties agree as follows: 
 I. Definitions. Section XXXI of this Agreement, which begins on page 22,
includes a glossary of defined terms. 
 II. Term. The term of this Agreement (the “Term”) will begin immediately
following the “Rights Closing Effective Time” specified in the Separation Agreement (the “Separation Agreement”) to be executed and delivered by SHO and Sears Holdings Corporation (“SHLD”) (the date on
which the Rights Closing Effective Time occurs, the “Effective Date”) and will end, unless terminated earlier, on the tenth anniversary of the Effective Date. The day that becomes the Effective Date will be inserted on Appendix II
after the Effective Date has occurred. 
 III. The Program. SHMC will control and be responsible in all respects for the operation and
administration of the Program including (A) the Program Terms and Conditions and the other terms and conditions of the Program, (B) the terms and conditions of advertising and promoting the Program, (C) maintenance and retention of
Program records, (D) the terms and 

  
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conditions of earning and redemption of Points by Members, (E) providing the Program to Members as advertised, and (F) any and all obligations and liabilities to Members regarding the
offering and fulfillment of the Program. Subject to applicable law and the next two sentences, SHMC may amend or modify the Program at any time at its discretion. If an amendment or modification applies on a non-discriminatory basis to all
Authorized Vendors and all Authorized Providers (a “Complying Change”) and has a material adverse effect on SHO, SHO will provide prompt written notice to SHMC, and SHMC will use commercially reasonably efforts to provide an
accommodation for SHO’s approval and consent, which consent SHO will not unreasonably withhold. If SHMC is unable or unwilling to provide the accommodation, then the Complying Change will not be binding on SHO. SHMC’s interpretations of
the Program Terms and Conditions will be final and binding absent manifest error. SHMC will operate the Program in compliance with applicable law including with respect to the offering, marketing, advertising, and fulfillment of the Program, and
applicable accounting principles. 
 IV. Program Authorizations; Program is Exclusive. SHMC authorizes SHO, on a non-exclusive basis and
subject to and in accordance with the Program Terms and Conditions and this Agreement, (A) to represent to Members that Members may earn Points with respect to their Program-Eligible Purchases made from SHO, (B) to accept the redemption of
Points as payment for Program-Eligible Purchases made from SHO in accordance with the Program Terms and Conditions, and (C) to perform all other actions authorized or required by this Agreement. Except for the Program, SHO will not participate
in any rewards or points-issuance/redemption program that (A) awards, or authorizes the awarding of, points or other tangible economic benefits in connection with purchases of merchandise or services from SHO or any of its Affiliates, or
(B) authorizes SHO or any of its Affiliates to accept the redemption of points or other tangible economic benefits as payment with respect to purchases of merchandise or services from SHO or any of its Affiliates. 

V. Transaction Information. 
 A. Delivery. SHO will deliver to SHMC, using delivery methods specified by SHMC from time to time, all information with respect to Program-Eligible Purchases made from SHO by Members including but
not limited to the following: Member Number; merchandise or service purchased; purchase price paid; purchase location (such as particular store or online); date and time of day of purchase; associated returns, exchanges, adjustments, and related
information; and tender type (not including credit card numbers) (collectively, the “Transaction Information”). 
 B. POS. SHO will establish, and at all times during the Term maintain, the appropriate point-of sale and related information systems to meet its enrollment obligations (the “POS
System”) and use its commercially reasonable efforts to maximize enrollments. In accordance with prevailing retail-industry standards, the POS System will accurately process, record, store, and permit retrieval of all Transaction
Information. 
 C. Format. The Transaction Information will be delivered to SHMC in the format and with the frequency,
and using the secure delivery methods, in effect as of the Effective Date. SHMC may revise the format, frequency, and methods related to the delivery of the Transaction Information from time to time upon 30-days’ advance written notice to SHO.

  
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 VI. Points. 
 A. Issuance of Points. In accordance with and subject to the Program Terms and Conditions, SHMC will issue Base Points and Bonus Points to Members’ Accounts with respect to Program-Eligible
Purchases from SHO and will take all related actions as SHMC determines are appropriate with respect to such purchases (including reflecting returns, exchanges, and similar transactions) as those actions may affect the Members’ Accounts.

 B. Bonus Point Offers. SHMC may make Bonus Point Offers to Members (in accordance with and subject to the Program
Terms and Conditions and this Agreement) to encourage Members to make Program-Eligible Purchases from SHO. SHMC will provide notice to SHO of each upcoming Bonus Point offers, and SHO may elect not to participate in the offer by providing SHMC with
a timely notice of its intent to not participate. If SHO participates in a Bonus Offer, SHO will pay a fee for all Bonus Points earned by SHO’s customers on Program-Eligible Purchases from SHO in accordance with the fee schedule on Appendix
VI.C. The Parties may mutually agree in advance to conduct Bonus Points Offers specific to SHO, including Bonus Points offers that are multiples of Base Points awarded to Members for a Program-Eligible Purchase during the applicable offer period,
Bonus Points award for Program-Eligible purchases that exceed a certain amount, “Lifecycle Points” awarded at specific events or milestones during Membership, or Points awarded for particular categories of brands or types of
purchases.
 C. Points Issuance Fee. Appendix VI.C describes the Points Issuance Fees that SHO will pay to SHMC with
respect to the issuance of Base Points and Bonus Points in accordance with this Agreement, all of which fees are non-refundable regardless of the extent to which Points are redeemed. Appendix VI.C describes the conditions under which Points Issuance
Fees will be subject to quarterly true-up payments from SHO to SHMC. 
 D. Redemption of Points. SHO will, on a
non-exclusive basis, accept Points from all Members as partial or full payment for all Program-Eligible Purchases in accordance with the Program Terms and Conditions and this Agreement and regardless of the means of payment tendered by Members for
any portion of Program-Eligible Purchases that are not paid for with Points and regardless of the merchandise and services purchased. SHMC may authorize, upon terms and conditions determined by SHMC in its sole discretion, additional third parties
to redeem Points, including Authorized Vendors and Authorized Providers. 
 E. Reimbursement Upon Redemption. SHMC will
reimburse SHO for Points that SHO, in accordance with the Program Terms and Conditions and this Agreement, accepts from its customers that are Members as payment for Program-Eligible Purchases at the rate or rates specified on Appendix VI.E. SHMC
will continue to reimburse SHO for all Points redeemed by Members at its premises after this Agreement has terminated, until such time as all Points issued to Members for Program-Eligible Purchases made at SHO have expired. 

  
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 F. Expiration of Points. SHMC will have no obligation to compensate a Member or
SHO for expired Points earned by Members at SHO. 
 G. Reconciliation and Payment. The amount or amounts that SHO owes to
SHMC in accordance with this Agreement, and the amount or amounts that SHMC owes to SHO in accordance with this Agreement, will be determined by SHMC on a monthly basis, which amounts will be netted against each other. The Party that owes an amount
to the other Party after the netting will remit the amount it owes to the other Party within five days of the reconciliation. 

H. Differentiation. SHMC from time to time in its sole discretion may establish multiple rates for earning Base Points and Bonus
Points that differentiate among Members on the basis of, or that depend on, reflect, or are affected by, factors or considerations determined by SHMC in its sole discretion, including the applicable Authorized Vendors or Authorized Providers from
whom Program-Eligible Purchases are made, and Member achievement of specified levels of Program-Eligible Purchases, Qualifying Purchases, Qualifying Prescriptions, or similar criteria. SHMC from time to time in its sole discretion may establish
multiple rates for redemption of Base Points and Bonus Points that differentiate among Authorized Vendors, Authorized Providers, and other participants in the Program on the basis of, or that depend on, reflect, or are affected by, factors or
considerations determined by SHMC in its sole discretion, including the applicable Authorized Vendors or Authorized Providers from whom Program-Eligible Purchases are made, and achievement of specified levels of Program-Eligible Purchases,
Qualifying Purchases, Qualifying Prescriptions, or similar criteria. 
 I. Permits and Taxes. SHO will at its own expense
(i) obtain all permits and licenses required under applicable law to operate its business, and (ii) pay and discharge all applicable sales taxes and assessments which may be charged or levied, now or in the future, against SHO on any
Program-Eligible Purchase made under this Agreement. Except as otherwise provided in the Tax Sharing Agreement to be executed by SHO and SHLD, each Party will be responsible for collecting and remitting their own taxes resulting from any income
earned under this Agreement. 
 VII. Services; Marketing. 
 A. Marketing by SHMC for SHO. 
 1. All SHO marketing related to the Program
will be performed by SHMC at SHO’s request as mutually agreed upon by the Parties and in accordance with, and subject to the fees described on, Appendix VII.A.1 (the “Rate Card”), which marketing is referred to as the
“Program-Related Marketing.” Program-Related Marketing includes multi-media advertising, including print media, SYWR-branded social media, store signage, direct customer communications (such as targeted or un-targeted email or text
messaging campaigns), sweepstakes and other contest offers, and point-of-sale messaging related to the Program. Additional marketing services with respect to the Program that do not constitute Program-Related Marketing are described in the Services
Agreement between SHMC and SHO dated August 8, 2012 (the “Services Agreement”). SHMC may revise the types of Program-Related Marketing and the rates and fees defined in the Rate Card at any time upon 30-days’ prior notice
to SHO. The Parties will mutually determine the frequency, targeting rules, and related 

  
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parameters of all Program-Related Marketing. All Program-Related Marketing is subject to SHMC’s then-current technical capabilities, SHMC’s privacy policy, and the terms of the Rate
Card. If the Parties agree on additional marketing services that are not Program-Related Marketing, the additional marketing services may be reflected in a statement-of-work amendment to this Agreement. The Parties acknowledge that SHMC will provide
non-Program-related marketing (such as promotional and trigger emails) in accordance with the Services Agreement. 
 2. SHMC
will deliver to SHO solely for its use in accordance with this Agreement (1) Program-related analytical reports with respect to SHO in the form with the type of content that SHMC provides to its business units and the business units of their
Affiliates, and (2) other analyses of Transaction Data and other Member activity at SHO retail locations prepared from time to time by SHMC (together, “Monthly Member Analytics”). SHMC will include as part of the Monthly Member
Analytics the identification of Members who have opted-in to receive SHO communications (“SHO Opt-ins”) and Members who SHMC has determined, based on analytical analysis of Member data, are likely to have an interest in receiving
SHO communications (“Implicit Interest”). All Monthly Member Analytics are SHMC’s Confidential Business Information and are subject to the terms and conditions of Article XI. 

3. SHMC offers the Personal Shopper by Shop Your WaySM program (the “Personal Shopper Program”) whereby Members can enroll to become Personal Shoppers (as
defined in the Personal Shopper Program Terms and Conditions located at http://ps.shopyourway.com/terms/PersonalShopper (as amended and interpreted by SHMC from time to time in its sole discretion, the “PS T&C”)) and recommend
to Clients who are Members that they purchase merchandise from SHO. With respect to each Commission payable by SHMC to a Personal Shopper as a result of a Qualifying Purchase from SHO, SHO will pay to SHMC an amount equal to the sum of (1) the
Commission payable plus (2) 25 basis points on the Net Sales for which the Commission is payable. SHMC may terminate the Personal Shopper Program at any time. The terms “Clients,” “Commission,” “Net
Sales,” and “Qualifying Purchase” are defined in the PS T&C. 
 B. SHMC’s Other
Marketing. SHMC may advertise the Program generally to the extent and via advertising channels that SHMC determines are appropriate. SHMC must submit all marketing materials containing SHO Marks or referencing SHO’s participation in the
Program for SHO’s prior approval, which SHO will neither unreasonably delay or withhold. Nothing in this Agreement restricts SHMC’s right to communicate Transaction Information and administrative information (such as notices of changes to
the Program terms) to Members. 
 C. SHO Email Obligation. With respect to its own email communications SHO will comply
with the CAN-SPAM Act as the Sender or Designated Sender (as defined in the act and associated rules promulgated by FTC under the Act), to the exclusion of all others, which email communication will be distinguished from email communications from
SHMC and its Affiliates, as follows: (1) SHO will send its email communications a domain name that clearly indicates SHO or one of its Affiliates is the sender (such as searshometownandoutlet.com or 

  
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searshomtownstores.com); (2) SHO will use SEARS HOMETOWN AND OUTLET STORES on the FROM line; (3) SHO will not use the Sears logo without including “Hometown Stores,”
“Home Appliance Showroom,” or “Outlet” in SHO’s logos and branding; and (4) SHO will use in the footer of each email communication the following text for an unsubscribe link: “Click here to unsubscribe from
receiving promotional email from Sears Hometown and Outlet Stores, Inc. (“SHO”). Please note that SHO is not associated with Sears, Roebuck and Co., Sears Holdings, or any of their subsidiaries.” 

VIII. License to Use Marks 
 A. SHMC Marks. SHMC hereby grants to SHO a non-exclusive, non-transferable, royalty-free license to use, solely in connection with its participation and marketing of the Program in accordance with
this Agreement, the trade names, trademarks, and service marks of SHMC (each a “SHMC Mark”), subject to SHMC’s prior review and approval of each use. SHO acknowledges that the use of any SHMC Mark will not confer upon SHO any
proprietary rights to the SHMC Mark, and SHO will not question, contest, or challenge SHMC’s ownership of a SHMC Mark. SHO will not register or attempt to register any SHMC Mark, or any trade names, or trademarks similar to them. Nothing in
this Agreement will be construed to bar SHMC from protecting its right to the exclusive ownership of a SHMC Mark against infringement or appropriation by any party or parties, including SHO. SHMC will have the right to control the quality and nature
of the services rendered in conjunction with all SHMC Marks, and SHO will conform to the standards set by SHMC in conjunction therewith. 
 B. SHO Marks. SHO hereby grants to SHMC a non-exclusive, non-transferable, royalty-free license to use, solely in connection with its participation and marketing of the Program according to this
Agreement, the trade names, trademarks, and service marks of SHO (each a “SHO Mark”), subject to SHO’s prior review and approval of each use. SHMC acknowledges that the use of any SHO Mark will not confer upon SHMC any
proprietary rights to the SHO Marks, and SHMC will not question, contest, or challenge SHO’s ownership of the SHO Marks. SHMC will not register or attempt to register any SHO Mark, or any trade names, or trademarks similar to them. Nothing in
this Agreement will be construed to bar SHO from protecting its right to the exclusive ownership of the SHO Marks against infringement or appropriation by any party or parties, including SHMC. SHO will have the right to control the quality and
nature of the services rendered in conjunction with any SHO Mark, and SHMC will conform to the standards set by SHO in conjunction therewith. 
 C. Injunctive Relief. Each Party acknowledges that (a) the other Party’s trade names, trademarks, and service marks possess a special, unique and extraordinary character which makes it
difficult to assess the monetary damage that the other Party or its affiliates would sustain in the event of unauthorized use, (b) irreparable injury would be caused to the other Party by such unauthorized use for which there would be no
adequate remedy at law, and (c) injunctive relief would be appropriate with respect to any unauthorized use. 
 IX. Enrollment of New
Members. SHMC authorizes and directs SHO to enroll new Members at the point of sale, online, via SMS, and call centers. SHO will use commercially reasonable efforts to maximize enrollments of its customers in the Program. SHO will make

  
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available to customers at the point of sale (or otherwise as agreed upon by the Parties) all marketing materials provided by SHMC, including marketing materials detailing enrollment procedures.

 X. Ownership of Data. SHMC is the sole and exclusive owner of the Member list, all Member enrollment information, Member passwords,
Member Numbers, and Points accounts, and SHO has, and will have, no ownership interest of any kind whatsoever in the foregoing. SHO and SHMC are joint owners of the Transaction Information except that SHMC is the sole owner of Member information
derived from the Transaction Information. SHMC may use the Transaction Information to operate the Program and for all other purposes in accordance with its privacy policy and applicable law (including transfer to, and use by, third parties) without
restriction. SHO may use the Transaction Information to communicate with its customers (including Members who are customers) and for the purpose of conducting its business, each in accordance with its privacy policy and applicable law, and for no
other purpose of any kind whatsoever. If this Agreement or the Services Agreement is terminated and SHMC no longer provides technical or system support to SHO, SHMC will provide SHO with an electronic copy of all its Transaction Information. The
electronic copy will not include any Program-specific Member data, data created or derived by SHMC from the SHO Transaction Information, or data enhancements, updates, or enrichments made by SHMC’s third party service providers, (collectively
referred to here as “Summary Data”) unless SHMC, in its sole discretion, elects to provide Summary Data, subject to any licensing or contractual limitations imposed by SHMC’s third-party service providers. 

XI. Confidentiality. The term “Confidential Information” as used herein will include both Confidential Business Information and
Confidential Personal Information (each as defined below). 
 A. Confidential Business Information. All non-public
information each Party shares with the other Party in connection with this Agreement, including all: business plans, strategies, forecasts, analyses, or financial information; employee information, information technology information, other
proprietary information, and the terms of this Agreement (collectively, “Confidential Business Information”), will be held in strict confidence by the Party that receives the Confidential Business Information regardless of the
manner or medium in which it is furnished or otherwise obtained. 
 B. Exceptions. Notwithstanding the provisions of
Section XI.A., Confidential Business Information will not include any information that (i) is obtained from a public source, other than due to breach by such Party of this Section XI, (ii) is obtained by one Party on a non-confidential
basis from a source other than the disclosing Party (provided that such source, to such party’s knowledge, was not obligated to the disclosing Party to keep such information confidential), (iii) was in one Party’s possession prior to
disclosure by the other Party to it, (iv) is disclosed with the prior written consent of the disclosing Party whose information is proprietary or non-public, or (v) is independently developed by or on behalf of a Party. Subject to the next
sentence, nothing contained in this Agreement will limit the right of a Party to disclose any information as required by applicable law or by any governmental authority. If in the reasonable opinion of its legal counsel a Party is required by law to
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Information of the other Party in connection with any legal proceeding relating to this Agreement or any other legal proceeding to an arbitrator, the court or other governmental authority, the
receiving Party may disclose such information if it notifies the other Party within a reasonable time prior to disclosure and allows the other Party a reasonable opportunity to seek appropriate protective measures. Each Party will notify the other
Party promptly upon the discovery of the loss, unauthorized disclosure, or unauthorized use of Confidential Business Information. 
 C. Confidential Personal Information. “Confidential Personal Information” means all information about Members, including Transaction Information and customer names, addresses, all
contact information, customer lists, and demographic or financial information. Confidential Personal Information may be used only as permitted in this Agreement. Each Party is liable for all unauthorized disclosures and use of Confidential Personal
Information by its Affiliates and personnel. Each Party will notify the other Party promptly upon the discovery of the loss, unauthorized disclosure, or unauthorized use of the Confidential Personal Information. All Confidential Personal Information
constitutes Confidential Business Information, however, the terms of this section govern the use of any Confidential Personal Information. 
 D. Data Security. Each Party will establish, maintain and implement an information security program, including appropriate administrative, technical and physical safeguards, that is designed to
(i) ensure the security and confidentiality of Confidential Information, (ii) protect against any reasonably anticipated threats or hazards to the security or integrity of such Confidential Information, (iii) protect against
unauthorized access to or use of such Confidential Information that could result in substantial harm or inconvenience to any Member, and (iv) ensure the proper disposal of such Confidential Information. Each Party will use the same degree of
care in protecting the Confidential Information of the other Party against unauthorized disclosure as it accords to its own confidential customer information, but in no event less than a reasonable standard of care. 

E. Unauthorized Use or Disclosure of Confidential Information. Each Party acknowledges that any unauthorized use or disclosure of
Confidential Information of the disclosing Party or a Member might cause immediate and irreparable harm to the disclosing Party for which money damages might not constitute an adequate remedy. Accordingly, each Party acknowledges that the other may
seek injunctive relief to enforce the terms of this Section XI in addition to any other remedies the disclosing Party may have. Each Party will promptly (i) advise the other Party by telephone and in writing via facsimile of all security
breaches that may have compromised any Confidential Information of such Party or a Member or that may have constituted an unauthorized misappropriation, disclosure, or use by any Person of the Confidential Information of the other Party or a Member,
in each case which may come to its attention, and (ii) take all steps at its own expense reasonably requested by the other Party to limit, stop or otherwise remedy such misappropriation, disclosure, or use. 

F. Return of Confidential Information. Upon the termination of this Agreement, each Party will return to the other Party all such
Party’s Confidential Business Information, and will certify such return or destruction upon request of the other Party. 

  
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 G. Publicity. Each Party will refrain from making any reference to this Agreement
or to the other Party in the solicitation of business, unless the other Party gives its prior written consent to such action and approves any press release or other publicity materials prior to their dissemination. 

XII. Termination. Neither Party may exercise its rights in this Section XII if the Party has failed to comply with any of its material
obligations in this Agreement and the failure is continuing. 
 A. General. 

1. Subject to the next sentence, SHO or SHMC may terminate this Agreement in the event of a material breach of this Agreement by the
other Party if the breach is curable by the breaching Party and the breaching Party fails to cure the breach within 30 days following its receipt of written notice of the breach from the non-breaching Party. If the breach is not curable by the
breaching Party, the non-breaching Party may immediately terminate this Agreement following the non-breaching Party’s delivery of notice to the breaching Party (whichever Party is entitled to terminate, the “Terminating
Party”). 
 2. SHMC may terminate this Agreement for cause if SHO fails to agree to a Complying Change made in
accordance with Section III on or before the tenth day following SHO’s receipt of notice of the Complying Change. 
 3.
SHMC may terminate this Agreement if a Stockholding Change occurs. 
 B. Termination for Convenience.
Each Party may terminate this Agreement for any reason or no reason on or after the last day of the 66th full month following the Effective Date by providing the other Party with one hundred eighty (180) days’ advance written notice of the Terminating Party’s intent to terminate, which notice
the Terminating Party may not deliver until after the fifth anniversary of the Effective Date. Termination in accordance with this section will be without penalty and further obligation of any kind except as provided in subsection C of this section.

 C. Termination in Response to a Termination of another Agreement. Each Party may terminate this Agreement effective
immediately upon 30-days’ advance written notice to the other Party if (1) the Terminating Party or any of its Affiliates terminates the Separation Agreement as a result of a material breach of, or a material default by, the other party or
its Affiliates of their obligations in the Separation Agreement, (2) the Terminating Party or any of its Affiliates terminates a License Agreement in accordance with its terms as a result of a material breach of, or a material default by, the
other party or its Affiliates of their obligations in the License Agreement, or (3) the Terminating Party or any of its Affiliates terminates the Merchandising Agreement dated as of August 8, 2012 between SHO and Sears, Roebuck and Co.
(“SRC”), among others (the “Merchandising Agreement”) in accordance with its terms as a result of a material breach of, or a material default by, the other party or its Affiliates of their obligations in the
Merchandising Agreement. “License Agreement” means each of the 

  
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following, each dated August 8, 2012: the Store License Agreement between Sears Authorized Hometown Stores, L.L.C. and SRC; the Store License Agreement between Sears Home Appliance
Showrooms, LLC and SRC; the Store License Agreement between Sears Outlet Stores, L.L.C. and SRC; and the Trademark License Agreement between SHO and SRC. 
 D. Obligations at Termination or Expiration. Upon the termination of this Agreement in accordance with Sections XII.A, B or C, or upon the expiration of this Agreement: 

1. Each Party will perform, and reasonably assist the other Party in the performance of, all existing contractual obligations to Members;

 2. Each Party will promptly pay all undisputed amounts owed to the other; 

3. Each Party will cease use of the other party’s trade names, trademarks, and service marks, and will immediately cease use of, and
destroy (or if requested return), all of the other party’s Confidential Business Information; 
 4. All rights granted to
SHO in this Agreement will immediately terminate except to the extent necessary to enable SHO to fulfill its obligations to Members with respect to Program-Eligible Purchases, including continuing to accept all Points presented for redemption that
were earned by Members for Program-Eligible Purchases made at SHO premises prior to the date of termination. SHO will provide notice to its customers that they may no longer earn Points in connection with purchases of merchandise and services from
SHO after the date of termination. 
 XIII. Books and Records; Audits. Each Party will keep and maintain books and records that
accurately reflect its operations according to industry standards, generally accepted accounting practices, and all applicable terms of this Agreement (the “Books and Records”). Each Party (the “Auditing Party”)
will be permitted once each calendar year to audit the other Party’s premises, Books and Records, and methods of operation in order to determine the audited Party’s compliance with the terms of this Agreement. Audits may occur at any time
during normal business hours designated by the Auditing Party. At the Auditing Party’s sole option, audits may be conducted (i) by the Auditing Party, its third-party designee, or a combination of the two, and (ii) at any location or
locations reasonably specified by the Auditing Party. The audited Party will deliver copies of all Books and Records to a single audit location designated by the Auditing Party. The Auditing Party will bear the reasonable costs and expenses of each
audit. Each Party will retain its Books and Records for at least five years from the date of settlement of the last audit to which the Party was subject. 
 XIV. SYW Operating Committee; Dispute Resolution. 
 A. SYW Operating
Committee. The Parties will form a committee (the “SYW Operating Committee”) that will address all day-to-day operational and other issues that may arise with respect to this Agreement and all Disputes (as defined in
section XIV.B.3). The SYW Operating Committee will discuss all of these issues and will attempt to resolve informally all Disputes in accordance with section XIV.B.3. The SYW Operating Committee will consist of three employees of each Party that the
Party designates. The initial representatives are listed on Appendix XIV.A. Each Party may replace one or more of its representatives at any time upon 

  
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notice to the other Party. Each Party will promptly fill all of its SYW Operating Committee vacancies as they arise by notice to the other Party. Unless the members of the SYW Operating Committee
unanimously agree otherwise, the SYW Operating Committee will meet at least once every calendar month during the Term on the dates determined by the members of the SYW Operating Committee. If the members of the SYW Operating Committee cannot agree
on a date or a time for a particular monthly meeting the meeting will occur at 1:00 p.m. Central Time on the second Thursday of the month at the offices of Sears Holdings Corporation, 3333 Beverly Road, Hoffman Estates, IL 60179 B6-D. At all times
one of the members of the SYW Operating Committee will serve as the SYW Operating Committee’s Chairperson. The Chairperson will rotate among the SYW Operating Committee members on a monthly basis. The initial Chairperson is listed on Appendix
XIV.A and the other SYW Operating Committee members each will serve thereafter as Chairperson, on a monthly basis, rotating between Seller’s designees and Buyer’s designees. The Chairperson (i) will request that SYW Operating
Committee members provide meeting agenda items and (ii) will distribute to members, at least two business days in advance of each SYW Operating Committee meeting, an agenda for the meeting. 

B. Dispute Resolution. 
 1. If a Dispute arises, neither Party may cease to perform any of its obligations in this Agreement in accordance with their terms or take any formal legal action (such as seeking to terminate this
Agreement, seeking mediation in accordance with Section XIV.B.3., or instituting or seeking any judicial or other legal action, relief, or remedy with respect to or arising out of this Agreement) unless the Party has first
(a) delivered a notice of dispute (the “Dispute Notice”) to all of the members of the SYW Operating Committee and (b) complied with the terms and conditions of this Section XIV. At the first monthly meeting of
the SYW Operating Committee following the delivery of the Dispute Notice (the “Dispute Resolution Meeting”) the SYW Operating Committee will attempt to resolve all of the Disputes that are the subject of the Dispute Notice. Each
Party will cause its designees on the SYW Operating Committee to negotiate in Good Faith to resolve all Disputes in a timely manner. If by the 10th calendar day following the Dispute Resolution Meeting the SYW Operating Committee has not resolved all of the Disputes
(the “Resolution Failure Date”) the Parties will proceed to mediate the unresolved Disputes (“Unresolved Disputes”) in accordance with Section XIV.B.3. 

2. Subject to the next sentence, “Dispute” means each claim, controversy, dispute, and disagreement between (A) on
the one hand, SHO or any of its Affiliates, or any of their respective shareholders, officers, directors, agents, employees, legal representatives (including attorneys in their representative capacity), successors and assigns, and (B) on the
other hand, SHMC or any of its Affiliates, employees, legal representatives (including attorneys in their representative capacity), successors and assigns, in each case arising out of or relating to a Party’s performance, or failure to perform,
one or more of its obligations in this Agreement. Disputes do not include claims, controversies, disputes, or disagreements with respect to compliance with Section XI or payment obligations with respect to amounts due in accordance with
the terms and conditions of this Agreement that are not reasonably in dispute. 

  
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 3. SHMC and SHO in Good Faith will attempt to resolve all Unresolved
Disputes by non-binding mediation. SHMC and SHO will negotiate in Good Faith to determine the mediator, the mediator’s compensation and related costs, and the applicable rules for the mediation. If by the 15th day following the Resolution Failure Date SHMC and SHO have been
unable to settle an Unresolved Dispute the obligations of SHMC and SHO in this Section XIV will end with respect to the Unresolved Dispute. 

XV. Representations and Warranties; Covenants of SHO. 
 A. Representations and Warranties of SHO. To induce SHMC to permit SHO to enroll in the Program, SHO, on behalf of itself and its Affiliates, makes the following representations and warranties to
SHMC, and each and all of which will be deemed to be restated and remade on each day from the Effective Date and at all times thereafter during the Term except that the representations and warranties in XV.A(7) are made solely as of the Effective
Date. 
 1. SHO (a) is a corporation duly organized, validly existing, and in good standing under the laws of the State of
its incorporation, (b) is duly licensed or qualified to do business as a corporation and is in good standing as a foreign corporation in all jurisdictions in which the nature of the activities conducted or proposed to be conducted by it or the
character of the assets owned or leased by it makes such licensing or qualification necessary to perform its obligations required in this Agreement except to the extent that its non-compliance would not have a material adverse effect on SHO’s
ability to perform its obligations in this Agreement, and (c) has all necessary licenses, permits, consents, and approvals from or by, and has made all necessary notices to, all governmental authorities having jurisdiction, to the extent
required for SHO to perform its obligations under this Agreement, except to the extent that the failure to obtain such licenses, permits, consents or approvals or to provide such notices would not have a material adverse effect on SHO’s ability
to perform its obligations required in this Agreement. 
 2. SHO has all necessary corporate power and authority to
(a) execute and enter into this Agreement, and (b) perform the obligations required of SHO under this Agreement and the other documents, instruments and agreements executed by SHO pursuant hereto. The execution and delivery by SHO of this
Agreement and all documents, instruments and agreements executed and delivered by SHO pursuant hereto, and the consummation by SHO of the transactions specified herein have been duly and validly authorized and approved by all necessary corporate
action of SHO. This Agreement (a) has been duly executed and delivered by SHO, (b) constitutes the valid and legally binding obligation of SHO, and (c) is enforceable in accordance with its terms. 

3. The execution, delivery, and performance of this Agreement by SHO, its compliance with the terms hereof, and its consummation of the
transactions specified herein will not (a) conflict with, violate, result in the breach of, constitute an event which would, or with the lapse of time or action by a third party or both would, result in a default under, or accelerate the
performance required by, the terms of any material contract, instrument or agreement to which SHO is a party or by which it is bound, or by which SHO assets are bound, except for conflicts, breaches and defaults which would not have a material and
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perform its obligations under this Agreement, (b) conflict with or violate the articles of incorporation or by-laws, or any other equivalent organizational document of SHO, (c) violate
any applicable law, or conflict with or require any consent or approval under any judgment, order, writ, decree, permit or license, to which SHO is a party or by which it is bound or affected, except to the extent that such violation or the failure
to obtain such consent or approval would not have a material and adverse effect upon SHO’s ability to perform its obligations under this Agreement, (d) require the consent or approval of any other party to any contract, instrument or
commitment to which SHO is a party or by which it is bound, which consent or approval has not been obtained, except to the extent that the failure to obtain such consent or approval would not have a material adverse effect upon SHO’s ability to
perform its obligations under this Agreement, or (e) require any filing with, notice to, consent or approval of, or any other action to be taken with respect to, any regulatory authority, except to the extent that the failure to obtain such
consent or approval would not have a material adverse effect upon SHO, the Program or SHO’s ability to perform its obligations under this Agreement. 
 4. SHO is solvent. 
 5. Neither SHO nor any of its Affiliates is in default with
respect to any contract, agreement, lease, or other instrument to which it is a party or by which it is bound, except for defaults which would not have a material and adverse effect upon SHO’s ability to perform its obligations under this
Agreement, nor has SHO received any notice of default under any contract, agreement, lease or other instrument regarding a default which, if realized, would materially and adversely affect the performance by SHO of its obligations under this
Agreement. 
 6. All of SHO’s Books and Records and the Books and Records of its Affiliates are in all material respects
complete and correct and are maintained in accordance with applicable law, except to the extent that the failure to so maintain such books and records would not have a material and adverse effect upon SHO’s ability to perform its obligations
under this Agreement. 
 7. No action, claim or any litigation, proceeding, arbitration, investigation or controversy is pending
or, to the best of SHO’s knowledge, threatened against SHO or any of its Affiliates, at law, in equity, or otherwise, which, if adversely determined, could have a material and adverse effect on SHO’s ability to perform its obligations
under this Agreement. 
 8. None of intellectual property of SHO, including SHO Marks (together the “SHO IP”),
infringes on the intellectual property rights of any third parties. SHO or its Affiliates are the owners of the SHO IP and SHO has the right, power, and authority to license to SHMC and authorized designees the use of the SHO IP, and such use by
such licensees in a manner approved (or deemed approved) by SHO will not (a) violate any applicable law or (b) infringe upon the rights of any third party, in either case to the extent that the infringement would have a material and
adverse effect upon the Program or SHO’s ability to perform its obligations under this Agreement. 
 9. All data related to
Program-Eligible Purchases, the Transaction Information, and product returns, exchanges, and similar information transmitted or sent by SHO to SHMC for purposes of issuing to or redeeming Points of SHO’s Members is accurate, and the result of
bona fide purchases or returns, free from fraud and misrepresentations. 

  
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 B. Representations of SHMC. To induce SHO to enter into this Agreement and
participate in the Program, SHMC, on behalf of itself and its Affiliates, makes the following representations and warranties to SHO and each and all of which will be deemed to be restated and remade on each day from the Effective Date, and at all
times thereafter during the Term except that the representations and warranties in XV.B(7) are made solely as of the Effective Date. 
 1. SHMC (a) is a corporation duly organized, validly existing, and in good standing under the laws of the State of its incorporation, (b) is duly licensed or qualified to do business and is in
good standing as a foreign corporation in all jurisdictions in which the nature of the activities conducted or proposed to be conducted by it or the character of the assets owned or leased by it makes such licensing or qualification necessary to
perform its obligations in this Agreement except to the extent that its non-compliance would not have a material and adverse effect on SHMC or the Program or SHMC’s ability to perform its obligations in this Agreement, and (c) has all
necessary licenses, permits, consents, or approvals from or by, and has made all necessary notices to, all governmental authorities having jurisdiction, to the extent required for SHMC to perform its obligations under this Agreement, except to the
extent that the failure to obtain such licenses, permits, consents, or approvals or to provide such notices would not have a material and adverse effect on SHMC, the Program or SHMC’s ability to perform its obligations under this Agreement.

 2. SHMC has all necessary power and authority to (a) execute and enter into this Agreement, and (b) perform all of
the obligations required of SHMC under this Agreement and the other documents, instruments and agreements executed by SHMC pursuant hereto. The execution and delivery by SHMC of this Agreement and all documents, instruments and agreements executed
and delivered by SHMC pursuant hereto, and the consummation by SHMC of the transactions specified herein, have been duly and validly authorized and approved by all necessary corporate action of SHMC. This Agreement (a) has been duly executed
and delivered by SHMC, (b) constitutes the valid and legally binding obligation of SHMC, and (c) is enforceable in accordance with its terms. 
 3. The execution, delivery and performance of this Agreement by SHMC, its compliance with the terms hereof, and the consummation of the transactions specified herein will not (a) conflict with,
violate, result in the breach of, constitute an event which would, or with the lapse of time or action by a third party or both would, result in a default under, or accelerate the performance required by, the terms of any material contract,
instrument or agreement to which SHMC is a party or by which it is bound, except for conflicts, breaches and defaults which would not have a material and adverse effect upon SHMC or the Program or SHMC’s ability to perform its obligations under
this Agreement, (b) conflict with or violate the articles of incorporation or by-laws, or any other equivalent organizational document(s) of SHMC, (c) violate any applicable law, or conflict with or require any consent or approval under
any judgment, order, writ, decree, permit or license, to which SHMC is a party or by which it is bound or affected, except to the extent that such violation or the failure to obtain such consent or

  
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approval would not have a material and adverse effect upon SHMC or the Program or SHMC’s ability to perform its obligations under this Agreement, (d) require the consent or approval of
any other party to any contract, instrument or commitment to which SHMC is a party or by which it is bound, which consent or approval has not been obtained, except to the extent that the failure to obtain such consent or approval would not have a
material and adverse effect upon SHMC’s ability to perform its obligations under this Agreement, or (e) require any filing with, notice to, consent or approval of, or any other action to be taken with respect to, any regulatory authority.

 4. SHMC is solvent. 
 5. Neither SHMC nor any of its Affiliates is in default with respect to any contract, agreement, lease, or other instrument to which it is a party or by which it is bound, except for defaults which would
not have a material and adverse effect upon SHMC or the Program or SHMC’s ability to perform its obligations under this Agreement, nor has SHMC received any notice of default under any such contract, agreement, lease or other instrument
regarding a default which, if realized, would materially and adversely affect the performance by SHMC of its obligations under this Agreement. 
 6. All of SHMC’s Books and Records and the Books and Records of its Affiliates are in all material respects complete and correct and are maintained in accordance with applicable law, except to the
extent that the failure to so maintain such books and records would not have a material and adverse effect upon the Program or SHMC’s ability to perform its obligations under this Agreement. 

7. No action, claim, or any litigation, proceeding, arbitration, investigation or controversy is pending or, to the best of SHMC’s
knowledge, threatened against SHMC or its Affiliates, at law, in equity or otherwise, which, if adversely determined, could have a material and adverse effect on SHMC or the Program or SHMC’s ability to perform its obligations under this
Agreement, nor, to the best of SHMC’s knowledge, do facts exist which might give rise to any such proceedings. 
 8. None
of intellectual property of SHMC, including the SHMC Marks (together the “SHMC IP”), infringes on the intellectual property rights of any third parties. SHMC or its Affiliates are the owners of the SHMC IP and SHMC has the right,
power, and authority to license to SHO and authorized designees the use of the SHMC IP, and such use by such licensees in a manner approved (or deemed approved) by SHMC will not (a) violate any applicable law or (b) infringe upon the
rights of any third party, in either case to the extent the infringement would have a material and adverse effect upon the Program or SHMC’s ability to perform its obligations under this Agreement. 

C. Covenants of SHO. SHO makes the following covenants to SHMC, each and all of which will survive the execution and delivery of
this Agreement. 
 1. SHO will preserve and keep in full force and effect its corporate existence. 

  
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 2. SHO promptly will notify SHMC if it receives written notice of any litigation that,
if adversely determined, would have a material and adverse effect on the Program or SHO’s ability to perform its obligations in this Agreement. 
 3. Except as otherwise specified herein, SHO will enforce its rights against third parties to the extent that a failure to enforce such rights could reasonably be expected to materially and adversely
affect the Program or SHO’s ability to perform its obligations in this Agreement. SHO will not enter into any agreement which, at the time such agreement is executed, could reasonably be expected to have a material and adverse effect on the
Program. 
 4. SHO will at all times during the Term comply in all material respects with all law applicable to its activities.

 5. SHO will perform all of its obligations in this Agreement competently and in Good Faith, in a professional and
commercially reasonable manner, in accordance with generally accepted industry standards. 
 D. Covenants of SHMC. SHMC
makes the following covenants to SHO, each and all of which will survive the execution and delivery of this Agreement. 
 1.
SHMC promptly will notify SHO if it receives written notice of any litigation that, if adversely determined, would have a material and adverse effect on the Program or SHMC’s ability to perform its obligations hereunder. 

2. Except as otherwise specified herein, SHMC will enforce its rights against third parties to the extent that a failure to enforce such
rights could reasonably be expected to materially and adversely affect the Program or SHMC’s ability to perform its obligations hereunder. SHMC will not enter into any agreement which, at the time such agreement is executed, could reasonably be
expected to have a material and adverse effect on the Program or SHMC’s ability to perform its obligations hereunder. 
 3.
SHMC will at all times during the Term comply in all material respects with Applicable Law applicable to its activities. 
 4.
SHMC will keep adequate records and books of account with respect to its obligations under the Program. 
 5. SHMC will perform
all of its obligations hereunder competently and in Good Faith, in a professional and commercially reasonable manner, in accordance with generally accepted industry standards. 
 6. SHMC will, to the extent necessary, cause its Affiliates to comply with the terms of this Agreement. 
 XVI. Indemnification. 
 A. SHO Indemnification of SHMC. From and
after the Effective Date SHO will indemnify and hold harmless SHMC, its Affiliates, their respective officers, directors, employees, agents and representatives and any Person claiming by or through any of them (collectively, the “SHMC
Indemnified Parties”) from and against and in respect of any and all 

  
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losses, liabilities, damages, costs and expenses of whatever nature, including reasonable attorneys’ fees and expenses and all other costs and expenses of defense (collectively,
“Losses”) relating to third-party claims that are caused or incurred by, result from, arise out of, or relate to: 
 1. SHO’s negligence, recklessness or willful misconduct (including acts and omissions) relating to the Program; 
 2. Breaches and defaults by SHO or any of its Affiliates, or their respective officers, directors, employees or agents of any of the terms, conditions, covenants, representations, or warranties contained
in this Agreement; 
 3. Actions and omissions by SHMC taken or not taken at SHO’s request or direction pursuant to this
Agreement except where SHMC would have been otherwise required to take such action (or refrain from acting) absent the request or direction of SHO; 
 4. Fraudulent acts by SHO, its Affiliates, or their respective officers, directors employees or agents; 
 5. SHO’s failure to comply with applicable law unless such failure was the result of any action taken or not taken by SHO at the specific request or direction of SHMC; 

6. Allegations by a third party that the use of the SHO IP or any materials or documents provided by SHO constitutes (a) libel,
slander, or defamation, (b) unfair competition or misappropriation of another’s ideas or trade secret, (c) invasion of rights of privacy or rights of publicity, or (d) breach of contract or tortious interference; 

7. Allegations by a third party that the use of the SHO IP or any materials or documents provided by SHO other than at SHMC’s
direction constitutes infringement of intellectual property, including trademark infringement or dilution, or copyright infringement. 
 B. SHMC’s Indemnification of SHO. From and after the Effective Date, SHMC will indemnify and hold harmless SHO, its Affiliates, their respective officers, directors, employees, agents and
representatives and any Person claiming by or through any of them (collectively, the “SHO Indemnified Parties”) from and against and in respect of any and all Losses relating to third-party claims, which are caused or incurred by,
result from, arise out of or relate to: 
 1. SHMC’s negligence, recklessness or willful misconduct (including acts and
omissions) relating to the Program; 
 2. Breaches and defaults by SHMC or any of its Affiliates, or their respective officers,
directors, employees or agents of any of the terms, conditions, covenants, representations, or warranties contained in this Agreement; 
 3. SHMC’s failure to satisfy any of its obligations or liabilities to Members; 
 4. Actions and omissions by SHO taken or not taken at SHMC’s request or direction pursuant to this Agreement except where SHO would have been otherwise required to take such action (or refrain from
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 5. Fraudulent acts by SHMC, its Affiliates or their respective officers, directors
employees or agents; 
 6. Allegations by a third party that the use of the SHMC IP or any materials or documents provided by
SHMC constitutes (a) libel, slander, or defamation, (b) unfair competition or misappropriation of another’s ideas or trade secret, (c) invasion of rights of privacy or rights of publicity, or (d) breach of contract or
tortious interference; 
 7. Allegations by a third party that the use of the SHMC IP or any materials or documents provided by
SHMC other than at SHO’s direction constitutes infringement of intellectual property, including trademark infringement or dilution, or copyright infringement. 
 C. Procedures. In case any claim is made, or any suit or action is commenced, against an SHMC Indemnified Party or a SHO Indemnified Party, the Party in respect of which indemnification may be
sought under this Section XVI (including for the benefit of its officers, directors, employees, agents or representatives or any Person claiming by or through any of them) (the “Indemnified Party”) will promptly give the other party
(the “Indemnifying Party”) notice thereof and the Indemnifying Party will be entitled to participate in the defense thereof and, with prior notice to the Indemnified Party given not later than twenty (20) days after the
delivery of the applicable notice, to assume, at the Indemnifying Party’s expense, the defense thereof, with counsel reasonably satisfactory to such Indemnified Party. After notice from the Indemnifying Party to such Indemnified Party of its
election so to assume the defense thereof, the Indemnifying Party will not be liable to such Indemnified Party under this Section for any attorneys’ fees or other expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation. 
 1. The Indemnified Party will have the right to employ its own
counsel if the Indemnifying Party elects to assume such defense, but the fees and expenses of such counsel will be at the Indemnified Party’s expense, unless (a) the employment of such counsel has been authorized in writing by the
Indemnifying Party, (b) the Indemnifying Party has not employed counsel to take charge of the defense within twenty (20) days after delivery of the applicable notice or, having elected to assume such defense, thereafter ceases its defense
of such action, or (c) the Indemnified Party has reasonably concluded that there may be defenses available to it which are different from or additional to those available to the Indemnifying Party (in which case the Indemnifying Party will not
have the right to direct the defense of such action on behalf of the Indemnified Party), in any of which event attorneys’ fees and expenses will be borne by the Indemnifying Party. 

2. The Indemnifying Party will promptly notify the Indemnified Party if the Indemnifying Party desires not to assume, or participate in
the defense of, any such claim, suit or action, but such notice will not affect in any way the obligation of the Indemnifying Party in accordance with this Section XVI to indemnify and hold harmless the Indemnified Party against Losses consisting of
reasonable attorneys’ fees and expenses and all other costs and expenses of defense. 
 3. The Indemnified Party or
Indemnifying Party may at any time notify the other of its intention to settle or compromise any claim, suit or action against the Indemnified 

  
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Party in respect of which payments may be sought by the Indemnified Party in this Agreement, and the Indemnifying Party may settle or compromise any such claim, suit or action solely for the
payment of money damages, but will not agree to any other settlement or compromise without the prior consent of the Indemnified Party, which consent will not be unreasonably withheld or delayed. 

D. Notice and Additional Rights and Limitations. 
 1. If an Indemnified Party fails to give prompt notice of any claim being made or any suit or action being commenced in respect of which indemnification under this Section XVI may be sought, such failure
will not limit the liability of the Indemnifying Party. The preceding sentence will not limit the Indemnifying Party’s rights to recover for any loss, cost or expense which it can establish resulted from any failure to give prompt notice.

 2. This Section XVI will govern the obligations of the Parties with respect to the subject matter hereof but will not be
deemed to limit the rights which any Party might otherwise have at law or in equity. 
 XVII. Disclaimer. Except as otherwise provided
for in this Agreement, each Party disclaims all other express or implied representations, warranties and covenants. Further, SHMC and SHO each acknowledges that reliance on any representation, warranty or covenant not contained in this Agreement
will be deemed unreasonable. 
 XVIII. Exclusion of Consequential Damages; Limitation of Liability. Notwithstanding anything to the
contrary in this Agreement, in no event will either Party be liable to the other Party for any indirect, consequential, incidental, special, or punitive damages, losses, or expenses whether in contract, tort (including negligence and strict
liability) or any other legal or equitable principles, or for any loss of profits or revenue, arising in connection with this Agreement or the performance, omission of performance, or termination of this Agreement without regard to the nature of the
claim (e.g., breach of contract, negligence or otherwise), even if a Party has been advised of the possibility of such damages. 
 XIX. Force
Majeure. If either SHMC or SHO (the “Excused Party”) is prevented from performing its obligations in this Agreement in accordance with their terms as the result of a condition or cause that did not arise or occur as the result
of the Excused Party’s act or failure to act and is beyond the Excused Party’s ability to avoid and is not directly or indirectly caused by, contributed to, or exacerbated by any of the Excused Party’s acts or failures to act or any
of the acts or failures to act of anyone acting on the Excused Party’s behalf, including work stoppages, strikes, lockouts or labor disputes, embargoes, casualties, acts of God, natural disasters, acts of terrorism, war or civil disturbances,
and restraints of laws or governments (each a “Condition or Cause”) but excluding all losses of market, and all other commercial contingencies and economic events (such as financial crises, recessions, depressions, and other
economic downturns), the failure to perform by the Excused Party will be excused only to that extent and only so long as the Condition or Cause is existing. The Excused Party will promptly, but in all events within seven days, notify the other of
the commencement and termination of the Condition or Cause and include with the notice a statement estimating the effect of the Condition 

  
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or Cause on the Excused Party’s ability to perform its obligations in this Agreement in accordance with their terms. If the Condition or Cause prevents the Excused Party from performing its
obligations in this Agreement in accordance with their terms for more than thirty consecutive calendar days either SHMC or SHO may terminate this Agreement upon delivery of written notice to the other, but the Terminating Party may not seek to
recover damages from the Excused Party resulting from the Condition or Cause. With respect to each Condition or Cause that results from a restraint of law or government, the Excused Party will make Good Faith efforts to cause the removal or repeal
of the Condition or Cause. 
 XX. Notice. 
 Notices under this Agreement are sufficient if given by nationally recognized overnight courier service, certified mail (return receipt requested), facsimile with electronic confirmation, or personal
delivery to the other party at the address below: 
  

			
	If to SHMC:	  	Sears Holdings Management Corporation
		
		  	3333 Beverly Road
		  	Hoffman Estates, IL 60179
		  	Attn: SVP & President OnLine, Marketing, and Pricing
		
	If to SHO:	  	Sears Hometown and Outlet Stores, Inc.
		  	3333 Beverly Road
		  	Hoffman Estates, IL 60179
		  	Attn: Vice President, Supply Chain and Technology

 XXI. Relationship of Parties. For all purposes, including federal and state tax purposes, nothing contained in
this Agreement will be deemed or construed by the parties or any third party to create a partnership, joint venture or of any association between the Parties, and no act of either Party will be deemed to create any such relationship. SHMC and SHO
each will take all additional actions as the other may request to evidence and affirm the non-existence of any such relationship, and that neither Party will become bound by any representation, act or omission of the other. Neither Party will file
suit using the name of the other Party or any of its Affiliates. 
 XXII. Expenses. Except as expressly provided in this Agreement, each
Party will be solely responsible for the costs and expenses incurred by the Party in connection with the exercise of its rights and performance of its obligations under this Agreement. 
 XXIII. No Third Party Beneficiaries. There are no third-party beneficiaries to this Agreement except that SHMC Indemnified Parties and SHO Indemnified Parties are intended third party beneficiaries
of Section XV. Except as provided in the preceding sentence, the Parties do not intend the benefits of this Agreement to inure to any third party or any rights, claims or causes of action against a Party to be created in favor of any person or
entity other than the other Party. 
 XXIV. Severability. If any provision of this Agreement is determined to be unenforceable, the
Parties intend that this Agreement be enforced as if the unenforceable provisions were not present and that any partially valid and enforceable provisions be enforced to the extent that they are enforceable. 

  
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 XXV. No Waiver. A Party does not waive any right under this Agreement by failing to insist on
compliance with any of the terms of this Agreement or by failing to exercise any right in this Agreement. Any waivers granted under this Agreement are effective only if recorded in a writing signed by the Party granting the waiver. 

XXVI. Cumulative Rights. The rights and remedies of the Parties under this Agreement are cumulative, and either Party may enforce any of its
rights or remedies under this Agreement or other rights and remedies available to it at law or in equity. 
 XXVII. Construction. Except
as otherwise expressly provided in this Agreement, the following rules will apply hereto: (a) the singular includes the plural and the plural includes the singular; (b) “or” is not exclusive and “include” and
“including” are not limiting; (c) a reference to any agreement or other contract includes any permitted modifications, supplements, amendments and replacements; (d) a reference in this Agreement to a Section or Appendix is to the
Section of or Appendix to this Agreement unless otherwise expressly provided; (e) a reference to a Section in this Agreement will, unless the context clearly indicates to the contrary, refer to all sub-parts or sub-components of any said
article or section; (f) words such as “hereto,” “hereof,” and “herein,” and other words of like import will, unless the context clearly indicates to the contrary, refer to the whole of this Agreement and not to any
particular clause hereof; (g) a reference in this Agreement contemplating certain action by a Party “after consultation with” or “in consultation with” another Party does not mean that the consent or approval of such other
Party is required or contemplated in connection with such action; (h) a reference to “mutually agree,” “mutually agreed” and “mutual agreement” with respect to a matter each individually means that a written
agreement; and (I) “will” expresses an imperative, an obligation, and a requirement. 
 XXVIII. Further Assurances. Each
of SHMC and SHO will produce or execute such other documents or agreements as may be necessary or desirable for the execution and implementation of this Agreement and the consummation of the transactions specified herein and to take all such further
action as the other Party may reasonably request in order to give evidence to the consummation of the transactions specified herein. 
 XXIX.
Survival. Each term of this Agreement that would, by its nature, survive the termination or expiration of this Agreement will so survive, including the obligation of either Party to pay all amounts accrued hereunder and including without
limitation Article X (Ownership of Data), Article XI (Confidentiality), Article XIII (Books and Records), Article XVI Indemnification, Article XVIII (Exclusion of Consequential Damages; Limitation of Liability, and Section XXXVI (Governing Law,
Jurisdiction ; Waiver of Jury Trial). 
 XXX. Entire Agreement; Modifications. This Agreement, including all Appendices attached which
are incorporated by this reference, constitute the complete and final agreement of the parties pertaining to the Agreement. No modification of this Agreement is binding unless it is in writing and signed by SHMC and SHO. 

  
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 XXXI. Glossary. The following terms are defined in the text of the Agreement, as indicated:

  

			
	 Term
	  	 Section

	 Actual Redemption Rate
	  	Appendix VI.C.
	 Affiliate
	  	This Section
	 Auditing Party
	  	XIII.
	 Authorized Provider
	  	Appendix R.B.
	 Authorized Vendor
	  	Appendix R.B.
	 Base Points
	  	Appendix R.B.
	 Bonus Points
	  	Appendix R.B.
	 Stockholding Change
	  	This Section
	 Competitor
	  	This Section
	 Complying Change
	  	III.
	 Confidential Business Information
	  	XI.A.
	 Confidential Personal Information
	  	XI.C.
	 Dispute
	  	XIV.B.2
	 Dispute Notice
	  	XIV.B.1
	 Effective Date
	  	II.
	 Implicit Interest
	  	VII.A.2.
	 Indemnified Parties
	  	XVI.
	 Initial Redemption Rate
	  	Appendix VI.C
	 Measurement Period
	  	Appendix VI.C
	 Member
	  	Appendix R.B.
	 Member Number
	  	Appendix R.B.
	 Monthly Member Analytics
	  	VII.A.2.
	 SHO Opt-In
	  	VII.A.2.
	 SYW Operating Committee
	  	XIV.A
	 Personal Shopper Program
	  	VII.A.3.
	 POS System
	  	V.B.
	 Program
	  	Recital A.
	 Program-Eligible Purchases
	  	Appendix R.B.
	 Program Terms and Conditions
	  	Recital B.
	 Purchase Points
	  	Appendix VI.C.
	 Rate Card
	  	VII.A.1.
	 Separation Agreement
	  	II.
	 SHLD
	  	II.

  
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	 SHMC Mark
	  	VIII.A.
	 SHO Mark
	  	VIII.B.
	 Term
	  	II.
	 Terminating Party
	  	XII.A.1.
	 Transaction Information
	  	V.A.
	 True-Up Fee
	  	Appendix VI.C.
	 Unresolved Dispute
	  	XIV.B.1.

 “Affiliate” means (A) with respect to SHO, each of its subsidiaries, (B) with respect to SHMC,
Sears Holdings Corporation and each of its subsidiaries, and (C) with respect to a Competitor, each Person that directly or indirectly and by whatever means controls, is under common control with, or is controlled by, the Competitor.

 “Stockholding Change” means a Competitor becomes, directly or indirectly, at any time after the date of this Agreement and
by whatever means the beneficial owner of more than 50% of the total voting power of SHO’s outstanding securities entitled, to vote in, or carrying the right to direct voting with respect to, directly or indirectly and by whatever means the
election of SHO’s board of directors. 
 “Competitor” means each Person and each of its Affiliates that operates a
points-issuance/redemption business that competes in any material respect with the Program or with any other rewards or points-issuance/redemption business operated by SHMC or any of its Affiliates. 

“Person” means an individual, a sole proprietorship, a partnership, a joint venture, a limited liability company, a corporation, and all
other entities. 
 XXXII. Assignment. This Agreement may not be assigned by SHO without the prior written consent of SHMC except that SHO
may assign this Agreement to an Affiliate. SHMC may assign this Agreement without restriction. 
 XXXIII. Counterparts. This Agreement
may be executed in any number of counterparts, all of which together will constitute one and the same instrument, but in making proof of this Agreement, it will not be necessary to produce or account for more than one such counterpart. Any facsimile
or PDF e-mailed version of an executed counterpart will be deemed an original. 
 XXXIV. Good Faith and Fair Dealing. Outlet Stores and
Sears each will exercise Good Faith in the performance of its obligations in this Agreement. “Good Faith” means honesty in fact and the observance of reasonable commercial standards of fair dealing in accordance with Applicable Law.

 XXXV. Condition Precedent to the Effectiveness of this Agreement. This Agreement will not become effective until it has been approved
by the Audit Committee of the Board of Directors of SHLD. 

  
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 XXXVI. Governing Law; Jurisdiction; Waiver of Jury Trial. 

A. Governing Law. This Agreement will be construed in accordance with, and governed by, the federal laws of the United States,
including but not limited to the Lanham Act, and the internal laws of the State of Illinois other than its conflict of laws principles and the Illinois Franchise Disclosure Act. This Agreement will not be subject to any of the provisions of the
United Nations Convention on Contracts for the International Sale of Goods. 
 B. Jurisdiction. Each of the Parties
submits, for itself and its property, to the exclusive jurisdiction of all Illinois state courts and federal courts of the United States of America sitting in Cook County, Illinois, and all appellate courts to each thereof, in all actions and
proceedings arising out of or relating to this Agreement or the transactions contemplated hereby or for recognition or enforcement of all judgments relating thereto, and each of the Parties (i) will commence all such actions and proceedings
only in such courts, (ii) will cause all claims in respect of all such actions and proceedings to be heard and determined in such Illinois state court or, to the extent permitted by law, in such federal court, (iii) waives, to the fullest
extent it may legally and effectively do so, all objections that it may now or hereafter have to the laying of venue of all such actions and proceedings in any such Illinois state or federal court, and (iv) waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of such actions and proceedings in all such Illinois state and federal courts. A final judgment in any such action or proceeding will be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by law. Each Party irrevocably consents to service of process in the manner provided for notices in Section XX. Nothing in this Agreement will affect the right of any
Party to serve process in any other manner permitted by law. 
 C. Waiver of Jury Trial. Each Party acknowledges that each
controversy that may arise under this Agreement is likely to involve complicated and difficult issues and, therefore, it irrevocably and unconditionally waives all rights it may have to a trial by jury in respect of any litigation directly or
indirectly arising out of or relating to this Agreement or the transactions contemplated hereby. Each Party certifies and acknowledges that (i) it understands and has considered the implications of such waivers, (ii) it makes such waivers
voluntarily, and (iii) it has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section XXXVI. 
 [Signatures on following page] 

  
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	Sears Holdings Management Corporation	 		 	Sears Hometown and Outlet Stores, Inc.
					
	By:	 	  
	 		 	By:	 	  

	Imran Jooma	 		 	W. Bruce Johnson
	SVP & President OnLine, Marketing, and Pricing	 		 	Chief Executive Officer and President

  
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 Appendix R.B 

Program Terms and Conditions 
 Terms and Conditions of the ShopYourWayRewardsSM Program 

Effective Date April 12, 2012 
 These
Terms and Conditions (as they may be amended from time to time, these “Terms”) apply to all members of the ShopYourWay Rewards Program (the “Program”) offered by Sears Holdings Management Corporation (together with
its affiliated companies, “Company”). Upon your completion of the enrollment process you: (i) become a ShopYourWay Rewards Member (“you” or “Member”), (ii) are issued a Member Number
(“Member Number”), and (iii) agree that you have read and agree to these Terms. These Terms are subject to periodic changes that Company may make in its sole discretion. Company is entitled to modify the participation
requirements (the “Participation Requirements”) for Members at any time. Unless otherwise specified herein, all changes to these Terms and the Participation Requirements apply to all Members, including Members enrolled before the
date the changes take effect.  
 YOU AGREE WITH COMPANY AS FOLLOWS: 

1. Program-Eligible Purchases: “Program-Eligible Purchases” means Qualifying Purchases and Qualifying Prescriptions.
“Qualifying Purchases” means qualifying purchases of products and services (i) at Company’s Stores, (ii) from food concessions at Company Stores , (iii) from Company-branded catalogs, (iv) at participating
Company licensed businesses (products and services selected by these businesses from time to time), (v) from participating Company-branded and Company-sponsored websites, (vi) from participating third-parties that are designated by Company
from time to time in its sole discretion (“Authorized Vendors”), and (vii) from participating third-party vendors that are designated by Authorized Providers in accordance with terms and conditions established by the Authorized
Providers and approved by Company in its sole discretion. “Company Stores” means the following stores located in the United States: Sears; Sears Grand; Sears Essentials; Sears Hometown Stores; Sears Home Appliance Showrooms; Sears
Hardware; Sears Outlet; Sears Auto Centers; Sears Home Services; Kmart; Lands’ End; The Great Indoors; and mygofer. All references to the United States herein include Puerto Rico. “Qualifying Prescriptions” means prescriptions
filled at Kmart Pharmacies. “Authorized Providers” are third-party providers, such as networks, aggregators, sponsors, and consumer credit-card issuers, that Company from time to time in its sole discretion authorizes to participate
in the Program. 

  
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 2. Excluded Purchases and Layaway. The following are excluded from Qualifying Purchases
(collectively “Non-Qualifying Purchases”): (i) sales and use taxes; (ii) service fees; (iii) donations to charitable organizations; (iv) commercial account purchases; (v) purchases of lottery tickets,
licenses, tobacco, alcohol, firearms, gift cards, postage, gasoline, and Western Union services; (vi) bill payments; (vii) credit card payments; (viii) purchases that include a redemption of Points for some part or all of the purchase
price; (ix) purchases of products and services via ServiceLive.com, including any fees paid to ServiceLive.com; (x) layaway payments made prior to when you became a Member; (xi) shipping and delivery charges; (xii) purchases from
third-party vendors (other than Authorized Vendors and other than participating third-party vendors that are designated by Authorized Providers) on Company-branded and Company-sponsored websites if to complete a purchase the customer is redirected
to the third-party vendor’s or other website (other than a Company-branded or Company-sponsored website); (xiii) Sears and Kmart auctions on eBay; (xiv) the portion of any purchase price which is eliminated due to a coupon or other
discount, (xv) purchases, transactions, and other items excluded by the terms and conditions established by Authorized Providers or by Authorized Vendors; (xvi) purchases outside the United States and (xvii) other items determined by
Company from time to time in its sole discretion. Layaway payments made after you become a Member will become Qualifying Purchases when you make your final layaway payment. The following are not Qualifying Prescriptions (collectively
“Non-Qualifying Prescriptions”): (A) prescriptions paid for in whole or in part by state or federal healthcare programs; (B) prescriptions filled by Kmart Pharmacies located in AL, AR, NJ, MA, or NY; and
(C) prescriptions for controlled substances filed by Kmart Pharmacies located in LA. 
 3. Earning Points: When you present
your Member Number at the point of sale in accordance with these Terms you earn base points on your Program-Eligible Purchase amount (“Base Points”) at the rate or rates established by Company from time to time in its sole
discretion. As of January 29, 2012 Members earn Base Points at the rate of one Base Point for every $0.10 of Qualifying Purchase amount, which rate may change without notice. If as of January 29, 2012 your Qualifying Purchase amount is not
a multiple of $0.10 you earn one additional Base Point if your Qualifying Purchase amount ends in $0.05 or more. For example, a Qualifying Purchase amount of $10.75 will earn 108 Base Points, while a Qualifying Purchase amount of $10.74 will earn
107 Base Points. As of January 29, 2012 you earn 500 Base Points for each Qualifying Prescription filled regardless of the dollar amount of the Qualifying Prescription, which rate may change without notice. Members residing in the United States
may also earn additional Base Points on non-purchase activities pursuant to the terms and conditions governing those activities as adopted by Company from time to time (which terms and conditions are incorporated into, and become a part of, these
Terms). 
 Bonus Members may earn bonus points, in addition to Base Points, on specified Qualifying Purchases pursuant to the terms and
conditions of promotional offers (which terms and conditions are incorporated into, and become a part of, these Terms) published by Company from time to time (“Bonus Points”). “Bonus Members” are Members who
maintain a valid email address in their Program profile and who remain opted-in the Program to receiving promotional emails from the Program. Members who opt-out of receiving promotional emails from the Program (“Base Members”) do
not receive Bonus Points. Base Points and Bonus Points are together referred to in these Terms as “Points.” 

  
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If a Bonus-Point offer gives Bonus Members the opportunity to earn, in Points, a specified multiple or percentage of a Qualifying Purchase or dollar value (for example, “2x Points,”
“2% of value in Points,” or “$2 back in Points”) (a “Multiplier Offer”) the specified multiple, percentage, or dollar amount of Bonus Points earned will include the Base Points earned on the purchase. For
example, a Bonus Member will earn 1,000 Base Points on a $100 Qualifying Purchase. If a “2x” Multiplier Offer is applicable to the Qualifying Purchase, the total Points the Bonus Member will earn on the Qualifying Purchase will be 2,000.

 If Company, in its discretion, permits a Bonus Member to combine two or more Multiplier Offers on a Qualifying Purchase, the total number of
Points the Bonus Member will earn on the Qualifying Purchase will be equal to the sum of (i) the total Base Points earned for the Qualifying Purchase (the “Total Base Points”) and (ii) the Bonus Points for each
Multiplier Offer based on the specified multiple, percentage, or dollar amount for the Multiplier Offer less that portion of the Total Base Points that is attributable to the Multiplier Offer. For example, if a total Qualifying Purchase is $290 ($40
for shoes and $250 for tools) and if Company permits a Bonus Member to combine two Multiplier Offers (one that is 2% in Points for shoes and the other that is 10x in Points for tools) the total Points that the Bonus Member will earn on the
Qualifying Purchase will be 25,800 calculated as follows: 2,900 Total Base Points (400 for shoes and 2,500 for tools) + 400 Bonus Points for shoes (800-400) + 22,500 Bonus Points for tools (25,000-2,500) = 25,800 total Points earned. 

POINTS ARE NOT EARNED ON (A) NON-QUALIFYING PURCHASES, (B) NON-QUALIFYING PRESCRIPTIONS, OR (C) PROGRAM-ELIGIBLE PURCHASES MADE PRIOR TO
YOUR ENROLLMENT DATE. BONUS POINTS ARE NOT EARNED ON PROGRAM-ELIGIBLE PURCHASES MADE PRIOR TO THE START DATE OF ANY BONUS POINT OFFER OR PROMOTION. Points are issued into your Points account within approximately 30 days from the date of the
Qualifying Purchases, except that Points for Qualifying Prescriptions may be issued on a quarterly basis and Points for Qualifying Purchases from Authorized Vendors and from participating third-party vendors that are designated by Authorized
Providers may be issued up to 90 days from the date of the Qualifying Purchases. You may review your Point balance in your Points account at shopyourway.com/rewards (the “Rewards Site”, or such other site as designated by Company
from time to time). You do not acquire property rights in any Points in, or earned but not yet issued into, your Points account. 
 You may also
earn Base Points and, if you are a Bonus Member, Bonus Points on purchases from, or using services provided by, eligible third parties (including without limitation Authorized Vendors and Authorized Providers) pursuant to the terms and conditions
governing those purchases as adopted, or approved, by Company from time to time (which terms and conditions are incorporated into, and become a part of, these Terms). 
 Company from time to time in its sole discretion may establish multiple rates for earning Base Points and Bonus Points that differentiate among Members on the basis of, or that depend on, reflect, or are
affected by, Member achievement of specified levels of Program-Eligible Purchases, Qualifying Purchases, Qualifying Prescriptions, or similar criteria. 

  
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 Company from time to time in its sole discretion may sell or otherwise transfer Points for cash or other
consideration to Members, Authorized Vendors, and Authorized Providers. 
 4. Point Redemption and Expiration; Special Promotions.
You may redeem Points in Your Points account as determined by Company from time to time in its sole discretion. As of January 29, 2012 Members may redeem Points on all Program-Eligible Purchases except for purchases from Sears Home Services,
purchases of Prescriptions, purchases from Authorized Vendors, purchases from Authorized Providers, and purchases from participating third-party vendors that are designated by Authorized Providers. You may redeem your Points at the rate or rates
determined by Company from time to time in its discretion (the “Redemption Value”), which rate or rates are incorporated into, and become a part of, these Terms. You may redeem your Points only to pay all or a part of the purchase
price for Program-Eligible Purchases. POINTS HAVE NO CASH VALUE AND MAY NOT BE REDEEMED FOR CASH, CREDIT, OR OTHER VALUE. NO CREDIT, CASH, OR OTHER VALUE WILL BE GIVEN FOR UNUSED POINTS. ALL POINTS EXPIRE WITHOUT CREDIT, PAYMENT, OR OTHER VALUE TO
YOU AT THE END OF THE CALENDAR QUARTER THAT INCLUDES THE 12 MONTH ANNIVERSARY OF THE DATE THOSE POINTS WERE EARNED. Calendar-quarter end dates are March 31, June 30, September 30, and December 31. For example, Points
earned on November 1, 2011 expire on December 31, 2012. 
 From time to time Company may offer Members the chance to win various
prizes, including Points. NO PURCHASE WILL BE NECESSARY TO PLAY OR WIN these prizes. Rules and restrictions apply to these promotions and will be published with the applicable promotion. Further, Company may in its sole discretion, from time to
time, also award Point(s) to Members, or to any subset of Members. Notwithstanding anything to the contrary herein, Company may, in its sole discretion, attach additional or different terms to any Points awarded by Company, including, without
limitation, establishing different (including shorter) expiration dates for any Points provided by Company. 
 Company from time to time in its
sole discretion may establish multiple Redemption Values that differentiate among Members on the basis of, or that depend on, reflect, or are affected by, Member achievement of specified levels of Program-Eligible Purchases, Qualifying Purchases, or
similar criteria. 
 5. Returns: Any Points you earn on a Program Eligible Purchase are deducted from your Points account if you
return the merchandise, or cancel the service, comprising that Program Eligible Purchase, even if: (i) you have redeemed those Points prior to the return, and (ii) the deduction from your Points account results in a negative Points
balance. 
 6. Negative Points Balance. If you have a negative Points balance, you will still earn Points on Program-Eligible
Purchases, which will be applied to Your Points account until a positive Points balance is restored and thereafter. However, while your Points balance is negative, you will not be able to redeem Points until the positive Points balance is restored.
If you return a Program Eligible Purchase while your Points balance is negative, Company reserves the right to deduct an amount equal to the Redemption Value of that negative Points balance from the purchase price to

  
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be paid to you with respect to that return. For example, if your Points balance is negative 1,000 Points and you return a $10.00 Program Eligible Purchase, then you will receive $9.00 in cash or
store credit, and 1,000 Points (a Redemption Value of $1.00) will be applied to your Points account. 
 7. Participation: There is
no Program membership fee. As of April 12, 2012, the Participation Requirements for each Member, are that such Member: (i) is 13 years of age or older (ii) is a resident of the United States (including Puerto Rico), or Mexico
(iii) has provided to Company (as part of their Program profile) such Member’s correct: (a) First Name, (b) Last Name, and (c) Zip Code, and (iv) has provided a valid unique email address that such Member has the right
to use. Company may request proof of identification and age to verify (A) your eligibility for Program membership, (B) membership participation, and (C) your compliance with these Terms. 

If as a result in a change by Company in the Participation Requirements a Member no longer meets the requirements for participation, then, from the date
of such change, such Member will no longer be entitled to earn Points (and all purchases from the date of such change by such Member will be Non-Qualifying Purchases), unless and until such Member meets the revised Participation Requirements.
Notwithstanding the foregoing, Members who have not provided the information required in Section 7(iii) and Section 7(iv) above (but who were valid Members prior to imposition of such requirements), will be entitled to
continue as full Members of the Program (with the same rights and responsibilities as other Members); provided that Company reserves the right to remove this exception at any time.  

If you provide Company with your mobile telephone number (x) Company may send to your mobile telephone number SMS (text) and other messages,
(y) with respect to those messages you may be charged data and message rates, and (z) if you reply “stop” to a Company message to your mobile number Company may send to you an additional message confirming your “stop”
reply. 
 8. Loss of Membership Number, Restrictions, and Taxes: You are entitled to only one Member Number and one Points
account. Company will issue you a new Member Number and transfer your Point balance, even if negative, to your new Member Number but only if you surrender your old Member Number. If you have more than one Points account we may, in our discretion,
combine your Points accounts into one Points account. You will immediately notify Company in the event of a lost or stolen Member Number. Unless you have timely notified Company of a lost or stolen Member Number, Company is not responsible for
(i) lost or stolen Member Numbers or (ii) any misuse resulting from lost or stolen Member Numbers. Your Member Number and, if you have a Membership card your Membership card, remain the property of Company and must be surrendered upon
request. Member Numbers and Points are not transferable and may not be sold, resold, exchanged, or bartered. Company may terminate Points, or any portion of your Points balance, at any time, without prior notice. Program benefits can be terminated
by Company at any time regardless of how much you participate in the 

  
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Program. Company may adjust your Points account status or Points balance, at any time and without notice, due to any (A) computer error, (B) technical issues experienced by Company,
(C) machine malfunction, (D) employee, customer, or other error, or (E) fraud or other misuse of Points or the Program. All transactions involving Points are subject to review and verification by Company. All Points are for one-time
use, and all transactions involving Points are final unless otherwise determined by Company. Any violation of these Terms may result in the confiscation or cancellation of your Points and the suspension or termination of your Membership. Points you
earn or are awarded may be subject to taxation, for which you are solely responsible. 
 9. Overall Program Terms: The Program is
void where prohibited by law. Participation in the Program is subject to these Terms and all other terms and conditions, rules, policies, and procedures that Company may establish or change at any time and from time to time without notice. Company
may change the Program at any time and without notice, including but not limited to (i) changing the Program’s earning rates, (ii) changing the Program’s structure, (iii) removing or changing Points including the rate at
which Points are earned, (iv) changing the Redemption Value of Points, (v) raising or lowering Point levels, (vi) revising the procedures and rules for earning or redeeming Points, (vii) changing when Points expire,
(viii) associating, combining, integrating, linking, or merging the Program with other programs, and (ix) associating, combining, integrating, linking, or merging other programs with the Program. Company may make these changes even if
these changes affect your ability to use Points already accumulated. You are responsible for remaining knowledgeable about these Terms. The interpretation and application of these Terms is at the sole discretion and determination of Company, which
in each case is final and conclusive. Company assumes no responsibility for errors caused by equipment or system malfunctions, acts of God, or incorrect Member information. If you wish to discontinue your participation in the Program you may cancel
at any time by contacting: ShopYourWay Rewards Customer Relations at P.O. Box 365, Dodgeville, WI 53533 or by calling 800.991.8708 during business hours. Important Notice Concerning Credit Card / Financing Offers: THE INFORMATION YOU HAVE GIVEN
COMPANY FOR THE PROGRAM MAY BE USED TO MAKE PREAPPROVED CREDIT OFFERS TO YOU. The laws of the State of Illinois apply to the Program and these Terms without regard to any conflict of law rules that may require the application of the laws of another
jurisdiction. 
 If to access your Points account you use a user ID and password you are fully responsible for maintaining their
confidentiality. You are fully responsible for all activities that occur with respect to your user ID and password whether or not you authorize the activities. You must immediately notify Company of any unauthorized use of your user ID or password
of which you become aware. You acquire no property rights in your password, Member Number, or Points account. You may not give access to your Points account to any third-party on-line service, including but not limited to any points management
service, points tracking service, points aggregation service, or other service. 
 10. Confidential Arbitration: ALL DISPUTES
COMPANY OR YOU HAS RELATING IN ANY WAY TO THE PROGRAM (INCLUDING WITHOUT LIMITATION WITH RESPECT TO COMPANY’S DISCLOSURES, EMAIL AND MOBILE SMS (TEXT) MESSAGES 

  
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COMPANY SENDS TO YOU, OR ANY CONTACT INFORMATION YOU SUPPLY TO COMPANY IN CONNECTION WITH THE PROGRAM), THESE TERMS, OR THE REWARDS SITE WILL BE SUBMITTED TO CONFIDENTIAL ARBITRATION IN THE
FEDERAL JUDICIAL DISTRICT IN WHICH YOU RESIDE, EXCEPT TO THE EXTENT THAT YOU HAVE, IN ANY WAY, VIOLATED OR THREATENED TO VIOLATE ANY COMPANY INTELLECTUAL PROPERTY RIGHT. All arbitrations required by these Terms will be conducted under the rules then
prevailing of the American Arbitration Association. The arbitrator’s award is binding and may be entered in any court of competent jurisdiction. To the fullest extent permitted by applicable law no arbitration brought under, or with respect to,
the Program, these Terms, any Company disclosure, any email or SMS (text) message that Company sends to you, any contact information you supply to Company in connection with the Program, or the Rewards Site is to be joined to an arbitration
involving any other party subject to these Terms whether through class arbitration proceedings or otherwise. 
 For arbitration claims you
assert against Company in accordance with this section (but not for any arbitration claim against you) Company will pay all of your administrative, hearing, and arbitrator’s fees and costs for the arbitration (but not the fees, expenses, and
costs of your lawyers, experts, or witnesses) in excess of any filing fee you would have been required to pay to file the claim as a lawsuit in a state or federal court (whichever is greater) in the judicial district in which you reside. Unless
unlawful, Company will pay its, and you will pay your, lawyers’, experts’, and witness fees, expenses, and costs with respect to all claims. 
 To the extent permitted by law, you will not agree to act as a representative or a private attorney general, or in any other representative capacity, or participate as a member of a class of claimants in
any lawsuit against Company in any court, or in arbitration, with respect to any claims arising under these Terms, the Program (including without limitation with respect to Company’s disclosures, email and mobile SMS (text) messages Company
sends to you, or any contact information you supply to Company in connection with the Program), or your status as a Member. This waiver will survive the termination of the relationship between you and Company. 

Company or you may seek injunctive relief in any state or federal court in Chicago, Illinois, USA, and Company and you consent to the exclusive
jurisdiction and venue in the state and federal courts in Chicago, Illinois, USA for injunctive relief purposes. 
 NOTWITHSTANDING ANYTHING TO
THE CONTRARY IN THESE TERMS, UNDER NO CIRCUMSTANCES IS COMPANY LIABLE FOR ANY INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE, EXEMPLARY, OR CONSEQUENTIAL DAMAGES. 
 The employees of Company and its affiliates and individuals eligible for an Associate discount are eligible to participate in the Program. See 88sears.com for Associate enrollment and participation
guidelines. 

  
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 © 2012 Sears Brands LLC. All rights reserved. 

These Terms and Conditions apply to the ShopYourWay Rewards Program offered by Company to ShopYourWay Rewards members. Please read these Terms and
Conditions carefully as they govern all aspects of the Shop Your Ways Rewards Program. Visit the Rewards Site for the most current Terms and Conditions. 

  
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 Appendix II 

Effective Date 
 The
Effective Date referred to in Article II is September     , 2012. 

  
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 Appendix VI.C 

Points Issuance Fee 
 [***] A total of four pages were omitted and filed separately with the Securities and Exchange Commission. 

  
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 [***] 

  
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 Appendix VI.E 

Reimbursement for Points Redemption 
 SHMC will reimburse SHO at the rate of $0.001 for each Point accepted for redemption by SHO in accordance with Section VI.E of the Shop Your Way Rewards Retail Establishment Agreement to which this
Appendix is attached. 

  
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 Appendix VII.A.1 

Rate Card and Email Support Services 
 Definitions: 
 “CPM” means cost per thousand. 

“Hero” means the primary featured product in a multiple product email. The Hero is featured at the top of the email, and determines the
subject line of the email. 
 “Slice” means one of 4-6 sub-features or products in an email. The Slice is typically displayed
“below the fold” e.g. not visible until/unless Member scrolls down in the email, or some equivalent action depending on the format of the email. 
 “Solo” means an email campaign that features a single business unit or store format. 
 “TI” means targeted interactions. 
 “Trigger” means any metric
or event used to generate an automatic communication to a Member, for example, emails sent upon purchase of merchandise, or POS contact. 
 Rate Card 
  

					
	 	  	 Cost

	 Email Campaign Development and Deployment Services
	  	
		
	One (1) Dedicated Email Campaign Manager - required upon SHO request for an email campaign or campaigns.	  	$170,000/annually; billed at $14,167/month; may be hired on a month-to-month basis as mutually agreed by the Parties.
		
	 Email Campaigns to SHO Opt-Ins or Members designated as Implicit Interests (as defined in the Agreement)

 
 •     Includes
Transactional Communications, Existing Triggers, Shopper Recap, and eReceipts
	  	$4.00 CPM
		
	Email Campaigns to Members not designated as SHO opt-ins or as Implicit SHO Interests	  	$15 CPM for Solo campaigns
		
	 •     Includes Solos, SHMC/SYWR promotional, and other campaigns to non-SHO exclusive
customers
	  	$10 CPM for SHO Hero

  
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		  	$1 CPM for Slice
		
		  	One (1) Email Campaign per Month to 500,000 Members at $4 CPM Cost
		
	 Customized SYW Promotion and Event Campaigns

 

•      Includes for example campaigns such as “Secret Sales,”
“Liquidity Injection,” or “Extreme Redeem,” etc.
	  	$15 CPM for Solo campaigns
		
	 Special Projects/New Development – defined in a separate SOW

 

•      Includes new Triggers, New/Revised transactional messaging and
communications, or other net new campaigns
	  	Rate Card + CPM (if applicable, otherwise as defined in SOW)

							
	 Email Creative/Coding Development Services
	   

			
	 New Trigger/Transactional Template
	  		  	$	                 16,000	  
	 New Dynamic Promotional Template
	  		  	$	8,000	  
	 New Standard Email Postcard Template
	  		  	$	4,000	  
	 Banners/Trolley’s
	  		  	$	500	  
	 Critical Changes
	  	(changes requested less than 5 days prior to launch date)	  			
		  	Hero	  	$	5,000	  
		  	Slice	  	$	2,500	  

					
	
	 Analytics

			
	 Ad Hoc Analyses
	 		  	$200/hour
			
	 Segmentation and other larger projects
	 		  	Per agreed upon SOW
	
	 Personalization Services

			
	 TI @ POS (SHO)
	 		  	$0.03 per print
	 TI propensity models (includes quarterly re-scoring)
	 		  	$15,000/each

  
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	 TI Implementation into new email campaign
	  	$5,000 per campaign
	 Other TI requests
	  	Per agreed upon SOW

							
	
	 Hourly rates for OBU Engineering/User experience/Marketing Planning personnel
	   

	 Group
	 	 Role
	  	Rate	 
	 Product Mgmt
	 	Product Manager	  	$	                  100.00	  
	 Merchandising
	 	Merchant	  	$	80.00	  
	 Marketing
	 	Marketing Coordinator	  	$	80.00	  
	 Creative & UX
	 	Creative Director	  	$	150.00	  
		 	Art Director	  	$	125.00	  
		 	Web Designer	  	$	80.00	  
		 	Principal UX Architect	  	$	125.00	  
		 	UX Architect	  	$	95.00	  
		 	Copywriter	  	$	80.00	  
		 	Taxonomist	  	$	110.00	  
		 	Front End Developer	  	$	90.00	  
		 	UX Project Manager	  	$	90.00	  
	 Engineering
	 	Technical Project Manager	  	$	90.00	  
		 	Engineering Lead	  	$	110.00	  
		 	Developer	  	$	75.00	  
		 	QA Engineer	  	$	75.00	  
		 	Support Engineer	  	$	75.00	  
		 		  			

 Email Support Schedule 
  

					
		  	Services	  	Notes
	
	Note: Fees for email support services not included in the Services Agreement will be the equivalent fees defined in the Rate Card
			
		  	 •      SHC/OBU will continue to provide support for non-SYW related promotional and trigger
emails
	  	

  
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		  	 •      Promotional emails
	  	a.) SHC/OBU will continue to provide standard promotional emails to Sears Opt-Ins with additional SHO Opt-In or Implicit Interest in SHO including specific business
line/category promotional offer
			
		  		  	b.) SHO will continue to have the opportunity to purchase promotional banners/content in standard OBU promotional emails
			
		  	 •      Trigger Emails
	  	 SHC/OBU will continue to provide support for the following trigger emails:

 

•      Shopping Cart Abandonment emails for SearsOutlet.com

 

•      Post Order emails for SearsOutlet.com

 

•      Shopper Recap emails

 

•      Digital receipt email

 

•      Post order emails for in-store purchases

		  	 •      Special Projects/New Campaign Development
	  	Defined in a separate written SOW
		  		  	

  
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 Appendix XIII.A 

SYW Operating Committee 

In accordance with section XIII.A of the Shop Your Way Rewards Retail Establishment Agreement to which this Appendix is attached, SHO and SHMC hereby
designate the following persons as members of the SYW Operating Committee: 
 For SHO 

1. J.J. Ethridge 
 2. Beau Warren 

3. Lauri Turjeman 
 For SHMC

1. Michael Anderson 
 2. Philip Emmanuele

 3. Sandeep Swaminathan 
 Initial
Chairperson: Michael Anderson 

  
 45Form of Employee Transition and Administrative Services Agreement

 Exhibit 10.10 
 EMPLOYEE TRANSITION AND ADMINISTRATIVE SERVICES AGREEMENT 
 THIS EMPLOYEE TRANSITION AND
ADMINISTRATIVE SERVICES AGREEMENT (this “Agreement”), dated as of August 22, 2012, is made by and between Sears, Roebuck and Co. (hereinafter “Service Provider” or “SRC”), Sears Hometown and
Outlet Stores, Inc. (“SHO Parent”), Sears Authorized Hometown Stores, LLC (“Hometown”), Sears Outlet Stores, L.L.C. (“Outlet” and together with SHO Parent and Hometown, collectively
“SHO”). 
 RECITALS 
 WHEREAS, the Service Provider is a wholly owned subsidiary of Sears Holdings Corporation (“SHLD”), and SHLD has determined that it would be appropriate, desirable and in the best interests of
SHLD and the shareholders of SHLD to separate the SHO Business from SHLD; and 
 WHEREAS, SHLD and SHO have entered into the
Separation Agreement, dated August     , 2012 (the “Separation Agreement”), pursuant to which SHLD intends to distribute to its stockholders its entire interest in the SHO Business by way of a Rights
Offering; and 
 WHEREAS, after the Rights Offering, it is contemplated by the Parties that Service Provider will provide
certain transitional employee services to SHO for a certain interim period of time, and will provide certain administrative services to SHO for a certain period of time; and 
 WHEREAS, to facilitate the uninterrupted operation of the SHO Business as SHO seeks to develop and maintain its own independent workforce, SHO desires to utilize the services of the Service Employees (as
defined below) for the Transitional Service Period (as defined below), and after the expiration of the Transitional Service Period, the Service Employees will be transferred to SHO and SRC will provide certain administrative services to SHO, all on
the terms and conditions set forth herein. 
 NOW, THEREFORE, in consideration of the foregoing and mutual covenants and
agreements contained herein and in the Separation Agreement, and intending to be legally bound hereby, the Parties hereto agree as follows: 
 ARTICLE I 
 DEFINITIONS 

1.1 General. Capitalized terms not defined herein shall have the meanings set forth in the Separation Agreement. In this Agreement
(i) “include,” “includes,” and “including” are inclusive and mean, respectively, “include without limitation,” “includes without limitation,” and “including without limitation,”
(ii) “or” is disjunctive but not necessarily exclusive, (iii) “will” expresses an imperative, an obligation, or a requirement, (iv) numbered “section” and “article” references refer to sections
and articles, respectively, of this Agreement unless otherwise specified, (v) unless otherwise indicated all references to a number of days will mean calendar days unless otherwise specified and all references to months or years will mean
calendar months or years, and (vi) $ or Dollars will mean U.S. Dollars. 

 1.2 Certain Defined Terms. For the purposes of this Agreement: 

“Administrative Services Period” means the period defined under Section 2.2.(b) of this Agreement during
which SRC will provide to SHO the administrative services specified in Article IV. 
 “Affiliate” means (solely
for purposes of this Agreement and for no other purpose) (i) with respect to SHO, its subsidiaries, and (ii) with respect to SRC, SHLD and the subsidiaries of SHLD (other than Sears Canada, Inc.). 

“Benefit Plan” means, with respect to an entity, each plan, program, policy, agreement, arrangement or understanding
that is a deferred compensation, executive compensation, incentive bonus or other bonus, pension, profit sharing, savings, retirement, severance pay, salary continuation, life, death benefit, health, hospitalization, sick leave, vacation pay,
disability or accident insurance or other employee benefit plan, program, agreement or arrangement, including any “employee benefit plan” (as defined in Section 3(3) of ERISA) sponsored, maintained or contributed to by such entity or
to which such entity is a party or under which such entity has any obligation; provided that no SHLD Restricted Stock Award, nor any plan under which any such SHLD Restricted Stock Award is granted, shall constitute a “Benefit Plan”
under this Agreement. In addition, no Employment Agreement shall constitute a Benefit Plan for purposes hereof. 
 “Cash
Retention Award” or “Other Cash Retention Award” has the meaning set forth in Section 3.4. 

“COBRA” means continuation of group health coverage provisions of the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended and regulations promulgated thereunder. 
 “Code” means the U.S. Internal Revenue Code of
1986, as amended and regulations promulgated thereunder. 
 “Conversion Date” shall have the meaning set forth
in Section 2.2(a) of this Agreement. 
 “Employment Agreement” means any individual employment,
retention, incentive bonus, severance or other individual compensatory agreement between any employee and a member of the SHLD Group or the SHO Group. 
 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended and regulations promulgated thereunder. 

“New Hires” shall have the meaning set forth in Section 3.7. 

  
 2 

 “Person” means any individual, partnership, firm, corporation, limited
liability company, association, trust, joint venture, unincorporated organization, other entity or Governmental Authority, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Exchange Act.

 “Plan Payee” means, as to an individual who participates in a Benefit Plan, such individual’s
dependents, beneficiaries, alternate payees and alternate recipients, as applicable under such Benefit Plan. 

“Separation Agreement” is defined in the Recitals hereof. 

“Service Employee” has the meaning set forth in Section 3.1(a). 

“Service Employee AIP” has the meaning set forth in Section 3.4(c)(i). 

“Service Employee LTIP” has the meaning set forth in Section 3.4(c)(ii). 

“SHLD Benefit Plan” means, as of the Rights Closing Effective Time, any Benefit Plan sponsored or maintained by any
member of the SHLD Group. SHLD Benefit Plan shall also mean any multi-employer plan (as defined in Section 3(37) of ERISA) to which any member of the SHLD Group contributes for the benefit of its employees. For the avoidance of doubt, no member
of the SHLD Group shall be deemed to sponsor or maintain any Benefit Plan if its relationship to such Benefit Plan is solely to administer such Benefit Plan or provide to SHO any reimbursement in respect of such Benefit Plan. The SHLD Benefit Plans
(excluding any multi-employer plans) shall be those Benefit Plans sponsored solely by one or more members of the SHLD Group following the Rights Closing Effective Time. SHLD Benefit Plans shall not include the Service Provider LTIP and the Service
Employee LTIP after the assignment and assumption of such plans by SHO as of the Conversion Date. 
 “SHLD Common
Stock” means the common stock of SHLD, par value $0.01 per share. 
 “SHLD DC Plan” means each of the
following qualified defined contribution plans: the Sears Holdings 401(k) Savings Plan, the Lands’ End, Inc. Retirement Plan, and the Sears Holdings Puerto Rico Savings Plan. 

“SHLD Employment Agreement” means any Employment Agreement to which any member of the SHLD Group is a party and to which
no member of the SHO Group is a party or beneficiary as of the Conversion Date. SHLD Employment Agreements shall not include any Employment Agreement originally between the SHLD Group and a Service Employee that is assigned by SHLD to SHO as of the
Conversion Date. The SHLD Employment Agreements shall be the responsibility of one or more members of the SHLD Group following the Conversion Date. 
 “SHLD Group” is defined in the Separation Agreement, but for convenience is duplicated here, provided that the definition in the Separation Agreement controls. SHLD Group means,
collectively, SHLD and all of its Subsidiaries other than members of the SHO Group. 

  
 3 

 “SHLD Restricted Stock Award” has the meaning set forth in
Section 3.4(f)(i). 
 “SHLD Pension Plan” has the meaning set forth in
Section 4.5(c)(i). 
 “SHLD Severance Plan” has the meaning set forth in
Section 3.4(e)(i). 
 “SHLD SRIP” has the meaning set forth in Section 4.5(c)(ii).

 “SHLD Welfare Plan” means each SHLD Benefit Plan that is a Welfare Plan. 

“SHO Benefit Plan” means any Benefit Plan sponsored or maintained by any member of the SHO Group, excluding SHLD, and
any Benefit Plan made available to SHO Employees by a designee at the direction of SHO. For the avoidance of doubt, no member of the SHLD Group shall be deemed to sponsor or maintain any SHO Benefit Plan if its relationship to such Benefit Plan is
solely to administer such Benefit Plan or provide to SHO any reimbursement in respect of such Benefit Plan during the Administrative Services Period. In addition, SHLD is not responsible for any federal or state liability that SHO, the SHO Benefit
Plan, or SHO’s designee may incur due to the relationship between SHO and the designee, or the structure of the SHO Benefit Plan. 
 “SHO Employee” means each Service Employee, including, for the avoidance of doubt, any such individual who is on a leave of absence, whether paid or unpaid, from which such employee is
permitted to return (in accordance with SRC’s personnel policies, as applicable, or applicable Law, who is transferred to SHO as of the Conversion Date, any Service Employees hired by SRC and assigned to SHO during the Transitional Service
Period, and any other employee SHO hires on or after the Conversion Date. 
 “SHO Employee Liabilities” means
all potential or actual employment-related, employee benefits-related, or other Liabilities, whether arising on or after the Effective Date, with respect to: (a) Service Employees (and their respective Plan Payees); (b) any other
individuals asserting rights or obligations stemming from their services to or in connection with the SHO Group or the SHO Business; (c) SHO Employment Agreements; and (d) the SHO Benefit Plans, except as otherwise provided in this
Agreement or the Separation Agreement. 
 “SHO Employment Agreement” means any Employment Agreement
(a) between the SHLD Group and a Service Employee who is transferred to SHO as of the Conversion Date or who is terminated after the Effective Date and before the Conversion Date, or (b) to which any member of the SHO Group is a party and
to which no member of the SHLD Group is a party. The SHO Employment Agreements shall be the sole responsibility of one or more members of the SHO Group as of the Conversion Date. 

“SHO Group” is defined in the Separation Agreement, but for convenience is duplicated here, provided that the definition
in the Separation Agreement controls. SHO Group means, collectively, SHO Parent, Hometown, Outlet, and all other Persons that hereafter become a Subsidiary of SHO. 

  
 4 

 “SHO Welfare Plan” means each SHO Benefit Plan that is a Welfare Plan,
including Welfare Plans sponsored by a designee of SHO and made available to SHO Employees and made available to SHO Employees as of the Conversion Date. 
 “Transferred Employee” means each Service Employee who, as of the Conversion Date, is transferred to the SHO Group, including, for the avoidance of doubt, any such individual who is on an
approved leave of absence, whether paid or unpaid, from which such employee is permitted to return (in accordance with the Service Provider’s or its designee’s personnel policies, as applicable, or applicable Law, as of the Conversion
Date). 
 “Transitional Employee Services” shall have the meaning set forth in Section 3.2. 

“Welfare Plan” means each Benefit Plan that provides life insurance, health care, dental care, vision care, employee
assistance programs (EAP), accidental death and dismemberment insurance, disability, severance, vacation or other group welfare or fringe benefits, including, but not limited to, a benefit that is an “employee welfare benefit plan” as
described in Section 3(1) of ERISA. 
 “Workers’ Compensation Event” means the event, injury, illness
or condition giving rise to a workers’ compensation claim. 
 ARTICLE II 

TERM 
 2.1 General Term. This Agreement shall be in effect commencing immediately following the “Rights Closing Effective Time” specified in the Separation Agreement (the date on which the
Rights Closing Effective Time occurs, the “Effective Date”) and continuing until 5:00 p.m. (Central Time) on the last day of the sixty-sixth month following the Effective Date, subject to earlier termination in accordance with
Section 7.1. 
 2.2 Periods and Conversion Date. The term of this Agreement shall consist of two periods, as
follows: 
 (a) The “Transitional Service Period” shall be the period commencing immediately following the
“Rights Closing Effective Time” specified in the Separation Agreement (the date on which the Rights Closing Effective Time occurs, the “Effective Date”) and continuing until 5:00 p.m. (Central Time) on the last day of the
third full month following the Effective Date. Thereafter, the Transitional Service Period shall automatically be extended in consecutive ninety (90) day increments, unless the parties mutually agree to conclude the Transitional Service Period
earlier. Notwithstanding anything herein to the contrary, (i) the Transitional Service Period may not be extended past twelve (12) months after the Effective Date, and (ii) upon termination of this Agreement in accordance with
Section 7.1, the Transitional Service Period shall also terminate. The date on which the Transitional Service Period (including any extensions) terminates shall be referred to as the “Conversion Date.” 

  
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 (b) The “Administrative Services Period” shall be the period commencing
immediately following the Conversion Date and continuing until the last day of the sixty-sixth month following the Effective Date. 
 ARTICLE III 
 TRANSITIONAL SERVICES AND SERVICE EMPLOYEES

 3.1 Provision of Service Employees during Transitional Service Period. 

(a) Subject to the terms and conditions of this Agreement, during the Transitional Service Period, the Service Provider
shall provide the Service Employees for the exclusive use by SHO pursuant to this Agreement. The “Service Employees” are (a) those employees who will be coded by the Service Provider in its HRIS systems under code
“SHS,” and include all individuals who, as of the Rights Closing Effective Time, are employed by any member of the SHO Group or is otherwise working primarily for the SHO Business, as well as any other employees agreed to by the parties
prior to the Effective Date, which will be set forth on an Exhibit 3.1, including for the avoidance of doubt, any such individual who is on a leave of absence, whether paid or unpaid, from which such employee is permitted to return in
accordance with SRC’s policies or applicable Law, and (b) additional Service Employees that are added from time to time in accordance with the provisions of Section 3.7 of this Agreement. In the event that SHO rejects a Service
Employee, SHO shall be responsible for all costs relating to the termination of such employee, including severance costs in accordance with SRC’s policies and practices in effect from time to time as and when payable to such employee.

 (b) Service Employees that are terminated or who otherwise leave the employment of SRC, or who cease to be
assigned to work with SHO in accordance with the terms of Section 3.8, shall cease to be Service Employees hereunder; provided SHO shall be responsible for payment of all costs related to such Service Employees during their assignment to
SHO and for all costs of termination, including severance costs in accordance with SRC’s policies and practices in effect from time to time as and when payable to such employee. For the avoidance of doubt, any individual Service Employee who
during the Transitional Service Period is on a leave of absence, whether paid or unpaid, from which such employee is permitted to return in accordance with SRC’s policies or applicable Law, shall continue to be a Service Employee hereunder, and
upon return shall be assigned to SHO. 
 3.2 Services of the Service Employees during the Transitional Service Period.
During the Transitional Service Period, the Service Provider shall assign the Service Employees to perform services for SHO. The services to be provided by those employed by Service Provider as of the Effective Date shall be those functions and
services, and at such locations, as were performed by the Service Employees for the benefit of Service Provider and the SHO Business immediately prior to the Rights Closing Effective Time, or similar functions and services, and at such other
locations, as SHO and Service Provider may mutually agree (the “Transitional Employee Services”). Nothing in this Agreement will require or be interpreted to require Service Provider to provide Transitional Employee Services beyond
the scope and content of similar services provided to Service Provider in connection with the SHO Business prior to the Rights Closing Effective Time, unless expressly agreed by Service Provider and SHO. 

  
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 3.3 Responsibilities with Respect to the Transitional Service Period. With respect to
each Service Employee, during the Transitional Service Period: 
 (a) The Service Provider undertakes that it
will use its best efforts to provide the Service Employee’s services to SHO to assist SHO with respect to the SHO Business. 
 (b) No Service Employee shall be deemed to be an employee of SHO, but instead will continue to be an employee of Service Provider. The Service Provider will have sole responsibility for the hiring and
terminating of each Service Employee, subject to the provisions of Section 3.8. SRC shall have the right to manage and direct the daily activities of the Service Employees consistent with SRC policies and procedures. SHO shall manage the
worksite. Service Provider will coordinate and cooperate with SHO with regard to the daily activities of the Service Employees. 
 (c) Notwithstanding clause (b) above, for daily activities with respect to the SHO Business, SHO and Service Provider will coordinate and cooperate with regard to the direction and supervision of the
Service Employees; provided however that any complaints, allegations, or incidents of any tortious misconduct or workplace safety violations, regardless of the source, are required to be reported to the Service Provider by SHO and upon such notice
the Service Provider shall take appropriate action as a result of receiving any such report related to a Service Employee who has committed a tortious act. 
 (d) The Service Provider or any of its Affiliates shall have the right to determine (i) each Service Employee’s salary, wages and other compensation, subject to SHO’s consent, (ii) the
amount of taxes, fees or contributions paid to any governmental entity or program by the Service Provider on behalf of, or with respect to, the Service Employees (subject to SHO’s right to reasonably request an accounting and review),
(iii) the Service Employees’ eligibility for benefits under the Service Provider’s or any of its affiliates’ employee benefit plans and personnel policies and procedures, including without limitation, vacation policies (provided,
however, that each Service Employee’s ability to schedule vacation during the Transitional Service Period is subject to SHO’s reasonable review and consent), and (iv) the amount of contributions made with respect to the Service
Employees’ participation in any of the Service Provider’s or any of its Affiliates’ employee benefit plans or programs. Subject to Section 3.4, the Service Provider may change the amount of contributions or benefits
provided to the Service Employees during the Transitional Service Period. 
 (e) The Service Provider and SHO
shall promptly advise each other and SHO’s and SRC’s Legal Department as to any claims or matters which come to their respective attention involving potential legal actions or regulatory enforcement activity that involves the employment of
a Service Employee, and shall promptly advise each other and SHO’s and SRC’s Legal Department of any and all legal actions or administrative notices or proceedings which are actually commenced. Without limitation, SHO shall promptly
forward to Service Provider and SRC’s Legal Department a copy of any notices, legal documents or communications received with respect to any such matter or potential matter. SHO agrees to

  
 7 

 
fully cooperate with the Service Provider in the investigation and defense of all such matters, regardless of whether SHO or Service Provider is the named party, and SHO agrees not to oppose any
intervention by the Service Provider in such action or proceeding if only one of the parties is named. 
 (f) SRC
shall have the right to utilize its Subsidiaries, Affiliates or a third party provider to provide any of the services under this Agreement. 
 3.4 Compensation, Payroll, Bonuses and Employee Benefits during the Transitional Service Period. 
 (a) During the Transitional Service Period, Service Provider and/or its Affiliates shall be solely responsible for paying the Service Employees’ compensation and withholding and paying the applicable
taxes and customary deductions through Service Provider payroll or a third party payroll provider. The Service Employees shall be paid base compensation at the same rates that such Service Employees were receiving immediately prior to the Effective
Date; provided that compensation for employees whose employment is subject to a collective bargaining agreement shall be governed by that collective bargaining agreement or any replacement agreement. Service Provider shall not otherwise increase or
decrease the compensation of the Service Employees without the written consent of SHO except as may be required by Law; provided that Service Provider may make regular and customary increases in accordance with its existing compensation policies.
During the Transitional Service Period, the Service Provider shall not promise, pay or accrue any bonus on behalf of any Service Employee except in accordance with its existing bonus program without the written consent of SHO, subject to subsection
3.4(c) below. All Service Employees’ payroll withholding elections (including without limitation, those related to income taxes, qualified retirement plans, and group health and welfare plans) shall remain the same during the Transitional
Service Period as such elections were as of the date of this Agreement, except to the extent a Service Employee voluntarily elects (in a manner permitted or required of employees and plan participants generally) to change any such election.

 (b) During the Transitional Service Period, each Service Employee shall continue to be eligible to participate
in all SHLD Benefit Plans (excepts as provided in Section 3.4(c)), subject to the terms, conditions and continued availability of such plans, as amended from time to time, to the extent such Service Employee was eligible to participate
in immediately preceding the Effective Date; provided that employee benefits for employees whose employment is subject to a collective bargaining agreement shall be governed by that collective bargaining agreement or any successor agreement. Service
Provider and/or its Affiliates shall be responsible for Operating and administering all claims incurred by Service Employees during the Transitional Service Period pursuant to the terms and conditions of the applicable SHLD Benefit Plans, including
any requirement generally applicable to the submission of benefit claims. New Hires and Service Employees that become eligible for benefits during the Transitional Service Period shall participate in such SHLD Benefit Plans as similarly situated
employees of Service Provider, except as Service Provider and SHO shall otherwise agree, and subject to eligibility and vesting requirements of such plans. 

  
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 (c) Notwithstanding the foregoing: 

(i) Service Provider or one of its Affiliates shall establish an Annual Incentive Plan for Associates Supporting Sears
Hometown and Outlet Stores, Inc. (“Service Employee AIP”), effective as of the Effective Date, for the purpose of: 
 (1) Accepting the 2012 fiscal year accruals under the Sears Holdings Annual Incentive Plan attributable to the Service Employees who were employees of the SHO Business prior to the Effective Date and
under which the financial and performance metrics will be converted, as agreed by the parties, to SHO-specific metrics. 
 (2) Establishing a 2013 Service Employee AIP for eligible Service Employees, as agreed to by the parties, and for which the goals, measures, executive officer target incentive percentages and assignments
also will be approved by the Compensation Committee of the SHO Board of Directors. 
 (ii) Service Provider or
one of its Affiliates shall establish a Long-Term Incentive Program for Associates Supporting Sears Hometown and Outlet Stores, Inc. (“Service Employee LTIP”), effective as of the Effective Date, for the purpose of: 

(1) Transferring the accruals attributable to the close out of the participation by Service Employees under the Sears
Holdings Corporation Long-Term Incentive Program (“SHLD LTIP”) for the 2010-2012 and 2011-2013 SHLD LTIPs, as agreed by the parties, from the SHLD LITP to the Service Employee LTIP; and 

(2) Establishing a 2012-2014 and/or 2013-2015 Service Employee LTIP for eligible Service Employees, as agreed to be the
parties and for which the goals, measures, executive officer target incentive percentages and assignments will be approved by the Compensation Committee of SHO’s Board of Directors. 

(iii) The Service Employee AIP and Service Employee LTIP and any incentive programs established and target incentives
awarded to Service Employees thereunder, that have not been paid by the Service Provider as of Conversion Date, shall be assigned to and assumed by SHO as of the Conversion Date, in accordance with Section 4.4. 

(d) SHO understands and acknowledges that the terms and conditions of employment for certain Service Employees will be
governed by various collective bargaining agreements that were previously negotiated between Service Provider and the collective bargaining agent for the selected Service Employees. Service Provider agrees that during the Transitional Service
Period, without the knowledge of SHO, it will not negotiate with the collective bargaining agent of the Service Employees covered on any items related to the interpretation, modification, extension, or alteration of any collective bargaining
agreements covering the Service Employees because Service Employees and any collective bargaining agreement will be assumed by SHO. Before implementing any changes, Service Provider will obtain SHO’s advice and consent. SHO acknowledges that
Service Provider has a duty to bargain in good faith under the National Labor Relations Act. To the extent that Service 

  
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Provider becomes liable for failing to bargain in good faith under the National Labor Relations Act as a result of SHO unreasonably failing to give its consent to any interpretation,
modification, extension, or alteration of any collective bargaining agreements covering the Service Employees, SHO shall indemnify Service Provider for any Losses relating to such failure to bargain in good faith. Service Provider understands and
acknowledges that as a condition of granting such consent, SHO in its sole discretion may require that a representative of SHO shall be involved and have authority in any such negotiations contemplated by this paragraph. 

(e) SHO understands and acknowledges that the terms and conditions of employment for certain Service Employees also are
subject to the following. 
 (i) A broad based severance plan sponsored by SHLD (“SHLD Severance
Plans”), and that to the extent any Service Employee is involuntarily terminated during the Transitional Service Period under circumstances entitling the Service Employee to severance pay and benefits, the Service Provider shall pay such
amounts to the Service Employee. SHO acknowledges and agrees that during the Transitional Service Period if a Service Employee becomes eligible for such pay and benefits, Service Provider is obligated to make such payments, and SHO shall reimburse
SRC for all such payments, in accordance with Appendix A. Service Provider agrees that during the Transitional Service Period, it will not increase the pay and benefits payable under the SHLD Severance Plans as of the Effective Date, affecting any
Service Employees, without first notifying SHO. 
 (ii) SHLD Employment Agreements, under which certain Service
Employees may be entitled to executive severance-related salary and benefit continuation, and SHO acknowledges and agrees that during the Transitional Service Period if a Service Employee becomes eligible for such pay and benefits, Service Provider
is obligated to make such payments, and SHO shall reimburse SRC for all such payments, in accordance with Appendix A. Service Provider agrees that during the Transitional Service Period, it will not increase the pay and benefits payable under an
SHLD Employment Agreement as of the Effective Date, without SHO’s advice and consent. 
 (iii) Any remaining
severance-related pay and benefits payable to a Service Employee as of and after the Conversion Date shall be assigned to and assumed by SHO as of the Conversion Date in accordance with Section 4.4. All SHLD Employment Agreements between
the Service Provider or SHLD and a Service Employee shall be assigned to and assumed by SHO as of the Conversion Date in accordance with Section 4.4 and thereafter be SHO Employment Agreements. 

(f) SHO understands and acknowledges that: 

(i) Any restricted stock award with respect to SHLD Common Stock including any cash right or award issued with respect to
such restricted stock award (“SHLD Restricted Stock Award”) that was granted under or pursuant to any equity compensation plan or arrangement of SHLD, that, as of the Effective Date, is held by any Service Employee, shall be
replaced by SHLD with an equivalent cash retention award 

  
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(“Cash Retention Award”) as of the Effective Date, which will continue to be subject to the same (remaining) vesting schedule as the SHLD Restricted Stock Award it replaces.
Equivalent value with respect to the forfeited portion of the SHLD Restricted Stock Award constituted by SHLD Common Stock will be determined based upon the market closing price of SHLD Common Stock on the day before the Effective Date during
regular trading hours. That closing price will be multiplied by the number of forfeited shares (rounded down to the nearest whole share) for each award to arrive at the dollar value of the Cash Retention Award. 

(ii) Any SHLD employee retention award payable in cash that, as of the Effective Date, was awarded to any Service
Employee, and cash retention awards awarded to any Service Employees by the Service Provider after the Effective Date and before the Conversion Date, with the advice and consent of SHO, (“Cash Retention Awards”) shall continue in
effect during the Transitional Service Period. 
 (iii) As of the Conversion Date, all outstanding Cash Retention
Awards, shall be assigned to and assumed by SHO in accordance with Section 4.4. 
 3.5 Compliance With Law.
Service Provider and/or its Affiliates shall be responsible for compliance with all legal obligations in respect of the Service Employees during the Transitional Service Period. Service Provider and/or its Affiliates shall bear sole responsibility
to respond to any questions and inquiries from federal, state, and local agencies and other Persons regarding payroll and employment data and history relating to the Service Employees concerning the Transitional Service Period. SHO agrees to
cooperate in all reasonable ways to assist Service Provider with responding to such inquires. 
 3.6 Inactive Service
Employees. The terms of this Agreement (including the obligations of SHO pursuant to Article VI) shall apply to any Service Employee who as of the Effective Date is on or who during the Transitional Service Period is placed on, an
approved leave of absence (whether paid or unpaid) from which such employee is permitted to return (in accordance with the Service Provider’s personnel policies or applicable Law (an “Inactive Service Employee”). Service
Provider shall deliver to SHO a list of the names of all Inactive Service Employees as of the Effective Date and as of the Conversion Date not later than five (5) business days prior to each such date. Until the earlier of the date on which he
or she is able to return to active employment status, and presents him or herself for work, and the Conversion Date, Service Provider and/or its Affiliates, as the case may be, shall (a) provide to such Inactive Service Employee (and each
beneficiary or eligible dependent thereof) coverage or eligibility for coverage under the applicable SHLD Benefit Plans, subject to the terms, conditions and continued availability of such plans, and (b) be solely responsible for all claims
relating to employee benefit obligations with respect to such Inactive Service Employee (and each beneficiary or eligible dependent thereof); provided, however, that SHO shall reimburse Service Provider for all costs associated with
all such Inactive Service Employees in accordance with Section 6.1 of this Agreement to the extent Service Provider is required to make any payments during the Transitional Service Period or thereafter under SHLD Benefit Plans in effect
as of the Effective Date. 

  
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 3.7 New Hires. 

(a) Upon ten (10) business days’ prior written request from SHO, Service Provider, directly or indirectly through one or more
of its Affiliates, shall offer employment in accordance with and subject to Service Provider’s hiring practices and procedures. The compensation level for such individual shall be subject to Service Provider’s discretion after
consideration of the level set forth by SHO in such written request to those individuals identified by SHO (“New Directed Hires”), and such New Directed Hires shall be employed by Service Provider to provide services to SHO and
shall be deemed Service Employees for purposes of this Agreement. 
 (b) In addition, Service Provider shall recruit, hire and
assign to provide services to SHO, such additional Service Employees, in accordance with and subject to Service Provider’s hiring practices and procedures, and in such positions and at compensation levels, as it shall determine to be
appropriate in accordance with budgets and staffing level requirements established by SHO (such persons referred to as “New SRC Hires” and together with the New Directed Hires, the “New Hires”). 

(c) During the Transitional Service Period SHO shall not directly or through an entity, other than the Service Provider, employ or retain
any employee, independent contractor, volunteer or intern. 
 3.8 Termination of Employees during Transitional Service
Period. All Service Employees (other than those subject to collective bargaining agreements) shall, at all times during the Transitional Service Period, remain at-will employees of Service Provider and/or its Affiliates (subject to any
provisions of applicable Employment Agreements). With respect to each Service Employee, SHO in its absolute discretion shall have the right at any time during the Transitional Service Period to issue to the Service Provider a written notice
informing the Service Provider that the Service Employee will no longer be required by SHO. Service Provider, in its sole discretion, may reassign such individual to another SHLD entity or it may terminate such individual’s employment. If the
employment of the employee is terminated, SHO shall reimburse the Service Provider for the cost of any severance as and when the severance is payable to the Service Employee. The Service Provider retains the right to dismiss any Service Employee,
and if severance becomes payable, SHO shall reimburse the Service Provider for the cost of such severance payments, as and when the severance payments are payable to the Service Employee. The provisions of Section 6.1, with regard to
payment of fees incurred with respect to a Service Employee during his or her period of employment during the Transitional Service Period, shall survive termination of this Agreement or termination of such employee. 

3.9 Certain Laws. The parties acknowledge that certain laws may create further rights and obligations with respect to the Service
Employees. Service Provider and SHO shall cooperate and take such further actions as may be reasonably necessary to give effect to the Separation Agreement and this Agreement to the extent possible without causing any liability to either party (and,
in particular, the wrongful discharge, failure to hire, and severance rules) under the applicable employment laws. Service Provider and SHO shall take all reasonable steps to maintain Service Provider as the exclusive common law employer during the
Transitional Service Period. 

  
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 ARTICLE IV 

CONVERSION DATE AND TRANSFER OF EMPLOYEES 
 4.1 Transfer of Service Employees. On the Conversion Date, all Service Employees and the applicable information related to Service Employees, shall be transferred from SRC to SHO or its designee in
accordance with applicable Law, and SHO or its designee will become the employer of each Service Employee (hereinafter referred to as “Transferred Employee”) who is employed by the Service Provider as a Service Employee on the
Conversion Date. The Service Provider and/or its Affiliates and SHO shall take reasonable steps to effect an orderly transfer of the Service Employees and the applicable employment-related data related to Service Employees (including but not limited
to salary, payroll, benefit coverage, and compensation history) to SHO, effective as of the Conversion Date (or such earlier date as may be agreed by the parties). SHO shall pay SRC reasonable charges for SRC’s services and expenses in
connection with the transfer of employees and the transfer of applicable information. In the event that SHO does not accept the transfer of any Service Employee, then SHO shall be responsible for, and shall reimburse SRC for, the costs and
liabilities arising out of or relating to SRC’s termination or retention of such employees. 
 4.2 Transition Plan.
At least every 45 days throughout the Transitional Service Period, SHO will provide Service Provider with current information and reasonable assistance concerning SHO’s implementation plans for transitioning all Service Employees to SHO or its
designees at or prior to the Conversion Date. Service Provider will provide SHO with such information as is reasonably necessary to assist SHO with such transition plan. 
 4.3 Notice Requirements. SHO shall bear any liability that may accrue to the Service Employees or to any unit of government under the Worker Adjustment and Retraining Notification Act of 1988, as
amended (the “WARN Act”), or any similar state Law, arising out of (1) any actions taken by SRC at SHO’s request or direction during the Transitional Service Period, (2) the conversion of SRC employees to SHO
employees, and (3) any action taken by SHO after the Conversion Date. 
 4.4 Assignment and Assumption of
Liabilities. Effective as of the Conversion Date, Service Provider hereby assigns and SHO hereby assumes, all of the following obligations and agreements with respect to the Service Employees, whether arising before or after the Conversion Date,
except as expressly otherwise provided in Section 4.5 (for purposes of this Agreement “Assumed Liabilities”): 
 (a) the existing collective bargaining agreements; 
 (b) all of the following
obligations of Service Provider with respect to the Service Employees (except to the extent such obligation arises from SRC’s breach of its obligations under this Agreement): (i) accrued but unpaid salaries, wages, overtime,
bonuses/incentives, including without limitation the Service Employee AIP and Service Employee LTIP and the related payroll taxes; (ii) liabilities for accrued but unpaid vacation, illness and other approved leaves; and (iii) liabilities
for insurance and pension contributions to multi-employer plans pursuant to the terms of any applicable collective bargaining agreement, and (iv) the COBRA liabilities described in Section 4.5(b); 

  
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 (c) all liabilities arising out of or relating to all SHO Employment Agreements, except to
the extent such liabilities arise from SRC’s breach of its responsibilities under this Agreement; 
 (d) all liabilities
arising out of or relating to any SHLD Severance Plan, as described in subsection 3.4(e)(i); 
 (e) all outstanding liabilities
arising out of or relating to any Service Employee Incentive Plan or Service Employee LTIP; 
 (f) all liabilities arising out
of or relating to any Cash Retention Award or Other Cash Retention Award, except to the extent such liabilities is arise from SRC’s breach of its responsibilities under this Agreement; 

(g) all other Liabilities with respect to the employment, service, termination of employment or termination of service of any Service
Employees, their respective Plan Payees, and other service providers (including any individual who is, or was, an independent contractor, temporary employee, temporary service worker, consultant, freelancer, agency employee, leased employee, on-call
worker, incidental worker, or nonpayroll worker of any member of SHO or in any other employment, non-employment, or retainer arrangement, or relationship with any member of SHO), in each case to the extent arising in connection with or as a result
of employment with or the performance of services for the SHO Business from and after the Conversion Date, and 
 (h) all other
SHO Employee Liabilities. 
 Pursuant to such assignment and assumption agreements, SHO shall be solely responsible for all the Assumed
Liabilities, and SRC shall not retain any Assumed Liabilities. 
 4.5 Cessation of Participation and Allocation of
Liabilities With Respect to Benefit Plans. 
 (a) Except as otherwise specifically provided in this Agreement, as of the
Conversion Date, each Transferred Employee (and each such individual’s Plan Payees) shall cease participation in all SHLD Benefit Plans (subject to COBRA) and, as of such time, SHO shall or shall cause another member of the SHO Group to have in
effect or make available such SHO Benefit Plans as are necessary to comply with its obligations pursuant to this Agreement. 

(b) On and after the Conversion Date, SHO and the SHO Group shall assume all requirements under COBRA with respect to all Service
Employees and their respective Plan Payees who, immediately prior to the Effective Date, were participating in, or entitled to present or future benefits under the SHLD Welfare Plans pursuant to COBRA or who have a COBRA qualifying event (as defined
in Section 4980B of the Code) on or after the Effective Date. 

  
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 (c) Pension Benefits. 

(i) As of the Conversion Date, each Service Employee who is a participant in the Sears Holdings Pension Plan (the
“SHLD Pension Plan”) (which is a frozen defined benefit pension plan) will cease to actively participate in the SHLD Pension Plan and will be treated as a terminated participant or retiree, as applicable, under the SHLD Pension
Plan. No additional service will accrue under the SHLD Pension Plan after such date for any purpose (e.g., eligibility or vesting) until or unless such Transferred Employee again becomes a SHLD employee. Notwithstanding any other provision contained
herein, neither SHO nor its Affiliates will have any Liability with respect to the SHLD Pension Plan for any Service Employee, and their respective Plan Payees, except as required by Law. 

(ii) As of the Conversion Date, each Service Employee who is a participant in the Sears, Roebuck and Co.’s
Supplemental Retirement Income Plan (the “SHLD SRIP”) (which is a frozen, non-qualified deferred compensation plan that supplements the pension benefit under the SHLD Pension Plan for certain participants of the SHLD Pension Plan)
will cease to actively participate in the SHLD SRIP and will be treated as a terminated participant or retiree, as applicable, under the SHLD SRIP. No additional service will accrue under the SHLD SRIP after such date for any purpose (e.g.,
eligibility or vesting). Notwithstanding any other provision contained herein, neither SHO nor any SHO Affiliate will have any Liability with respect to the SHLD SRIP for any Service Employee, and their respective Plan Payees, except as required by
Law. 
 (iii) As soon as practicable after the Conversion Date, the recordkeeper for the SHLD Pension Plan and
SHLD SRIP will inform the SHO Employees who are participants in the SHLD Pension Plan and SHLD SRIP of their rights thereunder; and SHLD will process distributions in accordance with the terms of the SHLD Pension Plan and SHLD SRIP, as applicable.

 (d) 401(k) Plans. 
 (i) As of the Conversion Date, each Transferred Employee who is a participant in a SHLD DC Plan will cease to actively participate in such SHLD DC Plan and, unless the parties agree prior to the
Conversion Date to a trust-to-trust transfer between the applicable SHLD DC and a new SHO-sponsored tax-qualified defined contribution plan, will be treated as a terminated participant under the SHLD DC Plan, and no additional service will accrue
under the SHLD DC Plan after such date for any purpose (e.g., eligibility or vesting) until or unless such Transferred Employee again becomes an SHLD employee. 
 (ii) As soon as practicable prior to or after the Conversion Date, Transferred employees will be informed of their options with respect to their account balances under the SHLD DC Plans. 

(e) Employee Stock Purchase Plan. All Transferred Employees shall cease active participation in the Sears Holdings Corporation
Associate Stock Purchase Plan (the “SHLD Associate Stock Purchase Plan”) with respect to offering periods ending after the Conversion Date. For the avoidance of doubt, the Service Employees who participated in the SHLD

  
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Associate Stock Purchase Plan prior to the Conversion Date shall continue to participate in any offering period under SHLD Associate Stock Purchase Plan ending prior to the Conversion Date
(subject to any action taken by any such Service Employee who is participating in this plan to terminate such participation prior to the Conversion Date). 
 4.6 No Duplication or Acceleration of Benefits. Notwithstanding anything to the contrary in this Agreement or the Separation Agreement, no Service Employee shall receive benefits under a SHLD
Benefit Plan that duplicate benefits provided by the corresponding SHO Benefit Plan. Furthermore, unless expressly provided for in this Agreement or the Separation Agreement or required by applicable Law, no provision in this Agreement shall be
construed to create any right to accelerate vesting or entitlements to any compensation or Benefit Plan on the part of any Service Employee or former Service Employee, except as specifically provided for under SHO Employment Agreement or Cash
Retention Award or Other Cash Retention Award. 
 4.7 Service Crediting under SHO Benefit Plans. 

(a) General. From and after the Conversion Date, SHO shall, and shall cause its affiliates, and successors to, provide credit
under the SHO Benefit Plans to Transferred Employees for their service with SHO and its predecessors and affiliates (including but not limited to service for the SHO Business, the SHO Group, Service Provider and SHLD) for all purposes to the same
extent that such service was recognized under the relevant SHLD Benefit Plans prior to the Conversion Date. Service shall be credited under SHO Benefit Plans for all purposes, including but not limited to, determining eligibility to participate,
vesting, and eligibility to retire; provided, however, that service shall not be recognized to the extent that such recognition would result in the duplication of benefits. 

(b) Noncontinuous Employees. If a former employee of the SHO Group or SHLD Group (such Group, the “Original
Group”) becomes employed by a member of the other Group (such Group, the “Transferee Group”) without having been continuously employed by a member of the Original Group from the Effective Date through the date such former
employee commences active employment with a member of the Transferee Group, then the Benefits Plans of the Transferee Group will not recognize for any purpose such individual’s service with the Original Group before or after the Rights Closing
Effective Time, except to the extent required by Law or the terms of any such Benefit Plan. If a former employee is rehired by his or her Original Group then all such individual’s service shall be recognized by the Benefit Plans of the Original
Group to the extent required by Law the terms of any such Benefit Plan. 
 4.8 Assignment of Employment Agreements. All
SHO Employment Agreements will be assigned to and assumed by SHO, pursuant to Section 4.4. SRC will provide copies of all SHO Employment Agreements and other assumed documents to SHO. SRC shall use reasonable efforts to transfer or cause
to be transferred to SHO documentation related to such SHO Employment Agreements, including offer letters, agreements and other instruments reasonably required for the maintenance and administration of the SHO Employment Agreements. 

4.9 Administration of SHO Benefit Plans. As of and after the Conversion Date, SHO or its delegate shall be exclusively responsible
for administering each SHO Benefit Plan and each SHO Employment Agreement in accordance with its terms and for all obligations and 

  
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liabilities with respect to the SHO Employment Agreements and all benefits owed to individuals who are parties to the SHO Employment Agreements, whether entered into before, on or after the
Conversion Date. SHO shall not assume sponsorship, maintenance or administration of any Benefit Plan or Employment Agreement that is not a SHO Benefit Plan or a SHO Employment Agreement or receive or assume any assets or liabilities in connection
with any such Benefit Plan or Employment Agreement. Further, SHO agrees to enforce the non-competition provision and related definition of “Sears Competitor” under any Employment Agreement assumed by SHO as of the Conversion Date, with
respect to any termination occurring after the Effective Date with protective covenants still in effect after the Conversion Date and during the term of the Services Agreement. 

4.10 Plan-Related Litigation. Notwithstanding anything herein to the contrary, the management of the defense of all litigation
related to the SHLD Benefit Plans, the SHLD Employment Agreements, the SHO Benefit Plans and the SHO Employment Agreements shall be governed by the Separation Agreement, and this Agreement shall govern the allocation of Liabilities related to any
such litigation. 
 4.11 Cooperation. SRC and SHO shall, and shall cause their respective Affiliates to use reasonable
best efforts to cooperate with respect to any employee compensation or benefits matters that SRC or SHO, as applicable, reasonably determines require the cooperation of both SRC and SHO in order to accomplish the objectives of this Agreement.
Without limiting the generality of the preceding sentence, (a) SRC and SHO shall cooperate in coordinating each of their respective payroll systems in connection with the transfers of Service Employees to SHO payroll as of the Conversion Date,
and (b) SRC shall transfer records to SHO as reasonably necessary for the proper administration of the participation of Service Employees in any SHO Benefit Plan, to the extent such records are in SRC’s possession (including without
limitation, for purposes of crediting service in accordance with this Article III). The obligations of SHO and SRC to cooperate pursuant to this Section 4.11 shall remain in effect until all audits of all Benefit Plans and certification of
goals and payments under a Service Provider AIP or Service Provider LTIP, with respect to which the other party may have information, have been completed or the applicable statute of limitations with respect to such audits has expired. 

ARTICLE V 
 ADMINISTRATIVE SERVICES 
 5.1 Administrative Services Period.
The Administrative Services Period shall be the period commencing on the Conversion Date, and continuing until 5:00 p.m. (Central Time) on the last day of the sixty-sixth month following the Effective Date, subject to termination in accordance with
Section 7.1. 
 5.2 Administrative Services. During the Administrative Services Period, SRC (or its
Subsidiary or Affiliate) will provide to SHO certain administrative and business process outsourcing services, as described in any accompanying Statement of Work(s) (such services referred to as the “Administrative Services”),
either itself or by third parties. The Administrative Services may include payroll administration services, time and attendance, human resources administration, health and safety administration, workers compensation administration, and other

  
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human resources-related services. SRC may provide the Administrative Services directly or through a designee, or may subcontract out all or a portion of the Administrative Services. Except as
otherwise set forth in a particular SOW, nothing in this Agreement shall give SRC an exclusive right to provide, or require SHO to purchase exclusively from SRC, any administrative services. 

5.3 Use of Services. SHO agrees to the following with regard to its use of the Services: 

(a) SHO, and not SRC, will be solely responsible for all decisions relating to the relationship between SHO and SHO employees, including
Transferred Employees. 
 (b) SHO will be responsible for the manner in which it uses Administrative Services, including the
manner in which it interprets and acts upon any guidance or recommendation provided by SRC. 
 (c) SHO will be responsible for
the consequences of any instruction or request SHO may give to SRC. 
 (d) SHO shall use Administrative Services in accordance
with the terms and conditions of this Agreement as well as any policies established by SRC from time to time (provided such policies shall not limit or otherwise modify the terms of this Agreement, including the Parties rights or obligations
hereunder). 
 (e) SHO shall not resell, directly or indirectly, the Administrative Services or any portion thereof to any party
other than SHO, its Subsidiaries or Affiliates. 
 5.4 SOWs. All SOWs must be in writing and signed by both parties to be
effective. In the event of a conflict among the terms of the various documents that at any given time constitute this Agreement, the following order of precedence shall apply: (a) any Amendment thereto (as defined below) shall control over any
conflicting terms in the document that it is amending (e.g., a SOW or this Agreement); and (b) the Agreement shall control over any conflicting terms of an SOW, unless the SOW specifically references conflicting terms of this Agreement that the
SOW is changing. 
 5.5 Inherent Services. If any services, functions, tasks, activities, or other responsibilities not
specifically described in any SOW but which are reasonably required for the proper performance and provision of the Administrative Services described in any SOW to the same extent and in the same manner as if specifically described herein
(collectively, “Inherent Services”), such services, functions, tasks, activities, and responsibilities shall be deemed to be included within the scope of the Administrative Services to be provided hereunder, as if such services,
functions, tasks, activities, and responsibilities were specifically described in this Agreement or a SOW. 
 5.6 Termination
of an Individual Service for Convenience by SHO. Subject to the next sentence, SHO, upon 60-day’s prior written notice to SRC, may terminate for SHO’s convenience any individual Administrative Service at the end of a SHO fiscal month.
SHO may not terminate an individual Administrative Service if the termination would adversely affect 

  
 18 

 
SRC’s ability to perform another Administrative Service. In the event that any individual Administrative Service is terminated, the Administrative Fee shall be adjusted in accordance with a
good faith estimate by Service Provider. SHO agrees to reimburse Service Provider for any costs incurred in the termination of such a service at the request of SHO 
 ARTICLE VI 
 PAYMENTS BY SHO 

6.1 Fee for Transitional Employee Services. In consideration for the Transitional Employee Services, SHO shall pay to Service
Provider the fees and cost reimbursements set forth on Appendix A (collectively, the “Transitional Service Fee”), in the manner set forth on Appendix A. The Transitional Service Fee will not include amounts payable
under the Services Agreement. The payment of the Transitional Service Fee shall be made by wire transfer to an account to be designated by Service Provider, at such times as shall be agreed between the Parties. The payment of the Transitional
Service Fee shall not be subject to any right of setoff. 
 6.2 Fee for Administrative Services. In consideration for the
Administrative Services, SHO shall pay to Service Provider the fees and cost reimbursements set forth on Appendix B (collectively, the “Administrative Service Fee”), in the manner set forth on Appendix B. The
Administrative Service Fee will not include amounts payable under the Services Agreement. The payment of the Administrative Service Fee shall be made by wire transfer to an account to be designated by Service Provider, at such times as shall be
agreed between the Parties. The payment of the Administrative Service Fee shall not be subject to any right of setoff. 
 6.3
Audit Rights. SHO shall have the right, from time to time upon reasonable prior notice and during normal business hours, to inspect SRC’s records as reasonably necessary to verify the calculation of costs and fees payable by SHO to SRC
under this Agreement, including third party vendor statements and accounts. 
 6.4 Recalculation of Transition Service
Fees. The Parties acknowledge and agree that the Transitional Service Fee was calculated based on the expectation that the fee will compensate SRC for its costs related to the provision of Employee Services under this Agreement (including wages,
benefits, and insurance, but excluding costs of Claims covered by the indemnification provisions of this Agreement, costs of termination or severance which are otherwise to be reimbursed by SHO, and costs of additional services) plus the profit
margin described on Appendices A and B. If after the date hereof SRC in good faith determines that the Transitional Service Fee was miscalculated, or did not fully take into account all costs (other than the excluded costs referred to in the
preceding sentence), or otherwise does not compensate SRC for such costs plus such profit margin, then upon SRC’s demonstration of such facts, the Parties shall in good faith negotiate an appropriate adjustment to the Transitional Service Fee.
In addition, if there is a change in legislation, adoption of a regulation or other matters that result in an increase or decrease in the cost or amount of services from those currently being projected by SRC, then upon SRC’s demonstration of
such facts, the Parties shall in good faith negotiate an appropriate adjustment to the Transitional Service Fee. 

  
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 6.5 Recalculation of Administrative Service Fees. The Parties acknowledge and agree
that the Administrative Service Fee was calculated based on the expectation that the fee will compensate SRC for its costs related to the provision of Administrative Services under this Agreement (including wages, benefits, and insurance, but
excluding costs of Claims covered by the indemnification provisions of this Agreement, costs of termination or severance which are otherwise to be reimbursed by SHO, and costs of additional services) plus the profit margin described on Appendices A
and B. If after the date hereof SRC in good faith determines that the Administrative Services Fee was miscalculated, or did not fully take into account all costs (other than the excluded costs referred to in the preceding sentence), or otherwise
does not compensate SRC for such costs plus such profit margin, then upon SRC’s demonstration of such facts, the Parties shall in good faith negotiate an appropriate adjustment to the Administrative Service Fee. In addition, if there is a
change in legislation, adoption of a regulation or other matters that result in an increase or decrease in the cost or amount of services from those currently being projected by SRC, then upon SRC’s demonstration of such facts, the Parties
shall in good faith negotiate an appropriate adjustment to the Administrative Service Fee. 
 6.6 Covered Administrative
Services. The Administrative Services Fee shall be for the Administrative Services which shall be described in a SOW/service plan that will be developed by SRC with input from SHO. In the event that SHO desires SRC to provide additional or more
comprehensive services, the parties shall negotiate with respect to the provision of such services and the fees therefore. 

6.7 Expenses. In addition to the Transitional Service Fee and the Administrative Service Fee (collectively “Fees”), SHO
will reimburse SRC for (i) COBRA expenses advanced by SRC with respect to SHO’s and its Affiliates’ employees who incur a qualifying event (as defined under COBRA) prior to the Effective Date, (ii) COBRA expenses advanced by SRC
with respect to SHO’s and its subsidiaries’ employees who incur a qualifying event (as defined under COBRA) on or after the Effective Date until such COBRA liability is transferred to a SHO-sponsored group health plan on or after the
Conversion Date, and (iii) all other reasonable out-of-pocket expenses actually incurred in its performance of the Employee Services or Administrative Services, that are not included in the Fees (“Expenses”). To the extent
reasonably practicable, SRC will provide SHO with notice of such Expenses prior to incurring them. SHO shall be responsible for the costs and liabilities arising out of or relating to the termination of such employees. SHO shall reimburse SRC for or
will pay directly any or all third-party contractors providing services to or for the benefit of SHO. 
 6.8 Additional
Reimbursements. The Parties agree that during the Transitional Services Period, SRC will maintain the workers compensation insurance with respect to the Service Employees, and after the Conversion Date, SHO will maintain such insurance. In the
event that SRC is unable to recoup or obtain a refund of excess premiums from its insurance carrier (after diligently seeking to do so), with respect to workers compensation coverage for the Service Employees that extends beyond the Conversion Date,
the SHO shall reimburse SRC for such excess premiums. 
 6.9 Taxes; Insurance. Fees do not include applicable taxes. SHO
will be responsible for the payment of all taxes payable in connection with the Employee Services or Administrative Services including sales, use, excise, value-added, business, service, goods and services,

  
 20 

 
consumption, withholding, and other similar taxes or duties, including taxes incurred on transactions between and among SRC, its Affiliates, and third-party contractors, along with any related
interest and penalties (“Transaction Taxes”). SHO will reimburse SRC for any deficiency relating to Transaction Taxes that are SHO’s responsibility under this Agreement. Notwithstanding anything in this Section 6.9 to the
contrary, each Party will be responsible for its own income and franchise taxes, employment taxes, and property taxes. Each Party will provide to the other Party any resale exemption, multiple points of use certificates, treaty certification and
other exemption information reasonably requested by the other Party. 
 ARTICLE VII 

TERMINATION 
 7.1 Termination of this Agreement. 
 (a) Subject to the next sentence, SHO
or Service Provider may terminate this Agreement in the event of a material breach of this Agreement by the other Party if the breach is curable by the breaching Party and the breaching Party fails to cure the breach within thirty (30) days
following its receipt of written notice of the breach from the non-breaching Party. If the breach is not curable by the breaching Party, the non-breaching Party may immediately terminate this Agreement following the non-breaching Party’s
delivery of notice to the breaching Party. 
 (b) SHO or Service Provider may terminate this Agreement (whichever party is
entitled to terminate, the “Terminating Party”) effective immediately upon thirty (30)-days’ advance written notice to the other party if (i) the Terminating Party or any of its Affiliates terminates the Separation Agreement as a
result of a material breach of, or a material default by, the other party or its Affiliates of their obligations in the Separation Agreement, (ii) the Terminating Party or any of its Affiliates terminates a License Agreement in accordance with
its terms as a result of a material breach of, or a material default by, the other party or its Affiliates of their obligations in the License Agreement, (iii) the Terminating Party or any of its Affiliates terminates the Merchandising
Agreement in accordance with its terms as a result of a material breach of, or a material default by, the other party or its Affiliates of their obligations in the Merchandising Agreement. or (iv) the Terminating Party or any of its Affiliates
terminates the Shop Your Way Rewards Retail Establishment Agreement dated August 8, 2012 between SHO and Service Provider (the “SYW Agreement”) in accordance with its terms as a result of a material breach of, or a material default
by, the other party or its Affiliates of their obligations in the SYW Agreement. “License Agreement” means each of the following, each dated August 8, 2012: the Store License Agreement between Hometown and SRC; the Store License
Agreement between Sears Home Appliance Showrooms, LLC and SRC; the Store License Agreement between Outlet and SRC; and the Trademark License Agreement between SHO and SRC. 
 (c) Service Provider may terminate this Agreement if a Stockholding Change (as defined in the Services Agreement) occurs. 
 (d) SHO may terminate this Agreement at any time prior to the Conversion Date upon at least six (6) months prior written notice to SRC (provided such termination date shall be at the end of a payroll
period). SHO and SRC each may terminate this Agreement after the Conversion Date, upon at least one years prior written notice to the other delivered after the Conversion Date (provided such termination date shall be at the end of a payroll
period).

  
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 7.2 Effect of Termination. Upon expiration or termination of this Agreement on or
prior to the Conversion Date, to the extent that all Service Employees are not transferred to SHO in accordance with Article III, then Service Provider may at its option terminate the employment of such employees, and SHO shall reimburse the Service
Provider for the cost of and liabilities arising from such termination, including severance payments, as and when the same are payable to such employees. 
 ARTICLE VIII 
 INDEMNIFICATION AND INSURANCE 

8.1 Indemnification by SHO. SHO will defend, indemnify, and hold harmless Service Provider and its Affiliates and their respective
Representatives, from and against any and all costs, liabilities, losses, penalties, expenses and damages (including reasonable attorneys’ fees) of every kind and nature (“Losses”) arising from or relating to third-party
claims, demands, litigation, and suits related to or arising out of the Service Employees, the employment or termination of the Service Employees, or this Agreement (including the performance or nonperformance of services under this Agreement)
(together “SHO Claims”), except to the extent that such SHO Claims are caused by: (i) a failure by Service Provider to comply with reasonable instructions from SHO; or (ii) any grossly negligent act or omission, willful
misconduct, or willful failure of Service Provider, its Affiliates, or their respective Representatives in performance of this Agreement. Without limitation, SHO Claims shall include any claims, demands, litigation and suits arising under or
relating to out, or out of, any labor, employment, benefit or other matter relating to any Service Employee or any former Service Employee or any alleged or claimed Service Employee, any claims relating to whether an individual is or is not
considered a Service Employee, and any claims with respect to hiring, failure to hire, firing, promoting, disciplining, discrimination, harassment, classification, or other matter relating to any Service Employee or any former Service Employee,
alleged or claimed. 
 8.2 Indemnification by Service Provider. Service Provider will defend, indemnify, and hold
harmless SHO and its Affiliates, and their respective Representatives, from and against any and all costs, liabilities, losses, penalties, expenses and damages (including reasonable attorneys’ fees) of every kind and nature arising from
third-party claims, demands, litigation, and suits, that: (a) relate to bodily injury or death of any person or damage to real and/or tangible personal property directly caused by the gross negligence or willful misconduct of Service Provider
or its Affiliates during the performance of the Services, or (b) relate to the infringement of any copyright or trade secret by an Asset owned by Service Provider or its Affiliates and used by Service Provider in the performance of the Services
(together, “SP Claims”). Notwithstanding the obligations set forth above in this Section 8.2, Service Provider will not defend or indemnify SHO, its Affiliates, or their respective Representatives to the extent that such
SP Claims are caused by: (i) a breach of any provision of this Agreement by SHO; (ii) any grossly negligent act or omission, willful misconduct, or willful failure of SHO, its Affiliates, or their respective Representatives in performance
of this Agreement; or (iii) with respect to infringement claims: (A) SHO’s use of the Asset in combination with any product or information not provided by 

  
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Service Provider; (B) SHO’s distribution, marketing or use for the benefit of third parties of the Asset; (C) SHO’s use of the Asset other than as contemplated by this
Agreement; or (D) information, direction, specification or materials provided by or on behalf of SHO. SHO Claims and SP Claims are each individually referred to as a “Claim.” 

8.3 Procedure. In the event of a Claim, the indemnified Party will give the indemnifying Party as well as the SRC Legal Department
prompt notice in writing of the Claim; but the failure to provide such notice will not release the indemnifying Party from any of its obligations under this Article except to the extent the indemnifying Party is materially prejudiced by such
failure. Upon receipt of such notice the indemnifying Party may assume the defense of the Claim, and if it does assume it will be entitled to control the defense of the Claim at its expense and through counsel of its choice, by giving notice of its
intention to do so to the indemnified Party within twenty (20) business days of the receipt of such notice from the indemnified Party. Notwithstanding anything herein to the contrary, during the Transitional Services Period, SRC shall have the
sole right to control the investigation and defense of all Claims, whether it is the indemnifying Party (at its expense) or the indemnified Party (at the expense of the indemnifying Party). The indemnifying Party will not, without the prior written
consent of the indemnified Party, (i) settle or compromise any Claim or consent to the entry of any judgment that does not include as an unconditional term thereof the delivery by the claimant or plaintiff to the indemnified Party of a written
release from all liability in respect of the Claim or (ii) settle or compromise any Claim in any manner that may adversely affect the Indemnified Party other than as a result of money damages or other monetary payments that are indemnified
hereunder. The indemnified Party will have the right at its own cost and expense to employ separate counsel and participate in the defense of any Claim. 
 8.4 Limitation of Liability. Except for (a) each Party’s indemnity and defense obligations as set forth in Sections 8.1, 8.2, and 8.3 and other liabilities to
unaffiliated third parties, and (b) a party’s breach of its confidentiality obligations, in no event will either Party be liable for any consequential, incidental, indirect, special, or punitive damages, losses or expenses (including
business interruption, lost business, lost profits, or lost savings) even if it has been advised of their possible existence. The sole liability of Service Provider and its Affiliates for any and all claims in any manner related to this Agreement
will be the payment of direct damages, not to exceed (for all claims in the aggregate) the Fees received by Service Provider under this Agreement. Notwithstanding anything in this Agreement to the contrary, Service Provider will not be liable for
damages caused by Service Provider’s third-party contractors; however, to the extent permitted in a TP Agreement, Service Provider will pass through to SHO applicable rights and remedies under the respective TP Agreement. 

8.5 Performance. SERVICE PROVIDER MAKES NO REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR IMPLIED, THAT THE EMPLOYEE SERVICES
PROVIDED HEREUNDER ARE OR WILL BE ADEQUATE OR SUFFICIENT (AS TO QUANTITY, QUALITY OR TYPE) TO MEET THE NEEDS (INCLUDING ANY SPECIFICALLY IDENTIFIED NEEDS) OR OBJECTIVES OF SHO WITH RESPECT TO THE CONDUCT OF THE BUSINESS. EXCEPT AS SET FORTH IN THIS
AGREEMENT, THE EMPLOYEE SERVICES ARE PROVIDED ON AN “AS-IS” BASIS. 

  
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 8.6 Insurance. SHO warrants and represents to SRC that it has in force at the
Effective Date of this Agreement, and will maintain during this Agreement, the following insurance coverage and minimum limits. Such coverage shall be provided at SHO’s sole cost and expense and shall and purchased from companies having a
rating of A- VII or better in the current Best’s Insurance Reports published by A.M. Best Company 
 (a)
Commercial General Liability, with coverage including, but not limited to, premises/operations, contractual, personal and advertising injury, and products/completed operations liabilities, with limits of at least $5,000,000 per occurrence for bodily
injury and property damage combined. Limits of liability requirements may be satisfied by a combination of Commercial General Liability and Umbrella Excess Liability policies 
 (b) Automobile Liability. Comprehensive automobile liability insurance covering all owned, hired, and non-owned SHO vehicles, with minimum limits of One Million and No/100 Dollars ($1,000,000.00) combined
single limit per occurrence for bodily injury and property damage liability. SHO warrants that all persons operating SHO’s vehicles are duly licensed and covered under the SHO’s automobile liability insurance policy without exception. The
policy shall be endorsed to include Service Employees who shall be operating motor vehicles for SHO. 
 (c) Workers’
compensation insurance coverage on any of its employees that are not part of the Service Employees, individual owners who work in the business and not included in Service Employees, and any SHO subcontractor employees or independent contractors.
Alternatively, with respect to any SHO subcontractors or independent contractors, SHO shall require its subcontractors and independent contractors to maintain workers’ compensation insurance coverage if SHO has not obtained workers’
compensation coverage for SHO subcontractors or independent contractors. SHO shall keep certificates of insurance documenting such coverage on file and provide them to SRC upon request. SHO agrees to reimburse and indemnify SRC for any costs or
expenses incurred by SRC as a result of SHO’s breach of this provision or the failure of any subcontractor or independent contractor of SHO to maintain workers’ compensation insurance coverage. 

(d) All SHO insurance policies required herein shall provide for thirty (30) days written notice to SRC prior to cancellation or
non-renewal of the coverage. All such insurance policies shall be endorsed to waive any and all rights of subrogation against SRC, its parent company, and its subsidiaries and affiliates. SRC, its parent company and its subsidiaries and affiliates
shall be named as additional insureds, with the standard “separation of Insureds” provision or an endorsement for cross-liability coverage. The policies shall be endorsed to state that coverage is primary, and non-contributory with other
available coverage, both at no additional cost or expense to SRC 
 (e) SHO shall submit certificates of insurance to SRC
evidencing all insurance required pursuant to this Appendix within thirty (30) days of execution of this Agreement and at any renewal or replacement of such policies. 
 8.7 SRC shall maintain workers’ compensation insurance coverage on the Service Employees during the Transitional Service Period, and SHO shall maintain such coverage during the Administrative
Services Period. Each Party shall keep certificates of insurance documenting such respective coverage on file and provide them to the other Party upon request. 

  
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 ARTICLE IX 

CONFIDENTIAL INFORMATION, WORK PRODUCT, AND INFORMATION SECURITY 

9.1 Confidential Information. 
 (a) “Confidential Information” means all non-public information received by a Party, its Affiliates, and their respective Representatives (together, the “Receiving Party”) relating to
the other Party, its Affiliates, and their respective Representatives (together, the “Disclosing Party”), in connection with this Agreement, including information concerning Service Employees, pricing, service history, customer information
and lists (except to the extent that these may be shared under privacy laws and regulations), employee information, sourcing and third party contractor information, costs, product specifications and methods of operations, business plans, strategies,
financial information, information technology information, and other proprietary information, regardless of the manner or medium in which it is furnished to or otherwise obtained by the Receiving Party; provided, that the term
“Confidential Information” does not include information which (i) is or becomes generally available to the public other than as a result of a disclosure by the Receiving Party in violation of this Agreement, (ii) is or was
available to the Receiving Party on a non-confidential basis prior to its disclosure to the Receiving Party by the Disclosing Party, provided that such information did not become available to the Receiving Party, from a Person who, to the
Receiving Party’s knowledge and at the time of receipt by the Receiving Party of the relevant information, is bound by a confidentiality agreement with respect to such information with (or other confidentiality obligation to) the Disclosing
Party or another Person or (iii) was or becomes available to the Receiving Party on a non-confidential basis from a source other than the Disclosing Party, provided that such source is or was (at the time of receipt of the relevant
information) not, to the Receiving Party’s knowledge, bound by a confidentiality agreement with respect to such information with (or other confidentiality obligation to) the Disclosing Party or another Person. 

(b) The Receiving Party will not disclose, and will cause its Affiliates and Representatives not to disclose, any Confidential
Information of the Disclosing Party to any Person; provided, however, that each Party will be responsible in any event for the acts or omissions of its Affiliates and Representatives to whom it discloses the Disclosing Party’s
Confidential Information; and provided, further, that Confidential Information may be disclosed only: 

(i) to the Receiving Party’s Affiliates and Representatives in the normal course of performance of Receiving
Party’s obligations under this Agreement; 
 (ii) by the Receiving Party to the extent required by
applicable Law, rule or regulation (including complying with any oral or written questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process to which such Party is subject), with prior
notice, if legally permitted, to the Disclosing Party; 

  
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 (iii) by the Receiving Party, if such Person determines in good faith that
such disclosure is required in order to comply with such Person’s obligations under the federal or state securities laws, rules or regulations, the rules of the NASD or the Nasdaq Stock Market or any other similar body), with prior notice, if
legally permitted, to the Disclosing Party; or 
 (iv) with the prior written consent of the Disclosing Party.

 (c) Nothing contained herein will prevent the use (subject, to the extent possible, to a protective order) of Confidential
Information in connection with the assertion or defense of any claim by or against the other Party. 
 (d) Each Party
acknowledges that if it breaches this Agreement, the other Party may be irreparably and immediately harmed and may not be made whole by monetary damages. Accordingly, the Disclosing Party, in addition to any other remedy to which it may be entitled
in law or equity, is entitled to pursue any injunction or injunctions to prevent breaches of this Agreement and to compel specific performance of this Agreement, without the need for proof of actual damages. 

(e) Third-Party Contractor Confidentiality Terms. If SRC’s agreement with an unaffiliated third-party contractor performing services
hereunder (“TP Agreement”) includes confidentiality terms that are less restrictive than this Agreement (i.e., the TP Agreement permits broader sharing or disclosure of confidential information than permitted in this Agreement), then,
notwithstanding anything in this Agreement to the contrary, the less-restrictive confidentiality terms of the TP Agreement will (i) control over this Agreement and (ii) govern SRC’s rights and obligations in this Agreement regarding
the sharing of SHO Confidential Information with the unaffiliated third-party contractor, but in each circumstance only to the extent necessary to permit the unaffiliated third-party contractor to perform the services. 

9.2 Inventions; Work Product. The Parties acknowledge that for the purpose of establishing rights to any and all inventions,
including but not limited to, improvements, designs, original, works of authorship, formulas, processes, compositions of matter, computer software programs, databases, mask works and trade secrets (“Inventions”) made or conceived by such
Service Employee, (a) during the Transitional Service Period, all Service Employees will be deemed employees of SRC, and (b) after the Conversion Date, all Service Employees will be deemed employees of SHO. SHO and Service Provider further
acknowledge and agree that all rights to any patent, patent application, copyright, mask works, trade secrets, or intellectual property or any interest in any Invention shall be unaffected by this Agreement. Nothing about this Agreement shall create
in Service Provider any such rights or interests in any Invention now or in the future. 
 9.3 IT Information Security.
SHO, to the extent it uses information technology systems not provided by Sears Holdings Management Corporation, and SRC will comply with the provisions of SRC’s IT information security policy, as the same may be revised by SRC and provided to
SHO from time to time, with respect to their activities under this Agreement, including but not limited to data relating to Service Employees 

  
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 ARTICLE X 

MISCELLANEOUS 
 10.1 Independent Contractor Relationship. 
 (a) The provision of the
Employee Services shall not be construed to create an employer/employee or agency relationship between SHO and Service Provider. 
 (b) Service Provider and/or its Affiliates, as the case may be, acknowledge that for the Transitional Service Period, SHO and/or its Affiliates shall have no responsibility for the provision of
compensation or benefits to any Service Employee. Each party hereto agrees that the employees, agents and representatives of one party shall not be considered, and shall not hold themselves out as, employees, agents, representatives or partners of
the other party. Except as otherwise specifically provided herein, neither party shall have, nor shall hold itself out as having, any right, power or authority to create any obligation, express or implied, on behalf of the other party. 

10.2 Expenses. Except as otherwise provided herein, each Party will bear its own expenses with respect to the transactions
contemplated by this Agreement. 
 10.3 Waiver of Compliance. Any failure of a Party to comply with any obligation,
covenant, agreement or condition in this Agreement may be waived in writing by the other Party, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition will not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure. 
 10.4 Amendment. This Agreement may not be amended except by
a written amendment signed by each Party. 
 10.5 Assignment. SHO may not assign its rights or obligations under this
Agreement without the prior written consent of Service Provider, to be withheld in Service Provider’s absolute discretion. A Stockholding Change will constitute an assignment of this Agreement by SHO for which assignment Service Provider’s
prior written consent will be required. Service Provider may freely assign its rights and obligations under this Agreement to any of its Affiliates without the prior consent of SHO; provided, that any such assignment will not relieve Service
Provider of its obligations hereunder. This Agreement will be binding on, and will inure to the benefit of, the successors and assigns of the Parties. 

  
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 10.6 Notices. All notices, requests, demands, waivers and other communications
required or permitted to be given under this Agreement must be in writing and will be deemed to have been duly given (a) when delivered by hand, (b) three (3) business days after it is mailed, certified or registered mail, return
receipt requested, with postage prepaid, (c) on the same business day when sent by facsimile if the transmission is completed before 5:00 p.m. recipient’s time, or one business day after the facsimile is sent, if the transmission is
completed on or after 5:00 p.m. recipient’s time or (d) one (1) business day after it is sent by Express Mail, Federal Express or other courier service, as follows: 

 

	 	(a)	if to Service Provider: 

 Sears,
Roebuck and Co. 
 3333 Beverly Road B5-119A 
 Hoffman Estates, IL 60179 
 Attention: Senior Vice President-Finance 

Facsimile: (847) 286-1699 
 with a copy to: 
 Sears Holdings Management Corporation 

3333 Beverly Road, B6-210B 
 Hoffman Estates, IL 60179 
 Attention: General Counsel 

Facsimile: (847) 286-2471 
  

	 	(b)	if to SHO: 

 Sears Authorized
Hometown Stores, LLC 
 Sears Hometown and Outlet Stores, Inc. 

3333 Beverly Road B4-150A 
 Hoffman Estates, IL 60179 
 Attention: Senior Vice President and Chief Operating
Officer 
 Facsimile: (847) 286-7838 
 with a copy to: 
 Sears Hometown and Outlet Stores, Inc. 

3333 Beverly Road B6-260A 
 Hoffman Estates, IL 60179 
 Attention: General Counsel 

Facsimile: (847) 286-0266 

or such other address as the person to whom notice is to be given has furnished in writing to the other Parties. A notice of change in address will not
be deemed to have been given until received by the addressee. 
 10.7 Survival. The provisions of Articles VI, VII, VIII,
IX and X will survive any termination or expiration of this Agreement. 

  
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 10.8 Headings. The article and section headings contained in this Agreement are
inserted for reference purposes only and will not affect the meaning or interpretation of this Agreement. 
 10.9 No Third
Party Rights. Except for the indemnification rights under this Agreement of any Service Provider or SHO indemnitee in their respective capacities as such, this Agreement is intended to be solely for the benefit of the Parties and is not intended
to confer any benefits upon, or create any rights in favor of, any person other than the Parties. 
 10.10 Counterparts.
This Agreement may be executed by facsimile and in any number of counterparts, each of which will be deemed to be an original, and all of which together will be deemed to be one and the same instrument. 

10.11 Severability. If any provision of this Agreement is declared by any court of competent jurisdiction to be illegal, invalid,
void or unenforceable, such provision will (to the extent permitted under applicable Law) be construed by modifying or limiting it so as to be legal, valid and enforceable to the maximum extent compatible with, and possibly under, applicable Law,
and all other provisions of this Agreement will not be affected and will remain in full force and effect. 
 10.12 Entire
Agreement. This Agreement (including the appendices hereto), as well as the Separation Agreement and the Services Agreement, constitute the entire agreement between the parties hereto and supersedes all prior agreements and understandings, oral
and written, between the parties hereto with respect to the subject matter hereof. In the event of any conflict between the Separation Agreement and the Services Agreement, the provisions of this Agreement shall control with respect to any matter
relating to the Service Employees. 
 10.13 Force Majeure. Neither Party will be responsible to the other for any delay
in or failure of performance of its obligations under this Agreement, or under any order placed pursuant to this Agreement, to the extent such delay or failure is attributable to any act of God, act of terrorism, fire, accident, war, embargo or
other governmental act, or riot; provided, however, that the Party affected thereby gives the other Party prompt written notice of the occurrence of any event which is likely to cause any delay or failure setting forth its best
estimate of the length of any delay and any possibility that it will be unable to resume performance; provided, further, that said affected Party will use its commercially reasonable efforts to expeditiously overcome the effects of
that event and resume performance. 
 10.14 Fair Construction. This Agreement will be deemed to be the joint work product
of the Parties without regard to the identity of the draftsperson, and any rule of construction that a document will be interpreted or construed against the drafting Party will not be applicable. 

10.15 No Agency. Nothing in this Agreement creates a relationship of agency, partnership, or employer/employee between Service
Provider and SHO and it is the intent and desire of the Parties that the relationship be and be construed as that of independent contracting parties and not as agents, partners, joint venturers or a relationship of employer/employee. 

  
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 10.16 Services Operating Committee; Dispute Resolution; Mediation. 

(a) Services Operating Committee. The Services Operating Committee established pursuant to the Services Agreement (the
“Services Operating Committee”) will address all day-to-day operational, financial, and other issues that may arise with respect to this Agreement, including its interpretation, the Parties’ intent reflected in this Agreement, and the
policies and practices between Service Provider and its Affiliates and the businesses comprising SHO’s businesses in effect immediately prior to the Effective Date, and all Disputes (as defined below). The Services Operating Committee will
discuss all of these issues and will attempt to resolve informally all Disputes in accordance with the applicable provisions of the Services Agreement. 
 (b) Dispute Resolution by the Services Operating Committee. 
 (i) If a Dispute arises, neither Party may take any formal legal action (such as seeking to terminate this Agreement, seeking mediation in accordance with Section 8.15(d), or instituting or
seeking any judicial or other legal action, relief, or remedy with respect to or arising out of this Agreement) unless the Party has first (i) delivered a notice of dispute (the “Dispute Notice”) to all of the members of the
Services Operating Committee and (ii) complied with the terms of this Section 8.15(c). At the first monthly meeting of the Services Operating Committee following the delivery of the Dispute Notice (the “Dispute Meeting”) the
Operating Committee will attempt to resolve all of the Disputes that are the subject the Dispute Notice. Each Party will cause its members on the Services Operating Committee to negotiate in good faith to resolve all Disputes in a timely manner. If
by the 10th day following the Dispute Meeting the Services
Operating Committee has not resolved all of the Disputes (the “Resolution Failure Date”) the Parties will proceed to mediate the unresolved Disputes (“Unresolved Disputes”) in accordance with Section 8.15(d).

 (ii) Subject to the next sentence, “Dispute” means each claim, controversy, dispute, and
disagreement between, on the one hand, SHO or any of its Affiliates, or any of their respective shareholders, officers, directors, agents, employees, legal representatives (including attorneys in their representative capacity), successors and
assigns and, on the other hand, Service Provider or any of its Affiliates, employees, legal representatives (including attorneys in their representative capacity), successors and assigns, in each case arising out of or relating to a Party’s
performance, or failure to perform, one or more of its obligations in this Agreement. 
 (c) Mediation of
Unresolved Disputes. Service Provider and SHO will in good faith attempt to resolve all Unresolved Disputes by non-binding mediation. Service Provider and SHO will negotiate in good faith to determine the mediator, the mediator’s
compensation and related costs, and the applicable rules for the mediation. If by the 15th day following the Resolution Failure Date Service Provider and SHO have been unable to settle an Unresolved Dispute the obligations of Service Provider and SHO in this Section 8.15(c) will
terminate with respect to the Unresolved Dispute. 
 10.17 Condition Precedent to the Effectiveness of this Agreement.
This Agreement will not become effective until it has been approved by the Audit Committee of the Board of Directors of SHLD. 

  
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 10.18 Governing Law; Jurisdiction; Waiver of Jury Trial. 

(a) This Agreement will be governed by, and construed in accordance with, the laws of the State of Illinois, without giving effect to the
conflicts of law principles thereof. This Agreement will not be subject to any of the provisions of the United Nations Convention on Contracts for the International Sale of Goods. 

(b) Each of the Parties irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any
Illinois state court or Federal court of the United States of America, in either case sitting in Cook County, Illinois, and any appellate court to any thereof, in any action or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby or for recognition or enforcement of any judgment relating thereto, and each of the Parties irrevocably and unconditionally (i) agrees not to commence any such action or proceeding except in such courts,
(ii) agrees that any claim in respect of any such action or proceeding may be heard and determined in such Illinois state court or, to the extent permitted by law, in such Federal court, (iii) waives, to the fullest extent it may legally
and effectively do so, any objection that it may now or hereafter have to the laying of venue of any such action or proceeding in any such Illinois state or Federal court, and (iv) waives, to the fullest extent permitted by law, the defense of
an inconvenient forum to the maintenance of such action or proceeding in any such Illinois state or Federal court. A final judgment in any such action or proceeding will be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Each Party irrevocably consents to service of process in the manner provided for notices in Section 8.6. Nothing in this Agreement will affect the right of any Party to serve process in
any other manner permitted by law. 
 (c) EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HERETO HEREBY
(i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(ii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.18(c).

 * * * * * 

  
 31 

 IN WITNESS WHEREOF, Service Provider and SHO have caused this Agreement to be executed on
the date first written above by their respective duly authorized officers. 
  

			
	Sears, Roebuck and Co.
		
	By:	 	  

	 Name:

Title:

	
	Sears Authorized Hometown Stores, LLC
		
	By:	 	  

	 Name:

Title:

	
	Sears Outlet Stores, L.L.C.
		
	By:	 	  

	 Name:

Title:

	
	Sears Hometown and Outlet Stores, Inc.
		
	By:	 	  

	 Name:

Title:

 Signature Page to Employee Transition and Administrative Services Agreement

 LIST OF APPENDICES 
 Appendix A     Transitional Service Fee 
 Appendix B    
Administrative Service Fee 

  
 2 

 Appendix A 
 Transitional Service Fee and Cost Reimbursement 
 1. For each month during the Transition
Service Period the Transitional Service Fee will be $31.54 per Service Employee, which amount has been determined by the following formula: ($1,956,500 divided by 12) divided by 5,169 (the “Base Employee Number”). $1,956,500 is
Service Provider’s total annual costs to provide the Transitional Employee Services during the Transitional Service Period plus a 30% profit margin. The Base Employee Number is the total number of Service Employees as of August 15, 2012.
The number of Service Employees for each month during the Transitional Service Period will be determined by the following formula: number of Service Employees at the beginning of the month plus the number of Service Employees at the end of the
month, divided by 2. 
 2. During the Transitional Service Period, SHO also will be billed for and pay SRC for all gross payroll, compensation
related and other direct costs incurred or paid by SRC in connection with the services provided hereunder, which shall include, and not be limited to all wages (standard and overtime), bonuses, commissions, severance and termination payments, taxes,
insurance costs, benefits, contributions and other direct costs for the Service Employees. All costs, fees, and reimbursements will be payable by SHO to SRC in a manner agreed to by the parties prior to the Effective Date. 

3. During the Transitional Service Period SHO will reimburse Service Provider for (a) all costs that are reimbursable by SHO in accordance with the
Agreement, and (b) for all services that Service Provider performs at SHO’s request and that are not Transitional Employee Services covered by the Transitional Service Fee. 

  
 3 

 Appendix B 
 Administrative Service Fee and Cost Reimbursement 
 1. For the first 12 months of the
Administrative Services Period (the “Base ASP”) the monthly Administrative Service Fee will be $20.38 per SHO employee, which amount has been determined by the following formula ($1,264,125 divided by 12) divided by the Base
Employee Number. $1,264,125 is Service Provider’s total annual costs to provide the Administrative Services during the Administrative Service Period plus a 30% profit margin. The number of SHO employees for each month of the Administrative
Service Period will be determined by the following formula: number of SHO employees at the beginning of the month plus the number of SHO employees at the end of the month, divided by 2. 

2. For each of the next two 12-month periods and the final period beginning on the first day following the end of second 12-month
period and ending on the last day of the 66th month
following the Effective Date (each a “Remaining ASP”), SHO and Service Provider will negotiate in good faith to determine the Administrative Service Fee for the Remaining ASP, which negotiations will reflect the following
understandings with respect to the amount of the Administrative Service Fee: 
  

	 	a.	The Administrative Service Fee will include all of Service Provider’s costs and expenses to provide the Administrative Services (together, the “Total
Costs”); 

  

	 	b.	The Administrative Service Fee will include, as Service Provider’s profit margin, an amount equal to 30% of Service Provider’s fixed costs comprising the
Total Costs; 

  

	 	c.	The Administrative Service Fee for the first Remaining ASP will not be greater than 120% of the Administrative Service Fee for the Base ASP, and the Administrative
Service Fee for each of the second Remaining ASP and the third Remaining ASP will not be greater than 120% of the Administrative Service Fee for the immediately preceding Remaining ASP. 

3. During the Administrative Service Period, SHO also will be billed for and pay SRC for all gross payroll, compensation related and other direct costs
incurred or paid by SRC in connection with the services provided hereunder, which shall include, and not be limited to all wages (standard and overtime), bonuses, commissions, severance and termination payments, taxes, insurance costs, benefits,
contributions and other direct costs for the Service Employees. All costs, fees, and reimbursements will be payable by SHO to SRC in a manner agreed to by the parties prior to the Effective Date. 

4. During the Administrative Service Period SHO will reimburse Service Provider for (a) all costs that are reimbursable by SHO in accordance with
the Agreement and (b) for all services that Service Provider performs at SHO’s request and that are not Administrative Services covered by the Administrative Service Fee. In addition, if Service Provider uses a vendor that is not an
Affiliate of Service Provider to provide the Administrative Services and during any Remaining ASP the vendor increases its prices to provide the Administrative Services, SHO will reimburse Service Provider for the amount of the increase. 

  
 4

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