Sears Hometown and Outlet Stores, Inc. Stock Unit Agreement _________, 20__

This is a Stock Unit Agreement between Sears Hometown and Outlet Stores, Inc. (the “Company”) and the individual who has executed this Stock Unit Agreement above the signature line entitled “Grant Holder” (the “Grant Holder”). The term “this Agreement” means collectively this Stock Unit Agreement and each Grant Supplement (defined in section 1 of this Agreement) relating to this Agreement.

This Agreement is made pursuant to the Company’s Amended and Restated 2012 Stock Plan, as amended from time to time (the “Plan”). Capitalized terms used but not defined in this Agreement are defined in the Plan.

The Company and the Grant Holder agree as follows:

1. Stock Unit Grants. This Agreement is a “Stock Agreement” referred to in Section 2.20 of the Plan. For each of the Company’s Stock Unit grants to the Grant Holder pursuant to the Plan, this Agreement, the Plan, and each Grant Supplement to this Agreement (which Supplement need not be signed by the Grant Holder), will govern. The Stock Units granted by the Company to the Grant Holder pursuant to the Plan together are referred to as the “Stock Units.” The Company will evidence each grant of Stock Units to the Grant Holder by an agreement entitled “Supplement to Stock Unit Agreement” to be attached to this Agreement from time to time (each a “Grant Supplement” and together the “Grant Supplements”). Grant Supplements will indicate the number of Stock Units granted to the Grant Holder and the restrictions and forfeiture conditions that are applicable to the Stock Units granted. This Agreement governs all (a) Stock Units granted to the Grant Holder prior to date of this Agreement as to which the forfeiture conditions pursuant to section 2 of this Agreement have not expired as of the date of this Agreement and (b) Stock Units granted to the Grant Holder on or after the date of this Agreement. All Grant Supplements, whenever delivered to the Grant Holder, are incorporated into and form a part of this Agreement.

2. Restrictions; Forfeiture Conditions.

reorganizations, consolidations, recapitalizations, and other changes in corporate structure affecting the common stock of the Company.

3. Limitations on Rights. The Stock Units are bookkeeping entries only. In accordance with, and subject to, this Agreement and the Grant Supplements the Company only will make cash payments with respect to the Stock Units, as to which the Grant Holder will have no rights to receive Stock or other securities of the Company, no rights as a stockholder of the Company, no dividend rights, and no voting rights.

4. Timing and Manner of Cash Payment. As soon as practicable, and in no event more than twenty days, after the date Stock Units vest in accordance with this Agreement and the applicable Grant Supplement or Grant Supplements, the Company will make to the Grant Holder the lump sum cash payment to be made in satisfaction of the Stock Units in accordance with, and subject to, this Agreement and the the Grant Supplement. The Grant Holder and the Grant Holder’s successors, heirs, assigns, and personal representatives will have no continuing rights or interests in the Stock Units that have been paid by the Company in accordance with this section 4.

5. Adjustments. Section 12 of the Plan is applicable to this Agreement and the Stock Units.

6. No Right of Continued Employment. Nothing in this Agreement will (a) interfere with or limit in any way the right of the Company or any of the Company’s subsidiaries to terminate the Grant Holder’s employment at any time or (b) confer upon the Grant Holder any right to continue in the employ of the Company or any of the Company’s subsidiaries.

7. Payment of Taxes. Whenever the law requires the Company to withhold or pay federal, state, or local taxes of any kind (including the Grant Holder’s FICA obligation) on behalf of the Grant Holder with respect to the Stock Units, the Grant Holder will pay the required withholding amount to the Company no later than the date due, or to make other arrangements satisfactory to the Company regarding payment of the withholding amount. The obligations of the Company under this Agreement will be conditional on the Grant Holder’s compliance with these withholding payment requirements. The Company and its affiliates will, to the extent permitted by law, have the right to deduct the withholding amount from any payment of any kind otherwise due from the Company or its subsidiary to the Grant Holder, including without limitation any payment referred to in section 4 of this Agreement.

8. Grants Subject to Clawback. All cash and other consideration received by the Grant Holder with respect to the Stock Units are subject to forfeiture, recovery by the Company, and each other action pursuant to clawback or recoupment policies that the Company may adopt from time to time, including without limitation policies that the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder or as otherwise required by law.

9. Amendment. This Agreement may not be modified, amended, or waived in any manner except in writing signed by the Company and the Grant Holder. The waiver by the Company or the Grant Holder of compliance with any term of this Agreement will not operate or be construed as a waiver of any other term of this Agreement or any subsequent breach of a term of this Agreement.

10. The Plan Controls. The terms of the Plan are incorporated into and made a part of this Agreement, and this Agreement will be governed by and construed in accordance with the Plan. If any actual or alleged conflict occurs (a) among the terms of the Plan, the terms of this Agreement, and the terns of a Grant Supplement, or (b) between the terms of the Plan and the terms of this Agreement or the terms of any Grant Supplement, the terms of the Plan will be controlling and determinative.

11. Successors. This Agreement will be binding upon all successors of the Company in accordance with the terms of this Agreement and the Plan.

12. Severability. If any one or more of the terms contained in this Agreement are invalid, illegal, or unenforceable, the other terms of this Agreement will be construed and enforced as if the invalid, illegal, or unenforceable term had not been included.

13. Notice. Notices and communications under this Agreement must be in writing and delivered personally, by overnight courier, or by registered or certified United States mail, return receipt requested, postage prepaid. Notices to the Company must be addressed to:

Human Resources Department

Sears Hometown and Outlet Stores, Inc.

5500 Trillium Boulevard, Suite 501

Hoffman Estates, Illinois 60192

Attn: Vice President, Human Resources

or any other address designated by the Company in a written notice to the Grant Holder. Notices to the Grant Holder will be directed to the address of the Grant Holder then currently on file with the Company, or at any other address given by the Grant Holder in a written notice to the Company.

14. Administration. The authority to manage and control the operation and administration of this Agreement will be vested in the Committee. The Committee will have all powers with respect to this Agreement that it has with respect to the Plan. All interpretations of this Agreement and the Plan by the Committee and all decisions made by it with respect to this Agreement are final and binding on the Grant Holder and all other persons.

15. Governing Law. Illinois law, other than its conflict of laws principles, will govern interpretation, performance, and enforcement of this Agreement.

By: ____________________

Becky Iliff

Vice President, Human Resources

________________________

I am pleased to inform you that Sears Hometown and Outlet Stores, Inc. has granted to you the number of Stock Units indicated above. The Stock Units are granted to you pursuant, and subject to, the terms of (1) the Sears Hometown and Outlet Stores, Inc. Amended and Restated 2012 Stock Plan (the “Plan”), (2) the Stock Unit Agreement between Sears Hometown and Outlet Stores, Inc. and you (the “Stock Unit Agreement”), and (3) this Supplement to Stock Unit Agreement. This Supplement to Stock Unit Agreement is a “Grant Supplement” referred to in the Stock Unit Agreement.

Unless the Stock Units are forfeited earlier in accordance with section 2 of the Stock Unit Agreement, the Stock Units will vest on __________, 20__ (the “Vesting Date”) and, subject to the terms and conditions of the Plan, the Stock Unit Agreement, and this Supplement to Stock Unit Agreement, we will make a cash payment to you on or about __________, 20__ equal to the product of (1) the number of Stock Units indicated above and (2) the closing price of our common stock, $0.01 par value, on the Nasdaq Stock Market (or substitute or successor stock exchange) on the Vesting Date.

    

By:                    

Becky Iliff

Vice President, Human Resources