Amendment No. 1 to Separation Agreement Dated: December 9th, 2013

NOW, THEREFORE, in consideration of the above premises and the mutual covenants and other good and valuable consideration contained herein, the parties agree as follows:

“(vii)    the “Retail Establishment Agreement; and

(viii)    the Supplemental Agreement.

“12.2    Additional Cooperation. The parties agree to further cooperate with each other as follows (including, where applicable, causing their Affiliates to provide such cooperation):

(a)    Subleasing by SHO and its Affiliates. For each lease or sublease to SHO granted by SHLD’s Affiliates that require SHLD’s Affiliates’ consent to sublease, SHLD’s Affiliate will not unreasonably withhold or delay their consent to subleases by SHO to its dealers and franchises. For each such request, SHO will pay SHLD a $2,500 per-sublease consent fee. SHLD’s Affiliates’ may not withhold its consent to a sublease due to the proximity of such location to a Sears FLS (unless such location is in violation of the proximity restrictions contained in the parties’ Merchandising Agreement).”

(b)    Sears Canada. SHO is permitted to hold direct discussions with Sears Canada about business opportunities (thru October 31, 2018). The rights of Sears Canada’s shareholders will not be affected. For clarity, the parties note that this provision does not grant SHO any additional rights under the parties’ Ancillary Agreements.

(c)    Caribbean. SHO and SHC will negotiate in good faith with respect to SHO’s proposals from time to time to conduct its dealer and franchise business in the Caribbean region; provided that neither party is obligated to enter into a definitive agreement. SHO acknowledges that SHC has existing contractual obligations and rights in effect with counterparties conducting business in the region. For clarity, the parties note that this provision does not grant SHO any additional rights under the parties’ Ancillary Agreements.

(d)     Additional Businesses. SHO may own, establish, acquire, and operate businesses (each a “New SHO Business”) that do not: (i) use the “Sears” name, and (ii) that is not a Seller Competitor. SHLD’s Affiliates will not be obligated to supply merchandise or provide services for any New SHO Businesses (under the Ancillary Agreements and SHO and its Affiliates will not be obligated to accept performance from SHLD’s Affiliates under the Ancillary Agreements), but upon SHO’s request, SHLD Affiliates and SHO will negotiate in good faith, regarding SHLD’s Affiliates continuing to, on commercially reasonable terms, supply merchandise and to provide services for New SHO Businesses permitted under this subsection (d); provided that neither party is obligated to enter into a definitive agreement.

(e)     Ground Leases. SHO is the owner of certain buildings on land leased by a SHLD Affiliate at the following locations: (x) Portage, IN; (y) O’Fallon, MO; and (z) Shelton, CT (the “SHLD Ground Leases”). With respect to each location, SHLD’s Affiliates have authorized SHO to speak with the landlord on the SHLD Ground Lease regarding (1) the cancellation of the SHLD Ground Lease for the location, at no charge or liability to SHLD and (2) the execution and delivery of a new ground lease for the location between the landlord and SHO, at no charge to SHLD (each new lease, a “New Ground Lease”). SHO will use commercially reasonable efforts to enter into a New Ground Lease for each location on the foregoing terms, and if, with respect to a location, SHO and the Landlord enter into a New Ground Lease; SHLD will consent to the cancelation of the existing SHLD Ground Lease; provided that it is at no cost to SHLD. Subject to the next sentence, if with respect to a location SHO has complied with the preceding sentence but the Landlord for the location is unwilling to enter into a New Ground Lease with SHO and/or cancel the existing SHLD Ground Lease, the applicable SHLD Affiliate will assign the SHLD Ground Lease for the location to SHO provided that either a landlord’s consent is not required or SHO has obtained such consent at its sole cost and expense. With respect to each such assignment, SHLD Affiliate’s will not be obligated to (i) pay any amount in connection with such assignment (other than amounts which SHO agrees in advance and in writing to pre-fund to such SHLD Affiliate for payment to the landlord or applicable third parties) or (ii) incur any other additional liability or any ongoing liability (except remaining liable as tenant on the SHLD Ground Lease) in connection such assignment. If SHLD’s Affiliates remain liable as tenant or otherwise with respect to an SHLD Ground Lease that is assigned to SHO, SHO will provide SHLD’s Affiliates with an indemnification agreement containing commercially reasonable terms and conditions.

(f)     Norristown. SHLD and SHO will enter a lease to zero out rent back to the Effective Date and SHO will have responsibility under that lease for the upkeep of the

Norristown property. In addition, upon SHO’s request, SHLD will convey to SHO, via a quit-claim deed, title to the buildings, structures, and improvements (that includes all existing easements and development rights, to the extent they exist) associated with the Norristown estate for years; in which case SHO will be liable for all costs associated with transferring such property to SHO (e.g. transfer taxes) and SHO will within 5 days reimburse SHLD for any such costs pay by SHLD.\

(g) HVAC, Utilities, and Related Matters Regarding Certain SHO-SHLD Leases/Subleases. SHO’s obligations under the leases and subleases from SHLD’s Affiliates listed on Schedule 12.2(g) regarding HVAC, utilities, taxes, insurance, and similar items (such as roofs, other structural matters, parking lot repairs, and storm drains) will reflect the following resolution of these matters (which resolutions are reflected in the four recently executed TGI leases):

(1)SHO will have no responsibility for CAM, taxes, and insurance, which will be included in the existing basic rent.

(2)SHO will be responsible for utilities (gas, water, electric, sewer) based on the percent of building being leased/subleased by SHO (assumes co-tenant is similar user). For example, if SHO occupies 30,000 sf of a 100,000 sf building, SHO will pay 30% of total utility expense. If SHO occupies all of a building SHO will pay 100% of the total utility expense.

(3)SHLD’s Affiliates will have sole responsibility for maintenance, repair and replacement of roofs, building structures, sprinkler systems, parking lots, storm drains, common areas, and similar obligations.

(4)SHO will be responsible for maintenance, repair, and replacement of the HVAC units directly serving the area it occupies subject to an annual, per location, cap on such charges of $15,000 (“Annual HVAC Cap”). Expenses in excess of the Annual HVAC Cap will be reimbursed by SHLD Affiliates and amortized over the remaining years of lease (but no less than 3 years) and will be paid as additional rent up to the Annual HVAC CAP in years when HVAC service does not exceed the cap.  SHO will have no obligation to pay outstanding amortized amounts at lease/sublease termination. For example, if a property on Schedule 12.2(h): (i) SHLD had 3 years left on its lease (2014-2016) and (iii) that property needed a single 30K HVAC repair in 2014on an HVAC unit directly serving the area occupied by SHO, then SHO’s rent would be increased by $15K in 2014, and by $7.5K in 2015 and 2016 to cover the repair.

(h)     Changes Affecting accounting entries. Each party agrees that prior to changing an established practice for entering accounting entries that affect the other party’s accounts (e.g., due to a change in such party’s interpretation of an Ancillary Agreement),

such party will notify the other party in writing of such change in accordance with the notice provisions of the Services Agreement.

(i)     Reporting. In the event of a Dispute, each party agrees that it will, upon reasonable request of the other party, provide specific information requested which is necessary to confirm whether such party is in conformance with this Agreement with respect to such disputed matter; provided that neither party will be required to produce information: (1) that cannot be readably obtained without incurring significant expense or (2) is protectable from discovery because it is legally privileged or constitutes attorney client work product.”

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date set forth below by their respective officers thereunto duly authorized.