Exhibit 10.5

FORM OF SERITAGE GROWTH PROPERTIES

PERFORMANCE-VESTING RESTRICTED SHARE UNIT AGREEMENT

2018 INCENTIVE P-RSUs

 

 

 

 

 

 

Name of Grantee:

 

 

 

(the “Grantee”)

 

 

 

Target No. of Restricted Share Units:

 

 

 

 

 

 

 

Grant Date:

 

 

 

(the “Grant Date”)

WHEREAS, the Grantee currently provides services to Seritage Growth Properties,
a Maryland real estate investment trust or one of its Subsidiaries (the
“Company”);

WHEREAS, the Company desires to (i) provide the Grantee with an incentive to
remain in the employ of the Company or its Subsidiaries and (ii) increase the
Grantee’s interest in the success of the Company by granting performance-vesting
restricted share units (the “P-RSUs”) payable in the form of Shares; and

WHEREAS, reference is made herein to the Grantee’s employment agreement with the
Company dated [●] (the “Employment Agreement”)[, as this issuance of P-RSUs
constitutes the performance-based portion of the “Renewal Award” for purposes of
the Company satisfying its obligations to grant such an award pursuant to the
Employment Agreement]1 ; and

WHEREAS, the issuance of the P-RSUs is made pursuant to the Seritage Growth
Properties 2015 Share Plan (the “Plan”); and made subject to the terms and
conditions of this Seritage Growth Properties 2018 Incentive Award
Performance-Vesting Restricted Share Unit Agreement (the “Agreement”).

NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:

1. Definitions; Incorporation of Plan Terms. Capitalized terms used in this
Agreement without definition shall have the meanings assigned to them in the
Plan. This Agreement and the P-RSUs shall be subject to the Plan and the terms
of the Plan are incorporated into this Agreement by reference. In the event of
any difference between the provisions of this Agreement and the terms of the
Plan, the terms of this Agreement will control. The Grantee hereby acknowledges
prior receipt of a copy of the Plan.

2. Grant of P-RSUs. Subject to the provisions of this Agreement and pursuant to
the provisions of the Plan, the Company hereby grants and issues to the Grantee
the P-RSUs specified above, the calculation of which is set forth on Schedule A.
The Company shall credit to a bookkeeping account (the “Account”) maintained by
the Company (or a third party on behalf of the Company) for the Grantee’s
benefit the P-RSUs, each of which shall be deemed to be the equivalent of one
Share.

3. Terms and Conditions.

(a) Vesting.

(i) All of the P-RSUs shall initially be unvested. All P-RSUs shall be subject
to the vesting requirements set forth on Schedule A of this Agreement.

 

1 

As applicable.

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(ii) In respect of the P-RSUs, in the event the then current Fair Market Value
of a share of the Company’s common stock (a “Share”) is less than forty-six
dollars ($46) per Share on the first (1st) anniversary of the Grant Date and/or
the then current Fair Market Value of a Share is less than fifty-one dollars
($51) per Share on the second (2nd) anniversary of the Grant Date, and, in
either case, the Fair Market Value of a Share is no lower than a price of
thirty-five dollars ($35) per Share, additional P-RSUs shall be granted based on
the then current Fair Market Value of a Share on the first (1st) anniversary of
the Grant Date in respect of P-RSU Tranche 2 (as defined on Schedule A) and/or
the second (2nd) anniversary of the Grant Date in respect of P-RSU Tranche 3 (as
defined on Schedule A). If the Fair Market Value of a Share is less than $35 on
the first (1st) Anniversary of the Grant Date, P-RSU Tranche 2 shall be adjusted
as set forth above based on a calculation using $35 as the relevant price on
such anniversary. If the Fair Market Value of a Share is less than $35 on the
second (2nd) Anniversary of the Grant Date, P-RSU Tranche 3 shall be adjusted as
set forth above based on a calculation using $35 as the relevant price on such
anniversary.

If an adjustment to either (x) P-RSU Tranche 2 or (y) P-RSU Tranche 3 is
required pursuant to this Section 3(a)(ii), the number of additional P-RSUs to
be granted shall be calculated in each case as the difference between (A) the
number of P-RSUs equal to (1) the original dollar allocation of the applicable
P-RSU tranche (as set forth on Schedule A), divided by (2) in respect of P-RSU
Tranche 2, the relevant Fair Market Value of a Share on the first (1st)
anniversary of the Grant Date and/or, in respect of P-RSU Tranche 3, on the
second (2nd) anniversary of the Grant Date, and (B) the number of P-RSUs
originally granted in the applicable tranche.

Any additional P-RSUs granted as a result of the application of this Section
3(a)(ii) shall be added to the number of target P-RSUs in the applicable tranche
and will be subject to the same terms and conditions as apply to the originally
granted target P-RSUs, including the same vesting schedule, as set forth in this
Agreement.

(iii) If the Grantee’s employment terminates due to the Grantee’s death or
Disability, or the Grantee’s employment is terminated by the Company without
Cause (as defined in the Employment Agreement) or the Grantee resigns with Good
Reason (as defined in the Employment Agreement), any of the Grantee’s P-RSUs
that are not fully vested as of the Date of Termination (as defined in the
Employment Agreement) will immediately vest in full as of the Date of
Termination.

(iv) Upon the occurrence of a Change in Control (as defined in the Plan):

(A) The Company will determine the modifier applicable to the P-RSUs based on
actual performance as of the date of the Change in Control.

(B) If the purchaser or successor entity does not assume, convert, or replace
Grantee’s unvested and outstanding P-RSUs with awards of equity that is traded
on the NYSE or NASDAQ, subject to Section 3(a)(iv)(C) below, such unvested and
outstanding P-RSUs will immediately vest upon the Change in Control (taking into
account Section 3(a)(iv)(A) above. If the purchaser or successor entity does
assume, convert, or replace such unvested and outstanding P-RSUs with equity
traded on the NYSE or NASDAQ, subject to Section 3(a)(iv)(C) below, such
unvested and outstanding P-RSUs will continue to vest in accordance with its
terms set forth in this Agreement.

(C) For purposes of this Section 3(a)(iv), (1) if the outstanding awards are not
assumed, converted, or replaced, the number of P-RSUs that shall be considered
unvested and outstanding (and subject to acceleration) will include any
additional P-RSUs that would be granted to the Grantee after applying the
adjustment provision in accordance with Section 3(a)(ii) (except that the day
prior to Change in Control shall be used as the measurement date rather than
applicable anniversary of the Grant Date); and (2) if the outstanding awards are
assumed, converted, or replaced, an additional grant of such assumed, converted
or replaced awards shall be made in accordance with Section 3(a)(ii) upon the
applicable anniversary of the original grant date of the P-RSU (taking into
account any conversion or replacement terms that applied to the conversion or
replacement of the outstanding P-RSUs at the time of the Change in Control).

(b) Forfeiture. Except as otherwise provided in this Agreement, upon the
termination of the Grantee’s employment with the Company and its Subsidiaries
prior to vesting, all unvested P-RSUs shall be automatically cancelled and
forfeited.

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(c) Determination of Performance Achievement. The applicable performance period
shall be January 1, 2018 – December 31, 2020 (the “Performance Period”). The
performance metrics and threshold and target goal levels have been determined by
the Compensation Committee of the Board of Trustees of the Company (the
“Compensation Committee”) and are set forth on Exhibit B. At the end of the
Performance Period, for each of P-RSU Tranche 1, P-RSU Tranche 2 and P-RSU
Tranche 3, the Compensation Committee will determine the number of P-RSUs earned
based on the extent to which the performance goals have been achieved, as set
forth on Exhibit A.

(d) Settlement. P-RSUs not previously forfeited shall be settled within thirty
(30) days after the applicable Vesting Date (as set forth on Schedule A) under
Section 3(a)(i) by delivery of one Share for each P-RSU being settled.

4. Taxes.

(a) This Section 4(a) applies only to (a) all Grantees who are U.S. employees,
and (b) to those Grantees who are employed by a Subsidiary of the Company that
is obligated under applicable local law to withhold taxes with respect to the
settlement of the P-RSUs. Such Grantee shall pay to the Company or a designated
Subsidiary, promptly upon request, and in any event at the time the Grantee
recognizes taxable income with respect to the P-RSUs, an amount equal to the
taxes the Company determines it is required to withhold under applicable tax
laws with respect to the P-RSUs. The Grantee may satisfy the foregoing
requirement by making a payment to the Company in cash or by delivering already
owned unrestricted Shares or by having the Company withhold a number of Shares
in which the Grantee would otherwise become vested under this Agreement, in each
case, having a value equal to the minimum amount of tax required to be withheld.
Such Shares shall be valued at their fair market value on the date as of which
the amount of tax to be withheld is determined.

(b) The Grantee acknowledges that the tax laws and regulations applicable to the
P-RSUs and the disposition of the shares following the settlement of P-RSUs are
complex and subject to change.

5. Protections Against Violations of Agreement. No purported sale, assignment,
mortgage, hypothecation, transfer, pledge, encumbrance, gift, transfer in trust
(voting or other) or other disposition of, or creation of a security interest in
or lien on, any of the P-RSUs by any holder thereof in violation of the
provisions of this Agreement or the Declaration of Trust or the Bylaws of the
Company, will be valid, and the Company will not transfer any shares resulting
from the settlement of P-RSUs on its books nor will any of such shares be
entitled to vote, nor will any dividends be paid thereon, unless and until there
has been full compliance with such provisions to the satisfaction of the
Company. The foregoing restrictions are in addition to and not in lieu of any
other remedies, legal or equitable, available to enforce such provisions.

6. Rights as a Shareholder; Dividend Equivalent Right. The Grantee shall not
possess the right to vote the shares underlying the P-RSUs until the P-RSUs have
settled in accordance with the provisions of this Agreement and the Plan. During
any period when the P-RSUs are forfeitable, a dividend equivalent right (“DER”)
shall apply to such P-RSUs, as follows:

(i) if and when any cash dividends are declared on Shares, on the date such
dividend is paid, the Company will credit to a bookkeeping account (the
“Account”) maintained by the Company (or a third party on behalf of the Company)
for the Grantee’s benefit an amount, which shall be equal to the amount of such
dividend that would have been paid on the same number of P-RSUs that are
unvested and outstanding hereunder as of the record date of such dividend. Such
credited amount shall be subject to the vesting and forfeiture provisions
applicable to the P-RSUs to which such credited amount relates, as set forth in
Section 3(a) above. Any credited amounts shall be only payable in cash and shall
become vested and payable at the same time as Shares are otherwise delivered
upon the settlement of vested P-RSUs, if any, as set forth in this Agreement.

(ii) Except as otherwise provided in the Plan or this Agreement, during any
period when the P-RSUs are forfeitable, if and when the Company declares and
pays a dividend or distribution on Shares, or there occurs a forward split of
Shares, then a number of additional P-RSUs in respect of the P-RSUs shall be
credited to the Account as of the payment date for such dividend or distribution
or forward split equal to (i) the same number of Shares that would have been
delivered

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on the same number of P-RSUs that are unvested and outstanding hereunder as of
the record date of such event, multiplied by (ii) the number of additional
Shares actually paid as a dividend or distribution or issued in such split in
respect of each outstanding Share. These additional P-RSUs shall become vested
and deliverable upon the vesting of the P-RSUs to which such additional P-RSUs
relate as set forth in this Agreement.

7. Survival of Terms. This Agreement shall apply to and bind the Grantee and the
Company and their respective permitted assignees and transferees, heirs,
legatees, executors, administrators and legal successors.

8. Notices. All notices and other communications provided for herein shall be in
writing and shall be delivered by hand or sent by certified or registered mail,
return receipt requested, postage prepaid, addressed, if to the Grantee, to the
Grantee’s attention at the mailing address set forth at the foot of this
Agreement (or to such other address as the Grantee shall have specified to the
Company in writing) and, if to the Company, to the Company’s office at 500 Fifth
Avenue, Suite 1503, New York, NY  10110, Attention: General Counsel (or to such
other address as the Company shall have specified to the Grantee in writing).
All such notices shall be conclusively deemed to be received and shall be
effective, if sent by hand delivery, upon receipt, or if sent by registered or
certified mail, on the fifth day after the day on which such notice is mailed.

9. Waiver. The waiver by either party of compliance with any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any other provision of this Agreement, or of any subsequent breach by such party
of a provision of this Agreement.

10. Authority of the Administrator. The Committee shall have full authority to
interpret and construe the terms of the Plan and this Agreement. The
determination of the Committee as to any such matter of interpretation or
construction shall be final, binding and conclusive.

11. Representations. The Grantee has reviewed with the Grantee’s own tax
advisors the applicable tax (U.S., foreign, state, and local) consequences of
the transactions contemplated by this Agreement. The Grantee is relying solely
on such advisors and not on any statements or representations of the Company or
any of its agents. The Grantee understands that he (and not the Company) shall
be responsible for any tax liability imposed upon him that may arise as a result
of the transactions contemplated by this Agreement.

12. Entire Agreement; Governing Law. This Agreement and the Plan and the other
related agreements expressly referred to herein set forth the entire agreement
and understanding between the parties hereto and supersedes all prior agreements
and understandings relating to the subject matter hereof. This Agreement may be
executed in one or more counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
agreement. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Maryland.

13. Severability. Should any provision of this Agreement be held by a court of
competent jurisdiction to be unenforceable, or enforceable only if modified,
such holding shall not affect the validity of the remainder of this Agreement,
the balance of which shall continue to be binding upon the parties hereto with
any such modification (if any) to become a part hereof and treated as though
contained in this original Agreement. Moreover, if one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively broad
as to scope, activity, subject or otherwise so as to be unenforceable, in lieu
of severing such unenforceable provision, such provision or provisions shall be
construed by the appropriate judicial body by limiting or reducing it or them,
so as to be enforceable to the maximum extent compatible with the applicable law
as it shall then appear, and such determination by such judicial body shall not
affect the enforceability of such provisions or provisions in any other
jurisdiction.

14. Amendments; Construction. The Committee may amend the terms of this
Agreement prospectively or retroactively at any time, but no such amendment
shall impair the rights of the Grantee hereunder without his consent. Headings
to Sections of this Agreement are intended for convenience of reference only,
are not part of this Restricted Share Unit and shall have no effect on the
interpretation hereof.

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15. Acceptance. The Grantee hereby acknowledges receipt of a copy of the Plan
and this Agreement. The Grantee has read and understand the terms and provision
thereof, and accepts the shares of RSUs subject to all the terms and conditions
of the Plan and this Agreement. The Grantee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Committee upon any
questions arising under this Agreement.

16. Miscellaneous.

(a) No Rights to Grants or Continued Employment. The Grantee acknowledges that
the award granted under this Agreement is not an employment right. Neither the
Plan nor this Agreement, nor any action taken or omitted to be taken hereunder
or thereunder, shall be deemed to create or confer on the Grantee any right to
be retained as an employee of the Company or any Subsidiary thereof, or to
interfere with or to limit in any way the right of the Company or any Subsidiary
thereof to terminate the employment of the Grantee at any time.

(b) No Restriction on Right of Company to Effect Corporate Changes. Neither the
Plan nor this Agreement shall affect in any way the right or power of the
Company or its Shareholders to make or authorize any or all adjustments,
recapitalizations, reorganizations, or other changes in the Company’s capital
structure or its business, or any merger or consolidation of the Company, or any
issue of shares or of options, warrants or rights to purchase shares or of
bonds, debentures, preferred, or prior preference shares whose rights are
superior to or affect the shares or the rights thereof or which are convertible
into or exchangeable for shares, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of the assets or business of
the Company, or any other corporate act or proceeding, whether of a similar
character or otherwise.

(c) Assignment. The Company shall have the right to assign any of its rights and
to delegate any of its duties under this Agreement to any of its affiliates.

17. Code Section 409A. Notwithstanding anything in this Agreement to the
contrary, the receipt of any benefits under this Agreement is intended to be
exempt from the provisions of Section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”) pursuant to the short-term deferral exception provided
for thereunder. The RSUs granted hereunder shall not be deferred, accelerated,
extended, paid out or modified in a manner that would result in the application
of Section 409A of the Code to such grants.

THIS AGREEMENT SHALL BE NULL AND VOID AND UNENFORCEABLE BY THE GRANTEE UNLESS
SIGNED AND DELIVERED TO THE COMPANY NOT LATER THAN THIRTY (30) DAYS SUBSEQUENT
TO THE GRANT DATE.

BY SIGNING THIS AGREEMENT, THE GRANTEE IS HEREBY CONSENTING TO THE PROCESSING
AND TRANSFER OF THE GRANTEE’S PERSONAL DATA BY THE COMPANY TO THE EXTENT
NECESSARY TO ADMINISTER AND PROCESS THE AWARDS GRANTED UNDER THIS AGREEMENT.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer and the Grantee has executed this Agreement, both as of
the day and year first above written.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Company and the Grantee have executed this P-RSU
Agreement as of the date first above written.

 

COMPANY

 

 

 

SERITAGE GROWTH PROPERTIES

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

GRANTEE

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SCHEDULE A

(TIME-VESTING RSUS)

Calculation

The number of P-RSUs at grant shall be calculated as follows:

Total Value of 2018 Incentive Award granted to the Grantee: $______________ (the
“Total Value”)

Value of Total Performance-Based Portion of the 2018 Incentive Award (i.e., 70%
of Total Value): $______________ (the “Performance-Based Value”)

The Number of P-RSUs comprising the Performance-Based Portion of the 2018
Incentive Award as of the Grant Date is calculated as follows:

 

1)

one-third (1/3rd) of the Performance Based Value (i.e., $[●]) will be converted
to P-RSUs based on thirty-five dollars ($35) per share (“P-RSU Tranche 1”);

 

2)

one-third (1/3rd) of the Performance Based Value (i.e., $[●]) will be converted
to P-RSUs on the basis of forty-six dollars ($46) per share (“P-RSU Tranche 2”);
and

 

3)

one-third (1/3rd) of the Performance Based Value (i.e., $[●]) will be converted
to P-RSUs on the basis of fifty-one dollars ($51) per share (“P-RSU Tranche 3”).

Vesting

One-hundred percent (100%) of each of P-RSU Tranche 1, P-RSU Tranche 2, and
P-RSU Tranche, as may be adjusted pursuant to Section 3(a)(ii) of the Agreement,
will vest as of the third (3rd) anniversary of the Grant Date, provided the
Grantee is employed as of such date, unless specified otherwise in this Award
Agreement, and be settled within thirty (30) days of such anniversary.

Performance Determination

At the end of the Performance Period, for each of P-RSU Tranche 1, P-RSU Tranche
2 and P-RSU Tranche 3, the Compensation Committee will determine the number of
shares earned based on the extent to which performance goals have been achieved,
which achievement levels will then be used to determine whether performance
thresholds have been met and if so, to calculate a P-RSU modifier of between
fifty percent (50%) and one hundred fifty percent (150%). If threshold
performance has not been achieved, the P-RSU modifier will be deemed to be zero
percent (0%). If threshold performance has been achieved, then the P-RSU
modifier will be based on the extent to which the Company has attained certain
performance goals, with the P-RSU modifier being one hundred percent (100%) if
performance achievement is at the established “target.” Upon determination of
the performance achievement, the number of P-RSUs will automatically be adjusted
to a number equal to the total number of P-RSUs granted multiplied by the
modifier.

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Exhibit B

Performance Metrics and Goals

 

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