Exhibit 10.4

FORM OF SERITAGE GROWTH PROPERTIES

TIME-VESTING RESTRICTED SHARE UNIT AGREEMENT

2018 INCENTIVE RSUs

 

 

 

 

 

 

Name of Grantee:

 

 

 

(the “Grantee”)

 

 

 

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 any of its Subsidiaries and (ii) increase
the Grantee’s interest in the success of the Company by granting restricted
share units (the “RSUs”) payable in the form of Shares;

WHEREAS, reference is made herein to the Grantee’s employment agreement with the
Company dated [●] (the “Employment Agreement”)[, as this issuance of RSUs
constitutes the time-based portion of the “Renewal Award” for purposes of the
Company satisfying its obligations to grant such an award pursuant to the
Employment Agreement1]; and

WHEREAS, the issuance of the 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 Time-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 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 RSUs.

(a) 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 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 RSUs, each of which shall be deemed to be the equivalent of one Share.

(b) If and whenever any ordinary cash dividends are declared on Shares, on the
date such dividend is paid, the Grantee will receive payment of a dividend
equivalent in respect of the number of RSUs that are unvested and outstanding
hereunder as of the record date of such dividend.

 

 

1 

As applicable.

= 1 16608584.4 16608584.4

--------------------------------------------------------------------------------

 

The Grantee’s rights to any cash dividend equivalent other than an ordinary cash
dividend shall be subject to the terms of the Plan. The Grantee will not be
entitled to voting or dividend equivalent rights with respect to record dates
occurring before the Grant Date, nor with respect to record dates occurring on
or after the date, if any, on which the Grantee forfeits the RSUs.

(c) If and whenever the Company declares and pays a dividend or distribution on
the Shares in the form of additional Shares, or there occurs a forward split of
Shares, then a number of additional 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 on the same number
of 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 RSUs shall become vested and deliverable
upon the vesting of the RSUs to which such Shares relate as set forth in this
Agreement.

3. Terms and Conditions.

(a) Vesting.

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

(ii) In respect of the RSUs, in the event the then current Fair Market Value (as
defined in the Plan) 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 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 RSU Tranche 2 (as defined on
Schedule A) and/or the second (2nd) anniversary of the Grant Date in respect of
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, 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, 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) RSU Tranche 2 or (y) RSU Tranche 3 is required
pursuant to this Section 3(a)(ii), the number of additional RSUs to be granted
shall be calculated in each case as the difference between (A) the number of
RSUs equal to (1) the original dollar allocation of the applicable RSU tranche
(as set forth on Schedule A), divided by (2) in respect of 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 RSU Tranche 3, on the second (2nd) anniversary
of the Grant Date, and (B) the number of RSUs originally granted in the
applicable tranche.

Any additional RSUs granted as a result of the application of this Section
3(a)(ii) shall be added to the number of RSUs in the applicable tranche and will
be subject to the same terms and conditions as apply to the originally granted
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 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) If the purchaser or successor entity does not assume, convert, or replace
Grantee’s unvested and outstanding RSUs with awards of equity that is traded on
the NYSE or NASDAQ, subject to Section 3(a)(iv)(B) below, such unvested and
outstanding RSUs will immediately vest upon the Change in Control. If the
purchaser or

2

= 1 16608584.4

--------------------------------------------------------------------------------

 

successor entity does assume, convert, or replace such unvested and outstanding
RSUs with equity traded on the NYSE or NASDAQ, subject to Section 3(a)(iv)(B)
below, such unvested and outstanding RSUs will continue to vest in accordance
with its terms set forth in this Agreement.

(B) For purposes of this Section 3(a)(iv), (1) if the outstanding awards are not
assumed, converted, or replaced, the number of RSUs that shall be considered
unvested and outstanding (and subject to acceleration) will include any
additional 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 RSU (taking into
account any conversion or replacement terms that applied to the conversion or
replacement of the outstanding 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,
the Grantee shall forfeit any and all RSUs which have not vested as of the date
of such termination.

(c) Settlement. 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 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 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 RSUs, an amount equal to the taxes
the Company determines it is required to withhold under applicable tax laws with
respect to the 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
RSUs and the disposition of the shares following the settlement of 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 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 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. The Grantee shall not possess the right to vote the
shares underlying the RSUs until the RSUs have settled in accordance with the
provisions of this Agreement and the Plan.

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

3

= 1 16608584.4

--------------------------------------------------------------------------------

 

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.

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.

4

= 1 16608584.4

--------------------------------------------------------------------------------

 

(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]

5

= 1 16608584.4

--------------------------------------------------------------------------------

 

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

 

COMPANY

 

 

 

SERITAGE GROWTH PROPERTIES

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

GRANTEE

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

= 1 16608584.4

--------------------------------------------------------------------------------

 

SCHEDULE A

(TIME-VESTING RSUS)

Calculation

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

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

Value of Total Time-Based Portion of the 2018 Incentive Award (i.e., 30% of
Total Value): $______________ (the “Time-Based Value”)

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

 

1)

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

 

2)

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

 

3)

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

Vesting

Each of RSU Tranche 1, RSU Tranche 2, and RSU Tranche 3, as may be adjusted
pursuant to Section 3(a)(ii) of the Agreement, will vest in accordance with the
following vesting schedule, subject to the Grantee’s continued employment until
such date, unless specified otherwise in this Agreement, and be settled within
thirty (30) days of such vesting date.

 

Vesting Date

 

Percentage of Restricted
Share Units granted on
Grant Date to Vest

 

May 2, 2019

 

 

33.33

%

May 2, 2020

 

 

33.33

%

May 2, 2021

 

 

33.33

%

 

7

= 1 16608584.4