Document:

STZ EX 10.1_6.29.15 8K EXECUTIVE COMP

Exhibit 10.1

EXECUTIVE EMPLOYMENT AGREEMENT

This Agreement is made as of June 29, 2015 between Constellation Brands, Inc., a Delaware corporation (“Constellation”), and David Klein (“Executive”).

Executive has contributed substantially to the growth and success of Constellation.  Accordingly, Constellation desires to retain Executive’s services as set forth in the Agreement and to provide the necessary consideration to assure such services.

Constellation and Executive therefore agree as follows:

1.    Employment.  Constellation hereby employs Executive as its Executive Vice President and Chief Financial Officer or in such other senior executive position with Constellation or its affiliates as Constellation and Executive shall mutually agree upon.  Executive hereby accepts the employment specified herein, agrees to perform, in good faith, the duties, consistent with his position, to abide by the terms and conditions described in this Agreement and to devote his full working time and best efforts to Constellation and its affiliates.  These obligations shall not restrict Executive from engaging in customary activities as a director or trustee of other business or not-for-profit organizations so long as such activities, in the reasonable opinion of Constellation or its Board of Directors, do not materially interfere with the performance of Executive’s responsibilities under this Agreement or create a real or apparent conflict of interests.

2.    Term.  The term of this Agreement shall commence on the date set forth above and shall expire on February 28, 2016, provided that on February 28, 2016, and on each subsequent anniversary thereof, the term shall automatically be extended by the parties for an additional one-year period, until Constellation gives Executive notice, not less than 180 days prior to February 28, 2016, or an anniversary thereof, of a decision not to extend the Agreement for an additional one-year period.

3.    Compensation.  During the term of Executive’s employment, Constellation shall pay him a base salary at the rate of $530,000 per annum or such greater amount as the Human Resources Committee of the Board shall determine (“Base Salary”).  Such Base Salary shall be payable in accordance with Constellation’s standard payroll practices for senior executives.  Constellation may pay Executive a bonus in such amount and at such time or times as the Human Resources Committee of the Board shall determine.

4.    Reimbursement for Expenses/Benefits.  Executive shall be expected to incur various reasonable business expenses customarily incurred by persons holding like positions, including but not limited to traveling, entertainment and similar expenses incurred for the benefit of Constellation.  Constellation shall reimburse Executive for such expenses from time to time, at Executive’s request, and Executive shall account to Constellation for such expenses.  Executive shall participate in such benefit plans that are generally made available to all executives of Constellation.

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5.    Definitions.

“Board” or “Board of Directors” means the Board of Directors of Constellation Brands, Inc.

“COBRA” means the continuation of health care rules of Part 6 of Title I of the Employee Retirement Income Security Act of 1974, as amended.

“Code” means the Internal Revenue Code of 1986, as amended.

“For Cause Termination” means Constellation terminates Executive for (a) any intentional, non-incidental misappropriation of funds or property of Constellation by Executive; (b) unreasonable (and persistent) neglect or refusal by Executive to perform his duties as provided in Section 1 hereof and which he does not remedy within thirty days after receipt of written notice from Constellation; (c) the material breach by Executive of any provision of Sections 8 or 10 which he does not remedy within thirty days after receipt of written notice from Constellation; or (d) conviction of Executive of a felony.

“Good Reason Termination” means Executive terminates his employment under this Agreement for “good reason” upon 30 days’ notice to Constellation given within 90 days following the occurrence of any of the following events without his consent, each of which shall constitute a “good reason” for such termination; provided that the following events shall not constitute “good reason” if the event is remedied by Constellation within 30 days after receipt of notice given by Executive to Constellation specifying the event: 

(a)    Constellation acts to materially reduce Executive’s employment band or materially reduce Executive’s duties and responsibilities;

(b)    Constellation materially reduces the amount of Executive’s Base Salary; or

(c)    Constellation materially breaches this Agreement.

“Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury Department regulations and other authoritative guidance issued thereunder.

“Termination Date” means the date of the Executive’s “separation from service” (within the meaning of Section 409A) from Constellation.

6.    Consequence of Termination or Expiration of Agreement.  If (i) Executive voluntarily ceases employment with Constellation and its affiliates, quits or terminates this Agreement for any reason other than a Good Reason Termination, or (ii) Constellation terminates the employment of Executive in a For Cause Termination, then Executive’s rights and Constellation’s obligations hereunder shall forthwith terminate except that Executive shall be paid, as soon as administratively practicable after the Termination Date, all earned but unpaid base salary, accrued paid time off and accrued but unreimbursed expenses required to be reimbursed under this Agreement.

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If Executive’s employment with Constellation and its affiliates terminates on the date that this Agreement expires or if, during the term of this Agreement, Executive’s employment with Constellation and its affiliates is terminated (i) by Executive for a Good Reason Termination or (ii) by Constellation for any reason other than a For Cause Termination, then Executive shall be entitled to the following (which shall be in full and complete satisfaction of all of Constellation’s obligations under this Agreement):

(a)    Constellation shall pay to Executive all earned but unpaid Base Salary, accrued paid time off and accrued but unreimbursed expenses required to be reimbursed under this Agreement; and

(b)    Constellation shall pay to Executive a cash amount equal to two (2) times his Base Salary as in effect on the Termination Date plus two (2) times his Previous Bonus (as defined below).  For purposes of this Agreement, “Previous Bonus” shall equal the average annual cash bonus paid to Executive over the three most recently completed fiscal years, whether under Constellation’s Annual Management Incentive Plan or as part of another annual cash bonus program; and

(c)    Commencing on the first business day of the month following the month in which the Termination Date occurs and for the 23 months following such date, Constellation shall pay Executive an amount equal to the monthly cost of Executive’s medical and dental coverage as of the Termination Date taking into account both Constellation’s and Executive’s cost for such coverage; provided that the first payment shall not be made until the first business day occurring on or after the forty-fifth (45th) day following the Termination Date and the payment on that date shall include all payments that would otherwise have been paid absent this forty-five (45) day delay; and

(d)    For the eighteen (18) month period commencing on the first business day occurring on or after the forty-fifth (45th) day after the Termination Date, Constellation shall provide Executive with reasonable outplacement services; and

(e)    Constellation shall provide Executive with the opportunity to purchase continued health care coverage under Constellation’s plans as required by COBRA; and

(f)    Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise, nor will any payments hereunder be subject to offset in respect of compensation earned as a result of Executive’s employment with another employer subsequent to the Executive’s termination with Constellation and its affiliates.

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7.    Timing of Payments

All payments under Section 6(a) shall be due and payable, as soon as administratively practicable after the Termination Date.  All payments under Section 6(b) shall be due and payable in a single lump sum amount on the first business day occurring on or after the forty-fifth (45th) day after the Termination Date.  Payments or benefits set forth in Sections 6(c)-(d) shall be paid or provided at such times set forth therein.  Notwithstanding any provision in this Agreement to the contrary, no amounts or benefits under Sections 6(b)-(d) shall be paid to Executive hereunder unless Executive signs and executes a release substantially in the form attached hereto as Exhibit A and such release becomes effective and nonrevocable within forty-five (45) days after the Termination Date.

Notwithstanding any provision in this Agreement to the contrary, in the event that Executive is a “specified employee” (within the meaning of Section 409A) on the Termination Date and Constellation determines that delaying the payment of amounts under this Agreement is necessary to comply with the requirements of Section 409A, the payments under Sections 6(b) and 6(c) that would have otherwise been paid within the six month period after the Termination Date shall instead be paid on the first business day of the seventh month following the Termination Date.  The timing of all payments and benefits under this Agreement shall be made consistent with the requirements of Section 409A to the extent a payment or benefit is subject to such requirements.

8.    Restrictive Covenant.

(a)    Executive agrees that (i) during the period of his employment hereunder and (ii) provided that Executive is entitled to the payment under Section 6(b) or is terminated due to a For Cause Termination, for a period of two (2) years after he ceases employment, he will not, without the written consent of Constellation, seek or obtain a position with a Competitor (as defined below) in which Executive will use or is likely to use any confidential information or trade secrets of Constellation or any affiliate of Constellation, or in which Executive has duties for such Competitor that involve Competitive Services (as defined below) and that are the same or similar to those services actually performed by Executive for Constellation or any affiliate of Constellation.  The parties agree that Executive may continue service on any boards of directors on which he is serving while employed by Constellation or its affiliates.  If Executive’s employment is terminated by Executive for a Good Reason Termination or by Constellation for any reason other than a For Cause Termination, then Constellation will not unreasonably withhold such consent provided Constellation receives information and assurances, satisfactory to Constellation, regarding Executive’s new position.

(b)    Executive understands and agrees that the relationship between Constellation and its affiliates and each of their respective employees constitutes a valuable asset of Constellation and its affiliates and may not be converted to Executive’s own use.  Accordingly, Executive hereby agrees that (i) during the period of his employment hereunder and (ii) for a period of twelve months (12) months after he ceases employment, Executive shall not directly or indirectly, on his own behalf or on behalf of another person, solicit or induce any employee to terminate his or her employment relationship with Constellation or any affiliate of Constellation or to enter into employment with another person.  The foregoing shall not apply to employees who respond to solicitations of employment directed to the general public or who seek employment at their own initiative.

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(c)    For the purposes of this Section 8, “Competitive Services” means the provision of goods or services that are competitive with any goods or services offered by Constellation or any affiliate of Constellation including, but not limited to manufacturing, importing, exporting, distributing or selling wine, beer, liquor or other alcoholic beverages in the United States, Canada, New Zealand, Italy and/or Mexico.  The parties acknowledge that Constellation or its affiliates may from time to time during the term of this Agreement change or increase the line of goods or services it provides and its geographic markets, and Executive agrees that this Agreement shall be deemed to be amended from time to time to include such different or additional goods, services, and geographic markets to the definition of “Competitive Services” for purposes of this Section 8.  “Competitor” means any individual or any entity or enterprise engaged, wholly or in part, in Competitive Services.

(d)    Executive agrees that, due to his position of trust and confidence, the restrictions contained in this Section 8 are reasonable, and the benefits conferred on him in this Agreement, including his compensation, are adequate consideration, and, since the nature of Constellation’s and its affiliates’ collective business is international in scope, the geographic restriction herein is reasonable.

(e)    Executive acknowledges that a breach of this Section 8 will cause irreparable injury and damage, which cannot be reasonably or adequately compensated by money damages. Accordingly, he acknowledges that the remedies of injunction and specific performance shall be available in the event of such a breach, and Constellation shall be entitled to money damages, costs and attorneys’ fees, and other legal or equitable remedies, including an injunction pending trial, without the posting of bond or other security. Any period of restriction set forth in this Section 8 shall be extended for a period of time equal to the duration of any breach or violation thereof.

(f)    In the event of Executive’s breach of this Section 8, in addition to the injunctive relief described above, Constellation’s remedy shall include (i) the right to require Executive to account for and pay over to Constellation all compensation, profits, monies, accruals, increments or other benefits derived or received by Executive as the result of any transactions constituting a breach of the restrictive covenants in this Section 8, and (ii) in the case of a breach during the term of Executive’s employment hereunder, the termination of all compensation otherwise payable to Executive under Sections 3 and 4 with respect to the period of time after such breach, or (iii) in the case of a breach during the period described in Section 8(a)(ii) or 8(b)(ii) above, the forfeiture to Constellation of any payment made under Sections 6(b) herein.

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(g)     In the event that any provision of this Section 8 is held to be in any respect an unreasonable restriction, then the court so holding may modify the terms thereof, including the period of time during which it operates or the geographic area to which it applies, or effect any other change to the extent necessary to render this Section 8 enforceable, it being acknowledged by the parties that the representations and covenants set forth herein are of the essence of this Agreement.

9.    Limitation on Payments.  Notwithstanding anything contained in this Agreement or any other compensation plan to the contrary, if upon or following a change in the “ownership or effective control” of Constellation or in the “ownership of a substantial portion of the assets” of Constellation (each within the meaning of Section 280G of the Code), the tax imposed by Section 4999 of the Code (the “Excise Tax”) applies to any payments, benefits and/or amounts received by the Executive pursuant to this Agreement or otherwise, including, without limitation, any benefits received by the Executive as a result of any automatic vesting, lapse of restrictions and/or accelerated target or performance achievement provisions, or otherwise, applicable to outstanding grants or awards to the Executive under any of Constellation’s incentive plans, including without limitation, Constellation’s Long-Term Stock Incentive Plan (collectively, the “Total Payments”), then the Total Payments shall be reduced so that the maximum amount of the Total Payments (after reduction) shall be one dollar ($1.00) less than the amount which would cause the Total Payments to be subject to the Excise Tax; provided that such reduction to the Total Payments shall be made only if the total after-tax benefit to the Executive is greater after giving effect to such reduction than if no such reduction had been made.  If such a reduction is required, Constellation shall reduce or eliminate the Total Payments by eliminating or reducing the payment under Section 6(b) and then, if necessary eliminating or reducing the payment under Section 6(c).  In the case of reductions under Section 6(c) the payments shall be reduced in reverse order beginning with the payments which are to be paid the farthest in time.

10.    Trade Secrets and Confidential Information.  Executive agrees that unless duly authorized in writing by Constellation, he will neither during his employment by Constellation or its affiliates nor at any time thereafter divulge or use in connection with any business activity other than that of Constellation or its affiliates any trade secrets or confidential information first acquired by him during and by virtue of his employment with Constellation or its affiliates.

11.    Indemnification.  Constellation and its successors and/or assigns will indemnify, hold harmless, and defend Executive to the fullest extent permitted by the law of the State of Delaware and the Certificate of Incorporation and By-Laws of Constellation as in effect on the date of this Agreement with respect to any claims that may be brought against Executive arising out of any action taken or not taken by Executive in his capacity as an employee, officer or director of Constellation.  In addition, Constellation will advance to Executive reasonable legal fees and expenses, as such fees and expenses are incurred by Executive, to the fullest extent permitted by law, subject only to any requirements as are imposed by law.  Executive shall not unreasonably withhold his consent to the settlement of any claim for monetary damages for which Executive is entitled to full indemnification hereunder.  Executive shall be covered, in respect of his activities as an officer or director of Constellation, by any Directors and Officers liability policy or other similar policies maintained or obtained by Constellation or any of its successors and/or assigns to the fullest extent permitted by such policies.  Notwithstanding anything to the contrary contained in this Agreement, Executive’s rights under this Section 11 shall survive the Termination Date and the expiration or termination of this Agreement and shall continue without limit for so long as Executive may be subject to any claims covered by this Section 11.  No amendment to the Certificate of Incorporation or By-Laws of Constellation after the date of this Agreement will affect or impair 

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Executive’s rights under this Section 11 even with respect to any action taken or not taken by Executive after the effective date of any such amendment.

12.    Notice.  Any and all notices referred to herein shall be sufficient if furnished in writing and sent by registered mail to the parties.

13.    Transferability.  The rights, benefits and obligations of Constellation under this Agreement shall be transferable, and all covenants and agreements hereunder shall inure to the benefit of and be enforceable by or against, its successors and assigns.  Whenever the term “Constellation” is used in this Agreement, such term shall mean and include Constellation Brands, Inc. and its successors and assigns.  The rights and benefits of Executive under this Agreement shall not be transferable other than rights to property or compensation that may pass on his death to his estate or beneficiaries through his will or the laws of descent and distribution and the terms of any Constellation compensation or benefit plan.

14.    Severability.  If any provision of this Agreement or the application thereof is held invalid or unenforceable, the invalidity or unenforceability thereof shall not affect any other provisions of this Agreement which can be given effect without the invalid or unenforceable provision, and to this end the provisions of this Agreement are to be severable.

15.    Amendment; Waiver.  This Agreement contains the entire agreement of the parties with respect to the employment of Executive by Constellation and/or its affiliates and upon execution of this Agreement supersedes any previous agreement with Constellation and/or its affiliates.  No amendment or modification of this Agreement shall be valid unless evidenced by a written instrument executed by the parties hereto.  No waiver by either party of any breach by the other party of any provision or conditions of this Agreement shall be deemed a waiver of any similar or dissimilar provision or condition at the same or any prior or subsequent time.

16.    Tax Withholding.  Constellation may withhold from any payments due to Executive hereunder such amounts as Constellation may determine are required to be withheld under applicable federal, state and local tax laws.  To the extent that there are no cash payments to withhold upon, Executive shall promptly remit to Constellation cash payments that are sufficient to cover all applicable withholdings.

17.    Section 409A.  The parties intend that benefits under this Agreement are to be either exempt from, or comply with, the requirements of Section 409A, and this Agreement shall be interpreted and administered in accordance with the intent that Executive not be subject to tax under Section 409A.  If any provision of the Agreement would otherwise conflict with or frustrate this intent, that provision will be interpreted and deemed amended so as to avoid the conflict.  Any reference in this Agreement to “terminates employment”, “employment with Constellation and its affiliates terminates”, or similar phrase shall mean an event that constitutes a “separation from service” within the meaning of Section 409A.  Constellation shall not be responsible for any tax, penalty, interest or similar assessment imposed on Executive as a consequence of Section 409A.  Each payment hereunder shall be treated as a separate payment for purposes of Section 409A.

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18.    Governing Law.  This Agreement shall be governed by and construed under and in accordance with the laws of the State of New York without regard to principles of conflicts of laws.

[signature page follows]

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IN WITNESS WHEREOF, the parties have executed this Executive Employment Agreement as of the date first set forth above.

	
			
	 
	CONSTELLATION BRANDS, INC.

	 
	 

	 
	By:
	/s/Robert Sands

	 
	Name:
	Robert Sands

	 
	Title:
	President and Chief Executive 
Officer

	
			
	 
	 
	/s/David Klein

	 
	 
	David Klein

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Exhibit A

FULL AND FINAL RELEASE OF CLAIMS

1.    In consideration of the payments provided for in Sections 6(b)-(d) of the Executive Employment Agreement (hereinafter referred to as the “Employment Agreement”) between CONSTELLATION BRANDS, INC. and DAVID KLEIN (hereinafter referred to as “Executive”), which is attached hereto and forms a part of this Full and Final Release of Claims, on behalf of himself, his heirs, administrators and assigns, Executive hereby releases and forever discharges Constellation Brands, Inc., its subsidiaries and affiliates and each of its and their respective officers, directors, employees, servants and agents, and their successors and assigns, (hereinafter collectively referred to as “Constellation Released Parties”) jointly and severally from any and all actions, causes of action, contracts and covenants, whether express or implied, claims and demands for damages, indemnity, costs, attorneys’ fees, interest, loss or injury of every nature and kind whatsoever arising under any federal, state, or local law, or the common law, which Executive may heretofore have had, may now have or may hereinafter have in any way relating to any matter, including but not limited to, any matter related to Executive’s employment by Constellation Released Parties and the termination of that employment; provided, however, nothing in this Full and Final Release of Claims shall release (i) Executive’s right to receive the payments or benefits provided for in Sections 6(b)-(d) of the Employment Agreement, (ii) Executive’s vested benefits under Constellation Brands, Inc.’s pension plans or rights under any existing stock options held by Executive, or (iii) any right to indemnification or advancement of expenses pursuant to Section 11 of the Employment Agreement or the Certificate of Incorporation or By-laws of Constellation Brands, Inc. (the items in the foregoing clauses (i) through (iii) are hereinafter referred to as the “Preserved Rights”).

a.    This Full and Final Release of Claims covers, without limitation, any claims of discrimination, unlawful retaliation or harassment, or denial of rights, on the basis of any protected status, characteristic or activity, including, but not limited to, sex, disability, handicap, race, color, religion, creed, national origin, ancestry, citizenship, ethnic characteristics, sexual orientation, marital status, military status, or age (including, without limitation, any right or claim arising under the Age Discrimination in Employment Act), need for a leave of absence, or complaint about discrimination, harassment, or other matter, arising under any state, federal, or local law (whether statutory or common law), regulation or ordinance which may be applicable to his employment by Constellation Released Parties.  This Full and Final Release of Claims also covers, without limitation, any claims of wrongful termination, breach of express or implied contract, breach of implied covenant of good faith and fair dealing, violation of public policy, intentional or negligent infliction of emotional distress, defamation, invasion of privacy, fraud or negligent misrepresentation, intentional or negligent interference with contractual relations, and any other common law tort.  Except to the extent that they constitute Preserved Rights, this Full and Final Release of Claims also covers any claims for severance pay, bonus, life insurance, health and medical insurance, disability benefits, or any other fringe benefit, and claims related to any other transaction, occurrence, act, or omission or any loss, damage or injury whatsoever, known or unknown, resulting from any act or omission by or on the part of Constellation Released Parties, or any of them, committed or omitted prior to the date of this Full and Final Release of Claims.

A-1

b.    Executive understands and agrees that the giving of the aforementioned consideration is deemed to be no admission of liability on the part of the Constellation Released Parties.

c.    In the event that Executive should hereafter make any claim or demand or commence or threaten to commence any action, claim or proceeding against the Constellation Released Parties for or by reason of any cause, matter or thing other than a Preserved Right, this document may be raised as a complete bar to any such claim, demand or action.

2.     By signing this Full and Final Release of Claims, Executive acknowledges that:

a.    He has been afforded a reasonable and sufficient period of time to review, and deliberate thereon, and has been specifically urged by Constellation Released Parties to consult with legal counsel or a representative of his choice before signing this Full and Final Release of Claims and that he has had a fair opportunity to do so; and 

b.    He has carefully read and understands the terms of this Full and Final Release of Claims; and

c.    He has signed this Full and Final Release of Claims freely and voluntarily and without duress or coercion and with full knowledge of its significance and consequences, and of the rights and claims relinquished, surrendered, released and discharged hereunder; and

d.    He acknowledges he is not entitled to the consideration described above in the absence of signing this Full and Final Release of Claims; and

e.    The consideration which he is receiving in exchange for his release of claims is of value to him; and

f.    The only consideration for signing this Full and Final Release of Claims are the terms stated herein, and no other promise, agreement or representation of any kind has been made to him by any person or entity whatsoever to cause him to sign this Full and Final Release of Claims; and

g.    He was offered a minimum period of at least twenty-one (21) days after his receipt of this Full and Final Release of Claims to review and consider it and for deliberation thereon, and, to the extent he has elected to sign it prior to the expiration of the twenty-one (21) day period, he does so voluntarily on his own initiative without any inducement or encouragement on the part of the Constellation Released Parties to do so.

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h.    He understands that this Full and Final Release of Claims may be revoked in writing by him at any time during the period of seven (7) calendar days following the date of his execution of this Full and Final Release of Claims by delivering such written revocation to _________, at his office located at ______________, New York _____.  If such seven‐day revocation period expires without his exercising his revocation right, the obligations of this Full and Final Release of Claims will then become fully effective as more fully set forth herein.

IN WITNESS WHEREOF, Executive has hereunto executed this Full and Final Release of Claims by affixing his hand this ____ day of ____________________, 20__ in the presence of the witness whose signature is subscribed below.
	
	
	 

	David Klein

Sworn to before me this
_____ day of ____________, 20__.

_____________________________
Notary Public

IN WITNESS WHEREOF, _________________ has hereunto executed this Full and Final Release of Claims on behalf of Constellation Brands, Inc., its subsidiaries, affiliates, by affixing [his/her] hand this ____ day of ____________________, 20__ in the presence of the witness whose signature is subscribed below.
	
	
	 

	[Name]

	[Title]

Sworn to before me this
_____ day of ____________, 20__.

_____________________________
Notary Public

A-3EX-10.1

 Exhibit 10.1 

EXECUTION VERSION 
 EXCHANGE
AGREEMENT 
 by and among 
 ESL
PARTNERS, L.P. 
 and 
 EDWARD
S. LAMPERT 
 and 
 SERITAGE
GROWTH PROPERTIES, L.P. 
 and 

SERITAGE GROWTH PROPERTIES 

June 26, 2015 

 TABLE OF CONTENTS 

 

									
	 	 	 	 	 	  	Page	 
			
	 1.
	 	 Definitions
	  	 	2	  
			
	 2.
	 	 Exchange
	  	 	4	  
		 	 2.1
	 	Exchange	  	 	4	  
		 	 2.2
	 	Exchange Closing	  	 	4	  
			
	 3.
	 	 Representations and Warranties of the Company
	  	 	4	  
		 	 3.1
	 	Existence and Power	  	 	4	  
		 	 3.2
	 	Capitalization	  	 	5	  
		 	 3.3
	 	Authorization	  	 	5	  
		 	 3.4
	 	Valid Issuance of Exchange Interests	  	 	5	  
		 	 3.5
	 	Non-Contravention; No Consents	  	 	5	  
			
	 4.
	 	 Representations and Warranties of the Holders
	  	 	6	  
		 	 4.1
	 	Organization; Ownership	  	 	6	  
		 	 4.2
	 	Authorization	  	 	6	  
		 	 4.3
	 	Non-Contravention, No Consents	  	 	6	  
		 	 4.4
	 	SHC Securities	  	 	6	  
		 	 4.5
	 	Securities Act Representations	  	 	7	  
		 	 4.6
	 	Brokers and Finders	  	 	7	  
		 	 4.7
	 	No Additional Representations	  	 	7	  
			
	 5.
	 	 Covenants
	  	 	8	  
		 	 5.1
	 	Taking of Necessary Action	  	 	8	  
		 	 5.2
	 	Securities Laws; Legends	  	 	8	  
		 	 5.3
	 	Proportional Surrender	  	 	10	  
			
	 6.
	 	 Termination
	  	 	10	  
		 	 6.1
	 	Conditions of Termination	  	 	10	  
		 	 6.2
	 	Effect of Termination	  	 	10	  
			
	 7.
	 	 Miscellaneous Provisions
	  	 	11	  
		 	 7.1
	 	Survival of Representations and Warranties	  	 	11	  
		 	 7.2
	 	Notices	  	 	11	  
		 	 7.3
	 	Entire Agreement; Third Party Beneficiaries; Amendment	  	 	12	  
		 	 7.4
	 	Counterparts	  	 	12	  
		 	 7.5
	 	Governing Law; Jurisdiction; Venue	  	 	12	  
		 	 7.6
	 	Expenses	  	 	12	  
		 	 7.7
	 	Successors and Assigns	  	 	13	  
		 	 7.8
	 	Severability	  	 	13	  
		 	 7.9
	 	Specific Performance	  	 	13	  
		 	 7.10
	 	Headings	  	 	13	  

  
 i 

 EXCHANGE AGREEMENT 

EXCHANGE AGREEMENT, dated as of June 26, 2015 (this “Agreement”), by and among SERITAGE GROWTH PROPERTIES, a Maryland real estate
investment trust (the “Company”), SERITAGE GROWTH PROPERTIES, L.P., a Delaware limited partnership of which the Company is the general partner (the “Operating Partnership”) and ESL Partners, L.P., a Delaware limited
partnership, and Edward S. Lampert, a United States citizen (each a “Holder” and together, the “Holders”). 

WHEREAS, Sears Holdings Corporation (“SHC”) has announced its intent to undertake a separation transaction whereby it will
cause its Subsidiaries to sell to one or more Subsidiaries of the Company certain properties and/or one or more of its Subsidiaries owning certain properties and lease such properties back from the Company and/or such Subsidiaries, and, in
connection therewith, the Company, through a pro rata distribution by SHC to holders of shares of its common stock, par value $0.01 per share (the “SHC Common Stock”) of rights (the “Rights”), each of which entitles
the holder to purchase one half of one Class A common share of beneficial interest, par value $0.01 per share, of the Company (the “Shares”), will become a new publicly traded real estate investment trust (a
“REIT”) under the Code (as defined herein) (the “Rights Offering”); 
 WHEREAS, pursuant to
Section 856(d)(2)(B) of the Code, rents received or accrued, directly or indirectly, from any Person in which a REIT owns, directly or indirectly, 10% or more of the vote or value of shares of all classes of stock are excluded from the
definition of “rents from real property” under Section 856(d) of the Code and therefore are not qualifying income for purposes of the gross income tests under Section 856(c)(2) and (3) of the Code (the “Related Party
Tenant Rule”); 
 WHEREAS, Article VII of the Declaration of Trust of the Company (the “Company DOT”) contains
restrictions on the ownership and transfer of stock of the Company, including provisions that prohibit any Person from owning stock of the Company if such ownership would cause any income of the Company to fail to qualify as “rents from real
property” for purposes of Section 856(d) of the Code; 
 WHEREAS, absent a realignment of the interests of the Holders, if the
Holders were to exercise all Rights received by the Holders pursuant to the Rights Offering, for purposes of the Related Party Tenant Rule, the Company would own, directly or indirectly, 10% or more of SHC, in part by virtue of the Beneficial
Ownership by the Holders of 10% or more of both SHC and the Company; 
 WHEREAS, if, for purposes of the Related Party Tenant Rule, the
Company were to own, directly or indirectly, 10% or more of SHC, the Company would not be expected to meet the gross income tests under Section 856(c)(2) and (3) of the Code, and therefore would not qualify to be taxed as a REIT; and 

  
 1 

 WHEREAS, in connection with the proposed separation transaction, and so that the Company may
qualify to be taxed as a REIT, the Holders and the Company have agreed to exchange any and all Rights held by the Holders as of immediately prior to the closing of the Rights Offering the “Rights Offering Closing”) that would, if
exercised, result in the Holders Beneficially Owning more than 3.2% of the aggregate value or number of all of the common shares of beneficial interest of the Company outstanding immediately following the Rights Offering Closing, calculated in
accordance with Section 2.3 (such Rights, the “Excess Rights”), together with cash as provided herein, for units representing limited partnership interests in the Operating Partnership (the “Partnership
Units”) and Class B common shares of beneficial interest, par value $0.01 per share (the “Class B Shares”) of the Company, subject to the terms and conditions set forth herein. 

NOW THEREFORE, in consideration of the mutual agreements, representations, warranties and covenants in this Agreement contained, the parties
agree as follows: 
 1. Definitions. As used in this Agreement, the following terms shall have the following respective meanings:

 “Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under direct
or indirect common control with such Person; provided, that each of the Holders and their respective Affiliates (other than the Company, the Operating Partnership and SHC) shall not be deemed to be an Affiliate of the Company, the Operating
Partnership or SHC, and vice versa. 
 “Beneficial Ownership” shall mean ownership of securities by a Person who would be treated as
an owner of such securities within the meaning of Section 856(d)(2)(B) of the Code either directly, indirectly or constructively through the application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code. The
terms “Beneficial Owner,” “Beneficially Own,” “Beneficially Owns” and “Beneficially Owned” shall have the correlative meanings. 

“Business Day” means any day other than the days on which banks in New York, New York are required or authorized to remain closed. 

“Code” means the Internal Revenue Code of 1986, as amended. 

“Exchange Shares Purchase Price” means the product obtained by multiplying (a) the aggregate number of Exchange Shares to be received by
the Holders in the Exchange by (b) $0.53. 
 “Exchange Units Purchase Price” means the product obtained by multiplying (a) the
aggregate number of Excess Units to be received by the Holders in the Exchange by (b) $29.58. 
 “Exchange Rate” shall mean one
(1) Partnership Unit per one (1) Share. 

  
 2 

 “Governmental Authority” means any court, administrative agency or commission or other
governmental authority or instrumentality, whether federal, state, local or foreign, and any applicable industry self-regulatory organization. 

“Law” means applicable statutes, common law, rules, ordinances, regulations, codes, licensing requirements, orders, judgments, injunctions,
writs, decrees, licenses, governmental guidelines or interpretations having the force of law, permits, rules and bylaws, in each case, of a Governmental Authority. 

“Purchase Price” means amount in cash in U.S. dollars equal to the sum of (a) the Exchange Units Purchase Price and (b) the
Exchange Shares Purchase Price. 
 “Person” means any individual, corporation, company, limited liability company, partnership,
association, trust, joint venture, group or any other entity or organization, including any government or political subdivision or any agency or instrumentality thereof. 

“Securities Act” shall mean the Securities Act of 1933, as amended, and all of the rules and regulations promulgated thereunder. 

“Subsidiary” means, with respect to any Person, any other Person of which the first Person owns, directly or indirectly, securities or other
ownership interests having voting power to elect a majority of the board of directors or other persons performing similar functions (or, if there are no such voting interests, more than 50% of the equity interests of the second Person). 

Index of Defined Terms 

 

					
	 	  	Page	 
		
	 Affiliate
	  	 	2	  
	 Agreement
	  	 	1	  
	 Beneficial Ownership
	  	 	2	  
	 Business Day
	  	 	2	  
	 Class B Shares
	  	 	2	  
	 Closing
	  	 	4	  
	 Code
	  	 	2	  
	 Company
	  	 	1	  
	 Enforceability Exceptions
	  	 	5	  
	 Excess Rights
	  	 	2	  
	 Exchange
	  	 	4	  
	 Exchange Interests
	  	 	4	  
	 Exchange Rate
	  	 	2	  
	 Exchange Shares
	  	 	4	  
	 Exchange Shares Purchase Price
	  	 	2	  
	 Exchange Units
	  	 	4	  
	 Exchange Units Purchase Price
	  	 	2	  
	 Governmental Authority
	  	 	3	  

					
	 	  	Page	 
		
	 Holder Shares
	  	 	7	  
	 Holders
	  	 	1	  
	 Law
	  	 	3	  
	 Operating Partnership
	  	 	1	  
	 Partnership Agreement
	  	 	4	  
	 Partnership Units
	  	 	2	  
	 Person
	  	 	3	  
	 Purchase Price
	  	 	3	  
	 REIT
	  	 	1	  
	 Rights Offering
	  	 	1	  
	 Rights Offering Closing
	  	 	2	  
	 Securities Act
	  	 	3	  
	 Shares
	  	 	1	  
	 SHC
	  	 	1	  
	 SHC Common Stock
	  	 	1	  
	 Subsidiary
	  	 	3	  
	 Transactions
	  	 	5	  
	 Transfer
	  	 	10	  

 
 

  
 3 

 2. Exchange. 

2.1. Exchange. Subject to and upon the terms and conditions set forth in this Agreement, the Company, the Operating Partnership and the
Holders hereby agree that at the Closing, all of the Holders’ Excess Rights that would otherwise be exercisable for Shares may be tendered to the Company together with the Purchase Price in exchange for the issuance and sale to the Holders of
their pro rata portion of (a) Partnership Units (the “Exchange Units”) at the Exchange Rate and (b) such number of Class B Shares (the “Exchange Shares,” and together with the Exchange Units, the
“Exchange Interests”) as are required for the Holders to hold, in the aggregate and taking into account all Shares to be held by the Holders, 9.8% of the voting power of the Company immediately following the Rights Offering Closing
(collectively, the “Exchange”); provided, that notwithstanding the Holders’ exercise of the foregoing right, the Holders shall have the right to exercise its over-subscription privilege relating to its Excess Rights (as
described in the Company’s Registration Statement on Form S-11) to the same extent as it would have if it were to exercise such Excess Rights for Shares, except that in lieu of Shares, the Holders shall receive additional Exchange Units at the
Exchange Rate for each Share that would have been issuable pursuant to the exercise of such over-subscription privilege. 
 2.2. Exchange
Closing. The closing of the Exchange (the “Closing”) shall occur immediately prior to the Rights Offering Closing. At the Closing, (a) the Holders shall (i) deliver to the Company all of the Excess Rights, free and
clear of all liens, together with any necessary or appropriate instruments of transfer relating thereto, and (ii) pay, or cause to be paid, to Operating Partnership or its designee the Purchase Price, (b) each of the Holders and the
Operating Partnership shall execute the amended and restated agreement of limited partnership of Operating Partnership (the “Partnership Agreement”) and (c) the Operating Partnership shall issue to the Holders free and clear of
all liens, and deliver to the Holders evidence of book-entry notations representing the Exchange Interests (in each case, pro rata based on the number of Rights held by each Holders prior to the Exchange), together with a copy of the executed
Partnership Agreement with a notation evidencing the Holders as the holders of the Exchange Units and a duly executed certificate evidencing the Exchange Shares; provided, however, that the delay or failure by any party to satisfy its
obligations pursuant to this sentence shall not in any way delay or invalidate the automatic exchange effectuated pursuant to Section 2.1. 

3. Representations and Warranties of the Company. The Company and the Operating Partnership hereby represent and warrant to the
Holders, as of the date hereof and as of the Closing, as follows: 
 3.1. Existence and Power. The Company is a real estate
investment trust duly organized, validly existing and in good standing under the laws of the State of Maryland and has all requisite trust power and authority to own, operate and lease its properties and to carry on its business as it is being
conducted on the date of this Agreement. The Operating Partnership is a limited partnership duly organized, validly existing 

  
 4 

 
and in good standing under the laws of the State of Delaware and has all requisite partnership power and authority to own, operate and lease its properties and to carry on its business as it is
being conducted on the date of this Agreement. 
 3.2. Capitalization. 

(a) The authorized shares of beneficial interest of the Company consist of 100,000,000 Shares, 50,000,000 Class B Shares, 50,000,000 Class C
common shares of beneficial interest, par value $0.01 per share, and 50,000,000 preferred shares of beneficial interest. As of the date of this Agreement, no shares of beneficial interest of the Company are issued and outstanding. 

(b) The number of Partnership Units that may be issued by the Operating Partnership is not limited by the Operating Partnership’s
organizational documents. As of the date of this Agreement, no Partnership Units are issued and outstanding. The Company is the sole general partner of the Operating Partnership. 

3.3. Authorization. The execution, delivery and performance of this Agreement (the “Transactions”) have been duly
authorized by all necessary action on the part of the Company and on the part of the Operating Partnership, and this Agreement is a valid and binding obligation of each of the Company and the Operating Partnership, enforceable against each of them
in accordance with its terms, subject to the limitation of such enforcement by (i) the effect of bankruptcy, insolvency, reorganization, receivership, conservatorship, arrangement, moratorium or other laws affecting or relating to
creditors’ rights generally or (ii) the rules governing the availability of specific performance, injunctive relief or other equitable remedies and general principles of equity, regardless of whether considered in a proceeding in equity or
at law (the “Enforceability Exceptions”). 
 3.4. Valid Issuance of Exchange Interests. The Exchange Units have been
duly authorized by all necessary limited partnership action of the Operating Partnership. When issued and sold against receipt of the consideration therefor, the Exchange Units will be validly issued, fully paid and nonassessable. The Exchange
Shares have been duly authorized by all necessary trust action of the Company. When issued and sold against receipt of the consideration therefor, the Exchange Shares will be validly issued, fully paid and nonassessable. 

3.5. Non-Contravention; No Consents. The execution, delivery and performance of this Agreement, and the consummation by the Company and
by the Operating Partnership of the Transactions, does not conflict with, violate or result in a breach of any provision of, or constitute a default under, or result in the termination of or accelerate the performance required by, or result in a
right of termination or acceleration under, (i) the organizational documents of the Company or of the Operating Partnership, (ii) any mortgage, note, indenture, deed of trust, lease, loan agreement or other agreement binding upon the
Company, the Operating Partnership or any of their respective Subsidiaries or (iii) any permit, license, judgment, order, decree, ruling, injunction, statute, law, ordinance, rule or regulation applicable to the Company, the Operating
Partnership or any of their respective 

  
 5 

 
Subsidiaries, other than in the cases of clauses (ii) and (iii) as would not reasonably be expected to have a material adverse effect on the Company, the Operating Partnership and their
respective Subsidiaries, taken as a whole. Assuming the accuracy of the representations of the Holders set forth herein, other than as have been obtained prior to the date of this Agreement, no material consent, approval, order or authorization of,
or material registration, declaration or filing with, any Governmental Authority is required on the part of the Company, the Operating Partnership or any of their respective Subsidiaries in connection with the execution, delivery and performance by
the Company and the Operating Partnership of this Agreement and the consummation by the Company and the Operating Partnership of the Transactions. 

4. Representations and Warranties of the Holders. The Holders hereby represent and warrant to the Company and the Operating
Partnership, as of the date hereof and as of the Closing, as follows: 
 4.1. Organization; Ownership. ESL Partners, L.P. is a
Delaware limited partnership and is duly organized, validly existing and in good standing under the laws of Delaware and has all requisite power and authority to own, operate and lease its properties and to carry on its business as it is being
conducted on the date of this Agreement. 
 4.2. Authorization. The Transactions have been duly authorized by all necessary corporate
or equivalent action on the part of each Holder, and this Agreement is a valid and binding obligation of each Holder, enforceable against it in accordance with its terms, subject to the limitation of such enforcement by the Enforceability
Exceptions. 
 4.3. Non-Contravention; No Consents. The execution, delivery and performance of this Agreement by the Holders, and the
consummation by the Holders of the Transactions, does not conflict with, violate or result in a breach of any provision of, or constitute a default under, or result in the termination of or accelerate the performance required by, or result in a
right of termination or acceleration under, (i) the organizational documents of any of the Holders, (ii) any mortgage, note, indenture, deed of trust, lease, loan agreement or other agreement binding upon any of the Holders or
(iii) any permit, license, judgment, order, decree, ruling, injunction, statute, law, ordinance, rule or regulation applicable to the Holders or any of their respective Subsidiaries, other than in the cases of clauses (ii) and
(iii) as would not reasonably be expected to adversely affect or delay the consummation of the Transactions by the Holders. Assuming the accuracy of the representations of the Company and the Operating Partnership set forth herein, other than
as have been obtained prior to the date of this Agreement, no material consent, approval, order or authorization of, or material registration, declaration or filing with, any Governmental Authority is required on the part of the Holders or any of
their respective Subsidiaries in connection with the execution, delivery and performance by the Holders of this Agreement and the consummation by the Holders of the Transactions. 

4.4. SHC Securities and Rights. 

  
 6 

 (a) As of the record date for the Rights Offering, the Holders owned of record, and, to the
Holders’ knowledge, the Holders Beneficially Owned, (a) shares of SHC Common Stock as set forth on Exhibit A (the “Holder Shares”) and (b) no other (i) voting securities, or securities of SHC or any of its
Subsidiaries convertible into or exchangeable for shares of capital stock or voting securities, of SHC, (ii) options or other rights to acquire from SHC any shares of capital stock, voting securities or securities convertible into or
exchangeable for shares of capital stock or voting securities of SHC or (iii) equity equivalent interests in the ownership or earnings of SHC, other than as set forth on Exhibit A. 

(b) A Holder owns and has valid title to each of the Holder Shares, free and clear of any and all liens. Other than this Agreement, no Holder
is party to any option, warrant, purchase right or other contract or commitment obligating it to sell, transfer, pledge or otherwise dispose of the Holder Shares or to any voting trust, proxy or other agreement or understanding with respect to the
voting of the Holder Shares. 
 (c) As of the Closing, a Holder owns and has valid title to each of the Excess Rights, free and clear of
any and all liens. As of the Closing, other than this Agreement, no Holder is party to any option, warrant, purchase right or other contract or commitment obligating it to sell, transfer, pledge or otherwise dispose of the Excess Rights or to any
voting trust, proxy or other agreement or understanding with respect to the voting of the Excess Rights. 
 4.5. Securities Act
Representations. Each Holder is an accredited investor (as defined in Rule 501 of the Securities Act) and is aware that the issuance and exchange of Exchange Interests is being made in reliance on a private placement exemption from registration
under the Securities Act. Each Holder is acquiring the Exchange Interests for its own account, and not with a view toward, or for sale in connection with, any distribution thereof in violation of any federal or state securities or “blue
sky” law, or with any present intention of distributing or selling such Exchange Interests in violation of the Securities Act. Each Holder has sufficient knowledge and experience in financial and business matters so as to be capable of
evaluating the merits and risks of its investment in such Exchange Interests and is capable of bearing the economic risks of such investment. Each Holder has been provided a reasonable opportunity to undertake and has undertaken such investigation
and has been provided with and has evaluated such documents and information as it has deemed necessary to enable it to make an informed and intelligent decision with respect to the execution, delivery and performance of this Agreement. 

4.6. Brokers and Finders. None of the Holders nor any of their respective officers, directors, employees or agents has utilized any
broker, finder, placement agent or financial advisor or incurred any liability for any brokers’, finders’ or similar fees or commissions in connection with any of the Transactions which are or may become payable by the Company or any of
its Subsidiaries. 
 4.7. No Additional Representations. 

(a) The Holders acknowledge that neither the Company nor the Operating Partnership makes any representation or warranty as to any matter
whatsoever except as 

  
 7 

 
expressly set forth in Section 3, and specifically (but without limiting the generality of the foregoing), that neither the Company nor the Operating Partnership makes any
representation or warranty with respect to (i) any projections, estimates or budgets delivered or made available to the Holders (or any of their Affiliates or their respective, officers, trustees or employees) of future revenues, results of
operations (or any component thereof), cash flows or financial condition (or any component thereof) of the Company and its Subsidiaries or (ii) the future business and operations of the Company and its Subsidiaries, and none of the Holders
relied on such information or any other representations or warranties not set forth in Section 3. 
 (b) Each Holder has
conducted its own independent review and analysis of the business, operations, assets, liabilities, results of operations, financial condition and prospects of the Company and its Subsidiaries and acknowledges that each Holder has been provided
sufficient access for such purposes. Except for the representations and warranties expressly set forth in Section 3 by the Company and the Operating Partnership in accordance with the terms hereof, in entering into this Agreement, each
Holder has relied solely upon its independent investigation and analysis of the Company and its Subsidiaries, and each Holder acknowledges and agrees that it has not been induced by and has not relied upon any representations, warranties or
statements, whether express or implied, made by the Company, its Subsidiaries or any of their respective affiliates, shareholders, controlling persons or representatives that are not expressly set forth in Section 3, whether or not such
representations, warranties or statements were made in writing or orally. Each Holder acknowledges and agrees that, except for the representations and warranties expressly set forth in Section 3, (i) the Company or the Operating
Partnership does not make, or has not made, any representations or warranties relating to itself or its business or otherwise in connection with the Transactions and no Holder is relying on any representation or warranty except for those expressly
set forth in this Agreement, (ii) no person has been authorized by the Company or the Operating Partnership to make any representation or warranty relating to either of them or their respective businesses or otherwise in connection with the
Transactions, and if made, such representation or warranty must not be relied upon by the Holders as having been authorized by the Company or the Operating Partnership, and (iii) any estimates, projections, predictions, data, financial
information, memoranda, presentations or any other materials or information provided or addressed to the Holders or any of their respective Affiliates or representatives are not and shall not be deemed to be or include representations or warranties
of the Company or the Operating Partnership unless any such materials or information is the subject of any express representation or warranty set forth in Section 3 of this Agreement. 

5. Covenants. 
 5.1.
Taking of Necessary Action. Each of the parties hereto agrees to use its reasonable best efforts promptly to take or cause to be taken all action and promptly to do or cause to be done all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the Transactions. In case at any time before or after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement shall, at such party’s expense, take all such necessary action as may be reasonably requested by another party to this Agreement. 

  
 8 

 5.2. Securities Laws; Legends. 

(a) Each Holder acknowledges and agrees that as of the Closing the Exchange Interests will not have been registered under the Securities Act
or the securities laws of any state and that they may be sold or otherwise disposed of only in one or more transactions registered under the Securities Act and, where applicable, such laws, or as to which an exemption from the registration
requirements of the Securities Act and, where applicable, such laws, is available. Each Holder acknowledges that it has no right to require the Company or the Operating Partnership to register the Exchange Interests. Each Holder further acknowledges
and agrees that any certificate for the Exchange Units shall bear a legend substantially as set forth in paragraph (b) of this Section 5.2 (and any Exchange Units evidenced in book entry form shall contain appropriate comparable
notation and reflect related stop transfer instructions) and any certificate for the Exchange Shares shall bear a legend substantially as set forth in paragraph (c) of this Section 5.2 (and any Exchange Shares evidenced in book
entry form shall contain appropriate comparable notation and reflect related stop transfer instructions). 
 (b) Any certificates for the
Exchange Units shall bear legends in substantially the following form: 
 THE COMMON UNITS REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT MAY
NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE PARTNERSHIP AGREEMENT AS OF [●], 2015 AS
IT MAY BE AMENDED FROM TIME TO TIME (A COPY OF WHICH IS ON FILE WITH THE PARTNERSHIP). EXCEPT AS OTHERWISE PROVIDED IN SUCH AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE COMMON UNITS REPRESENTED BY THIS
CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR (B) IF THE PARTNERSHIP HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF
COUNSEL FOR THE HOLDER THAT SUCH TRANSFER, SALE ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN EFFECT THEREUNDER. 

(c) Any certificates for the Exchange Shares shall bear legends in substantially the following form: 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO A REGISTRATION IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS. 

  
 9 

 (d) When issued pursuant hereto, any certificates evidencing the Exchange Interests shall also
bear any legend required by any applicable state blue sky law. 
 (e) Any holder of Exchange Units may request the Operating Partnership,
and any holder of Exchange Shares may request the Company, to remove any or all of the legends described in this Section 5.2 from the certificates evidencing such Exchange Units or Exchange Shares, as applicable, by submitting to the
Operating Partnership or the Company, as applicable, such certificates, together with an opinion of counsel reasonably satisfactory to the Operating Partnership or the Company, as applicable, to the effect that such legend or legends are no longer
required under the Securities Act or applicable state laws, as the case may be. 
 5.3. Proportional Surrender. Each Holder hereby
agrees that from and after the Closing, upon any sale, transfer or other disposition (a “Transfer”) of one or more Exchange Units to any Person other than an Affiliate of the Holders, it shall surrender to the Company as promptly as
practicable a number of Class B Shares equal to the product obtained by multiplying (a) the number of Class B Shares then held by such Holder by (b) the quotient obtained by dividing (i) the number of Exchange Units subject to such
Transfer by such Holder by (ii) the number of Exchange Units held by such Holder immediately prior to such Transfer, rounded down to the nearest whole number; provided, that upon any Transfer of one or more Exchange Units to any Affiliate of
the Holders, the foregoing surrender obligation shall be assumed by such Affiliate and shall apply in the event of any Transfer by such Affiliate to any Person other than Affiliate of the Holders. 

6. Termination. 
 6.1.
Conditions of Termination. Notwithstanding anything to the contrary contained in this Agreement, this Agreement: 
 (a) may be
terminated at any time: 
 (i) by mutual consent of SHC, the Company and the Holders; 

(ii) by either the Company, on the one hand, or the Holders, on the other hand, if any temporary restraining order,
preliminary or permanent injunction or other judgment or order issued by any court of competent jurisdiction or other Law prohibiting, restraining or rendering illegal the consummation of the Transactions shall be in effect and shall have become
final and nonappealable; or 
 (b) shall be terminated automatically if at any time SHC publicly announces that it has determined to cancel
the Rights Offering. 
 6.2. Effect of Termination. In the event of any termination pursuant to Section 6.1, this
Agreement shall become null and void and have no effect, with no continuing obligation or liability on the part of the Company, the Operating 

  
 10 

 
Partnership or the Holders, or their respective directors, officers, agents or stockholders, with respect to this Agreement, provided that nothing herein shall relieve any party of any liability
for its willful breach. 
 7. Miscellaneous Provisions. 

7.1. Survival of Representations and Warranties. All covenants and agreements contained herein, other than those which by their terms
apply in whole or in part after the Closing, shall terminate as of the Closing. The representations and warranties contained in Section 3 and Section 4 shall survive the Closing until the expiration of the applicable statute
of limitations. 
 7.2. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been
duly given, if delivered personally, by facsimile, by email or sent by overnight courier as follows: 
  

							
			If to the Holders, to:
				
							c/o ESL Investment, Inc.
							1170 Kane Concourse, Suite 200
							Bay Harbor Islands, Florida 33154
				
							Attention: Harold Talisman
				
							Fax: 305-864-1370
							Email: harold@eslinvest.com
		
			If to the Company and/or the Operating Partnership, to:
				
							Seritage Growth Properties
							c/o Sears Holdings Corporation
							3333 Beverly Road
							Hoffman Estates, Illinois 60179
				
							Attention: General Counsel
				
							Email: mfernand@seritage.com
				
							With a copy (which shall not constitute notice) to:
				
							Wachtell, Lipton, Rosen & Katz
							51 West 52nd Street
							New York, NY 10019

  
 11 

							
							Attention: Robin Panovka
				
							Fax: (212) 403-2000
							Email: RPanovka@wlrk.com

 or to such other address or addresses as shall be designated in writing. All notices shall be effective when received. 

7.3. Entire Agreement; Third Party Beneficiaries; Amendment. This Agreement, together with the Partnership Agreement (when executed),
sets forth the entire agreement between the parties hereto with respect to the Transactions and is not intended to and shall not confer upon any person other than the parties hereto any rights or remedies hereunder. Any provision of this Agreement
may be amended or modified in whole or in part at any time by an agreement in writing between the parties hereto executed in the same manner as this Agreement. No failure on the part of any party to exercise, and no delay in exercising, any right
shall operate as a waiver thereof nor shall any single or partial exercise by any party of any right preclude any other or future exercise thereof or the exercise of any other right. 

7.4. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to constitute any
original, but all of which together shall constitute one and the same documents. Signatures to this Agreement transmitted by facsimile transmission, by electronic mail in “portable document format” (“.pdf”) form, or by any other
electronic means intended to preserve the original graphic and pictorial appearance of a document will have the same effect as physical delivery of the paper document bearing the original signature. 

7.5. Governing Law; Jurisdiction; Venue. This Agreement shall be governed by, and interpreted in accordance with, the laws of the State
of New York. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND THE COURTS OF THE STATE OF NEW YORK LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK (AND OF THE
APPROPRIATE APPELLATE COURTS THEREFROM) FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. The parties hereby waive, to the fullest extent permitted by applicable law, any objection which they now
or hereafter may have to personal jurisdiction or to the laying of venue of any such suit, action or proceeding brought in any court referred to in this Section 7.5 and such parties agree not to plead or claim the same. EACH OF THE
PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL BY JURY IN CONNECTION WITH ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY 
 7.6. Expenses. Except as otherwise expressly provided herein, each party hereto shall bear its own costs and expenses
(including attorneys’ fees) incurred in connection with this Agreement and the Transactions. 

  
 12 

 7.7. Successors and Assigns. Except as otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, each of the Company’s, the Operating Partnership’s and the Holders’ respective successors and assigns, and no other person. 

7.8. Severability. If any provision of this Agreement is determined to be invalid, illegal, or unenforceable, the remaining provisions
of this Agreement shall remain in full force and effect provided that the economic and legal substance of, any of the Transactions is not affected in any manner materially adverse to any party. In the event of any such determination, the parties
agree to negotiate in good faith to modify this Agreement to fulfill as closely as possible the original intent and purpose hereof. To the extent permitted by law, the parties hereby to the same extent waive any provision of law that renders any
provision hereof prohibited or unenforceable in any respect. 
 7.9. Specific Performance. The parties agree that if any of the
provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine, and that the
parties will be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity. 
 7.10.
Headings. The headings of Articles and Sections contained in this Agreement are for reference purposes only and are not part of this Agreement. 

*        *        *       
 *        *        * 

  
 13 

 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. 

 

					
	SERITAGE GROWTH PROPERTIES
		
	By: 		 /s/ Matthew Fernand

			Name:		Matthew Fernand
			Title:		Executive Vice President
					and General Counsel
	
	SERITAGE GROWTH PROPERTIES, L.P.
		
	By: 		 /s/ Matthew Fernand

			Name:		Matthew Fernand
			Title:		Executive Vice President
					and General Counsel

 [Signature Page to Exchange Agreement] 

 
			
	ESL PARTNERS, L.P.
		
	By:		 /s/ Edward S. Lampert

			Name:
			Title:
	
	EDWARD S. LAMPERT
		
	By:		 /s/ Edward S. Lampert

			Name:
			Title:

 [Signature Page to Exchange Agreement]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00246-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00246-of-00352.parquet"}]]