SERITAGE GROWTH PROPFRTIFS Benjamin Schall Chief Executive Officer
Exhibit 10 3
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SERITAGE GROWTH PROPFRTIFS |
Xxxxxxxx Xxxxxx Chief Executive Officer |
May 16, 2018
Xxxxxxx X. Xxxxxxx
xxxxxxxx@xxxxx.xxx
Dear Xxxxxxx,
We are pleased to extend to you our offer to join Seritage Growth Properties (the "Company") as Executive Vice President and Chief Operating Officer, reporting to Xxxxxxxx Xxxxxx, President and Chief Executive Officer. This position will be located at Seritage's office in Westwood (Los Angeles), CA, and we anticipate that you will commence employment with us on May 20, 2018. This letter (the "Letter Agreement") serves as confirmation of our offer, subject to the terms and conditions below.
The key elements of your compensation package and the other conditions of your employment are as follows:
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1. |
Base Salary. Your annual base salary will be at a rate of $450,000. |
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2. |
Sign-On Compensation. |
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a. |
You will receive a one-time sign-on bonus of $300,000 (the "Sign-On Bonus") payable in cash. |
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b. |
You will receive a one-time sign-on equity award with a value of $300,000 (the "Sign-On Equity"). The terms of this Sign-On Equity will be identical to the equity shares recently issued to the Executive management team, including but not limited to, the share conversion mechanism, the ratio of time based and performance based equity, vesting provisions, and performance criteria. |
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c. |
The Sign-On Bonus and Sign-On Equity shall be payable within fifteen (15) days following your start date. |
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b. |
In the event you voluntarily terminate your employment with the Company without Good Reason (as defined below) or are terminated by the Company for Cause (as defined below) within twelve (12) months immediately following your start date, you will be required to immediately repay the Sign-On Bonus. For the Sign-On Equity, the termination provisions shall be governed by the share agreements and will be identical to the equity shares recently issued to the Executive management team. |
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3. |
Annual Bonus and Awards. |
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a. |
As a participant in the Company's annual incentive plan, you will be eligible to receive an annual cash bonus (the "Annual Bonus") provided threshold performance goals are achieved. Your annual target incentive opportunity will be 75% of your annual base salary and your annual maximum incentive opportunity will be 100% of your annual base salary, in each case, subject to performance goals, terms and conditions established by the Compensation Committee. You will be eligible for a target incentive opportunity for your first year of employment which shall not be prorated.. Any Annual Bonus payable with respect to a fiscal year will be paid during the following fiscal year at the same time as the annual incentives are paid generally to other members of the executive team, provided that you are actively employed on the payment date. |
Xxxxxxx X. Xxxxxxx
May 16, 2018
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4. |
Termination. |
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a. |
Your employment shall be at will and you may be terminated by the Company at any time with or without Cause. "Cause" shall mean (i) a material breach by you (other than a breach resulting from your incapacity due to death or a Disability) of your duties and responsibilities which breach is demonstrably willful and deliberate on your part, is committed in bad faith or without reasonable belief that such breach is in the best interests of the Company or the Company's affiliates and is not remedied in a reasonable period of time after receipt of written notice from the Company specifying such breach; or (ii) the conviction of you of a felony (other than vehicular-related). "Disability" shall mean disability as defined under the Company's long-term disability plan (regardless of whether you are a participant under such plan) or if no such plan exists, your inability by reason of disability to perform your duties for 180 consecutive days. |
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b. |
If you are terminated for Cause, you shall not be entitled to any of the benefits or amounts set forth in section 5 hereof (except with respect to section 5(c) to the extent required by law) and all Shares granted to you prior to the date of termination will be forfeited. |
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5. |
Other Benefits and Compensation Matters. |
x. Xxxxxxxxx.
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i. |
In the event you are terminated by the Company without Cause or resign for Good Reason (as defined below), (A) you shall be entitled to (1) (a) if such termination occurs in the first twelve (12) months of your employment, a guaranty of your base salary for such period (payable in equal installments over the remaining portion of such twelve (12) month period) plus a cash severance payment equivalent to twelve (12) months of base salary (payable in equal installments over a twelve (12) month period) and (b) if such termination occurs after the first twelve (12) months of your employment, a cash severance payment equivalent to twelve (12) months (payable in equal installments over a twelve (12) month period), (2) a prorated Annual Bonus for the year of termination (based on performance of the Company for the full year in |
which the termination occurs), and (3) twelve (12) months of subsidized COBRA coverage whereby your premium costs are the active employee rate and (B) (1) either the Additional Sign-On Bonus or the Shares (and any other equity interests) granted to you as part of the Sign-On Award shall automatically vest and (2) a pro
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May 16, 2018
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rata portion of your Annual Awards shall vest (based on the number of days you were employed during the applicable vesting period); provided that in the case of the foregoing (B) (1) and (B) (2), vesting in respect of any performance-vesting Shares (and any other equity interests) shall be based on the performance of the Company through the date of termination. The payments and awards contemplated by (A) and (B) above shall be subject to you continuing to comply with sections 6, 7 and 8 hereof at all times and you signing a release, on the thirtieth (30th) day following termination of your employment, in a form satisfactory to the Company (a "Release"). "Good Reason" shall mean, without your written consent, (1) a reduction of ten percent (10%) or more of your annual base salary, annual cash bonus opportunity and annual equity grant opportunity from those in effect as of the date of this Letter Agreement) or, if the reduction does not also apply to other senior executives of the Company equally, then a material reduction of the foregoing; (2) your mandatory relocation to an office more than twenty five (25) miles from the primary location at which you are required to perform your duties on your start date; (3) any action or inaction that constitutes a material breach of the terms of this Letter Agreement, including failure of a successor company to assume or fulfill the obligations under this Letter Agreement; (4) a material reduction in your duties or adverse change in title. In each case, you must provide the Company with written notice of the facts giving rise to a claim that "Good Reason" exists within thirty (30) days of the occurrence of such facts, and the Company shall have a right to remedy such event within sixty (60) days after receipt of such written notice.
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ii. |
In the event your employment terminates due to your death or Disability, (A) you shall be entitled to (1) a prorated Annual Bonus for the year of termination (based on performance of the Company for the full year in which the termination occurs) and (2) solely in the case of a Disability, twelve (12) months of subsidized COBRA coverage whereby your premium costs are the active employee rate and (B) either the Additional Sign-On Bonus or the Shares (and any other equity interests) granted to you as part of the Sign-On Award and Annual Awards shall automatically vest; provided that vesting in respect of any performance-vesting Shares (and any other equity interests) shall be based on the performance of the Company through the date of termination. |
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b. |
Change of Control. In the event there is a "change in control" of the Company, the Shares granted to you shall be treated as set forth in the Equity Plan and underlying award agreements as established by the Compensation Committee. |
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Vacation. You will be eligible to receive up to four weeks of paid vacation per year to be taken in accordance with Company policy at that time, which shall be prorated during you first year of service based on your start date. |
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Benefits. You will be eligible to participate in all retirement, life insurance, health and welfare programs on a basis no less favorable than other senior executives of the Company, in accordance with the applicable terms, conditions and availability of those programs. |
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Section 409A. If you are a "specified employee" within the meaning of Section 409A of the Internal Revenue Code of 1986 (as amended) ("Section 409A"), to the extent required by Section 409A, you will not be entitled to receive the benefits of section 5(a) hereof until the first (1st) day of the seventh (7t1) month following the date of termination of your employment. |
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Non-Competition. You acknowledge that as a result of your position at the Company, you have learned or developed, or will learn or develop, confidential information and that use or disclosure of such confidential information is likely to occur if you were to render advice or services to any Seritage Competitor (as defined below). For twelve (12) months, following the termination of your employment with the Company, you will not, directly or indirectly, aid, assist, participate in, consult with, render services for, accept a position with, become employed by, or otherwise enter into any relationship with (other than having a passive ownership interest in or being a customer of) any Seritage Competitor. For purposes of this Letter Agreement, "Seritage Competitor" means the companies listed on Appendix A, each of which you acknowledge is a Seritage Competitor. |
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Confidentiality. You will not, during the term of your employment with the Company or thereafter, and other than in the performance of your duties and obligations during your employment with the Company or as required by law or legal process, and except as the Company may otherwise consent or direct in writing, reveal or disclose, sell, use, lecture upon or publish any confidential information of the Company. You further agree that the existence and terms of this Letter Agreement, including any compensation paid to you, and discussions with the Company regarding this Letter Agreement, shall be considered confidential and shall not be disclosed or communicated in any manner except: (a) as required by law or legal process; (b) to your spouse or domestic partner; (c) to your financial/legal advisors, all of whom shall agree to keep such information confidential; or (d) if such Letter Agreement is hereafter publicly filed by the Company; |
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Irreparable Harm. You acknowledge that irreparable harm would result from any breach by you of sections 6, 7, and/or 8 hereof, and that monetary damages alone would not provide adequate relief for any such breach. Accordingly, if you breach or threaten to breach this Letter Agreement, the Company may seek injunctive relief in favor of the Company without the necessity of the Company posting a bond. Moreover, any award of injunctive relief shall not preclude the Company from seeking or recovering any lawful compensatory damages which may have resulted from a breach of this Letter Agreement. |
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Cooperation. You agree, without receiving additional compensation, to reasonably cooperate with the Company, both during and after the period of employment with the Company, with respect to matters that relate to your period of employment, in all investigations, potential litigation or litigation in which the Company is involved or may become involved other than any such investigations, potential litigation or litigation between the Company and you. The Company will reimburse you for reasonable travel and out-of-pocket expenses incurred in connection with any such investigations, potential litigation or litigation. |
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Future Enforcement or Remedy. Any waiver, or failure to seek enforcement or remedy for any breach or suspected breach, of any provision of this Letter Agreement by the Company or you in any instance shall not be deemed a waiver of such provision in the future. |
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May 16, 2018
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originally incorporated herein as so modified or restricted or as if such provision(s) had not been originally incorporated herein, as the case may be. |
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Governing Law. This Letter Agreement will be governed under the internal laws of the state of New York without regard to principles of conflicts of laws. You agree that the state and federal courts located in the state of New York shall have exclusive jurisdiction in any action, lawsuit or proceeding based on or arising out of this Letter Agreement, and you hereby: (a) submit to the personal jurisdiction of such courts; (b) consent to the service of process in connection with any action, suit, or proceeding against you; and (c) waive any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction, venue or service of process. |
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Right to Jury. You agree to waive any right to a jury trial on any claim contending that this Letter Agreement or any Release is illegal or unenforceable in whole or in part, and you agree to try any claims brought in a court or tribunal without use of a jury or advisory jury. |
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Entire Agreement. This Letter Agreement contains and comprises the entire understanding and agreement between you and the Company and fully supersedes any and all prior agreements or understandings between you and the Company with respect to the subject matter contained herein, and may be amended only by a writing signed by you and a duly authorized officer of the Company. |
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Tax Withholding. Any compensation paid or provided to you under this Letter Agreement shall be subject to any applicable federal, state or local income and employment tax withholding requirements. |
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Assignment. The Company may assign its rights under this Letter Agreement to any successor by merger, consolidation, or sale of assets. This Letter Agreement shall be binding whether it is between the Company and you or between any such successor and you. |
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Counterparts. This Letter Agreement may be executed in one or more counterparts, which together shall constitute a valid and binding agreement. |
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Section 409A Compliance. |
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To the extent that a payment or benefit under this Letter Agreement is subject to Section 409A, it is intended that this Letter Agreement as applied to that payment or benefit comply with the requirements of Section 409A, and the Letter Agreement shall be administered and interpreted consistent with this intent. |
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With regard to any provision herein that provides for reimbursement of costs and expenses of in-kind benefits, except as permitted by Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits, to be provided in any other taxable year, and (iii) such payments shall be made on or before the last day of your taxable year following the taxable year in which the expense occurred. |
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For purposes of Section 409A, your right to receive any installment payments pursuant to this Letter Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Letter Agreement specifies a payment period with reference to a number of days (e.g., "payment shall be made within thirty (30) days following the date of termination"), the actual date of payment within the specified period shall be within the sole discretion of the Company. |
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Employee Representation. You hereby represent to the Company that the execution and delivery of this Letter Agreement by you and the Company and the performance by you of your duties hereunder shall not constitute a breach of, or otherwise contravene, or be prevented, interfered with or hindered by, the terms of any employment agreement or other agreement or policy to which you are a party or otherwise bound, and further that you are not subject to any limitation on your activities on behalf of the Company as a result of agreements into which you have entered except for obligations of confidentiality with former employers. To the extent this representation and warranty is not true and accurate, it shall be treated as a Cause event and the Company may terminate you for Cause or not permit you to commence employment. |
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Employment Verification. This offer, and your employment by the Company, is contingent upon satisfactory employment authorization verification, and the submission of a completed Form 1-9 and required documents thereunder. |
Xxxxxxx, we are looking forward to you joining the Company. We are excited about the important contributions you will make to the Company and look forward to your acceptance of our offer. If you need additional information or clarification, please call.
This offer will expire if not accepted within one week from the date of this letter. To accept, sign below and return this letter to my attention.
Sincerely,
/s/ Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxxxx
Enclosures
[Letter Agreement Acceptance Signature Page Follows]
I understand and am in agreement with the above terms and conditions of my prospective employment, including the employee representations set forth in the Letter Agreement. In addition, I consent to references and a background check. I acknowledge that this Letter Agreement embodies our entire employment agreement. My acceptance of this offer is made voluntarily and after careful consideration.
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/s/ Xxxxxxx X. Xxxxxxx |
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5/16/18 |
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Xxxxxxx X. Xxxxxxx |
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Date |
[Letter Agreement Acceptance Signature Page]
