Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) by and among Jernigan Capital,
Inc., a Maryland corporation (the “REIT”), Jernigan Capital Operating Company
LLC, a Delaware limited liability company, the operating company subsidiary of
the REIT (the “Operating Company”), and the Operating Company’s subsidiary, JCAP
Management LLC, a Delaware limited liability company (the “REIT Operator” and,
together with the REIT and the Operating Company, the “Company”), and Jonathan
L. Perry (“Executive”) is dated as of the Effective Date.

 

WHEREAS, REIT Operator desires to employ Executive and Executive desires to be
employed by REIT Operator to provide services for the Company on the terms
contained herein.

 

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

 

1.            Term of Employment.

 

(a)           Subject to the terms and conditions of this Agreement, REIT
Operator hereby employs Executive, and Executive hereby accepts employment with
REIT Operator, in the positions and with the duties and responsibilities as set
forth in Section 2 hereof for the Term of Employment (as defined below). The
REIT and the Operating Company agree to be jointly and severally liable for all
obligations of REIT Operator under this Agreement, including payment
obligations.

 

(b)           The term of employment under this Agreement will commence on the
date of the Closing (as defined in that certain Asset Purchase Agreement by and
among the REIT, the Operating Company, JCap Advisors, LLC and the other parties
thereto, dated as of December 16, 2019) (the “Effective Date”) and continue for
an initial term through the third anniversary of the Effective Date (the
“Initial Term”), unless the Agreement is terminated sooner in accordance with
Section 4 below. Commencing on the last day of the Initial Term and on each
subsequent anniversary of such date, the term of this Agreement shall
automatically be extended for successive one-year periods (each such extension,
a “Renewal Term”); provided, however, that either the Company or Executive may
elect not to extend the Term of Employment by giving written notice to the other
party at least sixty (60) days prior to any such anniversary date (a
“Non-Renewal”). The period commencing on the Effective Date and ending at the
end of the Initial Term or any Renewal Term (or earlier termination of
Executive’s employment hereunder) shall hereinafter be referred to as the “Term
of Employment.” If the Closing (as defined in that certain Asset Purchase
Agreement by and among the REIT, the Operating Company, JCap Advisors, LLC and
the other parties thereto, dated as of December 16, 2019) does not occur within
ninety (90) days after the date of the stockholder vote regarding the
transactions contemplated by such agreement, this Agreement will automatically
terminate and be of no force or effect. For the avoidance of doubt, no payments
or other benefits shall accrue to the Executive hereunder prior to the Effective
Date.

 

2.            Position; Duties and Responsibilities.

 

(a)           During the Term of Employment, Executive will be employed full
time by REIT Operator and will serve as the President and Chief Investment
Officer of the REIT, reporting directly to the Chief Executive Officer. In this
capacity, Executive shall have the duties, authorities and responsibilities as
are required by Executive’s position commensurate with the duties, authorities
and responsibilities of persons in similar capacities in similarly sized
companies, and such other duties, authorities and responsibilities as may
reasonably be assigned to Executive as the Chief Executive Officer shall
designate from time to time that are not inconsistent with Executive’s position
and that are consistent with the bylaws of the REIT and the limited liability
company agreements of the Operating Company and the REIT Operator, each as may
be amended from time to time, including, but not limited to, managing the
affairs of the Company.

 

 

 

(b)           During the Term of Employment, Executive will, without additional
compensation, also serve on the board of directors of, serve as an officer of,
and/or perform such executive and consulting services for, or on behalf of, the
REIT and such Subsidiaries of the REIT as the Chief Executive Officer may, from
time to time, reasonably request.

 

(c)           During the Term of Employment, Executive will serve the Company
faithfully, diligently, and to the best of his ability and will devote
substantially all of his business time and attention to the performance of his
duties hereunder, and shall have no other employment (unless approved by the
Board of Directors of the REIT (the “Board”)); provided, however, that nothing
contained herein shall prohibit Executive from (i) participating in trade
associations or industry organizations in furtherance of the Company’s
interests, (ii) engaging in charitable, civic, educational or political
activities, (iii) engaging in passive personal investment activities for himself
and his family or (iv) accepting directorships or similar positions (together,
the “Personal Activities”), in each case so long as the Personal Activities do
not unreasonably interfere, individually or in the aggregate, with the
performance of Executive’s duties to the Company under this Agreement or the
restrictive covenants set forth in Section 9 of this Agreement. For the
avoidance of doubt, participation in any active manner, whether or not during
work hours, in a Jernigan Family Business described in Section 9, including,
without limitation, sourcing, modeling, underwriting, and seeking financing for
or with respect to any self-storage facility, during the Executive’s Term of
Employment shall not be a permitted Personal Activity.

 

(d)           During the Term of Employment, Executive shall perform the
services required by this Agreement in Philadelphia, Pennsylvania (the
“Principal Location”), except for travel to other locations as may be necessary
to fulfill Executive’s duties and responsibilities hereunder.

 

3.            Compensation and Benefits.

 

(a)           Base Salary. During the Term of Employment, Executive will be
entitled to receive an annualized base salary (the “Base Salary”) of not less
than $400,000. The Base Salary shall be paid in accordance with REIT Operator’s
normal payroll practices, but no less often than semi-monthly.

 

(b)           Incentive Compensation. In addition to the Base Salary, Executive
shall be entitled to participate in any short-term and long-term incentive
programs (including without limitation equity compensation plans) established by
the Company, including for its senior level executives. Without limitation,
during the Term of Employment, and subject to subsection (e) below, in each
calendar year of the Term of Employment, Executive shall be eligible to receive
an annual bonus (the “Annual Bonus”) payable in cash, pursuant to the
performance criteria and targets established and administered by the Board (or a
committee of directors to whom such responsibility has been delegated by the
Board), with a target Annual Bonus of at least 85% of Executive’s Base Salary
(the “Target Annual Bonus). The Annual Bonus payable to Executive shall be
determined and payable as soon as practicable after year-end for such year (but
no later than March 15th). To be entitled to receive any Annual Bonus, except as
otherwise provided in Section 4(c), Executive must remain employed through the
last day of the calendar year to which the Annual Bonus relates. Executive will
also be eligible to receive equity and other long-term incentive awards
(including long-term incentive units in the Operating Company) under any
applicable plan or program adopted by the Company during the Employment Term.
Executive’s entitlement to any equity and other long-term incentives will be in
the discretion of the Board (or a committee of directors to whom such
responsibility has been delegated by the Board).

 

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(c)           Employee Benefit Programs; Expense Reimbursements; Auto Allowance.
During the Term of Employment, Executive will be eligible to participate in all
employee benefit programs of the Company made available to the Company’s senior
level executives generally, as such programs may be in effect from time to time;
provided that nothing herein shall prevent the Company from amending or
terminating any such programs pursuant to the terms thereof. REIT Operator will
reimburse Executive for any and all necessary, customary and usual business
expenses incurred and paid by Executive in connection with his employment upon
presentation to the Company of reasonable substantiation and documentation, and
in accordance with, and subject to the terms and conditions of, applicable
Company policies. During the Term of Employment, Executive shall be entitled to
paid vacation and, if applicable, paid time off, per year of the Term of
Employment (as pro-rated for any stub employment period) in accordance with the
Company’s policy on accrual and use applicable to employees as in effect from
time to time, but in no event shall Executive accrue less than four (4) weeks of
vacation per calendar year (pro-rated for any stub employment period).
Additionally, during the Term of Employment, Executive will receive a monthly
auto allowance equal to $1,500, which shall be paid on or before the tenth
(10th) day of the month.

 

(d)           Insurance; Indemnification. Executive shall be covered by such
comprehensive directors’ and officers’ liability insurance and errors and
omissions liability insurance as the Company shall have established and
maintained in respect of its directors and officers generally and at its
expense, and the Company shall cause such insurance policies to be maintained in
a manner reasonably acceptable to Executive both during and, in accordance with
Section 4(h) below, after Executive’s employment with the Company. Executive
shall also be entitled to indemnification rights, benefits and related expense
advances and reimbursements to the same extent as any other director or officer
of the Company or the REIT and to the maximum extent permitted under applicable
law pursuant to an indemnification agreement, including “tail” coverage
following termination of service. It is acknowledged and agreed that Executive
is a party to an indemnification agreement with the REIT, which agreement shall
continue in full force and effect notwithstanding the effectiveness of this
Employment Agreement.

 

(e)           Annual Review. The Compensation Committee of the Board (the
“Compensation Committee”) will undertake a formal review of the amounts payable
and potentially payable to Executive pursuant to this Section 3 (the
“Compensation and Benefits”) no less frequently than annually. The Compensation
Committee shall be entitled to make all determinations relating to this Section
3(e) in its sole discretion; provided, however, that neither the Compensation
Committee nor the Company shall be entitled to decrease Executive’s Base Salary
or Target Annual Bonus.

 

(f)            Clawback/Recoupment. Notwithstanding any other provisions in this
Agreement to the contrary, any compensation provided to, or gain realized by,
Executive pursuant to this Agreement or any other agreement or arrangement with
the Company shall be subject to repayment and/or forfeiture by Executive to the
Company if and to the extent any such compensation or gain is or becomes subject
to (i) a “clawback” policy adopted by the Company that is applicable to
Executive and other similarly situated executives, or (ii) any law, rule,
requirement or regulation which imposes mandatory recoupment or forfeiture,
under circumstances set forth in such law, rule, requirement or regulation.

 

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4.            Termination of Employment.

 

(a)           Termination Due to Disability. The REIT Operator may terminate
Executive’s employment if Executive (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than twelve (12) months, or (ii) is, by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve (12) months, actually receiving income replacement
benefits for a period of not less than three months under an accident and health
plan covering employees of the Company (“Disability”). Any questions as to the
existence of the Executive’s Disability as to which the Executive and the REIT
Operator cannot agree shall be determined in writing by a qualified independent
medical practitioner mutually acceptable to Executive and the REIT Operator. If
Executive’s employment is terminated under this Section 4(a) for Disability, (A)
the Company shall pay to Executive the Accrued Benefits pursuant to Section 4(h)
below and any earned but unpaid Annual Bonus relating to the calendar year prior
to the year of termination, and (B) subject to Executive’s execution of a
general release of claims in favor of the Company in substantially the form
attached hereto as Exhibit A, after termination of Executive’s employment, and
the expiration of any applicable or legally required revocation period, all
within sixty (60) days after the effective date of termination (the “Release
Requirement”) and further subject to Executive’s compliance with the obligations
in Sections 7, 8 and 9, if Executive is entitled to elect continuation of
coverage under any Company group health plan pursuant to the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, or other applicable law
(“COBRA”), and Executive timely elects such coverage, the Company shall directly
pay, or reimburse Executive for, the COBRA premiums, less the amount Executive
would have had to pay to receive such group health coverage for Executive and
his covered dependents based on the cost sharing levels in effect on the date of
termination, during the period commencing on the date of termination and ending
upon the earliest of (x) the date eighteen (18) months after the date
Executive’s employment terminates, (y) the date Executive and, if applicable,
Executive’s covered dependents become no longer eligible for COBRA and (z) the
date Executive becomes eligible to receive healthcare coverage from a subsequent
employer (as applicable, the “COBRA Continuation Period”); provided, however,
that if Executive is not eligible to elect COBRA continuation coverage or the
Company determines that it cannot provide the foregoing benefit under its group
health plan or without potentially violating applicable law or triggering
adverse tax consequences to the Company or Executive, the Company shall in lieu
thereof provide to Executive a taxable monthly payment during the COBRA
Continuation Period in an amount equal to the monthly premium that the Company
would have contributed to Executive’s and Executive’s covered dependents’ group
health coverage in effect on the date of termination (which amount shall be
based on the premiums in effect on the date of termination), less the amount the
Executive would have had to pay to receive such group health coverage for
Executive and his covered dependents based on the cost sharing levels in effect
on the date of termination (as applicable, the “Continued Health Care Coverage
Benefit”). Subject to Section 28, the Continued Health Care Coverage Benefits
will commence within sixty (60) days following the date of termination (with the
first payment to include any installment payments that would have been made
during such sixty (60) day period if payments had commenced on the date of
termination).

 

(b)           Termination Due to Death. Executive’s employment shall terminate
automatically upon Executive’s death during the Term of Employment. If
Executive’s employment is terminated because of Executive’s death, the Company
shall pay to Executive’s executor, legal representative, administrator or
designated beneficiary, as applicable, the Accrued Benefits pursuant to Section
4(i) below and any earned but unpaid Annual Bonus relating to the calendar year
prior to the year of termination.

 

(c)           Termination by the Company Without Cause or by Executive for Good
Reason. The REIT Operator may terminate Executive’s employment at any time
without Cause (as provided in Section 6) and Executive may terminate his
employment for Good Reason (as provided in Section 6) upon not less than sixty
(60) days’ prior written notice of such resignation to the Company. If the
Company exercises its right of Non-Renewal under Section 1(b) hereof, then
termination of the Executive’s employment by reason of such Non-Renewal will be
deemed a Termination by the Company without Cause. Upon any such termination of
Executive’s employment without Cause or for Good Reason during the Term of
Employment, Executive shall be entitled to receive the following:

 

(i)           The Accrued Benefits pursuant to Section 4(h) below and any earned
but unpaid Annual Bonus relating to the calendar year prior to the year of
termination; and

 

(ii)          subject to Executive’s satisfaction of the Release Requirement and
compliance with the obligations in Sections 7, 8 and 9:

 

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(1)       the Company shall pay Executive cash severance (the “Severance
Amount”) equal to the Severance Multiple times the sum of (A) Executive’s
then-current Base Salary (disregarding any reduction in Base Salary not approved
by Executive) and (B) the average of the Annual Bonuses earned by Executive in
accordance with Section 3(b) hereof (and/or, if applicable, annual bonuses
earned by Executive as an employee of JCap Advisors, LLC) for the two (2)
calendar years preceding the year of termination. If the termination described
in this Section 4(c) does not occur during the Change in Control Period (as
defined in Section 6), subject to Section 28, the Severance Amount will be paid
in equal installments in accordance with the normal payroll practice of REIT
Operator over the twenty-four (24) month period following the date of
termination, with such installment payments beginning within sixty (60) days
following the date of termination (with the first payment to include any
installment payments that would have been made during such sixty (60) day period
if payments had commenced on the date of termination). If the termination
described in this Section 4(c) occurs during the Change in Control Period (as
defined in Section 6), subject to Section 28, the Severance Amount will be paid
in a lump sum within sixty (60) days following the date of termination;

 

(2)       within sixty (60) days following the effective date of termination,
the Company shall pay Executive an amount equal to Executive’s Target Bonus for
the then-current calendar year of Executive’s employment (annualized if the
termination occurs in 2020), pro-rated for the number of days in such calendar
year ending on the effective date of Executive’s termination of employment;

 

(3)       Executive’s outstanding equity awards that are subject solely to
time-based vesting conditions will become fully vested as of the effective date
of Executive’s termination and Executive’s outstanding equity awards that are
subject to performance-based vesting conditions will vest if and to the extent
the applicable performance-based vesting conditions are satisfied in the
ordinary course, determined as if Executive’s employment had not terminated;
provided, however, that any such performance-based award that vests pursuant to
this Section 4(c)(ii)(3) will be pro-rated for the actual number of days in the
applicable vesting period preceding the effective date of Executive’s
termination of employment; and

 

(4)       the Continued Health Care Coverage Benefit described in Section 4(a)
with such benefits commencing within sixty (60) days following the date of
termination (with the first payment to include any installment payments that
would have been made during such sixty (60) day period if payments had commenced
on the date of termination).

 

(d)           Termination by the Company for Cause. The REIT Operator may
terminate Executive’s employment at any time for Cause pursuant to the
provisions of Section 6(a) below, in which event as of the effective date of
such termination all payments and benefits under this Agreement shall cease and
all then unvested awards or benefits shall be forfeited, except for the
continuing obligation to pay Executive his Accrued Benefits.

 

(e)           Voluntary Termination by Executive without Good Reason. Executive
may voluntarily terminate his employment without Good Reason upon sixty (60)
days’ prior written notice. In any such event, after the effective date of such
termination, no further payments or benefits shall be due under this Agreement
and all then unvested awards or benefits shall be forfeited, except for the
obligation to pay Executive after the effective date of such termination his
Accrued Benefits and any earned but unpaid Annual Bonus relating to the calendar
year prior to the year of termination. For the avoidance of doubt, Non-Renewal
by Executive shall constitute a voluntary termination without Good Reason.

 

(f)            Notice of Termination. Any termination of Executive’s employment
shall be communicated by a written notice of termination to the other party
hereto given in accordance with Section 18 and shall specify the termination
date in accordance with the requirements of this Agreement.

 

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(g)           Resignation of All Other Positions. Upon termination of
Executive’s employment for any reason, Executive shall be deemed to have
resigned from all positions that Executive holds as an officer of the Company or
any affiliate of the Company, and from all positions that he holds as a member
of the Board (or a committee thereof) or the board of directors (or a committee
thereof) of any Subsidiary of the REIT, unless otherwise mutually agreed with
the Board, and shall take all actions reasonably requested by the Company to
effectuate the foregoing.

 

(h)           General Provisions. (1) Upon any termination of Executive’s
employment, Executive shall be entitled to receive the following: (A) any unpaid
Base Salary and accrued but unused vacation and/or paid time off (determined in
accordance with Company policy) through the date of termination (paid in cash
within thirty (30) days, or such shorter period required by applicable law,
following the effective date of termination), (B) reimbursement for all
necessary, customary and usual business expenses and fees incurred and paid by
Executive prior to the effective date of termination, in accordance with Section
3(c) above (payable in accordance with the Company’s expense reimbursement
policy), and (C) vested benefits, if any, to which Executive may be entitled
under the Company’s employee benefit plans, including those as provided in
Section 3(c) above (payable in accordance with the applicable employee benefit
plan), and directors and officers liability coverage pursuant to Section 3(d)
for actions and inactions occurring during the Term of Employment, and continued
coverage for any actions or inactions by Executive while providing cooperation
under this Agreement (collectively, “Accrued Benefits”).

 

(2)   During any notice period required under Section 4 or Section 6, as
applicable, (A) Executive shall remain employed by the Company and shall
continue to be bound by all the terms of this Agreement and any other applicable
duties and obligations to the Company, (B) the Company may direct Executive not
to report to work, and (C) Executive shall only undertake such actions on behalf
of the Company, consistent with his position, as expressly directed by the
Board.

 

5.            Code Section 280G.

 

(a)           Treatment of Payments. Notwithstanding anything in this Agreement
or any other plan, arrangement or agreement to the contrary, in the event that
an independent, nationally recognized, accounting firm which shall be designated
by the Company with Executive’s written consent (which consent shall not be
unreasonably withheld) (the “Accounting Firm”) shall determine that any payment
or benefit received or to be received by Executive from the Company or any of
its affiliates or from any person who effectuates a change in control or
effective control of the Company or any of such person’s affiliates (whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement) (all such payments and benefits, the “Total Payments”) would fail to
be deductible under Section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”), or otherwise would be subject (in whole or part) to the
excise tax imposed by Section 4999 of the Code (the “Excise Tax”) then the
payments or benefits to be received by Executive that are subject to Section
280G or 4999 of the Code shall be reduced to the extent necessary so that no
portion of the Total Payments is subject to the Excise Tax, but such reduction
shall occur if and only to the extent that the net amount of such Total
Payments, as so reduced (and after subtracting the net amount of federal, state
and local income taxes, and employment, Social Security and Medicare taxes on
such reduced Total Payments), is greater than or equal to the net amount of such
Total Payments without such reduction (but after subtracting the net amount of
federal, state and local income taxes and employment, Social Security and
Medicare taxes on such Total Payments and the amount of Excise Tax (or any other
excise tax) to which Executive would be subject in respect of such unreduced
Total Payments). For purposes of this Section 5(a), the above tax amounts shall
be determined by the Accounting Firm, applying the highest marginal rate under
Section 1 of the Code and under state and local laws which applied (or is likely
to apply) to Executive’s taxable income for the tax year in which the
transaction which causes the application of Section 280G or 4999 of the Code
occurs, or such other rate(s) as the Accounting Firm determines to be likely to
apply to Executive in the relevant tax year(s) in which any of the Total
Payments is expected to be made. If the Accounting Firm determines that
Executive would not retain a larger amount on an after-tax basis if the Total
Payments were so reduced, then Executive shall retain all of the Total Payments.

 

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(b)           Ordering of Reduction. In the case of a reduction in the Total
Payments pursuant to Section 5(a), the Total Payments will be reduced in the
following order: (A) payments that are payable in cash that are valued at full
value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if
necessary, to zero), with amounts that are payable last reduced first;
(B) payments and benefits due in respect of any equity valued at full value
under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values
reduced first (as such values are determined under Treasury Regulation Section
1.280G-1, Q&A 24) will next be reduced; (C) payments that are payable in cash
that are valued at less than full value under Treasury Regulation Section
1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be
reduced; (D) payments and benefits due in respect of any equity valued at less
than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the
highest values reduced first (as such values are determined under Treasury
Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (E) all other
cash or non-cash benefits not otherwise described in above will be next reduced
pro-rata.

 

(c)           Certain Determinations. For purposes of determining whether and
the extent to which the Total Payments will be subject to the Excise Tax: (A) no
portion of the Total Payments the receipt or enjoyment of which Executive shall
have waived at such time and in such manner as not to constitute a “payment”
within the meaning of Section 280G(b) of the Code will be taken into account;
(B) no portion of the Total Payments will be taken into account which, in the
opinion of the Accounting Firm, does not constitute a “parachute payment” within
the meaning of Section 280G(b)(2) of the Code (including by reason of Section
280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of
such Total Payments will be taken into account which, in the opinion of the
Accounting Firm, constitutes reasonable compensation for services actually
rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of
the “base amount” (as set forth in Section 280G(b)(3) of the Code) that is
allocable to such reasonable compensation; and (C) the value of any non-cash
benefit or any deferred payment or benefit included in the Total Payments will
be determined by the Accounting Firm in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. Executive and the Company shall furnish
such documentation and documents as may be necessary for the Accounting Firm to
perform the requisite calculations and analysis under this Section 5 (and shall
cooperate to the extent necessary for any of the determinations in this Section
5(c) to be made), and the Accounting Firm shall provide a written report of its
determinations hereunder, including detailed supporting calculations. If the
Accounting Firm determines that aggregate Total Payments should be reduced as
described above, it shall promptly notify Executive and the Company to that
effect. In the absence of manifest error, all determinations by the Accounting
Firm under this Section 5 shall be binding on Executive and the Company and
shall be made as soon as reasonably practicable following the later of
Executive’s date of termination of employment or the date of the transaction
which causes the application of Section 280G of the Code. The Company shall bear
all costs, fees and expenses of the Accounting Firm and any legal counsel
retained by the Accounting Firm.

 

(d)           Additional Payments. If Executive receives reduced payments and
benefits by reason of this Section 5 and it is established pursuant to a
determination of a court of competent jurisdiction which is not subject to
review or as to which the time to appeal has expired, or pursuant to an Internal
Revenue Service proceeding, that Executive could have received a greater amount
without resulting in any Excise Tax, then the Company shall thereafter pay
Executive the aggregate additional amount which could have been paid without
resulting in any Excise Tax as soon as reasonably practicable following such
determination.

 

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6.            Definitions.

 

(a)           “Cause” shall mean any of the following:

 

(i)           Executive’s conviction of, or plea of guilty or nolo contendere
to, a felony (excluding traffic-related felonies), or any financial crime
involving the Company or any subsidiary of the REIT (including, but not limited
to, fraud, embezzlement or misappropriation of Company assets);

 

(ii)          Executive’s willful and gross misconduct in the performance of his
duties (other than by reason of his incapacity or disability), it being
expressly understood that the Company’s dissatisfaction with Executive’s
performance that is not willful and gross misconduct in the performance of
Executive’s duties shall not constitute Cause under this clause (ii);

 

(iii)         Executive’s continuous, willful and material breach of this
Agreement after written notice of such breach has been given by the Board in its
reasonable discretion exercised in good faith; provided that, in no event shall
any action or omission in subsection (ii) or (iii) constitute “Cause” unless (1)
the Company gives notice to Executive stating that Executive will be terminated
for Cause, specifying the particulars thereof in reasonable detail and the
effective date of termination (which shall be no less than twenty (20) business
days following the date on which such written notice is received by Executive)
(the “Cause Termination Notice”), (2) the Company provides Executive and his
counsel with an opportunity to appear before the Board to rebut or dispute the
alleged reason for termination on a specified date that is at least ten (10)
business days following the date on which the Cause Termination Notice is given,
and (3) a majority of the Board (calculated without regard to Executive, if
applicable) determines that Executive has failed to materially cure or cease
such misconduct or breach within twenty (20) business days after the Cause
Termination Notice is given to him. For purposes of the foregoing sentence, no
act, or failure to act, on Executive’s part shall be considered willful unless
done or omitted to be done, by him not in good faith and without reasonable
belief that his action or omission was in the best interest of the Company, and
any act or omission by Executive pursuant to the authority given pursuant to a
resolution duly adopted by the Board or on the written advice of counsel to the
Company will be deemed made in good faith and in the best interest of the
Company.

 

(b)           “Change in Control” means the occurrence of any of the following
after the Effective Date: (i) the direct or indirect sale, transfer, conveyance
or other disposition, in one or a series of related transactions, of all or
substantially all of the properties or assets of the REIT and its Subsidiaries,
taken as a whole, to any Exchange Act Person; (ii) the following individuals
cease for any reason to constitute a majority of the number of directors then
serving on the Board: individuals who, as of the Effective Date, constitute the
Board and any new director (other than a director whose initial assumption of
office is in connection with an actual or threatened election contest,
including, but not limited to, a consent solicitation, relating to the election
of directors of the REIT) whose appointment or election by the Board or
nomination for election by the REIT’s shareholders was approved or recommended
by a vote of at least a majority of the directors then still in office who
either were directors on the Effective Date or whose appointment, election or
nomination for election was previously so approved or recommended; (iii) an
Exchange Act Person becomes the “beneficial owner” (as used in Rule 13d-3 under
the Exchange Act) of 50% or more of the total voting power of the stock of the
REIT; or (iv) the consummation of a reorganization, merger, consolidation,
statutory share exchange or similar form of corporate transaction involving the
REIT if, immediately after the consummation of such transaction, the
shareholders of the REIT immediately prior thereto do not own, directly or
indirectly, either outstanding voting securities representing more than fifty
percent (50%) of the combined outstanding voting power of the surviving entity
in such transaction or more than fifty percent (50%) of the combined outstanding
voting power of the parent of the surviving entity in such transaction.
Notwithstanding the foregoing, (A) a Change in Control shall not be deemed to
have occurred by virtue of any transaction or series of integrated transactions
immediately following which the shareholders of the REIT immediately prior to
such transaction or series of transactions continue to have substantially the
same proportionate ownership in a Person that owns all or substantially all of
the voting securities or assets of the REIT immediately following such
transaction or series of transactions, and (B) if the severance payable under
Section 4(d) constitutes deferred compensation under Section 409A of the Code, a
Change in Control shall be deemed to have occurred for purposes of this
Agreement only if a change in the ownership or effective control of the Company
or a change in ownership of a substantial portion of the assets of the Company
shall also be deemed to have occurred under Section 409A of the Code.

 

8

 

 

(c)           “Change in Control Period” means the period beginning on the date
of a Change in Control and ending on the twelve (12) month anniversary of the
date of the Change in Control.

 

(d)           “Exchange Act” means the Securities Exchange Act of 1934, as
amended from time to time.

 

(e)           “Exchange Act Person” means any Person or group (as defined in
Section 13(d)(3) of the Exchange Act), except that “Exchange Act Person” will
not include (i) the REIT or any Subsidiary of the REIT, (ii) any employee
benefit plan of the REIT or any Subsidiary of the REIT or any trustee or other
fiduciary holding securities under an employee benefit plan of the REIT or any
Subsidiary of the REIT, (iii) an underwriter temporarily holding securities
pursuant to a registered public offering of such securities, (iv) an entity
owned, directly or indirectly, by the shareholders of the REIT in substantially
the same proportions as their ownership of shares of the REIT or (v) any Person
that, as of immediately prior to the transaction or series of transactions, is
the owner, directly or indirectly, of securities of the REIT representing more
than 50% of the combined voting power of the REIT’s then outstanding securities.

 

(f)            “Good Reason” shall mean, without Executive’s consent:

 

(i)           the assignment to Executive of duties or responsibilities
substantially inconsistent with Executive’s title at the Company or a material
diminution in Executive’s title, authority or responsibilities;

 

(ii)          a material reduction in Executive’s Base Salary or Target Annual
Bonus opportunity during the Term;

 

(iii)         a continuous, willful and material breach by the Company of this
Agreement; or

 

(iv)         the relocation (without the written consent of Executive) of
Executive’s principal place of employment by more than thirty-five (35) miles
from the Principal Location.

 

Notwithstanding the foregoing, (1) Good Reason shall not be deemed to exist
unless notice of termination on account thereof (specifying a termination date
of at least sixty (60) days but no more than ninety (90) days from the date of
such notice) is given no later than ninety (90) days after the time at which the
event or condition purportedly giving rise to Good Reason first occurs or arises
and (2) if there exists an event or condition that constitutes Good Reason, the
Company shall have thirty (30) days from the date notice of such termination is
received to cure such event or condition and, if the Company does so, such event
or condition shall not constitute Good Reason hereunder; provided, however, that
the Company’s right to cure such event or condition shall not apply if there
have been repeated breaches by the Company.

 

(g)           “Person” has the meaning given in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 13(d) and 14(d) thereof.

 

(h)           “Severance Multiple” means (i) two (2.0) pursuant to Section 4(c)
if the Severance Amount is payable under Section 4(c) on account of termination
that does not occur during the Change in Control Period and (ii) three (3.0)
Severance Amount is payable under Section 4(c) on account of a termination that
occurs during the Change in Control Period.

 

9

 

 

(i)            “Subsidiary” or “Subsidiaries” means, with respect to any Person,
as of any date of determination, any other Person or Persons as to which such
first Person owns or otherwise controls, directly or indirectly, 50% or more of
the voting shares or other similar interests or a sole general partner interest
or managing member or similar interest of such other Person or Persons.

 

7.            Confidentiality/Non-Disclosure. Executive acknowledges that, in
the course of his employment with the Company, he has become and/or will become
acquainted and trusted with (a) certain confidential information and trade
secrets, which confidential information includes, but is not limited to,
proprietary software, customer lists and information, information concerning the
Company’s finances, business practices, long-term and strategic plans and
similar matters, information concerning the Company’s formulas, designs, methods
of business, trade secrets, technology, business operations, business records
and files, and any other information that is not generally known to the public
or within the industry or trade in which the Company competes and was not known
to Executive prior to his employment with the Company, and (b) information of
third parties that the Company is under a duty to maintain as confidential
(collectively, “Confidential Information”). Except in furtherance of his duties
hereunder, Executive agrees that he will not cause any Confidential Information
to be disclosed to third parties without the prior written consent of the
Company and that he will not, without the prior written consent of the Company,
divulge or make any use of such Confidential Information, except as may be
required by law and/or to fulfill his obligations hereunder. Upon the
termination of Executive’s employment for whatever reason, or at any time the
Company may request, Executive shall immediately deliver to the Company all of
the Company’s property in Executive’s possession or under Executive’s control,
including but not limited to all originals and copies of memoranda, notes,
plans, records, reports, computer files, disks and tapes, thumb drives,
printouts, worksheets, source code, software, programming work, and all
documents, forms, records or other information, in whatever form it may exist,
regarding the Company’s business, clients, products or services. Confidential
Information does not include information that: (i) becomes generally known to
the public subsequent to disclosure to Executive through no wrongful act of
Executive or any representative of Executive; (ii) was known to the public prior
to its disclosure to Executive; or (iii) Executive is required to disclose by
applicable law, regulation or legal process. Additionally, the parties
acknowledge and agree that the obligations of this Section 7 shall be in
addition to and shall not diminish any obligations that Executive may have to
Company or any customer of Company under any separate Non-Disclosure and
Confidentiality Agreement that Executive may execute during his employment with
the Company.

 

8.            Intellectual Property, Inventions and Patents. Executive
acknowledges that all discoveries, concepts, ideas, inventions, innovations,
improvements, developments, methods, designs, analyses, drawings, reports,
patent applications, copyrightable work and mask work (whether or not including
any Confidential Information) and all registrations or applications related
thereto, all other proprietary information and all similar or related
information (whether or not patentable) which relate to the Company’s actual or
anticipated business, research and development or existing or future products or
services and which were or are conceived, developed, contributed to or made or
reduced to practice by Executive (whether alone or jointly with others) while
employed by the Company, whether before or after the date of this Agreement
(“Work Product”), belong to the Company. Executive shall promptly disclose such
Work Product to the Board and, at the Company’s expense, perform all actions
reasonably requested by the Board (whether during or after the Term of
Employment) to establish and confirm such ownership (including assignments,
consents, powers of attorney and other instruments). Executive acknowledges that
all copyrightable Work Product shall be deemed to constitute “works made for
hire” under the U.S. Copyright Act of 1976, as amended, and that the Company
shall own all rights therein. To the extent that any such copyrightable work is
not a “work made for hire,” Executive hereby assigns and agrees to assign to the
Company all right, title and interest, including a copyright, in and to such
copyrightable work. The foregoing provisions of this Section 8 shall not apply
to any invention that Executive developed entirely on Executive’s own time
without using the Company’s equipment, supplies, facilities or trade secret
information, except for those inventions that (i) relate to the Company’s
business or actual or demonstrably anticipated research or development, or (ii)
result from any work performed by Executive for the Company.

 

10

 

 

9.            Restrictive Covenants.

 

(a)           Notification of New Employer. During Executive’s employment and
for a period of twelve (12) months immediately following the termination of his
employment with the Company for any reason, Executive will advise the Company of
any new employer of his, or any other person or entity for whom he may perform
services, within ten (10) days after commencing to work for such employer or
other person or entity. Executive hereby agrees to notify, and grant consent to
notification by the Company to, any new employer, or other person or entity for
whom he may perform services, of his obligations under this Agreement.

 

(b)           Solicitation of Employees. Executive agrees that during his
employment and for a period of twelve (12) months immediately following the
termination of his employment with the Company for any reason, whether with or
without cause, he will not directly or indirectly, for himself or any other
person or entity:

 

(i)           solicit, induce, recruit or encourage any of the Company’s
employees, exclusive consultants or exclusive independent contractors or any
person who provides services to the Company to terminate or reduce their
employment or other relationship with the Company;

 

(ii)          hire any individual who is (or was, within the six (6) month
period immediately preceding such hiring) an employee, exclusive consultant, or
exclusive independent contractor of the Company; or

 

(iii)         attempt to do any of the foregoing.

 

Notwithstanding the foregoing, the provisions of this Section 9(b) shall not be
violated by (A) general advertising or solicitation not specifically targeted at
Company-related persons or entities or hiring a respondent to such advertising
or solicitation or (B) actions taken by any person or entity with which
Executive is associated if Executive is not personally involved in any manner in
the matter and has not identified such Company-related person or entity for
soliciting or hiring.

 

(c)           Solicitation of Customers. Executive agrees that during his
employment and for a period of twelve (12) months immediately following the
termination of his employment with the Company for any reason, whether with or
without cause, he will not directly or indirectly, (i) solicit, entice, or
induce any Customer for the purpose of providing, or provide, products or
services that are competitive with the products or services provided by the
Company, or (ii) solicit, entice, or induce any Customer to terminate or reduce
its business with (or refrain from increasing its business with) the Company.
Notwithstanding the foregoing, nothing in this subsection 9(c) shall prohibit
Executive from accepting a business relationship with a Customer that is not
solicited within the meaning of this subsection 9(c) so long as the Executive is
not acting in violation of the provisions of Section 9(d) below.

 

As used in this Section 9(c), “Customer” means any person or entity to which the
Company provided products or services (or was invested in products offered by
the Company), and with which Executive had contact on behalf of the Company,
within the last twelve (12) months of his employment with the Company; provided,
however, that notwithstanding the foregoing, the term “Customer” shall not
include any person or entity whose relationship with the Company shall have
consisted solely of renting one or more self-storage units from the Company or
at any self-storage facility in which the Company has an equity or debt
investment.

 

11

 

 

(d)           Noncompetition. Executive agrees that during his employment and
for a period of twelve (12) months immediately following the termination of his
employment with the Company in connection with which Executive is entitled to
severance under Section 4(d) he will not directly or indirectly:

 

(i)           have any ownership interest in a Competitor other than a passive
investment of no more than 5% of the outstanding equity or debt securities of a
Competitor; or

 

(ii)          engage in or perform services other than Personal Activities
(whether as an employee, consultant, proprietor, partner, director or otherwise)
for any Competitor, if such services either (1) are the same as or similar to
(individually or in the aggregate) the services Executive performed for the
Company during his employment with the Company, or (2) are performed with
respect to products or services of the Competitor that are competitive with the
products or services provided by the Company with which Executive was involved
during his employment with the Company or about which he received Confidential
Information during his employment with the Company.

 

As used in this section, “Competitor” means: (i) any private or publicly traded
real estate investment trust, fund or other investment vehicle or program whose
principal place of business is in the United States and whose business strategy
is based on investing in, acquiring or developing self-storage properties,
whether directly or indirectly through joint ventures, or (ii) any entity whose
principal place of business is in the United States and that advises (including
any external advisor) such investment vehicles or programs. Notwithstanding
anything to the contrary in this Agreement, following Executive’s termination of
employment, Executive’s ownership of, and/or devoting time as he determines in
good faith to be necessary or appropriate to fulfill his duties to, Jernigan
Family Business, shall not constitute a violation of this Section 9(d). For
purposes of this Agreement, the term “Jernigan Family Business” shall have the
meaning set forth in the Asset Purchase Agreement dated as of December 16, 2019
among the REIT, the Operating Company, JCap Advisors, LLC and the other parties
thereto, including Executive.

 

The scope of the covenant set forth in Section 9(d) will be within or with
respect to the United States.

 

(e)           Non-Disparagement. The Company and Executive each acknowledge that
any disparaging comments by either party against the other are likely to
substantially depreciate the business reputation of the other party. The
Executive further agrees that he will not, and the Company agrees that it will
direct its officers and directors to not directly or indirectly defame,
disparage, or publicly criticize the services, business, integrity, veracity or
reputation of the other party, including but not limited to, the Company or its
owners, officers, directors, or employees in any forum or through any medium of
communication. Nothing in this Agreement will preclude Executive or the Company
from supplying truthful information to any governmental authority or in response
to any lawful subpoena or other legal process.

 

(f)            Executive acknowledges and agrees that during his employment with
Company he will owe the Company duties of good faith, loyalty and non-disclosure
and such statutory duties that are applicable to an officer of the Company under
the laws of the State of Tennessee.

 

10.          Remedies. Executive acknowledges and agrees that the restrictions
set forth in this Agreement are critical and necessary to protect the Company’s
legitimate business interests; are reasonably drawn to this end with respect to
duration, scope, and otherwise; are not unduly burdensome; are not injurious to
the public interest; and are supported by adequate consideration. Executive
agrees that it would be impossible or inadequate to measure and calculate the
Company’s damages from any breach of the restrictions set forth herein.
Accordingly, Executives agrees that if he breaches or threatens to breach any of
such restrictions, the Company will have available, in addition to any other
right or remedy available, the right to obtain an injunction from a court of
competent jurisdiction restraining such breach or threatened breach and to
specific performance of any such provision of this Agreement. Executive further
agrees that no bond or other security will be required in obtaining such
equitable relief and he hereby consents to the issuance of such injunction and
to the ordering of specific performance. Executive further acknowledges and
agrees that (a) any claim he may have against the Company, whether under this
Agreement or otherwise, will not be a defense to enforcement of the restrictions
set forth in this Agreement, (b) the circumstances of his termination of
employment with the Company will have no impact on his obligations under this
Agreement, and (c) this Agreement is enforceable by the Company and its
respective Subsidiaries, affiliates, successors and permitted assigns.

 

12

 

 

11.         Additional Acknowledgments.

 

(a)            Executive and the Company each agree and intend that Executive’s
obligations under this Agreement (to the extent not perpetual) be tolled during
any period that Executive is in breach of any of the obligations under this
Agreement, so that the Company is provided with the full benefit of the
restrictive periods set forth herein.

 

(b)           Executive also agrees that, in addition to any other remedies
available to the Company and notwithstanding any provision of this Agreement to
the contrary, in the event Executive breaches in any material respect any of his
obligations under Sections 7, 8 or 9 and any applicable cure period under this
Employment Agreement with respect to such breach shall have lapsed, the Company
shall be entitled to immediately cease all payments and benefits (including
vesting of equity-based awards) under Section 4 and will have no further
obligations thereunder.

 

(c)           Executive and the Company further agree that, in the event that
any provision of Section 9 is determined by a court of competent jurisdiction to
be unenforceable by reason of its being extended over too great a time, too
large a geographic scope or too great a range of activities, that provision will
be deemed to be modified to permit its enforcement to the maximum extent
permitted by law. Each of Executive and the Company acknowledges and agrees that
the Company will suffer irreparable harm from a breach by Executive of any of
the covenants or agreements contained in Sections 7, 8, or 9. Executive further
acknowledges that the restrictive covenants set forth in those Sections are of a
special, unique, and extraordinary character, the loss of which cannot be
adequately compensated by monetary damages. Executive agrees that the terms and
provisions of Sections 7, 8, or 9 are fair and reasonable and are reasonably
required for the protection of the Company in whose favor such restrictions
operate. Executive acknowledges that, but for Executive’s agreements to be bound
by the restrictive covenants set forth in Sections 7, 8, or 9, the Company would
not have entered into this Agreement. In the event of an alleged or threatened
breach by Executive of any of the provisions of Sections 7, 8, or 9, the Company
or its successors or assigns may, in addition to all other rights and remedies
existing in its or their favor, apply to any court of competent jurisdiction for
specific performance and/or injunctive or other equitable relief in order to
enforce or prevent any violations of the provisions hereof (including, without
limitation, the extension of the noncompetition period or nonsolicitation
period, as applicable, by a period equal to the duration of the violation).

 

(d)           Executive and the Company further agree that REIT Operator is the
employer of Executive for all U.S. federal income tax and employment tax
purposes. In accordance with such status, to the extent that any provision
herein permits the Company to control, supervise, or otherwise determine the
rights, responsibilities, or obligations of Executive hereunder; to remunerate,
reimburse, or otherwise provide any economic benefit to Executive hereunder (or
to determine the amount of such payments or benefits); or to otherwise initiate,
terminate, or otherwise alter the terms of Executive’s employment with REIT
Operator hereunder, it is acknowledged and agreed by all parties hereto that
such actions are taken on behalf of REIT Operator, which hereby grants all
necessary power and authority to the Company to take such actions on behalf of
REIT Operator.

 

13

 

 

12.         Executive’s Cooperation. During the Term of Employment and, to the
extent that the Company pays Executive’s actual, reasonable and documented legal
fees for legal counsel, also for a reasonable period thereafter, Executive shall
reasonably cooperate with the Company in any internal investigation, any
administrative, regulatory or judicial investigation or proceeding or any
dispute with a third party as reasonably requested by the Company to the extent
that such investigation, proceeding or dispute may relate to matters in which
Executive has knowledge as a result of Executive’s employment with the Company
or Executive’s serving as an officer or director of the Company (including
Executive being available to the Company upon reasonable notice for interviews
and factual investigations, appearing at the Company’s request, after reasonable
notice, to give testimony without requiring service of a subpoena or other legal
process, volunteering to the Company all pertinent information and turning over
to the Company all relevant documents which are or may come into Executive’s
possession, all at times and on schedules that are reasonably consistent with
Executive’s other permitted activities and commitments). Without limiting the
generality of the foregoing, to the extent that the Company seeks such
assistance, the Company shall use reasonable business efforts, whenever
possible, to provide Executive with reasonable advance notice of its need for
Executive’s assistance and will attempt to coordinate with Executive the time
and place at which Executive’s assistance will be provided with the goal of
minimizing the impact of such assistance on any other material pre-scheduled
business commitment that Executive may have. In the event the Company requires
Executive’s reasonable assistance or cooperation in accordance with this Section
12, the Company shall reimburse Executive solely for reasonable travel expenses
(including lodging and meals) upon submission of receipts and, for cooperation
following the Term of Employment, Executive’s actual, reasonable and documented
legal fees. In addition, Company shall pay Executive compensation at the rate of
two hundred ($200) dollars per hour worked in providing the services
constituting the cooperation requested. Nothing in this Section 12 shall
abrogate in any respect the obligation (contractual or otherwise) of the REIT,
the Operating Company, the REIT Operator or any affiliate of any of the
foregoing to indemnify the Executive for any acts or omissions during the Term
of Employment or any period prior thereto.

 

13.         Executive’s Representations. Executive hereby represents and
warrants to the Company that (a) the execution, delivery and performance of this
Agreement by Executive do not and shall not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which Executive is bound, (b)
Executive is not a party to or bound by any employment agreement, non-compete
agreement or confidentiality agreement with any other person or entity and (c)
upon the execution and delivery of this Agreement by the Company, this Agreement
shall be the valid and binding obligation of Executive, enforceable in
accordance with its terms. Executive hereby acknowledges and represents that
Executive has consulted with independent legal counsel regarding Executive’s
rights and obligations under this Agreement and that Executive fully understands
the terms and conditions contained herein.

 

14.         Corporate Opportunity. Executive agrees that during his Term of
Employment he will not use opportunities discovered in the course of his
employment hereunder for his own personal gain or benefit without the written
consent of the Company. For example, if in any capacity described in Section 2
of this Agreement, Executive is approached about or otherwise becomes aware of a
potential investment or other business transaction that may be appropriate for
the Company, Executive will not take that opportunity for himself, or share or
disclose it to any third party, but rather Executive will bring it to the
attention of the Chief Executive Officer or the Board.

 

15.         Insurance for Company’s Own Behalf. The Company may, at its
discretion, apply for and procure in its own name and for its own benefit life
and/or disability insurance on Executive in any amount or amounts considered
advisable. Executive agrees to cooperate in any medical or other examination,
supply any information and execute and deliver any applications or other
instruments in writing as may be reasonably necessary to obtain and constitute
such insurance.

 

14

 

 

16.         Withholding. The Company shall be entitled to deduct or withhold
from any amounts owing from the Company to Executive any federal, state, local
or foreign withholding taxes, excise tax, or employment taxes that it reasonably
determines are required to be imposed with respect to Executive’s compensation
or other payments or benefits from the Company or Executive’s ownership interest
in the Company (including wages, bonuses, the receipt or exercise of equity
options and/or the receipt or vesting of restricted equity).

 

17.         Survival. The rights and obligations of the parties under this
Agreement shall survive as provided herein or if necessary or desirable to
accomplish the purposes of other surviving provisions following the termination
of Executive’s employment with the Company, regardless of the manner of or
reasons for such termination.

 

18.         Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally against written receipt or mailed by prepaid first class certified
mail, return receipt requested, or mailed by overnight courier prepaid, to (a)
Executive at the address on file with the Company, and (b) Company at the
following address:

 

JCAP Management LLC

c/o Jernigan Capital, Inc.

6410 Poplar Ave. Ste. 650

Memphis, TN 38119

 

Attention: Chair of the Board

 

All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section 18, be deemed given on the
day so delivered, or, if delivered after 5:00 p.m. local time or on a day other
than a Saturday, Sunday or any day on which banks located in the State of
Tennessee are authorized or obligated to close (a “Business Day”), then on the
next proceeding Business Day, (ii) if delivered by certified mail in the manner
described above to the address as provided in this Section 18, be deemed given
on the earlier of the third Business Day following mailing or upon receipt and
(iii) if delivered by overnight courier to the address as provided for in this
Section 18, be deemed given on the earlier of the first Business Day following
the date sent by such overnight courier or upon receipt, in each case regardless
of whether such notice, request or other communication is received by any other
Person to whom a copy of such notice is to be delivered pursuant to this Section
18. Any party hereto from time to time may change its address or other
information for the purpose of notices to that party by giving notice specifying
such change to the other party hereto.

 

19.         Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any action in any other jurisdiction,
but this Agreement shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein.

 

20.         Entire Agreement. Except as otherwise stated here, this Agreement
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the parties. For the avoidance of
doubt, Executive shall not be eligible to participate in any severance plan or
program during the Term of Employment to the extent such participation would
result in a duplication of benefits.

 

15

 

 

21.         No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.

 

22.         Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

 

23.         Successors and Assigns. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and assigns, except that Executive may not assign
Executive’s rights or delegate Executive’s duties or obligations hereunder
without the prior written consent of the Company. The Company may only assign
this Agreement to a successor to all or substantially all of the business and/or
assets of the Company. As used in this Agreement, “Company” shall mean the
Company and any successor to its business and/or assets, which assumes and
agrees to perform the duties and obligations of the Company under this Agreement
by operation of law or otherwise.

 

24.         Choice of Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of Tennessee, without giving effect to any choice-of-law or
conflict-of-law rules or provisions (whether of the State of Tennessee or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Tennessee.

 

25.         Amendment and Waiver. The provisions of this Agreement may be
amended or waived only with the prior written consent of the Company (as
approved by the Board) and Executive, and no course of conduct or course of
dealing or failure or delay by any party hereto in enforcing or exercising any
of the provisions of this Agreement (including the Company’s right to terminate
the Executive’s employment for Cause) shall affect the validity, binding effect
or enforceability of this Agreement or be deemed to be an implied waiver of any
provision of this Agreement.

 

26.         Consent to Jurisdiction. EACH OF THE PARTIES IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE
STATE OF TENNESSEE FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING
ARISING OUT OF THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY OR THEREBY. EACH OF THE PARTIES HERETO FURTHER AGREES THAT
SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL,
RETURN RECEIPT REQUESTED, TO SUCH PARTY’S RESPECTIVE ADDRESS SET FORTH ABOVE
SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION, SUIT OR PROCEEDING IN THE
STATE OF TENNESSEE WITH RESPECT TO ANY MATTERS TO WHICH IT HAS SUBMITTED TO
JURISDICTION IN THIS SECTION 25. EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT
OR PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY IN THE STATE AND FEDERAL COURTS
LOCATED IN THE STATE OF TENNESSEE, AND HEREBY AND THEREBY FURTHER IRREVOCABLY
AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.

 

27.         Waiver of Jury Trial. AS A SPECIFICALLY BARGAINED-FOR INDUCEMENT FOR
EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE
OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE
RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN
ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

 

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28.         Section 409A.

 

(a)           Interpretation. Notwithstanding any provision to the contrary in
this Agreement, this Agreement is intended to comply with the requirements of
Section 409A of the Code and regulations thereunder (“Section 409A”) or any
exemption thereunder, to the extent applicable, and this Agreement shall be
interpreted accordingly. If any provisions of this Agreement (or of any award of
compensation, including equity compensation or benefits) would cause Executive
to incur any additional tax or interest under Section 409A of the Code, the REIT
Operator shall, after consulting with and receiving the approval of Executive,
reform such provision in a manner intended to avoid the incurrence by Executive
of any such additional tax or interest; provided that the REIT Operator agrees
to maintain, to the maximum extent practicable, the original intent and economic
benefit to Executive of the applicable provision without violating the
provisions of Section 409A of the Code. For purposes of Section 409A, each
payment made under this Agreement shall be treated as a separate payment. In no
event may Executive, directly or indirectly, designate the calendar year of any
payment that constitutes deferred compensation for purposes of Section 409A. To
the extent any payment or benefit provided under this Agreement is contingent
upon Executive’s execution of the general release of claims described in
Sections 4(a) or 4(d)(ii), if such payment or benefit constitutes deferred
compensation for purposes of Section 409A and the 60-day period described in
such sections spans calendar years, such payment and/or benefit shall be paid or
commence, as applicable, in the latter calendar year. Executive will be deemed
to have a termination of employment for purposes of determining the timing of
any payments or benefits hereunder that constitute deferred compensation for
purposes of Section 409A only upon a “separation from service” within the
meaning of Section 409A.

 

(b)           Payment Delay. Notwithstanding any provision to the contrary in
this Agreement, if on the date of Executive’s termination of employment,
Executive is a “specified employee” (as such term is used in Section 409A), then
any amounts payable to Executive that constitute deferred compensation for
purposes of Section 409A that are payable due to Executive’s termination of
employment shall be postponed and paid (without interest) to Executive in a lump
sum on the first day of the seventh month after Executive’s “separation from
service” (within the meaning of Section 409A) with the Company (or any successor
thereto); provided, however, that if Executive dies during such six-month period
and prior to payment of the postponed cash amounts hereunder, the amounts
delayed on account of Section 409A shall be paid to the personal representative
of Executive’s estate on the sixtieth (60th) day after Executive’s death.

 

(c)           Reimbursements. All reimbursements provided under this Agreement
that constitute deferred compensation under Section 409A shall be made or
provided in accordance with the requirements of Section 409A, including, where
applicable, the requirement that (i) any reimbursement is for expenses incurred
during Executive’s lifetime (or during a shorter period of time specified in
this Agreement), (ii) the amount of expenses eligible for reimbursement during a
calendar year may not affect the expenses eligible for reimbursement in any
other calendar year, (iii) the reimbursement of an eligible expense will be made
on or before the last day of the taxable year following the year in which the
expense is incurred, and (iv) the right to reimbursement is not subject to
liquidation or exchange for another benefit.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

  Jernigan Capital, Inc.           By: /s/ John A. Good   Name: John A. Good  
Title: Chief Executive Officer           Jernigan Capital Operating Company LLC,
      By: JERNIGAN CAPITAL, INC, its managing member           By: /s/ John A.
Good   Name: John A. Good   Title: Chief Executive Officer           JCAP
MANAGEMENT LLC       By: JERNIGAN CAPITAL OPERATING COMPANY, LLC, its managing
member       By: JERNIGAN CAPITAL, INC, its managing member           By: /s/
John A. Good   Name: John A. Good   Title: Chief Executive Officer          
EXECUTIVE           /s/ Jonathan L. Perry   Jonathan L. Perry

 

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Exhibit A

 

GENERAL RELEASE

 

I, Jonathan L. Perry, in consideration of and subject to the performance by
Jernigan Capital, Inc., a Maryland corporation (the “REIT”), Jernigan Capital
Operating Company LLC, a Delaware limited liability company, the operating
company subsidiary of the REIT (the “Operating Company”), and the Operating
Company’s subsidiary, JCAP Management LLC, a Delaware limited liability company
(the “REIT Operator” and, together with the REIT, the Operating Company, and
their respective subsidiaries, the “Company”), of their respective obligations
under the Employment Agreement with an Effective Date as of [DATE] (the
“Agreement”), do hereby release and forever discharge as of the date hereof the
Company and its respective affiliates and all present, former and future
managers, directors, officers, employees, attorneys, advisors, successors and
assigns of the Company and its affiliates and direct or indirect owners
(collectively, the “Released Parties”) to the extent provided below (this
“General Release”). The Released Parties are intended to be third-party
beneficiaries of this General Release, and this General Release may be enforced
by each of them in accordance with the terms hereof in respect of the rights
granted to such Released Parties hereunder. Terms used herein but not otherwise
defined shall have the meanings given to them in the Agreement.

 

1.             I understand that any payments or benefits paid or granted to me
under Section 4(d) of the Agreement represent, in part, consideration for
signing this General Release and are not salary, wages or benefits to which I
was already entitled. I understand and agree that I will not receive certain of
the payments and benefits specified in Section 4 of the Agreement unless I
execute this General Release and do not revoke this General Release within the
time period permitted hereafter. Such payments and benefits will not be
considered compensation for purposes of any employee benefit plan, program,
policy or arrangement maintained or hereafter established by the Company or its
affiliates.

 

2.             Except as provided in paragraphs 4 and 5 below and except for the
provisions of the Agreement which expressly survive the termination of my
employment with the Company, I knowingly and voluntarily (for myself, my heirs,
executors, administrators and assigns) release and forever discharge the Company
and the other Released Parties from any and all claims, suits, controversies,
actions, causes of action, cross-claims, counter-claims, demands, debts,
compensatory damages, liquidated damages, punitive or exemplary damages, other
damages, claims for costs and attorneys’ fees, or liabilities of any nature
whatsoever in law and in equity, both past and present (through the date that
this General Release becomes effective and enforceable) and whether known or
unknown, suspected, or claimed against the Company or any of the Released
Parties which I, my spouse, or any of my heirs, executors, administrators or
assigns, may have, which arise out of or are connected with my employment with,
or my separation or termination from, the Company (including, but not limited
to, any allegation, claim or violation, arising under: Title VII of the Civil
Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age
Discrimination in Employment Act of 1967, as amended (including the Older
Workers Benefit Protection Act); the Equal Pay Act of 1963, as amended; the
Americans with Disabilities Act of 1990; the Family and Medical Leave Act of
1993; the Worker Adjustment Retraining and Notification Act; the Employee
Retirement Income Security Act of 1974; any applicable Executive Order Programs;
the Fair Labor Standards Act; or their state or local counterparts; or under any
other federal, state or local civil or human rights law, or under any other
local, state, or federal law, regulation or ordinance; or under any public
policy, contract or tort, or under common law; or arising under any policies,
practices or procedures of the Company; or any claim for wrongful discharge,
breach of contract, infliction of emotional distress, defamation; or any claim
for costs, fees, or other expenses, including attorneys’ fees incurred in these
matters) (all of the foregoing collectively referred to herein as the “Claims”).

 

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3.             I represent that I have made no assignment or transfer of any
right, claim, demand, cause of action or other matters covered by paragraph 2
above.

 

4.             I agree that this General Release does not waive or release any
rights or claims that I may have under the Age Discrimination in Employment Act
of 1967 which arise after the date I execute this General Release. I acknowledge
and agree that my separation from employment with the Company in compliance with
the terms of the Agreement shall not serve as the basis for any claim or action
(including, without limitation, any claim under the Age Discrimination in
Employment Act of 1967).

 

5.             I agree that I hereby waive all rights to sue or obtain
equitable, remedial or punitive relief from any or all Released Parties of any
kind whatsoever in respect of any Claims, including, without limitation,
reinstatement, back pay, front pay, and any form of injunctive relief.
Notwithstanding the above, I further acknowledge that I am not waiving and am
not being required to waive any right that cannot be waived under law, including
the right to file an administrative charge or participate in an administrative
investigation or proceeding; provided, however, that subject to Section 11
below, I disclaim and waive any right to share or participate in any monetary
award resulting from the prosecution of such charge or investigation or
proceeding. Additionally, I am not waiving (i) any right to the Accrued Benefits
or any severance benefits to which I am entitled under the Agreement, (ii) any
claim relating to directors’ and officers’ liability insurance coverage or any
right of indemnification under the Company’s organizational documents or
otherwise, or (iii) my rights as an equity or security holder in the Company or
its affiliates.

 

6.             Defend Trade Secrets Act. I acknowledge that I am hereby notified
that under the Defend Trade Secrets Act of 2016: (i) no individual will be held
criminally or civilly liable under federal or state trade secret law for
disclosure of a trade secret (as defined in the Economic Espionage Act) that is:
(A) made in confidence to a federal, state, or local government official, either
directly or indirectly, or to any attorney, and made solely for the purpose of
reporting or investigating a suspected violation of law or (B) made in a
complaint or other document filed in a lawsuit or other proceeding, if such
filing is made under seal so that it is not made public; and (ii) an individual
who pursues a lawsuit for retaliation by an employer for reporting a suspected
violation of the law may disclose the trade secret to the attorney of the
individual and use the trade secret information in the court proceeding, if the
individual files any document containing the trade secret under seal, and does
not disclose the trade secret, except as permitted by court order.

 

7.             In signing this General Release, I acknowledge and intend that it
shall be effective as a bar to each and every one of the Claims hereinabove
mentioned or implied. I expressly consent that this General Release shall be
given full force and effect according to each and all of its express terms and
provisions, including those relating to unknown and unsuspected Claims
(notwithstanding any state or local statute that expressly limits the
effectiveness of a general release of unknown, unsuspected and unanticipated
Claims), if any, as well as those relating to any other Claims hereinabove
mentioned or implied. I acknowledge and agree that this waiver is an essential
and material term of this General Release and that without such waiver the
Company would not have agreed to the terms of the Agreement. I further agree
that in the event I should bring a Claim seeking damages against the Company, or
in the event I should seek to recover against the Company in any Claim brought
by a governmental agency on my behalf, this General Release shall serve as a
complete defense to such Claims to the maximum extent permitted by law. I
further agree that I am not aware of any pending claim of the type described in
paragraph 2 above as of the execution of this General Release.

 

8.             I agree that neither this General Release, nor the furnishing of
the consideration for this General Release, shall be deemed or construed at any
time to be an admission by the Company, any Released Party or myself of any
improper or unlawful conduct.

 

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9.             I agree that if I violate this General Release by suing the
Company or the other Released Parties, I will pay all costs and expenses of
defending against the suit incurred by the Released Parties, including
reasonable attorneys’ fees.

 

10.           I agree that this General Release and the Agreement are
confidential and agree not to disclose any information regarding the terms of
this General Release or the Agreement, except to my immediate family and any
tax, legal or other counsel I have consulted regarding the meaning or effect
hereof or as required by law, and I will instruct each of the foregoing not to
disclose the same to anyone.

 

11.           I agree that this General Release does not prohibit or restrict me
(or my attorney) from responding to any inquiry about this General Release or
its underlying facts and circumstances by the Securities and Exchange Commission
(SEC), the Financial Industry Regulatory Authority (FINRA), any other
self-regulatory organization or any other governmental entity or federal or
state regulatory authority (collectively, “Government Agencies”). I further
understand that this General Release does not limit my ability to communicate
with any Government Agencies or otherwise participate in any investigation or
proceeding that may be conducted by any Government Agency without notice to the
Company. This General Release does not limit my right to receive an award for
information provided to any Government Agencies.

 

12.           I hereby acknowledge that Sections 4 through 28 of the Agreement
shall survive my execution of this General Release.

 

13.           I represent that I am not aware of any claim by me other than the
claims that are released by this General Release. I acknowledge that I may
hereafter discover claims or facts in addition to or different than those which
I now know or believe to exist with respect to the subject matter of the release
set forth in paragraph 2 above and which, if known or suspected at the time of
entering into this General Release, may have materially affected this General
Release and my decision to enter into it.

 

14.           Notwithstanding anything in this General Release to the contrary,
this General Release shall not relinquish, diminish, or in any way affect any
rights or claims arising out of any breach by the Company or by any Released
Party of the Agreement after the date hereof.

 

15.           Whenever possible, each provision of this General Release shall be
interpreted in, such manner as to be effective and valid under applicable law,
but if any provision of this General Release is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this General Release shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

 

BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

 

1.I HAVE READ IT CAREFULLY;

 

2.I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS,
INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT
ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED;
THE EQUAL PAY ACT OF 1963, THE AMERICANS WITH DISABILITIES ACT OF 1990; AND THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;

 

3.I VOLUNTARILY CONSENT TO EVERYTHING IN IT;

 

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4.I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND I HAVE
DONE SO OR, AFTER CAREFUL READING AND CONSIDERATION, I HAVE CHOSEN NOT TO DO SO
OF MY OWN VOLITION;

 

5.I HAVE HAD AT LEAST [21][45] DAYS FROM THE DATE OF MY RECEIPT OF THIS RELEASE
TO CONSIDER IT, AND THE CHANGES MADE SINCE MY RECEIPT OF THIS RELEASE ARE NOT
MATERIAL OR WERE MADE AT MY REQUEST AND WILL NOT RESTART THE REQUIRED
[21][45]-DAY PERIOD;

 

6.I UNDERSTAND THAT I HAVE SEVEN (7) DAYS AFTER THE EXECUTION OF THIS RELEASE TO
REVOKE IT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL
THE REVOCATION PERIOD HAS EXPIRED;

 

7.I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE
ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND

 

8.I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED,
WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN
AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME.

 

 

SIGNED:    DATED: 

 

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