Form of July 2021 Performance LTIP Unit Agreement (Special Termination & Vesting Provisions)
FORM OF JBG SMITH PROPERTIES
2017 OMNIBUS SHARE PLAN
PERFORMANCE LTIP UNIT AGREEMENT
July 2021 Equity Award
Name of Employee:
_____________________ (the “Employee”)
No. of LTIP Units Awarded:
July 29, 2021
NOW, THEREFORE, the Company, the Partnership and the Employee agree as follows:
“Cause” means, if not otherwise defined in the Employee’s Service Agreement, if any, the Employee’s: (i) conviction of, or plea of guilty or nolo contendere to, a felony, (ii) willful and continued failure to use reasonable best efforts to substantially perform his duties (other than such failure resulting from the Employee’s incapacity due to physical or
mental illness) that the Employee fails to remedy within 30 days after written notice is delivered by the Company to the Employee that specifically identifies in reasonable detail the manner in which the Company believes the Employee has not used reasonable efforts to perform in all material respects his duties hereunder, or (iii) willful misconduct (including, but not limited to, a willful breach of the provisions of any agreement with the Company with respect to confidentiality, ownership of documents, non-competition or non-solicitation) that is materially economically injurious to the Company or its affiliates. For purposes of this paragraph, no act, or failure to act, by the Employee will be considered “willful” unless committed in bad faith and without a reasonable belief that the act or omission was in the best interests of the Company.
“Closing Price” means the closing price of a Share as reported in the principal stock exchange or quotation system on which the Shares are listed on the applicable date.
“Committee” means the Compensation Committee of the Board of Trustees of the Company.
“Common Units” means Common Partnership Units issued by the Partnership.
“Continuous Service” means the continuous service to the Employer, without interruption or termination, in any capacity of employee, or, with the written consent of the Committee, consultant. Continuous Service shall not be considered interrupted in the case of: (a) any approved leave of absence; (b) transfers among the Employers, or any successor, in any capacity of employee, or with the written consent of the Committee, as a member of the Board or a consultant; or (c) any change in status as long as the individual remains in the service of the Employer in any capacity of employee or (if the Committee specifically agrees in writing that the Continuous Service is not uninterrupted) as a member of the Board or a consultant. An approved leave of absence shall include sick leave, military leave, or any other authorized personal leave.
“Disability” means, if not otherwise defined in the Employee’s Service Agreement, if any, if, as a result of the Employee’s incapacity due to physical or mental illness, the Employee shall have been substantially unable to perform his duties for a continuous period of 180 days, and within 30 days after written notice of termination is given after such 180-day period, the Employee shall not have returned to the substantial performance of his duties on a full-time basis, the employment of the Employee is terminated by the Company.
“Distribution Participation Date” shall have the meaning set forth in the Partnership Agreement and in Section 6 hereof.
“Employer” means either the Company, the Partnership or any of their subsidiaries that employ the Employee.
“Good Reason” means, if not otherwise defined in the Employee’s Service Agreement, if any, (a) a reduction by the Company in the Employee’s base salary, (b) a material diminution in the Employee’s position, authority, duties or responsibilities, (c) a relocation of the Employee’s location of employment to a location outside of the Washington D.C. metropolitan area, or (d) the Company’s material breach of the Agreement, provided, in each case, that the Employee terminates employment within 90 days after the Employee has actual knowledge of the occurrence, without the written consent of the Employee, of one of the foregoing events that has not been cured within 30
days after written notice thereof has been given by the Employee to the Company setting forth in reasonable detail the basis of the event (provided such notice must be given to the Company within 30 days of the Employee becoming aware of such condition).
“LTIP Unit Initial Sharing Percentage” shall have the meaning set forth in Section 6(c) hereof.
“Performance Period” means the period beginning on the first anniversary of the Grant Date and ending on the sixth anniversary of the Grant Date, subject to earlier termination as provided in Section 5(a)(i).
“Retirement” means the termination of employment of the Employee after the Employee has met all of the following conditions: (a) the Employee has attained at least age 50, (b) the Employee has completed at least ten (10) years of service with the Company and its affiliates (including any predecessors thereto), (c) the sum of his or her age and years of service with the Company and its affiliates (including any predecessors thereto) equals or exceeds seventy (70) and (d) the Employee has provided at least six (6) months’ notice of his or her termination of employment to the Company or its applicable affiliate.
“Securities Act” means the Securities Act of 1933, as amended.
“Service Agreement” means, as of a particular date, any employment, consulting or similar service agreement then in effect between the Employee, on the one hand, and the Employer, on the other hand, as amended or supplemented through such date.
“Share” means a common share of beneficial interest of the Company.
“Transactional Change of Control” means a Change of Control resulting from any person or group making a tender offer for the Shares, a merger or consolidation where the Company is not the acquirer or surviving entity or consisting of a sale, lease, exchange or other transfer to an unrelated party of all or substantially all of the assets of the Company.
The Award will be forfeited in its entirety if the Closing Price fails to reach $35 over a consecutive twenty (20) trading day period during the Performance Period. For the avoidance of doubt, once a Hurdle Date for a Hurdle Price Level is achieved, the applicable percentage of Award LTIP Units will be earned regardless of whether the Closing Price later falls below such Hurdle Price Level and further provided that Employee can only earn Award LTIP Units once per Hurdle Price Level. For example, if Shares attain a Closing Price over twenty (20) consecutive trading days of $35, then 17.5% of the Award LTIPs will be considered to have been earned. No additional Award LTIP Units will be considered to have been earned unless and until the Shares attain a Closing Price over twenty (20) consecutive trading days of $40, at which time an additional 22.5% of the Award LTIP Units will be considered to have been earned. For the avoidance of doubt, any Award LTIP Units that become earned will be subject to the requirements to remain in Continuous Service through the dates set forth in Section 3(d) below to become vested.
If, at the conclusion of the Performance Period, the number of Earned LTIP Unit Equivalents is smaller than the number of Award LTIP Units previously issued to the Employee, then the Employee, as of the conclusion of the Performance Period, shall forfeit a number of Award LTIP Units equal to the difference without payment of any consideration by the Partnership; thereafter the term Award LTIP Units will refer only to the Earned Award LTIP Units (and any Distribution Equivalent LTIP Units) and neither the Employee nor any of his or her successors, heirs, assigns, or personal representatives will thereafter have any further rights or interests in the LTIP Units that were so forfeited.
|(i)||If the Committee determines that the intent, economic opportunity and economic value of the Award LTIP Units are not capable of being replicated at least at the same level as in effect prior to the Change in Control, (i) the Performance Period shall end as of immediately prior to the Change in Control, (ii) the provisions of Section 3 shall apply to determine the Earned LTIP Unit Equivalents except that if the Change in Control is a Transactional Change in Control, the fair value, as determined by the Committee, of the total consideration paid or payable in the transaction resulting in the Transactional Change of Control for one Share shall be used to determine if any incremental Award LTIP Units become earned, and the determination shall be made based on such price per Share without regard to the price over the preceding trading days, (iii) the Earned LTIP Unit Equivalents, as well as any Award LTIP Units that previously became Earned LTIP Unit Equivalents, shall become fully vested immediately prior to the consummation of such Change in Control, and (iv) any Award LTIP Units that do not become earned shall be forfeited.|
|(ii)||If the Committee determines that the intent, economic opportunity and economic value of the Award LTIP Units are capable of being replicated at least at the same level as in effect prior to the Change in Control, the Performance Period shall not end as of immediately prior to the Change in Control and the Award LTIP Units shall continue with appropriate adjustments to the Hurdle Price Levels as the Committee deems appropriate.|
[signature page follows]
IN WITNESS WHEREOF, this Performance LTIP Unit Agreement has been executed by the parties hereto as of the date and year first above written.
JBG SMITH PROPERTIES
Name: Steven A. Museles
Title: Chief Legal Officer and Secretary
JBG SMITH PROPERTIES LP
By: JBG SMITH PROPERTIES, its General Partner
Name: Steven A. Museles
Title: Chief Legal Officer and Secretary
FORM OF LIMITED PARTNER SIGNATURE PAGE
The Employee, desiring to become one of the within named Limited Partners of JBG SMITH Properties LP, hereby accepts all of the terms and conditions of (including, without limitation, the provisions related to powers of attorney), and becomes a party to, the Second Amended and Restated Limited Partnership Agreement, dated as of December 17, 2020, of JBG SMITH Properties LP, as amended (the “Partnership Agreement”). The Employee agrees that this signature page may be attached to any counterpart of the Partnership Agreement and further agrees as follows (where the term “Limited Partner” refers to the Employee): Capitalized terms used but not defined herein have the meaning ascribed thereto in the Partnership Agreement.
Signature Line for Limited Partner:
July [ ], 2021
Address of Limited Partner:
EMPLOYEE’S COVENANTS, REPRESENTATIONS AND WARRANTIES
The Employee hereby represents, warrants and covenants as follows:
The Employee also acknowledges that any delivery of the Background Documents and other information relating to the Company and the Partnership prior to the determination by the Partnership of the suitability of the Employee as a holder of Award LTIP Units shall not constitute an offer of Award LTIP Units until such determination of suitability shall be made.
ELECTION TO INCLUDE IN GROSS INCOME IN YEAR OF TRANSFER OF PROPERTY PURSUANT TO SECTION 83(B) OF THE INTERNAL REVENUE CODE
The undersigned hereby makes an election pursuant to Section 83(b) of the Internal Revenue Code with respect to the property described below and supplies the following information in accordance with the regulations promulgated thereunder:
1.The name, address and taxpayer identification number of the undersigned are:
Name: [Employee Name] (the “Taxpayer”)
Social Security No./Taxpayer Identification No.:
2.Description of property with respect to which the election is being made:
The election is being made with respect to LTIP Units in JBG SMITH Properties LP (the “Partnership”).
3.The date on which the LTIP Units were transferred is July __, 2021. The taxable year to which this election relates is calendar year 2021.
4.Nature of restrictions to which the LTIP Units are subject:
(a)With limited exceptions, until the LTIP Units vest, the Taxpayer may not transfer in any manner any portion of the LTIP Units without the consent of the Partnership.
(b)The Taxpayer’s LTIP Units vest in accordance with the vesting provisions described in the Schedule attached hereto. Unvested LTIP Units are forfeited in accordance with the vesting provisions described in the Schedule attached hereto.
5.The fair market value at time of transfer (determined without regard to any restrictions other than a nonlapse restriction as defined in Treasury Regulations Section 1.83-3(h)) of the LTIP Units with respect to which this election is being made was $0 per LTIP Unit.
6.The amount paid by the Taxpayer for the LTIP Units was $0 per LTIP Unit.
7.A copy of this statement has been furnished to the Partnership and JBG SMITH Properties.
SCHEDULE TO EXHIBIT C
Vesting Provisions of LTIP Units
The LTIP Units are subject to performance-based vesting criteria, based on certain share price hurdles, and subsequent time-based vesting criteria, provided that the Taxpayer remains an employee of JBG SMITH Properties or its affiliate through the relevant vesting periods, subject to acceleration in the event of certain extraordinary transactions or termination of the Taxpayer’s service relationship with JBG SMITH Properties (or its affiliate) under specified circumstances. Unvested LTIP Units are subject to forfeiture in the event of failure to vest based on the failure to satisfy the applicable performance goals and the passage of time and continued employment.
JBG SMITH Properties, a Maryland real estate investment trust
Name: Steven A. Museles
Title: Chief Legal Officer and