EXHIBIT 10.3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is made
and entered into this 1st day of September, 2000 by and among Prime Group Realty
Trust, a Maryland real estate investment trust ("PGRT"), Prime Group Realty,
L.P., a Delaware limited partnership and the operating partnership for PGRT
("Prime") (Prime and PGRT are hereinafter sometimes collectively referred to as
"Employer"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, an individual domiciled in the State of
Illinois ("Executive").
W I T N E S S E T H
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A. Employer and Executive are parties to that certain Employment
Agreement (the "Prior Agreement") dated as of November 17, 1997 pursuant to
which Executive became employed by Employer as Executive Vice President and
Chief Investment Officer.
B. Employer is engaged primarily in the ownership, management, leasing,
marketing, acquisition, development and construction of office and industrial
real estate facilities throughout the United States.
C. Employer believes that it would benefit from the application of
Executive's particular and unique skill, experience, and background to the (i)
acquisition, disposition, financing, leasing and development of office
properties and the management thereof, (ii) the negotiation and consummation of
joint venture transactions relating to office and other properties, and (iii)
the management oversight relating to the foregoing.
D. Executive wishes to commit to continue to serve Employer in the
position set forth herein on the terms herein provided.
E. The parties wish to amend and restate the Prior Agreement on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein set forth, and for other good and valuable consideration, Employer and
Executive hereby agree as follows:
1. Employment and Duties. During the Employment Term (as defined in
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Section 2 hereof), Employer agrees to employ Executive, and Executive agrees to
be employed by Employer, in the Office of the President as Co-President of
Employer on the terms and conditions provided in this Agreement. Executive shall
conduct, operate, manage and promote the business and business concept of
Employer. The Chief Executive Officer of Employer may from time to time further
define and clarify Executive's duties and services hereunder as Co-President of
Employer. Executive agrees to devote Executive's best efforts and substantially
all of Executive's business time, attention, energy and skill to perform
Executive's duties as Co-President of Employer.
2. Term. The term of this Agreement shall commence on the date hereof and
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expire on November 17, 2002 (the "Initial Term"), provided, however, that this
Agreement shall automatically be renewed for successive one year terms following
the Initial Term (each a "Renewal Term" and together with the Initial Term, the
"Employment Term"), unless at least six (6) months prior to, in the case of a
non-renewal by Employer, or at least thirty (30) days prior to, in the case of a
non-renewal by Executive, the end of the Initial Term or any Renewal Term, as
applicable, either party shall give the other written notice of its intention to
terminate this Agreement.
3. Compensation and Related Matters. (a) Base Salary. As compensation for
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hereof and performing the services required by this Agreement during the
Employment Term, Employer shall pay to Executive an annual salary of no less
than the annual base salary currently paid to Executive as of the date hereof
("Base Compensation"), payable in accordance with the general policies and
procedures for payment of salaries to its executive personnel maintained, from
time to time, by Employer (but no less frequently than monthly), subject to
withholding for applicable federal, state, and local taxes. Increases in Base
Compensation, if any, shall be determined by the Compensation Committee (the
"Committee") of the Board of Trustees of PGRT (the "Board"), based on periodic
reviews of Executive's performance conducted on at least an annual basis.
(b) Bonus. In addition to Base Compensation, the Board and/or the
Committee, in their sole and absolute discretion, may, but in no event shall be
obligated to, authorize the payment of a bonus (a "Performance Bonus
Distribution") payable in cash, common shares in PGRT and/or options for PGRT
shares to Executive based upon achievement of such corporate and individual
performance goals and objectives as may be established or determined by the
Board or the Committee from time to time.
(c) Benefits. During the Employment Term and subject to the
limitations and alternative rights set forth in this Section 3(c), Executive and
Executive's eligible dependents shall have the right to participate in the
medical and dental benefit plan to be established by Employer (which may include
contributions by Executive) and in any other retirement, pension, insurance,
health or other benefit plan or program that has been or is hereafter adopted by
Employer (or in which Employer participates), as such plans and programs may be
amended or modified from time to time by Employer, according to the terms of
such plan or program with all the benefits, rights and privileges as are enjoyed
by any other executive officers of Employer. Employer expects to have in place a
life insurance program in which Executive will be entitled to participate. If
the participation of Executive would adversely affect the qualification of a
plan intended to be qualified under Section 401(a) of the Internal Revenue Code
as the same may be amended from time to time (the "Code"), Employer shall have
the right to exclude Executive from that plan in return for Executive's
participation in (i) a nonqualified deferred compensation plan or (ii) an
arrangement providing substantially comparable benefits under a plan that is
either a qualified or nonqualified under the Code at Employer's option.
(d) Expenses. Executive shall be reimbursed, subject to Employer's
receipt of invoices or similar records as Employer may reasonably request in
accordance with its policies and procedures, as such policies and procedures may
be amended or modified from time to time by Employer, for all reasonable and
necessary expenses incurred by Executive in the
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performance of Executive's duties hereunder, including expenses for business
entertainment and meals (whether in or out of town) and gas for business travel,
but excluding automobile insurance.
(e) Vacations. During the Employment Term, Executive shall be
entitled to vacation in accordance with Employer's practices, as such practices
may be amended or modified from time to time by Employer, provided that
Executive shall be entitled to at least three (3) weeks paid vacation in each
full calendar year. Executive may accrue unused vacation time if not used in any
calendar year or years, however, the maximum cumulative amount of vacation time
that Executive may accrue and carry over to the next year is two (2) weeks.
Executive shall be entitled to a payment for any vacation time which has accrued
but has not been used as of the date of the termination of Executive's
employment with Employer, unless Executive's employment is terminated pursuant
to Section 5(a)(ii) hereof.
4. Share Options and Grants. PGRT has established a share incentive plan
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(the "Share Incentive Plan"). The Share Incentive Plan initially provides, among
other things, for the issuance from time to time to certain officers, directors
and other employees of PGRT and Employer, including Executive, of share options.
Pursuant to the Share Incentive Plan, on the date of the Prior Agreement, PGRT
granted to Executive 85,000 share options ("Options") that will have such terms
and conditions as are set forth in the Share Incentive Plan and the Share Option
Agreement to be entered into between PGRT and Executive. Such Options granted to
Executive shall vest immediately (i) upon the death or disability of Executive
or (ii) upon termination of this Agreement and Executive's employment for any
reason other than (A) a termination for cause by Employer or (B) if Executive
terminates Executive's employment for any reason other than pursuant to Section
5(b)(i) hereof. In the case of a termination for cause or if Executive
terminates Executive's employment for any reason other than pursuant to Section
5(b)(i) hereof, all unvested Options shall be forfeited by Executive, but
Executive shall have the right to exercise within the time period provided for
in the Share Incentive Plan all Options vested prior to such termination. In
addition, on the date of the Prior Agreement, PGRT granted to Executive 110,000
shares of beneficial interests of PGRT in exchange for certain assets
contributed by Executive to Prime pursuant to the Formation Agreement dated
November 17, 1997 among PGRT, Prime, Prime Group Services, Inc., The Prime
Group, Inc., Prime Group Limited Partnership and Executive, which shares were
subject to pro-rata forfeiture (based on number of days) if Executive
voluntarily terminated Executive's employment with Employer prior to November
17, 1998. Subsequent to the date of the Prior Agreement, additional share
options and restricted shares have been granted to Executive.
5. Termination and Termination Benefits. (a) Termination by Employer. (i)
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Without Cause. Employer may terminate this Agreement and Executive's employment
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at any time (other than for Cause, as that term is defined in Section 5(a)(ii)
hereof) upon thirty (30) days' prior written notice to Executive. In connection
with the termination of Executive's employment pursuant to this Section 5(a)(i),
(A) Employer shall pay to Executive Executive's Base Compensation in accordance
with Section 3(a) hereof up to the effective date of such termination, (B)
Employer shall pay to Executive a pro rata portion of any Performance Bonus
Distribution otherwise payable to Executive for or with respect to the calendar
year in which such termination occurs in accordance with Section 3(b) hereof up
to the effective date of such termination and, to the extent not previously
paid, Employer shall pay to Executive all
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Performance Bonus Distributions payable to Executive in accordance with Section
3(b) hereof for or with respect to any calendar years prior to the calendar year
in which such termination occurs, (C) Employer shall provide to Executive the
benefits set forth in Sections 3(c), 3(d) and 3(e) hereof up to the effective
date of such termination and (D) Employer shall pay to Executive the Termination
Compensation specified in Section 5(d) hereof. For purposes of calculating
Executive's pro rata portion of any Performance Bonus Distribution pursuant to
clause (B) in the previous sentence, if the termination takes place prior to
receipt by Executive of any Performance Bonus Distribution, the Performance
Bonus Distribution, a pro rata (based on the number of days in the year) portion
of which Executive shall be entitled to receive, shall be deemed to be 50% of
Executive's then current annual Base Compensation. For purposes of this
Agreement, the "effective date of termination" shall mean the last day on which
Executive is employed with Employer which may be later than the date of the
delivery of any applicable notice of termination.
(ii) With Cause. Employer may terminate this Agreement for Cause
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immediately upon written notice to Executive. Employer may elect to require
Executive to continue to perform Executive's duties under this Agreement for an
additional thirty (30) days following notice of termination. In connection with
the termination of Executive's employment pursuant to this Section 5(a)(ii), (A)
Employer shall pay to Executive Executive's Base Compensation in accordance with
Section 3(a) hereof up to the effective date of such termination, and, to the
extent not previously paid, Executive shall be entitled to any Performance Bonus
Distributions payable to Executive in accordance with Section 3(b) hereof for or
with respect to any calendar years prior to the calendar year in which such
termination occurs and (B) Employer shall provide to Executive the benefits set
forth in Sections 3(c), 3(d) and 3(e) hereof up to the effective date of such
termination. For purposes of this Section 5(a)(ii), "Cause" shall mean (1) a
finding by the Board that Executive has materially harmed Employer, its
business, assets or employees through an act of dishonesty, material conflict of
interest, gross misconduct or willful malfeasance, (2) Executive's conviction of
(or plea of nolo contendere to) a felony involving acts of dishonesty, financial
untrustworthiness or adversely impacting Executive's ability to perform
Executive's duties hereunder, (3) Executive's failure to perform (which shall
not include inability to perform due to disability) in any material respect
Executive's material duties under this Agreement after written notice specifying
the failure and a reasonable opportunity to cure (it being understood that if
Executive's failure to perform is not of a type requiring a single action to
fully cure, then Executive may commence the cure promptly after such written
notice and thereafter diligently prosecute such cure to completion), (4) the
breach by Executive of any of Executive's material obligations hereunder (other
than those covered by clause (3) above) and the failure of Executive to cure
such breach within thirty (30) days after receipt by Executive of a written
notice of Employer specifying in reasonable detail the nature of the breach, or
(5) Executive's sanction (including restrictions, prohibitions and limitations
agreed to under a consent decree or agreed order) under, or conviction for
violation of, any federal or state securities law, rule or regulation (provided
that in the case of a sanction, such sanction materially impedes or impairs the
ability of Executive to perform Executive's duties and exercise Executive's
responsibilities hereunder in a satisfactory manner).
(iii) Disability. If due to illness, physical or mental
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disability, or other incapacity, Executive shall fail during any four (4)
consecutive months to perform the duties required by this Agreement, Employer
may, upon thirty (30) days' written notice to Executive,
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terminate this Agreement and Executive's employment. In the event of any such
termination, (A) Employer shall pay to Executive Executive's Base Compensation
in accordance with Section 3(a) hereof up to the effective date of such
termination, (B) Employer shall pay to Executive a pro rata portion of any
Performance Bonus Distribution otherwise payable to Executive for or with
respect to the calendar year in which such termination occurs in accordance with
Section 3(b) hereof up to the first day of such four (4) month period and, to
the extent not previously paid, Executive shall be entitled to all Performance
Bonus Distributions payable to Executive in accordance with Section 3(b) hereof
for or with respect to any calendar years prior to the calendar year in which
such termination occurs, (C) Employer shall provide to Executive the benefits
set forth in Sections 3(c) (or the after-tax cash equivalent), 3(d) and 3(e)
hereof up to the effective date of such termination and (D) Employer shall pay
to Executive the Termination Compensation specified in Section 5(d) hereof, but
only if and to the extent that Employer actually obtained disability insurance
coverage for Executive at commercially reasonable rates in Employer's discretion
which reimburses Employer for such amounts. For purposes of calculating
Executive's pro rata portion of any Performance Bonus Distribution pursuant to
clause (B) in the previous sentence, if the termination takes place prior to
receipt by Executive of any Performance Bonus Distribution, the Performance
Bonus Distribution, a pro rata portion of which Executive shall be entitled to
receive, shall be deemed to be 50% of Executive's then current annual Base
Compensation. This Section 5(a)(iii) shall not limit the entitlement of
Executive, Executive's estate or beneficiaries to any disability or other
benefits available to Executive under any disability insurance or other benefits
plan or policy which is maintained by Employer for Executive's benefit (as
opposed to Employer's benefit). For purposes of this Agreement, the "date of
disability" shall mean the first day of the consecutive period during which
Executive fails to perform the duties required by this Agreement due to illness,
physical or mental disability or other incapacity.
(b) Termination by Executive. (i) After Change of Control. Executive
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may terminate this Agreement upon thirty (30) days' written notice to Employer
following any "change of control" (as defined below) of Employer and (i) a
resulting "diminution event" (as defined below) or (ii) a resulting relocation
of Executive's office to a location more than twenty-five (25) miles from ▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, but in no event later than two years after
the change of control event. Executive shall continue to perform, at the
election of Employer, Executive's duties under this Agreement for an additional
thirty (30) days following notice of termination. In the event of such
termination, (A) Employer shall pay to Executive Executive's Base Compensation
up to the effective date of such termination, (B) Employer shall pay to
Executive a pro rata portion of any Performance Bonus Distribution otherwise
payable to Executive for or with respect to the calendar year in which such
termination occurs in accordance with Section 3(b) hereof up to the effective
date of such termination and, to the extent not previously paid, Executive shall
be entitled to all Performance Bonus Distributions payable to Executive in
accordance with Section 3(b) hereof for or with respect to any calendar years
prior to the calendar year in which such termination occurs, (C) Employer shall
provide to Executive the benefits set forth in Sections 3(c), 3(d) and 3(e)
hereof up to the effective date of such termination and (D) Employer shall pay
to Executive the Termination Compensation specified in Section 5(d) hereof. For
purposes of calculating Executive's pro rata portion of any Performance Bonus
Distribution pursuant to clause (B) in the previous sentence, if the termination
takes place prior to receipt by Executive of any Performance Bonus Distribution,
the Performance Bonus Distribution, a pro rata portion of which Executive shall
be entitled to
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receive, shall be deemed to be 50% of Executive's then current annual Base
Compensation. For purposes of this Agreement, in the event Employer defaults in
its obligation under Section 9 hereof and, as a consequence thereof, Executive's
employment with Employer (or Employer's successor or assign) terminates, such
termination shall be deemed to be a termination under this Section 5(b)(i).
For purposes of this Section 5(b)(i), (A) a "change of control" of Employer
shall be deemed to have occurred if: (1) any person (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), including a "group" as defined in Section 13(d)(3) of the
Exchange Act (but excluding The Prime Group, Inc. or any of its affiliates or
any group in which The Prime Group, Inc. or any of its affiliates has a
significant interest and excluding a trustee or other fiduciary holding
securities under an employee benefit plan of Employer), becomes the beneficial
owner of shares of beneficial interests or limited partnership interests, as
applicable, of Employer having at least fifty percent (50%) of the total number
of votes that may be cast for the election of trustees of Employer; (2) the
merger or other business combination of Employer, sale of all or substantially
all of Employer's assets or combination of the foregoing transactions (a
"Transaction"), other than a Transaction immediately following which the
shareholders of Employer immediately prior to the Transaction continue to have a
majority of the voting power in the resulting entity (excluding for this purpose
any shareholder, other than The Prime Group, Inc. and its affiliates, owning
directly or indirectly more than ten percent (10%) of the shares of the other
company involved in the Transaction); or (3) within any twenty-four (24) month
period beginning on or after the date hereof, the persons who were trustees of
Employer immediately before the beginning of such period (the "Incumbent
Directors") shall cease to constitute at least a majority of the Board or a
majority of the board of trustees of any successor to Employer, provided that,
any trustee who was not a trustee as of the date hereof shall be deemed to be an
Incumbent Director if such trustee was elected to the Board by, or on the
recommendation of or with the approval of, at least two-thirds of the trustees
who then qualified as Incumbent Directors either actually or by prior operation
of this provision, unless such election, recommendation or approval was the
result of an actual or threatened election contest of the type contemplated by
Regulation 14a-11 promulgated under the Exchange Act or any successor provision;
and (B) a "diminution event" shall mean any material diminution in (1) the
duties and responsibilities of Executive (including any title below Co-President
of Chief Investment Officer) or (2) the compensation package for Executive.
In the event that any payment, benefit or distribution by or on behalf of
Employer to or for the benefit of Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 5(b)(i)) (the "Payments") is determined to be an "excess
parachute payment" pursuant to Code Section 280G or any successor or substitute
provision of the Code, with the effect that Executive is liable for the payment
of the excise tax described in Code Section 4999 or any successor or substitute
provision of the Code (the "Excise Tax"), then Employer shall pay to Executive
an additional amount (the "Gross-Up Payment") such that the net amount retained
by Executive, after deduction of any Excise Tax on the Total Payments and any
federal, state and local income and employment taxes and Excise Tax on the
Gross-Up Payment, shall be equal to the Total Payments. All determinations
required to be made under this paragraph, and the assumptions to be utilized in
arriving at such determination, shall be made by the certified public accounting
firm used for auditing purposes by Employer
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immediately prior to Executive's employment termination (the "Accounting Firm"),
which shall provide detailed supporting calculations both to Employer and
Executive. Employer shall pay all fees and expenses of the Accounting Firm. Any
determination by the Accounting Firm shall be binding upon Employer and
Executive, except as provided in the following sentence. As a result of the
uncertainty in the application of Code Sections 280G and 4999 at the time of the
initial determination by the Accounting Firm hereunder, it is possible that the
Internal Revenue Service ("IRS") or other agency will claim that a greater or
lesser Excise Tax is due. In the event that the Excise Tax is finally determined
to be less than the amount taken into account hereunder in calculating the
Gross-Up Payment, Executive shall repay to Employer, at the time that the amount
of such reduction in Excise Tax is finally determined, the portion of the Gross-
Up Payment attributable to such reduction (plus that portion of the Gross-Up
Payment attributable to the Excise Tax and federal, state and local income and
employment taxes imposed on the Gross-Up Payment being repaid by Executive to
the extent that such repayment results in a reduction in Excise Tax and/or a
federal, state or local income or employment tax deduction). In the event that
the Excise Tax is determined to exceed the amount taken into account hereunder
in calculating the Gross-Up Payment (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-Up
Payment), Employer shall make an additional Gross-Up Payment in respect of such
excess (plus any interest, penalties or additions payable by Executive with
respect to such excess) at the time that the amount of such excess is finally
determined. Executive and Employer shall each reasonably cooperate with the
other in connection with any administrative or judicial proceedings concerning
the existence or amount of liability for Excise Tax with respect to the Total
Payments. Employer shall pay all fees and expenses of Executive relating to a
claim by the IRS or other agency.
(ii) Without Good Reason. Executive may terminate this Agreement
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and Executive's employment at any time for any reason or for no reason upon
thirty (30) days' written notice to Employer, during which period Executive
shall continue to perform Executive's duties under this Agreement if Employer so
elects. In connection with the termination of Executive's employment pursuant to
this Section 5(b)(ii), (A) Employer shall pay to Executive Executive's Base
Compensation in accordance with Section 3(a) hereof up to the effective date of
such termination, and, to the extent not previously paid, Executive shall be
entitled to all bonuses payable to Executive in accordance with Section 3(b)
hereof for or with respect to any calendar years prior to the calendar year in
which such termination occurs and (B) Employer shall provide to Executive the
benefits set forth in Sections 3(c), 3(d) and 3(e) hereof up to the effective
date of such termination.
(iii) For Good Reason. Executive may terminate this Agreement for
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Good Reason upon thirty (30) days' written notice to Employer. In connection
with the termination of Executive's employment pursuant to this Section
5(b)(iii), (A) Employer shall pay to Executive Executive's Base Compensation in
accordance with Section 3(a) hereof up to the effective date of such
termination, (B) Employer shall pay to Executive a pro rata portion of any
Performance Bonus Distribution otherwise payable to Executive for or with
respect to the calendar year in which such termination occurs in accordance with
Section 3(b) hereof up to the effective date of such termination and, to the
extent not previously paid, Employer shall pay to Executive all Performance
Bonus Distributions payable to Executive in accordance with Section 3(b) hereof
for or with respect to any calendar years prior to the calendar year in which
such termination occurs, (C) Employer shall provide to Executive the benefits
set forth in Sections
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3(c), 3(d) and 3(e) hereof up to the effective date of such termination and (D)
Employer shall pay to Executive the Termination Compensation specified in
Section 5(d) hereof. For purposes of calculating Executive's pro rata portion of
any Performance Bonus Distribution pursuant to clause (B) in the previous
sentence, if the termination takes place prior to receipt by Executive of any
Performance Bonus Distribution, the Performance Bonus Distribution, a pro rata
(based on the number of days in the year) portion of which Executive shall be
entitled to receive, shall be deemed to be 50% of Executive's then current
annual Base Compensation. For purposes of this Section 5(b)(iii), "Good Reason"
shall mean (1) any material breach by Employer of the terms of this Agreement
which is not cured within thirty (30) days after receipt by Employer of a
written notice from Executive specifying in reasonable detail the nature of the
breach, or (2) any relocation of Executive's office to a location more than
twenty-five (25) miles from ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
(c) Death. Notwithstanding any other provision of this Agreement,
this Agreement shall terminate on the date of Executive's death. In such event,
(A) Employer shall pay to Executive Executive's Base Compensation in accordance
with Section 3(a) hereof up to the date of such death, (B) Employer shall pay to
Executive a pro rata portion of any Performance Bonus Distribution otherwise
payable to Executive for or with respect to the calendar year in which such
death occurs in accordance with Section 3(b) hereof up to the effective date of
such death and, to the extent not previously paid, Executive shall be entitled
to all Performance Distribution Bonus payable to Executive in accordance with
Section 3(b) hereof for or with respect to any calendar years prior to the
calendar year in which such death occurs, (C) Employer shall provide to
Executive the benefits set forth in Sections 3(c) (or the after-tax cash
equivalent), 3(d) and 3(e) hereof up to the date of such death and (D) Employer
shall pay to Executive the Termination Compensation specified in Section 5(d)
hereof, but only if and to the extent that Employer has actually obtained life
insurance coverage for Executive at commercially reasonable rates in Employer's
discretion which reimburses Employer for such amounts. This Section 5(c) shall
not limit the entitlement of Executive, Executive's estate or beneficiaries
under any insurance or other benefits plan or policy which is maintained by
Employer for Executive's benefit (as opposed to Employer's benefit). For
purposes of calculating Executive's pro rata portion of any Performance Bonus
Distribution pursuant to clause (B) in the previous sentence, if the termination
takes place prior to receipt by Executive of any Performance Bonus Distribution,
the Performance Bonus Distribution, a pro rata portion of which Executive shall
be entitled to receive, shall be deemed to be 50% of Executive's then current
annual Base Compensation.
(d) Termination Compensation. In the event of a termination of this
Agreement pursuant to Section 5(a)(i) (by Employer without cause), 5(a)(iii)
(disability), 5(b)(i) (change of control), 5(b)(iii) (by Executive for good
reason) or 5(c) (death) hereof, Employer shall pay to Executive, within thirty
(30) days of termination, an amount in one lump sum ("Termination Compensation")
equal to:
(i) in the case of a termination pursuant to Section 5(a)(i)
(by Employer without cause) except as specified in clause 5(d)(ii) below,
5(a)(iii) (disability), 5(b)(iii) (by Executive for good reason) or 5(c)
(death) hereof, the greater of (A) the sum of (1) the Executive's then
current annual Base Compensation, plus (2) the average annual Performance
Bonus Distribution paid or payable to Executive for or with respect to the
full two calendar years immediately preceding the calendar year in which
the date of
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termination occurs and (B) the sum of (1) the aggregate Base Compensation
payable to Executive over the remainder of the Employment Term and (2) the
aggregate Performance Bonus Distributions payable to Executive over the
remainder of the Employment Term, based on the average annual Performance
Bonus Distributions paid or payable to Executive for or with respect to the
full two calendar years immediately preceding the calendar year in which
the date of termination occurs, but in the case of Sections 5(a)(iii)
(disability) and 5(c) (death), subject to the availability of insurance
coverage as provided in such Sections; or
(ii) in the case of a termination pursuant to Section 5(a)(i)
(by Employer without cause) within two years after a change of control or
Section 5(b)(i) (change of control) hereof, two times the sum of (A) the
Executive's then current annual Base Compensation, plus (B) the average
annual Performance Bonus Distribution paid or payable to Executive for or
with respect to the two full calendar years immediately preceding the
calendar year in which the date of termination occurs.
For purposes of calculating Executive's Termination Compensation pursuant to
this Section 5(d), the value of any Performance Bonus Distribution component of
the Termination Compensation calculation which is comprised of shares or share
options shall be determined based upon the cash equivalent amount for such share
and/or share options as approved by the Board or the Committee, as applicable,
at the time of the grant, and for the purposes of Termination Compensation,
shall be paid entirely in cash.
6. Covenants of Executive.
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(a) No Conflicts. Executive represents and warrants that Executive is
not personally subject to any agreement, order or decree which restricts
Executive's acceptance of this Agreement and the performance of Executive's
duties with Employer hereunder.
(b) Non-Competition. During the Employment Term and, in the event of
the termination of this Agreement pursuant to the provisions of Section 5(a)(ii)
(by Employer with cause) or 5(b)(ii) (by Executive without good reason) hereof,
for a period of two years thereafter, Executive shall not, directly or
indirectly, in any capacity whatsoever, either on Executive's own behalf or on
behalf of any other person or entity with whom Executive may be employed or
associated, own any interest in, participate or engage in the day-to-day
supervision, management, development, marketing or operation of any office or
industrial real estate facilities or such other business as Employer may be
engaged in during the Employment Term (the "Business") which is competitive with
any of Employer's facilities. For purposes hereof, a facility will be deemed
competitive with one of Employer's facilities if such facility is located within
ten (10) miles of a facility owned, operated or managed by Employer or within
ten (10) miles of a facility which Employer is developing or with respect to
which Employer has signed a letter of intent or term sheet or binding contract
for the acquisition, development or management thereof dated on or prior to the
date of such termination. Furthermore, for a period of two years after any
applicable Section 5 termination event, Executive shall not, directly or
indirectly, solicit, attempt to hire or hire any employee or client of Employer
or solicit or attempt to lease space to or lease space to any tenant of
Employer. Notwithstanding the foregoing, nothing herein shall prohibit Executive
from owning 5% or less of any securities of a competitor engaged in the same
Business if such
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securities are listed on a nationally recognized securities exchange or traded
over-the-counter on the National Association of Securities Dealers Automated
Quotation System or otherwise.
(c) Non-Disclosure. During the Employment Term and for a period of
two years after the expiration or termination of this Agreement for any reason,
Executive shall not disclose or use, except in the pursuit of the Business for
or on behalf of Employer, any Trade Secret (as hereinafter defined) of Employer,
whether such Trade Secret is in Executive's memory or embodied in writing or
other physical form. For purposes of this Section 6(c), "Trade Secret" means any
information which derives independent economic value, actual or potential, with
respect to Employer from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use and is the subject of efforts to maintain its secrecy
that are reasonable under the circumstances, including, but not limited to,
trade secrets, customer lists, sales records and other proprietary commercial
information. Said term, however, shall not include general "know-how"
information acquired by Executive prior to or during the course of Executive's
service which could have been obtained by him from public sources without the
expenditure of significant time, effort and expense which does not relate to
Employer.
(d) Business Opportunities. During the Employment Term, Executive
agrees to bring to Employer any and all business opportunities which come to
Executive's attention for the acquisition, development, management, leasing or
marketing of real estate for industrial or office use. In the event that
Employer elects not to participate or take advantage of any such business
opportunity, upon termination of Executive's employment with Employer for any
reason, Executive shall be free to pursue such business opportunity, provided
that such business opportunity does not cause any tenant to relocate from a
facility owned and/or operated by Employer, PGRT or any of their respective
subsidiaries.
(e) Return of Documents. Upon termination of Executive's services
with Employer, Executive shall return all originals and copies of books,
records, documents, customer lists, sales materials, tapes, keys, credit cards
and other tangible property of Employer within Executive's possession or under
Executive's control.
(f) Equitable Relief. In the event of any breach by Executive of any
of the covenants contained in this Section 6, it is specifically understood and
agreed that Employer shall be entitled, in addition to any other remedy which it
may have, to equitable relief by way of injunction, an accounting or otherwise
and to notify any employer or prospective employer of Executive as to the terms
and conditions hereof.
(g) Acknowledgment. Executive acknowledges that Executive will be
directly and materially involved as a senior executive in all important policy
and operational decisions of Employer. Executive further acknowledges that the
scope of the foregoing restrictions has been specifically bargained between
Employer and Executive, each being fully informed of all relevant facts.
Accordingly, Executive acknowledges that the foregoing restrictions of Section 6
are fair and reasonable, are minimally necessary to protect Employer, its other
partners and the public from the unfair competition of Executive who, as a
result of Executive's performance of services on behalf of Employer, will have
had unlimited access to the most confidential and important information of
Employer, its business and future plans. Executive furthermore
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acknowledges that no unreasonable harm or injury will be suffered by him from
enforcement of the covenants contained herein and that Executive will be able to
earn a reasonable livelihood following termination of Executive's services
notwithstanding enforcement of the covenants contained herein.
7. Prior Agreements. This Agreement, together with the Stock Incentive
----------------
Plan, amends and restates in its entirety the Prior Agreement and supersedes and
is in lieu of any and all other employment arrangements between Executive and
Employer or its predecessor or any subsidiary, including the Prior Agreement,
and any and all such employment agreements and arrangements are hereby
terminated and deemed of no further force or effect.
8. Assignment. Neither this Agreement nor any rights or duties of
----------
Executive hereunder shall be assignable by Executive and any such purported
assignment by him shall be void. Employer may assign all or any of its rights
hereunder provided that substantially all of the assets of Employer are also
transferred to the same party.
9. Successor to Employer. Employer will require any successor or assign
---------------------
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all the business and/or assets of Employer, as the case may
be, by agreement in form and substance reasonably satisfactory to Executive,
expressly, absolutely and unconditionally to assume and agree to perform this
Agreement in the same manner and to the same extent that Employer would be
required to perform it if no such succession or assignment had taken place. Any
failure of Employer to obtain such agreement prior to the effectiveness of any
such succession or assignment shall be a material breach of this Agreement
giving Executive the right to terminate this Agreement, in which case Executive
shall be entitled to receive the compensation specified in Section 5(b)(i)
(change of control) hereof. This Agreement shall inure to the benefit of and be
enforceable by Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive should die while any amounts are still payable to Executive hereunder,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to Executive's devisee, legatee or other
designee or, if there be no such designee, to Executive's estate.
10. Notices. Any notice required or permitted to be given under this
-------
Agreement shall be sufficient if in writing and if personally delivered, sent by
courier or by certified mail, postage or delivery charges prepaid, to the
following addresses:
(a) if to Executive, to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
--------------
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-11-
(b) if to Employer, to:
Prime Group Realty Trust
Suite 3900
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
With a copy to:
--------------
Prime Group Realty Trust
Suite 3900
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
and to:
------
Winston & ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Any notice, claim, demand, request or other communication given as provided in
this Section 10, if delivered personally, shall be effective upon delivery; and
if given by courier, shall be effective one (1) business day after deposit with
the courier if next day delivery is guaranteed; and if given by certified mail,
shall be effective three (3) business days after deposit in the mail. Either
party may change the address at which it is to be given notice by giving written
notice to the other party as provided in this Section 10.
11. Amendment. This Agreement may not be changed, modified or amended
---------
except in writing signed by both parties hereto.
12. Waiver of Breach. The waiver by either party of the breach of any
----------------
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by either party.
13. Severability. Employer and Executive each expressly agree and contract
------------
that it is not the intention of either party to violate any public policy,
statutory or common law, and that if any covenant, sentence, paragraph, clause
or combination of the same of this Agreement (a "Contractual Provision") is in
violation of the law of any state where applicable, such Contractual Provision
shall be void in the jurisdictions where it is unlawful, and the remainder of
such Contractual Provision, if any, and the remainder of this Agreement shall
remain binding on the parties such that such Contractual Provision shall be
binding only to the extent that such Contractual Provision is lawful or may be
lawfully performed under then applicable laws. In the event that any part of any
Contractual Provision of this Agreement is determined by a court of
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competent jurisdiction to be overly broad thereby making the Contractual
Provision unenforceable, the parties hereto agree, and it is their desire, that
such court shall substitute a judicially enforceable limitation in its place,
and that the Contractual Provision, as so modified, shall be binding upon the
parties as if originally set forth herein.
14. Indemnification by Executive. Executive shall indemnify Employer for
----------------------------
any and all damages, costs and expenses resulting from any material harm to
Employer, its business, assets or employees through an act of dishonesty,
material conflict of interest, gross misconduct or willful malfeasance by
Executive. Executive also shall indemnify Employer for any and all damages,
costs and expenses resulting from Executive's acts of omission constituting
reckless disregard of Executive's duties to Employer following notice thereof by
Employer after it becomes aware of such conduct and Executive's failure to so
cure within thirty (30) days.
15. Governing Law. This Agreement shall be governed by, and construed,
-------------
interpreted and enforced in accordance with the laws of the State of Illinois,
exclusive of the conflict of laws provisions of the State of Illinois.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Employment Agreement as of the date first written above.
EMPLOYER:
PRIME GROUP REALTY TRUST
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Executive
Officer
PRIME GROUP REALTY, L.P.
By: Prime Group Realty Trust,
its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Executive
Officer
EXECUTIVE:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇