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[Form for
President and CEO]
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Re:
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Prime Group
Realty Trust (the “Company”)
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Retention
Program (the “Retention Program”)
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The purpose of this letter is to describe your
(the “Employee”) benefits under the Company’s
Retention Program.
In the event a “change of control”
of the Company and Prime Group Realty, L.P. (collectively, and
including any affiliate of the Company that is currently your
employer, the “Employer”) occurs and you are employed
by the Employer seven days after the effective date of the change
of control, the Employer (or any successor employer, such as the
purchaser of the Company) will pay you on such date a lump sum
amount equal to the sum of: (i) as a pro-rata bonus for the
year in which the change of control occurs, an amount equal to your
most recent full-year annual bonus (the “Last Bonus”)
pro-rated through to the date of the change of control based on the
number of days in the calendar year through and including the
effective date of the change of control, (plus if annual bonuses
for the prior calendar year have not yet been paid, an annual bonus
for such prior year equal to your Last Bonus), (ii) an amount
equal to the “Termination Compensation” described in
Section 5(d) of the Amended and Restated Employment Agreement dated
May 31, 2005, between you and the Employer (as amended, the
“Employment Agreement”), calculated as if you
terminated your employment on the effective date of the change of
control, plus (iii) a discretionary closing bonus of a minimum
of $300,000, less in each case all applicable federal and state
withholding. The term “change of control” will have the
meaning set forth in the attached Appendix.
The Retention Program and the benefits described
in this letter will remain in effect and apply to the first change
of control of the Employer that closes on or before two
(2) years from the date of this letter. The Company may, in
its sole discretion, extend the date on which the Retention Program
will expire. The Company will notify you in writing of any such
extension. The Company will require any successor to all or
substantially all of the Company’s business and/or assets to
assume the Employer’s obligations under the Retention Program
and the benefits described in this letter.
Notwithstanding the foregoing, if at any time
prior to a change of control of the Employer your employment
terminates for any reason, your participation in the Retention
Program will immediately cease and you will not receive the
benefits described in this letter. Your participation in the
Retention Program does not give you the right to be retained in the
employment of the Employer and you will remain an employee at will,
subject to the terms of your Employment Agreement. This letter is
not meant to amend or replace your Employment Agreement which shall
remain in full force and effect in accordance with its
terms.
The Retention Program will be administered by
the Employer’s President and Chief Executive Officer, who
will have full power and authority to interpret the Retention
Program and to make any other determinations and to take such other
actions as he deems necessary or advisable in carrying its duties
under the Retention Program, including the delegation of such
authority or power, where appropriate. All decisions and
determinations made in good faith and not in contravention of the
express terms of this letter by the Employer’s President and
Chief Executive Officer will be final, conclusive, and binding on
the Employer, all participants, all employees, and any other
persons having or claiming an interest hereunder.
The Retention Program benefits described in this
letter are intended to encourage you to continue your employment
with the Employer and reward you if the Company is sold.
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Very truly
yours,
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Prime Group
Realty, L.P.
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By:
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Prime Group
Realty Trust
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By:
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[s] James F.
Hoffman
James F.
Hoffman
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Executive Vice
President, General
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Counsel and
Secretary
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2
1. For
purposes of the Retention Program, a “change of
control” of the Employer shall be deemed to have occurred
if:
(A) 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 and acting as such for purposes of Section 409A
of the Internal Revenue Code of 1986, as amended (the
“Code”) (but excluding a trustee or other fiduciary
holding securities under an employee benefit plan of the Employer),
directly or indirectly, becomes the beneficial owner of shares of
beneficial interests or limited partnership interests, as
applicable, of the Employer having more than fifty percent (50%) of
the total number of votes that may be cast for the election of
trustees of the Employer; or
(B) the (i) merger or other business
combination of the Employer (a “Transaction”), other
than a Transaction immediately following which the shareholders of
the 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 owning directly or indirectly more
than ten percent (10%) of the shares of the other company involved
in the Transaction) or (ii) sale or disposition of a
substantial portion of the Employer’s assets; or
(C) within any twelve (12) month
period beginning on or after the date of the foregoing letter, the
persons who were trustees of the Employer at the beginning of such
period (the “Incumbent Directors”) shall cease to
constitute at least a majority of the Board of Trustees of the
Company (the “Board”) or a majority of the board of
trustees of any successor to the Employer, provided that, any
trustee who was not a trustee as of the date immediately following
the date of the foregoing letter 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 a majority 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; or
(D) a purchase, sale, redemption, merger,
or other transaction affecting all or a substantial portion of the
Series B Preferred Shares of the Company the result of which
is that the Company is no longer subject to the reporting
requirements of Section 13 or 15(d) of the Exchange
Act.
3
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[Senior
Executive Vice President, General Counsel and Secretary]
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Re:
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Prime Group
Realty Trust (the “Company”)
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Retention
Program (the “Retention Program”)
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The purpose of this letter is to describe your
(the “Employee”) benefits under the Company’s
Retention Program.
In the event a “change of control”
of the Company and Prime Group Realty, L.P. (collectively, and
including any affiliate of the Company that is currently your
employer, the “Employer”) occurs and you are employed
by the Employer seven days after the effective date of the change
of control, the Employer (or any successor employer, such as the
purchaser of the Company) will pay you on such date a lump sum in
an amount equal to the sum of: (i) as a pro-rata bonus for the
year in which the change of control occurs, an amount equal to your
most recent full-year annual bonus (the “Last Bonus”)
pro-rated through to the date of the change of control based on the
number of days in the calendar year through and including the
effective date of the change of control, (plus if annual bonuses
for the prior calendar year have not yet been paid, an annual bonus
for such prior year equal to your Last Bonus), (ii) an amount
equal to the “Termination Compensation” described in
Section 4(d) of the Employment Agreement dated May 31, 2005,
between you and the Employer (as amended, the “Employment
Agreement”), calculated as if you terminated your employment
on the effective date of the change of control, plus (iii) a
discretionary closing bonus of a minimum of $100,000, less in each
case all applicable federal and state withholding. The term
“change of control” will have the meaning set forth in
the attached Appendix.
The Retention Program and the benefits described
in this letter will remain in effect and apply to the first change
of control of the Employer that closes on or before two
(2) years from the date of this letter. The Company may, in
its sole discretion, extend the date on which the Retention Program
will expire. The Company will notify you in writing of any such
extension. The Company will require any successor to all or
substantially all of the Company’s business and/or assets to
assume the Employer’s obligations under the Retention Program
and the benefits described in this letter.
Notwithstanding the foregoing, if at any time
prior to a change of control of the Employer your employment
terminates for any reason, your participation in the Retention
Program will immediately cease and you will not receive the
benefits described in this letter. Your participation in the
Retention Program does not give you the right to be retained in the
employment of the Employer and you will remain an employee at will,
subject to the terms of your Employment Agreement. This letter is
not meant to amend or replace your Employment Agreement which shall
remain in full force and effect in accordance with its
terms.
4
The Retention Program will be administered by
the Employer’s President and Chief Executive Officer, who
will have full power and authority to interpret the Retention
Program and to make any other determinations and to take such other
actions as he deems necessary or advisable in carrying its duties
under the Retention Program, including the delegation of such
authority or power, where appropriate. All decisions and
determinations made in good faith and not in contravention of the
express terms of this letter by the Employer’s President and
Chief Executive Officer will be final, conclusive, and binding on
the Employer, all participants, all employees, and any other
persons having or claiming an interest hereunder.
The Retention Program benefits described in this
letter are intended to encourage you to continue your employment
with the Employer and reward you if the Company is sold.
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Very truly
yours,
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Prime Group
Realty, L.P.
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By:
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Prime Group
Realty Trust
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By:
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[s] Jeffrey A.
Patterson
Jeffrey A.
Patterson
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President and
Chief Executive Officer
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5
1. For
purposes of the Retention Program, a “change of
control” of the Employer shall be deemed to have occurred
if:
(A) 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 and acting as such for purposes of Section 409A
of the Internal Revenue Code of 1986, as amended (the
“Code”) (but excluding a trustee or other fiduciary
holding securities under an employee benefit plan of the Employer),
directly or indirectly, becomes the beneficial owner of shares of
beneficial interests or limited partnership interests, as
applicable, of the Employer having more than fifty percent (50%) of
the total number of votes that may be cast for the election of
trustees of the Employer; or
(B) the (i) merger or other business
combination of the Employer (a “Transaction”), other
than a Transaction immediately following which the shareholders of
the 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 owning directly or indirectly more
than ten percent (10%) of the shares of the other company involved
in the Transaction) or (ii) sale or disposition of a
substantial portion of the Employer’s assets; or
(C) within any twelve (12) month
period beginning on or after the date of the foregoing letter, the
persons who were trustees of the Employer at the beginning of such
period (the “Incumbent Directors”) shall cease to
constitute at least a majority of the Board of Trustees of the
Company (the “Board”) or a majority of the board of
trustees of any successor to the Employer, provided that, any
trustee who was not a trustee as of the date immediately following
the date of the foregoing letter 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 a majority 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; or
(D) a purchase, sale, redemption, merger,
or other transaction affecting all or a substantial portion of the
Series B Preferred Shares of the Company the result of which
is that the Company is no longer subject to the reporting
requirements of Section 13 or 15(d) of the Exchange
Act.
6
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[Form for
Executive Vice President — Capital Markets]
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Re:
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Prime Group
Realty Trust (the “Company”)
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Retention
Program (the “Retention Program”)
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The purpose of this letter is to describe your
benefits under the Company’s Retention Program. Please be
advised that the terms of the Retention Program and the benefits
described in this letter are highly confidential and should not be
discussed by you (the “Employee”) with, or disclosed
to, any person other than the Company’s Chief Executive
Officer, General Counsel and/or Human Resources Director, as well
as, on a confidential basis, your legal and tax advisors and your
family. If you breach the foregoing provisions, the Company will
have the right to terminate the Retention Program as it relates to
you without the payment of the retention benefits described in this
letter.
In the event a “change of control”
of the Company and Prime Group Realty, L.P. (collectively, and
including any affiliate of the Company that is currently your
employer, the “Employer”) occurs, and (a) you are
employed by the Employer at the time of the change of control or
(b) the Employer has terminated your employment within six
months prior to a change of control of the Employer in anticipation
of such change of control, the Employer (or any successor employer,
such as the purchaser of the Company) will pay you on the effective
date of the change of control (i) an amount equal to twelve
months of your base salary in effect at the time of the change of
control (or in the case of clause (b) above, in effect at the
time of your termination), (ii) an amount equal to the annual
bonus paid to you with respect to the 2007 calendar year,
(iii) a “pro-rata bonus” for the year in which the
change of control occurs pro-rated through the date of the change
of control (or in the case of clause (b) above, for the year
in which your termination occurs pro-rated through to the date of
your termination) and (iv) a discretionary closing bonus of a
minimum of $100,000, less in each case all applicable federal and
state withholding. Your “pro-rata bonus” will be based
on your most recent full year annual bonus (or if not applicable,
such amount as determined by the Company). The term “change
of control” will have the meaning set forth in the attached
Appendix. As a condition to receiving these benefits if your
employment has been or is being terminated, the Employer may
require you to execute a general release and waiver of claims in a
form reasonably satisfactory to the Company.
The Retention Program and the benefits described
in this letter will remain in effect and apply to the first change
of control of the Employer that closes on or before two
(2) years from the date of this letter. The Company may, in
its sole discretion, extend the date on which the Retention Program
will expire. The Company will notify you in writing of any such
extension. The Company will require any successor to all or
substantially all of the Company’s business and/or assets to
assume the Employer’s obligations under the Retention Program
and the benefits described in this letter.
7
Notwithstanding the foregoing, if at any time
prior to a change of control of the Employer you terminate your
employment voluntarily or if the Employer terminates your
employment for “cause” (as defined in the attached
Appendix), your participation in the Retention Program will
immediately cease and you will not receive the benefits described
in this letter. Your participation in the Retention Program does
not give you the right to be retained in the employment of the
Employer and you will remain an employee at will.
The Program will be administered by the
Employer’s President and Chief Executive Officer, who will
have full power and authority to interpret the Program and to make
any other determinations and to take such other actions as he deems
necessary or advisable in carrying its duties under the Program,
including the delegation of such authority or power, where
appropriate. All decisions and determinations made in good faith
and not in contravention of the express terms of this letter by the
Employer’s President and Chief Executive Officer will be
final, conclusive, and binding on the Employer, all participants,
all employees, and any other persons having or claiming an interest
hereunder.
The Retention Program benefits described in this
letter are intended to encourage you to continue your employment
with the Employer and reward you if the Company is sold.
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Very truly
yours,
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Prime Group
Realty, L.P.
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By:
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Prime Group
Realty Trust
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By:
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[s] Jeffrey A.
Patterson
Jeffrey A.
Patterson
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President and
Chief Executive Officer
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8
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