FIRST AMENDMENT TO THE
EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT TO THE EMPLOYMENT AGREEMENT
(“Amendment”) is entered into this 31
st day of December, 2008, by and between James F.
Hoffman (“Executive”), Prime Group Realty Trust
(“PGRT”) and Prime Group Realty, L.P.
(“Prime”) (PGRT and Prime are collectively referred to
herein as “Employer”) and provides as
follows:
WHEREAS, on May 31, 2005, Executive and
Prime Office Company, LLC (“Parent”) entered into an
employment agreement (the “Employment Agreement”),
which Employment Agreement was later assumed by Employer, who
agreed to perform the obligations of Employer
thereunder;
WHEREAS, the parties desire to amend the
Employment Agreement to comply with Section 409A of the
Internal Revenue Code of 1986, as amended, as set forth in this
Amendment.
NOW, THEREFORE, in consideration of these
premises and intending to be legally bound, the parties agree as
follows:
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1.
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By replacing Section 4(a)(i)
with the following:
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“ Without Cause .
Employer may terminate this Agreement and Executive’s
employment at any time (other than for Cause, as that term is
defined in Section 4(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 4(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 on the effective date of
such termination a pro rata portion of any Bonus Compensation
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, all Bonus Compensation 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, at the
time set forth in, Section 4(d) hereof. 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.”
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2.
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By replacing Section 4(a)(iii)
with the following:
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“ Disability . If due
to illness, physical or mental 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, 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 on the effective date of such termination a
pro rata portion of any Bonus Compensation 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, all Bonus Compensation 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, at the time set forth in, Section 4(d)
hereof. This Section 4(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.”
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3.
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By replacing the first two
paragraphs of Section 4(b)(i) with the following two
paragraphs:
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“ After Change of
Control . Executive may terminate this Agreement following any
‘change of control’ (as defined below) of Employer
which occurs after the Effective Date 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 77 West Wacker Drive,
Chicago, Illinois, but in no event later than one year after the
change of control event. In such case, Executive shall provide
written notice of termination to Employer specifying in reasonable
detail the nature of the diminution event or office relocation
within ninety (90) days after its occurrence and must provide
Employer with a period of thirty (30) days after receipt of
notice by Employer during which it may reverse the diminution event
or office relocation without giving rise to liability under this
Section 4(b)(i). Executive shall continue to perform, at the
election of Employer, Executive’s duties under this Agreement
during the foregoing thirty (30) day period; provided,
that
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Employer complies with, and
provides the compensation and benefits provided for, in this
Agreement. 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 on the effective date of such termination a pro rata
portion of any Bonus Compensation 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,
all Bonus Compensation 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, at the time set forth in,
Section 4(d) hereof. For purposes of this Agreement, in the event
Employer materially defaults in its obligation under Section 8
hereof, Executive may deliver written notice of termination,
describing the circumstances in reasonable detail, to Employer
within ninety (90) days after such default. If Employer fails
to remedy the default within thirty (30) days of receipt after
such notice, Executive may terminate employment with Employer (or
Employer’s successor or assign), and such termination shall
be deemed to be a termination under this
Section 4(b)(i).
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For purposes of this
Section 4(b)(i), (A) a ‘change of control’ of
Employer shall be deemed to have occurred if after the Effective
Date: (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
a trustee or oth
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