This Equity Option Agreement is dated as of
December 31, 2008, by and between Jeffrey A. Patterson, an
individual residing in Hinsdale, Illinois (the
“Executive”), and Prime Office Company LLC, a Delaware
limited liability company (the “Company”).
WHEREAS, the Executive is President and Chief
Executive Officer of Prime Group Realty Trust, a subsidiary of the
Company, and the Company and the Executive have entered into that
certain Employment Agreement dated as of May 31, 2005, as
amended (the “Employment Agreement”);
WHEREAS, the Company desires to grant to the
Executive an option to purchase the equity interest described
below, subject to the terms and conditions hereinafter set
forth.
NOW, THEREFORE,
for good and valuable consideration, the parties hereto agree as
follows:
1. Option . The Executive will have
the option (the “Option”) to purchase, either directly
or through equity ownership in the Company, up to 3.5% of the
equity ownership (the “Equity”) of Prime Group Realty,
L.P. and Prime Group Realty Trust (collectively, “Prime
Group”). The Equity will be in the form of L.P. units,
shares, membership interests or other similar units that are of the
same class, and the Option will have a purchase price and
substantially the same other economic terms, as the class, price
and economic terms applicable to the Company’s other initial
equity investors (the “Investors”), taking into account
both capital contributions and distributions since the date of the
Investors’ original investment. In addition, the
“purchase price” for the Equity shall be increased at
the rate of seven percent (7%) per year, pro-rated on a per diem
basis, from January 1, 2007 through the date of the closing of
the purchase of the Equity by the Executive. The Option will expire
at 5:00 p.m. New York time, on December 31, 2009, subject to
earlier termination if not exercised prior to the Executive’s
termination of employment under the Employment
Agreement.
The Executive shall be entitled to exercise the
Option to purchase the Equity at any time through December 31,
2009, by written notice to the Company, but the closing on the
purchase of the Equity may only be effective on the earlier of
(i) immediately preceding a “change of control,”
as defined in the Employment Agreement, that constitutes a change
in control event under Section 1.409A-3(i)(5) of the Treasury
Regulations, and (ii) December 31, 2009. The closing
shall stil
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