EMPLOYMENT AGREEMENT Exhibit 10.9
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered
into this 17th day of November, 1997 by and between Prime Group Realty, L.P.,
a Delaware limited partnership ("Employer"), and Xxxxxx X. Xxxxxxxxx, an
individual domiciled in the State of Illinois ("Executive").
W I T N E S S E T H
A. 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.
B. Employer believes that it would benefit from the application
of Executive's particular and unique skill, experience, and background to the
development of office properties and the management thereof.
C. Executive wishes to commit to serve Employer in the position
set forth herein on the terms herein provided.
D. The parties wish by this Agreement to set forth the terms and
conditions of the employment relationship between Employer and Executive.
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 Section 2 hereof), Employer agrees to employ Executive, and Executive
agrees to be employed by Employer, as the President of Employer's Office
Division 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 or the President of Employer may
from time to time further define and clarify Executive's duties and services
hereunder as President of Employer's Office Division, which principal duties
will include the development, management, leasing, marketing and acquisition
of office properties. 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 President of Employer's Office
Division.
2. TERM. The term of this Agreement shall commence on November
17, 1997 and expire on November 17, 2000 (the "Employment Term").
3. COMPENSATION AND RELATED MATTERS. (a) BASE SALARY. As
compensation for performing the services required by this Agreement during
the Employment Term, Employer shall pay to Executive an annual salary of no
less than Two Hundred Thousand Dollars ($200,000) ("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 (the "Board") of Prime Group
Realty Trust ("PGRT"), the general partner of Prime, based on periodic
reviews of Executive's performance conducted on at least an annual basis.
(b) BONUS. In addition to Base Compensation, Executive shall
have the right to receive, and Employer agrees to distribute to Executive, a
performance bonus distribution for each calendar year during the Employment
Term, commencing on January 1, 1998, in such amounts as determined by the two
point formula delineated hereinbelow (collectively, a yearly "Performance
Bonus Distribution"); provided, however, that the aggregate Performance Bonus
Distribution for any calendar year distributable in accordance with the
provisions of this Section 3(b) shall in no event exceed 100% of the Base
Compensation for such calendar year. The amount of the Performance Bonus
Distribution for each calendar year distributable to Executive hereunder
shall be determined by the Committee based upon the achievement of Employer's
annual business plan approved by the Board for such calendar year, as
reflected in the audited financial statements of Employer prepared in
accordance with generally accepted accounting principles and auditing
standards and practices, consistently applied ("GAAP"). Prior to issuance of
the final audited financial statements for each calendar year, Executive
shall have the right to review and approve or challenge any calculation or
determination of the amount of the Performance Bonus Distribution
distributable for such calendar year. Any amount of Performance Bonus
Distribution required to be distributed to Executive for any calendar year
during the Employment Term shall be distributed by Employer to Executive
during the pay period of Employer following finalization of the audit for
such calendar year and final review and approval of the bonus calculation by
the Committee and, in all events, on or before April 15 of the year
immediately following the end of the calendar year for which such Performance
Bonus Distribution is attributable.
The two point formula to determine a Performance Bonus
Distribution for any calendar year during the Employment Term shall be as
follows:
(i) FUNDS FROM OPERATIONS. Executive's Performance Bonus
Distribution in an amount of up to seventy-five percent (75%) of Executive's
Base Compensation for any given calendar year shall be based on Employer's
Funds From Operations publicly announced by Employer ("FFO") such calendar
year in relation to projected budget for FFO disclosed to shareholders of
PGRT set forth in Employer's Board approved annual business plan for such
calendar year ("Public FFO") as follows:
(A) If FFO is less than Public FFO, Executive shall not be
entitled to any Performance Bonus Distribution under this Section 3(b)(i).
(B) If FFO is one hundred and three percent (103%) or more
of Public FFO, Executive shall be entitled to a Performance Bonus
Distribution under this Section 3(b)(i) equal to seventy-five percent (75%)
of Executive's Base Compensation for such calendar year.
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(C) If FFO is equal to Public FFO but less than one hundred
and three percent (103%) of Public FFO, Executive shall be entitled to a
Performance Bonus Distribution under this Section 3(b)(i) equal to thirty
seven and one-half percent (37.5%) of Executive's Base Compensation for such
calendar year.
(D) If FFO is greater than Public FFO but less than one
hundred and three percent (103%) of Public FFO, then a pro rata adjustment
shall be made to the Performance Bonus Distribution to which Executive is
entitled under this Section 3(b)(i) for such calendar year.
(ii) DISCRETIONARY. Executive's Performance Bonus
Distribution in an amount of up to twenty-five percent (25%) of Executive's
Base Compensation for any given calendar year shall be determined at the sole
discretion of the Board or the Committee based upon achievement of such
corporate or individual performance goals and objectives as may be
established or determined by the Board or the Committee from time to time.
Within ninety (90) days after the date hereof, Employer and Executive shall
negotiate in good faith a revised Performance Bonus Distribution formula
which more accurately measures the performance by Executive of Executive's
duties and responsibilities related to Employer's Office Division for which
Executive has direct authority and oversight.
(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 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. Subject to the policies and procedures
referred to in the previous sentence, Employer agrees to reimburse Executive
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for membership dues for the following organizations (i) NACORE, (ii) ULI and
(iii) U.S. Green Building - Council and for travel and related expenses
incurred by Executive to attend the annual conventions and board and council
meetings of such organizations.
(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 four (4) 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. PGRT has established a share incentive plan (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 hereof, PGRT
shall grant to Executive 70,000 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.
5. TERMINATION AND TERMINATION BENEFITS. (a) TERMINATION BY
EMPLOYER. (i) WITHOUT CAUSE. Employer may terminate this Agreement and
Executive's employment at any time for any reason or for no reason at all
upon thirty (30) days' prior written notice to Executive following notice of
termination. In connection with the termination of Executive's employment
pursuant to this Section 5(a)(i), Executive shall (A) be paid Executive's
Base Compensation in accordance with Section 3(a) hereof up to the effective
date of such termination, (B) be paid a pro rata portion of any bonus
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 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, (C) be entitled
to the benefits set forth in Sections 3(c), 3(d) and 3(e) hereof up to the
effective date of such termination and (D) receive the Termination
Compensation specified in Section 5(d) hereof. For purposes of calculating
Executive's pro rata portion of any bonus 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
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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 with
cause 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), Executive shall (A) be paid 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 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) be entitled to 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 pleading nolo contendere to) a felony, (3) Executive's
failure to perform (which shall not include inability to perform due to
disability) in any material respects 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
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, either terminate
this Agreement or suspend Executive's right to any Base Compensation or
Performance Bonus Distributions without terminating this Agreement. In any
such event, Executive shall (A) be paid Executive's Base Compensation in
accordance with Section 3(a) hereof up to the effective date of such
termination, (B) be paid a pro rata portion of any bonus 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 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
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and (C) be entitled to the benefits set forth in Sections 3(c) hereof (or the
after-tax cash equivalent) up to the effective date of such termination, and
be entitled to the benefits set forth in Sections 3(d) and 3(e) hereof up to
the date of such termination. For purposes of calculating Executive's pro
rata portion of any bonus 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. In the event Employer
elects to suspend Executive's right to Base Compensation and Performance
Bonus Distributions, at such time as Executive is able to resume the duties
required under this Agreement, Executive shall be entitled to receive Base
Compensation and Performance Bonus Distributions from the date Executive
commences the performance of such duties following the disability in
accordance with the terms and provisions of this Agreement. 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. 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 may terminate this Agreement upon thirty (30) days' written notice
to Employer following any "change of control" of PGRT and a resulting
"diminution event", each as defined below, 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 such
event, Executive shall (A) be paid Executive's Base Compensation up to the
effective date of such termination, (B) be paid a pro rata portion of any
bonus 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 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, (C) be entitled
to the benefits set forth in Sections 3(c), 3(d) and 3(e) hereof up to the
effective date of such termination and (D) receive the Termination
Compensation specified in Section 5(d) hereof. For purposes of calculating
Executive's pro rata portion of any bonus 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. 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 PGRT
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
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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 PGRT), becomes the beneficial
owner of shares of beneficial interests of PGRT having at least fifty percent
(50%) of the total number of votes that may be cast for the election of
trustees of PGRT; (2) the merger or other business combination of PGRT or
Employer, sale of all or substantially all of PGRT's or Employer's assets or
combination of the foregoing transactions (a "Transaction"), other than a
Transaction immediately following which the shareholders of PGRT 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 PGRT immediately
before the beginning of such period (the "Incumbent Trustees") shall cease to
constitute at least a majority of the Board or a majority of the board of
trustees of any successor to PGRT, provided that, any trustee who was not a
trustee as of the date hereof shall be deemed to be an Incumbent Trustee 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 Trustees 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 (other than a mere title change, unless the new
title is not President) or (2) the compensation package for Executive.
(ii) WITHOUT GOOD REASON. Executive may terminate this
Agreement and Executive's employment at any time for any reason or for no
reason at all 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), Executive shall (A)
be paid 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) be entitled to the benefits set forth in Sections 3(c), 3(d) and 3(e)
hereof up to the effective date of such termination.
(c) DEATH. Notwithstanding any other provision of this Agreement,
this Agreement shall terminate on the date of Executive's death. In such
event, Executive shall (A) be paid Executive's Base Compensation in
accordance with Section 3(a) hereof up to the date of such death, (B) be paid
a pro rata portion of any bonus 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 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 death occurs and (C)
be entitled to 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. This
Section 5(c) shall not limit the entitlement of Executive, Executive's estate
or
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beneficiaries under any insurance or other benefits plan or policy which
is maintained by Employer for Executive's benefit. For purposes of
calculating Executive's pro rata portion of any bonus 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) or 5(b)(i) 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) hereof, the product of (A) the sum of
(1) Executive's then current annual Base Compensation and (2) Executive's
last annualized Performance Bonus Distribution times (B) a fraction, the
numerator of which is the number of days between such date of termination and
expiration of the Employment Term (but in no event less than 365) and the
denominator of which is 365 or (ii) in the case of a termination pursuant to
Section 5(b)(i) hereof, two times the sum of (A) Executive's then current
annual Base Compensation and (B) Executive's last annualized Performance
Bonus Distribution. For purposes of calculating Executive's Termination
Compensation, if the termination takes place prior to receipt by Executive of
any Performance Bonus Distribution, the Performance Bonus Distribution
component of the Termination Compensation calculation shall be deemed to be
50% of Executive's then current annual Base Compensation.
6. COVENANTS OF EXECUTIVE.
(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. In return for the performance of the
management duties described in Section 1 hereof, during the Employment Term,
and for a period of two years after any applicable Section 5 termination
event, Executive shall not, directly or indirectly, 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 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
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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 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, supersedes and is in lieu of any and all other employment
arrangements between Executive and Employer or its predecessor or any
subsidiary and any and all such employment agreements and arrangements are
hereby terminated and deemed of no further force or effect.
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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) 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:
Xxxxxx X. Xxxxxxxxx
000 Xxxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
WITH A COPY TO:
J. Xxxxx Xxxxxxxxx
Continental Offices, Ltd.
0000 Xxxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
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(b) if to Employer, to:
Prime Group Realty, L.P.
Xxxxx 0000
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Chief Executive Officer
WITH A COPY TO:
Prime Group Realty, L.P.
Xxxxx 0000
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: General Counsel
AND TO:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
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
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Provision of this Agreement is determined by a court of 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 Agreement as
of the date first written above.
EMPLOYER:
PRIME GROUP REALTY, L.P.
By: Prime Group Realty Trust,
its General Partner
By: /s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxxxx
Title: Executive VP
EXECUTIVE:
/s/ Xxxxxx X. Xxxxxxxxx
-----------------------------
Xxxxxx X. Xxxxxxxxx
DOCUMENT NUMBER: 230515.5
March 23, 1998
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