EXHIBIT NO. 99.3
May 20, 2002 Stay Bonuses
PRIME GROUP REALTY TRUST
BONUS AGREEMENT
This BONUS AGREEMENT (the "Agreement") is dated as of May 20, 2002
(the "Grant Date"), by and between Xxxxx X. Xxxxxxx, an individual residing in
Chicago, Illinois (the "Grantee"), Prime Group Realty Trust, a Maryland real
estate investment trust (the "Company") and Prime Group Realty, L.P., a Delaware
limited partnership (the "Operating Partnership"; the Company and the Operating
Partnership are jointly and severally referred to herein as "Prime").
W I T N E S S E T H:
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WHEREAS, the Grantee is a key employee and officer of the
Company; and
WHEREAS, Prime desires to grant to the Grantee a stay bonus for
calendar year 2002, which is in addition to all other bonuses and stay bonuses
previously or in the future granted to such Grantee.
NOW, THEREFORE, for good and valuable consideration, the parties
hereto agree as follows:
1. Definitions. The terms "Capital Event" or "Capital Events" as
used in this Agreement shall mean any capital event or capital events (including
financings, refinancings or sales or joint ventures of assets) closed by the
Company or any of its affiliates which results individually or in the aggregate
in the Company or its affiliates receiving Net Proceeds from such capital event.
The term "Net Proceeds" as used in this Agreement shall mean the gross proceeds
from any such Capital Event minus the costs and any repayment of debt relating
specifically to, and encumbering the asset or assets involved in, such Capital
Event. The term "Diminution Event" as used in this Agreement shall mean any
material diminution in (1) the rights, benefits (other than changes applying to
employees generally), duties and/or responsibilities of Grantee (including a
change of title below Executive Vice President, General Counsel and Secretary)
or (2) the compensation package for Grantee. Any other initially capitalized
terms used in this Agreement which are not defined herein and which are defined
in that certain Severance Agreement dated as of September 1, 2000 between
Grantee and the Company (the "Employment Agreement") shall have the same meaning
as given in such Employment Agreement.
2. 2002 Stay Bonuses. Prime hereby awards to the Grantee a 2002 Stay
Bonus (the "Stay Bonus") in the amount of $100,000. The Stay Bonus granted to
the Grantee in this Agreement is in addition to any and all bonuses and stay
bonuses previously or in the future granted to the Grantee. The Stay Bonus
shall vest on a per diem basis over calendar year 2002 commencing on January 1,
2002 and ending on December 31, 2002 and be payable as described in this
Agreement. Vested portions of the Stay Bonus shall be payable upon the earlier
of (i) the date of the closing of any Capital Event or Capital Events resulting
in sufficient Net Proceeds to the Trust in the judgment of the Compensation
Committee of the Board of Trustees of the Company to pay the portion of the
Stay Bonus then vested at the time of such payment, (ii) December 31, 2002
provided that if the Grantee is no longer an employee of an "Employer" (as
currently defined in the Company's Share Incentive Plan) on such date, only
that portion of the Stay Bonus which vested on or prior to such termination of
employment shall be payable, or (iii) as otherwise provided in this Agreement.
Notwithstanding the foregoing, (i) in the event the Grantee ceases to be an
employee of an Employer after the Grant Date (a) due to the Grantee's death or
Disability, (b) in connection with a "Change in Control" of the Company, or (c)
because Grantee is terminated without "Cause" as defined in the Employment
Agreement or (ii) in the event of the occurrence of a Diminution Event, then in
any such event, all rights to any portion of the Stay Bonus not theretofore
vested or payable shall immediately vest and the entire Stay Bonus shall be
payable on the date of such employment is terminated or such Diminution Event
occurs. Except as expressly provided above, all rights to receive any portion of
the Stay Bonus not theretofore vested shall be forfeited as of the date the
Grantee voluntarily leaves his employment with an Employer, unless Grantee
voluntarily leaves his employment in connection with a Diminution Event. If
Grantee voluntarily terminates his employment with an Employer prior to December
31, 2002 and such termination is not in connection with a Diminution Event, then
(x) that portion of the Stay Bonus which shall be vested shall be equal to the
total amount of such Stay Bonus multiplied by a fraction equal to the number of
days in calendar year 2002 through to the date of such termination divided by
the remaining number of days in calendar year 2002 after the date of such
termination, (y) the remaining unvested portion of the Stay Bonus shall be
forfeited and (z) the vested portion of the Stay Bonus shall be payable pursuant
to the timetable set forth above.
4. Transferability. This Grant is personal to the Grantee and the
same may not in any manner or in any respect be assigned or transferred, other
than by will or the laws of descent and distribution. Upon the Grantee's death,
the Company will distribute the Grantee's Stay Bonus to such beneficiary or
beneficiaries and in such proportions as the Grantee may designate in writing,
and in the absence of a designation, to the Grantee's personal representative.
5. Employee Agreement. The total aggregate amount of the Stay Bonus
under this Agreement shall be considered to be a 2002 "Performance Bonus
Distribution "for the purpose of calculating any "Termination Compensation"
under the Employment Agreement due to Grantee, in addition to any other bonuses
that may be approved for Grantee relating to calendar year 2002. The Annual
Bonuses and Stay Bonuses previously granted to Grantee pursuant to that certain
Bonus Agreement among the parties dated as of February 8, 2002 shall be
considered 2001 "Performance Bonus Distributions" for the purpose of calculating
any such Termination Compensation. In the event that any such Termination
Compensation becomes due to a Grantee, the current bonuses for 2002 and 2001, as
described above, shall be used in calculating such compensation, notwithstanding
the fact that additional 2002 Performance Bonus Distributions may be granted in
the future pursuant to Prime's customary compensation review process.
6. Miscellaneous.
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(a) This Agreement is not a contract of employment or service, and
no terms of the Grantee's employment or service will be affected in any way by
this Agreement or related instruments, except to the extent expressed therein or
herein. This Agreement shall not be construed as conferring any legal rights of
the Grantee to continue to be employed or remain in the employ or service of the
Company, nor will it interfere with Prime's or any Subsidiary's (as defined in
the Company's current Share Incentive Plan) right to discharge the Grantee or to
deal with him or her regardless of the existence of this Agreement. For the
purposes of this Agreement, employment with a Subsidiary shall be considered
employment with the Company.
(b) The validity, interpretation and effect of this Agreement shall
be governed by the laws of the State of Maryland, excluding the "conflicts of
laws" rules thereof.
(c) Any notice or other communication required or permitted under
this Agreement must be in writing and must be delivered personally, sent by
certified, registered or express mail, or sent overnight by nationally
recognized courier, at the sender's expense. Notice will be deemed given when
delivered personally or, if mailed, three days after the date of deposit in the
United States mail or, if sent by nationally recognized overnight courier, on
the regular business day following the date sent. Notice to the Company and/or
the Operating Partnership should be sent to Prime Group Realty Trust, 00 Xxxx
Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, Attention: Acting Chairman of
the Board and General Counsel. Notice to the Grantee will be personally
delivered or sent to the address for the Grantee maintained by the Company's
Human Resources Department. The Company and/or Operating Partnership shall first
try to personally deliver notices prior to sending them via another method
approval above.
(d) All obligations of the Company and/or Operating Partnership
under this Agreement will be binding on any successor to the Company or the
Operating Partnership, whether the existence of the successor results from a
direct or indirect purchase of all or substantially all of the business and/or
assets of the Company and/or Operating Partnership, or a merger, consolidation,
or otherwise.
(e) In the event that any payment by Prime in cash is not made by
the deadline required hereunder interest shall accrue daily on such amount at
the rate of 12% per annum, compounded monthly, and the Grantee shall be entitled
to recover its reasonable attorney's fees, court costs and other expenses in
enforcing Prime's obligation to make such payment.
(f) The Company, the Operating Partnership and the Grantee may amend
this Agreement only by a written instrument signed by the parties.
(g) The invalidity or unenforceability of any particular clause or
provision of this Agreement will not affect the other clauses or provisions
hereof, and this Agreement will be construed in all respects as if such invalid
or unenforceable clauses or provisions were omitted.
(h) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have duly executed this Bonus
Agreement on the day and year first above written.
PRIME GROUP REALTY TRUST GRANTEE
By: /s/ Xxxxxxx X. Xxxxx /s/Xxxxx X. Xxxxxxx
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Its: Acting Chairman of the Board Xxxxx X. Xxxxxxx
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PRIME GROUP REALTY, L.P.
a Delaware limited partnership
By: Prime Group Realty Trust,
its general partner
By: /s/ Xxxxxxx X. Xxxxx
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Its: Acting Chairman of the Board
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