EMPLOYMENT AGREEMENT
EXHIBIT 10.3
THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into this 31st day of August, 2005, to be effective as of September 26, 2005 (the “Effective Date”), by and between Prime Group Realty Trust, a Maryland real estate investment trust (“PGRT”), Prime Group Realty, L.P., a Delaware limited partnership and the operating partnership for PGRT (“Prime”) and solely for purposes of Section 4 hereof, Prime Office Company, LLC, a Delaware limited liability company (the “Parent”) and Xxxxxx X. Xxxxxxx, an individual domiciled in the State of Illinois (“Executive”).
W I T N E S S E T H:
A. PGRT and Prime are engaged primarily in the ownership, management, leasing, marketing, acquisition, development and construction of office and industrial real estate facilities throughout the Chicago metropolitan area.
B. Each of PGRT, Prime and Parent believe that each would benefit from Executive’s service as Executive Vice-President – Leasing of Employer (as defined in Section 1 hereof), and PGRT and Prime agree to employ Executive in such position.
C. Executive wishes to commit to serve Employer in the position set forth herein on the terms herein provided.
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), Prime and PGRT shall employ Executive, and Executive agrees to be employed by Prime and PGRT, as Executive Vice President – Leasing of Prime and PGRT on the terms and conditions provided in this Agreement (Prime and PGRT, collectively, are “Employer”). Employer shall have the right to specify which of Employer’s affiliates or related parties (including but not limited to Prime Group Realty Services, Inc. or PRS Corporate Realty Services, Inc.) shall have Executive on its payroll. Executive shall conduct, operate, manage and promote the leasing efforts across the Employer’s portfolio, with primary responsibility for 77 West Xxxxxx and/or such other building(s) as may be mutually determined by Executive and the Employer’s Chief Executive Officer (the “CEO”). The CEO and/or the Board of Trustees of PGRT (the “Board”) may from time to time further define and clarify Executive’s duties and services hereunder. 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 Executive Vice President – Leasing of Employer, provided, that it shall not be a violation of this Agreement for Executive to engage in limited tenant representation contemplated by Exhibit A hereto, or to manage his and his family’s personal investments or engage in service for such corporate, civil, community or charitable organizations as he may select, so long as such activities do not
substantially interfere with Executive’s performance of his duties hereunder or violate his obligations under Section 6.
2. Term. The term of this Agreement shall commence on the Effective Date and expire on September 30, 2007 (the “Initial Term”), provided, however, that this Agreement shall automatically be renewed for successive one year terms following the Initial Term (each a “Renewal Term” and together with the Initial Term, the “Employment Term”), unless at least one hundred and eighty (180) days prior to, in the case of non-renewal by Employer, or at least sixty (60) days prior to, in the case of non-renewal by Executive, the end of the Initial Term or any Renewal Term, as applicable, either party shall give the other written notice of its intention to terminate this Agreement.
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 $275,000 (“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 CEO, based on periodic reviews of Executive’s performance conducted on at least an annual basis, provided, however, that commencing on January 1, 2007, Executive’s Base Compensation shall be an amount that represents an increase of no less than three percent (3%) from his initial annual salary.
(b) Bonus. In addition to Base Compensation, the Executive shall be paid, or shall have the opportunity to earn, Bonus Compensation, as set forth on Exhibit A hereto.
(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 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.
(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. Employer shall provide Executive with Employer-paid parking at 77 West Xxxxxx.
(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 three (3) 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 one (1) week.
(f) Indemnification and Insurance. Subject to applicable law from time to time, Employer agrees to indemnify and hold harmless Executive to the fullest extent permitted by applicable law and upon terms no less favorable than as provided in Employer’s organizational documents in effect immediately prior to the Effective Date.
4. Equity Opportunity. Parent shall provide to Executive an opportunity to purchase equity on terms and conditions set forth on Exhibit B hereto.
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5. |
Termination. (a) Termination by Employer: |
(i) 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 5(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 5(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) to the extent not previously paid, Employer shall pay to Executive all Bonus Compensation payable to Executive in accordance with Section 3(b) and Exhibit A 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 an amount in one lump sum equal to the aggregate Base Compensation over the remainder of the Employment Term in effect immediately prior to the effective date of termination, determined without regard to such termination, but not to exceed one (1) year of Base Compensation; provided, however, that the Employer’s obligations to make such payments shall be subject to the execution, enforceability and effectiveness of a general release and waiver of all claims by the Executive with respect to the Employer and its subsidiaries, and their respective affiliates, officers, directors, trustees, employees and agents pursuant to a separation agreement in form and substance reasonably specified by the Employer. 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 for 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, and Executive shall be entitled to the benefits of this Agreement (including compensation) during such thirty (30) day period; provided, however, that unless per-approved by Employer, Executive shall not incur any material business expenses during such period other than customary recurring expenses such as monthly cell phone charges. In connection with the termination of Executive’s employment pursuant to this Section 5(a)(ii), (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, and (B) 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. For purposes of this Agreement, “Cause” shall mean (1) a finding by the CEO or 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 plea of nolo contendere to) a felony, (3) Executive’s failure to perform (which shall not include inability to perform due to disability) in any material respect 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, 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) to the extent not previously paid, Executive shall be entitled to all Bonus Compensation payable to Executive in accordance with Section 3(b) and Exhibit A hereof for or with respect to any calendar years prior to the calendar year in which such termination occurs, and (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. 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 (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.
(b) Termination by Executive. Executive may terminate this Agreement and Executive’s employment at any time for any reason or for no reason 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), (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) to the extent not previously paid, Executive shall be entitled to 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, and (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.
(c) Death. Notwithstanding any other provision of this Agreement, this Agreement shall terminate on the date of Executive’s death. In such event, (A) Employer shall pay to Executive Executive’s Base Compensation in accordance with Section 3(a) hereof up to the date of such death, (B) to the extent not previously paid, Executive shall be entitled to all Bonus Compensation payable to Executive in accordance with Section 3(b) and Exhibit A hereof for or with respect to any calendar years prior to the calendar year in which such death occurs, and (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 date of such death. This Section 5(c) shall not limit the entitlement of Executive, Executive’s estate or beneficiaries under any insurance or other benefits plan or policy which is maintained by Employer for Executive’s benefit (as opposed to Employer’s benefit).
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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. During the Employment Term and, in the event of the termination of this Agreement pursuant to the provisions of Section 5(a)(ii) (by Employer with Cause) or 5(b) (by Executive) hereof, for a period of twelve (12) months thereafter, Executive shall not, directly or indirectly, in any capacity whatsoever, either on Executive’s own behalf or on behalf of any other person or entity with whom Executive may be employed or associated, participate or engage in any marketing or leasing activities relating to the leasing or potential leasing of any real estate space to any tenants of Employer and/or its affiliates. Furthermore, for a period of twelve (12) months after any applicable Section 5(a)(ii) or 5(b) termination event, Executive shall not, directly or indirectly, solicit, attempt to hire or hire any employee or client of Employer.
(c) Non-Disclosure. During the Employment Term and for as long after the expiration or termination of the Employment Term as such information is a Trade Secret (as hereinafter defined), Executive shall not disclose or use, except in the pursuit of the Business for or on behalf of Employer, any Trade Secret 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 maintain its secrecy that are reasonable under the circumstances, including, but not limited to, lease terms and provisions, 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. Entire Agreement. This Agreement supersedes any and all prior agreements between Executive and Employer and any officer, director, employee or affiliate thereof and constitutes the entire agreement between the parties representing the subject matter hereof and there are no representations, warranties or other commitments other than those expressed herein.
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. 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:
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(a) |
if to Executive, to: |
Xxxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
with a copy to:
The Law Offices of Xxxxx Xxxxxxxxxx Xxx
000 Xxxxxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxxx Xxx
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(b) |
if to Employer, to: |
Suite 3900
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Chief Executive Officer
With a copy to:
Suite 3900
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: General Counsel
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 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. Employer shall indemnify Executive as provided in Section 3(f) of this Agreement. 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.
16. Counterparts and Facsimile Signatures. This Agreement may be executed by the parties in separate counterparts, each of which shall be considered one and the same Agreement. This Agreement may be signed by each of the parties via facsimile or email signatures, each of which shall be as valid and binding as an original signature.
IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date first written above.
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By: /s/ Xxxxxxx X. Xxxxxxxxx |
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Name: Xxxxxxx X. Xxxxxxxxx |
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Title: President and Chief Executive Officer |
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PRIME GROUP REALTY, L.P. |
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Its: General Partner |
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By: /s/ Xxxxxxx X. Xxxxxxxxx |
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Name: Xxxxxxx X. Xxxxxxxxx |
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Title: President and Chief Executive Officer |
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/s/ Xxxxxx X. Xxxxxxx |
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Xxxxxx X. Xxxxxxx |
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The undersigned agrees to perform the obligations of Parent described in Section 4 and Exhibit B hereof.
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PRIME OFFICE COMPANY, LLC |
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By: /s/ Xxxxx Xxxxxxxxxxxx |
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Name: Xxxxx Xxxxxxxxxxxx |
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Title: Managing Member |
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Exhibit A to Employment Agreement
BONUS COMPENSATION
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A. |
Sign-On Bonus |
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1) |
$125,000, payable within thirty (30) days of the Effective Date. |
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2) |
$125,000, payable April 30, 2006 (or within ten (10) days thereafter), provided Executive remains continuously employed with the Employer through April 30, 2006. |
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B. |
PNOI Bonus |
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1) |
2005. Provided Executive remains continuously employed with Employer through December 31, 2005, Executive shall receive a PNOI Bonus for 2005, payable within 45 days after year-end 2005. The “PNOI Bonus” shall be equal to the gross PNOI Bonus for 2005 determined as described below, pro rated to reflect the number of full and partial months during the period from the Effective Date to the end of 2005. |
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2) |
2006 and 2007. Provided Executive remains continuously employed with Employer through December 31, 2006, and the earlier of the expiration of the Employment Term or December 31, 2007, Executive shall receive a PNOI Bonus for each of 2006 and 2007, respectively, payable within 45 days after the applicable year end. The “PNOI Bonus” shall be equal to the gross PNOI Bonus determined as described below, minus, in the case of 2006, the sign-on bonus paid in 2006 in accordance with paragraph A(2) immediately above, and pro rated, in the case of 2007, for the period of actual employment during 2007. |
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3) |
Calculation of PNOI Bonus. With respect to each calendar year during the Employment Term, Executive shall be entitled to receive a gross PNOI Bonus equal to 3.5% of the positive increase, if any, in PNOI (as defined below) for the calendar year with respect to which the PNOI Bonus is being determined (“Bonus Year”) over PNOI for the prior calendar year (“Base Year”).For purposes of this calculation, PNOI shall be equal to the aggregate net property operating income of all of Employer’s properties based upon the property specific operating statements, exclusive of debt and other financing costs. PNOI for the Bonus Year and/or Base Year will be subject to such adjustments as the Board and Executive may agree to take into account for known or anticipated lease expirations or inceptions or other events; provided, that with respect to new leases involving free or discounted lease payment periods at inception, income shall be rolled forward into such periods using a discount factor of 8%; and, provided further, that with respect to properties that are not wholly-owned, there will be taken into account from the operating statements of such properties only that portion of the results that reflects the Employer’s ownership portion. For purposes of determining the PNOI Bonus for 2005, the PNOI for the 2004 Base Year shall be $59,700,000. |
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C. |
Leasing Bonus. |
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1) |
Executive shall be entitled to receive a bonus payment with respect to each new lease and lease renewal executed during the Employment Term; provided a bonus will be payable with respect to those lease transactions set forth on the list previously provided to Executive only if (i) the lease is executed after and not before November 30, 2005, and (ii) Executive has taken an active role in obtaining an executed lease. The amount of the bonus (with the exception of bonuses for leases relating to 00 Xxxx Xxxxxx Xxxxx, or such other building for which Executive has primary responsibility for leasing as mutually determined by Employer and Executive pursuant to Section 1 of the Agreement) shall be 25 cents per square foot for leases having a term of at least three years. Bonuses for such leases having a term of less than three years will be pro-rated at 8.33 cents per square foot for each full year of term. With respect to leases of space in 77 West Xxxxxx (or such other building for which Employee has primary responsibility for leasing as mutually determined by Employer and Executive pursuant to Section 1 of the Agreement), such leasing bonus shall be $1.00 per square foot for leases having a term of at least three years, and for leases having terms shorter than three years, 33 cents per square foot for each full year of term. The leasing bonuses described in this paragraph shall be paid within 30 days after execution of the lease or lease renewal. |
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2) |
In the event Executive’s employment shall be terminated by the Employer other than for Cause, Executive shall submit to Employer for review and approval (which approval shall not be unreasonably withheld) a list of possible lease transactions with respect to which Executive is actively involved as of the effective date of termination. The list shall be submitted no later than ten (10) days after such date of termination. Employer shall return a copy of the list as approved (the “Protected List”) to Executive. In the event any of the leases on the Protected List are executed within six (6) months after said effective date of termination, then such lease will be deemed to have been executed during the Employment Term, and a bonus shall be paid in accord with this paragraph. |
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D. |
Tenant Representation Bonus. |
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1) |
During the Employment Term, Executive may be involved in limited tenant representation provided (a) Executive conducts such activity through the Employer’s licensed brokerage firm, (b) such activity is incidental in nature, each tenant representation is done with the consent of the CEO and such activity does not interfere with Executive’s discharge of his duties and responsibilities as contemplated in Section 1 of the Agreement, and (c) commissions are paid to the Employer’s licensed brokerage firm. The Executive will be entitled to receive a bonus with respect to such representations from the Employer’s licensed brokerage firm a commission equal to 65% of the commissions so received. |
Exhibit B to Employment Agreement
The following sets forth the principal terms to be reflected in an agreement between Executive and Prime Office Company, LLC to be entered into six (6) months after the Effective Date, provided, Executive has remained continuously employed through such date. The agreement shall be in substantially the same form as the similar agreement with the CEO, revised as necessary to reflect the relevant business terms as described below.
Equity-Based Arrangements
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Equity Investment |
The Executive will be permitted to purchase up to 1.0% of the equity ownership (the “Equity”) of Prime Office Company, LLC (the “Company”) in the form of L.P. or similar units of the same class at a price on substantially the same other economic terms as Prime Office Company LLC’s other initial equity investors (the “Investors”). This option will expire on December 31, 2006, subject to earlier termination upon Executive’s employment termination, for any reason. |
To the extent the Company is funded through additional issuances of equity, the Executive shall be given an opportunity to purchase additional equity in an amount necessary to preserve the Executive’s 1.0% percent of ownership. The price for such additional Equity shall be the purchase price paid for the additional equity issuance that gave rise to the additional Equity purchase opportunity. The Company will provide Executive at least ten business days notice prior to any cash distributions resulting from financing or sale transactions (as opposed to from operations) to the Investors such that Executive shall have an opportunity to purchase Equity prior thereto and thereby be entitled to share in any such distribution. This notice obligation shall cease once Executive has purchased all of the Equity.
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Purchase Loan |
The Lightstone Group LLC or an affiliate thereof (“Lightstone”) will make a loan (“Loan”) available to the Executive for his purchase of the Equity. The principal and interest on the loan will be subject to a ten-year balloon repayment with interest accruing annually at 7%; provided that Executive shall be required to apply the net after-tax cash proceeds of any distributions from the Company towards payment of the Loan. The Loan shall be secured by the Equity and non-recourse to the Executive. |
The Loan may be prepaid without penalty. The Loan will accelerate and become due to the extent of any transfer or sale of Equity by Executive other than as permitted below.
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Transfer Restrictions |
No Equity issued to the Executive may be transferred (subject to customary exceptions for estate planning, transfers at death and transfers to an entity controlled solely by the Executive and formed solely for the benefit of the Executive and his immediate family), except as permitted under drag-along, tag-along or registration rights. |
Tag-Along, Drag-Along
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and Registration Rights |
Executive’s Equity will be subject to customary tag-along drag-along and registration rights. |
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Termination of Restrictions |
The restrictions on transfer shall terminate in the event of an IPO or other transaction whereby the Equity becomes publicly traded, subject to any lock-up restrictions imposed on other employee shareholders or Company or its affiliates. |
Any capitalized terms used in this Term Sheet that are not defined herein shall have the respective meanings given to such terms in the Employment Agreement to which this Exhibit B is attached.
