As filed with the Securities and Exchange Commission on October 1, 1998
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
PRIME GROUP REALTY TRUST
(Exact name of issuer as specified in its charter)
Maryland 36-4173047
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
77 West Wacker Drive
Suite 3900
Chicago, Illinois 60601
(Address of Principal Executive Offices) (Zip Code)
------------------------
PRIME GROUP REALTY TRUST
SHARE INCENTIVE PLAN
(Full title of the plan)
------------------------
Copy to:
JAMES F. HOFFMAN, ESQ. BRIAN T. BLACK, ESQ.
Senior Vice President, General Counsel and Secretary Winston & Strawn
77 West Wacker Drive 35 West Wacker Drive
Chicago, Illinois 60601 Chicago, Illinois 60601
(312) 917-1300
(Name, address, telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
Title of Amount Proposed maximum Proposed maximum Amount of
securities to to be offering price aggregate registration
be registered registered per share(1) offering price(1) fee
- --------------------------------------------------------------------------------
Common Shares
of Beneficial
Interest, par 1,850,000 $16.66 $30,821,000 $9092.20
value $0.01
per share
- --------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h)(1) of the Securities Act of 1933, as amended,
on the basis of the average of the high and low prices of the common
shares of beneficial interest, par value $0.01 per share ("Common
Shares"), of Prime Group Realty Trust on the New York Stock Exchange as
of September 29, 1998.
<PAGE>
PART I -- INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
Prime Group Realty Trust shall deliver the document containing the
information in Part I of this Registration Statement on Form S-8 to each
participant in the Prime Group Realty Trust Share Incentive Plan as specified by
Rule 428(b)(1) of the Securities Act of 1933, as amended (the "Securities Act").
Such document is not being filed with or included in this Registration Statement
(by incorporation by reference or otherwise) in accordance with the rules and
regulations of the Securities and Exchange Commission (the "Commission"). Such
document and the documents incorporated by reference into this Registration
Statement pursuant to Item 3 of Part II of this Registration Statement, taken
together, constitute a prospectus that meets the requirements of Section 10(a)
of the Securities Act.
PART II -- INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Commission by Prime Group Realty
Trust, a Maryland real estate investment trust (the "Trust" or the
"Registrant"), are incorporated, as of their respective dates, into this
Registration Statement by reference:
(a) The Trust's Prospectus filed pursuant to Rule 424(b)(4) (File No.
333-51599) dated May 29, 1998, as filed with the Commission on June 2,
1998;
(b) The Trust's Annual Report on Form 10-K (File No. 001-13589) for the
fiscal year ended December 31, 1997, as filed with the Commission on
March 31, 1998 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and as amended by the Trust's Amendment No. 1 on
Form 10-K/A, as filed with the Commission on April 28, 1998;
(c) The Trust's Quarterly Reports on Form 10-Q (File No. 001-13589) for
the quarters ended March 31 and June 30, 1998, as filed with the
Commission on May 15 and August 14, 1998, respectively;
(d) The Trust's Current Reports on Form 8-K (File No. 001-13589) dated
December 30, 1997, January 14, 1998, February 20, 1998, March 19,
1998, March 31, 1998 and May 29, 1998, as filed with the Commission on
January 14, 1998, January 30, 1998, March 6, 1998, April 14, 1998,
April 15, 1998 and June 15, 1998, respectively;
(e) The Trust's Current Reports on Form 8-K/A (File No. 001-13589) dated
December 15, 1997, December 15, 1997, January 14, 1998, February 20,
1998 and March 31, 1998, as filed with the Commission on February 27,
1998, March 31, 1998, March 31, 1998, May 5, 1998 and June 15, 1998,
respectively; and
(f) The description of the Trust's Common Shares of Beneficial Interest,
par value $0.01 per share, contained in the Trust's Registration
Statement on Form 8-A, as filed with the Commission on November 7,
1997 under the Exchange Act.
All documents subsequently filed by the Trust pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of filing such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
document which is or is deemed to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
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<PAGE>
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
James R. Thompson, a trustee of the Trust, is chairman of the law firm of
Winston & Strawn, which has provided, and continues to provide, legal services
to the Trust. As of the date of this Registration Statement, Mr. Thompson has
options to acquire 5,000 Common Shares.
ITEM 6. INDEMNIFICATION OF TRUSTEES AND OFFICERS.
The Trust's Articles of Amendment and Restatement of Declaration of Trust,
as amended, and Amended and Restated Bylaws authorize the Trust to indemnify its
present and former trustees and officers and to pay or reimburse expenses for
such individuals in advance of the final disposition of a proceeding to the
maximum extent permitted from time to time under Maryland law. The Maryland
General Corporation Law, as applicable to Maryland real estate investment
trusts, currently provides that indemnification of a person who is a party, or
threatened to be made a party, to legal proceedings by reason of the fact that
such a person is or was a trustee, officer, employee or agent of a corporation
or other firm at the request of a corporation, against judgments, fines,
penalties, amounts paid in settlement and reasonable expenses, is mandatory in
certain circumstances and permissive in others, subject to authorization by the
board of trustees, a committee of the board of trustees consisting of two or
more trustees not parties to the proceeding (if there does not exist a majority
vote quorum of the board of trustees consisting of trustees not parties to the
proceeding), special legal counsel appointed by the board of trustees or such
committee of the board of trustees, or by the shareholders, so long as it is not
established that the act or omission of such person was material to the matter
giving rise to the proceedings and was committed in bad faith, was the result of
active and deliberate dishonesty, involved such person receiving an improper
personal benefit in money, property or services, or, in the case of criminal
proceedings, such person had reason to believe that his or her act or omission
was unlawful.
The Trust's officers and trustees are also indemnified pursuant to the
Amended and Restated Agreement of Limited Partnership of Prime Group Realty,
L.P., as amended and their respective employment agreements.
The Trust purchased an insurance policy which purports to insure the
officers and trustees of the Trust against certain liabilities incurred by them
in the discharge of their functions as such officers and trustees, except for
liabilities resulting from their own malfeasance.
-3-
<PAGE>
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
4.1 Prime Group Realty Trust Share Incentive Plan
4.2 Form of Share Option Agreement (Non-Qualified Option)
4.3 Form of Share Option Agreement (Incentive Share Option)
4.4 Form of Share Option Agreement (Trustee Option)
5.1 Opinion of Miles & Stockbridge as to the legality of the securities
being registered
15 Not Applicable
23.1 Consent of Miles & Stockbridge (included as part of Exhibit 5.1)
23.2 Consent of Ernst & Young LLP
24.1 Powers of Attorney (included on the signature page hereof)
25 Not Applicable
26 Not Applicable
27 Not Applicable
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-8 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF CHICAGO, STATE OF ILLINOIS, ON THE 1ST DAY OF
OCTOBER, 1998.
PRIME GROUP REALTY TRUST
/s/ RICHARD S. CURTO
-------------------------------------
Richard S. Curto
President and Chief Executive Officer
--------------------
KNOW ALL PERSONS BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE
APPEARS BELOW CONSTITUTES AND APPOINTS RICHARD S. CURTO, WILLIAM M. KARNES, ROY
P. RENDINO AND JAMES F. HOFFMAN, AND EACH OF THEM, HIS TRUE AND LAWFUL
ATTORNEYS-IN-FACT AND AGENTS, WITH FULL POWER OF SUBSTITUTION, FOR HIM AND IN
HIS NAME, PLACE AND STEAD, IN ANY AND ALL CAPACITIES, TO SIGN ANY AND ALL
AMENDMENTS (INCLUDING POST-EFFECTIVE AMENDMENTS) TO THIS REGISTRATION STATEMENT,
AND TO FILE THE SAME, WITH ALL EXHIBITS THERETO AND ALL DOCUMENTS IN CONNECTION
THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID
ATTORNEYS-IN-FACT AND AGENTS FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND
EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE
PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN
PERSON, HEREBY RATIFYING AND CONFIRMING ALL THAT EACH SAID ATTORNEYS-IN-FACT AND
AGENTS, OR HIS OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO
BE DONE BY VIRTUE HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW ON OCTOBER 1, 1998 BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED.
SIGNATURE TITLE
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/s/ MICHAEL W. RESCHKE Chairman of the Board, Trustee
- ----------------------------------
Michael W. Reschke
/s/ RICHARD S. CURTO President and Chief Executive
- ---------------------------------- Officer (principal executive
Richard S. Curto officer), Trustee
/s/ WILLIAM M. KARNES Executive Vice President
- ---------------------------------- and Chief Financial Officer
William M. Karnes (principal financial officer)
/s/ ROY P. RENDINO Senior Vice President--Finance
- ---------------------------------- and Chief Accounting Officer
Roy P. Rendino (principal accounting officer)
/s/ STEPHEN J. NARDI Trustee
- ----------------------------------
Stephen J. Nardi
/s/ JACQUE M. DUCHARME Independent Trustee
- ----------------------------------
Jacque M. Ducharme
Independent Trustee
- ----------------------------------
Christopher J. Nassetta
Independent Trustee
- ----------------------------------
Thomas J. Saylak
Independent Trustee
- ----------------------------------
James R. Thompson
PRIME GROUP REALTY TRUST
SHARE INCENTIVE PLAN
<PAGE>
PRIME GROUP REALTY TRUST
SHARE INCENTIVE PLAN
TABLE OF CONTENTS
Page
----
Article 1. Establishment, Objectives and Duration..........................1
Article 2. Definitions.....................................................2
Article 3. Administration..................................................7
Article 4. Shares Subject to the Plan and Maximum Awards...................7
Article 5. Eligibility and Participation...................................9
Article 6. Stock Options...................................................9
Article 7. Stock Appreciation Rights......................................11
Article 8. Restricted Stock and Restricted Units..........................13
Article 9. Performance Units .............................................14
Article 10. Performance Measures...........................................16
Article 11. Beneficiary Designation........................................17
Article 12. Deferrals......................................................17
Article 13. Rights of Employees............................................18
Article 14. Change in Control..............................................18
Article 15. Amendment, Modification and Termination........................19
Article 16. Withholding....................................................20
Article 17. Indemnification................................................20
Article 18. Successors.....................................................21
Article 19. Legal Construction.............................................21
Article 20. Shareholder Approval...........................................22
i
<PAGE>
PRIME GROUP REALTY TRUST
SHARE INCENTIVE PLAN
ARTICLE 1. ESTABLISHMENT, OBJECTIVES AND DURATION
1.1 ESTABLISHMENT OF THE PLAN. Prime Group Realty Trust, a Maryland real
estate investment trust (hereinafter referred to as the "Company"), hereby
establishes a long-term incentive compensation plan to be known as the "Prime
Group Realty Trust Share Incentive Plan" (hereinafter referred to as the
"Plan"), as set forth in this document. The Plan permits the grant of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock, Restricted Units and Performance Units.
Subject to the approval of the Company's shareholders, the Plan shall
become effective as of November 17, 1997 (the "Effective Date") and shall remain
in effect as provided in Section 1.3 hereof.
1.2 OBJECTIVES OF THE PLAN. The objectives of the Plan are to optimize the
profitability and growth of the Company through long-term incentives which are
consistent with the Company's objectives and which link the interests of
Participants to those of the Company's shareholders; to provide Participants
with an incentive for excellence in individual performance; and to promote
teamwork among Participants; and to give the Company a significant advantage in
attracting and retaining officers, key employees and trustees.
The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract and retain the services of Participants who make
significant contributions to the Company's success and to allow Participants to
share in the success of the Company.
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective Date, as
described in Section 1.1 hereof, and shall remain in effect, subject to the
right of the Board of Trustees to amend or terminate the Plan at any time
pursuant to Article 15 hereof, until all Shares subject to the Plan pursuant to
Article 4 shall have been purchased or acquired according to the provisions
hereof. In no event, however, may an Award be granted under the Plan on or after
October 31, 2007.
<PAGE>
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized:
2.1 "AWARD" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock, Restricted Units or Performance Units.
2.2 "AWARD AGREEMENT" means an agreement entered into by the Company and a
Participant setting forth the terms and provisions applicable to an Award or
Awards granted under this Plan to such Participant.
2.3 "BOARD" or "BOARD OF TRUSTEES" means the Board of Trustees of the
Company.
2.4 "CAUSE" shall have the meaning set forth in any unexpired employment or
severance agreement between the Participant and the Company or another Employer,
in the absence of any such agreement, shall mean (i) the willful and continued
failure of the Participant to substantially perform his or her duties with or
for the Company or another Employer, (ii) the engaging by the Participant in
conduct which is significantly injurious to the Company or another Employer,
monetarily or otherwise, (iii) the Participant's conviction of a felony, (iv)
the Participant's abuse of illegal drugs or other controlled substances or (v)
the Participant's habitual intoxication. Unless otherwise defined in the
Participant's employment or severance agreement, an act or omission is "willful"
for this purpose if such act or omission was knowingly done, or knowingly
omitted to be done, by the Participant not in good faith and without reasonable
belief that such act or omission was in the best interest of the Company or
another Employer.
<PAGE>
2.5 "CHANGE IN CONTROL" shall be deemed to have occurred if
(a) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, a corporation or
trust owned directly or indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of the Shares,
Michael W. Reschke or The Prime Group, Inc. or any of their respective
affiliates, becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 50% or more of the total voting power represented by the
Company's then outstanding securities which vote generally in the election
of Trustees (referred to herein as "Voting Securities");
(b) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board and any new Trustees whose
election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds of the Trustees
then still in office who either were Trustees at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority of the Board;
(c) the shareholders of the Company approve a merger or consolidation
of the Company with any other trust or corporation, other than a merger or
consolidation which would result in the Voting Securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) more than 50% of the total voting power represented by
the Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or
(d) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company (in one transaction or a series of transactions) of all or
substantially all of the Company's assets.
2.6 "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
2.7 "COMMITTEE" means, as specified in Article 3 herein, the Compensation
Committee of the Board or such other committee as may be appointed by the Board
to administer the Plan.
2.8 "COMPANY" means Prime Group Realty Trust, a Maryland real estate
investment trust, and any successor thereto as provided in Article 18 herein.
2.9 "DISABILITY" shall mean (a) long-term disability as defined under a
long-term disability plan maintained by an Employer and covering that
individual, or (b) if the individual is not covered by such a long-term
disability plan, disability as defined for purposes of eligibility for a
disability award under the Social Security Act.
2.10 "EFFECTIVE DATE" shall have the meaning ascribed to such term in
Section 1.1 hereof.
<PAGE>
2.11 "ELIGIBLE EMPLOYEE" means any officer or other key employee of the
Company or of any other Employer. Trustees who are not employed by the Company
or another Employer shall not be considered Eligible Employees under this Plan.
2.12 "EMPLOYER" means, individually, the Company, each Subsidiary, the
Operating Partnership, the Services Company and any other corporation, trust or
partnership in which the Company owns directly or indirectly at least 50% in
value of the outstanding capital or profits interest.
2.13 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.
2.14 "EXERCISE PRICE" means the price at which a Share may be purchased
pursuant to the exercise of an Option.
2.15 "FAIR MARKET VALUE" means the per share value of the Shares as of a
given date, determined as follows:
(a) If the Shares are listed or admitted for trading on the New York
Stock Exchange (or if not, on another national securities exchange upon
which the Shares are listed), the Fair Market Value of a Share is the
closing quotation for such shares based on composite transactions for the
New York Stock Exchange (or if not listed on it, such other national
securities exchange) on the last trading day for the Shares prior to such
given date.
(b) If the Shares are not traded on any national securities exchange,
but are quoted on the National Association of Securities Dealers, Inc.
Automated Quotation System (NASDAQ System) or any similar system of
automated dissemination of quotations of prices in common use, the Fair
Market Value of a Share is the last sales price (if the Shares are then
listed as a national market issue under the NASDAQ System) or the mean
between the closing representative bid and asked prices (in all other
cases) for the Shares on the last 5 trading days for the Shares preceding
such given date as reported by the NASDAQ System (or such similar quotation
system).
<PAGE>
(c) If neither clause (a) nor clause (b) of this Section 2.15 is
applicable, the Fair Market Value of a Share is the fair market value per
share as of such valuation date, as determined by the Board in good faith
and in accordance with uniform principles consistently applied; provided,
however, that the Fair Market Value of a Share on the date of the
completion of an initial public offering of the Shares shall be the initial
public offering price.
2.16 "FREESTANDING SAR" means an SAR that is granted independently of any
Option, as described in Article 7 herein.
2.17 "INCENTIVE STOCK OPTION" or "ISO" means an option to purchase Shares
granted under Article 6 herein which is designated as an Incentive Stock Option
and that is intended to meet the requirements of Code Section 422.
2.18 "NONEMPLOYEE TRUSTEE" means an individual who is a member of the Board
of Trustees of the Company but who is not an employee of the Company or any
other Employer.
2.19 "NONQUALIFIED STOCK OPTION" or "NQSO" means an option to purchase
Shares granted under Article 6 herein that is not intended to meet the
requirements of Code Section 422.
2.20 "OPERATING PARTNERSHIP" means Prime Group Realty, L.P., a Delaware
limited partnership.
2.21 "OPTION" means an Incentive Stock Option or a Nonqualified Stock
Option, as described in Article 6 herein.
2.22 "PARTICIPANT" means an Eligible Employee who has been selected by the
Committee to participate in the Plan pursuant to Section 5.2 and who has
outstanding an Award granted under the Plan. The term "Participant" shall not
include Nonemployee Trustees.
2.23 "PERFORMANCE-BASED EXCEPTION" means the performance-based exception
from the tax deductibility limitations of Code Section 162(m) and any
regulations promulgated thereunder.
2.24 "PERFORMANCE UNIT" means a Share equivalent Award granted to a
Participant, as described in Article 9 herein.
<PAGE>
2.25 "RESTRICTION PERIOD" means the period during which the transfer of
Shares of Restricted Stock is limited in some way (based on the passage of time,
the achievement of performance objectives, or upon the occurrence of other
events as determined by the Committee, at its discretion), and/or the Restricted
Stock/Units are not vested.
2.26 "RESTRICTED STOCK" means a contingent grant of Shares awarded to a
Participant pursuant to Article 8 herein.
2.27 "RESTRICTED UNIT" means a Share equivalent Award granted to a
Participant, as described in Article 8 herein.
2.28 "RETIREMENT" shall mean termination of employment on or after (a)
attaining the age established as the normal retirement age in any unexpired
employment agreement between the Participant and the Company or another Employer
or, in the absence of such an agreement, the normal retirement age under the
tax-qualified defined benefit retirement plan or, if none, the tax-qualified
defined contribution retirement plan, sponsored by the Company or another
Employer in which the Participant participates, or (b) attaining age sixty-two
with ten years of continuous service with one or more Employers provided that
the retirement is approved by the Chief Executive Officer of the Company unless
the Participant is an officer subject to Section 16 of the Exchange Act in which
case the retirement must be approved by the Committee.
2.29 "SERVICES COMPANY" means Prime Group Realty Services, Inc., a Maryland
corporation.
2.30 "SHARES" means the Company's common shares.
2.31 "STOCK APPRECIATION RIGHT" or "SAR" means an Award, granted alone or
in connection with a related Option, designated as an SAR, pursuant to the terms
of Article 7 herein.
2.32 "SUBSIDIARY" means a subsidiary corporation of the Company within the
meaning of Code Section 424(f).
2.33 "TANDEM SAR" means an SAR that is granted in connection with a related
Option pursuant to Article 7 herein, the exercise of which requires forfeiture
of the right to purchase a Share under the related Option (and when a Share is
purchased under the Option, the Tandem SAR shall similarly be canceled).
2.34 "TRUSTEE" means any individual who is a member of the Board of
Trustees.
<PAGE>
ARTICLE 3. ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the Compensation
Committee of the Board, or by any other Committee appointed by the Board, which
Committee (unless otherwise determined by the Board) shall satisfy the
"nonemployee director" requirements of Rule 16b-3 under the Exchange Act and the
regulations thereunder and the "outside director" provisions of Code Section
162(m), or any successor regulations or provisions. The members of the Committee
shall be appointed from time to time by, and shall serve at the discretion of,
the Board. The Committee shall act by a majority of its members at the time in
office and eligible to vote on any particular matter, and such action may be
taken either by a vote at a meeting or in writing without a meeting.
3.2 AUTHORITY OF THE COMMITTEE. Except as limited by law and subject to the
provisions herein, the Committee shall have full power and discretion to: select
Eligible Employees who shall participate in the Plan; select Nonemployee
Trustees to receive Awards under Article 6; determine the sizes and types of
Awards; determine the terms and conditions of Awards in a manner consistent with
the Plan; construe and interpret the Plan and any agreement or instrument
entered into under the Plan; establish, amend or waive rules and regulations for
the Plan's administration; and, subject to the provisions of Article 15 herein,
amend the terms and conditions of any outstanding Award to the extent such terms
and conditions are within the discretion of the Committee as provided in the
Plan. Further, the Committee shall make all other determinations which may be
necessary or advisable for the administration of the Plan. As permitted by law
and consistent with Section 3.1, the Committee may delegate its authority as
identified herein.
3.3 DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan shall be final, conclusive and
binding on all persons, including the Company, its Board of Trustees, its
shareholders, all Employers, employees, Participants and their estates and
beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
4.1 NUMBER OF SHARES AVAILABLE FOR GRANTS. Subject to adjustment as
provided in Section 4.3 herein, the number of Shares that may be issued or
transferred to Participants under the Plan shall be 1,850,000 Shares.
<PAGE>
The maximum number of Shares and Share equivalent units that may be granted
during any calendar year to any one Participant under Options, Freestanding
SARs, Restricted Stock, Restricted Units or Performance Units, shall be 200,000
(on an aggregate basis for all such types of Awards), which limit shall apply
regardless of whether such compensation is paid in Shares or in cash.
4.2 LAPSED AWARDS. If any Award granted under this Plan is canceled,
terminates, expires or lapses for any reason, any Shares subject to such Award
again shall be available for the grant of an Award under the Plan, but shall
continue to count for the purpose of the annual individual award limit set forth
in Subsection 4.1 above.
4.3 ADJUSTMENTS IN AUTHORIZED SHARES.
(a) In the event the Shares, as presently constituted, shall be changed
into or exchanged for a different number or kind of shares of
securities of the Company or of another corporation (whether by reason
of merger, consolidation, recapitalization, reclassification, split,
reverse split, combination of shares, or otherwise) or if the number
of such Shares shall be increased through the payment of a share
dividend, then there shall be substituted for or added to each Share
theretofore appropriated or thereafter subject or which may become
subject to an Award under this Plan, the number and kind of shares of
securities into which each outstanding Share shall be so changed, or
for which each such Share shall be exchanged, or to which each such
Share shall be entitled, as the case may be. Outstanding Awards shall
also be appropriately amended as to price and other terms as may be
necessary to reflect the foregoing events. In the event there shall be
any other change in the number or kind of the outstanding Shares, or
of any stock or other securities into which such Shares shall have
been changed, or for which it shall have been exchanged, then, if the
Committee shall, in its sole discretion, determine that such change
equitably requires an adjustment in any Award therefore granted or
which may be granted under the Plan, such adjustments shall be made in
accordance with such determination.
(b) Fractional Shares resulting from any adjustment in Awards pursuant to
this section may be settled in cash or otherwise as the Committee
shall determine. Notice of any adjustment shall be given by the
Company to each Participant who holds an Award which has been so
adjusted and such adjustment (whether or not such notice is given)
shall be effective and binding for all purposes of the Plan.
<PAGE>
4.4 EMPLOYER PAYMENT. In the case of Shares delivered pursuant to an Award
granted to an employee of an Employer other than the Company or a Subsidiary,
such Employer shall make a payment to the Company with respect to such Shares in
an amount equal to (i) the Fair Market Value of the Shares on the date as of
which they are so delivered, less (ii) in the case of an option, the aggregate
exercise price for such Shares. For this purpose, the obligation to deliver
Shares shall first be satisfied from any Shares transferred in payment of an
exercise price.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBILITY. Individuals eligible to participate in this Plan consist
of all Eligible Employees, including Eligible Employees who are members of the
Board, and Nonemployee Trustees but only to the extent provided herein.
5.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all Eligible Employees, those to
whom Awards shall be granted and shall determine the nature and amount of each
Award.
ARTICLE 6. STOCK OPTIONS
6.1 GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted to Eligible Employees in such number, and upon such
terms, and at any time and from time to time as shall be determined by the
Committee. Options granted to Eligible Employees who are employees of the
Company or a Subsidiary may be either ISOs or NQSOs. Options granted to other
Eligible Employees may only be NQSOs. In addition, NQSOs may be granted to
Nonemployee Trustees in such number, and upon such terms, and at any time and
from time to time as shall be determined by the Committee.
6.2 AWARD AGREEMENT. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Exercise Price, the duration of the Option, the
number of Shares to which the Option pertains, the manner, time and rate of
exercise or vesting of the Option, and such other provisions as the Committee
shall determine. The Award Agreement also shall specify whether the Option is
intended to be an ISO within the meaning of Code Section 422 or an NQSO which is
not intended to qualify under the provisions of Code Section 422.
<PAGE>
6.3 EXERCISE PRICE. The Exercise Price for each Share subject to an Option
granted under this Plan shall be at least equal to one hundred percent of the
Fair Market Value of a Share on the date the Option is granted; provided,
however, that, in the case of an ISO, the price per share shall not be less than
110% of the Fair Market Value of such Share if on the date of grant the
Participant owns (within the meaning of Code Section 424(d)) more than 10% of
the total combined voting power of all classes of shares of beneficial interest
of the Company or any Subsidiary.
6.4 DURATION OF OPTIONS. Each Option granted to an Eligible Employee or a
Nonemployee Trustee shall expire at such time as the Committee shall determine
at the time of grant; provided, however, that no Option shall be exercisable
later than the tenth anniversary of the date of its grant; provided, further,
that in the case of an ISO granted to a Participant owning (within the meaning
of Code Section 424(d)), on the date of grant, more than 110% of the total
combined voting power of all classes of shares of beneficial interest of the
Company or any Subsidiary, the Option shall not be exercisable later than the
fifth anniversary of the date of its grant.
6.5 DIVIDEND EQUIVALENTS. The Committee may grant dividend equivalents in
connection with Options granted under this Plan. Such dividend equivalents may
be payable in cash or in Shares, upon such terms as the Committee, in its sole
discretion, deems appropriate.
6.6 EXERCISE OF OPTIONS. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each Award or for each Participant. To the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options (within the
meaning of Section 422 of the Code, but without regard to Section 422(d) of the
Code) are exercisable for the first time by the Participant during any calendar
year (under the Plan and all other incentive stock option plans of the Company)
exceeds $100,000, such Options shall be treated as Nonqualified Options. The
rule set forth in the preceding sentence shall be applied by taking Options into
account in the order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the time the Option with respect to such
Shares is granted.
6.7 PAYMENT. Options granted under this Article 6 shall be exercised by the
delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised accompanied
by full payment for the Shares and any withholding tax relating to the exercise
of the Option.
<PAGE>
The Exercise Price, and any related withholding taxes, upon exercise of any
Option shall be payable: (a) in cash, or its equivalent, in United States
dollars, or (b) if permitted in the governing Award Agreement, by tendering
previously acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the total Exercise Price, or (c) if permitted in the governing
Award Agreement, by a combination of (a) and (b). The Committee also may allow
cashless exercise as permitted under Federal Reserve Board's Regulation T,
subject to applicable securities law restrictions, or by any other means which
the Committee determines to be consistent with the Plan's purpose and applicable
law.
6.8 TERMINATION OF EMPLOYMENT. Each Option Award Agreement shall set forth
the extent to which the Participant shall have the right to exercise the Option
following termination of the Participant's employment with the Company and all
other Employers. Such provisions shall be determined by the Committee, shall be
included in the Award Agreement entered into with each Participant or
Nonemployee Trustee, need not be uniform among all Options issued pursuant to
this Article 6, and may reflect distinctions based on the reasons for
termination of employment.
6.9 NONTRANSFERABILITY OF OPTIONS. No Option granted under the Plan may be
sold, transferred, pledged, assigned or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, all
Options granted to a Participant under the Plan shall be exercisable during the
Participant's lifetime only by such Participant or the Participant's guardian or
legal representative. The Committee may require a Participant's guardian or
legal representative to supply it with such evidence as the Committee deems
necessary to establish the authority of the guardian or legal representative to
act on behalf of the Participant.
ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1 GRANT OF SARS. Subject to the terms and conditions of the Plan, SARs
may be granted to Participants at any time and from time to time as shall be
determined by the Committee. The Committee may grant Freestanding SARs, Tandem
SARs or any combination of these forms of SAR.
Subject to Article 4 hereof, the Committee shall determine the number of
SARs granted to each Participant and, consistent with the provisions of the
Plan, determine the terms and conditions pertaining to such SARs.
The grant price of a Freestanding SAR shall equal the Fair Market Value of
a Share on the date of grant of the SAR. The grant price of Tandem SARs shall
equal the Exercise Price of the related Option.
<PAGE>
7.2 EXERCISE OF TANDEM SARS. Tandem SARs may be exercised for all or part
of the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
7.3 EXERCISE OF FREESTANDING SARS. Freestanding SARs may be exercised upon
whatever terms and conditions the Committee imposes upon them.
7.4 AWARD AGREEMENT. Each SAR grant shall be evidenced by an Award
Agreement that shall specify the grant price, the term of the SAR and such other
provisions as the Committee shall determine.
7.5 DURATION OF SARS. The term of an SAR granted under the Plan shall be
determined by the Committee; provided, however, that such term shall not exceed
ten years.
7.6 PAYMENT OF SAR AMOUNT. Upon exercise of an SAR, a Participant shall be
entitled to receive payment from his or her Employer in an amount determined by
multiplying:
(a) the excess (or some portion of such excess as determined at the
time of the grant by the Committee) if any, of the Fair Market
Value of a Share on the date of exercise of the SAR over the
grant price specified in the Award Agreement; by
(b) the number of Shares with respect to which the SAR is exercised.
At the discretion of the Committee, the payment upon SAR exercise may be in
cash, in Shares of equivalent Fair Market Value or in some combination thereof.
7.7 TERMINATION OF EMPLOYMENT. Each SAR Award Agreement shall set forth the
extent to which the Participant shall have the right to exercise the SAR
following termination of the Participant's employment with the Company and all
other Employers. Such provisions shall be determined by the Committee, shall be
included in the Award Agreement entered into with Participants, need not be
uniform among all SARs issued pursuant to the Plan, and may reflect distinctions
based on the reasons for termination of employment.
<PAGE>
7.8 NONTRANSFERABILITY OF SARS. Except as otherwise provided in a
Participant's Award Agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Participant's Award Agreement, all SARs granted to a
Participant under the Plan shall be exercisable during the Participant's
lifetime only by such Participant or the Participant's guardian or legal
representative. The Committee may require a Participant's guardian or legal
representative to supply it with such evidence as the Committee deems necessary
to establish the authority of the guardian or legal representative to act on
behalf of the Participant.
ARTICLE 8. RESTRICTED STOCK AND RESTRICTED UNITS
8.1 GRANT OF RESTRICTED STOCK/UNITS. Subject to the terms and provisions of
the Plan, the Committee may, at any time and from time to time, grant Restricted
Stock and/or Restricted Units to Participants in such amounts as the Committee
shall determine. Each grant of Restricted Stock shall be represented by the
number of Shares to which the Award relates. Each grant of Restricted Units
shall be represented by the number of Share equivalent units to which the Award
relates.
8.2 AWARD AGREEMENT. Each Restricted Stock/Unit grant shall be evidenced by
an Award Agreement that shall specify the Restriction Periods, the number of
Shares or Share equivalent units granted, and such other provisions as the
Committee shall determine.
8.3 NONTRANSFERABILITY. Except as provided in this Article 8, the
Restricted Stock/Units granted herein may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated until the end of the applicable
Restriction Period established by the Committee and as specified in the Award
Agreement, or upon earlier satisfaction of any other conditions, as specified by
the Committee and as set forth in the Award Agreement. All rights with respect
to Restricted Stock/Units granted to a Participant under the Plan shall be
available during the Participant's lifetime only to such Participant or the
Participant's guardian or legal representative. The Committee may require a
Participant's guardian or legal representative to supply it with such evidence
as the Committee deems necessary to establish the authority of the guardian or
legal representative to act on behalf of the Participant.
<PAGE>
8.4 OTHER RESTRICTIONS. The Committee may impose such other conditions
and/or restrictions on any restricted Stock/Units granted pursuant to the Plan
as it deems advisable including, without limitation, restrictions based upon the
achievement of specific performance objectives (Company-wide, business unit,
and/or individual), time-based restrictions on vesting following the attainment
of the performance objectives, and/or restrictions under applicable federal or
state securities laws.
The Company shall retain the certificates representing Shares of restricted
Stock in the Company's possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied.
8.5 PAYMENT OF AWARDS. Except as otherwise provided in this Article 8, (i)
Shares covered by each Restricted Stock grant made under the Plan shall become
freely transferable by the Participant after the last day of the applicable
Restriction Period and (ii) Share equivalent units covered by each Restricted
Unit under Section 8.1 shall be paid out in cash or Shares to the Participant
following the last day of the applicable Restriction Period or such later date
as provided in the Award Agreement.
8.6 VOTING RIGHTS. During the Restriction Period, Participants holding
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares.
8.7 DIVIDENDS AND OTHER DISTRIBUTIONS. During the Restriction Period,
Participants holding Shares of Restricted Stock/Units hereunder shall be
credited with regular cash dividends or dividend equivalents paid with respect
to the underlying Shares or Share equivalent units while they are so held. Such
dividends may be paid currently, accrued as contingent cash obligations, or
converted into additional Shares or units of Restricted Stock/Units, upon such
terms as the Committee establishes.
The Committee may apply any restrictions to the crediting and payment of
dividends and other distributions that the Committee deems advisable. Without
limiting the generality of the preceding sentence, if the grant or vesting of
Restricted Stock/Units is designed to qualify for the Performance-Based
Exception, the Committee may apply any restrictions it deems appropriate to the
payment of dividends declared with respect to such Restricted Stock/Units, such
that the dividends and/or the Restricted Stock/Units maintain eligibility for
the Performance-Based Exception.
<PAGE>
8.8 TERMINATION OF EMPLOYMENT. Each Award Agreement shall set forth the
extent to which the Participant shall have the right to retain unvested
Restricted Stock/Units following termination of the Participant's employment
with the Company and all other Employers. Such provisions shall be determined by
the Committee, shall be included in the Award Agreement entered into with each
Participant, need not be uniform among all Awards of Restricted Stock/Units
issued pursuant to the Plan, and may reflect distinctions based on the reasons
for termination of employment.
ARTICLE 9. PERFORMANCE UNITS
9.1 GRANT OF PERFORMANCE UNITS. Subject to the terms of the Plan,
Performance Units may be granted to Participants in such amounts and upon such
terms, and at any time and from time to time, as shall be determined by the
Committee.
9.2 VALUE OF PERFORMANCE UNITS. Each grant of Performance Units shall be
represented by the number of Share equivalent units to which the Award relates.
The Committee shall set performance objectives in its discretion which,
depending on the extent to which they are met, will determine the number of
Performance Units that will be paid out to the Participant. For purposes of this
Article 9, the time period during which the performance objectives must be met
shall be called a "Performance Period" and shall be set by the Committee in its
discretion.
9.3 EARNING OF PERFORMANCE UNITS. Subject to the terms of this Plan, after
the applicable Performance Period has ended, the holder of Performance Units
shall be entitled to receive payout on the number of Performance Units earned by
the Participant over the Performance Period, to be determined as a function of
the extent to which the corresponding performance objectives have been achieved.
9.4 AWARD AGREEMENT. Each grant of Performance Units shall be evidenced by
an Award Agreement which shall specify the material terms and conditions of the
Award, and such other provisions as the Committee shall determine.
9.5 FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS. Except as provided in
Article 12, payment of earned Performance Units shall be made within
seventy-five calendar days following the close of the applicable Performance
Period in a manner determined by the Committee. Payment of earned Performance
Units may be in the form of cash or in Shares (or in a combination thereof).
<PAGE>
9.6 TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR RETIREMENT.
Unless determined otherwise by the Committee and set forth in the Participant's
Award Agreement, in the event the employment of a Participant is terminated by
reason of death, Disability or Retirement during a Performance Period, the
Participant shall receive a payout of the Performance Units which is prorated,
as specified by the Committee in the Award Agreement. Payment of earned
Performance Units shall be made at a time specified by the Committee and set
forth in the Participant's Award Agreement.
9.7 TERMINATION OF EMPLOYMENT FOR OTHER REASONS. In the event that a
Participant's employment terminates during a Performance Period for any reason
other than those reasons set forth in Section 9.6 herein, all Performance Units
shall be forfeited by the Participant, unless determined otherwise by the
Committee in the Participant's Award Agreement.
9.8 NONTRANSFERABILITY. Except as otherwise provided in a Participant's
Award Agreement, Performance Units may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, except as otherwise provided in a
Participant's Award Agreement, a Participant's rights under the Plan shall be
exercisable during the Participant's lifetime only by such Participant or
Participant's guardian or legal representative. The Committee may require a
Participant's guardian or legal representative to supply it with such evidence
as the Committee deems necessary to establish the authority of the guardian or
legal representative to act on behalf of the Participant.
ARTICLE 10. PERFORMANCE MEASURES
Unless and until the Committee proposes for shareholder approval and the
Company's shareholders approve a change in the general performance measures set
forth in this Article 10, the attainment of which may determine the degree of
payout and/or vesting with respect to Awards which are designed to qualify for
the Performance-Based Exception, the performance measure(s) to be used for
purposes of such awards shall be chosen from among the following alternatives:
(a) return to shareholders (absolute or peer-group comparative);
(b) stock price increase (absolute or peer-group comparative);
(c) cumulative net income (absolute or competitive growth rates
comparative);
(d) return on equity;
<PAGE>
(e) return on capital;
(f) cash flow, including operating cash flow, free cash flow, discounted
cash flow return on investment, and cash flow in excess of cost of
capital;
(g) economic value added (income in excess of capital costs); or
(h) market share.
The Committee shall have the discretion to adjust the determinations of the
degree of attainment of the preestablished performance objectives; provided,
however, that Awards which are designed to qualify for the Performance-Based
Exception may not be adjusted except to the extent permitted under Code Section
162(m).
In the event that Code Section 162(m) or applicable tax and/or securities
laws change to permit Committee discretion to alter the governing performance
measures without obtaining shareholder approval of such changes, the Committee
shall have sole discretion to make such changes without obtaining shareholder
approval. In addition, in the event that the Committee determines that it is
advisable to grant Awards which shall not qualify for the Performance-Based
Exception, the Committee may make such grants without satisfying the
requirements of Code Section 162(m).
ARTICLE 11. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of the death of the
Participant before he or she receives any or all of such benefit. Each such
designation shall revoke all prior designations by the same Participant, shall
be in a form prescribed by the Committee during the Participant's lifetime. If
the Participant's designated beneficiary predeceases the Participant or no
beneficiary has been designated, benefits remaining unpaid at the Participant's
death shall be paid to the Participant's spouse or if none, the Participant's
estate.
<PAGE>
ARTICLE 12. DEFERRALS
The Committee may permit or require a Participant to defer such
Participant's receipt of the payment of cash or the delivery of Shares that
would otherwise be due to such Participant by virtue of the exercise of an
Option or SAR, the lapse or waiver of restrictions with respect to Restricted
Stock/Units, or the satisfaction of any requirements or objectives with respect
to Performance Units. If any such deferral election is permitted or required,
the Committee shall, in its sole discretion, establish rules and procedures for
such deferrals. Notwithstanding the foregoing, the Committee in its sole
discretion may defer payment of cash or the delivery of Shares that would
otherwise be due to a Participant under the Plan if such payment or delivery
would result in compensation not deductible by the Company or any other Employer
by virtue of Code Section 162(m). Such a deferral may continue until the payment
or delivery would result in compensation deductible by the Company or such other
Employer under Code Section 162(m).
ARTICLE 13. RIGHTS OF EMPLOYEES
13.1 EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any
way the right of the Company or any other Employer to terminate any
Participant's employment at any time, or confer upon any Participant any right
to continue in the employ of the Company or any other Employer.
13.2 PARTICIPATION. No Eligible Employee shall have the right to be
selected to receive an Award under this Plan, or, having been so selected, to be
selected to receive a future Award.
ARTICLE 14. CHANGE IN CONTROL
14.1 TREATMENT OF OUTSTANDING AWARDS. Upon the occurrence of a Change in
Control, unless otherwise specifically prohibited under applicable laws, or by
the rules and regulations of any governing governmental agencies or national
securities exchanges:
(a) Any and all outstanding Options and SARs granted hereunder shall
become immediately exercisable, and shall remain exercisable
throughout their entire term.
<PAGE>
(b) Any Periods of Restriction and restrictions imposed on Restricted
Stock/Units shall lapse; provided, however, that the degree of vesting
associated with Restricted Stock/Units which has been conditioned upon
the achievement of performance conditions pursuant to Section 8.4
herein shall be determined in the manner set forth in Section 14.1(c)
herein.
(c) Except as otherwise provided in the Award Agreement, the vesting of
all Performance Units shall be accelerated as of the effective date of
the Change in Control, and there shall be paid out in cash to
Participants within thirty days following the effective date of the
Change in Control a pro rata amount based upon an assumed achievement
of all relevant performance objectives at target levels, and upon the
length of time within the Performance Period which has elapsed prior
to the effective date of the Change in Control; provided, however,
that in the event the Committee determines that actual performance to
the effective date of the Change in Control exceeds target levels, the
prorated payouts shall be made at levels commensurate with such actual
performance (determined by extrapolating such actual performance to
the end of the Performance Period), based upon the length of time
within the Performance Period which has elapsed prior to the effective
date of the Change in Control.
14.2 TERMINATION, AMENDMENT, AND MODIFICATIONS OF CHANGE IN CONTROL
PROVISIONS. Notwithstanding any other provision of this Plan or any Award
Agreement provision, the provisions of this Article 14 may not be terminated,
amended, or modified on or after the effective date of a Change in Control to
affect adversely any Award theretofore granted under the Plan without the prior
written consent of the Participant with respect to his or her outstanding
Awards.
ARTICLE 15. AMENDMENT, MODIFICATION AND TERMINATION
15.1 AMENDMENT, MODIFICATION AND TERMINATION. Subject to Section 14.2
herein, the Board may at any time and from time to time, alter, amend, modify or
terminate the Plan in whole or in part.
Subject to the terms and conditions of the Plan, the Committee may modify,
extend or renew outstanding Awards under the Plan, or accept the surrender of
outstanding Awards (to the extent not theretofore exercised) and grant new
Awards in substitution therefor (to the extent not theretofore exercised). The
Committee shall not, however, modify any outstanding Incentive Stock Option so
as to specify a lower Exercise Price. Notwithstanding the foregoing, no
modification of an Award shall, without the consent of the Participant, alter or
impair any rights or obligations under any Award theretofore granted under the
Plan.
<PAGE>
15.2 ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS. The Committee may make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in
Section 4.3 hereof) affecting the Company or the financial statements of the
Company or of changes in applicable laws, regulations, or accounting principles,
whenever the Committee determines that such adjustments are appropriate in order
to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, subject to the requirements of
Code Section 162(m) for the Performance-Based Exception in the case of Awards
designed to qualify for the Performance-Based Exception.
15.3 AWARDS PREVIOUSLY GRANTED. No termination, amendment or modification
of the Plan shall adversely affect in any material way any Award previously
granted under the Plan, without the written consent of the Participant holding
such Award.
15.4 COMPLIANCE WITH CODE SECTION 162(M). Awards, when Code Section 162(m)
is applicable, shall comply with the requirements of Code Section 162(m);
provided, however, that in the event the Committee determines that such
compliance is not desired with respect to any Award or Awards available for
grant under the Plan, then compliance with Code Section 162(m) will not be
required. In addition, in the event that changes are made to Code Section 162(m)
to permit greater flexibility with respect to any Award or Awards available
under the Plan, the Committee may, subject to this Article 15, make any
adjustments it deems appropriate.
ARTICLE 16. WITHHOLDING
16.1 TAX WITHHOLDING. Each Employer shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Employer, an amount
(either in cash or Shares) sufficient to satisfy federal, state, and local
taxes, domestic or foreign, required by law or regulation to be withheld with
respect to any taxable event arising as a result of this Plan.
<PAGE>
16.2 SHARE WITHHOLDING. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock,
or upon any other taxable event arising as a result of Awards granted hereunder,
an Employer may satisfy the minimum withholding requirement for supplemental
wages, in whole or in part, by withholding from the Award Shares having a Fair
Market Value (determined on the date the Participant recognizes taxable income
on the Award) equal to the withholding tax required to be collected on the
transaction. The Participant may elect, subject to the approval of the
Committee, to deliver the necessary funds to satisfy the withholding obligation
to an Employer, in which case there will be no reduction in the Shares otherwise
distributable to the Participant.
ARTICLE 17. INDEMNIFICATION
Each person who is or has been a member of the Committee, or of the Board,
shall be indemnified and held harmless by the Company against and from any loss,
cost, liability, or expense that may be imposed upon or reasonably incurred by
such person in connection with or resulting from any claim, action, suit, or
proceeding to which such person may be a party or in which such person may be
involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by such person in a settlement
approved by the Company, or paid by such person in satisfaction of any judgment
in any such action, suit, or proceeding against such person, provided such
person shall give the Company an opportunity, at its own expense, to handle and
defend the same before such person undertakes to handle and defend it. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Articles of Incorporation or By-Laws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.
ARTICLE 18. SUCCESSORS
All obligations of an Employer under the Plan or any Award Agreement with
respect to Awards granted hereunder shall be binding on any successor to the
Employer, whether the existence of such successor is the result of a direct or
indirect purchase of all or substantially all of the business and/or assets of
the Employer, or a merger, consolidation, or otherwise.
ARTICLE 19. LEGAL CONSTRUCTION
19.1 GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
19.2 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
<PAGE>
19.3 REQUIREMENTS OF LAW. The granting of Awards and the issuance of Share
and/or cash payouts under the Plan shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required. The Committee may impose such
restrictions on any Shares delivered pursuant to any Award granted under this
Plan as the Committee deems necessary or advisable, including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed and/or traded, and under any blue sky or state securities laws applicable
to such Shares.
19.4 SECURITIES LAW COMPLIANCE. With respect to any individual who is, on
the relevant date, an officer, director or ten percent beneficial owner of any
class of the Company's equity securities that is registered pursuant to Section
12 of the Exchange Act, all as defined under Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 under the Exchange Act, or any successor rule. To the
extent any provision of the Plan or action by the Committee fails to so comply,
it shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.
19.5 AWARDS TO FOREIGN NATIONALS AND EMPLOYEES OUTSIDE THE UNITED STATES.
To the extent the Committee deems it necessary, appropriate or desirable to
comply with foreign law of practice and to further the purposes of this Plan,
the Committee may, without amending the Plan, (i) establish rules applicable to
Awards granted to Participants who are foreign nationals, are employed outside
the United States, or both, including rules that differ from those set forth in
this Plan, and (ii) grant Awards to such Participants in accordance with those
rules.
19.6 UNFUNDED STATUS OF THE PLAN. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments or deliveries of Shares not yet made to a Participant by the Company or
any other Employer, nothing contained herein shall give any rights that are
greater than those of a general creditor. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Shares or payments hereunder consistent with the foregoing.
19.7 GOVERNING LAW. To the extent not preempted by federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the State of Maryland.
<PAGE>
ARTICLE 20. SHAREHOLDER APPROVAL
This Plan will be submitted for the approval of the Company's shareholders
within twelve months before or after the date of the Board's initial adoption of
the Plan. Awards may be granted prior to such shareholder approval; provided,
however, that such Awards shall not be exercisable or payable prior to the time
when the Plan is approved by the shareholders; provided, further, that if such
approval has not been obtained at the end of said twelve-month period, all
Awards previously granted under the Plan shall thereupon be cancelled and become
null and void.
FORM OF
PRIME GROUP REALTY TRUST
SHARE OPTION AGREEMENT
(NONQUALIFIED OPTION)
This Share Option Agreement dated as of ___________, 1997 (the "Date of
Grant"), by and between _____________________, an individual residing in
_______________, ______________ (the "Optionee"), and Prime Group Realty Trust,
a Maryland real estate investment trust (the "Company").
W I T N E S S E T H:
WHEREAS, as used herein the term "Shares" shall mean the Company's Common
Shares of Beneficial Interest, $.01 par value per share;
WHEREAS, the Optionee is a key employee;
WHEREAS, the Company desires to grant to the Optionee an option to purchase
from the Company __________ Shares for a purchase price per share of $_______,
subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:
1. OPTION. In accordance with the provisions of the Prime Group Realty
Trust Share Incentive Plan (the "Plan"), the Company hereby grants to the
Optionee the right to purchase (the "Option"), subject to the terms, conditions
and restrictions stated herein, from the Company _______ Shares (the "Option
Shares") at a price per share of $_______.
2. VESTING. Except as may otherwise be provided in the Plan or this
Agreement, this Option shall vest only on the dates and to the extent
hereinafter set forth; provided, however, that the Optionee continuously remains
an employee of an "Employer" (as that term is defined in the Plan) through each
such date:
(i) no part of the Option shall vest prior to the first anniversary of the
Date of Grant;
(ii) on the first anniversary of the Date of Grant, the right to purchase
one-third of the Option Shares shall vest;
(iii) on the second anniversary of the Date of Grant, the right to purchase
an additional one-third of the Option Shares shall vest; and
(iv) on the third anniversary of the Date of Grant, the right to purchase
the remaining one-third of the Option Shares shall vest.
<PAGE>
Notwithstanding clauses (i) through (iv) above, in the event the Optionee ceases
to be an employee of an Employer on or after the first anniversary of the Date
of Grant due to the Optionee's death or "Disability" (as that term is defined in
the Plan), or in the event of a "Change in Control" of the Company (as that term
is defined in the Plan) on or before the date the Optionee ceases to be an
employee of an Employer, all rights to purchase Option Shares not theretofore
vested shall immediately vest on the date of such event. Except as otherwise
provided in the sentence next above, all rights to purchase Option Shares not
theretofore vested shall be forfeited as of the date the Optionee ceases to be
an employee of an Employer.
3. EXERCISE PERIOD. The Optionee (or in the event of the death of the
Optionee, the Optionee's successor in interest) may exercise the Option as to
those Option Shares which have theretofore vested as herein provided at any time
prior to the first to occur of the following events:
(i) the expiration of ten years from the Date of Grant;
(ii) the expiration of one year from the date the Optionee ceases to be an
employee of an Employer unless the Optionee dies within said one-year
period; or
(iii) the expiration of one year from the date of the Optionee's death.
4. MANNER OF EXERCISE. An exercisable Option, or any exercisable portion
thereof, may be exercised solely by delivery to the Secretary of the Company or
the Secretary's office of all of the following prior to the time as of which
such Option ceases to be exercisable:
(a) notice in writing signed by the Optionee or other person then entitled
to exercise such Option or portion thereof, stating that such Option
or portion is exercised, such notice complying with all applicable
rules set forth in the Plan or otherwise established by the committee
appointed to administer the Plan (the "Committee");
(b) full payment for the Option Shares with respect to which such Option
is thereby exercised as follows:
(i) in cash or by check; or
(ii) with the consent of the Committee, in Shares previously acquired
by the Optionee duly endorsed for transfer to the Company, with a
"Fair Market Value" (as that term is defined in the Plan) on the
date of Option exercise equal to the aggregate Option price of
the Option Shares with respect to which this Option or portion is
thereby exercised; or
<PAGE>
(iii) with the consent of the Committee, any other means which the
Committee determines to be consistent with the Plan's purpose and
applicable law; or
(iv) with the consent of the Committee, any combination of the
consideration provided in the foregoing subsections (i), (ii) and
(iii);
(c) the payment of all amounts which are required to be withheld, after
taking into account any applicable Share withholding, under federal,
state or local law in connection with the exercise of the Option;
(d) such representations and documents as the Committee, in its absolute
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933 and any other
federal or state securities laws or regulations; and
(e) in the event that the Option or a portion thereof shall be exercised
by any person or persons other than the Optionee, appropriate proof of
the right of such person or persons to exercise the Option or portion
thereof.
5. Transferability. This Option is personal to the Optionee 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.
6. Miscellaneous.
(a) The rights herein granted are in all respects subject to the provisions
set forth in the Plan to the same extent and with the same effect as if set
forth fully herein.
(b) The granting of this Option shall not be construed as giving to the
Optionee any right to be retained in the employ of the Company or any other
Employer.
(c) For the purpose hereof, a transfer of the Optionee's employment among
the Employers shall not constitute a termination of employment with an Employer.
(d) This Option shall not be treated as an incentive stock option under the
Internal Revenue Code of 1986, as amended.
(e) 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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day and year first above written.
PRIME GROUP REALTY TRUST
By:
--------------------------------------
Its:
OPTIONEE
-----------------------------------------
(name)
<PAGE>
FORM OF
PRIME GROUP REALTY TRUST
SHARE OPTION AGREEMENT
(INCENTIVE SHARE OPTION)
This Share Option Agreement dated as of ____________, 1997 (the "Date of
Grant"), by and between _____________________, an individual residing in
_______________, ______________ (the "Optionee"), and Prime Group Realty Trust,
a Maryland real estate investment trust (the "Company").
W I T N E S S E T H:
WHEREAS, as used herein the term "Shares" shall mean the Company's Common
Shares of Beneficial Interest, $.01 par value per share;
WHEREAS, the Optionee is a key employee of the Company or a "corporate
subsidiary" thereof, within the meaning of Section 424(f) of the Internal
Revenue Code of 1986, as amended (the "Code");
WHEREAS, the Company desires to grant to the Optionee an option to purchase
from the Company __________ Shares for a purchase price per share of $_______,
subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:
1. OPTION. In accordance with the provisions of the Prime Group Realty
Trust Share Incentive Plan (the "Plan"), the Company hereby grants to the
Optionee the right to purchase (the "Option"), subject to the terms, conditions
and restrictions stated herein, from the Company _______ Shares (the "Option
Shares") at a price per share of $_______.
2. VESTING. Except as may otherwise be provided in the Plan or this
Agreement, this Option shall vest only on the dates and to the extent
hereinafter set forth; provided, however, that the Optionee continuously remains
an employee of Company through each such date:
(i) no part of the Option shall vest prior to the first anniversary of the
Date of Grant;
(ii) on the first anniversary of the Date of Grant, the right to purchase
one-third of the Option Shares shall vest;
(iii) on the second anniversary of the Date of Grant, the right to purchase
an additional one-third of the Option Shares shall vest; and
<PAGE>
(iv) on the third anniversary of the Date of Grant, the right to purchase
the remaining one-third of the Option Shares shall vest.
Notwithstanding clauses (i) through (iv) above, in the event the Optionee ceases
to be an employee of the Company on or after the first anniversary of the Date
of Grant due to the Optionee's death or "Disability" (as that term is defined in
the Plan) or in the event of a "Change in Control" of the Company (as that term
is defined in the Plan) on or before the date the Optionee ceases to be an of
the Company, all rights to purchase Option Shares not theretofore vested shall
immediately vest on the date of such event. Except as otherwise provided in the
sentence next above, all rights to purchase Option Shares not theretofore vested
shall be forfeited as of the date the Optionee ceases to be an employee of the
Company.
3. Exercise Period. The Optionee (or in the event of the death of the
Optionee, the Optionee's successor in interest) may exercise the Option as to
those Option Shares which have theretofore vested as herein provided at any time
prior to the first to occur of the following events:
(i) the expiration of ten years from the Date of Grant,
(ii) except in the case of any Optionee who is disabled (within the meaning
of Section 22(e)(3) of the Code, the expiration of three months from
the date as of which the Optionee ceases to be an employee of the
Company for any reason other than such Optionee's death unless the
Optionee dies within said three-month period;
(iii) in the case of an Optionee who is disabled (within the meaning of
Section 22(e)(3) of the Code), the expiration of one year from the
date as of which the Optionee ceases to be an employee of the Company
unless the Optionee dies within said one-year period; or
(iv) the expiration of one year from the date of the Optionee's death.
4. MANNER OF EXERCISE. An exercisable Option, or any exercisable portion
thereof, may be exercised solely by delivery to the Secretary of the Company or
the Secretary's office of all of the following prior to the time as of which
such Option ceases to be exercisable:
(a) notice in writing signed by the Optionee or other person then entitled
to exercise such Option or portion thereof, stating that such Option
or portion is exercised, such notice complying with all applicable
rules set forth in the Plan or otherwise established by the committee
appointed to administer the Plan (the "Committee");
(b) full payment for the Option Shares with respect to which such Option
is thereby exercised as follows:
<PAGE>
(i) in cash or by check; or
(ii) with the consent of the Committee, in Shares previously acquired
by the Optionee duly endorsed for transfer to the Company, with a
"Fair Market Value" (as that term is defined in the Plan) on the
date of Option exercise equal to the aggregate Option price of
the Option Shares with respect to which this Option or portion is
thereby exercised; or
(iii) with the consent of the Committee, any other means which the
Committee determines to be consistent with the Plan's purpose and
applicable law; or
(iv) with the consent of the Committee, any combination of the
consideration provided in the foregoing subsections (i), (ii) and
(iii);
(c) such representations and documents as the Committee, in its absolute
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933 and any other
federal or state securities laws or regulations; and
(d) in the event that the Option or a portion thereof shall be exercised
by any person or persons other than the Optionee, appropriate proof of
the right of such person or persons to exercise the Option or portion
thereof.
5. TRANSFERABILITY. This Option is personal to the Optionee 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.
6. MISCELLANEOUS.
(a) The rights herein granted are in all respects subject to the provisions
set forth in the Plan to the same extent and with the same effect as if set
forth fully herein.
(b) The granting of this Option shall not be construed as giving to the
Optionee any right to be retained in the employ of the Company. For the purposes
of this Agreement, employment with a "Subsidiary" of the Company (as that term
is defined in the Plan) shall be considered employment with the Company.
(c) This Option shall be treated as an incentive stock option under the
Code.
(d) 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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day and year first above written.
PRIME GROUP REALTY TRUST
By:
--------------------------------------
Its:
OPTIONEE
-----------------------------------------
(name)
FORM OF
PRIME GROUP REALTY TRUST
SHARE OPTION AGREEMENT
(TRUSTEE OPTION)
This Share Option Agreement dated as of ___________, 1997 (the "Date of
Grant"), by and between _____________________, an individual residing in
_______________, ______________ (the "Optionee"), and Prime Group Realty Trust,
a Maryland real estate investment trust (the "Company").
W I T N E S S E T H:
WHEREAS, as used herein the term "Shares" shall mean the Company's Common
Shares of Beneficial Interest, $.01 par value per share;
WHEREAS, the Optionee is a member of the Company's Board of Trustees;
WHEREAS, the Company desires to grant to the Optionee an option to purchase
from the Company __________ Shares for a purchase price per share of $_______,
subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:
1. OPTION. In accordance with the provisions of the Prime Group Realty
Trust Share Incentive Plan (the "Plan"), the Company hereby grants to the
Optionee the right to purchase (the "Option"), subject to the terms, conditions
and restrictions stated herein, from the Company _______ Shares (the "Option
Shares") at a price per share of $_______.
2. VESTING. Except as may otherwise be provided in the Plan or this
Agreement, this Option shall vest only on the dates and to the extent
hereinafter set forth; provided, however, that the Optionee continuously remains
a trustee of Company through each such date:
(i) no part of the Option shall vest prior to the first anniversary of the
Date of Grant;
(ii) on the first anniversary of the Date of Grant, the right to purchase
one-third of the Option Shares shall vest;
(iii) on the second anniversary of the Date of Grant, the right to purchase
an additional one-third of the Option Shares shall vest; and
(iv) on the third anniversary of the Date of Grant, the right to purchase
the remaining one-third of the Option Shares shall vest.
<PAGE>
Notwithstanding clauses (i) through (iv) above, in the event the Optionee ceases
to be a trustee of the Company on or after the first anniversary of the Date of
Grant due to the Optionee's death or "Disability" (as that term is defined in
the Plan), or in the event of a "Change in Control" of the Company (as that term
is defined in the Plan) on or before the date the Optionee ceases to be a
trustee of the Company, all rights to purchase Option Shares not theretofore
vested shall immediately vest on the date of such event. Except as otherwise
provided in the sentence next above, all rights to purchase Option Shares not
theretofore vested shall be forfeited as of the date the Optionee ceases to be a
trustee of the Company.
3. EXERCISE PERIOD. The Optionee (or in the event of the death of the
Optionee, the Optionee's successor in interest) may exercise the Option as to
those Option Shares which have theretofore vested as herein provided at any time
prior to the first to occur of the following events:
(i) the expiration of ten years from the Date of Grant;
(ii) the expiration of one year from the date the Optionee ceases to be a
trustee of the Company, unless the Optionee dies within said one-year
period; or
(iii) the expiration of one year from the date of the Optionee's death.
4. MANNER OF EXERCISE. An exercisable Option, or any exercisable portion
thereof, may be exercised solely by delivery to the Secretary of the Company or
the Secretary's office of all of the following prior to the time as of which
such Option ceases to be exercisable:
(a) notice in writing signed by the Optionee or other person then entitled
to exercise such Option or portion thereof, stating that such Option
or portion is exercised, such notice complying with all applicable
rules set forth in the Plan or otherwise established by the committee
appointed to administer the Plan (the "Committee");
(b) full payment for the Option Shares with respect to which such Option
is thereby exercised, as follows:
(i) in cash or by check; or
(ii) with the consent of the Committee, in Shares previously acquired
by the Optionee duly endorsed for transfer to the Company, with a
"Fair Market Value" (as that term is defined in the Plan) on the
date of Option exercise equal to the aggregate Option price of
the Option Shares with respect to which this Option or portion is
thereby exercised; or
(iii) with the consent of the Committee, any other means which the
Committee determines to be consistent with the Plan's purpose and
applicable law; or
<PAGE>
(iv) with the consent of the Committee, any combination of the
consideration provided in the foregoing subsections (i), (ii) and
(iii);
(c) such representations and documents as the Committee, in its absolute
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933 and any other
federal or state securities laws or regulations; and
(d) in the event that the Option or a portion thereof shall be exercised
by any person or persons other than the Optionee, appropriate proof of
the right of such person or persons to exercise the Option or portion
thereof.
5. TRANSFERABILITY. This Option is personal to the Optionee 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.
6. MISCELLANEOUS.
(a) The rights herein granted are in all respects subject to the
provisions set forth in the Plan to the same extent and with the same
effect as if set forth fully herein.
(b) The granting of this Option shall not be construed as giving to the
Optionee any right to be retained as a member of the Company's Board
of Trustees.
(c) This Option shall not be treated as an incentive stock option under
the Internal Revenue Code of 1986, as amended.
(d) 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.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day and year first above written.
OPTIONEE PRIME GROUP REALTY TRUST
By:
--------------------------------------
(name) Its:
-------------------------------------
[MILES & STOCKBRIDGE LETTERHEAD]
September 30, 1998
Prime Group Realty Trust
77 West Wacker Drive, Suite 3900
Chicago, Illinois 60601
Ladies and Gentlemen:
In connection with the registration under the Securities Act of 1933 (the
"Act") of 1,850,000 Common Shares of Beneficial Interest, $.01 par value per
share (the "Common Shares"), of Prime Group Realty Trust, a Maryland real estate
investment trust (the "Trust"), on its Registration Statement on Form S-8 filed
with the Securities and Exchange Commission (the "Registration Statement"), we
have examined such trust records, certificates and documents as we deemed
necessary for the purpose of this opinion. Based on that examination, we advise
you that in our opinion the Common Shares have been duly and validly authorized
and reserved for issuance under the Share Incentive Plan of the Trust (the
"Plan") and, when issued in accordance with the Plan or upon the exercise of
options or other securities issued under the Plan that are exercisable into
Common Shares, will be legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving our consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act or the rules and regulations of the Securities and Exchange Commission
thereunder. The opinion expressed herein is limited to the matters set forth in
this letter and no other opinion should be inferred beyond the matters expressly
stated.
Very truly yours,
Miles & Stockbridge P.C.
By: /s/ J.W. Thompson Webb
---------------------------------
Principal
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) related to the Prime Group Realty Trust Share Incentive Plan of Prime Group
Realty Trust of our reports dated March 27, 1998 with respect to the
consolidated financial statements of Prime Group Realty Trust and combined
financial statements of the Predecessor Properties, dated August 20, 1997 with
respect to the combined statement of revenue and certain expenses of the Prime
Industrial Contribution Properties, the combined statement of revenue and
certain expenses of the IBD Properties, the combined statement of revenue and
certain expenses of Salt Creek Office Center, and the statement of revenue and
certain expenses of Citibank Office Plaza, dated October 10, 1997 with respect
to the combined statement of revenue and certain expenses of NAC Properties, the
statement of revenue and certain expenses of 280 Shuman Boulevard and the
statement of revenue and certain expenses of 475 Superior, dated December 5,
1997 with respect to the statement of revenue and certain expenses of
Continental Office Towers, dated December 2, 1997 with respect to the statement
of revenue and certain expenses of 180 North LaSalle Street, dated December 4,
1997 with respect to the statement of revenue and certain expenses of 2675
Mayfair, dated November 24, 1997 with respect to the statement of revenue and
certain expenses of 33 North Dearborn, dated December 20, 1997 with respect to
the statement of revenue and certain expenses of Commerce Point, dated January
30, 1998 with respect to the statement of revenue and certain expenses of 208
South LaSalle Street and the statement of revenue and certain expenses of 122
South Michigan Avenue, dated April 16, 1998 with respect to the statement of
revenue and certain expenses of 6400 Shafer Court, dated April 23, 1998 with
respect to the statement of revenue and certain expenses of Two Century Centre
and dated May 29, 1998 with respect to the statement of revenue and certain
expenses of Oak Brook Business Center included in the Prospectus of Prime Group
Realty Trust (File No. 333-51599) filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Chicago, Illinois
September 30, 1998
