Exhibit 10.3

 

AMENDED AND RESTATED SEVERANCE AGREEMENT

 

THIS AMENDED AND RESTATED SEVERANCE AGREEMENT (this “Agreement”) is made and
entered into this 21st day of October, 2004 by and among Prime Group Realty
Trust, a Maryland real estate investment trust (“PGRT”), Prime Group Realty,
L.P., a Delaware limited partnership and the operating partnership for PGRT
(“Prime”) (Prime and PGRT are hereinafter sometimes collectively referred to as
“Employer”), and Randel S. Waites, an individual domiciled in the State of
Illinois (“Executive”).

 

W I T N E S S E T H

 

A. Employer and Executive entered into that certain Severance Agreement (the
“Existing Agreement”) dated as of September 28, 2004 pursuant to which Executive
became employed by Employer as the Senior Vice President-Office Asset Management
of Employer.

 

B. Employer is engaged primarily in the ownership, management, leasing,
marketing, acquisition, development and construction of office and industrial
real estate facilities throughout the Chicago metropolitan area.

 

C. Employer believes that it would benefit from the continued application of
Executive’s particular and unique skill, experience, and background to the
development of office properties and the management thereof.

 

D. Executive wishes to commit to continue to serve Employer in the position set
forth herein on the terms herein provided.

 

E. The parties wish to amend and restate the Existing Agreement in its entirety
on the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein set forth, and for other good and valuable consideration, Employer and
Executive hereby agree as follows:

 

1. Employment and Duties. During the Employment Term (as defined in Section 2
hereof), Employer agrees to employ Executive, and Executive agrees to be
employed by Employer, as the Senior Vice President-Office Asset Management of
Employer on the terms and conditions provided in this Agreement. Executive shall
conduct, operate, manage and promote the business and business concept of
Employer. The Chief Executive Officer of Employer may from time to time further
define and clarify Executive’s duties and services hereunder as Senior Vice
President-Office Asset Management of Employer. Executive agrees to devote
Executive’s best efforts and substantially all of Executive’s business time,
attention, energy and skill to perform Executive’s duties as Senior Vice
President-Office Asset Management.

 

2. Term. The term of this Agreement shall commence on the date hereof and expire
on November 17, 2005 (the “Initial Term”), provided, however, that this
Agreement shall automatically be renewed for successive one year terms following
the Initial Term (each a “Renewal Term” and together with the Initial Term, the
“Employment Term”), unless at least six (6) months prior to, in the case of a
non-renewal by Employer, or at least thirty (30) days prior

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to, in the case of a non-renewal by Executive, the end of the Initial Term or
any Renewal Term, as applicable, either party shall give the other written
notice of its intention to terminate this Agreement.

 

3. Compensation and Related Matters. (a) Base Salary. As compensation for
performing the services required by this Agreement during the Employment Term,
Employer shall pay to Executive an annual salary of no less than the annual base
salary currently paid to Executive as of the date hereof (“Base Compensation”),
payable in accordance with the general policies and procedures for payment of
salaries to its executive personnel maintained, from time to time, by Employer
(but no less frequently than monthly), subject to withholding for applicable
federal, state, and local taxes. Increases in Base Compensation, if any, shall
be determined by the Compensation Committee (the “Committee”) of the Board of
Trustees of PGRT (the “Board”) or the Chief Executive Officer of PGRT, based on
periodic reviews of Executive’s performance conducted on at least an annual
basis.

 

(b) Bonus. In addition to Base Compensation, the Board, the Committee and/or the
Chief Executive Officer of PGRT, in their sole and absolute discretion, may, but
in no event shall be obligated to, authorize the payment of a bonus (a
“Performance Bonus Distribution”) payable in cash, common shares in PGRT and/or
options for PGRT shares to Executive based upon achievement of such corporate
and individual performance goals and objectives as may be established or
determined by the Board, the Committee and/or the Chief Executive Officer of
PGRT from time to time.

 

(c) Benefits. During the Employment Term and subject to the limitations and
alternative rights set forth in this Section 3(c), Executive and Executive’s
eligible dependents shall have the right to participate in the medical and
dental benefit plan established by Employer (which may include contributions by
Executive) and in any other retirement, pension, insurance, health or other
benefit plan or program that has been or is hereafter adopted by Employer (or in
which Employer participates), as such plans and programs may be amended or
modified from time to time by Employer, according to the terms of such plan or
program with all the benefits, rights and privileges as are enjoyed by any other
executive officers of Employer. Employer has in place a life insurance program
in which Executive will be entitled to participate. If the participation of
Executive would adversely affect the qualification of a plan intended to be
qualified under Section 401(a) of the Internal Revenue Code as the same may be
amended from time to time (the “Code”), Employer shall have the right to exclude
Executive from that plan in return for Executive’s participation in (i) a
nonqualified deferred compensation plan or (ii) an arrangement providing
substantially comparable benefits under a plan that is either a qualified or
nonqualified under the Code at Employer’s option.

 

(d) Expenses. Executive shall be reimbursed, subject to Employer’s receipt of
invoices or similar records as Employer may reasonably request in accordance
with its policies and procedures, as such policies and procedures may be amended
or modified from time to time by Employer, for all reasonable and necessary
expenses incurred by Executive in the performance of Executive’s duties
hereunder, including expenses for business entertainment and meals (whether in
or out of town) and gas for business travel, but excluding automobile insurance.

 

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(e) Vacations. During the Employment Term, Executive shall be entitled to
vacation in accordance with Employer’s practices, as such practices may be
amended or modified from time to time by Employer, provided that Executive shall
be entitled to at least three (3) weeks paid vacation in each full calendar
year. Executive may not accrue unused vacation time if not used in any calendar
year or years Executive shall not be entitled to a payment for any vacation time
which has not been used as of the date of the termination of Executive’s
employment with Employer.

 

4. Termination and Termination Benefits. (a) Termination by Employer. (i)
Without Cause. Employer may terminate this Agreement and Executive’s employment
at any time (other than for Cause, as that term is defined in Section 4(a)(ii)
hereof) upon thirty (30) days’ prior written notice to Executive. In connection
with the termination of Executive’s employment pursuant to this Section 4(a)(i),
(A) Employer shall pay to Executive Executive’s Base Compensation in accordance
with Section 3(a) hereof up to the effective date of such termination, (B)
Employer shall pay to Executive a pro rata portion of any Performance Bonus
Distribution otherwise payable to Executive for or with respect to the calendar
year in which such termination occurs in accordance with Section 3(b) hereof up
to the effective date of such termination and, to the extent not previously
paid, Employer shall pay to Executive all Performance Bonus Distributions
payable to Executive in accordance with Section 3(b) hereof for or with respect
to any calendar years prior to the calendar year in which such termination
occurs, (C) Employer shall provide to Executive the benefits set forth in
Sections 3(c), 3(d) and 3(e) hereof up to the effective date of such termination
and (D) Employer shall pay to Executive the Termination Compensation specified
in Section 4(d) hereof. For purposes of calculating Executive’s pro rata portion
of any Performance Bonus Distribution pursuant to clause (B) in the previous
sentence, if the termination takes place prior to receipt by Executive of any
Performance Bonus Distribution, the Performance Bonus Distribution, a pro rata
(based on the number of days in the year) portion of which Executive shall be
entitled to receive, shall be deemed to be 50% of Executive’s then current
annual Base Compensation. For purposes of this Agreement, the “effective date of
termination” shall mean the last day on which Executive is employed with
Employer which may be later than the date of the delivery of any applicable
notice of termination.

 

(ii) With Cause. Employer may terminate this Agreement for Cause immediately
upon written notice to Executive. Employer may elect to require Executive to
continue to perform Executive’s duties under this Agreement for an additional
thirty (30) days following notice of termination. In connection with the
termination of Executive’s employment pursuant to this Section 4(a)(ii), (A)
Employer shall pay to Executive Executive’s Base Compensation in accordance with
Section 3(a) hereof up to the effective date of such termination, and, to the
extent not previously paid, Executive shall be entitled to any Performance Bonus
Distributions payable to Executive in accordance with Section 3(b) hereof for or
with respect to any calendar years prior to the calendar year in which such
termination occurs and (B) Employer shall provide to Executive the benefits set
forth in Sections 3(c), 3(d) and 3(e) hereof up to the effective date of such
termination. For purposes of this Section 4(a)(ii), “Cause” shall mean (1) a
finding by the Board that Executive has materially harmed Employer, its
business, assets or employees through an act of dishonesty, material conflict of
interest, gross misconduct or willful malfeasance, (2) Executive’s conviction of
(or plea of nolo contendere to) a felony involving acts of dishonesty, financial
untrustworthiness or adversely impacting

 

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Executive’s ability to perform Executive’s duties hereunder, (3) Executive’s
failure to perform (which shall not include inability to perform due to
disability) in any material respect Executive’s material duties under this
Agreement after written notice specifying the failure and a reasonable
opportunity to cure (it being understood that if Executive’s failure to perform
is not of a type requiring a single action to fully cure, then Executive may
commence the cure promptly after such written notice and thereafter diligently
prosecute such cure to completion), (4) the breach by Executive of any of
Executive’s material obligations hereunder (other than those covered by clause
(3) above) and the failure of Executive to cure such breach within thirty (30)
days after receipt by Executive of a written notice of Employer specifying in
reasonable detail the nature of the breach, or (5) Executive’s sanction
(including restrictions, prohibitions and limitations agreed to under a consent
decree or agreed order) under, or conviction for violation of, any federal or
state securities law, rule or regulation (provided that in the case of a
sanction, such sanction materially impedes or impairs the ability of Executive
to perform Executive’s duties and exercise Executive’s responsibilities
hereunder in a satisfactory manner).

 

(iii) Disability. If due to illness, physical or mental disability, or other
incapacity, Executive shall fail during any four (4) consecutive months to
perform the duties required by this Agreement, Employer may, upon thirty (30)
days’ written notice to Executive, terminate this Agreement and Executive’s
employment. In the event of any such termination, (A) Employer shall pay to
Executive Executive’s Base Compensation in accordance with Section 3(a) hereof
up to the effective date of such termination, (B) Employer shall pay to
Executive a pro rata portion of any Performance Bonus Distribution otherwise
payable to Executive for or with respect to the calendar year in which such
termination occurs in accordance with Section 3(b) hereof up to the first day of
such four (4) month period and, to the extent not previously paid, Executive
shall be entitled to all Performance Bonus Distributions payable to Executive in
accordance with Section 3(b) hereof for or with respect to any calendar years
prior to the calendar year in which such termination occurs, (C) Employer shall
provide to Executive the benefits set forth in Sections 3(c) (or the after-tax
cash equivalent), 3(d) and 3(e) hereof up to the effective date of such
termination and (D) Employer shall pay to Executive the Termination Compensation
specified in Section 4(d) hereof, but only if and to the extent that Employer
has actually obtained disability insurance coverage for Executive at
commercially reasonable rates in Employer’s discretion which reimburses Employer
for, or pays Executive directly, such amounts. As an alternative to carrying
such disability insurance, Employer may carry long-term disability insurance
having employee as a beneficiary, which shall relieve Employer of paying the
Termination Compensation. For purposes of calculating Executive’s pro rata
portion of any Performance Bonus Distribution pursuant to clause (B) in the
previous sentence, if the termination takes place prior to receipt by Executive
of any Performance Bonus Distribution, the Performance Bonus Distribution, a pro
rata portion of which Executive shall be entitled to receive, shall be deemed to
be 50% of Executive’s then current annual Base Compensation. This Section
4(a)(iii) shall not limit the entitlement of Executive, Executive’s estate or
beneficiaries to any disability or other benefits available to Executive under
any disability insurance or other benefits plan or policy which is maintained by
Employer for Executive’s benefit (as opposed to Employer’s benefit). For
purposes of this Agreement, the “date of disability” shall mean the first day of
the consecutive period during which Executive fails to perform the duties
required by this Agreement due to illness, physical or mental disability or
other incapacity.

 

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(b) Termination by Executive. (i) After Change of Control. Executive may
terminate this Agreement upon thirty (30) days’ written notice to Employer
following any “change of control” (as defined below) of Employer and (i) a
resulting “diminution event” (as defined below) or (ii) a resulting relocation
of Executive’s office to a location more than twenty-five (25) miles from 77
West Wacker Drive, Chicago, Illinois, but in no event later than one year after
the change of control event. In addition to the foregoing, Executive may
terminate this Agreement upon thirty (30) days’ written notice to Employer prior
to or following any change of control of Employer (any such notice given prior
to a change of control may be contingent on the timing and actual occurrence of
the change of control event) provided such written notice is given to Employer
no later than sixty (60) days after the change of control event. Executive shall
continue to perform, at the election of Employer, Executive’s duties under this
Agreement for an additional thirty (30) days following notice of termination;
provided, however, in the event the notice of termination is given prior to a
change of control (and such notice is contingent on the occurrence of the change
of control), Executive shall perform Executive’s duties under this Agreement for
an additional thirty (30) days following the change of control, provided, that,
as required under this Agreement, Executive receives payment simultaneously with
the closing of the change of control of (i) the Termination Compensation
pursuant to Section 4(d)(ii), and (ii) the compensation due Executive pursuant
to clause (B) of this Section 4(b)(i), and Employer otherwise complies with, and
provides the other compensation and benefits provided for, in this Agreement. In
the event of such termination, (A) Employer shall pay to Executive Executive’s
Base Compensation up to the effective date of such termination, (B) Employer
shall pay to Executive a pro rata portion of any Performance Bonus Distribution
otherwise payable to Executive for or with respect to the calendar year in which
such termination occurs in accordance with Section 3(b) hereof up to the
effective date of such termination and, to the extent not previously paid,
Executive shall be entitled to all Performance Bonus Distributions payable to
Executive in accordance with Section 3(b) hereof for or with respect to any
calendar years prior to the calendar year in which such termination occurs, (C)
Employer shall provide to Executive the benefits set forth in Sections 3(c),
3(d) and 3(e) hereof up to the effective date of such termination and (D)
Employer shall pay to Executive the Termination Compensation specified in
Section 4(d) hereof (which amounts specified in the foregoing clauses (B) and
(D) shall be paid simultaneously with the occurrence of the change of control in
the event Executive has given a notice of termination prior to the change of
control). For purposes of calculating Executive’s pro rata portion of any
Performance Bonus Distribution pursuant to clause (B) in the previous sentence,
if the termination takes place prior to receipt by Executive of any Performance
Bonus Distribution, the Performance Bonus Distribution, a pro rata portion of
which Executive shall be entitled to receive, shall be deemed to be 50% of
Executive’s then current annual Base Compensation. For purposes of this
Agreement, in the event Employer defaults in its obligation under Section 8
hereof and, as a consequence thereof, Executive’s employment with Employer (or
Employer’s successor or assign) terminates, such termination shall be deemed to
be a termination under this Section 4(b)(i).

 

For purposes of this Section 4(b)(i), (A) a “change of control” of Employer
shall be deemed to have occurred if: (1) any person (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)), including a “group” as defined in Section 13(d)(3) of the
Exchange Act (but excluding a trustee or other fiduciary holding securities
under an employee benefit plan of Employer), becomes the beneficial owner of
shares of beneficial interests or limited partnership interests, as applicable,
of Employer

 

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having at least fifty percent (50%) of the total number of votes that may be
cast for the election of trustees of Employer; (2) the merger or other business
combination of Employer, sale of all or substantially all of Employer’s assets
or combination of the foregoing transactions (a “Transaction”), other than a
Transaction immediately following which the shareholders of Employer immediately
prior to the Transaction continue to have a majority of the voting power in the
resulting entity (excluding for this purpose any shareholder owning directly or
indirectly more than ten percent (10%) of the shares of the other company
involved in the Transaction); or (3) within any twenty-four (24) month period
beginning on or after the date hereof, the persons who were trustees of Employer
immediately before the beginning of such period (the “Incumbent Directors”)
shall cease to constitute at least a majority of the Board or a majority of the
board of trustees of any successor to Employer, provided that, any trustee who
was not a trustee as of the date hereof shall be deemed to be an Incumbent
Director if such trustee was elected to the Board by, or on the recommendation
of or with the approval of, at least two-thirds of the trustees who then
qualified as Incumbent Directors either actually or by prior operation of this
provision, unless such election, recommendation or approval was the result of an
actual or threatened election contest of the type contemplated by Regulation
14a-11 promulgated under the Exchange Act or any successor provision; and (B) a
“diminution event” shall mean any material diminution in (1) the duties and
responsibilities of Executive (including a change of title below Senior Vice
President-Office Asset Management) or (2) the compensation package for
Executive.

 

(ii) Without Good Reason. Executive may terminate this Agreement and Executive’s
employment at any time for any reason or for no reason upon thirty (30) days’
written notice to Employer, during which period Executive shall continue to
perform Executive’s duties under this Agreement if Employer so elects. In
connection with the termination of Executive’s employment pursuant to this
Section 4(b)(ii), (A) Employer shall pay to Executive Executive’s Base
Compensation in accordance with Section 3(a) hereof up to the effective date of
such termination, and, to the extent not previously paid, Executive shall be
entitled to all bonuses payable to Executive in accordance with Section 3(b)
hereof for or with respect to any calendar years prior to the calendar year in
which such termination occurs and (B) Employer shall provide to Executive the
benefits set forth in Sections 3(c), 3(d) and 3(e) hereof up to the effective
date of such termination.

 

(iii) For Good Reason. Executive may terminate this Agreement for Good Reason
upon thirty (30) days’ written notice to Employer. In connection with the
termination of Executive’s employment pursuant to this Section 4(b)(iii), (A)
Employer shall pay to Executive Executive’s Base Compensation in accordance with
Section 3(a) hereof up to the effective date of such termination, (B) Employer
shall pay to Executive a pro rata portion of any Performance Bonus Distribution
otherwise payable to Executive for or with respect to the calendar year in which
such termination occurs in accordance with Section 3(b) hereof up to the
effective date of such termination and, to the extent not previously paid,
Employer shall pay to Executive all Performance Bonus Distributions payable to
Executive in accordance with Section 3(b) hereof for or with respect to any
calendar years prior to the calendar year in which such termination occurs, (C)
Employer shall provide to Executive the benefits set forth in Sections 3(c),
3(d) and 3(e) hereof up to the effective date of such termination and (D)
Employer shall pay to Executive the Termination Compensation specified in
Section 4(d) hereof. For purposes of calculating Executive’s pro rata portion of
any Performance Bonus Distribution pursuant to

 

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clause (B) in the previous sentence, if the termination takes place prior to
receipt by Executive of any Performance Bonus Distribution, the Performance
Bonus Distribution, a pro rata (based on the number of days in the year) portion
of which Executive shall be entitled to receive, shall be deemed to be 50% of
Executive’s then current annual Base Compensation. For purposes of this Section
4(b)(iii), “Good Reason” shall mean (1) any material breach by Employer of the
terms of this Agreement which is not cured within thirty (30) days after receipt
by Employer of a written notice from Executive specifying in reasonable detail
the nature of the breach, or (2) any relocation of Executive’s office to a
location more than twenty-five (25) miles from 77 West Wacker Drive, Chicago,
Illinois.

 

(c) Death. Notwithstanding any other provision of this Agreement, this Agreement
shall terminate on the date of Executive’s death. In such event, (A) Employer
shall pay to Executive Executive’s Base Compensation in accordance with Section
3(a) hereof up to the date of such death, (B) Employer shall pay to Executive a
pro rata portion of any Performance Bonus Distribution otherwise payable to
Executive for or with respect to the calendar year in which such death occurs in
accordance with Section 3(b) hereof up to the effective date of such death and,
to the extent not previously paid, Executive shall be entitled to all
Performance Distribution Bonus payable to Executive in accordance with Section
3(b) hereof for or with respect to any calendar years prior to the calendar year
in which such death occurs, (C) Employer shall provide to Executive the benefits
set forth in Sections 3(c) (or the after-tax cash equivalent), 3(d) and 3(e)
hereof up to the date of such death and (D) Employer shall pay to Executive the
Termination Corporation specified in Section 4(d) hereof, but only if and to the
extent that Employer has actually obtained life insurance coverage for Executive
at commercially reasonable rates in Employer’s discretion which reimburses
Employer for the payment of the Termination Compensation or, alternatively,
which names Executive’s designee as the beneficiary, in which case the
Termination Compensation shall be paid directly by the applicable insurance
company to Executive’s beneficiary. This Section 4(c) shall not limit the
entitlement of Executive, Executive’s estate or beneficiaries under any
insurance or other benefits plan or policy which is maintained by Employer for
Executive’s benefit (as opposed to Employer’s benefit). For purposes of
calculating Executive’s pro rata portion of any Performance Bonus Distribution
pursuant to clause (B) in the previous sentence, if the termination takes place
prior to receipt by Executive of any Performance Bonus Distribution, the
Performance Bonus Distribution, a pro rata portion of which Executive shall be
entitled to receive, shall be deemed to be 50% of Executive’s then current
annual Base Compensation.

 

(d) Termination Compensation. In the event of a termination of this Agreement
pursuant to Section 4(a)(i) (by Employer without cause), 4(a)(iii) (disability),
4(b)(i) (change of control), 4(b)(iii) (by Executive for good reason) or 4(c)
(death) hereof, Employer shall pay to Executive, within thirty (30) days of
termination (or upon the occurrence of a change of control as provided in
Section 4(b)(i) above), an amount in one lump sum (“Termination Compensation”)
equal to:

 

(i) in the case of a termination pursuant to Section 4(a)(i) (by Employer
without cause) except as specified in clause 4(d)(ii) below, 4(a)(iii)
(disability), 4(b)(iii) (by Executive for good reason) or 4(c) (death) hereof,
fifty percent (50%) of the sum of (A) the Executive’s then current annual Base
Compensation, plus (B) the average annual Performance Bonus Distribution paid or
payable to Executive for or with respect to the full two

 

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calendar years immediately preceding the calendar year in which the date of
termination occurs, but in the case of Sections 4(a)(iii) (disability) and 4(c)
(death), subject to the availability of insurance coverage as provided in such
Sections; or

 

(ii) in the case of a termination pursuant to Section 4(a)(i) (by Employer
without cause) within one year after a change of control or Section 4(b)(i)
(change of control) hereof, the sum of (A) the Executive’s then current annual
Base Compensation, plus (B) the average annual Performance Bonus Distribution
paid or payable to Executive for or with respect to the two full calendar years
immediately preceding the calendar year in which the date of termination occurs.

 

For purposes of calculating Executive’s Termination Compensation pursuant to
this Section 4(d), the value of any Performance Bonus Distribution component of
the Termination Compensation calculation which is comprised of shares or share
options shall be determined based upon the cash equivalent amount for such share
and/or share options as approved by the Board or the Committee, as applicable,
at the time of the grant, and for the purposes of Termination Compensation shall
be paid entirely in cash.

 

Employer’s obligations to make any Termination Compensation payments under this
Agreement shall be subject to the execution, enforceability and effectiveness of
a general release and waiver of all claims by the Employee with respect to the
Employer and its subsidiaries, and their respective affiliates, officers,
directors, trustees, employees and agents, pursuant to a separation and/or
waiver agreement in form and substance reasonably specified by the Employer.

 

5. Covenants of Executive.

 

(a) No Conflicts. Executive represents and warrants that Executive is not
personally subject to any agreement, order or decree which restricts Executive’s
acceptance of this Agreement and the performance of Executive’s duties with
Employer hereunder.

 

(b) Non-Disclosure. During the Employment Term and for a period of two years
after the expiration or termination of this Agreement for any reason, Executive
shall not disclose or use, except in the pursuit of the Business for or on
behalf of Employer, any Trade Secret (as hereinafter defined) of Employer,
whether such Trade Secret is in Executive’s memory or embodied in writing or
other physical form. For purposes of this Section 5(c), “Trade Secret” means any
information which derives independent economic value, actual or potential, with
respect to Employer from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use and is the subject of efforts to maintain its secrecy
that are reasonable under the circumstances, including, but not limited to,
trade secrets, customer lists, sales records and other proprietary commercial
information. Said term, however, shall not include general “know-how”
information acquired by Executive prior to or during the course of Executive’s
service which could have been obtained by him from public sources without the
expenditure of significant time, effort and expense which does not relate to
Employer.

 

(c) Return of Documents. Upon termination of Executive’s services with Employer,
Executive shall return all originals and copies of books, records, documents,
customer lists, sales materials, tapes, keys, credit cards and other tangible
property of Employer within Executive’s possession or under Executive’s control.

 

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(d) Equitable Relief. In the event of any breach by Executive of any of the
covenants contained in this Section 5, it is specifically understood and agreed
that Employer shall be entitled, in addition to any other remedy which it may
have, to equitable relief by way of injunction, an accounting or otherwise and
to notify any employer or prospective employer of Executive as to the terms and
conditions hereof.

 

(e) Acknowledgment. Executive acknowledges that Executive will be directly and
materially involved as a senior executive in all important policy and
operational decisions of Employer. Executive further acknowledges that the scope
of the foregoing restrictions has been specifically bargained between Employer
and Executive, each being fully informed of all relevant facts. Accordingly,
Executive acknowledges that the foregoing restrictions of this Section 5 are
fair and reasonable, are minimally necessary to protect Employer, its other
partners and the public from the unfair competition of Executive who, as a
result of Executive’s performance of services on behalf of Employer, will have
had unlimited access to the most confidential and important information of
Employer, its business and future plans. Executive furthermore acknowledges that
no unreasonable harm or injury will be suffered by him from enforcement of the
covenants contained herein and that Executive will be able to earn a reasonable
livelihood following termination of Executive’s services notwithstanding
enforcement of the covenants contained herein.

 

(f) Nondisparagement. The parties further agree that during and after the
termination of their employment relationship, each party shall refrain from
making any disparaging remarks or comments with respect to any party hereto, and
such remarks or comments shall be deemed a breach of the Agreement. The parties
shall direct their respective attorneys, affiliates and investment bankers to
refrain from making any disparaging remarks or comments with respect to any
party hereto. Notwithstanding the foregoing, either party shall be permitted to
make statements as reasonably necessary to enforce his or its claims under the
Agreement in a legal proceeding.

 

6. Prior Agreements. This Agreement amends and restates in its entirety the
Existing Agreement and supersedes and is in lieu of any and all other employment
agreements or arrangements between Executive and Employer or its predecessor or
any subsidiary, including the Existing Agreement, and any and all such
employment agreements and arrangements are hereby terminated and deemed of no
further force or effect.

 

7. Assignment. Neither this Agreement nor any rights or duties of Executive
hereunder shall be assignable by Executive and any such purported assignment by
him shall be void. Employer may assign all or any of its rights hereunder
provided that substantially all of the assets of Employer are also transferred
to the same party.

 

8. Successor to Employer. Employer will require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all the business and/or assets of Employer, as the case may be, by
agreement in form and substance

 

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reasonably satisfactory to Executive, expressly, absolutely and unconditionally
to assume and agree to perform this Agreement in the same manner and to the same
extent that Employer would be required to perform it if no such succession or
assignment had taken place. Any failure of Employer to obtain such agreement
prior to the effectiveness of any such succession or assignment shall be a
material breach of this Agreement giving Executive the right to terminate this
Agreement, in which case Executive shall be entitled to receive the compensation
specified in Section 4(b)(i) (change of control) hereof. This Agreement shall
inure to the benefit of and be enforceable by Executive’s personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amounts are still
payable to Executive hereunder, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to
Executive’s devisee, legatee or other designee or, if there be no such designee,
to Executive’s estate.

 

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9. Notices. Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if personally delivered, sent by courier
or by certified mail, postage or delivery charges prepaid, to the following
addresses:

 

  (a) if to Executive, to:

 

Randel S. Waites

256 Talismon Drive

Crystal Lake, IL 60012

 

  (b) if to Employer, to:

 

Prime Group Realty Trust

Suite 3900

77 West Wacker Drive

Chicago, IL 60601

Attn: Chief Executive Officer

 

With a copy to:

 

Prime Group Realty Trust

Suite 3900

77 West Wacker Drive

Chicago, IL 60601

Attn: General Counsel

 

and to:

 

Winston & Strawn

35 West Wacker Drive

Chicago, IL 60601

Attn: Wayne D. Boberg

 

Any notice, claim, demand, request or other communication given as provided in
this Section 9, if delivered personally, shall be effective upon delivery; and
if given by courier, shall be effective one (1) business day after deposit with
the courier if next day delivery is guaranteed; and if given by certified mail,
shall be effective three (3) business days after deposit in the mail. Either
party may change the address at which it is to be given notice by giving written
notice to the other party as provided in this Section 9.

 

10. Amendment. This Agreement may not be changed, modified or amended except in
writing signed by both parties hereto.

 

11. Waiver of Breach. The waiver by either party of the breach of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by either party.

 

12. Severability. Employer and Executive each expressly agree and contract that
it is not the intention of either party to violate any public policy, statutory
or common law, and that if any covenant, sentence, paragraph, clause or
combination of the same of this Agreement (a “Contractual Provision”) is in
violation of the law of any state where applicable, such

 

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Contractual Provision shall be void in the jurisdictions where it is unlawful,
and the remainder of such Contractual Provision, if any, and the remainder of
this Agreement shall remain binding on the parties such that such Contractual
Provision shall be binding only to the extent that such Contractual Provision is
lawful or may be lawfully performed under then applicable laws. In the event
that any part of any Contractual Provision of this Agreement is determined by a
court of competent jurisdiction to be overly broad thereby making the
Contractual Provision unenforceable, the parties hereto agree, and it is their
desire, that such court shall substitute a judicially enforceable limitation in
its place, and that the Contractual Provision, as so modified, shall be binding
upon the parties as if originally set forth herein.

 

13. Governing Law. This Agreement shall be governed by, and construed,
interpreted and enforced in accordance with the laws of the State of Illinois,
exclusive of the conflict of laws provisions of the State of Illinois.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated
Severance Agreement as of the date first written above.

 

EMPLOYER:

PRIME GROUP REALTY TRUST

By:

 

/s/ Jeffrey A. Patterson

--------------------------------------------------------------------------------

    Jeffrey A. Patterson, Chief Executive Officer and President

PRIME GROUP REALTY, L.P.

By:

 

Prime Group Realty Trust, its General Partner

By:

 

/s/ Jeffrey A. Patterson

--------------------------------------------------------------------------------

    Jeffrey A. Patterson, Chief Executive Officer and President

EXECUTIVE:

/s/ Randel S. Waites

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Randel S. Waites