Document:

<PAGE>
                                                                     Exhibit 4.1

                 PARAGON REAL ESTATE EQUITY AND INVESTMENT TRUST

                             2004 SHARE OPTION PLAN

SECTION 1 GENERAL PURPOSE OF THE PLAN; DEFINITIONS.

      The name of the plan is the Paragon Real Estate Equity and Investment
Trust 2004 Share Option Plan (the "Plan"). The Plan amends and restates the
former share option plan of the Paragon Real Estate Equity and Investment Trust
(the "Company" or "Paragon") known as the Paragon Real Estate Equity and
Investment Trust (formerly Stonehaven Realty Trust and Wellington Properties
Trust) 1998 Share Option Plan (the "1998 Plan"). The purpose of this amendment
and restatement is (i) to amend the 1998 Plan to conform to changes in law, (ii)
to provide for an increase in the number of Shares reserved under the 1998 Plan,
and (iii) to continue the 1998 Plan for the maximum period allowable for
Incentive Options.

      The purpose of the Plan is to encourage and enable the officers, employees
and Trustees of Paragon and its Affiliates upon whose judgment, initiative and
efforts the Company largely depends for the successful conduct of its business
to acquire a proprietary interest in the Company. It is anticipated that
providing such persons with a direct stake in the Company's welfare will assure
a closer identification of their interests with those of the Company, thereby
stimulating their efforts on the Company's behalf and strengthening their desire
to remain with the Company.

      The following terms shall be defined as set forth below:

      "Act" means the Securities Exchange Act of 1934, as amended.

      "Affiliate" means any entity other than the Company and its Subsidiaries
that is designated by the Board or the Committee as a participating employer
under the Plan, provided that the Company directly or indirectly owns at least
20% of the combined voting power of all classes of stock of such entity or at
least 20% of the ownership interests in such entity.

      "Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include, but not be limited to, Incentive Options,
Non-Qualified Options, Restricted Share Awards, Performance Share Awards, Share
Appreciation Rights, and Dividend Equivalents.

      "Board" means the Board of Trustees of the Company.

      "Cause" means, and shall be limited to, a vote of the Board to the effect
that the participant should be dismissed as a result of (i) any material breach
by the participant of any agreement to which the participant and the Company or
an Affiliate are parties, (ii) any act (other than retirement, death or
disability) or omission to act by the participant, including without limitation,
the commission of any crime, which may have a material and adverse effect on the

<PAGE>

business of the Company or any Affiliate or on the participant's ability to
perform services for the Company or any Affiliate, or (iii) any material
misconduct or neglect of duties by the participant in connection with the
business or affairs of the Company or any Affiliate.

      "Change of Control" is defined in Section 14.

      "Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.

      "Committee" means any Committee of the Board referred to in Section 2.

      "Disability" means any "permanent and total disability" as set forth in
Section 22(e)(3) of the Code.

      "Dividend Equivalent" means a right, granted under Section 9 hereof, to
receive cash, Shares, or other property equal in value to dividends paid with
respect to a specified number of Shares or the excess of dividends paid over a
specified rate of return. Dividend Equivalents may be awarded on a free-standing
basis or in connection with another Award, and may be paid currently or on a
deferred basis.

      "Effective Date" means the earlier of the date on which the Plan is
adopted by the Board or approved by the Shareholders as set forth in Section 16.

      "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the related rules, regulations and interpretations.

      "Fair Market Value" on any given date means the average of the Reference
Price for the ten (10) consecutive trading days immediately preceding the date
for which the value is being determined.

      "Incentive Option" means any Option designated and qualified as an
"incentive stock option" as defined in Section 422 of the Code.

      "Non-Employee Trustee" means a member of the Board who: (i) is not
currently an officer of the Company or any Affiliate; (ii) does not receive
compensation for services rendered to the Company or any Affiliate in any
capacity other than as a Trustee; (iii) does not possess an interest in any
transaction with the Company for which disclosure would be required under the
securities laws; or (iv) is not engaged in a business relationship with the
Company for which disclosure would be required under the securities laws.

      "Non-Qualified Option" means any Option that is not an Incentive Option.

      "Option" or "Share Option" means any option to purchase Shares granted
pursuant to Section 5.

      "Parent" means a "parent corporation" as defined in Section 424(e) of the
Code.

      "Performance Share Award" means Awards granted pursuant to Section 7.

                                       2
<PAGE>

      "Reference Price" means for the applicable Shares on a given date: (i) if
such Shares are listed for quotation on a NASDAQ system, the average of the
closing bid and ask prices; or (ii) if such Shares are listed on a national
exchange, the closing price, regular way.

      "Restricted Share Award" means Awards granted pursuant to Section 6.

      "Share" means a common share of beneficial interest (or other comparable
equity interest) of the Company, subject to adjustment pursuant to Section 3.

      "Shareholder" means the holder of a Share.

      "Subsidiary" means a "subsidiary corporation" as defined in Section 424(f)
of the Code.

      "Trustee" means a member of the Board.

SECTION 2   ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT PARTICIPANTS
            AND DETERMINE AWARDS.

      (a)   Committee. The Plan shall be administered by a committee of not less
than two Non-Employee Trustees, as appointed by the Board from time to time (the
"Committee").

      (b)   Powers of Committee. The Committee shall have the power and
authority, subject to and within the limitations of the express provisions of
the Plan, to grant Awards consistent with the terms of the Plan, including the
power and authority:

            (i)   to select the officers, employees and Trustees of the Company
      and Affiliates to whom Awards may from time to time be granted;

            (ii)  to determine the time or times of grant, and the extent, if
      any, of Incentive Options, Non-Qualified Options, Restricted Shares,
      Performance Shares and Dividend Equivalents, or any combination of the
      foregoing, granted to any officer, employee or Trustee;

            (iii) to determine the number of Shares to be covered by any Award
      granted to an officer, employee or Trustee;

            (iv)  to determine and modify the terms and conditions, including
      restrictions, not inconsistent with the terms of the Plan, of any Award
      granted to an officer, employee or Trustee, which terms and conditions may
      differ among individual Awards and participants, and to approve the form
      of written instruments evidencing the Awards;

            (v)   to accelerate the exercisability or vesting of all or any
      portion of any Award granted to a participant;

            (vi)  subject to the provisions of Section 5(ii), to extend the
      period in which Options granted may be exercised;

                                       3
<PAGE>

            (vii) to determine whether, to what extent and under what
      circumstances Shares and other amounts payable with respect to an Award
      granted to a participant shall be deferred either automatically or at the
      election of the participant and whether and to what extent the Company
      shall pay or credit amounts equal to interest (at rates determined by the
      Committee) or dividends or deemed dividends on such deferrals; and

            (viii) to adopt, alter and repeal such rules, guidelines and
      practices for administration of the Plan and for its own acts and
      proceedings as it shall deem advisable; to interpret the terms and
      provisions of the Plan and any Award (including related written
      instruments) granted to a participant; and to decide all disputes arising
      in connection with and make all determinations it deems advisable for the
      administration of the Plan.

All decisions, interpretations and constructions made by the Committee in good
faith shall not be subject to review by any person and shall be final, binding
and conclusive on all persons, including the Company and Plan participants.

SECTION 3   SHARES ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION.

      (a)   Shares Issuable. Subject to the provisions of Sections 3(b) and (c),
the maximum number of Shares reserved and available for issuance under the Plan
shall be 3,500,000. For purposes of this limitation, the Shares underlying any
Awards which are forfeited, canceled, reacquired by the Company, satisfied
without the issuance of Shares or otherwise terminated (other than by exercise)
shall be added back to the Shares available for issuance under the Plan so long
as the participants to whom such Awards had been previously granted receive no
benefits of ownership of the underlying Shares to which the Award related.
Shares issued under the Plan may be authorized but unissued Shares or Shares
reacquired by the Company.

      (b)   Share Dividends, Mergers, etc. In the event of any recapitalization,
reclassification, split-up or consolidation of Shares, separation (including a
spin-off), dividend on Shares payable in Shares, or other similar change in
capitalization of the Company or a merger or consolidation of the Company or
sale by the Company of all or a portion of its assets or other similar event,
the Committee shall make such appropriate adjustments in the exercise prices of
Awards, including Awards then outstanding, in the number and kind of securities,
cash or other property which may be issued pursuant to Awards under the Plan,
including Awards then outstanding, and in the number of Shares with respect to
which Awards may be granted (in the aggregate and to individual participants) as
the Committee deems equitable with a view toward maintaining the proportionate
interest of the participant and preserving the value of the Awards.

      (c)   Evergreen Share Reserve Increase. Notwithstanding Section 3(a), and
subject to the provisions of Section 3(b), on the day of each annual meeting of
the Shareholders of the Company, for a period of nine (9) years, commencing with
the annual meeting of Shareholders in 2005, the aggregate number of Shares
available for issuance under the Plan shall automatically be increased to the
number of Shares equal to nine percent (9%) of the Shares outstanding, if
greater than the number of Shares then available for issuance under the Plan.

      (d)   Substitute Awards. The Committee may grant Awards under the Plan in
substitution for Share and Share-based awards held by employees of another
corporation who concurrently become employees of the Company or an Affiliate as
the result of a merger or

                                       4
<PAGE>

consolidation of the employing corporation with the Company or an Affiliate or
the acquisition by the Company or an Affiliate of property or shares of the
employing corporation. The Committee may direct that the substitute awards be
granted on such terms and conditions as the Committee considers appropriate in
the circumstances.

SECTION 4   ELIGIBILITY.

      Participants in the Plan will be Trustees and such full or part-time
officers and other employees of the Company and its Affiliates who are
responsible for or contribute to the management, growth or profitability of the
Company and its Affiliates and who are selected from time to time by the
Committee, in its sole discretion; provided, however, that Incentive Options may
only be granted to employees of the Company, as that relationship is defined in
Treasury Regulation 31.3401(c)-1.

SECTION 5   OPTIONS.

      Any Option granted under the Plan shall be in such form as the Committee
may from time to time approve.

      Options granted under the Plan may be either Incentive Options or
Non-Qualified Options. To the extent that any option does not qualify as an
Incentive Option, it shall constitute a Non-Qualified Option.

      No officer, employee or Trustee shall be granted together Incentive
Options and Non-Qualified Options under the Plan if the right to exercise one
type of option is dependent upon or affects the right to exercise the other
("Tandem Incentive/Non-Qualified Options").

      No Incentive Option may be granted under the Plan after the tenth (10th)
anniversary of the Effective Date.

      The Committee in its discretion may grant Options to officers, employees
or Trustees of the Company or any Affiliate; provided, however, that Incentive
Options may only be granted to employees of the Company, as that relationship is
defined in Treasury Regulation 31.3401(c)-1. Options granted to officers,
employees or Trustees pursuant to this Section 5 shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee shall
deem desirable:

            (a)   Exercise Price. The per share exercise price of an Option
      granted pursuant to this Section 5 shall be determined by the Committee at
      the time of grant. The per share exercise price of an Incentive Option
      shall not be less than 100% of Fair Market Value on the date of grant. If
      an employee owns or is deemed to own (by reason of the attribution rules
      applicable under Section 424(d) of the Code) more than 10% of the combined
      voting power of all classes of shares of the Company or any Subsidiary or
      Parent and an Incentive Option is granted to such employee, the option
      price shall be not less than 110% of Fair Market Value on the grant date.

                                       5
<PAGE>

            (b)   Option Term. The term of each Option shall be fixed by the
      Committee, but no Incentive Option shall be exercisable more than ten (10)
      years after the date the option is granted. If an employee owns or is
      deemed to own (by reason of the attribution rules of Section 424(d) of the
      Code) more than 10% of the combined voting power of all classes of shares
      of the Company or any Subsidiary or Parent and an Incentive Option is
      granted to such employee, the term of such option shall be no more than
      five (5) years from the date of grant.

            (c)   Exercisability; Rights of a Shareholder. Options shall become
      exercisable at such time or times, whether or not in installments, as
      shall be determined by the Committee at or after the grant date. The
      Committee may at any time accelerate the exercisability of all or any
      portion of any Option. An optionee shall have the rights of a Shareholder
      only as to Shares acquired upon the exercise of an Option and not as to
      unexercised Options.

            (d)   Method of Exercise. Options may be exercised in whole or in
      part, by giving written notice of exercise to the Company, specifying the
      number of Shares to be purchased. Payment of the purchase price may be
      made by one or more of the following methods:

                  (i)   In cash, by certified or bank check or other instrument
            acceptable to the Committee;

                  (ii)  In the form of Shares that are not then subject to
            restrictions under any Company plan, if permitted by the Committee
            in its discretion. Such surrendered Shares shall be valued at Fair
            Market Value on the exercise date; or

                  (iii) By the optionee delivering to the Company a properly
            executed exercise notice together with irrevocable instructions to a
            broker to promptly deliver to the Company cash or a check payable
            and acceptable to the Company to pay the purchase price; provided
            that in the event the optionee chooses to pay the purchase price as
            so provided, the optionee and the broker shall comply with such
            procedures and enter into such agreements of indemnity and other
            agreements as the Committee shall prescribe as a condition of such
            payment procedure. Payment instruments will be received subject to
            collection. The delivery of certificates representing Shares to be
            purchased pursuant to the exercise of the Option will be contingent
            upon receipt from the optionee (or a purchaser acting in his stead
            in accordance with the provisions of the Option) by the Company of
            the full purchase price for such Shares and the fulfillment of any
            other requirements contained in the Option or applicable provisions
            of laws.

            (e)   Non-transferability of Options. No Option shall be
      transferable by the optionee other than by will or by the laws of descent
      and distribution.

            (f)   Termination by Death. If any optionee's service with the
      Company and its Affiliates terminates by reason of death, the Option may
      thereafter be exercised, to the extent exercisable at the date of death,
      by the legal representative or legatee of the optionee, for a period of
      six (6) months (or such longer period as the Committee shall

                                       6
<PAGE>

      specify at any time) from the date of death, or until the expiration of
      the stated term of the Option, if earlier.

            (g)   Termination by Reason of Disability.

                  (i)   Any Option held by an optionee whose service with the
            Company and its Affiliates has terminated by reason of Disability
            may thereafter be exercised, to the extent it was exercisable at the
            time of such termination, for a period of twelve (12) months (or
            such longer period as the Committee shall specify at any time) from
            the date of such termination of service, or until the expiration of
            the stated term of the Option, if earlier.

                  (ii)  The Committee shall have sole authority and discretion
            to determine whether a participant's service has been terminated by
            reason of Disability.

                  (iii) Except as otherwise provided by the Committee at the
            time of grant or otherwise, the death of an optionee during a period
            provided in this Section 5(viig) for the exercise of a Non-Qualified
            Option, shall extend such period for six (6) months from the date of
            death, subject to termination on the expiration of the stated term
            of the Option, if earlier.

            (h)   Termination for Cause. If any optionee's service with the
      Company and its Affiliates has been terminated for Cause, any Option held
      by such optionee shall immediately terminate and be of no further force
      and effect; provided, however, that the Committee may, in its sole
      discretion, provide that such Option can be exercised for a period of up
      to thirty (30) days from the date of termination of service or until the
      expiration of the stated term of the Option, if earlier.

            (i)   Other Termination. Unless otherwise determined by the
      Committee, if an optionee's service with the Company and its Affiliates
      terminates for any reason other than death, Disability, or for Cause, any
      Option held by such optionee may thereafter be exercised, to the extent it
      was exercisable on the date of termination of service, for three (3)
      months (or such longer period as the Committee shall specify at any time)
      from the date of termination of service or until the expiration of the
      stated term of the Option, if earlier.

            (j)   Annual Limit on Incentive Options. To the extent required for
      "incentive stock option" treatment under Section 422 of the Code, the
      aggregate Fair Market Value (determined as of the time of grant) of the
      Share with respect to which Incentive Options granted under this Plan and
      any other plan of the Company or its Subsidiaries become exercisable for
      the first time by an optionee during any calendar year shall not exceed
      one hundred thousand dollars ($100,000).

            (k)   Form of Settlement. Shares issued upon exercise of an Option
      shall be free of all restrictions under the Plan, except as otherwise
      provided in this Plan.

                                       7
<PAGE>

SECTION 6   RESTRICTED SHARE AWARDS.

      (a)   Nature of Restricted Share Award. The Committee may grant Restricted
Share Awards to officers, employees and Trustees of the Company or any
Affiliate. A Restricted Share Award is an Award entitling the recipient to
acquire, at no cost or for a purchase price determined by the Committee, Shares
subject to such restrictions and conditions as the Committee may determine at
the time of grant ("Restricted Share"). Conditions may be based on continuing
service and/or achievement of pre-established performance goals and objectives.
In addition, a Restricted Share Award may be granted to an officer, employee or
Trustee by the Committee in lieu of any compensation due to such officer,
employee or Trustee.

      (b)   Acceptance of Award. A participant who is granted a Restricted Share
Award shall have no rights with respect to such Award unless the participant
shall have accepted the Award within sixty (60) days (or such shorter date as
the Committee may specify) following the award date by making payment to the
Company, if required, by certified or bank check or other instrument or form of
payment acceptable to the Committee in an amount equal to the specified purchase
price, if any, of the shares covered by the Award and by executing and
delivering to the Company a written instrument that sets forth the terms and
conditions of the Restricted Share in such form as the Committee shall
determine.

      (c)   Rights as a Shareholder. Upon complying with Section 6(b) above, a
participant shall have all the rights of a Shareholder with respect to the
Restricted Share including voting and dividend rights, subject to
transferability restrictions and Company repurchase or forfeiture rights
described in this Section 6 and subject to such other conditions contained in
the written instrument evidencing the Restricted Share Award. Unless the
Committee shall otherwise determine, certificates evidencing Restricted Shares
shall remain in the possession of the Company until such shares are vested as
provided in Section 6(e) below.

      (d)   Restrictions. Restricted Shares may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein.

      (e)   Vesting of Restricted Shares. The Committee at the time of grant
shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the
non-transferability of the Restricted Share and the Company's right of
repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or
the attainment of such pre-established performance goals, objectives and other
conditions, the Shares on which all restrictions have lapsed shall no longer be
Restricted Shares and shall be deemed "vested."

      (f)   Waiver, Deferral and Reinvestment of Dividends. The written
instrument evidencing the Restricted Share Award may require or permit the
immediate payment, waiver, deferral or investment of dividends paid on the
Restricted Share.

SECTION 7   PERFORMANCE SHARE AWARDS.

      (a)   Nature of Performance Shares. A Performance Share Award is an award
entitling the recipient to acquire Shares upon the attainment of specified
performance goals. The Committee may make Performance Share Awards independent
of or in connection with the granting of any other Award under the Plan.
Performance Share Awards may be granted under

                                       8
<PAGE>

the Plan to officers, employees and Trustees of the Company or any Affiliate,
including those who qualify for awards under other performance plans of the
Company. The Committee in its sole discretion shall determine whether and to
whom Performance Share Awards shall be made, the performance goals applicable
under each such Award, the periods during which performance is to be measured,
and all other limitations and conditions applicable to the awarded Performance
Shares; provided, however, that the Committee may rely on the performance goals
and other standards applicable to other performance based plans of the Company
in setting the standards for Performance Share Awards under the Plan.

      (b)   Restrictions on Transfer. Performance Share Awards and all rights
with respect to such Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered.

      (c)   Rights as a Shareholder. A participant receiving a Performance Share
Award shall have the rights of a Shareholder only as to shares actually received
by the participant under the Plan and not with respect to shares subject to the
Award but not actually received by the participant. A participant shall be
entitled to receive a share certificate evidencing the acquisition of Shares
under a Performance Share Award only upon satisfaction of all conditions
specified in the written instrument evidencing the Performance Share Award (or
in a performance plan adopted by the Committee).

      (d)   Termination. Except as may otherwise be provided by the Committee at
any time prior to termination of service, a participant's rights in all
Performance Share Awards shall automatically terminate upon the participant's
termination of service with the Company and its Affiliates for any reason
(including, without limitation, death, Disability and for Cause).

      (e)   Acceleration, Waiver, Etc. At any time prior to the participant's
termination of service with the Company and its Affiliates, the Committee may in
its sole discretion accelerate, waive or, subject to Section 12, amend any or
all of the goals, restrictions or conditions imposed under any Performance Share
Award; provided, however, that in no event shall any provision of the Plan be
construed as granting to the Committee any discretion to increase the amount of
compensation payable under any Performance Share Award to the extent such an
increase would cause the amounts payable pursuant to the Performance Share Award
to be nondeductible in whole or in part pursuant to Section 162(m) of the Code
and the regulations thereunder, and the Committee shall have no such discretion
notwithstanding any provision of the Plan to the contrary.

SECTION 8   SHARE APPRECIATION RIGHTS.

      (a)   Notice of Share Appreciation Rights. A Share Appreciation Right
("SAR") is a right entitling the participant to receive cash or Shares having a
fair market value equal to the appreciation in the Fair Market Value of a stated
number of Shares from the date of grant, or in the case of rights granted in
tandem with or by reference to an Option granted prior to the grant of such
rights, from the date of grant of the related Option to the date of exercise.
SARs may be granted to officers, employees or Trustees of the Company or any
Affiliate.

      (b)   Terms of Awards. No employee may be granted together an Incentive
Option and a SAR if the right to exercise the Incentive Option or the SAR is
dependent upon or affects the right to exercise the other instrument ("Tandem
Incentive Option/SAR"). Notwithstanding this

                                       9
<PAGE>

general prohibition, an employee may be granted a Tandem Incentive Option/SAR if
the SAR meets all of the following requirements:

            (i)   the SAR expires no later than the expiration of the underlying
      Incentive Option;

            (ii)  the SAR has a value of no more than 100% of the bargain
      purchase element of the underlying Incentive Option;

            (iii) the SAR is transferable only when the underlying Incentive
      Option is transferable and subject to the same conditions;

            (iv)  the SAR may only be exercised when the underlying Incentive
      Option may be exercised; and

            (v)   the SAR may only be exercised when the market price of the
      stock exceeds the exercise price of the Incentive Option.

In the event of an independent Award, or the award of a SAR in tandem with a
Non-Qualified Option, the SAR shall be subject to the terms and conditions
determined by the Committee.

      (c)   Restrictions on Transfer. SARs shall not be transferred, assigned or
encumbered, except that SARs may be exercised by the executor, administrator or
personal representative of the deceased participant within six (6) months of the
death of the participant (or such longer period as the Committee shall specify
at any time) and transferred pursuant to a certified domestic relations order.

      (d)   Payment Upon Exercise. Upon exercise of an SAR, the participant
shall be paid the excess of the then Fair Market Value of the number of shares
to which the SAR relates over the Fair Market Value of such number of shares at
the date of grant of the SAR, or of the related Option, as the case may be. Such
excess shall be paid in cash or in Shares having a Fair Market Value equal to
such excess or in such combination thereof as the Committee shall determine.

SECTION 9   DIVIDEND EQUIVALENTS.

      The Committee is authorized to grant Dividend Equivalents to the officers,
employees and Trustees of the Company or any Affiliate. The Committee may
provide, at the date of grant or thereafter, that Dividend Equivalents shall be
paid or distributed when accrued or shall be deemed to have been reinvested in
additional Shares, or other investment vehicles as the Committee may specify,
provided that Dividend Equivalents (other than freestanding Dividend
Equivalents) shall be subject to all conditions and restrictions of the
underlying Awards to which they relate.

SECTION 10  TAX WITHHOLDING.

      (a)   Payment by Participant. Each participant shall, no later than the
date as of which the value of an Award or of any Share or other amounts received
thereunder first becomes

                                       10
<PAGE>

includible in the gross income of the participant for Federal income tax
purposes, pay to the Company, or make arrangements satisfactory to the Committee
regarding payment of, any Federal, state, or local taxes of any kind required by
law to be withheld with respect to such income. The Company and its Affiliates
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the participant.

      (b)   Payment in Shares. A participant may elect to have such tax
withholding obligation satisfied, in whole or in part, by (i) authorizing the
Company to withhold from Shares to be issued pursuant to any Award a number of
Shares with an aggregate Fair Market Value (as of the date the withholding is
effected) that would satisfy the withholding amount due, or (ii) transferring to
the Company Shares owned by the participant with an aggregate Fair Market Value
(as of the date the withholding is effected) that would satisfy the withholding
amount due. With respect to any participant who is subject to Section 16 of the
Act, the following additional restrictions shall apply:

            (i)   the election to satisfy tax withholding obligations relating
      to an Award in the manner permitted by this Section 10(b) and the actual
      tax withholding shall be made during the period beginning on the third
      (3rd) business day following the date of release of quarterly or annual
      summary statements of revenues and earnings of the Company and ending on
      the twelfth (12th) business day following such date. Alternatively, such
      election may be made at least six (6) months prior to the date as of which
      the receipt of such an Award first becomes a taxable event for Federal
      income tax purposes;

            (ii)  such election shall be irrevocable;

            (iii) such election shall be subject to the consent or disapproval
      of the Committee; and

            (iv)  the Share(s) withheld to satisfy tax withholding, if granted
      at the discretion of the Committee, must pertain to an Award which has
      been held by the participant for at least six (6) months from the date of
      grant of the Award.

SECTION 11  TRANSFER, LEAVE OF ABSENCE, ETC.

      For purposes of the Plan, the following events shall not be deemed a
termination of service:

            (a)   a transfer to the employment of the Company from an Affiliate
      or from the Company to an Affiliate, or from one Affiliate to another; and

            (b)   an approved leave of absence for military service or sickness,
      or for any other purpose approved by the Company, if the employee's right
      to re-employment is guaranteed either by a statute or by contract or under
      the policy pursuant to which the leave of absence was granted or if the
      Committee otherwise so provides in writing.

                                       11
<PAGE>

SECTION 12  AMENDMENTS AND TERMINATION.

      The Board may at any time amend or discontinue the Plan and the Committee
may at any time amend or cancel any outstanding Award (or provide substitute
Awards at the same or reduced exercise or purchase price or with no exercise or
purchase price, but such price, if any, must satisfy the requirements which
would apply to the substitute or amended Award if it were then initially granted
under this Plan) for the purpose of satisfying changes in law or for any other
lawful purpose, but no such action shall adversely affect rights under any
outstanding Award without the holder's consent.

SECTION 13  STATUS OF PLAN.

      With respect to the portion of any Award which has not been exercised and
any payments in cash, Shares or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
unsecured creditor of the Company unless the Committee shall otherwise expressly
determine in connection with any Award or Awards. In its sole discretion, the
Committee may authorize the creation of trusts or other arrangements to meet the
Company's obligations to deliver Shares or make payments with respect to Awards
hereunder, provided that the existence of such trusts or other arrangements is
consistent with the provision of the foregoing sentence.

SECTION 14  CHANGE OF CONTROL PROVISIONS.

      Upon the occurrence of a Change of Control as defined in this Section 14:

            (a)   Each Share Option shall automatically become fully exercisable
      unless the Committee shall otherwise expressly provide at the time of
      grant.

            (b)   Restrictions and conditions on Awards of Restricted Shares,
      Performance Shares and Dividend Equivalents shall automatically be deemed
      waived, and the recipients of such Awards shall become entitled to receipt
      of the maximum amount of Shares subject to such Awards unless the
      Committee shall otherwise expressly provide at the time of grant.

            (c)   Unless otherwise expressly provided at the time of grant,
      participants who hold Options shall have the right, in lieu of exercising
      the Option, to elect to surrender all or part of such Option to the
      Company and to receive cash in an amount equal to the excess of (i) the
      higher of (x) the Fair Market Value of a Share on the date such right is
      exercised and (y) the highest price paid for Shares or, in the case of
      securities convertible into Shares or carrying a right to acquire Shares,
      the highest effective price (based on the prices paid for such securities)
      at which such securities are convertible into Shares or at which Shares
      may be acquired, by any person or group whose acquisition of voting
      securities has resulted in a Change of Control of the Company over (ii)
      the exercise price per share under the Option, multiplied by the number of
      Shares with respect to which such right is exercised.

                                       12
<PAGE>

            (d)   "Change of Control" shall mean the occurrence of any one of
      the following events:

                  (i)   any "person," as such term is used in Sections 13(d) and
            14(d) of the Act (other than the Company, any of its Subsidiaries,
            any trustee, fiduciary or other person or entity holding securities
            under any employee benefit plan of the Company or any of its
            Subsidiaries), together with all "affiliates" and "associates" (as
            such terms are defined in Rule 12b-2 under the Act) of such person,
            shall become the "beneficial owner" (as such term is defined in Rule
            13d-3 under the Act), directly or indirectly, of securities of the
            Company representing 40% or more of either (A) the combined voting
            power of the Company's then outstanding securities having the right
            to vote in an election of the Company's Board of Trustees ("Voting
            Securities") or (B) the then outstanding shares of common shares of
            the Company (in either such case other than as a result of
            acquisition of securities directly from the Company); or

                  (ii)  persons who, as of the date of the closing of the
            Company's initial public offering, constitute the Company's Board of
            Trustees (the "Incumbent Directors") cease for any reason, including
            without limitation, as a result of a tender offer, proxy contest,
            merger or similar transaction, to constitute at least a majority of
            the Board, provided that any person becoming a director of the
            Company subsequent to the Closing of the Company's initial public
            offering whose election or nomination for election was approved by a
            vote of at least a majority of the Incumbent Directors shall, for
            purposes of this Plan, be considered an Incumbent Director; or

                  (iii) the Shareholders of the Company shall approve (A) any
            consolidation or merger of the Company or any Subsidiary where the
            Shareholders of the Company, immediately prior to the consolidation
            or merger, would not, immediately after the consolidation or merger,
            beneficially own (as such term is defined in Rule 13d-3 under the
            Act), directly or indirectly, shares representing in the aggregate
            50% or more of the voting shares of the corporation issuing cash or
            securities in the consolidation or merger (or of its ultimate parent
            corporation, if any), (B) any sale, lease, exchange or other
            transfer (in one transaction or a series of transactions
            contemplated or arranged by any party as a single plan) of all or
            substantially all of the assets of the Company or (C) any plan or
            proposal for the liquidation or dissolution of the Company;

      Notwithstanding the foregoing, a "Change of Control" shall not be deemed
      to have occurred for purposes of the foregoing clause (i) solely as the
      result of an acquisition of securities by the Company which, by reducing
      the number of shares of Common Shares or other Voting Securities
      outstanding, increases (x) the proportionate number of shares of Common
      Shares beneficially owned by any person to 40% or more of the shares of
      Common Shares then outstanding or (y) the proportionate voting power
      represented by the Voting Securities beneficially owned by any person to
      40% or more of the combined voting power of all then outstanding Voting
      Securities; provided, however, that if any person referred to in clause
      (x) or (y) of this sentence shall thereafter become the beneficial owner
      of any additional shares of Common Shares or other Voting Securities

                                       13
<PAGE>

      (other than pursuant to a share split, share dividend, or similar
      transaction), then a "Change of Control" shall be deemed to have occurred
      for purposes of the foregoing clause (i).

SECTION 15  GENERAL PROVISIONS.

      (a)   No Distribution; Compliance with Legal Requirements. The Committee
may require each person acquiring Shares pursuant to an Award to represent to
and agree with the Company in writing that such person is acquiring the Shares
without a view to distribution thereof. No Shares shall be issued pursuant to an
Award until all applicable securities laws and other legal and stock exchange
requirements have been satisfied. The Committee may require the placing of such
stop-orders and restrictive legends on certificates for Shares and Awards as it
deems appropriate.

      (b)   Delivery of Share Certificates. Delivery of Share certificates to
participants under this Plan shall be deemed effected for all purposes when the
Company or a Share transfer agent of the Company shall have delivered such
certificates in the United States mail, addressed to the participant, at the
participant's last known address on file with the Company.

      (c)   Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, subject to stockholder approval if
such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of the Plan and
the grant of Awards do not confer upon any employee any right to continued
employment with the Company or any Subsidiary.

SECTION 16  EFFECTIVE DATE OF PLAN.

      The Plan shall become effective upon (i) its adoption by the Board, or any
committee appointed by the Board with the authority to adopt the Plan on its
behalf, and (ii) the approval of the Plan by the Shareholders. With respect to
the granting of Incentive Options, no Options granted under the Plan shall be
considered to be Incentive Options unless the Plan is approved by the
Shareholders within 12 months before or after its adoption by the Board.

SECTION 17  GOVERNING LAW.

      THIS PLAN SHALL BE GOVERNED BY OHIO LAW EXCEPT TO THE EXTENT SUCH LAW IS
PREEMPTED BY FEDERAL LAW.

                                       14<PAGE>
                                                                    Exhibit 10.1

                              EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT AGREEMENT (this "Agreement") is made at Cleveland, Ohio,
this 19th day of July, 2004, between PARAGON REAL ESTATE EQUITY AND INVESTMENT
TRUST, a Maryland business trust (the "Trust"), and JACK R. KUHN, 4318 Royal
Saint George Drive, Avon, Ohio 44011 ("Kuhn").

                                   WITNESSETH:

      WHEREAS, at the time set forth herein, Kuhn will hold the office of Senior
Vice President and Chief Property Management & Development Officer of the Trust;

      WHEREAS, Kuhn is expected to make major contributions toward the business
of the Trust;

      WHEREAS, the Trust and Kuhn desire to enter into this Agreement pursuant
to which the Trust will employ Kuhn and Kuhn will serve the Trust; and

      WHEREAS, the Trust desires to acquire the leadership, experience and
talent of Kuhn by providing him with an initial stock allocations as an
incentive ownership in the Trust;

      NOW, THEREFORE, the Trust and Kuhn, in consideration of the premises and
the mutual covenants herein contained, agree as follows:

      1.    EMPLOYMENT, CONTRACT PERIOD. During the period specified in this
Section 1, the Trust shall employ Kuhn, and Kuhn shall serve the Trust, on the
terms and subject to the conditions set forth herein. The initial term of Kuhn's
employment hereunder shall commence as of the date specified in the first
sentence of this Agreement (the "Effective Date") and, subject to prior
termination as provided in Section 8, shall continue through the first
anniversary of the Effective Date. The term of Kuhn's employment hereunder shall
be automatically renewed on the first anniversary of the Effective Date and on
each succeeding anniversary of the Effective Date thereafter for succeeding
terms of one year each, unless either party shall have given, at least 90 days
prior to the expiration of any term, written notice of his or its intention not
to renew the term of Kuhn's employment hereunder, except that no extension of
the term of Kuhn's employment hereunder shall extend beyond the date of Kuhn's
70th birthday. The term of Kuhn's employment hereunder is sometimes hereinafter
referred to as the "Contract Period."

      2.    POSITION, DUTIES, RESPONSIBILITIES.

            (a)   Except as set forth in Section 2(b), at all times during the
Contract Period, Kuhn shall have the title of Senior Vice President and Chief
Property Management & Development Officer of the Trust and shall have and
perform the duties and responsibilities of that office (the "Office"), subject
to the authority of the Board of Trustees of the Trust (the "Board of
Trustees"). In addition, Kuhn may hold such other offices as may be designated
from time to time by the Board of Trustees.

<PAGE>

            (b)   At all times during the Contract Period, Kuhn shall devote
substantially all of his business time, energy, and talent to the business of
and to the furtherance of the purposes and objectives of the Trust, and neither
directly nor indirectly render any business, commercial, or professional
services to any other person, firm, or organization for compensation without the
prior approval of the Board of Trustees. Nothing in this Agreement shall
preclude Kuhn from devoting reasonable periods of time to charitable and
community activities, service on boards of other companies (public or private)
not in competition with the Trust, undertaken after consultation with the Chief
Executive Officer of Paragon; or the management of his personal investment
assets provided:

                  (i)   such activities do not interfere with the performance by
                        Kuhn of his duties hereunder;

                  (ii)  Kuhn does not make any single investment in excess of
                        $500,000 in the outstanding securities of a publicly
                        owned equity real estate investment trust or of any
                        other entity engaged primarily in the ownership and/or
                        management of real estate, other than the Trust. This
                        limitation shall not apply to the continued holding by
                        Kuhn of any investments that were held by him on January
                        1, 2004 and have been held by him continuously
                        thereafter and any holding by Kuhn that is approved by
                        the independent Trustees of the Board of Trustees; and

                  (iii) Kuhn does not advise, assist, or render any services,
                        either directly or indirectly, to a publicly-owned
                        equity real estate investment trust or in any other
                        entity engaged primarily in the ownership and/or
                        management of real estate that competes with the Trust
                        (except that this limitation shall not apply to the
                        continued holding by Kuhn of any investments that were
                        held by him on January 1, 2004 and have been held by him
                        continuously thereafter), other than the Trust.

            (c)   The duties to be performed by Kuhn under this Agreement shall
be performed primarily in Cuyahoga County at the offices of the Trust, and he
shall not be required to perform services elsewhere except for travel incident
to his performance of services hereunder.

      3.    BASE SALARY, PLAN COMPENSATION AND BENEFITS.

            (a)   The rate of Kuhn's base salary hereunder as of the Effective
Date shall be $60,000 per year. The rate of Kuhn's base salary is considered to
be below the market rate for executives with similar experience and shall be
reviewed at least annually during the Contract Period and may be adjusted from
time to time, based upon such standards as the Board of Trustees may determine
to be appropriate, except that no such adjustment shall result in a reduction of
Kuhn's base salary below $60,000 per year during the Contract Period.

            (b)   After the first anniversary of the Effective Date, Kuhn shall
be eligible to participate in any annual incentive bonus program which is
offered collectively to the executive members of the Trust and approved by the
Management, Organization and Compensation Committee of the Board of Trustees and
receive the awards and any other compensation that

                                      2
<PAGE>

have been earned after the first anniversary of the Contract Period and that he
is entitled to receive under any of the Trust's present or future share option,
incentive compensation, or executive bonus plan in which he is entitled to
participate (such awards and other compensation are hereinafter referred to as
"Plan Compensation").

            (c)   During the Contract Period, the Trust shall provide Kuhn (a)
health and welfare benefits, including health insurance, travel accident
insurance, life and accidental death insurance, and long term disability upon
the same terms and conditions as to the other executives, (b) directors and
officers liability insurance, (c) a parking space, (d) memberships in a business
club in downtown Cleveland, if any, as may be deemed necessary by Kuhn, (e)
three weeks of vacation time, and (f) such other benefits as the Board of
Trustees may from time to time authorize.

      4.    RESTRICTED SHARE AWARDS.

            (a)   GRANT. The Trust will issue to Kuhn 125,000 restricted common
shares of beneficial interest, par value $0.01 per share, of the Trust ("Common
Shares"), on each of July 19, 2005, 2006, 2007 and 2008, so long as Kuhn remains
employed by the Trust on those dates, each grant of which will vest after four
years and be subject to a restricted stock agreement. In addition, the Trust
hereby awards 500,000 Common Shares (the "Award Shares") to Kuhn, subject to all
of the terms and conditions contained in this Agreement. The Trust shall issue
the Award Shares to Kuhn as soon as practicable after his execution of this
Agreement. The Award Shares will be subject to forfeiture under Section 4(b)
hereof.

            (b)   VESTING. 250,000 Award Shares shall vest, and such Award
Shares shall cease to be subject to the risk of forfeiture, on each of July 19,
2008 and 2009, provided, however, that the risk of forfeiture shall lapse for
all of Award Shares, and the Award Shares shall vest immediately if a "Shift of
Ownership" (as defined in Section 11) is deemed to have occurred. The vesting
schedule will not be affected if Kuhn dies or becomes "Disabled" (as defined
below). Kuhn shall automatically and without notice cease to have any right,
title or interest in or to any of the Award Shares that remain subject to
forfeiture upon the occurrence of any of the following events: (i) the Trust
terminates Kuhn's employment for "Cause" (as defined in Section 8(b)); or (ii)
Kuhn terminates his employment with the Trust without "Good Reason" (as defined
in Section 8(d)).

            (c)   KUHN'S REPRESENTATIONS. Kuhn understands that the issuance of
the Award Shares is intended to be exempt from registration under the Securities
Act of 1933, as amended (the "Act"), by virtue of Section 4(2) of the Act and
Rule 506 promulgated under the Act and Kuhn represents and warrants that:

                  (i)   Kuhn is aware that the Award Shares are not registered
                        under the Act or the securities or "blue sky" laws of
                        any state or jurisdiction (the "Blue Sky Laws") as of
                        the date of this Agreement, and the Trust is under no
                        obligation to cause the Award Shares to be registered
                        under the Act or the Blue Sky Laws.

                  (ii)  Kuhn has been advised that the Award Shares cannot be
                        resold unless they are registered under the Act or the
                        Blue Sky Laws or unless an exemption from registration
                        is available and that the certificates representing the
                        Award Shares will be legended

                                       3
<PAGE>

                        accordingly. Kuhn is acquiring the Award Shares for his
                        own account for long-term investment and not with a view
                        to, or for resale in connection with, the distribution
                        thereof, and Kuhn has no present intention of
                        distributing or reselling the Award Shares. Kuhn
                        represents and warrants that Kuhn has such knowledge and
                        experience in financial and business matters that he is
                        capable of evaluating the merits and risks of investment
                        in the Award Shares and is able to bear the economic
                        risk of holding the Award Shares indefinitely.

                  (iii) Kuhn has made a complete and thorough investigation of
                        the affairs and prospects of the Trust and has had a
                        reasonable opportunity to ask questions of and receive
                        answers from a person or persons acting on behalf of the
                        Trust concerning the Award Shares, and all such
                        questions have been answered to the full satisfaction of
                        Kuhn.

                  (iv)  Kuhn acknowledges that the Award Shares will be treated
                        as taxable income to him under the Internal Revenue Code
                        of 1986, as amended (the "Code"). Kuhn is not relying on
                        the advice of the Trust or its affiliates in connection
                        with the tax consequences of Kuhn's receipt of the Award
                        Shares.

                  (v)   Kuhn is aware that no federal or state agency has made
                        any finding or determination as to the fairness for
                        public or private investment in, nor any recommendation
                        or endorsement of, the Award Shares.

                  (vi)  Kuhn acknowledges that the Trust is entering into this
                        Agreement in reliance upon Kuhn's representations and
                        warranties in this Agreement, including, without
                        limitation, those set forth in this Section.

            (d)   RESTRICTIONS ON AWARD SHARES.

                  (i)   Other than the right to vote the Award Shares and to
                        receive any dividends that are declared on the Common
                        Shares, Kuhn shall not have any rights as a shareholder
                        with respect to any Award Shares prior to the date that
                        they vest as provided in Section 4(b) hereof, provided
                        that the foregoing shall not diminish or affect any
                        rights Kuhn may have under this Agreement.

                  (ii)  Kuhn shall not have the power or right to sell,
                        exchange, pledge, transfer, assign or otherwise encumber
                        or dispose of the Award Shares prior to the date they
                        vest as provided in Section 4(b) hereof, provided that
                        the foregoing shall not diminish or affect any rights
                        Kuhn may have under this Agreement.

            (e)   TAXES.

                  (i)   Under the general rule of Section 83 of the Code, Kuhn
                        will not be treated as receiving the Award Shares until
                        such time as Kuhn

                                       4
<PAGE>

                        becomes substantially vested in the Award Shares. Kuhn
                        will become substantially vested in the Award Shares
                        upon the expiration of any forfeiture period described
                        in Section 4(b) above. At that time, Kuhn will be taxed
                        on the value of the Award Shares as ordinary
                        compensation income. For the purposes of determining the
                        taxable compensation to Kuhn, the value of the Award
                        Shares will be determined without regard to the
                        "investment letter" restrictions on transferability set
                        forth in this Agreement. As an exception to this rule,
                        Section 83 of the Code permits Kuhn to elect to be taxed
                        on the value of the Award Shares as of the date of the
                        grant of the Award Shares. The Section 83(b) election
                        must be filed by Kuhn within 30 days of the grant of the
                        Award Shares. While there is no official Internal
                        Revenue Service form for a Section 83(b) election, a
                        sample form is attached as EXHIBIT A. The filing must be
                        made with the Internal Revenue Service Center with which
                        Kuhn files his federal income tax returns and a copy of
                        the election must be submitted (i) with Kuhn's income
                        tax return for the taxable year in which Kuhn receives
                        the Award Shares, and (ii) to the Trust. KUHN IS
                        STRONGLY URGED TO CONSULT WITH HIS TAX ADVISOR WITH
                        RESPECT TO THE CONSEQUENCES AND ADVISABILITY OF MAKING A
                        SECTION 83(B) ELECTION IN CONNECTION WITH HIS RECEIPT OF
                        THE AWARD SHARES AND OTHER TAX ASPECTS OF HIS RECEIPT
                        AND HOLDING OF THE AWARD SHARES.

                  (ii)  Kuhn will be responsible for all federal and state taxes
                        payable by Kuhn with respect to the issuance of the
                        Award Shares based upon their fair market value on the
                        date of issuance if a Section 83(b) election is made, or
                        on the date the Award Shares become vested if a Section
                        83(b) election is not made.

            (f)   GENERAL. The Trust shall reserve and keep available such
number of Common Shares as will be sufficient to satisfy the requirements of
this Agreement in respect of the issuance of the Award Shares, shall pay all
fees and expenses necessarily incurred by the Trust in connection therewith, and
shall use its best efforts to comply with all laws and regulations that, in the
reasonable opinion of counsel for the Trust, are applicable thereto.

      5.    SPLIT DOLLAR LIFE INSURANCE. Before the end of the Contract Period,
the Board of Trustees will consider whether it would be appropriate for the
Trust to enter into a split-dollar agreement with respect to an insurance policy
on the life of Kuhn with a death benefit for a specific amount payable to Kuhn's
designated beneficiary, provided, however, that such benefits or payments shall
at all times be subject to the Sarbanes-Oxley Act of 2002, as may be amended
from time to time, and to the rules issued by the SEC thereunder.

      6.    REIMBURSEMENT FOR EXPENSES. Subject to such limitations as may be
reasonably imposed by the Board of Trustees from time to time, the Trust shall
reimburse Kuhn for all reasonable, ordinary, and necessary expenses incurred by
him in the performance of his duties hereunder, provided, however, that such
benefits or payments shall at all times be subject to the Sarbanes-Oxley Act of
2002, as may be amended from time to time, and to the rules issued by the SEC
thereunder; and provided, further, that Kuhn accounts to the Trust therefor in a

                                       5
<PAGE>

manner sufficient to substantiate deductions with respect to those expenses by
the Trust for federal income tax purposes.

      7.    EFFECT OF DISABILITY DURING CONTRACT PERIOD. If, during the Contract
Period, Kuhn becomes disabled as determined by a physician acceptable to Kuhn
and the Trust, by reason of physical or mental impairment, to such an extent
that he is unable to substantially perform his duties under this Agreement
("Disabled"):

            (a)   The Trust may relieve Kuhn of his duties under this Agreement
for as long as Kuhn is Disabled.

            (b)   So long as Kuhn remains Disabled, the Trust shall continue to
pay Kuhn the base salary and bonus (cash and stock) at the rate in effect
immediately before he became Disabled, net of any other disability benefits paid
to him by the Trust or any insurance funded by the Trust, the Trust shall
continue to provide those health and welfare benefits, including contribution to
any pension plan, that were being provided to Kuhn immediately before he became
Disabled, and Kuhn shall continue to earn the Plan Compensation (other than
bonus) to which he would have been entitled under Section 3(b) had he continued
to be actively employed, until the earliest of (i) the first date on which he is
no longer Disabled, (ii) the date of his death, (iii) the date on which Kuhn
attains age 70, or (iv) the first anniversary of the date on which he became
Disabled. If Kuhn becomes Disabled, thereafter recovers sufficiently to be able
to substantially perform his duties, and later becomes Disabled again, the
combined period in which Kuhn is entitled to receive disability benefits under
this Section 7(b) shall not exceed one year.

      8.    TERMINATION.

            (a)   DEATH OR DISABILITY. Kuhn's employment hereunder will
terminate immediately upon Kuhn's death and the Trust shall not be obligated to
pay Kuhn any further compensation hereunder except through the date of death.
The Trust may terminate Kuhn's employment hereunder immediately upon giving
notice of termination if Kuhn is Disabled for an aggregate of 90 days (whether
business or non-business days and whether or not consecutive) during any period
of twelve consecutive calendar months; in the event of any such termination, the
disability benefits payable under Section 7(b) shall be in lieu of any payments
upon termination under Section 9.

            (b)   FOR CAUSE. The Trust may terminate Kuhn's employment under
this Agreement for "Cause" if:

                  (i)   Except by reason of being Disabled, Kuhn fails
                        substantially to devote the time and effort required for
                        him to perform his duties hereunder;

                  (ii)  Except by reason of being Disabled, Kuhn fails to follow
                        directions from the Board of Trustees that are
                        appropriate in the context of his status as an executive
                        officer of the Trust;

                  (iii) Kuhn is convicted of a felony involving moral turpitude;

                  (iv)  Kuhn engages in acts in violation of the provisions of
                        Section 2(b), the confidentiality provisions of Section
                        13 or otherwise breaches

                                       6
<PAGE>

                        the terms of this Agreement in any material respect; or

                  (v)   Kuhn willfully, wantonly, voluntarily, and without
                        approval of the Board of Trustees takes any action that
                        he knows to be materially adverse to the interest of the
                        Trust and its shareholders, collectively.

Any termination of Kuhn's employment for Cause shall be effective immediately
upon the Trust giving Kuhn 30 days' notice of termination of employment and the
grounds therefore. However, if any failure on Kuhn's part referred to in clause
(i), (ii) or (iv) of this Section 8(b) is curable, the Trust may not terminate
Kuhn's employment unless the Board of Trustees first gives him written notice
specifying the nature of the failure and the steps that he must take to cure the
failure, and Kuhn fails to take those steps within 30 days after the notice is
given.

            (c)   BY THE TRUST WITHOUT CAUSE. The Trust may terminate Kuhn's
employment hereunder without Cause at any time upon 30 days' notice from the
Board of Trustees to Kuhn.

            (d)   BY KUHN FOR GOOD REASON. Kuhn may terminate his employment
hereunder for "Good Reason" if one or more of the events listed in clauses (i)
through (vi) of this Section 8(d) occurs, provided, however, that for
termination under any of subsections (i) - (vi) below, Kuhn must provide the
Trust with a written notice of termination, specifying with particularity the
events constituting Good Reason and the Trust shall have a period of 30 days to
cure such events:

                  (i)   Kuhn's base salary is reduced from the amount in effect
                        for the preceding year;

                  (ii)  The Trust fails to provide the Plan Compensation
                        contemplated by Section 3(b) (after such Plan
                        Compensation has been adopted by the Board of Trustees
                        or a committee thereof);

                  (iii) The Trust fails in any material respect to provide
                        benefits in accordance with Section 3(c) or to consider
                        the appropriateness of the split-dollar insurance in
                        accordance with Section 5, in either case after Kuhn has
                        given the Trust written notice of the failure, and the
                        Trust has failed to effect a cure within 30 days after
                        the notice is given;

                  (iv)  Kuhn is removed from any of his Offices or
                        responsibilities or his duties with the Trust are
                        otherwise reduced to such an extent that he no longer
                        has authority commensurate with an executive officer of
                        the Trust (except as such removal and termination is
                        permitted under this Agreement);

                  (v)   Kuhn's principal place of employment for the Trust is
                        relocated outside of the Cleveland metropolitan area
                        and, as a result, he is required to relocate outside the
                        Cleveland metropolitan area; or

                                       7
<PAGE>

                  (vi)  After a Shift in Ownership (as defined in Section 11),
                        the Board of Trustees fundamentally changes its
                        strategic plan in a manner opposed by Kuhn. Kuhn may not
                        terminate his employment under this clause (vi) unless
                        he first gives the Board of Trustees written notice of
                        specifying the change or changes that he opposes and the
                        steps that the Board of Trustees must take to rectify
                        the strategic plan, and the Board of Trustees fails to
                        take those steps within 30 days after the notice is
                        given.

            (e)   BY KUHN WITHOUT GOOD REASON. Kuhn may terminate his employment
hereunder without Good Reason at any time upon 30 days' advance notice from Kuhn
to the Board of Trustees and upon such termination the Trust shall be obligated
to pay Kuhn only as set forth in Section 9 (a) of this Agreement.

      9.    PAYMENTS UPON TERMINATION. Following any termination of Kuhn's
employment with the Trust, the Trust shall pay and provide to Kuhn, after the
date of the termination (the "Termination Date"), the amounts and benefits
provided in this Section 9.

            (a)   TERMINATION BY THE TRUST OR BY KUHN FOR ANY REASON. Upon any
termination of Kuhn's employment for any reason, the Trust (i) shall pay to Kuhn
all unpaid base salary and other benefits (e.g., accrued vacation) with respect
to periods ending on or before the Termination Date and (ii) shall provide to
Kuhn all Plan Compensation that has been earned and vested prior to the
Termination Date, subject to the terms and provisions of the applicable plans.

            (b)   TERMINATION BY THE TRUST WITHOUT CAUSE, OR BY KUHN FOR GOOD
REASON. If Kuhn's employment hereunder is terminated by the Trust without Cause
or by Kuhn for Good Reason, in addition to (but not in duplication of) the
salary and Plan Compensation under Section 9(a), Trust shall pay and provide to
Kuhn the following amounts and benefits through the first anniversary of the
Termination Date (the "Benefit Termination Date") at the same times as those
amounts and benefits would have been paid and provided if Kuhn had continued in
the active employ of the Trust through the Benefit Termination Date:

                  (i)   Base salary and bonus (cash and stock) at the rate in
                        effect immediately before the Termination Date.

                  (ii)  Those health and welfare benefits including contribution
                        to any pension plan that were being provided to Kuhn
                        immediately before the Termination Date through the
                        Benefit Termination Date.

                  (iii) In addition to any benefits Kuhn is or may be entitled
                        to under any retirement plan or program in which he
                        participates, if after a Shift in Ownership an amount
                        equal to one (1) times the total amount contributed by
                        the Trust to Kuhn's account under the pension plan and
                        any excess benefit plan related thereto, with respect to
                        the plan year immediately prior to the Termination Date
                        provided such payment shall not be duplicative of any

                                       8
<PAGE>

                        payment made or to be made under subsection (ii) above.

                  (iv)  Continued vesting of share options held by Kuhn through
                        the Benefit Termination Date and the ability to exercise
                        vested options through the later to occur of the
                        expiration date of the share options or the Benefit
                        Termination Date, as if Kuhn had remained employed by
                        the Trust.

                  (v)   Continued earning of any restricted shares held by Kuhn.
                        After the Termination Date, against delivery to the
                        Trust of the certificate or certificates representing
                        all of the restricted shares, the Trust will issue to
                        Kuhn an unlegended certificate or certificates for the
                        shares whose restrictions have lapsed. If the market
                        price of the shares at the Benefit Termination Date
                        exceeds the market price of the shares at the
                        Termination Date, the Trust will promptly issue to Kuhn
                        an unlegended certificate for the balance of the shares
                        due to him.

                  (vi)  Continued accrual and vesting through the Benefit
                        Termination Date of any Plan Compensation not referred
                        to above and the ability to exercise vested awards
                        through the later to occur of the expiration date of the
                        awards or the Benefit Termination Date, as if Kuhn had
                        remained employed by the Trust.

                  (vii) If termination occurs six months before or six months
                        after a Shift of Ownership, the Trust shall pay to Kuhn
                        the base salary and bonus in Section 9(b)(i) immediately
                        in a lump sum; continue health and welfare benefits in
                        Section 9(b)(ii) through the Benefit Termination Date;
                        pay any pension or retirement plan payments in clause
                        (ii) and (iii) of Section 9(b) immediately in a lump
                        sum; all unvested share options in Section 9(b)(iv)
                        shall become vested; all restrictions on restricted
                        shares in Section 9(b)(v) shall lapse and an unlegended
                        certificate for the shares whose restriction has lapsed
                        shall be issued to Kuhn; and immediate accrual, vesting,
                        and payment of all items under Section 9(b)(vi).

            (c)   FULL SATISFACTION. Payment and provision of the salary and
benefits to which Kuhn is entitled under this Section 9 shall constitute full
satisfaction of all obligations of the Trust to Kuhn arising under this
Agreement and/or in connection with the termination of his employment. The Plan
Compensation and any other benefits or compensation provided to Kuhn under this
Section 9 shall not be subject to mitigation under any circumstances.

      10.   EFFECT OF FAILURE TO EXTEND TERM. If either the Trust or Kuhn gives
notice to the other of an intention not to extend the term of Kuhn's employment
hereunder for an additional year, as contemplated in Section 1, that notice
shall be treated as a notice of intended termination of Kuhn's employment as of
the end of then term. Accordingly, the termination of his employment will be
treated as a termination by the Trust or by Kuhn, as the case may be, with or
without Cause, and for or not for Good Reason, as the case may be. This Section
10 is not intended to abrogate the specific notice requirements applicable to a
termination for Cause

                                       9
<PAGE>

under clause (i) or (ii) of Section 8(b) or to a termination for Good Reason
under Section 8(d).

11.   SHIFT IN OWNERSHIP.

      (a)   A "Shift in Ownership" shall be deemed to have occurred if at any
time before the Termination Date any Person (other than the Trust, any
subsidiary of the Trust, any employee benefit plan or employee share ownership
plan of the Trust or any subsidiary of the Trust, or any person organized,
appointed, or established by the Trust or any subsidiary of the Trust for or
pursuant to the terms of any such plan), alone or together with any of its
affiliates or associates:

            (i)   causes Kuhn not to be appointed as Senior Vice President and
                  Chief Property Management & Development Officer, in accordance
                  with the intent herein;

            (ii)  or, if Kuhn is appointed as Senior Vice President and Chief
                  Property Management & Development Officer, causes Kuhn to be
                  removed as Senior Vice President and Chief Property Management
                  & Development Officer, and such change is not supported by
                  Kuhn.

      (b)   In the event of a Shift in Ownership of the Trust, (i) all share
options then outstanding will become fully exercisable as of the date of the
Shift in Ownership, (ii) all restrictions and conditions applicable to
restricted stock and other stock awards will be deemed to have been satisfied as
of the date of the Shift in Ownership, and (iii) all cash awards will be deemed
to have been fully earned as of the date of the Shift in Ownership.

      12.   EXCESS PARACHUTE PAYMENT REDUCTION.

            (a)   Anything in this Agreement to the contrary notwithstanding, if
it is determined that any payment or distribution by the Trust to or for the
benefit of Kuhn (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise) (a "Payment") would be
nondeductible by the Trust for Federal income tax purposes because of Section
280G of the Internal Revenue Code and applicable regulations promulgated
thereunder, then the aggregate present value of amounts payable or distributable
to or for the benefit of Kuhn pursuant to this Agreement (such payments or
distributions pursuant to this Agreement are hereinafter referred to as
"Agreement Payments") shall be reduced (but not below zero) to the Reduced
Amount. The "Reduced Amount" shall be an amount expressed in present value which
maximizes the aggregate present value of Agreement Payments without causing any
Payment to be nondeductible by the Trust because of Section 280G of the Internal
Revenue Code and applicable regulations promulgated thereunder. For purposes of
this Section 12, present value shall be determined in accordance with Section
280G(d)(4) of the Internal Revenue Code and applicable regulations promulgated
thereunder. All determinations required to be made under this Section 12 shall
be made by the Accounting Firm (as defined in Section 12(b)) which shall provide
detailed supporting calculations both to the Trust and Kuhn within 30 days after
the Termination Date or such earlier time as is requested by the Trust. The
Trust and Kuhn shall cooperate with each other and the Accounting Firm and will
provide necessary information so that the Accounting Firm may make all such
determinations. All such determinations by the Accounting Firm shall be final
and binding upon the Trust and Kuhn. Kuhn shall determine which of the Agreement
Payments (or, at the election of Kuhn, other payments) shall be eliminated or
reduced consistent with the requirements of this Section 12, provided that, if
Kuhn

                                       10
<PAGE>

does not make such determination within 20 days of the receipt of the
calculations made by the Accounting Firm, the Trust shall elect which of the
Agreement Payments shall be eliminated or reduced consistent with the
requirements of this Section 12, and shall notify Kuhn promptly of such
election. All costs and expenses relating to the determinations to be made
hereunder shall be borne solely by the Trust.

            (b)   The term "Accounting Firm" means the independent auditors of
the Trust for the fiscal year preceding the year in which the Shift in Ownership
occurred and such firm's successor or successors; provided, however, if such
firm is unable or unwilling to serve and perform in the capacity contemplated by
this Agreement, Kuhn shall select another national or regional accounting firm
of recognized standing to serve and perform in that capacity under this
Agreement, except that such other accounting firm shall not be the then
independent auditors for the Trust.

      13.   CONFIDENTIALITY. Kuhn acknowledges that the business in which the
Trust is engaged is competitive and that his employment with the Trust has
required and will require that he have access to and knowledge of confidential
and proprietary information pertaining to the Trust's operations and its
properties ("Confidential Information"). Kuhn shall not, during the term of his
employment hereunder or at any time thereafter, except in connection with the
performance of services hereunder or in furtherance of the business of the
Trust, communicate, divulge, or disclose to any other person not a Trustee,
officer, employee, or affiliate of, or not engaged to render services to or for,
the Trust or use for his own benefit or purposes any Confidential Information
that he has obtained from the Trust during the Contract Period, except that this
provision shall not preclude Kuhn from communication or use of Confidential
Information made known generally to the public by any party unrelated to Kuhn,
or from making any disclosure required by applicable law, rules, regulations, or
court or governmental or regulatory authority order or decree provided that, if
practicable, Kuhn shall not disclose any Confidential Information without first
giving the Trust notice of intention to make that disclosure and an opportunity
to interpose an objection to the disclosure.

      14.   DEFERRAL OF PAYMENT OF COMPENSATION UNDER CERTAIN CIRCUMSTANCES.

            (a)   SECTION 162(M). For purposes of this Section 14, the term
"Section 162(m)" shall mean Section 162(m) of the Internal Revenue Code (which,
as amended by the Revenue Reconciliation Act of 1993, prescribes rules
disallowing deductions for certain "applicable employee remuneration" to any of
five specified "covered employees" of a publicly held corporation in excess of
$1,000,000 per year), as from time to time amended, and the corresponding
provisions of any similar law subsequently enacted, and to all regulations
issued under that section and any such provisions.

            (b)   DEFERRAL. For purposes of this Section 14, "Excess
Compensation" as determined by the Accounting Firm, as defined in Section 12(b)
shall mean the amount of compensation (including base salary, bonus and the
lapse of restrictions on restricted shares granted to Kuhn) otherwise paid or
provided to Kuhn by the Trust under this Agreement at any particular time (the
"Scheduled Time") that, after giving effect to all elective deferrals of
compensation, (i) would not be deductible by the Trust if paid at the Scheduled
Time by reason of the disallowance rules of Section 162(m), and (ii) would be
deductible by the Trust if deferred until and paid during a later year.

                                       11
<PAGE>

            (c)   RESTRICTED SHARES. Except as provided in Section 14(e) or
Section 14(f), if and to the extent that the lapse of restrictions on restricted
shares at the Scheduled Time would result in Excess Compensation, Kuhn will
forfeit the restricted shares immediately prior to the Scheduled Time.
Thereafter, the Trust will deliver to Kuhn a number of unrestricted shares equal
to the number of restricted shares forfeited, together with an amount equal to
any and all dividends that would have been paid on those shares from the
Scheduled Time through the date of delivery, during the year that is determined
by the Accounting Firm to be the first year following the Scheduled Time during
which the unrestricted shares and dividends can be delivered without
disallowance of the deduction for payment of the compensation by reason of
Section 162(m). If the Accounting Firm determines that in any such year a
portion, but not all, of the unrestricted shares and dividends can be delivered
without disallowance of the deduction, the Trust will deliver to Kuhn the
portion that can be so delivered, and, except as provided in Section 14(e) or
Section 14(f), the remainder of the unrestricted shares and dividends will be
delivered at a later date.

            (d)   DEFERRED CASH COMPENSATION. Except as provided in Section
14(e) or Section 14(f), if and to the extent that the payment of cash
compensation would result in Excess Compensation, after the forfeiture of any
restricted shares under Section 14(c), payment of the cash compensation will be
deferred. Thereafter, the Trust will pay to Kuhn the amount of the deferred
compensation, together with accrued interest, during the year that is determined
by the Accounting Firm to be the first year following the Scheduled Time during
which the compensation can be paid without disallowance of the deduction for
payment of the compensation by reason of Section 162(m). If the Accounting Firm
determines that in any such year a portion, but not all, of the deferred
compensation and interest can be paid without disallowance of the deduction, the
Trust will pay to Kuhn the portion that can be so paid, and, except as provided
in Section 14(e) or Section 14(f), the remainder of the deferred compensation
and interest will be paid at a later date. For purposes hereof, interest will
accrue from the date on which the compensation would have been paid but for this
Section 14(d) through the date of payment at a rate equal to prime plus 1%
quoted by National City Bank, Cleveland, Ohio, compounded quarterly.

            (e)   EARLY DELIVERY OF UNRESTRICTED SHARES OR PAYMENT OF DEFERRED
COMPENSATION. If the Accounting Firm determines that the delivery to Kuhn of the
unrestricted shares and dividends under Section 14(c), or the payment to Kuhn of
the deferred compensation and interest under Section 14(d), will not result in a
deduction to the Trust, even if paid in a later year, the Trust will, within
three months of the date on which that determination is made, deliver to Kuhn
those unrestricted shares and dividends, or pay to Kuhn that deferred
compensation and interest, as the case may be.

           (f)   DELIVERY OR PAYMENT FOLLOWING TERMINATION OF EMPLOYMENT IN ALL
EVENTS. Within three months of the date on which Kuhn ceases to be employed as
an officer by the Trust, the Trust will deliver to Kuhn all of the unrestricted
shares and dividends not previously delivered to him under Section 14(c) and pay
to Kuhn, in a single lump sum, all of the deferred compensation and interest not
previously paid to him under Section 14(d), whether or not the Trust is entitled
to a deduction with respect thereto.

            (g)   MISCELLANEOUS. In addition to all other payments provided for
in this Section 14 the Trust shall also pay to Kuhn an amount, if any, equal to
the additional taxes payable by Kuhn on account of any deferral, due to higher
marginal income tax rates payable by

                                       12
<PAGE>

Kuhn when the deferred compensation becomes payable. Kuhn's rights with respect
to the delivery of unrestricted shares and dividends, and the payment of
deferred compensation and interest, under this Section 14 may not be assigned by
him unless approved by the Board of Trustees. If Kuhn dies before all
unrestricted shares and dividends, and all deferred compensation and interest,
under this Section 14 has been paid to him, any such unrestricted shares,
dividends, deferred compensation, and interest shall be delivered and paid, at
the same time it would have been paid if Kuhn had not died but had merely ceased
to be an employee of the Trust on the date of his death (or, if earlier, on the
last date he actually was an employee of the Trust), to his estate or, if Kuhn
so directs the Trust in writing, to his wife or to a trust created by Kuhn. The
obligations of the Trust to deliver unrestricted shares and dividends, and to
pay deferred compensation and interest, under this Section 14 constitute
unsecured promises of the Trust, and neither Kuhn nor any person claiming
through him shall have, as a result of this Section 14, any lien or claim on any
assets of the Trust that is superior to the claims of the general creditors of
the Trust.

      15.   PAYMENTS FOR TAXES. During the Contract Period, any payments that
are made on behalf of Kuhn by the Trust, other than for salary (including
deferred compensation), cash bonuses, and restricted shares, that are required
by the independent auditors of the Trust to be included in his income, for
federal, state, and local income tax will be paid to him on a "grossed-up" basis
equal to his federal, state, and local tax liabilities resulting therefrom.

      16.   MERGER OR TRANSFER OF ASSETS OF THE TRUST. The Trust will not
consolidate with or merge into any other entity, or transfer all or
substantially all of its assets or shares to another entity, unless such other
entity assumes this Agreement in a signed writing and delivers a copy thereof to
Kuhn. Upon such assumption the successor entity shall become obligated to
perform the obligations of the Trust under this Agreement, and the term "the
Trust" as used in this Agreement shall be deemed to refer to such successor
entity.

      17.   NOTICES. Notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered in person (to the Secretary of the Trust in the case of notices to the
Trust and to Kuhn in the case of notices to Kuhn) or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:

      If to the Trust:

      Paragon Real Estate Equity and Investment Trust
      1240 Huron Road
      Suite 301
      Cleveland, OH 44115

      If to Kuhn:

      Mr. Jack R. Kuhn
      4318 Royal Saint George Drive
      Avon, Ohio 44011

or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

                                       13
<PAGE>

      18.   VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement which shall remain in full force and effect.

      19.   MISCELLANEOUS. This Agreement may only be modified, waived, or
discharged by the Board of Trustees and agreed to in writing signed by Kuhn and
the Trust. This Agreement shall inure to the benefit of Kuhn and his heirs and
legal representatives. No waiver by either party hereto at any time of any
breach by the other party of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same time or at any prior
or subsequent time. No agreement or representation, oral or otherwise, express
or implied, with respect to the subject matter hereof has been made by either
party which is not set forth expressly in this Agreement. This Agreement shall
be governed by and construed in accordance with the laws of the State of Ohio.
In the event legal action is instituted to enforce any provision of this
Agreement, each party shall pay its own cost and expense thereof. This Agreement
constitutes the entire agreement between the parties with the subject matter
hereof and all prior negotiations, discussions, and agreements on that subject
matter are hereby superseded. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together, when executed and delivered,
will constitute one and the same instrument.

      20.   NO PERSONAL LIABILITY. Notwithstanding anything herein to the
contrary, this Agreement is made and executed on behalf of the Trust, a real
estate investment trust organized under the laws of the State of Maryland, by
its officers thereof on behalf of the trustees thereof, and none of the trustees
or any additional or successor trustees hereinafter appointed, nor any
beneficiary, officer, employee or agent of the Trust shall have any liability
hereunder in his personal or individual capacity, but, instead, all parties
shall look solely to the property and assets of the Trust for satisfaction of
claims of any nature arising under or in connection with this Agreement.

      IN WITNESS WHEREOF, this Agreement has been signed by the Trust and Kuhn
as of the date first above written.

PARAGON REAL ESTATE EQUITY AND INVESTMENT TRUST

By:    /s/ James C. Mastandrea
       --------------------------------------------
Title: James C. Mastandrea,
       Chairman of Board of Trustees

By:    /s/ Jack R. Kuhn
       --------------------------------------------
       JACK R. KUHN

                                       14
<PAGE>

                                    EXHIBIT A

                      ELECTION PURSUANT TO SECTION 83(b) OF
                            THE INTERNAL REVENUE CODE

      The undersigned, being a service-provider to Paragon Real Estate Equity
and Investment Trust (the "Company"), hereby makes an election pursuant to
Section 83(b) of the Internal Revenue Code with respect to the property
described below and supplies the following information in accordance with the
provisions of Treasury Regulation Section 1.83(e):

1. The name, address and taxpayer identification number of the undersigned are:

      Name:      Jack R. Kuhn
      Address:   4318 Royal Saint George Drive
                 Avon, Ohio 44011-3724

Taxpayer I.D. No.:____________________________

2.    Description of the property with respect to which the election is being
      made: _________ common shares of the Company.

3.    Date on which the property was transferred is: _______________

4.    The taxable year of the taxpayer in which the property was transferred is:
      ___________

5.    Nature of restrictions to which the property is subject:

      _________________________________________________________________________

      _________________________________________________________________________

      _________________________________________________________________________

6.    The fair market value at the time of transfer (determined without regard
      to any restrictions other than restrictions which by their terms will
      never lapse) of the property with respect to which this election is being
      made is $______________.

7.    The taxpayer did not provide any consideration for the transfer of said
      property.

8.    A copy of this statement has been furnished to the Company.

Dated:   _________________, 2004           ____________________________________
                                           Jack R. Kuhn

                                       15

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00069-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00069-of-00352.parquet"}]]