Exhibit 10.12

 

REPUBLIC PROPERTIES CORPORATION
NONCOMPETITION AGREEMENT

 

THIS NONCOMPETITION AGREEMENT (this “Agreement”) is entered into as of December
20, 2005 by and between Republic Property Trust, a Maryland real estate
investment trust (the “Company”) and Republic Properties Corporation (“RPC”), a
District of Columbia corporation.

 

WHEREAS, the Company and Republic Property Limited Partnership, a Delaware
limited partnership and wholly owned operating partnership subsidiary of the
Company (the “Operating Partnership”), are engaging in various related
transactions pursuant to which, among other things, (i) the Operating
Partnership would acquire interests in various limited liability companies that
own real estate properties, and (ii) the Company would effect an initial public
offering of its common shares of beneficial interest, par value $0.01 per share,
and contribute the proceeds therefrom for a like number of units of partnership
interest in the Operating Partnership (the “IPO”, and together with the other
transactions in connection therewith, the “IPO Transactions”);

 

WHEREAS, Richard L. Kramer (“Kramer”) is the Chairman of the Board of Trustees
(the “Board”) of the Company and also a co-founder and co-owner of RPC;

 

WHEREAS, the Company’s President and Chief Development Officer, Steven A. Grigg,
is also a co-founder and co-owner of RPC;

 

WHEREAS, the Company and RPC agree that, as part of the IPO Transactions, RPC
will not engage in competition with the Company and will refrain from taking
certain other actions pursuant to the terms and conditions hereof in an effort
to protect the Company’s legitimate business interests and goodwill and for
other business purposes; and

 

WHEREAS, Kramer has also agreed to enter an agreement not to engage in
competition with the Company on terms and conditions that are similar to this
Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, the
parties hereto agree as follows:

 

1.             Noncompetition.  RPC agrees with the Company that for the longer
of: (i) the three-year period beginning on the date of this Agreement, (ii) the
period during which Kramer is a member of the Board of the Company (or any
successor thereto), or (iii) in the event that Kramer is removed as a member of
the Board of the Company for cause, one and one-half (1-1/2) years thereafter
(the “Restricted Period”), RPC will not engage in any business involving the
development, construction, acquisition, ownership or operation of institutional
grade office property real estate (the “Company Business”), whether such
business is conducted by RPC individually or as a principal, partner, member,
stockholder or independent contractor of any Person (as defined below);
provided, however, that this Section 1

 

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shall not be deemed to prohibit any of the following:  (a) any of the real
estate (and real estate-related) activities listed on Schedule A hereto and
RPC’s ownership, marketing, sale, transfer or exchange of any of RPC’s interests
in any of the properties or entities listed on Schedule A hereto, (b) the direct
or indirect ownership by RPC of up to five percent of the outstanding equity
interests of any public company, (c) any activities with respect to
non-institutional grade office property real estate or Non-Office Building Real
Estate, including, without limitation, residential, hotel, retail, industrial or
recreational, and (d) a direct or indirect ownership by RPC of equity or similar
ownership interests of any corporation, partnership, limited liability company,
joint venture, association or other entity that is not a public company,
provided that RPC is not involved in the management or operation of such Person
or its business and such Person is not engaged in the Company Business. 
Notwithstanding the foregoing, during the one and one-half (1-1/2) year “tail”
period included in the Restricted Period, the restrictions set forth in this
Section 1 shall apply only within the following “Restricted Areas”: (I) the
District of Columbia and the states of Maryland and Virginia; and (II) the area
within a 50-mile radius of any property owned or leased by the REIT, as of the
date of Kramer’s removal as a member of the Board.  For purposes of this
Agreement, (i)  “Person” means any individual, firm, corporation, partnership,
company, limited liability company, trust, joint venture, association or other
entity, and (ii) “Non-Office Building Real Estate” means any real estate which
has an office space component equal to five percent (5%) or less of such real
estate’s total net rentable square footage. Notwithstanding the foregoing, the
Restricted Period shall terminate, if not earlier terminated in accordance with
this Section 1, upon the first to occur of (i) the consummation of a Change of
Control of the Company, as defined in Section 6 of this Agreement or (ii) the
failure of Kramer to be reelected as a member of the Board.

 

2.             Nonsolicitation. RPC agrees with the Company that for the longer
of (i) the three-year period beginning on the date of this Agreement or (ii) the
period during which Kramer is a member of the Board, and for eighteen months
thereafter, Kramer will not (a) directly or indirectly solicit, induce or
encourage any employee or independent contractor to terminate their employment
with the REIT or to cease rendering services to the REIT, and Kramer shall not
initiate discussions with any such Person for any such purpose or authorize or
knowingly cooperate with the taking of any such actions by any other Person, or
(b) hire (on behalf of itself or any other person or entity) any employee who
has left the employment of the REIT (or any predecessor thereof) within one year
of the termination of such employee’s employment with the REIT.

 

3.             Referrals.  In addition, RPC agrees that for the longer of (i)
the three-year period beginning on the date of this Agreement or (ii) the period
during which the Kramer is a member of the Board of the Company (or any
successor thereto), RPC will refer to the Company any investment and fee-based
development opportunities for commercial office properties in Greater
Washington, D.C. which are presented to the RPC.

 

4.             Reasonable and Necessary Restrictions.  RPC acknowledges that the
restrictions, prohibitions and other provisions hereof, including, without
limitation, the Restricted Area, the Restriction Period and the restriction
period set forth in Section 2, are reasonable, fair and equitable in terms of
duration, scope and geographic area, are necessary to protect the legitimate
business interests of the REIT.

 

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5.             Specific Performance.  RPC acknowledges that the obligations
undertaken by RPC pursuant to this Agreement are unique and that the Company
likely will have no adequate remedy at law if RPC shall fail to perform any of
RPC’s obligations hereunder, and RPC therefore confirms that the Company’s right
to specific performance of the terms of this Agreement is essential to protect
the rights and interests of the Company.  Accordingly, in addition to any other
remedies that the Company may have at law or in equity, the Company shall have
the right to have all obligations, covenants, agreements and other provisions of
this Agreement specifically performed by RPC, and the Company shall have the
right to obtain preliminary and permanent injunctive relief to secure specific
performance and to prevent a breach or contemplated breach of this Agreement by
RPC.  RPC hereby acknowledges and agrees that the Company shall not be required
to post bond as a condition to obtaining or exercising such remedies, and RPC
hereby waives any such requirement or condition.

 

6.             Miscellaneous Provisions.

 

(a)           Assignment; Binding Effect.  This Agreement may not be assigned by
RPC, but may be assigned by the Company to any successor to its business or to
any subsidiary or affiliate of the Company and will inure to the benefit of and
be binding upon any such successor.  Subject to the foregoing provisions
restricting assignment, all covenants and agreements in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors, assigns, heirs, and personal representatives.

 

(b)           Entire Agreement.  This Agreement constitutes the entire agreement
between the parties hereto with respect to the matters set forth herein and
supersedes and renders of no force and effect all prior oral or written
agreements, commitments and understandings among the parties with respect to the
matters set forth herein.  This Section 6(b) shall not be used to limit or
restrict the rights or remedies, whether express or implied, of any
noncompetition or nonsolicitation policies of the REIT applicable to RPC.

 

(c)           Amendment.  Except as otherwise expressly provided in this
Agreement, no amendment, modification or discharge of this Agreement shall be
valid or binding unless set forth in writing and duly executed by each of the
parties hereto.

 

(d)           Waivers.  No waiver by a party hereto shall be effective unless
made in a written instrument duly executed by the party against whom such waiver
is sought to be enforced, and only to the extent set forth in such instrument. 
Neither the waiver by either of the parties hereto of a breach or a default
under any of the provisions of this Agreement, nor the failure of either of the
parties, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right or privilege hereunder shall thereafter be
construed as a waiver of any subsequent breach or default of a similar nature,
or as a waiver of any such provisions, rights or privileges hereunder.

 

(e)           Severability.  If fulfillment of any provision of this Agreement,
at the time such fulfillment shall be due, shall transcend the limit of

 

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validity prescribed by law, then the obligation to be fulfilled shall be reduced
to the limit of such validity; and if any clause or provision contained in this
Agreement operates or would operate to invalidate this Agreement, in whole or in
part, then such clause or provision only shall be held ineffective, as though
not herein contained, and the remainder of this Agreement shall remain operative
and in full force and effect. Notwithstanding the foregoing, in the event that
the restrictions against engaging in competitive activity contained in this
Agreement shall be determined by any court of competent jurisdiction to be
unenforceable by reason of their extending for too great a period of time or
over too great a geographical area or by reason of their being too extensive or
unreasonable in any other respect, the Agreement shall be interpreted to extend
only over the maximum period of time for which it may be enforceable and over
the maximum geographical area as to which it may be enforceable and to the
maximum extent in all other respects as to which it may be enforceable, all as
determined by such court in such action and the court may limit the application
of any other provision or covenant, or modify any such term, provision or
covenant and proceed to enforce this Agreement as so limited or modified.  To
the extent necessary, the parties shall revise the Agreement and enter into an
appropriate amendment to the extent necessary to implement any of the foregoing.

 

(f)            Governing Law; Jurisdiction.  This Agreement, the rights and
obligations of the parties hereto, and any claims or disputes relating thereto,
shall be governed by and construed in accordance with the laws of the District
of Columbia, but not including the choice-of-law rules thereof.

 

(g)           Headings.  Section and subsection headings contained in this
Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.

 

(h)           RPC’s Acknowledgement. RPC acknowledges (i) that it has had the
opportunity to consult with independent counsel of its own choice concerning
this Agreement, and (ii) that it has read and understands this Agreement, is
fully aware of its legal effect, and has entered into it freely based on its own
judgment.

 

(i)            Notices.  All notices, requests, demands, and other
communications hereunder shall be in writing and shall be deemed to have been
delivered (i) when physically received by personal delivery (which shall include
the confirmed receipt of a telecopied facsimile transmission), or (ii) three
business days after being deposited in the United States certified or registered
mail, return receipt requested, postage prepaid or (iii) one business day after
being deposited with a nationally known commercial courier service providing
next day delivery service (such as Federal Express), to the following addresses:

 

(i)                                     if to RPC, to the address set forth in
the records of the Company

 

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(ii)                                  if to the Company

 

Republic Property Trust

1280 Maryland Avenue

Suite 280

Washington, D.C. 20024

Attn:  Mark R. Keller

Facsimile No.: (202) 863-4049

 

with copies in either case (which shall not constitute notice) to:

 

Hogan & Hartson L.L.P.

555 13th Street, NW

Washington, DC 20004

Attention:  Stuart A. Barr, Esq.

Facsimile: (202) 637-5910

 

(j)            Execution in Counterparts.  To facilitate execution, this
Agreement may be executed in as many counterparts as may be required.  It shall
not be necessary that the signature of or on behalf of each party appears on
each counterpart, but it shall be sufficient that the signature of or on behalf
of each party appears on one or more of the counterparts.  All counterparts
shall collectively constitute a single agreement.

 

(k)           Certain Definitions.  For the purpose of this Agreement, the term
“REIT” means the Company (or any successor thereto) and its subsidiaries and
affiliates, and the term “Change of Control” means the happening of any of the
following:

 

(i)            Any “Person” (which for the purpose of this subsection (k) only
has the meaning ascribed to such term in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and used in Sections 13(d)
and 14(d) thereof, including a “group” within the meaning of Section 13(d)(3))
has or acquires Beneficial Ownership of thirty (30%) percent or more of the
combined voting power of the Company’s then outstanding voting securities
entitled to vote generally in the election of directors (“Voting Securities”);
provided, however, that in determining whether a Change of Control has occurred,
Voting Securities which are held or acquired by the following: (i) the Company
or any of its Related Companies (as defined in paragraph 3(h)(iv) below) or (ii)
an employee benefit plan (or a trust forming a part thereof) maintained by the
Company or any of its Related Companies (the persons or entities described in
(i) and (ii) shall collectively be referred to as the “Excluded Group”), shall
not constitute a Change of Control.  For purposes of this Agreement, “Beneficial
Ownership” shall mean beneficial ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act.

 

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(ii)           The individuals who are members of the Incumbent Board cease for
any reason to constitute more than fifty (50%) percent of the Board.  For
purposes of this Agreement, “Incumbent Board” shall mean the individuals who, as
of the beginning of the period commencing two years prior to the determination
date, constitute the Board; provided, however, that for purposes of this
definition, any individual who becomes a member of the Board subsequent to the
beginning of such two-year period, whose election, or nomination for election by
the Company’s stockholders, was approved by a vote of at least two-thirds of
those individuals who are members of the Board and who were also members of the
Incumbent Board (or deemed to be such pursuant to this proviso) shall be
considered as though such individual were a member of the Incumbent Board; and
provided further, however, that any such individual whose initial assumption of
office occurs as a result of or in connection with an actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board shall not be considered a member of the Incumbent Board.

 

(iii)          A consummation of a merger, consolidation or reorganization or
similar event involving the Company, whether in a single transaction or in a
series of transactions (“Business Combination”), unless, following such Business
Combination:

 

a)              the Persons with Beneficial Ownership of the Company,
immediately before such Business Combination, have Beneficial Ownership of more
than fifty (50%) percent of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors of the
corporation (or in the election of a comparable governing body of any other type
of entity) resulting from such Business Combination (including, without
limitation, an entity which as a result of such transaction owns the Company or
all or substantially all of the Company’s assets either directly or through one
or more subsidiaries) (the “Surviving Company”) in substantially the same
proportions as their Beneficial Ownership of the Voting Securities immediately
before such Business Combination;

 

b)             the individuals who were members of the Incumbent Board
immediately prior to the execution of the initial agreement providing for such
Business Combination constitute more than fifty (50%) percent of the members of
the board of directors (or comparable governing body of a noncorporate entity)
of the Surviving Company; and

 

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c)              no Person (other than a member of the Excluded Group or any
Person who immediately prior to such Business Combination had Beneficial
Ownership of thirty percent (30%) or more of the then Voting Securities) has
Beneficial Ownership of thirty (30%) percent or more of the then combined voting
power of the Surviving Company’s then outstanding voting securities.

 

(iv)          The assignment, sale, conveyance, transfer, lease or other
disposition of all or substantially all of the assets of the Company to any
Person (other than the Company, any Related Company or an employee benefit plan
(or related trust) sponsored or maintained by the Company or any Related
Company) unless, immediately following such disposition, the conditions set
forth in paragraph (iii)(a), (b) and (c) above will be satisfied with respect to
the entity which acquires such assets.  For purposes of this Agreement, “Related
Company” shall mean any entity that is directly or indirectly controlled by, in
control of or under common control with the Company.

 

(v)           The occurrence of a liquidation or dissolution of the Company.

 

Notwithstanding the provisions of subparagraphs (i), (ii) and (iii) of this
paragraph (k), neither the IPO nor the IPO Transactions shall be considered a
Change of Control.

 

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, each of the undersigned has executed and delivered this
Agreement, or caused this Agreement to be duly executed on its behalf, as of the
date first set forth above.

 

 

REPUBLIC PROPERTIES CORPORATION:

 

 

 

  /s/ Steven A. Grigg

 

 

By: Steven A. Grigg

 

Title: President

 

 

 

 

 

THE COMPANY:

 

 

 

REPUBLIC PROPERTY TRUST

 

 

 

By:

  /s/ Mark R. Keller

 

 

Name: Mark R. Keller

 

Title: Chief Executive Officer

 

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Schedule A

 

EXCLUDED PROPERTIES, INTERESTS AND ACTIVITIES

 

1.               Ownership of interests in the following entities (provided such
entities do not own or acquire interests in any other properties not listed on
Schedule A), including services as a member, director or officer of any such
entity:

 

Republic Somerset LLC

Republic Land Development LLC

Republic Madison Green LLC

Madison Green Partners LLC

Republic CP IV Investors LLC

Republic-Charleston LLC

Republic Fund I LLC

Carolina Park Associates, LLC

Carlyle Investment LLC

ACK-Carlyle LLC

Kramer/Republic LLC

Madison Green Partners LLC

New Kent Partners LLC

Republic Southampton LLC

Republic New Kent LLC

ACK/Somerset LLC

Republic Augusta I LLC

Republic Scottsville Partners LLC

Sycamore Investments LLC

RKB/Republic Capital LLC

Republic Capital Partners LLC

Pointe at Cheverly LLC

Republic Cheverly Partners LLC

ACK Holdings LLC

AJ & K LLC

Sycamore/Charleston LLC

ACK/Republic Square LLC

Portals Investments LLC

RWPB Investors LLC

Datura & Olive Developer LLC

RWPB LLC

Republic Maryland Avenue Partners LLC

Rolled Sea Oats LLC

Republic Gateway Partners LLC

NKP Development LLC

NKP LB4 LLC

NKP LB5 LLC

Forbes-Republic Orange LLC

Republic Orange Partners LLC

Carillion-Republic LLC

Abington Investments LLC

 

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Kramer Family LLC

KramerCo (DC) LLC

KramerCo, LC

Krivco/Nags Head LLC

Portals Development Associates LP

Republic Cheverly LLC

Republic Cove Partners LLC

RHC/Somerset LLC

SIHC I LLC

Western Associates Limited Partnership

CPT Holdings, Inc.

Downtown Properties Corp.

Mentmore Holdings Corporation

Republic Holdings Corporation

Republic Properties Corporation

Sunderland Industrial Holdings Corporation

Trinity Investment Corporation

Republic Square Limited Partnership

25 Massachusetts Avenue Partners LLC

25 Massachusetts Avenue Property LLC

660 North Capitol Street Partners LLC

660 North Capitol Street Property LLC

Portals Development Associates Limited Partnership

Portals Interest LLC

Portals Northside LLC

47D Holdings LLC

Parcel 47D LLC

Parcel 47E LLC

Parcel 47F LLC

Parcel 49B Limited Partnership

Parcel 49C Limited Partnership

 

2.               Ownership, through the entities listed in Section 1 above, or
any real property owned by any such entities as of the date of this Agreement
(for the avoidance of doubt, all such real property owned by any such entities
as of the date of this Agreement shall be deemed to constitute “properties
listed on Schedule A” for purposes of Section 1(I) of the Agreement).

 

3.               Any of the real estate activities carried on by any of the
entities listed in Section 1 to the extent that such entities continue to
perform only real estate business activities that have been or are currently
carried on by such entities.

 

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