Exhibit 10.16


 


EMPLOYMENT
AGREEMENT


 


THIS AGREEMENT, made and
entered into as of                     ,
2005 (the “Effective Date”), by and between MARK R. KELLER (the “Executive”)
and REPUBLIC PROPERTY TRUST (the “Company”).


 


WITNESSETH THAT:


 


WHEREAS,
the Company desires to employ the Executive as Chief Executive Officer of the
Company upon the terms and subject to the conditions hereinafter set forth; and


 


WHEREAS,
the Executive desires to serve as the Company’s Chief Executive Officer upon
the terms and subject to the conditions hereinafter set forth;


 


NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:


 


1.             Performance of Services.  The Executive’s employment with the Company
shall be subject to the following:


 


(a)           Subject to the terms of this
Agreement, the Company hereby agrees to employ the Executive as its chief executive
officer, with the title of Chief Executive Officer during the Agreement Term
(as defined below), and the Executive hereby agrees to accept such employment
during the Agreement Term.  During the
Agreement Term, while he is employed by the Company, the Executive shall be
nominated for election to the Board of Trustees of the Company (the “Board”),
so long as he is Chief Executive Officer. 
If elected to and serving on the Board, the Executive agrees to resign
from the Board effective on his Date of Termination (as defined in paragraph
3(j)), unless the Executive and the Board otherwise agree.  The “Agreement Term” shall initially be the
period beginning on the Effective Date and ending on December 31, 2009.  Thereafter, the Agreement Term will be
automatically extended for 12-month periods, unless either the Company or the
Executive shall give the other party notice of the intention to not extend the
Agreement by October 1, 2009 or by October 1 of any succeeding year, if
applicable.


 


(b)           During the Agreement Term, while the
Executive is employed by the Company, the Executive shall devote his full time,
energies and talents to serving as its Chief Executive Officer.


 


(c)           The Executive agrees that he shall
perform his duties faithfully and to the best of his abilities subject to the
directions of the Board.  The Executive’s
duties may include providing services for both the Company and the Subsidiaries
(as defined below), as determined by the Board; provided, however, that the
Executive shall not, without his consent, be assigned tasks that would be
inconsistent with those of chief executive officer of the Company.  The Executive will have such authority,
power, responsibilities and


 


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duties as are inherent to his
position (and the undertakings applicable to his position) and necessary to
carry out his responsibilities and the duties required of him hereunder.  For purposes of this Agreement, the term
“Subsidiary” shall mean any corporation, limited liability company,
partnership, joint venture or other entity during any period, in which at least
a majority interest in such entity is owned, directly or indirectly, by the
Company (or a successor to the Company).


 


(d)           Notwithstanding the foregoing
provisions of this paragraph 1, during the Agreement Term, the Executive may
devote reasonable time to activities other than those required under this
Agreement, including management of his personal investments and activities
involving professional, charitable, educational, religious and similar types of
organizations, to the extent that such other activities do not, in the
reasonable judgment of the Board, inhibit or prohibit the performance of the
Executive’s duties under this Agreement, or conflict in any material way with
the business of the Company or any Subsidiary.


 


(e)           The Company shall, to the maximum
extent permitted by applicable law, protect, defend, indemnify and hold
harmless the Executive against any costs, losses, expenses, claims, suits,
proceedings, investigations, damages or liabilities to which the Executive may
become subject which arise out of, are based upon or relate to, or are alleged
to so arise, be based upon or relate to the Executive’s employment by the
Company (and any Subsidiary) or the Executive’s service to the Company (and any
Subsidiary) as an employee, officer or member of the Board, including, without
limitation, reimbursement on a current basis, upon submission of invoices, for
any legal or other expenses reasonably incurred by the Executive in connection
with investigation and defending against any such costs, losses, expenses,
claims, suits, proceedings, investigations, damages or liabilities; provided,
however, that the Company shall not be required to pay any amounts under this
paragraph except upon receipt of an unsecured undertaking by the Executive to
repay any such amounts as to which it shall ultimately be determined by a court
of competent jurisdiction that the Executive is not entitled to indemnification
by the Company and any other undertaking required by law.  The Executive will be covered under the
Company’s directors and officers insurance policy during the Agreement Term and
for such period following the Date of Termination during which any action may
be brought against the Executive related to the matters above, so long as the
Company maintains such coverage for any director or officer of the Company.


 


2.             Compensation. 
Subject to the terms of this Agreement, during the Agreement Term, while
the Executive is employed by the Company, the Company shall compensate him for
his services as follows:


 


(a)           Salary and Bonus.


 


(i)            During the Agreement Term, the
Executive shall receive an annual base salary (the “Salary”) of Five Hundred
Thousand Dollars ($500,000) subject to annual review by the Compensation
Committee of the Board (the “Committee”), which, in the discretion of such
Committee, may be increased


 


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from time to time.  Once increased, such Salary may not be
decreased.  Such Salary shall be payable
in arrears, in accordance with the payroll practices of the Company.


 


(ii)           For fiscal year 2005 and each
subsequent fiscal year of the Company during the Agreement Term, the Executive
shall be eligible to receive an annual cash performance-based bonus (the
“Bonus”) from the Company.  The amount of
any bonus shall be determined by the Committee in its sole discretion, taking
into consideration the relative contribution by the Executive to the business
of the Company and such other performance goals and factors as the Committee
deems relevant with the following targets: threshold target – 60% of Salary;
mid-point target – 100% of Salary; and above target – 175% of salary;
provided, however that, no minimum bonus amount is guaranteed.


 


(b)           Benefits.  The Executive shall be eligible to
participate in any employee pension and welfare benefit plans and programs made
available to the Company’s senior level executives, on terms which are no less
favorable than the terms provided generally for the Company’s senior level
executives from time to time, including, without limitation, pension, profit
sharing, savings and other retirement plans or programs, medical, dental,
hospitalization, short-term and long-term disability and life insurance plans, accidental
death and dismemberment protection, travel accident insurance, and any other
pension or retirement plans or programs and any other employee welfare benefit
plans or programs that may be sponsored by the Company from time to time,
including any plans that supplement the above-listed types of plans or
programs, whether funded or unfunded.


 


(c)           Vacation.  The Executive shall be entitled to four (4)
weeks of paid vacation each calendar year (or a pro rata portion thereof with
respect to any period during the Agreement Term which does not encompass a full
calendar year).


 


(d)           Business Expenses.  The Company will reimburse the Executive for
reasonable expenses incurred by the Executive on company business, pursuant to
the Company’s standard expense reimbursement policy as in effect from time to
time, so long as the Executive provides proper documentation establishing the
amount, date and business purpose of those expenses.


 


(e)           Stock-Based Compensation.


 


(i)            Annual Awards.  The Company shall adopt, and Executive shall
receive, awards from time to time as determined by the Committee under the
Company’s 2005 Omnibus Long-Term Incentive Plan or other comparable equity
arrangement (“Long Term Incentive Plan”). 
Other than the IPO Award (as defined below), any restricted stock grants
awarded to the Executive under the Long-Term Incentive Plan shall vest in four
(4) equal installments commencing on the first anniversary of the date of grant
and on the succeeding three anniversaries thereof, unless a different schedule
is mutually agreed to by the Company and the Executive.


 


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(ii)           IPO Award.  Upon the IPO, the Executive shall receive an
award of restricted shares of Common Stock, subject to the terms and conditions
of the Company’s Long-Term Incentive Plan (except as provided in this
Agreement), equal to 86,795 shares (the “IPO Award”).  The restricted shares granted pursuant to the
IPO Award shall be fully vested; provided, that, the sale, transfer or other
disposition of such restricted shares by the Executive shall be prohibited
until July 1, 2007.  Notwithstanding the foregoing, the Executive may transfer such
restricted shares (i) as a bona fide gift or gifts or by will or intestacy, or
(ii) to any trust for the direct or indirect benefit of the Executive or the
immediate family of the Executive, provided that any such transfer shall not
involve a disposition for value.  The Company shall pay to the Executive a cash
bonus equal to $867,946, which cash bonus shall be withheld by the Company, to
the extent necessary, to pay the withholding taxes associated with the grant of
restricted shares pursuant to the IPO Award and this cash bonus.


 


(iii)          Dividend Payments prior to Vesting.  Prior to vesting of the restricted shares,
the Executive shall be entitled to receive dividends on such restricted shares
in the same amounts, in the same manner and at the same time as holders of
unrestricted shares of Common Stock of the Company.


 


(iv)          Timing of Delivery of Shares.  As provided in Section 2(e)(ii), the IPO
Award shall be immediately vested.  For
all other restricted stock and other equity awards, the underlying shares shall
vest and be delivered, and all stock options and stock appreciation rights
shall be exercisable, at the time specified in, and in accordance with the
Company’s standard form of award agreement under the Company’s Long-Term
Incentive Plan (which shall comply with the vesting schedule set forth in this
paragraph 2(e)), except as follows:


 


(A)          All equity awards described in
paragraph 2(e)(i) shall immediately vest and all restricted stock and other
similar awards shall be deliverable upon the Date of Termination for a
termination of the Executive’s employment under the circumstances described in
paragraphs 3(a) (death) or 3(b) (Disability), upon a termination of the
Executive’s employment under the circumstances described in paragraphs 3(d)
(Constructive Termination), or under the circumstances described in paragraph
3(e) (voluntary resignation) at or after the Executive attains age 62, or under
the circumstances described in paragraph 3(g) (termination by the Company for
reasons other than Cause, death or Disability) or due to non-renewal of the
Agreement Term by the Company prior to the Executive attaining age 62, and all
stock options and stock appreciation rights held by the Executive, if any,
shall be exercisable for the unexpired stated term of each such option and
stock appreciation right in the case of a retirement.


 


(B)           The foregoing to the contrary notwithstanding,
all such equity awards shall immediately vest and all such restricted stock and
other similar awards shall be deliverable upon the occurrence of a Change in
Control.


 


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(C)           For the avoidance of doubt, all
unvested equity awards shall be forfeited upon a termination of the Executive’s
employment under the circumstances described in paragraph 3(e) (voluntary
resignation) prior to Executive attaining age 62 (including such a resignation
due to a non-renewal of the Agreement Term by the Executive), or paragraph 3(c)
(termination by Company for Cause).


 


3.             Termination. 
The Executive’s employment with the Company during the Agreement Term
may be terminated by the Company or the Executive without any breach of this
Agreement under the circumstances described in paragraphs 3(a) through

3(g):


 


(a)           Death.  The Executive’s employment hereunder will
terminate upon his death.


 


(b)           Disability.  The Company may terminate the Executive’s
employment due to the Executive’s Disability. 
For purposes of this Agreement “Disability” means the absence of the
Executive from the Executive’s duties with the Company on a full-time basis for
ninety (90) consecutive business days, or for one hundred and eighty (180)
business days (which need not be continuous) during any consecutive
twelve-month period, as a result of incapacity due to a physical or mental
illness which renders the Executive incapable, after reasonable accommodation,
of performing his duties under this Agreement. 
If the Executive disputes the Company’s determination of Disability, the
Executive (or his designated physician) and the Company (or its designated
physician) shall jointly appoint a third-party physician to examine the
Executive and determine whether the Executive has a Disability.


 


(c)           Termination by Company for Cause.  The Company may terminate the Executive’s
employment hereunder at any time for Cause. 
For purposes of this Agreement, the term “Cause” shall mean:


 


(i)            the willful and continued failure by
the Executive, after reasonable notice and opportunity to cure, to
substantially perform his duties with the Company (other than any such failure
resulting from the Executive’s Disability);


 


(ii)           willful gross misconduct involving
serious moral turpitude;


 


(iii)          violation of paragraph 6 of this
Agreement;


 


(iv)          material breach of this Agreement
(other than paragraph 6 of this Agreement);


 


(v)           conviction (or plea of no contest) of
(a) a felony, (b) a crime involving fraud or (c) other illegal conduct, other
than minor traffic violations, and with respect to clause (c), which is
demonstrably and materially injurious to the Company.


 


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For purposes of this
provision, no act or omission on the part of the Executive shall be considered
“willful” unless it is done or omitted in bad faith and without reasonable
belief that such conduct was in the best interests of the Company.  Any act, or failure to act, based for authority
granted pursuant to a resolution duly adopted by the Board or based upon the
advice of counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Company.  The cessation of employment
of the Executive shall not be deemed to be for Cause unless (A) as to
subparagraph (iv) above, if the material breach is curable, the Executive has
had a reasonable opportunity and time (but in no event less than thirty (30)
days) to cure such conduct or event and (B) until there shall have been
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership of the
Board (excluding the Executive), after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel, to
be heard before the Board, finding that, in the good faith opinion of the
Board, the Executive is guilty of conduct described above, and specifying the
particulars thereof in detail.


 


(d)           Constructive Termination.  The Executive shall be considered to have
terminated his employment as a result of a “Constructive Termination” if,
without the written consent of the Executive,


 


(i)            the Company reduces Executive’s
Salary or bonus opportunity;


 


(ii)           the Company materially reduces the
Executive’s duties or authority, fails to nominate the Executive to the Board,
or requires the Executive to report other than to the Board or a committee of
the Board;


 


(iii)          the Company relocates its principal offices,
or the Executive’s principal place of employment, more than 50 miles from the
Company’s current offices in Washington, D.C.; or


 


(iv)          the Company materially breaches this
Agreement;


 


(v)           any successor to the Company fails to
assume this Agreement or affirm its obligations hereunder in any material
respect.


 


A termination by the
Executive shall not be deemed to be as a result of a Constructive Termination
unless (A) the Executive shall have provided notice of the Constructive
Termination event and (B) as to subparagraph (iv) above, if the material breach
is curable, the Company shall have a reasonable opportunity and time (but in no
event less than 30 days) to cure such conduct or event.


 


(e)           Voluntary Resignation.  The Executive may terminate his employment
hereunder at any time for any reason by giving the Company prior written notice
of his resignation, whether pursuant to the non-renewal provision of paragraph
1(a) or otherwise, which shall be effective 30 days after receipt (provided,
that, the Company may accelerate the Date of Termination to an earlier date by
providing the Executive with notice of such action, or, alternatively, the
Company may place the Executive on paid


 


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leave during such period).  The Executive shall not be required to
specify a reason for any such termination under this paragraph 3(e) unless the
Executive intends for such termination to be subject to paragraph 3(d).


 


(f)            Mutual Agreement.  This Agreement may be terminated at any time
by the mutual agreement of the parties. 
Any termination of the Executive’s employment by mutual agreement of the
parties will be memorialized by an agreement which is reduced to writing and
signed by the Executive and a duly appointed officer of the Company.


 


(g)           Other Termination by Company.  The Company may terminate the Executive’s
employment hereunder at any time for any reason, by giving the Executive prior
written notice of his termination, which shall be effective immediately or as
of such later time as is specified in such notice.  Termination of the Executive’s employment by
the Company shall be deemed to have occurred under this paragraph 3(g) unless
the notice of termination provided to the Executive by the Company specifies
that the Executive’s termination is for reasons described in paragraphs 3(b),
3(c), or 3(f), or unless the circumstances described in paragraph 3(h) apply.


 


(h)           Change in Control.  The Executive shall be considered to have
terminated his employment under this paragraph 3(h) if a “Change in Control”
occurs with respect to the Company and within 24 months thereafter the
Executive is terminated by the Company for any reason whatsoever (including,
without limitation, with or without Cause), death or disability or the Executive
terminates his employment for any reason whatsoever (whether or not as a result
of a Constructive Termination).  For
purposes of this Agreement the term “Change in Control” means the happening of
any of the following:


 


(i)            Any “Person” (having the meaning
ascribed to such term in Section 3(a)(9) of 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 in
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 in Control.  For purposes of this Agreement, “Beneficial
Ownership” shall mean beneficial ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act.


 


(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


 


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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


 


(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)


 


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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 (h), the IPO
or acquisition of stock by underwriters in furtherance of a public offering
shall not be considered a Change in Control.


 


(i)            Date of Termination.  “Date of Termination” means the last day the
Executive is employed by the Company, whether by reason of the expiration of
the Agreement Term, termination of employment in accordance with the foregoing
provisions of this paragraph 3, or under any other circumstances.


 


4.             Rights Upon Termination.  The rights and obligations of the Company and
the Executive with respect to compensation and benefits under this Agreement
for periods after his Date of Termination shall be determined in accordance
with the following provisions of this paragraph 4:


 


(a)           If the Executive’s employment
terminates for any reason, the Company shall pay to the Executive:


 


(i)            The Executive’s Salary for the
period ending on the Date of Termination and, if applicable, any earned but
unpaid Bonus for the fiscal year ending on or before the Date of Termination.


 


(ii)           Payment for unused vacation days, as
determined in accordance with the Company policy as in effect from time to
time.


 


(iii)          Any other payments or benefits to be
provided to the Executive by the Company in accordance with the terms and
conditions of any employee benefit plans or arrangements adopted by the
Company, to the extent such amounts are due from the Company.


 


Except as may otherwise be
expressly provided to the contrary in this Agreement, nothing in this Agreement
shall be construed as requiring the Executive to be treated as employed by the
Company for purposes of any employee benefit plan or arrangement following the
date of the Executive’s Date of Termination.


 


(b)           If the Executive’s employment
terminates under circumstances described in paragraph 3(c) (termination for
Cause), paragraph 3(e) (voluntary resignation), paragraph 3(f) (termination by
mutual agreement), or if the Executive’s employment with the Company terminates
at the end of the Agreement Term due to: (i) non-renewal of the Agreement Term
by the Executive or (ii) non-renewal of the Agreement Term by the Company after
Executive attains age 62, then, except under the circumstances described


 


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in paragraph 3(h)
(terminations after Change of Control) and except as otherwise expressly
provided in this Agreement or otherwise agreed in writing between the Executive
and the Company, the Company shall have no obligation to pay any Salary, Bonus,
severance or similar compensation amounts to the Executive under this Agreement
for periods after the Executive’s Date of Termination.


 


(c)           If the Executive’s employment
terminates under circumstances described in paragraph 3(a) (relating to the
Executive’s death), paragraph 3(b) (relating to the Executive’s Disability),
paragraph 3(d) (Constructive Termination), paragraph 3(g) (termination by the
Company for reasons other than for Cause, death or Disability), or due to
non-renewal of the Agreement Term by the Company prior to Executive attaining
age 62, or under the circumstances described in paragraph 3(h) (terminations
after Change in Control), then, in addition to the amounts payable in
accordance with paragraph 4(a), the Executive shall receive from the Company a
lump sum cash payment, payable within 30 days of such termination, equal to (i)
two and one-half (2 1⁄2) times the total of (A) and (B), where (A) is his Salary
then in effect, and (B) is the average of Bonuses paid to the Executive within
the preceding 3 years, or if Executive is employed fewer than 3 years, such
fewer number of years (annualizing any Bonus for a partial year) (or, if the
Date of Termination is prior to the date of the first Bonus payment, then (B)
is $500,000, which is the Executive’s initial mid-point target bonus
opportunity); and (ii) a pro-rata Bonus for the portion of the calendar year
elapsed through the Date of Termination based on the amount set forth in clause
(B) of this paragraph 4(c).  During the
30-month period beginning on the Date of Termination of the Executive’s
employment pursuant to paragraph 3(h), the Executive and his family members
shall be entitled to continued participation in all medical, dental,
disability, life insurance coverage and any other benefit plans and
arrangements, in each case with benefits no less favorable in any material
respect than the level of coverage and benefits applicable to them immediately
prior to the Date of Termination, and the Company shall pay all premium amounts
therefor.  The 30 months of continued
medical coverage at the Company’s expense shall run concurrently with the time
period for which the Executive and his family members are entitled to continued
medical coverage under the provisions of Section 4980B of the Code and Section
601 of ERISA, if applicable, or any similar state law continuation coverage
requirements.  The Executive’s restricted
shares and other equity awards shall vest, and any stock options and stock
appreciation rights shall be exercisable after the Date of Termination, as set
forth at paragraph 2(e)(iv)(A) or (B) hereof as the case may be.


 


(d)           In the event of the Executive’s death
before payment of any amount that had become due and payable to or on behalf of
the Executive pursuant to the terms of this Agreement, payment of that amount
shall be made to the Executive’s estate or designated beneficiary.


 


(e)           The Company shall not be required to
make the payments and provide the benefits specified in paragraph

4(c) unless the Executive executes and delivers to the Company an agreement
releasing the Company, its affiliates and its officers, directors and employees
from all liability (other than the payments and benefits under this


 


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Agreement) substantially in
the form set forth attached hereto as Exhibit A and such agreement has
become effective and irrevocable.


 


5.             Duties on Termination.  Subject to the terms and conditions of this
Agreement, during the period beginning on the date of delivery of a notice of
resignation by the Executive or notice of termination of the Executive’s
employment by the Company, and ending on the Date of Termination, the Executive
shall continue to perform his duties as set forth in this Agreement, and during
such period shall also perform such reasonable services for the Company as are
necessary and appropriate for a smooth transition to the Executive’s successor,
if any.  Notwithstanding the foregoing
provisions of this paragraph 5, the Company may suspend the Executive from
performing his duties under this Agreement following the delivery of any such
notice of resignation or termination; provided, however, that during the period
of suspension (which shall end on the Date of Termination), the Executive shall
continue to be treated as employed by the Company for other purposes, and his
rights to compensation or benefits shall not be reduced by reason of the
suspension.


 


6.             Non-competition and Non-solicitation.


 


(a)           Except as otherwise permitted under
paragraph 1(d) of this Agreement and except for the permitted activities (or
ownership interests) set forth on Exhibit B, while the Executive is
employed by the Company, he agrees that he will not directly or indirectly
(without prior written consent of the Company) engage in, assist, perform
services for, establish or open, or have any equity interest (other than
ownership of 5% or less of the outstanding stock of any corporation listed on
the New York or American Stock Exchange or included in the National Association
of Securities Dealers Automated Quotation System) in any person, firm,
corporation, or business entity (whether as an employee, officer, director,
agent, security holder, creditor, consultant, or otherwise) that engages in any
activity which is directly competitive with the business of the Company and its
affiliates.  In addition, for an 18-month
period after the Executive’s Date of Termination under the circumstances
described in paragraphs 3(c) or 3(e), or for a 6-month period after the
Executive’s Date of Termination due to non-renewal of the Agreement Term by the
Company before the Executive attains age 62, except for the permitted
activities (or ownership interests) set forth on Exhibit B, the
Executive agrees that he will not actively engage in the business of the
acquisition or development of office properties by acting as an investor,
principal, broker or intermediary with respect to office property acquisitions
or development projects or by soliciting or otherwise identifying specific
acquisition opportunities, but the provisions of this sentence are not to be
construed so as to otherwise prevent the Executive from engaging in office
asset management or consulting activities. 
The restrictions in this paragraph 6(a) are intended to apply to the
United States only.


 


(b)           While the Executive is employed by
the Company, and for a period of 18 months after the Executive’s Date of
Termination, the Executive agrees that he will not in any manner, directly or
indirectly (without prior written consent of the Company) employ or solicit for
employment for himself or any other business entity (other than the Company and
its Subsidiaries) any individual who was, during the period of the Executive’s
employment with the Company or the 18-month period following the


 


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Executive’s Date of
Termination, an employee, officer, agent or representative of the Company (or
any successor corporation into which the Company may be merged or
consolidated).


 


(c)           While the Executive is employed by the Company, and for a
period of twelve (12) months after the Executive’s Date of Termination, the
Executive agrees that he will not, whether for his own account or for the
account of any other person, firm, corporation or other business organization,
(i) intentionally interfere with the Company’s relationship with, or endeavor
to entice away from the Company or any of the Subsidiaries, any person who
during the Agreement Term or such twelve (12) month period is or was a client,
customer, tenant or source of capital or other investor therein or (ii) usurp
an investment opportunity of the Company or any of the Subsidiaries in a
property, an entity or a person in which the Company invested during the
Agreement Term or actively considered investing in during the Agreement Term.


 


7.             Confidential Information.  The Executive agrees that:


 


(a)           Except as may be required by the
lawful order of a court or agency of competent jurisdiction, or except to the
extent that the Executive has express authorization from the Company, the
Executive agrees to keep secret and confidential indefinitely all non-public
information (including, without limitation, information regarding litigation
and pending litigation) concerning the Company and the Subsidiaries which was
acquired by or disclosed to the Executive during the course of his employment
with the Company, or during the course of any consultation with the Company
following his termination of employment pursuant to paragraph 3, and not to
disclose the same, either directly or indirectly, to any other person, firm, or
business entity, or to use it in any way.


 


(b)           To the extent that any court or
agency seeks to have the Executive disclose confidential information, he shall
promptly inform the Company, and he shall take such reasonable steps to prevent
disclosure of confidential information until the Company has been informed of
such requested disclosure, and the Company has an opportunity to respond to
such court or agency.  To the extent that
the Executive obtains information on behalf of the Company or any of the
Subsidiaries that may be subject to attorney-client privilege as to the
Company’s attorneys, the Executive shall take reasonable steps to maintain the
confidentiality of such information and to preserve such privilege.


 


(c)           Nothing in the foregoing provisions
of this paragraph 7 shall be construed so as to prevent the Executive from
using, in connection with his employment for himself or an employer other than
the Company or any of the Subsidiaries, knowledge which is generally known
(other than by reason of a violation of this paragraph 7) to persons of his
experience in other companies in the same industry.


 


8.             Defense of Claims.  The Executive agrees that, for the period
beginning the Effective Date, and continuing for a reasonable period after the
Executive’s termination of employment with the Company, the Executive will
cooperate with the Company in defense of any claims that may be made against
the Company, and will cooperate with the Company in the


 


12





















 


prosecution of any claims that may be made by the
Company, to the extent that such claims may relate to services performed by the
Executive for the Company.  The Executive
agrees to promptly inform the Company if he becomes aware of any lawsuits involving
such claims that may be filed against the Company.  The Company agrees to reimburse the
Executive, for all of the Executive’s reasonable out-of-pocket expenses and, if
any such cooperation is requested after Executive’s termination of employment
with the Company, to compensate the Executive for his time associated with such
cooperation at an hourly rate based on the Executive’s Salary in effect
immediately prior to the Date of Termination divided by 2,000.  The Executive also agrees to promptly inform the
Company if he is asked to assist in any investigation of the Company (or its
actions) that may relate to services performed by the Executive for the
Company, regardless of whether a lawsuit has then been filed against the
Company with respect to such investigation.


 


9.             Equitable Remedies.  The Executive acknowledges that the Company
would be irreparably injured by a violation of paragraphs 6, 7 or 8, and he
agrees that the Company, in addition to any other remedies available to it for
such breach or threatened breach, shall be entitled to a preliminary
injunction, temporary restraining order, or other equivalent relief,
restraining the Executive from any actual or threatened breach of any of
paragraphs 6, 7 or 8.  If a bond is
required to be posted in order for the Company to secure an injunction or other
equitable remedy, the parties agree that said bond need not be more than a
nominal sum.  The parties hereto
acknowledge that the potential restrictions on the Executive’s future
employment imposed by paragraphs 6, 7 and 8 are reasonable in duration and all
other respects.  If for any reason any
court of competent jurisdiction shall find paragraphs 6, 7, or 8 unreasonable
in duration or otherwise, the Executive and the Company agree that the
restrictions and prohibitions contained herein shall be effective to the
fullest extent allowed under applicable law in such jurisdiction.


 


10.           Certain Additional Payments by the Company.


 


(a)           Anything in this Agreement to the
contrary notwithstanding and except as set forth below, in the event it shall
be determined that any payment, award, benefit or distribution (or any
acceleration of any payment, award, benefit or distribution) by the Company to
or for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
paragraph 10) (a “Payment”) would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
“Excise Tax”), then the Executive shall be entitled to receive an additional
payment (a “Gross-Up Payment”) in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income and
employment taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.


 


(b)           Subject to the provisions of
paragraph 10(a), all determinations required to be made under this paragraph
10, including whether and when a Gross-Up Payment is


 


13





















 


required and the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by a certified public accounting firm reasonably
acceptable to the Executive as may be designated by the Company (the
“Accounting Firm”) which shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as is
requested by the Company.  If the
Accounting Firm determines that no Excise Tax is payable by the Executive, it
shall furnish the Executive with a written opinion, based on “substantial
authority” (within the meaning of Section 6662 of the Code), that the failure
to report the Excise Tax on the Executive’s individual income tax return would
not result in the imposition of a negligence or other accuracy-related
penalty.  All fees and expenses of the
Accounting Firm shall be borne solely by the Company.  Any Gross-Up Payment, as determined pursuant
to this paragraph 10, shall be paid by the Company to the Executive within five
days of the earlier of (i) the due date for the payment of any Excise Tax or
(ii) the issuance by the Internal Revenue Service (the “IRS”) of notice to the
effect that an Excise Tax is due in connection with a Payment.  Subject to a determination by the IRS, any
determination by the Accounting Firm shall be binding upon the Company and the
Executive, absent manifest error.


 


11.           Non-alienation. 
The interests of the Executive under this Agreement are not subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors of the Executive or the
Executive’s estate.


 


12.           Mitigation and Set-Off.  The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking other
employment or otherwise.  The Company
shall not be entitled to set off against the amounts payable to the Executive
under this Agreement any amounts earned by the Executive in other employment
after termination of his employment with the Company, or any amounts which
might have been earned by the Executive in other employment had he sought such
other employment.


 


13.           Amendment. 
This Agreement may be amended or canceled only by mutual agreement of
the parties in writing.  So long as the
Executive lives, no person, other than the parties hereto, shall have any
rights under or interest in this Agreement or the subject matter hereof.


 


14.           Governing Law. 
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE DISTRICT OF COLUMBIA, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT
OF LAWS.


 


15.           Severability. 
The invalidity or non-enforceability of any provision of this Agreement
will not affect the validity or enforceability of any other provision of this
Agreement, and this Agreement will be construed as if such invalid or
unenforceable provision were omitted (but only to the extent that such
provision cannot be appropriately reformed or modified).


 


16.           Waiver of Breach. 
No waiver by either party hereto of a breach of any provision of this
Agreement by the other party, or of compliance with any condition or provision
of this Agreement to be performed by such other party, will operate or be
construed as a waiver of any


 


14





















 


subsequent breach by such other party or any similar or
dissimilar provisions and conditions at the same or any prior or subsequent
time.  The failure of any party hereto to
take any action by reason of such breach will not deprive such party of the
right to take action at any time while such breach continues.


 


17.           Successors. 
This Agreement shall be binding upon, and inure to the benefit of, the
Company and its successors and assigns and upon any person acquiring, whether
by merger, consolidation, purchase of assets or otherwise, all or substantially
all of the Company’s assets and business.


 


18.           Notices. 
Notices and all other communications provided for in this Agreement
shall be in writing and shall be delivered personally or sent by registered or
certified mail, return receipt requested, postage prepaid, or sent by facsimile
or prepaid overnight courier to the parties at the addresses set forth below
(or such other addresses as shall be specified by the parties by like
notice).  Such notices, demands, claims
and other communications shall be deemed given: (x) when received if given in
person or by courier service, (y) on the date of transmission if sent by telex,
facsimile or other wire transmission or (z) three business days after being
deposited in the U.S. mail, certified or registered mail, postage prepaid:


 


(a)           If to the Company, addressed as
follows:


 


Republic Property Trust

1280 Maryland Avenue, Suite 280


Washington, D.C. 20024


Attn:General Counsel

Facsimile: (202) 863-4049


 


(b)           If to the Executive, addressed as
follows:


 


Mark R. Keller

4615 Laverock Place, N.W.


Washington, D.C. 20007


Facsimile: (202) 863-4049:


 


19.           Waiver of Jury Trial.  TO THE EXTENT PERMITTED BY APPLICABLE LAW,
THE PARTIES HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.


 


20.           Costs of Disputes. 
The Company shall reimburse the Executive’s reasonable expenses,
including legal fees (i) to negotiate and prepare this Agreement up to a
maximum of $50,000; (ii) in any dispute under this Agreement in which the
Executive prevails on a majority of the material claims.


 


21.           Survival of Agreement.  Except as otherwise expressly provided in
this Agreement, the rights and obligations of the parties to this Agreement
shall survive the termination of the Executive’s employment with the Company.


 


15





















 


22.           Entire Agreement. 
Except as otherwise noted herein this Agreement constitutes the entire agreement
between the parties concerning the subject matter hereof and supersedes all
prior and contemporaneous agreements, if any, between the parties relating to
the subject matter hereof.


 


23.           Acknowledgement by Executive.  The Executive represents to the Company that
he is knowledgeable and sophisticated as to business matters, including the
subject matter of this Agreement, that he has read this Agreement and that he
understands its terms.  The Executive
acknowledges that, prior to assenting to the terms of this Agreement; he has
been given a reasonable time to review it, to consult with counsel of his
choice, and to negotiate at arm’s-length with the Company as to the
contents.  The Executive and the Company
agree that the language used in this Agreement is the language chosen by the
parties to express their mutual intent, and that no rule of strict construction
is to be applied against any party hereto. 
The Executive represents and warrants that he is not, and will not
become a party to any agreement, contract, arrangement or understanding,
whether of employment or otherwise, that would in any way restrict or prohibit
him from undertaking or performing his duties in accordance with this
Agreement.


 


24.           Inconsistency. 
In the event of any inconsistency between this Agreement and any plan,
program or practice of the Company, the terms of this Agreement shall control.


 


25.           Section 409A. 
Notwithstanding anything to the contrary contained herein, in the event
that either the Company or the Executive determines in good faith that one or
more payments under this Agreement that become payable after the Executive
separates from service with the Company would be subject to the additional 20%
tax imposed by Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), prior to making any such payments, the Company and the Executive
shall confer with each other and unless the Company and the Executive mutually
determine that the additional 20% tax imposed by Section 409A of the Code will
not be applicable, such payments under this Agreement shall not commence until
six months after the Executive separates from service with the Company to the
extent necessary to avoid the imposition of the additional 20% tax imposed by

Section 409A of the Code.  Any payments
that are required to be delayed as a result of this Section 25 shall be made on
or about the earliest date on which the payment would not result in the
additional tax imposed by Section 409A of the Code.


 


16





















 


IN WITNESS THEREOF, the
Executive has hereunto set his hand, and the Company has caused these presents
to be executed in its name and on its behalf, all as of the day and year first
written above.


 


	
   

  	
   

  
	
   

  	
  Executive

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  REPUBLIC PROPERTY TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


17





















 


EXHIBIT A


 


RELEASE AND WAIVER
OF CLAIMS


 


THIS RELEASE is made as of
this        day of                     ,
        , by and between Republic
Property Trust (the “Company”) and Mark R. Keller (“Executive”).


 


WHEREAS, Executive and the
Company entered into that certain Employment Agreement, dated                               ,
2005 (“Agreement”);


 


WHEREAS, Executive’s
employment with the Company as Chief Executive Officer has terminated; and


 


WHEREAS, in connection with
the termination of Executive’s employment, under the Agreement, Executive is
entitled to certain payments and other benefits.


 


NOW, THEREFORE, in
consideration of the severance payments and other benefits due Executive under
the Agreement (“Severance Payments”):


 


1.             Executive hereby for himself, and his heirs, agents,
executors, successors, assigns and administrators (collectively, the “Related
Parties”), intending to be legally bound, does hereby REMISE, RELEASE AND
FOREVER DISCHARGE the Company, its affiliates, subsidiaries, parents, joint
ventures, and its and their officers, directors, shareholders, employees,
predecessors, and partners, and its and their respective successors and
assigns, heirs, executors, and administrators (collectively, “Releasees”) from
all causes of action, suits, debts, claims and demands whatsoever in law or in
equity, which Executive ever had, now has, or hereafter may have, or which the
Related Parties may have, by reason of any matter, cause or thing whatsoever,
from the beginning of his initial dealings with the Company to the date of this
Release, and particularly, but without limitation of the foregoing general
terms, any claims arising from or relating in any way to his employment relationship
with Company, the terms and conditions of that employment relationship, and the
termination of that employment relationship, including, but not limited to, any
claims arising under the Age Discrimination in Employment Act (“ADEA”), as
amended, 29 U.S.C. ss. 621 et seq., the Older Worker’s Benefit Protection Act,
29 U.S.C. ss. 626(f)(1), Title VII of The Civil Rights Act of 1964, as amended,
42 U.S.C. ss. 2000e et seq., the Civil Rights Act of 1871, the Civil Rights Act
of 1991, the Americans with Disabilities Act, 42 U.S.C. ss. 12101-12213, the
Rehabilitation Act, the Family and Medical Leave Act of 1993 (“FMLA”), 29
U.S.C. ss. 2601 et seq., the Fair Labor Standards Act, and any other claims
under any federal, state or local common law, statutory, or regulatory
provision, now or hereafter recognized, and any claims for attorneys’ fees and
costs, but not including such claims to payments, benefits and other rights
provided Executive under the Agreement and any employee benefit plan of the
Company in which Executive is a participant. 
This Release is effective without regard to the legal nature of the
claims raised and without regard to whether any such claims are based upon
tort, equity, implied or express contract or discrimination of any sort.  Except as specifically provided herein, it is
expressly understood and agreed that this Release shall operate as a clear and
unequivocal waiver by Executive of any claim for accrued or unpaid wages,
benefits or any other type of payment other than as provided under the
Agreement and any employee benefit plan of the Company in which Executive is a
participant.  It is the


 


18





















 


intention of the parties to make this release as broad
and as general as the law permits as to the claims released hereunder.


 


2.             Executive further agrees and recognizes that he has
permanently and irrevocably severed his employment relationship with the
Company, that he shall not seek employment with the Company or any affiliated
entity at any time in the future, and that the Company has no obligation to
employ him in the future.


 


3.             The parties agree and acknowledge that the Agreement,
and the settlement and termination of any asserted or unasserted claims against
the Releasees pursuant to the Agreement, are not and shall not be construed to
be an admission of any violation of any federal, state or local statute or
regulation, or of any duty owed by any of the Releasees to Executive.


 


4.             Executive certifies and acknowledges as follows:


 


(a)           That he has read the terms of this
Release, and that he understands its terms and effects, including the fact that
he has agreed to RELEASE AND FOREVER DISCHARGE all Releasees from any legal
action or other liability of any type related in any way to the matters
released pursuant to this Release other than as provided in the Agreement and
in this Release;


 


(b)           That he has signed this Release
voluntarily and knowingly in exchange for the consideration described herein,
which he acknowledges is adequate and satisfactory to him and which he
acknowledges is in addition to any other benefits to which he is otherwise
entitled;


 


(c)           That he has been and is hereby
advised in writing to consult with an attorney prior to signing this Release;


 


(d)           That he does not waive rights or
claims that may arise after the date this Release is executed;


 


(e)           That he has been informed that he has
the right to consider this Release and Waiver of Claims for a period of 21 days
from receipt, and he has signed on the date indicated below after concluding
that this Release and Waiver of Claims is satisfactory to him; and


 


(f)            That neither the Company, nor any of
its directors, employees, or attorneys, has made any representations to him
concerning the terms or effects of this Release and Waiver of Claims other than
those contained herein.


 


(g)           That he has not filed, and will not
hereafter file, any claim against the Company relating to his employment and/or
cessation of employment with the Company, or otherwise involving facts that
occurred on or prior to the date that Executive has signed this Release and
Waiver of Claims, other than a claim that the Company has failed to pay
Executive the Severance Payments or benefits due under any employee benefit
plan of the Company in which Executive is a participant.


 


19





















 


(h)           That if he commences, continues,
joins in, or in any other manner attempts to assert any claim released herein
against the Company, or otherwise violates the terms of this Release and Waiver
of Claims, (i) the Executive will cease to have any further rights to Severance
Payments from the Company, and (ii) the Executive shall be required to return
any Severance Payments made to the Executive by the Company (together with
interest thereon).


 


(i)            Executive acknowledges that he may
later discover facts different from or in addition to those which he knows or
believes to be true now, and he agrees that, in such event, this Release and
Waiver of Claims shall nevertheless remain effective in all respects,
notwithstanding such different or additional facts or the discovery of those
facts.


 


5.             This Release and Waiver of Claims may not be introduced
in any legal or administrative proceeding, or other similar forum, except one
concerning a breach of this Release and Waiver of Claims.


 


6.             This Release and Waiver of Claims and the Agreement
constitute the complete understanding between Executive and the Company
concerning the subject matter hereof.  No
other promises or agreements will be binding unless signed by Executive and the
Company.


 


7.             In the event that any provision or portion of this
Release and Waiver of Claims shall be determined to be invalid or unenforceable
for any reason, the remaining provisions or portions of this Release and Waiver
of Claims shall be unaffected thereby and shall remain in full force and effect
to the fullest extent permitted by law.


 


8.             The respective rights and obligations of the parties
hereunder shall survive termination of this Release and Waiver of Claims to the
extent necessary for the intended preservation of such rights and obligations.


 


9.             This Release and Waiver of Claims shall be governed by
and construed and interpreted in accordance with the laws of the State of
Delaware without reference to the principles of conflict of law.


 


10.           Executive also understands that he has the right to revoke
this Release and Waiver of Claims within 7 days after execution, and that this
Release and Waiver of Claims will not become effective or enforceable until the
revocation period has expired, by giving written notice to the following:


 


Republic Property Trust


1280 Maryland Avenue, Suite
280


Washington, D.C. 20024


Attn: General Counsel


Facsimile: (202) 863-4049


 


20





















 


IN WITNESS WHEREOF, and
intending to be legally bound hereby, the parties execute the foregoing Release
and Waiver of Claims:


 


	
   

  	
   

  
	
   

  	
  Mark R. Keller

  



 


21





















 


Exhibit B


 


EXCLUDED PROPERTIES, INTERESTS AND ACTIVIITES


 


1.               Ownership of interests in the following
entities, or any entities controlled by, controlling or under common control
with any of the following entities (provided such entities do not own or
acquire interests in any other properties not presently owned by such entities),
including services as a member, director or officer of any such entity:


 


AJ
& K LLC


Portals
Development Associates LP


Republic
Square Limited Partnership


ACK/Republic
Square LLC


RKB/Republic
Capital LLC


Keller
Family LLC


 


2.               Ownership of any real property owned by any
of the entities referred to in paragraph 1 of this Exhibit B 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 “ownership
interests” “set forth on Exhibit B” for purposes of paragraph 1 of Section 6(a)
of the Agreement).


 


3.               Any of the real estate activities carried on
by any of the entities referred to in paragraph 1 of Section 6(a) to the extent
that such activities relate to the real estate presently owned by such
entities.