Document:

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EXHIBIT 10.22

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) entered into as of October 8,
2003, by and between First Potomac Realty Investment Limited Partnership, a
Delaware limited partnership, (the “Company”) and James H. Dawson
(“Executive”).

     WHEREAS, First Potomac Realty Trust, a Maryland real estate investment
trust, (the “Trust”) is the Company’s general partner;

     WHEREAS, the parties desire to enter into an agreement to reflect
Executive’s executive capacities in the Trust’s business and to provide for
Executive’s employment by the Company, upon the terms and conditions set forth
herein; and

     WHEREAS, Executive has agreed to certain confidentiality, non-competition
and non-solicitation covenants contained hereunder, in consideration of the
additional benefits provided to Executive under this Agreement;

     NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:

     1.     Employment. The Company hereby agrees to employ Executive, and
Executive hereby accepts such employment and agrees to perform Executive’s
duties and responsibilities, in accordance with the terms, conditions and
provisions hereinafter set forth.

     1.1. Employment Term. This Agreement shall be effective as of the
commencement of the Trust’s initial public offering, and shall continue until
the second anniversary of such offering, unless the Agreement is terminated
sooner in accordance with Section 2 or 3 below. In addition, the term of the
Agreement shall automatically renew for periods of one (1) year unless either
party gives written notice to the other party, at least ninety (90) days prior
to the end of the initial term or at least ninety (90) days prior to the end of
any one (1) year renewal period, that the Agreement shall not be further
extended. The period commencing on the effective date and ending on the date
on which the term of Executive’s employment under the Agreement shall terminate
is hereinafter referred to as the “Employment Term.” If a Change in Control
(as defined in Section 3) occurs, the Employment Term shall be automatically
extended to the later of (i) the end of the then existing initial or renewal
period or (ii) the date that is one (1) year after the Change in Control,
unless the Employment Term is sooner terminated according to Section 2 or 3
below.

     1.2. Duties and Responsibilities. During the Employment Term, Executive
shall serve as the Senior Vice President of the Trust and President of First
Potomac Management Inc. and shall be employed at the Company. The Executive’s
principal employment duties and responsibilities shall be those duties and
responsibilities customary for the position of Senior Vice President of the
Trust and President of First Potomac Management Inc. and such other executive
duties and responsibilities as the Chief Executive Officer of the Trust shall
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assign to the Executive. Executive shall perform all duties and accept all
responsibilities incident to such position as may be reasonably assigned to him
by the Chief Executive Officer of the Trust. The Executive shall report
directly to the Chief Executive Officer of the Trust.

     1.3. Extent of Service. Executive agrees to use Executive’s best efforts
to carry out Executive’s duties and responsibilities under Section 1.2 hereof
and, consistent with the other provisions of this Agreement, to devote
substantially all of Executive’s business time, attention and energy thereto.
The foregoing shall not be construed as preventing Executive from making
investments in other businesses or enterprises, provided that Executive agrees
not to become engaged in any other business activity which, in the reasonable
judgment of the Chief Executive Officer of the Trust, is likely to interfere
with Executive’s ability to discharge Executive’s duties and responsibilities
to the Company and the Trust.

     1.4. Base Salary. For all the services rendered by Executive hereunder,
the Company shall pay Executive a base salary (“Base Salary”), commencing on
the commencement of the Trust’s initial public offering, at the annual rate of
$165,000, payable in installments at such times as the Company customarily pays
its other senior level executives. Executive’s Base Salary shall be reviewed
annually for appropriate increases by the Board of Trustees of the Trust (the
“Board”) (or the compensation committee of the Board) pursuant to the Board’s
normal performance review policies for senior level executives.

     1.5. Annual Incentive Award. Executive shall be entitled to receive an
annual cash incentive bonus for each fiscal year during the Employment Term
consistent with a bonus policy adopted by the Board (or the compensation
committee of the Board) (the “Bonus Policy”). If the Executive or the Company,
as the case may be, satisfies the performance criteria contained in such Bonus
Policy for a fiscal year, Executive shall receive an annual incentive bonus in
an amount determined by the Board (or the compensation committee of the Board).
If the Executive or the Company, as the case may be, fails to satisfy the
performance criteria contained in such Bonus Policy for a fiscal year, the
Board (or the compensation committee of the Board) may determine whether any
incentive bonus shall be payable to Executive for that year. For purposes of
this Agreement, the term “Incentive Bonus” shall mean the amount established
pursuant to this Section 1.5.

     1.6. Retirement, Welfare and Other Benefit Plans and Programs. During the
Employment Term, Executive shall be entitled to participate in all employee
retirement and welfare benefit plans and programs made available to the
Company’s senior level executives as a group or to its employees generally, as
such retirement and welfare plans may be in effect from time to time and
subject to the eligibility requirements of the plan. During the Employment
Term, Executive shall be entitled to vacation and sick leave in accordance with
the Company’s vacation, holiday and other pay for time not worked policies.
Nothing in this Agreement shall prevent the Company from amending or
terminating any retirement, welfare or other employee benefit plans or programs
from time to time as the Company deems appropriate.

     1.7. Reimbursement of Expenses. Executive shall be provided with
reimbursement of reasonable expenses related to Executive’s employment by the
Company on a basis no less

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favorable than that which may be authorized from time to time for senior level
executives as a group.

     1.8. Incentive Compensation.

          (a) Initial Option. At the time of the initial public offering of the
Trust’s common shares of beneficial interest, $0.001 par value, (the “Shares”),
the Trust shall grant to Executive an option (the “Initial Option”) to purchase
50,000 Shares, at a price per Share equal to the public offering price of the
Shares. The Initial Option shall become exercisable with respect to 1/4 of the
Shares on the first anniversary of the date of grant and the remaining 3/4 of
the Shares shall become exercisable in increments of 6.25% on the same day as
the date of grant of every third month, beginning with the third month that
commences after the first anniversary of the date of grant, provided that the
Executive is employed by or providing service to the Company or Trust on each
such date. All other terms and conditions of the Initial Option shall be
governed by the Trust’s standard stock option agreement for such grants.

          (b) Executive shall be entitled to participate in any short-term and
long-term incentive programs (including without limitation the 2003 Equity
Compensation Plan and any subsequently implemented stock option plans)
established by the Company or the Trust for the Company’s senior level
executives generally, at levels commensurate with the benefits provided to
other senior executives and with adjustments appropriate for his position as
the President and Chief Executive Officer of the Company.

     2.     Termination. Executive’s employment shall terminate upon the
occurrence of any of the following events:

     2.1. Termination Without Cause; Resignation for Good Reason.

          (a) The Company may remove Executive at any time without Cause (as defined
in Section 2.7) from the position in which Executive is employed hereunder (in
which case the Employment Term shall be deemed to have ended) not less than
thirty (30) days’ prior written notice to Executive; provided, however, that,
in the event that such notice is given, Executive shall be under no obligation
to render any additional services to the Company and shall be allowed to seek
other employment. In addition, Executive may initiate termination of
employment by resigning under this Section 2.1 for Good Reason (as defined in
Section 2.7). Executive shall give the Company not less than thirty (30) days’
prior written notice of such resignation.

          (b) Upon any removal or resignation described in Section 2.1(a) above,
Executive shall be entitled to receive only the amount due to Executive under
the Company’s then current severance pay plan for employees, if any. No other
payments or benefits shall be due under this Agreement to Executive, but
Executive shall be entitled to any benefits accrued or earned in accordance
with the terms of any applicable benefit plans and programs of the Company.

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          (c) Notwithstanding the provisions of Section 2.1(b), in the event that
Executive executes and does not revoke a written release upon such removal or
resignation, substantially in the form attached hereto as Exhibit A (the
“Release”), of any and all claims against the Company and all related parties
with respect to all matters arising out of Executive’s employment by the
Company, or the termination thereof (other than claims for any entitlements
under the terms of this Agreement or under any plans or programs of the Company
under which Executive has accrued a benefit), Executive shall be entitled to
receive, in lieu of the payment described in Section 2.1(b), the following:

               (i) One (1) times Executive’s Base Salary, at the rate in effect
immediately before Executive’s termination of employment, payable in equal
installments, consistent with the Company’s past payroll practices, over the
twelve (12) month period after the Executive’s Date of Termination, commencing
with the first payroll period that occurs after the period during which
Executive’s right to revoke his acceptance of the terms of the Release has
expired. Notwithstanding the foregoing, the Company may determine, in its sole
discretion and at any time, to provide that the amounts payable under this
subsection (i) shall be paid to Executive in a lump sum, as opposed to
installments over the twelve (12) month period.

               (ii) Pro rated Incentive Pay (as defined in Section 2.7) for the year in
which Executive’s Date of Termination occurs. The pro rated Incentive Pay
shall be based on the Executive’s Incentive Pay for the fiscal year in which
Executive’s Date of Termination occurs, multiplied by a fraction, the numerator
of which is the number of days during which Executive was employed by the
Company in the fiscal year of his termination and the denominator of which is
365. Such pro rated Incentive Pay shall be paid to Executive in equal
installments, consistent with the Company’s past payroll practices, over the
twelve (12) month period after the Executive’s Date of Termination, commencing
with the first payroll period that occurs after the period during which
Executive’s right to revoke his acceptance of the terms of the Release has
expired. Notwithstanding the foregoing, the Company may determine, in its sole
discretion and at any time, to provide that the amounts payable under this
subsection (ii) shall be paid to Executive in a lump sum, as opposed to
installments over the twelve (12) month period.

               (iii) For a period of twelve (12) months following the Date of
Termination, Executive shall continue to receive the medical coverage in effect
at the date of his termination (or generally comparable coverage) for himself
and, where applicable, his spouse and dependents, as the same may be changed
from time to time for employees generally, as if Executive had continued in
employment during such period; or, as an alternative, the Company may elect to
pay Executive cash in lieu of such coverage in an amount equal to Executive’s
after-tax cost of continuing such coverage, where such coverage may not be
continued (or where such continuation would adversely affect the tax status of
the plan pursuant to which the coverage is provided). The COBRA health care
continuation coverage period under section 4980B of the Internal Revenue Code
of 1986, as amended, (the “Code”) shall run concurrently with the foregoing
twelve (12) month benefit period.

               (iv) Notwithstanding any provision to the contrary in any applicable plan,
program or agreement, all outstanding stock options, restricted stock and other
equity rights held by the Executive as of Executive’s Date of Termination shall
become fully vested and/or

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exercisable, as applicable, as of Executive’s Date of Termination. All
outstanding stock options and other equity rights that have an exercise period
shall remain exercisable for the shorter of: (A) three (3) years from the
Executive’s Date of Termination or (B) the end of their applicable original
term.

               (v) Executive shall receive any other amounts earned, accrued or owing but
not yet paid under Section 1 above and any benefits accrued or earned in
accordance with the terms of any applicable benefit plans and programs of the
Company.

     2.2. Voluntary Termination. Executive may voluntarily terminate his
employment for any reason upon thirty (30) days’ prior written notice. In such
event, after the effective date of such termination, except as provided in
Section 2.1 with respect to a resignation for Good Reason, no further payments
shall be due under this Agreement, except that Executive shall be entitled to
any benefits due in accordance with the terms of any applicable benefit plans
and programs of the Company.

     2.3. Disability. The Company may terminate Executive’s employment if
Executive has been unable to perform the material duties of his employment for
a period of three (3) consecutive months in any 12-month period because of
physical or mental injury or illness (“Disability”); provided, however, that
the Company shall continue to pay Executive’s Base Salary until the Company
acts to terminate Executive’s employment. Executive agrees, in the event of a
dispute under this Section 2.3 relating to Executive’s Disability, to submit to
a physical examination by a licensed physician jointly selected by the Board
and Executive. If the Company terminates Executive’s employment for
Disability, Executive shall be entitled to receive the following:

          (a) The Company shall pay to Executive any amounts earned, accrued or
owing but not yet paid under Section 1 above and pro rated Incentive Pay for
the fiscal year in which his Date of Termination occurs, calculated according
to Section 2.1(c)(ii) above.

          (b) All outstanding stock options, restricted stock and other equity
rights held by the Executive as of Executive’s Date of Termination shall become
fully vested and/or exercisable, as applicable, as of Executive’s Date of
Termination. All outstanding stock options and other equity rights that have
an exercise period shall remain exercisable for the shorter of: (A) three (3)
years from the Executive’s Date of Termination or (B) the end of their
applicable original term.

          (c) Executive shall receive any other benefits accrued or earned in
accordance with the terms of any applicable benefit plans and programs of the
Company.

     2.4. Death. If Executive dies while employed by the Company, the Company
shall pay to Executive’s executor, legal representative, administrator or
designated beneficiary, as applicable, (i) any amounts earned, accrued or owing
but not yet paid under Section 1 above and any benefits accrued or earned under
the Company’s benefit plans and programs, (ii) a pro rated Incentive Pay for
the fiscal year in which Executive’s death occurs, which bonus shall be
calculated according to Section 2.1(c)(ii) above and (iii) all outstanding
stock options, restricted

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stock and other equity rights held by the Executive as of Executive’s Date of
Termination shall become fully vested and/or exercisable, as applicable, as of
Executive’s Date of Termination and all outstanding stock options and other
equity rights that have an exercise period shall remain exercisable for the
shorter of: (A) three (3) years from the Executive’s Date of Termination or (B)
the end of their applicable original term. Otherwise, the Company shall have
no further liability or obligation under this Agreement to Executive’s
executors, legal representatives, administrators, heirs or assigns or any other
person claiming under or through Executive.

     2.5. Cause. The Company may terminate Executive’s employment at any time
for Cause upon written notice to Executive, in which event all payments under
this Agreement shall cease, except for Base Salary to the extent already
accrued. Executive shall be entitled to any benefits accrued or earned before
his termination in accordance with the terms of any applicable benefit plans
and programs of the Company.

     2.6. Notice of Termination. Any termination of Executive’s employment
shall be communicated by a written notice of termination to the other party
hereto given in accordance with Section 9. The notice of termination shall (i)
indicate the specific termination provision in this Agreement relied upon, (ii)
briefly summarize the facts and circumstances deemed to provide a basis for a
termination of employment and the applicable provision hereof, and (iii)
specify the Date of Termination in accordance with the requirements of this
Agreement.

     2.7. Definitions.

          (a) “Cause” shall mean any of the following grounds for termination of
Executive’s employment:

               (i) Executive shall have been convicted of, or a plea of guilty or nolo
contendre to, a felony,

               (ii) Executive intentionally and continually fails substantially to
perform his reasonably assigned material duties to the Company (other than a
failure resulting from Executive’s incapacity due to physical or mental
illness), which failure has been materially and demonstrably detrimental to the
Company and has continued for a period of at least thirty (30) days after a
written notice of demand for substantial performance, signed by a duly
authorized officer of the Trust, has been delivered to Executive specifying the
manner in which Executive has failed substantially to perform,

               (iii) Executive engages in willful misconduct in the performance of his
duties, or

               (iv) Executive breaches any non-competition, non-disclosure or
non-solicitation agreement in effect with the Company.

          (b) “Date of Termination” shall mean the date that the termination of
Executive’s employment with the Company is effective on account of the
Executive’s death, Executive’s Disability, termination by the Company for Cause
or without Cause or by the

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Executive for Good Reason or without Good Reason, as the case may be. The
Employment Term shall end on the Date of Termination.

          (c) “Good Reason” shall mean the occurrence of any of the following events
or conditions, unless Executive has expressly consented in writing thereto or
unless the event is remedied by the Company promptly after receipt of notice
thereof given by Executive:

               (i) a substantial reduction in Executive’s Base Salary;

               (ii) a demotion of Executive;

               (iii) a material reduction of Executive’s duties hereunder;

               (iv) the Company’s requiring Executive to be based at a location other
than in the Washington, D.C. metropolitan area;

               (v) the non-renewal of the Agreement by the Company in accordance with
Section 1.1; or

               (vi) any material breach of this Agreement by the Company.

          (d) “Incentive Pay” shall mean the greater of (i) Executive’s maximum
Incentive Bonus for which Executive was eligible during the period that
includes the Date of Termination or (ii) the highest aggregate bonus or
incentive payment paid to Executive during any of the three (3) full calendar
years prior to his Date of Termination. For purposes of this definition,
“Incentive Pay” does not include any stock option, stock appreciation, stock
purchase, restricted stock or similar plan, program, arrangement or grant, one
time bonus or payment (including, but not limited to, any sign-on bonus), any
amounts contributed by the Company for the benefit of Executive to any
qualified or nonqualified deferred compensation plan, or any amounts designated
by the parties as amounts other than Incentive Pay.

     3.     Change in Control.

     3.1 Effect of Change in Control. If a Change in Control occurs and
Executive’s employment terminates under the circumstances described below, the
provisions of this Section 3 shall apply, instead of the provisions of Section
2.1.

     3.2 Termination Without Cause Upon or After a Change in Control. Upon or
after a Change in Control, the Company (by action of the Board) may remove
Executive at any time without Cause from the position in which Executive is
employed hereunder (in which case the Employment Term shall be deemed to have
ended) upon not less than sixty (60) days’ prior written notice pursuant to
Section 9 to Executive; provided, however, that, in the event that such notice
is given, Executive shall be under no obligation to render any additional
services to the Company and shall be allowed to seek other employment. This
provision shall not apply if Executive’s employment is terminated by the
Company on account of the Executive’s death or Disability.

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     3.3 Resignation for Good Reason Upon or After a Change in Control. Upon
or after a Change in Control, Executive may initiate termination of employment
by resigning under this Section 3 for Good Reason. Executive shall give the
Company not less than sixty (60) days’ prior written notice pursuant to Section
9 of such resignation.

     3.4 Benefits Payable Upon Termination Without Cause or Resignation for
Good Reason Upon or After a Change in Control.

          (a) Upon any removal or resignation described in Section 3.2 or 3.3 above,
Executive shall be entitled to receive only the amount due to Executive under
the Company’s then current severance pay plan for employees, if any. No other
payments or benefits shall be due under this Agreement to Executive, but
Executive shall be entitled to any benefits accrued or earned in accordance
with the terms of any applicable benefit plans and programs of the Company.

          (b) Notwithstanding the provisions of Section 3.4(a), in the event of a
removal or resignation described in Section 3.2 or 3.3 that occurs (i) (A) not
more than six (6) months prior to the date on which a Change in Control occurs
or (B) following the commencement of any discussion with a third person that
ultimately results in a Change in Control, or (ii) upon or after a Change in
Control if the termination occurs within the one (1) year period after the
Change in Control, Executive shall be entitled to receive the severance
benefits described below, in lieu of the payment described in Section 3.4(a),
if Executive executes and does not revoke a written Release upon such removal
or resignation. If Executive is entitled to the benefits described in this
Section 3.4(b) by reason of clause (i) above, Executive shall receive the
compensation and benefits described in Section 2.1(c) above after his Date of
Termination, in accordance with the provisions of Section 2.1(c), regardless of
whether the Change in Control actually occurs, and Executive shall receive the
additional compensation and benefits described in this Section 3.4(b) only if
the Change in Control is consummated and shall receive such additional amounts
after the consummation of the Change in Control, in accordance with the
provisions of this Section 3.4(b). For purposes of clause (i)(B) above, to be
eligible to receive the amounts described in this Section 3.4(b), the Change in
Control must be consummated within the twelve (12) month period following the
Executive’s Date of Termination. Payment of the lump sum benefits described
below (other than as described in subsection (ii) below) shall be made within
thirty (30) days after the Executive’s Date of Termination or the end of the
revocation period for the Release, if later.

               (i) Executive shall receive a lump sum cash payment equal to (x) two (2)
times Executive’s Base Salary at the rate in effect immediately before
Executive’s termination of employment and (y) two (2) times Executive’s
Incentive Pay.

               (ii) Executive shall receive his pro rated Incentive Pay for the year in
which Executive’s Date of Termination occurs. The pro rated Incentive Pay
shall be based on the Executive’s Incentive Pay for the fiscal year in which
Executive’s Date of Termination occurs, multiplied by a fraction, the numerator
of which is the number of days during which Executive was employed by the
Company in the fiscal year of his termination and the

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denominator of which is 365. Payment shall be made within thirty (30) days
after the effective date of the termination (or the end of the revocation
period for the Release, if later).

               (iii) For a period of twenty-four (24) months following the Date of
Termination, Executive shall continue to receive the medical coverage in effect
at the date of his termination (or generally comparable coverage) for himself
and, where applicable, his spouse and dependents, as the same may be changed
from time to time for employees generally, as if Executive had continued in
employment during such period; or, as an alternative, the Company may elect to
pay Executive cash in lieu of such coverage in an amount equal to Executive’s
after-tax cost of continuing such coverage, where such coverage may not be
continued (or where such continuation would adversely affect the tax status of
the plan pursuant to which the coverage is provided). The COBRA health care
continuation coverage period under section 4980B of the Code shall run
concurrently with the foregoing twenty-four (24) month benefit period.

               (iv) All outstanding stock options and other equity rights held by the
Executive as of his Date of Termination that have an exercise period shall
remain exercisable for the shorter of: (A) five (5) years from the Executive’s
Date of Termination or (B) the end of their applicable original term.

               (v) Executive shall receive any other amounts earned, accrued or owing but
not yet paid under Section 1 above and any benefits accrued or earned in
accordance with the terms of any applicable benefit plans and programs of the
Company.

     3.5 Acceleration of Vesting and Exercisability on a Change in Control.
Notwithstanding any provision to the contrary in any applicable plan, program
or agreement, upon the occurrence of a Change in Control, all outstanding stock
options, restricted stock and other equity rights held by the Executive will
become fully vested and/or exercisable, as applicable, on the date in which the
Change in Control occurs.

     3.6 Increase in Payments Upon a Change in Control.

          (a) Anything in this Agreement to the contrary notwithstanding, in the
event that it shall be determined that any payment or distribution by the
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a “Payment”), would constitute an “excess parachute payment” within
the meaning of section 280G of the Code, the Company shall pay Executive an
additional amount (the “Gross-Up Payment”) such that the net amount retained by
Executive after deduction of any excise tax imposed under section 4999 of the
Code, and any federal, state and local income tax, employment tax and excise
tax imposed upon the Gross-Up Payment, shall be equal to the Payment. For
purposes of determining the amount of the Gross-Up Payment, Executive shall be
deemed to pay federal income tax and employment taxes at the highest marginal
rate of federal income and employment taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of Executive’s
residence on Executive’s Date of Termination, net of the maximum reduction in
federal income taxes that may be obtained from the deduction of such state and
local taxes.

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          (b) All determinations to be made under this Section 3.6 shall be made by
the Company’s independent public accountant immediately prior to the Change in
Control (the “Accounting Firm”), which firm shall provide its determinations
and any supporting calculations both to the Company and Executive within twenty
(20) days after the Executive’s Date of Termination. Any such determination by
the Accounting Firm shall be binding upon the Company and Executive. Within
ten days after the Accounting Firm’s determination, the Company shall pay the
Gross-Up Payment to Executive.

          (c) Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after Executive knows of such
claim and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. Executive shall not pay such claim
prior to the expiration of the thirty (30) day period following the date on
which Executive gives such notice to the Company (or such shorter period ending
on the date that any payment of taxes with respect to such claim is due). If
the Company notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, Executive shall:

               (i) give the Company any information reasonably requested by the Company
relating to such claim,

               (ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company,

               (iii) cooperate with the Company in good faith in order to contest such
claim effectively, and

               (iv) permit the Company to participate in any proceedings relating to such
claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any excise tax, income tax or employment tax, including
interest and penalties, with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 3.6, the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearing and
conferences with the taxing authority in respect of such claim. The Company’s
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder, and Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.

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          (d) All of the fees and expenses of the Accounting Firm in performing the
determinations referred to in subsections (b) and (c) above shall be borne
solely by the Company.

     3.7 Definition of a Change in Control. As used herein, a “Change in
Control” shall be deemed to have occurred if:

          (a) Any “person” (as such term is used in sections 13(d) and 14(d) of the
Exchange Act) becomes a “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Trust representing
more than 50% of the voting power of the then outstanding securities of the
Trust; provided that a Change in Control shall not be deemed to occur as a
result of a change of ownership resulting from the Trust’s initial public
offering or the death of a shareholder, and a Change in Control shall not be
deemed to occur as a result of a transaction in which the Trust becomes a
subsidiary of another real estate investment trust and in which the
shareholders of the Trust, immediately prior to the transaction, will
beneficially own, immediately after the transaction, shares entitling such
shareholders to more than 50% of all votes to which all shareholders of the
parent real estate investment trust would be entitled in the election of
trustees (without consideration of the rights of any class of stock to elect
trustees by a separate class vote);

          (b) The consummation of (i) a merger or consolidation of the Trust with
another real estate investment trust where the shareholders of the Trust,
immediately prior to the merger or consolidation, will not beneficially own,
immediately after the merger or consolidation, shares entitling such
shareholders to more than 50% of all votes to which all shareholders of the
surviving real estate investment trust would be entitled in the election of
trustees (without consideration of the rights of any class of stock to elect
trustees by a separate class vote), or where the members of the Board,
immediately prior to the merger or consolidation, would not, immediately after
the merger or consolidation, constitute a majority of the board of trustees of
the surviving real estate investment trust, (ii) a sale or other disposition of
all or substantially all of the assets of the Trust, or (iii) a liquidation or
dissolution of the Trust; or

          (c) After the effective date of this Agreement, trustees are elected such
that a majority of the members of the Board shall have been members of the
Board for less than two years, unless the election or nomination for election
of each new trustee who was not a trustee at the beginning of such two-year
period was approved by a vote of at least two-thirds of the trustees then still
in office who were trustees at the beginning of such period.

     4.     Non-Competition, Confidentiality and Non-Solicitation. Executive
hereby acknowledges that, during and solely as a result of his employment by
the Company, Executive will receive special training and education with respect
to the operation of the Company’s business and other related matters, and
access to confidential information and business and professional contacts. In
consideration of Executive’s employment and in consideration of the special
and unique opportunities afforded by the Company to Executive as a result of
Executive’s employment, Executive hereby agrees to execute and abide by the
terms of the Non-Competition, Confidentiality and Non-Solicitation Agreement
attached as Exhibit B. Executive

11

 

agrees and acknowledges that his employment is full, adequate and sufficient
consideration for the restrictions and obligations set forth in the foregoing
Agreements.

     5.     Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or
limit Executive’s continuing or future participation in or rights under any
benefit, bonus, incentive or other plan or program provided by the Company and
for which Executive may qualify; provided, however, that if Executive becomes
entitled to and receives the payments provided for in Section 2 and 3 of this
Agreement, Executive hereby waives Executive’s right to receive payments under
any severance plan or similar program applicable to all employees of the
Company.

     6.     Survivorship. The respective rights and obligations of the parties
under this Agreement shall survive any termination of Executive’s employment to
the extent necessary to the intended preservation of such rights and
obligations.

     7.     Mitigation. Executive shall not be required to mitigate the amount of
any payment or benefit provided for in this Agreement by seeking other
employment or otherwise and there shall be no offset against amounts due
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that Executive may obtain.

     8.     Arbitration; Expenses. In the event of any dispute under the
provisions of this Agreement, other than a dispute in which the primary relief
sought is an equitable remedy such as an injunction, the parties shall be
required to have the dispute, controversy or claim settled by arbitration in
Washington, D.C. in accordance with the National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association,
before a panel of three arbitrators, two of whom shall be selected by the
Company and Executive, respectively, and the third of whom shall be selected by
the other two arbitrators. Any award entered by the arbitrators shall be
final, binding and nonappealable and judgment may be entered thereon by either
party in accordance with applicable law in any court of competent jurisdiction.
This arbitration provision shall be specifically enforceable. The arbitrators
shall have no authority to modify any provision of this Agreement or to award a
remedy for a dispute involving this Agreement other than a benefit specifically
provided under or by virtue of the Agreement. If Executive prevails on any
material issue which is the subject of such arbitration or lawsuit, the Company
shall be responsible for all of the fees of the American Arbitration
Association and the arbitrators and any expenses relating to the conduct of the
arbitration (including the Company’s and Executive’s reasonable attorneys’ fees
and expenses). Otherwise, each party shall be responsible for its own expenses
relating to the conduct of the arbitration (including reasonable attorneys’
fees and expenses) and shall share the fees of the American Arbitration
Association.

     9.     Notices. All notices and other communications required or permitted
under this Agreement or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when hand delivered or mailed
by registered or certified mail, as follows (provided that notice of change of
address shall be deemed given only when received):

12

 

     If to the Company, to:

	 	 	 	First Potomac Realty Trust

7200 Wisconsin Avenue, Suite 310

Bethesda MD 20814

Attention: Douglas J. Donatelli

     With a required copy to:

	 	 	 	Morgan, Lewis & Bockius LLP

1701 Market Street

Philadelphia PA 19103-2921

Attention: James W. McKenzie, Jr., Esquire

     If to Executive, to:

	 	 	 	James H. Dawson

First Potomac Realty Trust

7200 Wisconsin Avenue, Suite 310

Bethesda MD 20814

or to such other names or addresses as the Company or Executive, as the case
may be, shall designate by notice to each other person entitled to receive
notices in the manner specified in this Section.

     10.     Contents of Agreement; Amendment and Assignment.

          (a) This Agreement sets forth the entire understanding between the parties
hereto with respect to the subject matter hereof and cannot be changed,
modified, extended or terminated except upon written amendment approved by the
Board and executed on its behalf by a duly authorized officer and by Executive.

          (b) All of the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective heirs,
executors, administrators, legal representatives, successors and assigns of the
parties hereto, except that the duties and responsibilities of Executive under
this Agreement are of a personal nature and shall not be assignable or
delegatable in whole or in part by Executive. The Company and Trust shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all of the
business or assets of the Company or Trust, within fifteen (15) days of such
succession, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent as the Company and Trust would be required to
perform if no such succession had taken place.

     11.     Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect any other provision or application of this

13

 

Agreement which can be given effect without the invalid or unenforceable
provision or application and shall not invalidate or render unenforceable such
provision or application in any other jurisdiction. If any provision is held
void, invalid or unenforceable with respect to particular circumstances, it
shall nevertheless remain in full force and effect in all other circumstances.

     12.     Remedies Cumulative; No Waiver. No remedy conferred upon a party by
this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given under this Agreement or now or hereafter existing at law or in
equity. No delay or omission by a party in exercising any right, remedy or
power under this Agreement or existing at law or in equity shall be construed
as a waiver thereof, and any such right, remedy or power may be exercised by
such party from time to time and as often as may be deemed expedient or
necessary by such party in its sole discretion.

     13.     Beneficiaries/References. Executive shall be entitled, to the extent
permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit payable under this
Agreement following Executive’s death by giving the Company written notice
thereof. In the event of Executive’s death or a judicial determination of
Executive’s incompetence, reference in this Agreement to Executive shall be
deemed, where appropriate, to refer to Executive’s beneficiary, estate or other
legal representative.

     14.     Miscellaneous. All Section headings used in this Agreement are for
convenience only. This Agreement may be executed in counterparts, each of
which is an original. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any of the other
counterparts.

     15.     Withholding. All payments under this Agreement shall be made subject
to applicable tax withholding, and the Company shall withhold from any payments
under this Agreement all federal, state and local taxes as the Company is
required to withhold pursuant to any law or governmental rule or regulation.
Except as specifically provided otherwise in this Agreement, Executive shall
bear all expense of, and be solely responsible for, all federal, state and
local taxes due with respect to any payment received under this Agreement.

     16.     Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of Maryland without giving effect to any conflict
of laws provisions.

[SIGNATURE PAGE FOLLOWS]

14

 

     IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.

	 	 	 	 	 
	 	 	FIRST POTOMAC REALTY

INVESTMENT LIMITED PARTNERSHIP
	 	 	 	 	 
	 	 	
By:
	First Potomac Realty Trust

Its general partner
	 	 	 	 	 
	 	 	 	By: /s/ Douglas J. Donatelli
	 	 	 	 	

	 	 	 	Name: Douglas J. Donatelli
	 	 	 	Title: President and CEO
	 	 	 	 	 
	 	 	/s/ James H. Dawson

	 	 	EXECUTIVE

GUARANTEE:

For good and valuable consideration, including the Executive’s agreement to
serve as an officer of First Potomac Realty Trust, the obligations of First
Potomac Realty Investment Limited Partnership under this Employment Agreement,
dated October 8, 2003, with James H. Dawson, shall be guaranteed by First
Potomac Realty Trust.

FIRST POTOMAC REALTY TRUST

	 	 	 
	By:	 	
/s/ Douglas J. Donatelli
	 	 	

	 	 	
Name: Douglas J. Donatelli
	 	 	
Title: President and CEO

Dated: October 8, 2003

15

 

Exhibit A

Separation of Employment Agreement and General Release

     THIS SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE (the
“Agreement”) is made as of this      day of      ,      , by and between
First Potomac Realty Investment Limited Partnership (the “Company”) and
              (“Executive”).

     WHEREAS, Executive formerly was employed by the Company as      
pursuant to the terms of the Employment Agreement, dated
     , 200 ,
(the “Employment Agreement”);

     WHEREAS, the Employment Agreement provides for certain benefits in the
event that Executive’s employment is terminated on account of a reason set
forth in the Employment Agreement;

     WHEREAS, Executive and the Company mutually desire to terminate
Executive’s employment on an amicable basis, such termination to be effective
     ,      (“Date of Resignation”); and

     WHEREAS, in connection with the termination of Executive’s employment, the
parties have agreed to a separation package and the resolution of any and all
disputes between them.

     NOW, THEREFORE, IT IS HEREBY AGREED by and between Executive and the
Company as follows:

     1.    (a) Executive, for and in consideration of the commitments of the
Company as set forth in paragraph 5 of this Agreement, and intending to be
legally bound, does hereby REMISE, RELEASE AND FOREVER DISCHARGE the Company,
its affiliates, subsidiaries and parents, and its officers, directors,
employees, and agents, 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, whether known
or unknown, or which his or her heirs, executors, or administrators may have,
by reason of any matter, cause or thing whatsoever, from the beginning of his
or her employment to the date of this Agreement, and particularly, but without
limitation of the foregoing general terms, any claims arising from or relating
in any way to his or her 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, the Older Workers Benefit
Protection Act (“OWBPA”), Title VII of The Civil Rights Act of 1964, the
Americans with Disabilities Act, the Family and Medical Leave Act of 1993, the
Employee Retirement Income Security Act of 1974, [State Fair Employment
Practice Law], 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. This Agreement is effective without
regard to the legal nature of the claims raised and without regard

A-1

 

to whether any such claims are based upon tort, equity, implied or express
contract or discrimination of any sort.

          (b)    To the fullest extent permitted by law, and subject to the provisions
of paragraph 10 below, Executive represents and affirms that (i) [other than
     ,] he or she has not filed or caused to be filed on his or her behalf
any claim for relief against the Company or any Releasee and, to the best of
his or her knowledge and belief, no outstanding claims for relief have been
filed or asserted against the Company or any Releasee on his or her behalf; and
(ii) [other than      ,] he or she has not reported any improper, unethical
or illegal conduct or activities to any supervisor, manager, department head,
human resources representative, agent or other representative of the Company,
to any member of the Company’s legal or compliance departments, or to the
ethics hotline, and has no knowledge of any such improper, unethical or illegal
conduct or activities; and (iii) he or she will not file, commence, prosecute
or participate in any judicial or arbitral action or proceeding against the
Company or any Releasee based upon or arising out of any act, omission,
transaction, occurrence, contract, claim or event existing or occurring on or
before the date of this Agreement.

     2.    In consideration of the Company’s agreements as set forth in paragraph
5 herein, Executive agrees to be bound by the terms of the Company’s
Non-Competition, Confidentiality and Non-Solicitation Agreement executed by the
Executive on      ,      .

     3.    Executive further agrees and recognizes that he or she has permanently
and irrevocably severed his or her employment relationship with the Company,
that he or she 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 or her in the future.

     4.    Executive further agrees that he or she will not disparage or subvert
the Company, or make any statement reflecting negatively on the Company, its
affiliated corporations or entities, or any of their officers, directors,
employees, agents or representatives, including, but not limited to, any
matters relating to the operation or management of the Company, Executive’s
employment and the termination of his or her employment, irrespective of the
truthfulness or falsity of such statement.

     5.    In consideration for Executive’s agreement as set forth herein, the
Company agrees:

[Note: Severance Benefits provided under Employment Agreement would be inserted
in this paragraph 5.]

     6.    Executive understands and agrees that the payments, benefits and
agreements provided in this Agreement are being provided to him or her in
consideration for his or her acceptance and execution of, and in reliance upon
his or her representations in, this Agreement. Executive acknowledges that if
he or she had not executed this Agreement containing a release of all claims
against the Company, he or she would only have been entitled to the payments
provided in the Company’s standard severance pay plan for employees.

A-2

 

     7.    Executive acknowledges and agrees that the Company previously has
satisfied any and all obligations owed to him or her under any employment
agreement or offer letter he or she has with the Company and, further, that
this Agreement supersedes any employment agreement or offer letter he or she
has with the Company, and any and all prior agreements or understandings,
whether written or oral, between the parties shall remain in full force and
effect to the extent not inconsistent with this Agreement, and further, that,
except as set forth expressly herein, no promises or representations have been
made to him or her in connection with the termination of his or her employment
agreement or offer letter with the Company, or the terms of this Agreement.

     8.    Executive agrees not to disclose the terms of this Agreement to anyone,
except his or her spouse, attorney and, as necessary, tax/financial advisor.
Likewise, the Company agrees that the terms of this Agreement will not be
disclosed except as may be necessary to obtain approval or authorization to
fulfill its obligations hereunder or as required by law. It is expressly
understood that any violation of the confidentiality obligation imposed
hereunder constitutes a material breach of this Agreement.

     9.    Executive represents that he or she does not presently have in his or
her possession any records and business documents, whether on computer or hard
copy, and other materials (including but not limited to computer disks and
tapes, computer programs and software, office keys, correspondence, files,
customer lists, technical information, customer information, pricing
information, business strategies and plans, sales records and all copies
thereof) (collectively, the “Corporate Records”) provided by the Company and/or
its predecessors, subsidiaries or affiliates or obtained as a result of his or
her prior employment with the Company and/or its predecessors, subsidiaries or
affiliates, or created by Executive while employed by or rendering services to
the Company and/or its predecessors, subsidiaries or affiliates. Executive
acknowledges that all such Corporate Records are the property of the Company.
In addition, Executive shall promptly return in good condition any and all
beepers, credit cards, cellular telephone equipment, business cards and
computers. As of the Date of Resignation, the Company will make arrangements
to remove, terminate or transfer any and all business communication lines
including network access, cellular phone, fax line and other business numbers.

     10.    Nothing in this Agreement shall prohibit or restrict Executive from:
(i) making any disclosure of information required by law; (ii) providing
information to, or testifying or otherwise assisting in any investigation or
proceeding brought by, any federal regulatory or law enforcement agency or
legislative body, any self-regulatory organization, or the Company’s
[designated legal, compliance or human resources officer]; or (iii) filing,
testifying, participating in or otherwise assisting in a proceeding relating to
an alleged violation of any federal, state or municipal law relating to fraud,
or any rule or regulation of the Securities and Exchange Commission or any
self-regulatory organization.

     11.    The parties agree and acknowledge that the agreement by the Company
described herein, and the settlement and termination of any asserted or
unasserted claims against the Releasees, 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.

A-3

 

     12.    Executive agrees and recognizes that should he or she breach any of
the obligations or covenants set forth in this Agreement, the Company will have
no further obligation to provide Executive with the consideration set forth
herein, and will have the right to seek repayment of all consideration paid up
to the time of any such breach. Further, Executive acknowledges in the event
of a breach of this Agreement, Releasees may seek any and all appropriate
relief for any such breach, including equitable relief and/or money damages,
attorney’s fees and costs.

     13.    Executive further agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as to an equitable accounting of all earnings, profits
and other benefits arising from any violations of this Agreement, which rights
shall be cumulative and in addition to any other rights or remedies to which
the Company may be entitled.

     14.    This Agreement and the obligations of the parties hereunder shall be
construed, interpreted and enforced in accordance with the laws of the State of
Maryland.

     15.    Executive certifies and acknowledges as follows:

          (a)    That he or she has read the terms of this Agreement, and that he or
she understands its terms and effects, including the fact that he or she has
agreed to RELEASE AND FOREVER DISCHARGE the Company and each and everyone of
its affiliated entities from any legal action arising out of his or her
employment relationship with the Company and the termination of that employment
relationship;

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

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

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

          (e)    That the Company has provided him or her with a period of twenty-one
(21) days within which to consider this Agreement, and that Executive has
signed on the date indicated below after concluding that this Agreement is
satisfactory to him or her; and

          (f)    Executive acknowledges that this Agreement may be revoked by him or
her within seven (7) days after execution, and it shall not become effective
until the expiration of such seven day revocation period. In the event of a
timely revocation by Executive, this Agreement will be deemed null and void and
the Company will have no obligations hereunder.

A-4

 

     Intending to be legally bound hereby, Executive and the Company executed
the foregoing Confidential Separation Agreement and General Release this      
day of      ,      .

	 	 	 	 	 	 	 	 	 
	

	 	Witness:	

	[Executive]	 	 	 	 
	 	 	 	 	 	 	 	 	 
	FIRST POTOMAC REALTY

INVESTMENT LIMITED PARTNERSHIP	 	 	 	 
	 	 	 	 	 	 	 	 	 
	By:	 	First Potomac Realty Trust

Its general partner	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	
By:	 	 	 	 	 	 
	 	 	 	
	 	 	 
	 	 	Name:	 	 	 	 
	 	 	Title:	 	Witness:	

A-5

 

Exhibit B

Non-Competition, Confidentiality and Non-Solicitation Agreement

     In consideration of my new employment with First Potomac Realty Investment
Limited Partnership (the “Company”), and intending to be legally bound, I agree
as follows:

     1.    Confidentiality. I agree that my services to the Company are of a
special, unique and extraordinary character, and that my position places me in
a position of confidence and trust with the Company’s customers and employees.
I also recognize that my position with the Company will give me substantial
access to Confidential Information (as that term is defined below), the
disclosure of which to competitors of the Company would cause the Company to
suffer substantial and irreparable damage. I recognize, therefore, that it is
in the Company’s legitimate business interest to restrict my use of
Confidential Information for any purposes other than the discharge of my
employment duties at the Company, and to limit any potential appropriation of
Confidential Information by me for the benefit of the Company’s competitors and
to the detriment of the Company. Accordingly, I agree as follows:

     (a)    During and after my employment by the Company, I will not disclose to
any other person or company, nor use for my own personal benefit, except as may
be necessary in the performance of my duties as an employee of the Company, any
Confidential Information disclosed to me or of which I become aware by reason
of my employment or association with the Company.

     (b)    The term “Confidential Information” means any and all data and
information relating to the business of the Company (whether or not it
constitutes a trade secret), which is or has been disclosed to me or of which I
became aware as a consequence of my employment or relationship with the
Company, and which has value to the Company and is not generally known by its
competitors, including but not limited to information relating to experimental
and research work of the Company, the Company’s methods, processes, tools,
machinery, formulas, drawings or appliances, and the financial or business
affairs of the Company relating to services, customers, customer lists,
employees or employees’ compensation, projections, plans, development,
accounting and marketing studies or analyses. Confidential Information shall
not include any data or information that has been disclosed voluntarily to the
public by the Company (except where such public disclosure has been made by me
or some other person without authorization), or that has been independently
developed and disclosed by others, or that otherwise enters the public domain
through lawful and legitimate means.

     (c)    I agree that upon the termination of my employment with the Company, I
will not take with me or retain without written authorization any documents,
files or other property of the Company, and I will return promptly to the
Company any such documents, files or property in my possession or custody. In
connection with this Agreement, I recognize that all documents, files and
property which I have received and will receive from the Company, including but
not limited to customer lists, handbooks, memoranda, policy manuals, product
specifications, and other materials (with the exception of documents relating
to benefits to which I might be entitled following the termination of my
employment with the Company), are for the exclusive use of the

B-1

 

Company and employees who are discharging their responsibilities on behalf
of the Company, and that I have no claim or right to the continued use,
possession or custody of such documents, files or property following the
termination of my employment with the Company.

     2.    Intellectual Property. I will communicate to the Company any and all
novel ideas, concepts, inventions, processes, and improvements, patentable or
unpatentable, made or conceived by me, either solely or jointly with others,
from the time of entering the Company’s employ until I leave, along the line of
the Company’s business, or resulting from or suggested by any work which I may
do for the Company, or at its request, and I will, at all times during my
employment with the Company and after my termination for any reason, assist the
Company in every proper way (at the Company’s expense), to obtain for the
Company’s own benefit patents for any or all of these ideas, concepts,
inventions, processes and improvements in the United States and any and all
foreign countries, if patentable, by executing and delivering to the Company
any and all applications, assignments, and other instruments, by giving
evidence and testimony, and by executing and delivering to the Company all
drawings, blueprints, notes, and specifications deemed necessary by the Company
in order to apply for and obtain letters patent of the United States or foreign
countries for such ideas, concepts, inventions, processes and improvements, and
I do hereby assign and will assign and convey to the Company my entire right,
title and interest in and to all such ideas, concepts, inventions, processes,
and improvements, and all patent applications and patents thereon. I further
agree to conduct myself as described above after leaving the Company’s
employment as to all ideas, concepts, inventions, processes and improvements
conceived or disclosed while with the Company.

     3.    Non-Competition.

     (a)    During my employment by the Company and for a period of one (1) year
after my termination of employment for any reason, I will not, except with the
prior written consent of the Board of Trustees of First Potomac Realty Trust
(the “Board”), directly or indirectly, own, manage, operate, join, control,
finance or participate in the ownership, management, operation, control or
financing of, or be connected as an officer, director, employee, partner,
principal, agent, representative, consultant or otherwise with, or use or
permit my name to be used in connection with, any business or enterprise which
is engaged in any business or enterprise that acquires, operates and develops
properties in the industrial and flex property markets, within the Company’s
“Service Area,” as defined below. For the purposes of this Section, “Service
Area” shall mean (i) the States of Maryland, Delaware, North Carolina and West
Virginia, (ii) the Commonwealths of Pennsylvania and Virginia, and (iii)
Washington, D.C. I acknowledge that the Service Area is the area in which the
Company presently does, or currently intends to do, business.

     (b)    The foregoing restrictions shall not be construed to prohibit my
ownership of less than five percent of any class of securities of any
corporation which is engaged in any of the foregoing businesses and has a class
of securities registered pursuant to the Securities Exchange Act of 1934,
provided that such ownership represents a passive investment and that neither I
nor any group of persons including me in any way, either directly or
indirectly, manages or exercises control of any such corporation, guarantees
any of its financial obligations, otherwise takes any

B-2

 

part in its business, other than exercising my rights as a shareholder, or
seeks to do any of the foregoing.

     4.    Non-Solicitation.

     (a)    I covenant and agree that during my employment by the Company and for
the period of one (1) year thereafter, I will not, directly or indirectly, (i)
solicit, divert, take away, or attempt to solicit, divert or take away, any of
the Company’s principal customers, or (ii) encourage any principal customer to
reduce its patronage of the Company.

     (b)    I further covenant and agree that during my employment by the Company
and for the period of one (1) year thereafter, I will not, except with the
prior written consent of the Board, directly or indirectly, solicit or hire, or
encourage the solicitation or hiring of, any person who was an employee of the
Company at any time during the term of my employment by the Company by any
employer other than the Company for any position as an employee, independent
contractor, consultant or otherwise. The foregoing covenant shall not apply to
any person after 12 months have elapsed after the date on which such person’s
employment by the Company has terminated.

     5.    General Provisions.

     (a)    I acknowledge and agree that the type and periods of restrictions
imposed in this Agreement are fair and reasonable, and that such restrictions
are intended solely to protect the legitimate interests of the Company, rather
than to prevent me from earning a livelihood. I recognize that the Company
competes throughout the United States, and that my access to Confidential
Information makes it necessary for the Company to restrict my post-employment
activities in any market in which the Company competes, and in which my access
to Confidential Information and other proprietary information could be used to
the detriment of the Company. In the event that any restriction set forth in
this Agreement is determined to be overbroad with respect to scope, time or
geographical coverage, I agree that such a restriction or restrictions should
be modified and narrowed, either by a court or by the Company, so as to
preserve and protect the legitimate interests of the Company as described in
this Agreement, and without negating or impairing any other restrictions or
agreements set forth herein.

     (b)    I acknowledge and agree that if I should breach any of the covenants,
restrictions and agreements contained herein, irreparable loss and injury would
result to the Company, and that damages arising out of such a breach may be
difficult to ascertain. I therefore agree that, in addition to all other
remedies provided at law or at equity, the Company may petition and obtain from
a court of law or equity all necessary temporary, preliminary and permanent
injunctive relief to prevent a breach by me of any covenant contained in this
Agreement. I agree further that if it is determined by a court that I have
breached the terms of this Agreement, the Company shall be entitled to recover
from me all costs and attorneys’ fees incurred as a result of its attempts to
redress such a breach or to enforce its rights and protect its legitimate
interests.

B-3

 

     (c)      This Agreement shall be deemed to made in, and in all respects shall
be interpreted, construed and governed by and in accordance with, the laws of
the State of Maryland.

     (d)    I agree that if the Company fails to take action to remedy any breach
by me of this Agreement or any portion of the Agreement, such inaction by the
Company shall not operate or be construed as a waiver of any subsequent breach
by me of the same or any other provision, agreement or covenant.

     (e)      I agree that each covenant, paragraph and division of this Agreement
is intended to be severable and distinct, and that if any paragraph,
subparagraph, provision or term of this Agreement is deemed to be unlawful or
unenforceable, such a determination will not impair the legitimacy or
enforceability of any other aspect of the Agreement.

     (f)      I hereby state that I have read this Agreement in its entirety, that I
have been given an opportunity to consider the Agreement and discuss it with
the attorney of my choice, and that I enter into this Agreement voluntarily and
intending to be legally bound.

     (g)    I agree that the Company may assign this Agreement to any of its
successors by merger or otherwise, and that this Agreement shall inure to the
benefit of any such successor.

	 	 	 	 	 
	/s/ Thomas P. Conaghan

Witness	 	/s/ James H. Dawson

James H. Dawson
	 	 	 	 	 
	/s/ Thomas P. Conaghan

Witness	 	FIRST POTOMAC REALTY

INVESTMENT LIMITED PARTNERSHIP
	 	 	 	 	 
	 	 	
By:
	 	First Potomac Realty Trust

Its general partner
	 	 	 	 	 
	 	 	 	 	By:
/s/ Douglas J. Donatelli

Name: Douglas J. Donatelli

	 	 	 	 	
Title: President and CEO

B-4exv10w23

 

EXHIBIT 10.23

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) entered into as of October 8,
2003, by and between First Potomac Realty Investment Limited Partnership, a
Delaware limited partnership, (the “Company”) and Louis T. Donatelli
(“Executive”).

     WHEREAS, First Potomac Realty Trust, a Maryland real estate investment
trust, (the “Trust”) is the Company’s general partner;

     WHEREAS, the parties desire to enter into an agreement to reflect
Executive’s capacities in the Trust’s business and to provide for Executive’s
employment by the Company, upon the terms and conditions set forth herein; and

     WHEREAS, Executive has agreed to certain confidentiality, non-competition
and non-solicitation covenants contained hereunder, in consideration of the
additional benefits provided to Executive under this Agreement;

     NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:

     1.     Employment. The Company hereby agrees to employ Executive, and
Executive hereby accepts such employment and agrees to perform Executive’s
duties and responsibilities, in accordance with the terms, conditions and
provisions hereinafter set forth.

     1.1. Employment Term. This Agreement shall be effective as of the
commencement of the Trust’s initial public offering, and shall continue until
the third anniversary of such offering, unless the Agreement is terminated
sooner in accordance with Section 2 or 3 below. In addition, the term of the
Agreement shall automatically renew for periods of two (2) years unless either
party gives written notice to the other party, at least ninety (90) days prior
to the end of the initial term or at least ninety (90) days prior to the end of
any two (2) year renewal period, that the Agreement shall not be further
extended. The period commencing on the effective date and ending on the date
on which the term of Executive’s employment under the Agreement shall terminate
is hereinafter referred to as the “Employment Term.” If a Change in Control
(as defined in Section 3) occurs, the Employment Term shall be automatically
extended to the later of (i) the end of the then existing initial or renewal
period or (ii) the date that is two (2) years after the Change in Control,
unless the Employment Term is sooner terminated according to Section 2 or 3
below.

     1.2. Duties and Responsibilities. During the Employment Term, Executive
shall serve as the Chairman of the Board of Trustees of the Trust and shall be
employed at the Company. The Executive’s principal employment duties and
responsibilities shall be those duties and responsibilities customary for the
position of the Chairman of the Board of Trustees of the Trust and such other
duties and responsibilities as the Board of Trustees of the Trust (the “Board”)

 

 

shall reasonably assign to the Executive. Executive shall perform all duties
and accept all responsibilities incident to such position as may be reasonably
assigned to him by the Trust’s Board. The Executive shall report directly to
the Board.

     1.3. Extent of Service. Executive agrees to use Executive’s best efforts
to carry out Executive’s duties and responsibilities under Section 1.2 hereof
and, consistent with the other provisions of this Agreement, to devote as much
of his time, attention and energy as is necessary for him to perform his duties
and responsibilities as the Chairman of the Board of Trustees of the Trust.
The foregoing shall not be construed as preventing Executive from making
investments in other businesses or enterprises, provided that Executive agrees
not to become engaged in any other business activity which, in the reasonable
judgment of the Board, is likely to interfere with Executive’s ability to
discharge Executive’s duties and responsibilities to the Company and the Trust.
In addition, Executive shall be permitted to continue to serve as Chairman of
the Board of Directors of Donatelli & Klein, Inc. and shall continue to serve
and devote such time to Donatelli & Klein, Inc. as is necessary for his
position with such entity. Further, Executive shall be able to maintain his
investment as the sole stockholder of Donatelli & Klein, Inc.

     1.4. Base Salary. For all the services rendered by Executive hereunder,
the Company shall pay Executive a base salary (“Base Salary”), commencing on
the commencement of the Trust’s initial public offering, at the annual rate of
$130,000, payable in installments at such times as the Company customarily pays
its other senior level executives. Executive’s Base Salary shall be reviewed
annually for appropriate increases by the Board (or the compensation committee
of the Board) pursuant to the Board’s normal performance review policies for
senior level executives.

     1.5. Annual Incentive Award. Executive shall be entitled to receive an
annual cash incentive bonus for each fiscal year during the Employment Term
consistent with a bonus policy adopted by the Board (or the compensation
committee of the Board) (the “Bonus Policy”). If the Executive or the Company,
as the case may be, satisfies the performance criteria contained in such Bonus
Policy for a fiscal year, Executive shall receive an annual incentive bonus in
an amount determined by the Board (or the compensation committee of the Board).
If the Executive or the Company, as the case may be, fails to satisfy the
performance criteria contained in such Bonus Policy for a fiscal year, the
Board (or the compensation committee of the Board) may determine whether any
incentive bonus shall be payable to Executive for that year. For purposes of
this Agreement, the term “Incentive Bonus” shall mean the amount established
pursuant to this Section 1.5.

     1.6 Non-Compete Fee. In consideration for Executive’s agreement to enter
into the Non-Competition, Confidentiality and Non-Solicitation Agreement
attached hereto as Exhibit B, during the Employment Term and for the one (1)
year period after the Executive’s Date of Termination (as defined in Section
2), the Company shall pay to Executive an annual amount of $50,000 (the
“Non-Compete Fee”). The Non-Compete Fee shall become payable to Executive on
the initial effective date of this Agreement and on each anniversary of the
effective date of this Agreement for as long as this Section 1.6 is in effect.
The Non-Compete Fee shall be paid to the Executive on the Company’s first
payroll period that occurs after the Non-Compete Fee becomes payable to the
Executive as provided in the immediately preceding sentence. The Non-

2

 

Compete Fee shall automatically cease to be payable to Executive if the
Executive breaches the Non-Competition, Confidentiality and Non-Solicitation
Agreement.

     1.7. Retirement, Welfare and Other Benefit Plans and Programs. During the
Employment Term, Executive shall be entitled to participate in all employee
retirement and welfare benefit plans and programs made available to the
Company’s senior level executives as a group or to its employees generally, as
such retirement and welfare plans may be in effect from time to time and
subject to the eligibility requirements of the plan. During the Employment
Term, Executive shall be entitled to vacation and sick leave in accordance with
the Company’s vacation, holiday and other pay for time not worked policies.
Nothing in this Agreement shall prevent the Company from amending or
terminating any retirement, welfare or other employee benefit plans or programs
from time to time as the Company deems appropriate.

     1.8. Reimbursement of Expenses. Executive shall be provided with
reimbursement of reasonable expenses related to Executive’s employment by the
Company on a basis no less favorable than that which may be authorized from
time to time for senior level executives as a group.

     1.9. Incentive Compensation.

          (a) Initial Option. At the time of the initial public offering of the
Trust’s common shares of beneficial interest, $0.001 par value, (the “Shares”),
the Trust shall grant to Executive an option (the “Initial Option”) to purchase
100,000 Shares, at a price per Share equal to the public offering price of the
Shares. The Initial Option shall become exercisable with respect to 1/4 of the
Shares on the first anniversary of the date of grant and the remaining 3/4 of
the Shares shall become exercisable in increments of 6.25% on the same day as
the date of grant of every third month, beginning with the third month that
commences after the first anniversary of the date of grant, provided that the
Executive is employed by or providing service to the Company or Trust on each
such date. All other terms and conditions of the Initial Option shall be
governed by the Trust’s standard stock option agreement for such grants.

          (b) Executive shall be entitled to participate in any short-term and
long-term incentive programs (including without limitation the 2003 Equity
Compensation Plan and any subsequently implemented stock option plans)
established by the Company or the Trust for the Company’s senior level
executives generally, at levels commensurate with the benefits provided to
other senior executives and with adjustments appropriate for his position as
the President and Chief Executive Officer of the Company.

     2.     Termination. Executive’s employment shall terminate upon the
occurrence of any of the following events:

     2.1. Termination Without Cause; Resignation for Good Reason.

          (a) The Company may remove Executive at any time without Cause (as defined
in Section 2.7) from the position in which Executive is employed hereunder (in
which case the Employment Term shall be deemed to have ended) not less than
thirty (30) days’ prior

3

 

written notice to Executive; provided, however, that, in the event that such
notice is given, Executive shall be under no obligation to render any
additional services to the Company and shall be allowed to seek other
employment. In addition, Executive may initiate termination of employment by
resigning under this Section 2.1 for Good Reason (as defined in Section 2.7).
Executive shall give the Company not less than thirty (30) days’ prior written
notice of such resignation.

          (b) Upon any removal or resignation described in Section 2.1(a) above,
Executive shall be entitled to receive only the amount due to Executive under
the Company’s then current severance pay plan for employees, if any. No other
payments or benefits shall be due under this Agreement to Executive, but
Executive shall be entitled to any benefits accrued or earned in accordance
with the terms of any applicable benefit plans and programs of the Company.

          (c) Notwithstanding the provisions of Section 2.1(b), in the event that
Executive executes and does not revoke a written release upon such removal or
resignation, substantially in the form attached hereto as Exhibit A (the
“Release”), of any and all claims against the Company and all related parties
with respect to all matters arising out of Executive’s employment by the
Company, or the termination thereof (other than claims for any entitlements
under the terms of this Agreement or under any plans or programs of the Company
under which Executive has accrued a benefit), Executive shall be entitled to
receive, in lieu of the payment described in Section 2.1(b), the following:

               (i) Two (2) times Executive’s Base Salary, at the rate in effect
immediately before Executive’s termination of employment, payable in equal
installments, consistent with the Company’s past payroll practices, over the
twenty-four (24) month period after the Executive’s Date of Termination,
commencing with the first payroll period that occurs after the period during
which Executive’s right to revoke his acceptance of the terms of the Release
has expired. Notwithstanding the foregoing, the Company may determine, in its
sole discretion and at any time, to provide that the amounts payable under this
subsection (i) shall be paid to Executive in a lump sum, as opposed to
installments over the twenty-four (24) month period.

               (ii) Pro rated Incentive Pay (as defined in Section 2.7) for the year in
which Executive’s Date of Termination occurs. The pro rated Incentive Pay
shall be based on the Executive’s Incentive Pay for the fiscal year in which
Executive’s Date of Termination occurs, multiplied by a fraction, the numerator
of which is the number of days during which Executive was employed by the
Company in the fiscal year of his termination and the denominator of which is
365. Such pro rated Incentive Pay shall be paid to Executive in equal
installments, consistent with the Company’s past payroll practices, over the
twenty-four (24) month period after the Executive’s Date of Termination,
commencing with the first payroll period that occurs after the period during
which Executive’s right to revoke his acceptance of the terms of the Release
has expired. Notwithstanding the foregoing, the Company may determine, in its
sole discretion and at any time, to provide that the amounts payable under this
subsection (ii) shall be paid to Executive in a lump sum, as opposed to
installments over the twenty-four (24) month period.

4

 

               (iii) For a period of twenty-four (24) months following the Date of
Termination, Executive shall continue to receive the medical coverage in effect
at the date of his termination (or generally comparable coverage) for himself
and, where applicable, his spouse and dependents, as the same may be changed
from time to time for employees generally, as if Executive had continued in
employment during such period; or, as an alternative, the Company may elect to
pay Executive cash in lieu of such coverage in an amount equal to Executive’s
after-tax cost of continuing such coverage, where such coverage may not be
continued (or where such continuation would adversely affect the tax status of
the plan pursuant to which the coverage is provided). The COBRA health care
continuation coverage period under section 4980B of the Internal Revenue Code
of 1986, as amended, (the “Code”) shall run concurrently with the foregoing
twenty-four (24) month benefit period.

               (iv) Notwithstanding any provision to the contrary in any applicable plan,
program or agreement, all outstanding stock options, restricted stock and other
equity rights held by the Executive as of Executive’s Date of Termination shall
become fully vested and/or exercisable, as applicable, as of Executive’s Date
of Termination. All outstanding stock options and other equity rights that
have an exercise period shall remain exercisable for the shorter of: (A) five
(5) years from the Executive’s Date of Termination or (B) the end of their
applicable original term.

               (v) Executive shall receive any other amounts earned, accrued or owing but
not yet paid under Section 1 above and any benefits accrued or earned in
accordance with the terms of any applicable benefit plans and programs of the
Company.

     2.2. Voluntary Termination. Executive may voluntarily terminate his
employment for any reason upon thirty (30) days’ prior written notice. In such
event, after the effective date of such termination, except as provided in
Section 2.1 with respect to a resignation for Good Reason, no further payments
shall be due under this Agreement, except that Executive shall be entitled to
any benefits due in accordance with the terms of any applicable benefit plans
and programs of the Company.

     2.3. Disability. The Company may terminate Executive’s employment if
Executive has been unable to perform the material duties of his employment for
a period of three (3) consecutive months in any 12-month period because of
physical or mental injury or illness (“Disability”); provided, however, that
the Company shall continue to pay Executive’s Base Salary until the Company
acts to terminate Executive’s employment. Executive agrees, in the event of a
dispute under this Section 2.3 relating to Executive’s Disability, to submit to
a physical examination by a licensed physician jointly selected by the Board
and Executive. If the Company terminates Executive’s employment for
Disability, Executive shall be entitled to receive the following:

          (a) The Company shall pay to Executive any amounts earned, accrued or
owing but not yet paid under Section 1 above and pro rated Incentive Pay for
the fiscal year in which his Date of Termination occurs, calculated according
to Section 2.1(c)(ii) above.

5

 

          (b) All outstanding stock options, restricted stock and other equity
rights held by the Executive as of Executive’s Date of Termination shall become
fully vested and/or exercisable, as applicable, as of Executive’s Date of
Termination. All outstanding stock options and other equity rights that have
an exercise period shall remain exercisable for the shorter of: (A) five (5)
years from the Executive’s Date of Termination or (B) the end of their
applicable original term.

          (c) Executive shall receive any other benefits accrued or earned in
accordance with the terms of any applicable benefit plans and programs of the
Company.

     2.4. Death. If Executive dies while employed by the Company, the Company
shall pay to Executive’s executor, legal representative, administrator or
designated beneficiary, as applicable, (i) any amounts earned, accrued or owing
but not yet paid under Section 1 above and any benefits accrued or earned under
the Company’s benefit plans and programs, (ii) a pro rated Incentive Pay for
the fiscal year in which Executive’s death occurs, which bonus shall be
calculated according to Section 2.1(c)(ii) above and (iii) all outstanding
stock options, restricted stock and other equity rights held by the Executive
as of Executive’s Date of Termination shall become fully vested and/or
exercisable, as applicable, as of Executive’s Date of Termination and all
outstanding stock options and other equity rights that have an exercise period
shall remain exercisable for the shorter of: (A) five (5) years from the
Executive’s Date of Termination or (B) the end of their applicable original
term. Otherwise, the Company shall have no further liability or obligation
under this Agreement to Executive’s executors, legal representatives,
administrators, heirs or assigns or any other person claiming under or through
Executive.

     2.5. Cause. The Company may terminate Executive’s employment at any time
for Cause upon written notice to Executive, in which event all payments under
this Agreement shall cease, except for Base Salary to the extent already
accrued. Executive shall be entitled to any benefits accrued or earned before
his termination in accordance with the terms of any applicable benefit plans
and programs of the Company.

     2.6. Notice of Termination. Any termination of Executive’s employment
shall be communicated by a written notice of termination to the other party
hereto given in accordance with Section 10. The notice of termination shall
(i) indicate the specific termination provision in this Agreement relied upon,
(ii) briefly summarize the facts and circumstances deemed to provide a basis
for a termination of employment and the applicable provision hereof, and (iii)
specify the Date of Termination in accordance with the requirements of this
Agreement.

     2.7. Definitions.

          (a) “Cause” shall mean any of the following grounds for termination of
Executive’s employment:

               (i) Executive shall have been convicted of, or a plea of guilty or nolo
contendre to, a felony,

6

 

               (ii) Executive intentionally and continually fails substantially to
perform his reasonably assigned material duties to the Company (other than a
failure resulting from Executive’s incapacity due to physical or mental
illness), which failure has been materially and demonstrably detrimental to the
Company and has continued for a period of at least thirty (30) days after a
written notice of demand for substantial performance, signed by the Board, has
been delivered to Executive specifying the manner in which Executive has failed
substantially to perform,

               (iii) Executive engages in willful misconduct in the performance of his
duties, or

               (iv) Executive breaches any non-competition, non-disclosure or
non-solicitation agreement in effect with the Company.

          (b) “Date of Termination” shall mean the date that the termination of
Executive’s employment with the Company is effective on account of the
Executive’s death, Executive’s Disability, termination by the Company for Cause
or without Cause or by the Executive for Good Reason or without Good Reason, as
the case may be. The Employment Term shall end on the Date of Termination.

          (c) “Good Reason” shall mean the occurrence of any of the following events
or conditions, unless Executive has expressly consented in writing thereto or
unless the event is remedied by the Company promptly after receipt of notice
thereof given by Executive:

               (i) a substantial reduction in Executive’s Base Salary;

               (ii) a demotion of Executive;

               (iii) a material reduction of Executive’s duties hereunder;

               (iv) the Company’s requiring Executive to be based at a location other
than in the Washington, D.C. metropolitan area;

               (v) the non-renewal of the Agreement by the Company in accordance with
Section 1.1; or

               (vi) any material breach of this Agreement by the Company.

          (d) “Incentive Pay” shall mean the greater of (i) Executive’s maximum
Incentive Bonus for which Executive was eligible during the period that
includes the Date of Termination or (ii) the highest aggregate bonus or
incentive payment paid to Executive during any of the three (3) full calendar
years prior to his Date of Termination. For purposes of this definition,
“Incentive Pay” does not include any stock option, stock appreciation, stock
purchase, restricted stock or similar plan, program, arrangement or grant, one
time bonus or payment (including, but not limited to, any sign-on bonus), any
amounts contributed by the Company for

7

 

the benefit of Executive to any qualified or nonqualified deferred compensation
plan, or any amounts designated by the parties as amounts other than Incentive
Pay.

     3.   Change in Control.

     3.1 Effect of Change in Control. If a Change in Control occurs and
Executive’s employment terminates under the circumstances described below, the
provisions of this Section 3 shall apply, instead of the provisions of Section
2.1.

     3.2 Termination Without Cause Upon or After a Change in Control. Upon or
after a Change in Control, the Company (by action of the Board) may remove
Executive at any time without Cause from the position in which Executive is
employed hereunder (in which case the Employment Term shall be deemed to have
ended) upon not less than sixty (60) days’ prior written notice pursuant to
Section 10 to Executive; provided, however, that, in the event that such notice
is given, Executive shall be under no obligation to render any additional
services to the Company and shall be allowed to seek other employment. This
provision shall not apply if Executive’s employment is terminated by the
Company on account of the Executive’s death or Disability.

     3.3 Resignation for Good Reason Upon or After a Change in Control. Upon
or after a Change in Control, Executive may initiate termination of employment
by resigning under this Section 3 for Good Reason. Executive shall give the
Company not less than sixty (60) days’ prior written notice pursuant to Section
10 of such resignation.

     3.4. Resignation During a Window Period. If a Change in Control occurs,
Executive may initiate termination of employment by resigning under this
Section 3.4 with or without Good Reason during the one month period beginning
on the first anniversary of the consummation of the Change in Control (the
“Window Period”). Executive shall give the Company written notice pursuant to
Section 10 during the Window Period of such resignation, with the Date of
Termination to be effective not less than sixty (60) days after the date of
such notice.

     3.5 Benefits Payable Upon Termination Without Cause, Resignation for Good
Reason or Resignation During a Window Period Upon or After a Change in Control.

          (a) Upon any removal or resignation described in Section 3.2, 3.3 or 3.4
above, Executive shall be entitled to receive only the amount due to Executive
under the Company’s then current severance pay plan for employees, if any. No
other payments or benefits shall be due under this Agreement to Executive, but
Executive shall be entitled to any benefits accrued or earned in accordance
with the terms of any applicable benefit plans and programs of the Company.

          (b) Notwithstanding the provisions of Section 3.5(a), in the event of a
removal or resignation described in Section 3.2, 3.3 or 3.4 that occurs (i)(A)
not more than six (6) months prior to the date on which a Change in Control
occurs or (B) following the commencement of any discussion with a third person
that ultimately results in a Change in Control, or (ii) upon or

8

 

after a Change in Control if the termination occurs within the two (2) year
period after the Change in Control, Executive shall be entitled to receive the
severance benefits described below, in lieu of the payment described in Section
3.5(a), if Executive executes and does not revoke a written Release upon such
removal or resignation. If Executive is entitled to the benefits described in
this Section 3.5(b) by reason of clause (i) above, Executive shall receive the
compensation and benefits described in Section 2.1(c) above after his Date of
Termination, in accordance with the provisions of Section 2.1(c), regardless of
whether the Change in Control actually occurs, and Executive shall receive the
additional compensation and benefits described in this Section 3.5(b) only if
the Change in Control is consummated and shall receive such additional amounts
after the consummation of the Change in Control, in accordance with the
provisions of this Section 3.5(b). For purposes of clause (i)(B) above, to be
eligible to receive the amounts described in this Section 3.5(b), the Change in
Control must be consummated within the twelve (12) month period following the
Executive’s Date of Termination. Payment of the lump sum benefits described
below (other than as described in subsection (ii) below) shall be made within
thirty (30) days after the Executive’s Date of Termination or the end of the
revocation period for the Release, if later.

               (i) Executive shall receive a lump sum cash payment equal to (x) three (3)
times Executive’s Base Salary at the rate in effect immediately before
Executive’s termination of employment and (y) three (3) times Executive’s
Incentive Pay.

               (ii) Executive shall receive his pro rated Incentive Pay for the year in
which Executive’s Date of Termination occurs. The pro rated Incentive Pay
shall be based on the Executive’s Incentive Pay for the fiscal year in which
Executive’s Date of Termination occurs, multiplied by a fraction, the numerator
of which is the number of days during which Executive was employed by the
Company in the fiscal year of his termination and the denominator of which is
365. Payment shall be made within thirty (30) days after the effective date
of the termination (or the end of the revocation period for the Release, if
later).

               (iii) For a period of thirty-six (36) months following the Date of
Termination, Executive shall continue to receive the medical coverage in effect
at the date of his termination (or generally comparable coverage) for himself
and, where applicable, his spouse and dependents, as the same may be changed
from time to time for employees generally, as if Executive had continued in
employment during such period; or, as an alternative, the Company may elect to
pay Executive cash in lieu of such coverage in an amount equal to Executive’s
after-tax cost of continuing such coverage, where such coverage may not be
continued (or where such continuation would adversely affect the tax status of
the plan pursuant to which the coverage is provided). The COBRA health care
continuation coverage period under section 4980B of the Code shall run
concurrently with the foregoing thirty-six (36) month benefit period.

               (iv) All outstanding stock options and other equity rights held by the
Executive as of his Date of Termination that have an exercise period shall
remain exercisable for the shorter of: (A) five (5) years from the Executive’s
Date of Termination or (B) the end of their applicable original term.

9

 

               (v) Executive shall receive any other amounts earned, accrued or owing but
not yet paid under Section 1 above and any benefits accrued or earned in
accordance with the terms of any applicable benefit plans and programs of the
Company.

     3.6 Acceleration of Vesting and Exercisability on a Change in Control.
Notwithstanding any provision to the contrary in any applicable plan, program
or agreement, upon the occurrence of a Change in Control, all outstanding stock
options, restricted stock and other equity rights held by the Executive will
become fully vested and/or exercisable, as applicable, on the date in which the
Change in Control occurs.

     3.7 Increase in Payments Upon a Change in Control.

          (a) Anything in this Agreement to the contrary notwithstanding, in the
event that it shall be determined that any payment or distribution by the
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a “Payment”), would constitute an “excess parachute payment” within
the meaning of section 280G of the Code, the Company shall pay Executive an
additional amount (the “Gross-Up Payment”) such that the net amount retained by
Executive after deduction of any excise tax imposed under section 4999 of the
Code, and any federal, state and local income tax, employment tax and excise
tax imposed upon the Gross-Up Payment, shall be equal to the Payment. For
purposes of determining the amount of the Gross-Up Payment, Executive shall be
deemed to pay federal income tax and employment taxes at the highest marginal
rate of federal income and employment taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of Executive’s
residence on Executive’s Date of Termination, net of the maximum reduction in
federal income taxes that may be obtained from the deduction of such state and
local taxes.

          (b) All determinations to be made under this Section 3.7 shall be made by
the Company’s independent public accountant immediately prior to the Change in
Control (the “Accounting Firm”), which firm shall provide its determinations
and any supporting calculations both to the Company and Executive within twenty
(20) days after the Executive’s Date of Termination. Any such determination by
the Accounting Firm shall be binding upon the Company and Executive. Within
ten days after the Accounting Firm’s determination, the Company shall pay the
Gross-Up Payment to Executive.

          (c) Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after Executive knows of such
claim and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. Executive shall not pay such claim
prior to the expiration of the thirty (30) day period following the date on
which Executive gives such notice to the Company (or such shorter period ending
on the date that any payment of taxes with respect to such claim is due). If
the Company notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, Executive shall:

10

 

                (i) give the Company any information reasonably requested by the Company relating to such claim, 

               (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, 

               (iii) cooperate with the Company in good faith in order to contest such claim effectively, and 

               (iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any excise tax, income tax or employment tax, including
interest and penalties, with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 3.7, the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearing and
conferences with the taxing authority in respect of such claim. The Company’s
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder, and Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.

          (d) All of the fees and expenses of the Accounting Firm in performing the
determinations referred to in subsections (b) and (c) above shall be borne
solely by the Company.

     3.8 Definition of a Change in Control. As used herein, a “Change in
Control” shall be deemed to have occurred if:

          (a) Any “person” (as such term is used in sections 13(d) and 14(d) of the
Exchange Act) becomes a “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Trust representing
more than 50% of the voting power of the then outstanding securities of the
Trust; provided that a Change in Control shall not be deemed to occur as a
result of a change of ownership resulting from the Trust’s initial public
offering or the death of a shareholder, and a Change in Control shall not be
deemed to occur as a result of a transaction in which the Trust becomes a
subsidiary of another real estate investment trust and in which the
shareholders of the Trust, immediately prior to the transaction, will
beneficially own, immediately after the transaction, shares entitling such
shareholders to more than 50% of all votes to which all shareholders of the
parent real estate investment trust would be entitled in the election of
trustees (without consideration of the rights of any class of stock to elect
trustees by a separate class vote);

11

 

          (b) The consummation of (i) a merger or consolidation of the Trust with
another real estate investment trust where the shareholders of the Trust,
immediately prior to the merger or consolidation, will not beneficially own,
immediately after the merger or consolidation, shares entitling such
shareholders to more than 50% of all votes to which all shareholders of the
surviving real estate investment trust would be entitled in the election of
trustees (without consideration of the rights of any class of stock to elect
trustees by a separate class vote), or where the members of the Board,
immediately prior to the merger or consolidation, would not, immediately after
the merger or consolidation, constitute a majority of the board of trustees of
the surviving real estate investment trust, (ii) a sale or other disposition of
all or substantially all of the assets of the Trust, or (iii) a liquidation or
dissolution of the Trust; or

          (c) After the effective date of this Agreement, trustees are elected such
that a majority of the members of the Board shall have been members of the
Board for less than two years, unless the election or nomination for election
of each new trustee who was not a trustee at the beginning of such two-year
period was approved by a vote of at least two-thirds of the trustees then still
in office who were trustees at the beginning of such period.

     4.     Indemnity for Personal Loan Guarantees. If a Change in Control occurs
or if Executive’s employment terminates for any reason, with or without Cause,
by the Company or the Executive, the Company shall indemnify the Executive for
any liability that arises after the Change in Control or Executive’s Date of
Termination in connection with Executive’s personal guarantee of loans taken
out by the Trust or Company for the benefit of the Trust or the Company.

     5.     Non-Competition, Confidentiality and Non-Solicitation. Executive
hereby acknowledges that, during and solely as a result of his employment by
the Company, Executive will receive special training and education with respect
to the operation of the Company’s business and other related matters, and
access to confidential information and business and professional contacts. In
consideration of Executive’s employment and the payment of the Non-Compete Fee
and in consideration of the special and unique opportunities afforded by the
Company to Executive as a result of Executive’s employment, Executive hereby
agrees to execute and abide by the terms of the Non-Competition,
Confidentiality and Non-Solicitation Agreement attached as Exhibit B.
Executive agrees and acknowledges that his employment and the Non-Compete Fee
are full, adequate and sufficient consideration for the restrictions and
obligations set forth in the foregoing Agreements.

     6.     Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or
limit Executive’s continuing or future participation in or rights under any
benefit, bonus, incentive or other plan or program provided by the Company and
for which Executive may qualify; provided, however, that if Executive becomes
entitled to and receives the payments provided for in Section 2 and 3 of this
Agreement, Executive hereby waives Executive’s right to receive payments under
any severance plan or similar program applicable to all employees of the
Company.

12

 

     7.     Survivorship. The respective rights and obligations of the parties
under this Agreement shall survive any termination of Executive’s employment to
the extent necessary to the intended preservation of such rights and
obligations.

     8.     Mitigation. Executive shall not be required to mitigate the amount of
any payment or benefit provided for in this Agreement by seeking other
employment or otherwise and there shall be no offset against amounts due
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that Executive may obtain.

     9.     Arbitration; Expenses. In the event of any dispute under the
provisions of this Agreement, other than a dispute in which the primary relief
sought is an equitable remedy such as an injunction, the parties shall be
required to have the dispute, controversy or claim settled by arbitration in
Washington, D.C. in accordance with the National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association,
before a panel of three arbitrators, two of whom shall be selected by the
Company and Executive, respectively, and the third of whom shall be selected by
the other two arbitrators. Any award entered by the arbitrators shall be
final, binding and nonappealable and judgment may be entered thereon by either
party in accordance with applicable law in any court of competent jurisdiction.
This arbitration provision shall be specifically enforceable. The arbitrators
shall have no authority to modify any provision of this Agreement or to award a
remedy for a dispute involving this Agreement other than a benefit specifically
provided under or by virtue of the Agreement. If Executive prevails on any
material issue which is the subject of such arbitration or lawsuit, the Company
shall be responsible for all of the fees of the American Arbitration
Association and the arbitrators and any expenses relating to the conduct of the
arbitration (including the Company’s and Executive’s reasonable attorneys’ fees
and expenses). Otherwise, each party shall be responsible for its own expenses
relating to the conduct of the arbitration (including reasonable attorneys’
fees and expenses) and shall share the fees of the American Arbitration
Association.

     10.     Notices. All notices and other communications required or permitted
under this Agreement or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when hand delivered or mailed
by registered or certified mail, as follows (provided that notice of change of
address shall be deemed given only when received):

     If to the Company, to:

	 	 	 	 	 
	 	 	
First Potomac Realty Trust
	 	 
	 	 	
7200 Wisconsin Avenue, Suite 310	 	 
	 	 	
Bethesda MD 20814	 	 
	 	 	
Attention: Douglas J. Donatelli	 	 

     With a required copy to:

	 	 	 	 	 
	 	 	
Morgan, Lewis & Bockius LLP
	 	 
	 	 	
1701 Market Street	 	 
	 	 	
Philadelphia PA 19103-2921	 	 
	 	 	
Attention: James W. McKenzie, Jr., Esquire	 	 

13

 

     If to Executive, to:

	 	 	 	 	 
	 	 	
Louis T. Donatelli
	 	 
	 	 	
First Potomac Realty Trust	 	 
	 	 	
7200 Wisconsin Avenue, Suite 310	 	 
	 	 	
Bethesda MD 20814	 	 

     With a required copy to:

	 	 	 	 	 
	 	 	
Eric Kracov, Esquire
	 	 
	 	 	
Muldoon, Murphy & Faucette	 	 
	 	 	
5101 Wisconsin Avenue, N.W., Suite 500	 	 
	 	 	
Washington DC 20016	 	 

or to such other names or addresses as the Company or Executive, as the case
may be, shall designate by notice to each other person entitled to receive
notices in the manner specified in this Section.

     11.     Contents of Agreement; Amendment and Assignment.

          (a) This Agreement sets forth the entire understanding between the parties
hereto with respect to the subject matter hereof and cannot be changed,
modified, extended or terminated except upon written amendment approved by the
Board and executed on its behalf by a duly authorized officer and by Executive.

          (b) All of the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective heirs,
executors, administrators, legal representatives, successors and assigns of the
parties hereto, except that the duties and responsibilities of Executive under
this Agreement are of a personal nature and shall not be assignable or
delegatable in whole or in part by Executive. The Company and Trust shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all of the
business or assets of the Company or Trust, within fifteen (15) days of such
succession, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent as the Company and Trust would be required to
perform if no such succession had taken place.

     12.     Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect any other provision or application of this Agreement which can be
given effect without the invalid or unenforceable provision or application and
shall not invalidate or render unenforceable such provision or application in
any other jurisdiction. If any provision is held void, invalid or
unenforceable with respect to particular circumstances, it shall nevertheless
remain in full force and effect in all other circumstances.

14

 

     13.     Remedies Cumulative; No Waiver. No remedy conferred upon a party by
this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given under this Agreement or now or hereafter existing at law or in
equity. No delay or omission by a party in exercising any right, remedy or
power under this Agreement or existing at law or in equity shall be construed
as a waiver thereof, and any such right, remedy or power may be exercised by
such party from time to time and as often as may be deemed expedient or
necessary by such party in its sole discretion.

     14.     Beneficiaries/References. Executive shall be entitled, to the extent
permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit payable under this
Agreement following Executive’s death by giving the Company written notice
thereof. In the event of Executive’s death or a judicial determination of
Executive’s incompetence, reference in this Agreement to Executive shall be
deemed, where appropriate, to refer to Executive’s beneficiary, estate or other
legal representative.

     15.     Miscellaneous. All Section headings used in this Agreement are for
convenience only. This Agreement may be executed in counterparts, each of
which is an original. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any of the other
counterparts.

     16.     Withholding. All payments under this Agreement shall be made subject
to applicable tax withholding, and the Company shall withhold from any payments
under this Agreement all federal, state and local taxes as the Company is
required to withhold pursuant to any law or governmental rule or regulation.
Except as specifically provided otherwise in this Agreement, Executive shall
bear all expense of, and be solely responsible for, all federal, state and
local taxes due with respect to any payment received under this Agreement.

     17.     Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of Maryland without giving effect to any conflict
of laws provisions.

        IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	
 
	 	 
	 	FIRST POTOMAC REALTY 
INVESTMENT LIMITED PARTNERSHIP
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:
	 	First Potomac Realty Trust

Its general partner
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	By:
	  /s/ Douglas J. Donatelli
	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	Name: Douglas J. Donatelli
	 	 	 	 	 	 	 	 	Title: President and CEO

15

 

	 	 	 
	 	/s/ Louis T. Donatelli

	 
	 	
EXECUTIVE	 

GUARANTEE:

For good and valuable consideration, including the Executive’s agreement to
serve as an officer of First Potomac Realty Trust, the obligations of First
Potomac Realty Investment Limited Partnership under this Employment Agreement,
dated October 8, 2003, with Louis T. Donatelli, shall be guaranteed by First
Potomac Realty Trust.

FIRST POTOMAC REALTY TRUST

	 	 	 	 	 
	By:	 	
/s/ Douglas J. Donatelli
	 	 
	 	 	

	 	 
	 	 	
Name: Douglas J. Donatelli	 	 
	 	 	
Title: President and CEO	 	 

Dated: October 8, 2003

16

 

Exhibit A

Separation of Employment Agreement and General Release

[Note: The following is a suggested form of Release.]

     THIS SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE (the
“Agreement”) is made as of this         day of            ,         , by and between
First Potomac Realty Investment Limited Partnership (the “Company”) and         
(“Executive”).

     WHEREAS, Executive formerly was employed by the Company as      pursuant
to the terms of the Employment Agreement, dated         , 200   ,
(the “Employment Agreement”);

     WHEREAS, the Employment Agreement provides for certain benefits in the
event that Executive’s employment is terminated on account of a reason set
forth in the Employment Agreement;

     WHEREAS, Executive and the Company mutually desire to terminate
Executive’s employment on an amicable basis, such termination to be effective          ,   
(“Date of Resignation”); and

     WHEREAS, in connection with the termination of Executive’s employment, the
parties have agreed to a separation package and the resolution of any and all
disputes between them.

     NOW, THEREFORE, IT IS HEREBY AGREED by and between Executive and the
Company as follows:

     1.    (a) Executive, for and in consideration of the commitments of the
Company as set forth in paragraph 5 of this Agreement, and intending to be
legally bound, does hereby REMISE, RELEASE AND FOREVER DISCHARGE the Company,
its affiliates, subsidiaries and parents, and its officers, directors,
employees, and agents, 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, whether known
or unknown, or which his or her heirs, executors, or administrators may have,
by reason of any matter, cause or thing whatsoever, from the beginning of his
or her employment to the date of this Agreement, and particularly, but without
limitation of the foregoing general terms, any claims arising from or relating
in any way to his or her 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, the Older Workers Benefit
Protection Act (“OWBPA”), Title VII of The Civil Rights Act of 1964, the
Americans with Disabilities Act, the Family and Medical Leave Act of 1993, the
Employee Retirement Income Security Act of 1974, [State Fair Employment
Practice Law], and any other claims under any federal, state or local common
law, statutory, or regulatory

A-1

 

provision, now or hereafter recognized, and any claims for attorneys’ fees
and costs. This Agreement 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.

               (b)    To the fullest extent permitted by law, and subject to the provisions
of paragraph 10 below, Executive represents and affirms that (i) [other than        ,]
he or she has not filed or caused to be filed on his or her behalf
any claim for relief against the Company or any Releasee and, to the best of
his or her knowledge and belief, no outstanding claims for relief have been
filed or asserted against the Company or any Releasee on his or her behalf; and
(ii) [other than         ,] he or she has not reported any improper, unethical
or illegal conduct or activities to any supervisor, manager, department head,
human resources representative, agent or other representative of the Company,
to any member of the Company’s legal or compliance departments, or to the
ethics hotline, and has no knowledge of any such improper, unethical or illegal
conduct or activities; and (iii) he or she will not file, commence, prosecute
or participate in any judicial or arbitral action or proceeding against the
Company or any Releasee based upon or arising out of any act, omission,
transaction, occurrence, contract, claim or event existing or occurring on or
before the date of this Agreement.

     2.    In consideration of the Company’s agreements as set forth in paragraph
5 herein, Executive agrees to be bound by the terms of the Company’s
Non-Competition, Confidentiality and Non-Solicitation Agreement executed by the
Executive on             ,        .

     3.    Executive further agrees and recognizes that he or she has permanently
and irrevocably severed his or her employment relationship with the Company,
that he or she 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 or her in the future.

     4.    Executive further agrees that he or she will not disparage or subvert
the Company, or make any statement reflecting negatively on the Company, its
affiliated corporations or entities, or any of their officers, directors,
employees, agents or representatives, including, but not limited to, any
matters relating to the operation or management of the Company, Executive’s
employment and the termination of his or her employment, irrespective of the
truthfulness or falsity of such statement.

     5.    In consideration for Executive’s agreement as set forth herein, the
Company agrees:

     [Note: Severance Benefits provided under Employment Agreement would be inserted
in this paragraph 5.]

     6.    Executive understands and agrees that the payments, benefits and
agreements provided in this Agreement are being provided to him or her in
consideration for his or her acceptance and execution of, and in reliance upon
his or her representations in, this Agreement. Executive acknowledges that if
he or she had not executed this Agreement containing a release of all claims
against the Company, he or she would only have been entitled to the payments
provided in the Company’s standard severance pay plan for employees.

A-2

 

     7.    Executive acknowledges and agrees that the Company previously has
satisfied any and all obligations owed to him or her under any employment
agreement or offer letter he or she has with the Company and, further, that
this Agreement supersedes any employment agreement or offer letter he or she
has with the Company, and any and all prior agreements or understandings,
whether written or oral, between the parties shall remain in full force and
effect to the extent not inconsistent with this Agreement, and further, that,
except as set forth expressly herein, no promises or representations have been
made to him or her in connection with the termination of his or her employment
agreement or offer letter with the Company, or the terms of this Agreement.

     8.    Executive agrees not to disclose the terms of this Agreement to anyone,
except his or her spouse, attorney and, as necessary, tax/financial advisor.
Likewise, the Company agrees that the terms of this Agreement will not be
disclosed except as may be necessary to obtain approval or authorization to
fulfill its obligations hereunder or as required by law. It is expressly
understood that any violation of the confidentiality obligation imposed
hereunder constitutes a material breach of this Agreement.

     9.     Executive represents that he or she does not presently have in his or
her possession any records and business documents, whether on computer or hard
copy, and other materials (including but not limited to computer disks and
tapes, computer programs and software, office keys, correspondence, files,
customer lists, technical information, customer information, pricing
information, business strategies and plans, sales records and all copies
thereof) (collectively, the “Corporate Records”) provided by the Company and/or
its predecessors, subsidiaries or affiliates or obtained as a result of his or
her prior employment with the Company and/or its predecessors, subsidiaries or
affiliates, or created by Executive while employed by or rendering services to
the Company and/or its predecessors, subsidiaries or affiliates. Executive
acknowledges that all such Corporate Records are the property of the Company.
In addition, Executive shall promptly return in good condition any and all
beepers, credit cards, cellular telephone equipment, business cards and
computers. As of the Date of Resignation, the Company will make arrangements
to remove, terminate or transfer any and all business communication lines
including network access, cellular phone, fax line and other business numbers.

     10.    Nothing in this Agreement shall prohibit or restrict Executive from:
(i) making any disclosure of information required by law; (ii) providing
information to, or testifying or otherwise assisting in any investigation or
proceeding brought by, any federal regulatory or law enforcement agency or
legislative body, any self-regulatory organization, or the Company’s
[designated legal, compliance or human resources
officer]; or (iii) filing,
testifying, participating in or otherwise assisting in a proceeding relating to
an alleged violation of any federal, state or municipal law relating to fraud,
or any rule or regulation of the Securities and Exchange Commission or any
self-regulatory organization.

     11.    The parties agree and acknowledge that the agreement by the Company
described herein, and the settlement and termination of any asserted or
unasserted claims against the

A-3

 

Releasees, 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.

     12.    Executive agrees and recognizes that should he or she breach any of
the obligations or covenants set forth in this Agreement, the Company will have
no further obligation to provide Executive with the consideration set forth
herein, and will have the right to seek repayment of all consideration paid up
to the time of any such breach. Further, Executive acknowledges in the event
of a breach of this Agreement, Releasees may seek any and all appropriate
relief for any such breach, including equitable relief and/or money damages,
attorney’s fees and costs.

     13.    Executive further agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as to an equitable accounting of all earnings, profits
and other benefits arising from any violations of this Agreement, which rights
shall be cumulative and in addition to any other rights or remedies to which
the Company may be entitled.

     14.    This Agreement and the obligations of the parties hereunder shall be
construed, interpreted and enforced in accordance with the laws of the State of
Maryland.

     15.    Executive certifies and acknowledges as follows:

               (a)    That he or she has read the terms of this Agreement, and that he or
she understands its terms and effects, including the fact that he or she has
agreed to RELEASE AND FOREVER DISCHARGE the Company and each and everyone of
its affiliated entities from any legal action arising out of his or her
employment relationship with the Company and the termination of that employment
relationship;

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

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

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

               (e)    That the Company has provided him or her with a period of twenty-one
(21) days within which to consider this Agreement, and that Executive has
signed on the date indicated below after concluding that this Agreement is
satisfactory to him or her; and

               (f)    Executive acknowledges that this Agreement may be revoked by him or
her within seven (7) days after execution, and it shall not become effective
until the expiration of

A-4

 

such seven day revocation period. In the event of a timely revocation by
Executive, this Agreement will be deemed null and void and the Company will
have no obligations hereunder.

[SIGNATURE PAGE FOLLOWS]

A-5

 

     Intending to be legally bound hereby, Executive and the Company executed
the foregoing Confidential Separation Agreement and General Release this      
day of      ,      .

	 	 	 	 	 	 
	

[Executive]	 	Witness:	

	 	 	 	 	 
	FIRST POTOMAC REALTY

INVESTMENT LIMITED PARTNERSHIP	 	 
	 	 	 	 	 
	By:	
First Potomac Realty Trust

Its general partner	 	 
	 	 	 	 	 
	 	
By:
	 	 
	 	 	

	 	 	 
	 	
Name:	 	 
	 	
Title:
	 	Witness:	

A-6

 

Exhibit B

Non-Competition, Confidentiality and Non-Solicitation Agreement

     In consideration of the Non-Compete Fee (as defined in my Employment
Agreement, dated October 8, 2003) and my new employment with First Potomac
Realty Investment Limited Partnership (the “Company”), and intending to be
legally bound, I agree as follows:

     1.     Confidentiality. I agree that my services to the Company are of a
special, unique and extraordinary character, and that my position places me in
a position of confidence and trust with the Company’s customers and employees.
I also recognize that my position with the Company will give me substantial
access to Confidential Information (as that term is defined below), the
disclosure of which to competitors of the Company would cause the Company to
suffer substantial and irreparable damage. I recognize, therefore, that it is
in the Company’s legitimate business interest to restrict my use of
Confidential Information for any purposes other than the discharge of my
employment duties at the Company, and to limit any potential appropriation of
Confidential Information by me for the benefit of the Company’s competitors and
to the detriment of the Company. Accordingly, I agree as follows:

     (a)     During and after my employment by the Company, I will not disclose to
any other person or company, nor use for my own personal benefit, except as may
be necessary in the performance of my duties as an employee of the Company, any
Confidential Information disclosed to me or of which I become aware by reason
of my employment or association with the Company.

     (b)     The term “Confidential Information” means any and all data and
information relating to the business of the Company (whether or not it
constitutes a trade secret), which is or has been disclosed to me or of which I
became aware as a consequence of my employment or relationship with the
Company, and which has value to the Company and is not generally known by its
competitors, including but not limited to information relating to experimental
and research work of the Company, the Company’s methods, processes, tools,
machinery, formulas, drawings or appliances, and the financial or business
affairs of the Company relating to services, customers, customer lists,
employees or employees’ compensation, projections, plans, development,
accounting and marketing studies or analyses. Confidential Information shall
not include any data or information that has been disclosed voluntarily to the
public by the Company (except where such public disclosure has been made by me
or some other person without authorization), or that has been independently
developed and disclosed by others, or that otherwise enters the public domain
through lawful and legitimate means.

     (c)     I agree that upon the termination of my employment with the Company, I
will not take with me or retain without written authorization any documents,
files or other property of the Company, and I will return promptly to the
Company any such documents, files or property in my possession or custody. In
connection with this Agreement, I recognize that all documents, files and
property which I have received and will receive from the Company, including but
not limited to customer lists, handbooks, memoranda, policy manuals, product
specifications, and other materials (with the exception of documents relating
to benefits to which I might be entitled

B-1

 

following the termination of my employment with the Company), are for the
exclusive use of the Company and employees who are discharging their
responsibilities on behalf of the Company, and that I have no claim or right to
the continued use, possession or custody of such documents, files or property
following the termination of my employment with the Company.

     2.     Intellectual Property. I will communicate to the Company any and all
novel ideas, concepts, inventions, processes, and improvements, patentable or
unpatentable, made or conceived by me, either solely or jointly with others,
from the time of entering the Company’s employ until I leave, along the line of
the Company’s business, or resulting from or suggested by any work which I may
do for the Company, or at its request, and I will, at all times during my
employment with the Company and after my termination for any reason, assist the
Company in every proper way (at the Company’s expense), to obtain for the
Company’s own benefit patents for any or all of these ideas, concepts,
inventions, processes and improvements in the United States and any and all
foreign countries, if patentable, by executing and delivering to the Company
any and all applications, assignments, and other instruments, by giving
evidence and testimony, and by executing and delivering to the Company all
drawings, blueprints, notes, and specifications deemed necessary by the Company
in order to apply for and obtain letters patent of the United States or foreign
countries for such ideas, concepts, inventions, processes and improvements, and
I do hereby assign and will assign and convey to the Company my entire right,
title and interest in and to all such ideas, concepts, inventions, processes,
and improvements, and all patent applications and patents thereon. I further
agree to conduct myself as described above after leaving the Company’s
employment as to all ideas, concepts, inventions, processes and improvements
conceived or disclosed while with the Company.

     3.     Non-Competition.

     (a)     During my employment by the Company and for a period of one (1) year
after my termination of employment for any reason, I will not, except with the
prior written consent of the Board of Trustees of First Potomac Realty Trust
(the “Board”), directly or indirectly, own, manage, operate, join, control,
finance or participate in the ownership, management, operation, control or
financing of, or be connected as an officer, director, employee, partner,
principal, agent, representative, consultant or otherwise with, or use or
permit my name to be used in connection with, any business or enterprise which
is engaged in any business or enterprise that acquires, operates and develops
properties in the industrial and flex property markets, within the Company’s
“Service Area,” as defined below. For the purposes of this Section, “Service
Area” shall mean (i) the States of Maryland, Delaware, North Carolina and West
Virginia, (ii) the Commonwealths of Pennsylvania and Virginia, and (iii)
Washington, D.C. I acknowledge that the Service Area is the area in which the
Company presently does, or currently intends to do, business.

     (b)     The foregoing restrictions shall not be construed to prohibit my
ownership of less than five percent of any class of securities of any
corporation which is engaged in any of the foregoing businesses and has a class
of securities registered pursuant to the Securities Exchange Act of 1934,
provided that such ownership represents a passive investment and that neither I
nor any group of persons including me in any way, either directly or
indirectly, manages or exercises control of any such corporation, guarantees
any of its financial obligations, otherwise takes any

B-2

 

part in its business, other than exercising my rights as a shareholder, or
seeks to do any of the foregoing. In addition, the foregoing restrictions shall
not be construed to prohibit my continued ownership in partnership interests in
the entity that holds the “Donatelli – Bays Property” in Sterling, Virginia.

     4.     Non-Solicitation.

     (a)     I covenant and agree that during my employment by the Company and for
the period of one (1) year thereafter, I will not, directly or indirectly, (i)
solicit, divert, take away, or attempt to solicit, divert or take away, any of
the Company’s principal customers, or (ii) encourage any principal customer to
reduce its patronage of the Company.

     (b)     I further covenant and agree that during my employment by the Company
and for the period of one (1) year thereafter, I will not, except with the
prior written consent of the Board, directly or indirectly, solicit or hire, or
encourage the solicitation or hiring of, any person who was an employee of the
Company at any time during the term of my employment by the Company by any
employer other than the Company for any position as an employee, independent
contractor, consultant or otherwise. The foregoing covenant shall not apply to
any person after 12 months have elapsed after the date on which such person’s
employment by the Company has terminated.

     5.     General Provisions.

     (a)     I acknowledge and agree that the type and periods of restrictions
imposed in this Agreement are fair and reasonable, and that such restrictions
are intended solely to protect the legitimate interests of the Company, rather
than to prevent me from earning a livelihood. I recognize that the Company
competes throughout the United States, and that my access to Confidential
Information makes it necessary for the Company to restrict my post-employment
activities in any market in which the Company competes, and in which my access
to Confidential Information and other proprietary information could be used to
the detriment of the Company. In the event that any restriction set forth in
this Agreement is determined to be overbroad with respect to scope, time or
geographical coverage, I agree that such a restriction or restrictions should
be modified and narrowed, either by a court or by the Company, so as to
preserve and protect the legitimate interests of the Company as described in
this Agreement, and without negating or impairing any other restrictions or
agreements set forth herein.

     (b)     I acknowledge and agree that if I should breach any of the covenants,
restrictions and agreements contained herein, irreparable loss and injury would
result to the Company, and that damages arising out of such a breach may be
difficult to ascertain. I therefore agree that, in addition to all other
remedies provided at law or at equity, the Company may petition and obtain from
a court of law or equity all necessary temporary, preliminary and permanent
injunctive relief to prevent a breach by me of any covenant contained in this
Agreement. I agree further that if it is determined by a court that I have
breached the terms of this Agreement, the Company shall be entitled to recover
from me all costs and attorneys’ fees incurred as a result of its attempts to
redress such a breach or to enforce its rights and protect its legitimate
interests.

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     (c)     This Agreement shall be deemed to made in, and in all respects shall
be interpreted, construed and governed by and in accordance with, the laws of
the State of Maryland.

     (d)     I agree that if the Company fails to take action to remedy any breach
by me of this Agreement or any portion of the Agreement, such inaction by the
Company shall not operate or be construed as a waiver of any subsequent breach
by me of the same or any other provision, agreement or covenant.

     (e)  I agree that each covenant, paragraph and division of this Agreement
is intended to be severable and distinct, and that if any paragraph,
subparagraph, provision or term of this Agreement is deemed to be unlawful or
unenforceable, such a determination will not impair the legitimacy or
enforceability of any other aspect of the Agreement.

     (f)     I hereby state that I have read this Agreement in its entirety, that I
have been given an opportunity to consider the Agreement and discuss it with
the attorney of my choice, and that I enter into this Agreement voluntarily and
intending to be legally bound.

     (g)     I agree that the Company may assign this Agreement to any of its
successors by merger or otherwise, and that this Agreement shall inure to the
benefit of any such successor.

	 	 	 	 	 
	/s/ Thomas P. Conaghan

Witness	 	/s/ Louis T. Donatelli

Louis T. Donatelli
	 	 	 	 	 
	/s/ Thomas P. Conaghan

Witness	 	FIRST POTOMAC REALTY

INVESTMENT LIMITED PARTNERSHIP
	 	 	 	 	 
	 	 	
By:
	 	First Potomac Realty Trust

Its general partner
	 	 	 	 	 
	 	 	 	 	By: /s/ Douglas J. Donatelli

Name: Douglas J. Donatelli

Title: President and CEO

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