Document:

Exhibit 10.2

 

AGREEMENT
AND PLAN OF MERGER

 

AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of September 23, 2005 by and
among RKB Holding L.P., a Delaware limited partnership (“Holdco”),
Republic Property Trust, a Maryland real estate investment trust (“Republic”) and Republic Property Limited Partnership, a
Delaware limited partnership (the “Operating Partnership”)
and wholly owned operating partnership subsidiary of Republic.

 

RECITALS

 

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

 

WHEREAS, the parties hereto have determined that, in
order to facilitate the IPO, it is in their respective best interests, on the
terms and subject to the conditions hereinafter set forth, that (i) Holdco
be merged with and into the Operating Partnership, with the Operating
Partnership surviving, (ii) the outstanding limited partnership interests
in Holdco (the “Limited Partnership Interests”)
and the outstanding general partnership interest in Holdco (collectively with
the Limited Partnership Interests, the “Partnership Interests”)
be converted into the right to receive the Merger Consideration (as defined
below), (iii) the
Operating Partnership succeed to the liabilities of Holdco, including (a) an
outstanding loan (the “Finco Loan”) owed
by Holdco to RKB Finance L.P., a Cayman exempted limited partnership (“Finco”), and (b) any tax liabilities incurred by Holdco
arising as a result of the Merger (as defined below), and (iv) the Operating
Partnership repay the Finco Loan with a combination of REIT Shares and/or cash;

 

WHEREAS, RKB Washington Property Fund I (General
Partner) LLC, a Delaware limited liability company and the general partner of
Holdco (the “General Partner”), has determined
that the Merger, including this Agreement, is advisable, fair to, and in the
best interest of holders of Limited Partnership Interests (the “Limited Partners”, and collectively with the General
Partner, the “Holdco Partners”), and has
approved the Merger and this Agreement, and resolved to recommend that the
Limited Partners approve the Merger and this Agreement, pursuant to a written
consent of the General Partner dated as of July 21, 2005;

 

WHEREAS, Republic, as the general partner of the
Operating Partnership, has determined that the Merger, including this
Agreement, is advisable, fair to and in the best interests of the Operating
Partnership and its sole 

 

 

limited partner, approved
the Merger and this Agreement, and directed that the Merger and this Agreement
be submitted for consideration by the sole limited partner of the Operating
Partnership, pursuant to a unanimous written consent of the board of trustees
of Republic dated as of September 23, 2005;

 

WHEREAS, as of the date hereof, Limited Partners who,
in the aggregate, hold more than fifty percent (50%) of the percentage interest
in the profits of Holdco have approved the Merger pursuant to a Merger Consent
and Consideration Election Form (the “Election Form”),
a form of which was attached to the Confidential Solicitation of Consents and
Information Statement, as amended (the “Information Statement”)
previously delivered by Holdco, Republic and Finco to each Limited Partner on July 22,
2005; and

 

WHEREAS, the sole limited partner of the Operating
Partnership approved and adopted the Merger, including this Agreement, on the
terms and subject to the conditions set forth herein, pursuant to a written
consent dated as of September 23, 2005.

 

NOW, THEREFORE, for good and valuable consideration
and in consideration of the foregoing and of the representations, warranties,
covenants and agreements contained herein, the parties, each intending to be
legally bound hereby, agree as follows:

 

ARTICLE 1

 

THE MERGER; CLOSING; EFFECTIVE
TIME

 

1.1.          THE MERGER.  Subject
to the terms and conditions of this Agreement, and in accordance with the
provisions of the Delaware Revised Uniform Limited Partnership Act (the “DRULPA”), at the Effective Time (as defined below), Holdco
shall be merged with and into the Operating Partnership and the separate
existence of Holdco shall thereupon cease (the “Merger”).
The Operating Partnership shall be the surviving entity in the Merger
(sometimes hereinafter referred to as the “Surviving Company”)
and shall continue to be governed by the laws of the State of Delaware, and the
separate existence of the Operating Partnership as a Delaware limited
partnership, with all its rights, privileges, immunities, powers and
franchises, shall continue unaffected by the Merger.  The Merger shall have the effects specified
in the DRULPA.

 

1.2.          THE CLOSING.  Subject
to the terms and conditions of this Agreement, the closing of the Merger (the “Closing”) shall take place (a) at the offices of Hogan &
Hartson L.L.P., 555 Thirteenth Street, N.W., Washington, D.C., 20004, on the
day upon which all of the conditions to the Merger shall have been 

 

2

 

satisfied or waived in
writing, or (b) at such other time, date or place as Holdco, Republic and
the Operating Partnership may agree.  The
date on which the Closing occurs is hereinafter referred to as the “Closing Date.”

 

1.3.          EFFECTIVE TIME.  If
all the conditions to the Merger set forth in Article 7 shall have been
satisfied or waived in accordance herewith and this Agreement shall not have
been terminated as provided in Article 8, upon the Closing, the parties
hereto shall cause a certificate of merger substantially in the form attached
hereto as Exhibit A (the “Certificate of Merger”)
to be executed and filed with the Office of the Secretary of the State of
Delaware, as provided in Section 17-211(c) of the DRULPA.  The Merger shall become effective at the time
and on the date specified in the Certificate of Merger filed with the Secretary
of State of the State of Delaware or, absent any such indication, upon
acceptance of filing (the “Effective Time”).

 

ARTICLE 2

 

NAME, CERTIFICATE OF LIMITED
PARTNERSHIP

AND AGREEMENT OF LIMITED
PARTNERSHIP

OF THE SURVIVING COMPANY

 

2.1.          NAME AND LOCATION OF SURVIVING COMPANY.  The name of the Surviving Company, “Republic Property Limited Partnership,” shall continue
unchanged at the Effective Time.

 

2.2.          CERTIFICATE OF LIMITED PARTNERSHIP.  The certificate of limited partnership of the
Operating Partnership shall be the certificate of limited partnership of the
Surviving Company until thereafter changed or amended in accordance with the
provisions thereof and applicable law.

 

2.3.          AGREEMENT OF LIMITED PARTNERSHIP.  The Agreement of Limited Partnership of the
Operating Partnership as in effect immediately prior to the Effective Time
shall be the agreement of limited partnership of the Surviving Company until
thereafter changed or amended in accordance with the provisions thereof and
applicable law.

 

ARTICLE 3

 

GENERAL PARTNER OF THE SURVIVING
COMPANY

 

3.1.          GENERAL PARTNER. 
Republic, the general partner of the Operating Partnership immediately
prior to the Effective Time, shall be the general partner of the Surviving
Company immediately following the Effective Time.

 

3

 

ARTICLE 4

 

EFFECT ON PARTNERSHIP INTERESTS

 

4.1           EFFECT ON PARTNERSHIP INTERESTS.  In connection with the Merger and related
transactions, Holdco and Republic have previously delivered to each Holdco
Partner the Information Statement, including the Election Form, pursuant to
which, among other things, in connection with the Merger and subject to certain
conditions and eligibility requirements set forth in the Information Statement,
Holdco and Republic offered each Holdco Partner the option to receive as
consideration in the Merger either (i) cash, (ii) REIT Shares, or (iii) a
combination of the two, in exchange for each such Holdco Partner’s Partnership
Interests.

 

At the Effective Time, by virtue of the Merger and the
duly executed Election Form submitted by each Holdco Partner as of the
date hereof, and without any further action on the part of any such Holdco
Partner (with certain terms defined in Exhibit B hereto):

 

(a)           Each
Holdco Partner shall be entitled to receive an amount of cash equal to (i) the
product of (A) the Holdco Partner’s Share of the Aggregate Exchange Amount
multiplied by (B) such Holdco Partner’s Cash Percentage multiplied by (C) 91.5%
minus (ii) the product of (A) such Holdco Partner’s Cash Percentage
multiplied by (B) such Holdco Partner’s percentage of Total Capital
Commitments (as defined in the Holdco limited partnership agreement) in Finco multiplied
by (C) the Finco Debt multiplied by (D) 8.5%.

 

(b)           Each
Holdco Partner shall be entitled to receive a number of REIT Shares equal to (i) the
product of (A) the Holdco Partner’s Share of the Aggregate Exchange Amount
multiplied by (B) such Holdco Partner’s REIT Share Percentage divided by (ii) the
initial public offering price of a share of Republic.

 

(c)           A “Holdco Partner’s Share of the Aggregate Exchange Amount”
means the product of (i) the Aggregate Exchange Amount multiplied by (ii) such
Holdco Partner’s percentage of Total Capital Commitments (as defined in the
Holdco limited partnership agreement) in Holdco.

 

(d)           A “Holdco Partner’s Cash Percentage” means the percentage of
the consideration that such Holdco Partner is entitled to receive in cash in
accordance with such Holdco Partner’s Election Form, subject to Section 4.1(f) hereof.

 

4

 

(e)           A “Holdco Partner’s REIT Share Percentage” means the percentage
of the consideration that such Holdco Partner is entitled to receive in REIT
Shares in accordance with such Holdco Partner’s Election Form, subject to Section 4.1(f) hereof.

 

(f)            Any
Limited Partner that (i) does not
complete both the Election Form and an investor questionnaire, a form of
which was attached as an exhibit to the Information Statement (the “Investor Questionnaire”), and return them to Holdco on or
before the deadline for voting on the Merger set forth in the Information
Statement (the “Consent Deadline”), subject to the
right of the Operating Partnership, in its sole and absolute discretion, to
accept such forms after the Consent Deadline and prior to the initial filing by
Republic of its registration statement, to the extent practicable, (ii) is
not an Eligible Limited Partner (as defined in the Information Statement), or (iii) votes
on the Merger on or before the Consent Deadline, but does not specify a desired
form of consideration to be received in the Merger, and, in each case, the
requisite level of consent is received and the Merger is consummated, such
Limited Partner will be deemed to have elected to receive the Cash
Consideration, and no REIT Shares will be issued to such Limited Partner.

 

(g)           Each
Partnership Interest shall no longer be outstanding and shall be canceled and
retired and shall cease to exist.

 

(h)           The
aggregate amount of consideration to be paid to Holdco Partners pursuant to
Sections 4.1(a) and 4.1(b) hereof shall be referred to as the “Merger Consideration.”

 

4.2           RIGHTS UPON EXCHANGE.

 

(a)           The
aggregate amount of the Merger Consideration paid upon the surrender for
exchange of Partnership Interests in accordance with the terms hereof shall be
deemed to have been issued in full satisfaction of all rights pertaining to
such Partnership Interests.

 

(b)           At and
after the Effective Time, there shall be no transfers on the books and records
of Holdco of Partnership Interests which were outstanding immediately prior to
the Effective Time.

 

(c)           No
fractional REIT Shares shall be issued pursuant hereto.  The number of REIT Shares issued to any
holder of Partnership Interests immediately prior to the Effective Time shall
be rounded to the nearest whole REIT Share.

 

5

 

ARTICLE 5

 

REPRESENTATIONS AND WARRANTIES

 

5.1           REPRESENTATIONS AND WARRANTIES OF HOLDCO.  As a material inducement to the Operating
Partnership to enter into this Agreement and to consummate the transactions
contemplated hereby, Holdco hereby makes to each of Republic and the Operating
Partnership each of the representations and warranties set forth in this Article 5.1,
which representations and warranties are true and correct as of the date
hereof.

 

(a)           Organization
and Standing.  Holdco has been duly
formed and is validly existing as a limited partnership in good standing under
the DRULPA with the requisite partnership power and authority to own, lease and
operate its assets, conduct the business in which it is engaged and perform its
obligations under this Agreement.  Holdco
is duly qualified to transact business and is in good standing under the laws
of each jurisdiction in which it owns or leases assets, or conducts any
business, so as to require such qualification.

 

(b)           Authority.
Holdco has the requisite partnership power and authority to enter into this
Agreement and to consummate the Merger and the other transactions contemplated
by this Agreement.  The execution and
delivery of this Agreement by Holdco and the consummation by Holdco of the
Merger and the other transactions contemplated by this Agreement have been duly
authorized by all necessary action on the part of Holdco.  This Agreement has been duly executed and
delivered by Holdco and constitutes the legal, valid and binding agreement of
Holdco enforceable against Holdco in accordance with its terms, except as may
be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’
rights generally, and (b) equitable principles of general applicability
relating to the availability of specific performance, injunctive relief or
other equitable remedies.

 

(c)           Capital
Structure.  All outstanding
Partnership Interests are, and all such interests that may be issued prior to
the Effective Time will be when issued, duly authorized, validly issued, fully
paid and nonassessable and not subject to or issued in violation of any
purchase option, call option, right of first refusal, preemptive right,
subscription right or any similar right under any provision of the DRULPA, the
Agreement of Limited Partnership of Holdco or any contract, lease, license,
indenture, note, bond or other agreement (a “Contract”)
to which Holdco is a party.  There are
not any options, warrants, calls, rights, convertible or exchangeable
securities, units, commitments, Contracts, arrangements or undertakings to
which Holdco is a party (x) obligating Holdco to issue, deliver or sell, or
cause to be issued, delivered or sold, additional Partnership Interests or
other equity interests in, or any security convertible or exercisable for or
exchangeable into any Partnership Interests or other equity interest in, Holdco
or 

 

6

 

(y) obligating Holdco to
issue, grant, extend or enter into any such option, warrant, call, right,
security, unit, commitment, Contract, arrangement or undertaking.  As of the date of this Agreement, there are
no outstanding contractual obligations of Holdco to repurchase, redeem or
otherwise acquire any Partnership Interests. 
There are no agreements among Limited Partners, voting trusts or other
agreements or understandings to which Holdco is a party or to which it is bound
relating to the holding, voting or disposition of the Partnership Interests.

 

(d)           Litigation.  There is no litigation or
proceeding, either judicial or administrative, pending or, to Holdco’s knowledge, threatened, affecting its
ability to consummate the transactions contemplated hereby.  There is no outstanding order, writ,
injunction or decree of any court, government, governmental entity or authority
or arbitration against or affecting Holdco, which in any such case would impair Holdco’s ability to enter into and perform all of
its obligations under this Agreement.

 

(e)           No Insolvency Proceedings.  No
attachments, execution proceedings, assignments for the benefit of creditors,
insolvency, bankruptcy, reorganization or other proceedings are pending or, to Holdco’s knowledge, threatened against
Holdco, nor are any such proceedings
contemplated by Holdco.

 

(f)            No Brokers. Holdco has not entered
into, and covenants that it will not enter into, any agreement, arrangement or
understanding with any person or firm which will result in the obligation of Holdco to pay any finder’s fee, brokerage
commission or similar payment in connection with the transactions contemplated
hereby (other than underwriting fees paid in connection with the IPO).

 

(g)           Securities Laws
Matters. Holdco, for itself and
each of the Holdco Partners, acknowledges that (i) Republic and the
Operating Partnership intend the offer and issuance of any REIT Shares to any
Holdco Partner to be exempt from registration under the Securities Act of 1933,
as amended (the “Securities Act”), and applicable
state securities laws by virtue of either (A) the status of such Holdco
Partner as a “Non-U.S. Person” within the meaning of Rule 902(k) of
Regulation S (“Regulation S”) under the Securities
Act, and acquisition of the REIT Shares by such Holdco Partner in an “offshore
transaction” within the meaning of, and pursuant to, Regulation S, or (B) the status of such Holdco Partner as an “accredited
investor” within the meaning of Rule 501(a) of Regulation D under the
Securities Act (“Regulation D”) acquiring the REIT
Shares in a transaction exempt from registration pursuant to Rule 506 of
Regulation D, and (ii) in issuing any REIT Shares pursuant to the terms of
this Agreement, Republic and the Operating Partnership are relying on the
representations made by each Holdco Partner electing to receive REIT Shares as
consideration in the Merger, which 

 

7

 

representations are set
forth in the Investor Questionnaire as set forth on Exhibit C
attached hereto.

 

(h)           Status as a United
States Person.  Holdco represents and warrants that it is not
a foreign person within the meaning of Section 1445 of the Code. Holdco’s
U.S. taxpayer identification number that has previously been provided to the
Operating Partnership is correct.  Holdco’s
office address is the most recent address previously provided to the Operating
Partnership.

 

(i)            Status as a Corporation for U.S. Federal
Income Tax Purposes.  Holdco represents that it has filed a Form 8832
to be treated as a corporation for U.S. federal income tax purposes, which has
not been revoked and that it is treated as a corporation for U.S. federal
income tax purposes.

 

5.2           REPRESENTATIONS AND WARRANTIES OF
REPUBLIC AND THE OPERATING PARTNERSHIP.  As a material inducement to Holdco
to enter into this Agreement and to
consummate the transactions contemplated hereby, Republic and the Operating
Partnership hereby make to Holdco each
of the representations and warranties set forth in this Article 5.2, which
representations and warranties are true and correct as of the date hereof.

 

(a)           Organization
and Standing of Republic. Republic has been duly formed and is validly
existing as a real estate investment trust in good standing under Maryland law
with the requisite power and authority to own, lease and operate its assets,
conduct the business in which it is engaged and perform its obligations under
this Agreement.   Republic is duly qualified
to transact business and is in good standing under the laws of each
jurisdiction in which it owns or leases assets, or conducts any business, so as
to require such qualification.

 

(b)           Organization
and Standing of the Operating Partnership. 
The Operating Partnership has been duly formed and is validly existing
as a limited partnership in good standing under the DRULPA with the requisite
partnership power and authority to own, lease and operate its assets, conduct
the business in which it is engaged and perform its obligations under this Agreement.
The Operating Partnership is duly qualified to transact business and is in good
standing under the laws of each jurisdiction in which it owns or leases assets,
or conducts any business, so as to require such qualification.

 

(c)           Authority.  Each of Republic and the Operating
Partnership has the requisite power and authority to enter into this Agreement
and to consummate the Merger and the other transactions contemplated by this
Agreement.  The execution and delivery of
this Agreement by Republic and the Operating Partnership and the consummation
by Republic and the Operating Partnership of the Merger and the other
transactions contemplated by this Agreement have been 

 

8

 

duly authorized by all
necessary action on the part of Republic and the Operating Partnership.  This Agreement has been duly executed and
delivered by Republic and the Operating Partnership and constitutes the legal,
valid and binding agreement of Republic and the Operating Partnership enforceable
against each of them in accordance with its terms, except as may be limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, and (b) equitable
principles of general applicability relating to the availability of specific
performance, injunctive relief or other equitable remedies.

 

(d)           Capital
Structure.  All outstanding REIT Shares are duly
authorized, validly issued, fully paid and nonassessable and not subject to or
issued in violation of any purchase option, call option, right of first
refusal, preemptive right, subscription right or any similar right under
Republic’s declaration of trust or bylaws or any contract to which Republic is a
party or otherwise bound.  There are no
bonds, debentures, notes or other indebtedness of Republic having the right to
vote with shareholders on any matters on which holders of REIT Shares may
vote.  There are not any options,
warrants, rights, contracts, arrangements or undertakings of any kind to which
Republic is a party or by which Republic is bound obligating it to issue,
grant, sell or cause to be issued, granted or sold, additional REIT Shares or
other equity interests in, or any security convertible or exercisable for or
exchangeable into REIT Shares or other equity interest in, Republic, other than
as disclosed in or contemplated by the Information Statement.  The REIT Shares issued in the Merger will be
duly authorized, validly issued, fully paid and nonassessable.

 

(e)           Litigation.  There is no litigation or
proceeding, either judicial or administrative, pending or, to Republic’s or the
Operating Partnership’s knowledge, threatened, affecting its ability to
consummate the transactions contemplated hereby. There is no outstanding order,
writ, injunction or decree of any court, government, governmental entity or
authority or arbitration against or affecting Republic or the Operating
Partnership, which in any such case would impair Republic or the Operating
Partnership’s ability to enter into and perform all of its obligations under
this Agreement.

 

(f)            No Insolvency Proceedings. No attachments, execution proceedings,
assignments for the benefit of creditors, insolvency, bankruptcy,
reorganization or other proceedings are pending or, to Republic’s or the
Operating Partnership’s knowledge, threatened against Republic or the Operating
Partnership, nor are any such proceedings contemplated by the Operating
Partnership.

 

9

 

(g)           No Brokers.  Neither of Republic or the
Operating Partnership has entered into, and each of them covenants that it will
not enter into, any agreement, arrangement or understanding with any person or
firm which will result in the obligation of Republic or the Operating
Partnership to pay any finder’s fee, brokerage commission or similar payment in
connection with the transactions contemplated hereby (other than underwriting
fees paid in connection with the IPO).

 

ARTICLE 6

 

COVENANTS

 

6.1           CARRYING ON IN THE ORDINARY COURSE OF BUSINESS.  From the date hereof to the Closing Date,
each of the parties hereto shall conduct its business in the ordinary course in
all material respects, except that each party may take such actions and execute
such documents as may be required to effectuate the Merger, the IPO
Transactions and any related transactions.

 

6.2           CONTRIBUTION OF REIT SHARES AND CASH; REPAYMENT OF FINCO LOAN.  On or before the Closing Date, Republic will
contribute to the Operating Partnership, in exchange for a like number and
value of OP Units, the number of REIT Shares and amount of cash necessary for (a) payment
by the Operating Partnership of the aggregate amount of REIT Shares and cash
payable by the Operating Partnership pursuant to the terms of this Agreement
and (b) repayment by the Operating Partnership of the Finco Loan.  The Operating Partnership shall repay the
Finco Loan following the Merger and IPO Transactions.

 

6.3           FURTHER ASSURANCES. 
Holdco shall execute and deliver to Republic and the Operating
Partnership all such other and further instruments and documents and take or
cause to be taken all such other and further actions as either of them may
reasonably request in order to effect the Merger and the other transactions contemplated
by this Agreement.

 

6.4           CONDITIONAL NATURE OF TRANSACTION.  Holdco acknowledges and understands that it
is a condition to the Operating
Partnership’s obligations to close the transactions contemplated hereby
that the other IPO Transactions shall have occurred (or are occurring
simultaneously with the Closing), that the occurrence of any of the other IPO
Transactions is wholly within the sole and absolute discretion of Republic and
the Operating Partnership, and 

 

10

 

that Holdco has no right
to force any of the IPO Transactions to occur, on any terms.

 

ARTICLE 7

 

CONDITIONS

 

7.1           CONDITIONS TO THE OPERATING
PARTNERSHIP’S OBLIGATIONS TO EFFECT THE MERGER.  The
obligations of Republic and the Operating Partnership to effect the Merger and
the other transactions contemplated by this Agreement are subject to the
fulfillment, at or prior to the Closing, of the following conditions (unless
such conditions are waived in writing by the Operating Partnership and Republic):

 

(a)           IPO.  The IPO, in such form as
Republic, in its sole and absolute discretion, shall have determined to be
acceptable, shall have occurred (or is occurring simultaneously with the
Closing).

 

(b)           RPT 1425.  The contribution of interests
in RPT 1425 Investors L.P. in
such form as Republic, in its sole and absolute discretion, shall have
determined to be acceptable shall have occurred.

 

(c)           Representations and Warranties.  The
representations and warranties made by Holdco pursuant to this Agreement shall be true and correct in all material
respects when made, and on and as of the Closing Date, as though such
representations and warranties were made on the Closing Date.

 

(d)           Performance.  Holdco shall have performed
and complied with all agreements and covenants that it is required to perform
or comply with pursuant to this Agreement prior to the Closing in all material
respects.

 

(e)           Legal Proceedings.  No
order, statute, rule, regulation, executive order, injunction, stay, decree, or
restraining order shall have been enacted, entered, promulgated or enforced by
any court of competent jurisdiction or governmental entity that prohibits the
consummation of the Merger, and no litigation or governmental proceeding
seeking such an order shall be pending or threatened.

 

(f)            Consents and Approvals.  All
necessary consents of governmental and private parties to effect the Merger and
the other transactions contemplated by this Agreement, including, without
limitation, consents of any lenders, shall have been obtained.

 

11

 

(g)           Reliance on Regulation S and/or Regulation D. 
Republic shall, based on the advice of its counsel and the
representations made by any Holdco Partner electing to receive REIT Shares as
Merger Consideration in such Holdco Partner’s Investor Questionnaire, be
reasonably satisfied that the issuance and the contemplated distribution of
REIT Shares to any such Holdco Partner may be made without registration under
the Securities Act in reliance on either Regulation S and/or Regulation D under
the Securities Act.

 

(h)           Certification of Non-Foreign Status. 
Holdco shall complete and provide to the Operating Partnership a
certificate of non-foreign status substantially in the form provided in Section 1.1445-2(b)(2)(iv)(B) of
the Treasury regulations.

 

(i)            USRPHC
Certificate.  Holdco shall complete
and provide to the Operating Partnership a certificate pursuant to Treasury
Regulation Section 1.1445-2(c)(3), signed by Holdco and dated as of the
date of the Closing to the effect that Holdco will cease to be a United States
real property interest under Section 897(c)(1)(B) of the Internal
Revenue Code prior to the deemed liquidation of Holdco for federal income tax
purposes.

 

7.2           CONDITIONS TO HOLDCO’S OBLIGATION TO EFFECT THE
MERGER.  The obligation of Holdco to effect the Merger and the other
transactions contemplated by this Agreement are subject to the fulfillment, at
or prior to the Closing, of the following conditions (unless such conditions
are waived in writing by Holdco):

 

(a)           Representations and Warranties.  The
representations and warranties made by Republic and the Operating Partnership
pursuant to this Agreement shall be true and correct in all material respects
when made, and on and as of the Closing Date, as though such representations
and warranties were made on the Closing Date.

 

(b)           Performance. Republic and the Operating Partnership shall have performed and complied with all agreements and covenants
that they each are required to perform or comply with pursuant to this
Agreement prior to the Closing in all material respects.

 

(c)           Legal Proceedings.  No
order, statute, rule, regulation, executive order, injunction, stay, decree, or
restraining order shall have been enacted, entered, promulgated or enforced by
any court of competent jurisdiction or governmental entity that prohibits the
consummation of the Merger, and no litigation or governmental proceeding
seeking such an order shall be pending or threatened.

 

12

 

(d)           Consents and Approvals.  All
other necessary consents of governmental and private parties to effect the
Merger and other transactions contemplated by this Agreement, including,
without limitation, consents of any lenders, shall have been obtained;
provided, that the foregoing condition shall be deemed to have been satisfied
if Republic or the Operating Partnership shall have agreed to fully indemnify
the Partners from any loss, liability, claim, damage or expense arising out of
the Operating Partnership proceeding to effect the Merger without having
obtained a necessary consent.

 

ARTICLE 8

 

TERMINATION

 

8.1           TERMINATION AND ABANDONMENT BY
THE OPERATING PARTNERSHIP.  Republic or the Operating Partnership
shall have the right to terminate this Agreement and abandon the Merger at any
time prior to the filing of the Certificate of Merger, before or after approval
by the Holdco Limited Partners or Republic, as the general partner of the Operating Partnership, following
the occurrence of any of the following events:

 

(i)            the determination by Republic, in its sole
and absolute discretion, not to proceed with the IPO Transactions; or

 

(ii)           at any time on or after September 30,
2006, for any reason.

 

8.2           TERMINATION AND ABANDONMENT BY
HOLDCO.  Holdco shall have the right to terminate this Agreement and abandon the
Merger at any time and for any reason on or after September 30, 2006 but
prior to the filing of the Certificate of Merger, whether or not such
termination occurs before or after approval by the Limited Partners.

 

8.3           EFFECT OF TERMINATION AND
ABANDONMENT.   Upon the termination of this Agreement and
abandonment of the Merger pursuant to Section 8.1 or 8.2 hereof, this
Agreement shall become void and have no effect, and no party shall have any
liability to the other in connection with the transactions contemplated hereby,
including the Merger, or as a result of the termination of this Agreement;
provided, that the foregoing shall not relieve a party of any liability as a
result of a breach of any of the terms of this Agreement.

 

13

 

ARTICLE 9

 

GENERAL PROVISIONS

 

9.1           ENTIRE AGREEMENT. 
This Agreement, the Exhibits and any documents delivered by the parties
in connection herewith constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect thereto.  No addition to or modification of any
provision of this Agreement shall be binding upon any party hereto unless made
in writing and signed by all parties hereto.

 

9.2           AMENDMENT.  This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.

 

9.3           GOVERNING LAW.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware.

 

9.4           COUNTERPARTS.  This
Agreement may be executed by the parties hereto in separate counterparts, each
of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.  Each counterpart may consist of a number of
copies hereof, each signed by less than all, but together signed by all of the
parties hereto.

 

9.5           HEADINGS.  Headings of
the Articles and Sections of this Agreement are for the convenience of the
parties only, and shall be given no substantive or interpretive effect
whatsoever.

 

9.6           INCORPORATION.  All
Exhibits attached hereto and referred to herein are hereby incorporated herein
and made a part hereof for all purposes as if fully set forth herein.

 

9.7           SEVERABILITY.  Any
term or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction.  If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.

 

9.8           WAIVER OF CONDITIONS. 
The conditions to each of the parties’ obligations to consummate the
Merger are for the sole benefit of such party and may be waived by such party
in whole or in part to the extent permitted by applicable law.

 

14

 

9.9           NO THIRD-PARTY BENEFICIARIES.  This Agreement is not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder.

 

15

 

IN WITNESS WHEREOF, the parties have executed this
Agreement and caused the same to be duly delivered on their behalf as of the
day and year first written above.

 

 

	
   

  	
  Republic Property Trust

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
                /s/
  Mark R. Keller

  	
   

  
	
   

  	
   

  	
  Name: Mark R. Keller

  
	
   

  	
   

  	
  Title: Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Republic Property
  Limited

  Partnership

  
	
   

  	
   

  
	
   

  	
  By: Republic Property
  Trust,

  its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
                /s/
  Mark R. Keller

  	
   

  
	
   

  	
   

  	
  Name: Mark R. Keller

  
	
   

  	
   

  	
  Title: Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RKB Holding L.P.

  
	
   

  	
   

  
	
   

  	
  By: RKB Washington
  Property I

  
	
   

  	
  (General Partner) LLC,

  
	
   

  	
  its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
                /s/
  Mark R. Keller

  	
   

  
	
   

  	
   

  	
  Name: Mark R. Keller

  
	
   

  	
   

  	
  Title: Manager

  

 

 

[Signature
Page to Holdco Merger Agreement]

 

 

Exhibit A

 

FORM OF CERTIFICATE OF
MERGER

OF

RKB HOLDING L.P.  

INTO

REPUBLIC PROPERTY LIMITED PARTNERSHIP

 

Pursuant to Section 17-211(c) of
the Delaware Revised Uniform Limited Partnership Act, each of RKB Holding L.P.,
a Delaware limited partnership (“Holdco”), and
Republic Property Limited Partnership, a Delaware limited partnership (the “Operating Partnership”) does hereby certify to the following
facts relating to the merger of Holdco
with and into the Operating Partnership with the Operating Partnership
surviving and continuing as a limited partnership organized under the laws of
Delaware (the “Merger”):

 

FIRST:  The name and jurisdiction of organization of
each constituent entity that is to merge are as follows:

 

	
  Name

  	
   

  	
  Jurisdiction of Organization

  
	
   

  	
   

  	
   

  
	
  RKB
  Holding L.P.

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  
	
  Republic
  Property Limited Partnership

  	
   

  	
  Delaware

  

 

SECOND:  An Agreement and Plan of Merger among
Republic Property Trust, a Maryland real estate investment trust (“Republic”), the Operating Partnership and Holdco has been
approved and executed by each of the parties thereto.

 

THIRD:  The name of the surviving limited partnership
shall continue to be “Republic Property Limited Partnership.”

 

FOURTH:  The Merger of Holdco into the Operating
Partnership shall be effective on [                ],
2005  at          
(Eastern Daylight Time).

 

FIFTH:  The executed Agreement and Plan of Merger is
on file at the place of business of the surviving limited partnership at the
following address:

 

Republic Property Limited
Partnership

1280 Maryland Avenue, SW, Suite 280

Washington, D.C. 20024

 

SIXTH:  The Operating Partnership will furnish a copy
of the Agreement and Plan of Merger on request and without cost, to any partner
of Holdco or the Operating Partnership.

 

A-1

 

IN WITNESS WHEREOF, each of
Holdco and the Operating Partnership have caused this Certificate of Merger to
be duly executed as of this        th
day of              ,
2005.

 

	
   

  	
  RKB HOLDING L.P.

  
	
   

  	
   

  
	
   

  	
  By: RKB Washington
  Property I (General

  Partner) LLC, its general partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:
  Mark R. Keller

  
	
   

  	
   

  	
   

  	
  Title:
  Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  REPUBLIC PROPERTY LIMITED

  PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Republic Property
  Trust,

  
	
   

  	
  its general partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:
  Mark R. Keller

  
	
   

  	
   

  	
   

  	
  Title:
  Chief Executive Officer

  
						

 

A-2

 

Exhibit B

 

MERGER CONSIDERATION FORMULA

 

Definitions
(to the extent not defined in the Merger Agreement):

 

Aggregate Exchange Amount
= (11,090,411 * HSR * PPS) – (TXC+FD)

 

	
  HSR

  	
  =

  	
  Holdco Share of RKB
  Proceeds

  
	
  TXC

  	
  =

  	
  Tax Cost

  
	
  FD

  	
  =

  	
  Finco Debt

  
	
  PPS

  	
  =

  	
  Price Per Share

  

 

“Holdco Share of RKB
Proceeds” means, at the time of the IPO, the percentage of proceeds distributed
to Holdco or its successor in accordance with the partnership agreement of RKB
Washington Property Fund I L.P. (the “Fund”) upon a liquidation of the Fund
following the contribution of the assets of RKB Washington Property Fund I L.P.

 

“Tax Cost” means the
expected tax liabilities of Holdco as determined at the time of the IPO that
will be assumed by the OP.

 

“Finco Debt” means the
sum of the principal and interest outstanding on the loan between Holdco and
Finco at the time of the IPO.

 

“Price Per Share” means
the price per REIT Share in the IPO.

 

 

Exhibit C

 

Form of Investor
Representations

 

Form of Regulation S Representations

 

(1)           Limited Partner
is not a U.S. Person as that term is defined in Rule 902(k) of
Regulation S.

 

(2)           Limited Partner is outside the United States as of the date of the
execution and delivery of the Investor Questionnaire and will be outside the
United States at the time of the closing of the Merger and Finco Distribution
and delivery of the REIT Shares.

 

(3)           Limited Partner is acquiring the REIT Shares for its own account and
not for the account or benefit of any U.S. Person.  Upon consummation of the Merger, Limited
Partner will be the sole beneficial owner of the REIT Shares issued to Limited
Partner pursuant to the Merger and Limited Partner has not pre-arranged any
sale with any purchaser or purchasers located or  resident in, or organized under the laws of,
the United States.

 

(4)           Limited Partner is sufficiently experienced in financial and business
matters to be capable of evaluating the merits and risks of its investments and
to make an informed decision relating thereto.

 

(5)           Limited Partner is not a “distributor” as that term is defined in Rule 902(d) of
Regulation S of the REIT Shares and Limited Partner is not participating,
pursuant to a contractual agreement or otherwise, in the distribution of any
such securities.

 

(6)           Limited Partner is not an affiliate of Republic as that term is defined
in Rule 405 under the Securities Act.

 

(7)           Limited Partner represents and warrants and hereby agrees not to engage
in hedging transactions with regard to REIT Shares unless in compliance with
the Securities Act.

 

(8)           Limited Partner acknowledges that investment in REIT Shares involves a
high degree of risk, and Limited Partner is aware of these risks and further
acknowledges that it can bear the economic risk of an investment in REIT Shares
to be issued to Limited Partner hereunder, including the total loss of its
investment.

 

(9)           Limited Partner understands that the REIT Shares to be issued to
Limited Partner hereunder have not been and will not be registered under the
Securities Act and are being offered and sold to Limited Partner in reliance on
specific exemptions from the registration requirements of U.S. securities laws
and that Limited Partner is relying upon the truth and accuracy of the

 

 

representation, warranties,
agreements, acknowledgments or understandings of Limited Partner set forth
herein in order to determine the applicability of such exemptions and the
suitability of Limited Partner to acquire REIT Shares.  Limited Partner agrees that if any such
representations, warranty, agreement, acknowledgment and understanding deemed
to have been made by virtue of its purchase of REIT Shares is no longer
accurate, it shall promptly notify Republic.

 

(10)         Limited Partner further understands and agrees that the REIT Shares (or
any beneficial interest therein) may not be offered or resold, pledged or
otherwise transferred by such purchaser except (a) (i) in an offshore
transaction meeting the requirements of Rule 903 or 904 of Regulation S, (ii) pursuant
to an effective registration statement under the Securities Act or (iii) pursuant
to an available exemption from the registration requirements under the
Securities Act, including Rule 144 thereunder, and (b) in accordance
with all applicable securities laws of the states of the United States and
other jurisdictions.  Limited Partner
agrees that if it decides to resell, pledge or otherwise transfer any REIT
Shares or any beneficial interest in the REIT Shares prior to one year after
the later of (a) the time when the REIT Shares are first offered to
persons other than distributors in reliance on Regulation S and (b) the
date of closing of the Merger and Finco Distribution and delivery of the REIT
Shares (the “distribution compliance period”), it will do so only in
compliance with the foregoing.  Limited
Partner agrees to, and each subsequent holder is required to, notify any
purchaser of the REIT Shares from it of the resale restrictions referred to in
this paragraph, if then applicable. 
Limited Partner acknowledges that prior to any proposed transfer of REIT
Shares other than pursuant to an effective registration statement, the transferee
of REIT Shares may be required to provide certifications and other
documentation relating to the status of such transferee and the transfer.

 

(11)         Limited Partner understands that in the view of the SEC, the statutory
basis for the exemption claimed for this transaction may be unavailable if the
offering of REIT Shares, including, without limitation, any series of
transactions relating thereto, although in technical compliance with
Regulation S, is part of a plan or scheme to evade the registration
provisions of the Securities Act.  Limited
Partner is acquiring the REIT Shares to be issued to Limited Partner hereunder
for investment purposes and has no present intention to sell the REIT Shares to
be issued to Limited Partner hereunder in the United States or to a U.S. Person
or for the account or benefit of a U.S. Person.

 

(12)         Limited Partner expressly acknowledges that, in accordance with the
provisions of Regulation S, Republic is required to refuse to register any
transfer of the REIT Shares to be issued to Limited Partner hereunder not made
in compliance with the provisions of Regulation S, pursuant to a

 

 

registration statement under the Securities Act or pursuant to an
available exemption from registration.

 

(13)         Limited Partner expressly acknowledges that until the expiration of the
distribution compliance period:

 

(a)   every
purchaser of REIT Shares other than a distributor will be required to certify
that it is not a U.S. Person and is not acquiring the REIT Shares for the
account or benefit of a U.S. Person or is a U.S. Person who purchased the REIT
Shares in a transaction that did not require registration under the Securities
Act;

 

(b)   every
purchaser of the REIT Shares will be required to agree to resell such REIT
Shares only in accordance with the provisions of Regulation S, pursuant to
registration under the Securities Act or pursuant to an available exemption
from registration, and will be required to agree not to engage in hedging
transactions, directly or indirectly, with regard to REIT Shares unless in
compliance with the Securities Act; and

 

(c)   each
distributor selling securities to a distributor, dealer or person receiving a
selling commission, fee or other remuneration, will be required to send a
confirmation or other notice to the purchaser stating that the purchaser is subject
to the same restrictions on offers and sales that apply to a distributor.

 

(14)         Limited Partner acknowledges and hereby agrees that any certificate or
certificates representing the REIT Shares to be issued to Limited Partner
hereunder shall bear a legend substantially in the following form:

 

The shares of beneficial
interest represented by this certificate have not been registered under the
Securities Act of 1933, as amended (the “Securities Act”), or under the
securities laws of any state of the United States and may not be encumbered,
pledged, hypothecated, sold, transferred or otherwise disposed of within the
United States or to or for the account or benefit of U.S. Persons (as defined
in Rule 902(k) of Regulation S under the Securities Act (“Regulation S”))
except in accordance with the provisions of Regulation S, pursuant to
registration under the Securities Act or pursuant to an available exemption
from registration and, in each case in accordance with all applicable
securities laws.  The holder may not
engage in any hedging transactions with regard to these securities, directly or
indirectly, unless conducted in compliance with the Securities Act.

 

 

For purposes of Rule 902(k)
of Regulation S, “U.S. Person” includes each of the following:

 

(1)           any natural person resident in the United
States;

 

(2)           any partnership or corporation organized or
incorporated under the laws of the United States;

 

(3)           any estate of which any executor or
administrator is a U.S. person;

 

(4)           any trust of which any trustee is a U.S.
person;

 

(5)           any agency or branch of a foreign entity
located in the United States;

 

(6)           any non-discretionary account or similar
account (other than an estate or trust) held by a dealer or other fiduciary for
the benefit of a U.S. person;

 

(7)           any discretionary account or similar account
(other than an estate or trust) held by a dealer or other fiduciary organized,
incorporated or (if an individual) resident in the United States; and

 

(8)           any partnership or corporation if: (a) organized
or incorporated under the laws of any foreign jurisdiction and (b) formed
by a U.S. person principally for the purpose of investing in securities not
registered under the Securities Act, unless it is organized or incorporated,
and owned, by accredited investors who are not natural persons, estates or
trusts.

 

Form of Regulation D Representations

 

The undersigned hereby
represents and warrants that he, she or it is an “Accredited Investor,” as such
term is defined in Rule 501 under Regulation D, based upon the fact that
he, she or it meets at least one of the following requirements (check all that
apply):

 

A.                                                    Any natural person whose individual net
worth, or joint net worth with that person’s spouse, at the time of his or her
purchase of the REIT Shares exceeds $1,000,000;

 

B.                                                    Any natural person who had an individual
income in excess of $200,000 in each of the two most recent years or joint
income with that person’s spouse in excess of $300,000 in each of those years and
who has a reasonable expectation of reaching the same income level in the
current year;

 

 

C.                                                    Any private business development company as
defined in Section 202(a)(22) of the Investment Advisers Act of 1940;

 

D.                                                    Any bank as defined in Section 3(a)(2) of
the Securities Act, or any savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the Securities Act, whether acting
in its individual or fiduciary capacity; any broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934, as amended;
any insurance company as defined in Section 2(a)(13) of the Securities
Act; any investment company registered under the Investment Company Act of 1940
or a business development company as defined in Section 2(a)(48) of that
Act; any Small Business Investment Company licensed by the United States Small
Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958; any plan established and maintained by a
state, its political subdivisions, or any agency or instrumentality of a state
or its political subdivisions, for the benefit of its employees, if the plan
has total assets in excess of $5,000,000; any employee benefit plan within the
meaning of the Employee Retirement Income Security Act of 1974 if the
investment decision is made by a plan fiduciary, as defined in Section 3(21)
of that Act, which is either a bank, savings and loan association, insurance
company, or registered investment advisor, or if the employee benefit plan has
total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors;

 

E.                                                     Any organization described in Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended (the “Code”), corporation,
Massachusetts or similar business trust, or partnership, not formed for the
specific purpose of acquiring the REIT Shares, with total assets in excess of
$5,000,000;

 

F.                                                     Any trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the REIT Shares,
whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of
the Securities Act;

 

G.                                                    Any director, executive officer, or general
partner of the issuer of the securities being offered or sold, or any director,
executive officer, or general partner of a general partner of Republic; or

 

H.                                                    Any entity in which all the equity owners are
accredited investors as defined in A through G above.

 

 

Additional Regulation D
Representations

 

(1)           Limited Partner has had access to and has received such financial and
other information regarding Republic and the REIT Shares as Limited Partner
deems necessary in order to make its investment decision to purchase the REIT
Shares.  If Limited Partner has had any
questions regarding Republic or the REIT Shares, Limited Partner has asked
these questions and has received answers from representatives of Republic.  Limited Partner has not relied on
representations, warranties, opinions, projections, financial or other
information or analysis, if any, supplied to it by any person other than
Republic.

 

(2)           Limited Partner is a sophisticated investor and has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of the acquisition of the REIT Shares and Limited Partner is
able to bear the economic risks of such an investment.  In the normal course of its business, Limited
Partner invests in or purchases securities similar to the REIT Shares.  Limited Partner is aware that it may be required
to bear the economic risk of an investment in the REIT Shares for an indefinite
period of time, and it is able to bear such risk for an indefinite period.  Limited Partner has relied upon its own tax,
legal and financial advisors in connection with its decision to purchase the
REIT Shares.  Limited Partner is an “accredited
investor” within the meaning of Rule 501(a) of Regulation D.

 

(3)           Limited Partner is acquiring the REIT Shares for its own account.

 

(4)           Limited Partner is not acquiring the REIT Shares with a view to or for
the purposes of resale, distribution or fractionalization, in whole or in part,
of the REIT Shares.

 

(5)           Limited Partner acknowledges that such REIT Shares have not been and
will not be registered under the Securities Act and are being offered only in a
transaction not involving any public offering in the United States within the
meaning of the Securities Act.  Limited
Partner acknowledges that if Limited Partner decides to resell or otherwise
transfer the REIT Shares, then the REIT Shares may be resold or transferred
only if (a) at the time the transferee’s buy order is originated, the
transferee is, or Limited Partner reasonably believes the transferee is,
outside the United States and such offer is otherwise made in accordance with
Regulation S, (b) such REIT Shares are sold pursuant to an effective Registration
Statement under the Securities Act or (c) such REIT Shares are sold in a
transaction that does not require registration under the Securities Act,
including Rule 144 thereunder, or any applicable laws of the states of the
United States.  Limited Purchaser
acknowledges that prior to any proposed transfer of REIT Shares other than
pursuant to an effective registration statement, the transferee of REIT

 

 

Shares may be required to
provide certifications and other documentation relating to the status of such
transferee and the transfer.

 

(6)           Limited Partner agrees that so long as the REIT Shares are “restricted
securities” as defined in Rule 144 under the Securities Act, it shall
notify each transferee of REIT Shares from it that (a) such REIT Shares have
not been registered under the Securities Act, (b) such REIT Shares are
subject to the restrictions on the resale or other transfer thereof described
in paragraph 5 above, (c) such transferee shall be deemed to have
represented (i) as to its status as a purchaser acquiring the REIT Shares
in an offshore transaction pursuant to Regulation S under the Securities Act or
in transaction that does not require registration under the Securities Act or
any applicable laws of the states of the United States and (ii) that such
transferee is not an “underwriter” within the meaning of Section 2(11) of
the Securities Act and (d) such transferee shall be deemed to have agreed
to notify its subsequent transferees as to the foregoing.

 

(7)           Limited Partner agrees that each of the certificates for, or other
written evidences of, the REIT Shares will bear a legend substantially in the
following form:

 

The shares of beneficial interest represented by this certificate have
not been registered under the Securities Act of 1933, as amended (the “Securities
Act”), or under the securities laws of any state of the United States and may
not be encumbered, pledged, hypothecated, sold, transferred or otherwise
disposed of within the United States except pursuant to registration under the
Securities Act or pursuant to an available exemption from registration and, in
each case in accordance with all applicable securities laws.

 

(8)          Limited Partner understands that the REIT Shares to be issued to
Limited Partner hereunder have not been and will not be registered under the
Securities Act and are being offered and sold to Limited Partner in reliance on
specific exemptions from the registration requirements of U.S. securities laws
and that Republic is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of Limited Partner
set forth herein in order to determine the applicability of such exemptions and
the suitability of Limited Partner to acquire REIT Shares.  Limited Partner agrees that if any such
representations, warranty, agreement, acknowledgment and understanding deemed
to have been made by virtue of its purchase of REIT Shares is no longer
accurate, it shall promptly notify Republic.Exhibit 10.14

 

OPTION
AGREEMENT

 

THIS OPTION AGREEMENT (this “Agreement”) is
executed this 28th day of November, 2005 by and
between (i) PARCEL 47D LLC, a Delaware limited liability company (‘Property
Owner”), and (ii) REPUBLIC PROPERTY LIMITED PARTNERSHIP, a Delaware
limited partnership (“RPLP”).

 

WHEREAS, Property Owner is the owner of
certain real property in the District of Columbia that is more fully described
in Exhibit A attached hereto on which an office building is presently
being constructed, which property, together with the office building and other
improvements ultimately constructed thereon, is herein referred to as the “Property”).

 

WHEREAS, RPLP and its general partner,
Republic Property Trust, a Maryland real estate investment trust (“RPT”), are
engaging in various related transactions pursuant to which, among other things,
(i) RPLP will acquire interests in various entities that own real estate
properties in which certain persons affiliated with RPT and the Property Owners
have interests and (ii) RPT will effect an initial public offering (the “IPO”,
and together with the related transactions, the “IPO Transactions”) of its
common shares of beneficial interest (the “RPT Shares”) and contribute the
proceeds therefrom to RPLP for units of partnership interest in RPLP.

 

WHEREAS, as part of the IPO
Transactions,  Property Owner desires to
grant to RPLP an option to purchase the Property and RPLP desires to obtain
from  Property Owner an option to
purchase the Property, all in accordance with the terms and conditions
hereinafter set forth:

 

NOW, THEREFORE, in consideration of the
mutual promises herein contained and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, it is agreed as
follows:

 

1.                                       Grant of Option by Property Owner
Property Owner hereby irrevocably grants to RPLP an exclusive option (the “Option”)
to purchase the Property  at the Purchase
Price (hereafter defined) and upon the terms and conditions herein set forth in
this Agreement.

 

2.                                       Consideration for Grant of Option.  As consideration for the grant of each
Option, RPLP shall pay to Property Owner, upon execution of this Agreement, the
sum of Five Thousand Dollars ($5,000).

 

3.                                       Term of Option.  The Option shall be exercisable by RPLP
delivering written notice to Property Owner at any time during the period (the “Initial
Option Period”) commencing on the date on which a certificate of occupancy for
the base building of the Property is issued by the applicable District of
Columbia authorities and expiring on the date that is sixty (60) days prior to
the date of maturity (without acceleration but including extensions thereof)
(the “Construction Loan Maturity Date”) of the construction loan or
construction loans obtained by or on behalf of the Property Owner for the
Property.   As of the date of this
Agreement, the Construction Loan Maturity Date for the Property is July 1,
2007.   In the event that RPLP does not
exercise the Option prior to the expiration of the Initial Option Period and either

 

 

(i) Property Owner has consummated a Refinancing (as hereafter
defined) of the construction loan(s) for the Property prior to the date (the “Interim
Period Expiration Date”) that is one hundred eighty (180) days after the
expiration of the Initial Option Period, 
or (ii) if such Refinancing has not been consummated prior to the
Interim Period Expiration Date,  Property
Owner has not, prior to the Interim Period Expiration Date,  executed a Binding Contract (hereafter
defined) for the sale of the Property to an unaffiliated third party, then the
Option may be exercised by RPLP during the period (the “Second Option Period”)
commencing on the earlier of (i) the date of consummation of the
Refinancing of the construction loan(s) for the Property and (ii) the
Interim Period Expiration Date and expiring on the date that is four (4) years
after the date on which a certificate of occupancy for the base building of the
Property is issued by the applicable District of Columbia authorities;
provided, however, that (A) if the Property Owner has executed one or more
Binding Contracts for the sale of the Property to an unaffiliated third party
prior to the Interim Period Expiration Date and on the Interim Period
Expiration Date all of such sale contracts have terminated without the Property
having been conveyed to an unaffiliated third party, then the Option may be
exercised by RPLP during the Second Option Period; (B) if  the Property Owner has executed one or more
Binding Contracts for the sale of the Property to an unaffiliated third party
prior to the Interim Period Expiration Date and on the Interim Period
Expiration Date all of such sale contracts have not terminated but prior to the
expiration of three hundred sixty (360) days from the expiration of the Initial
Option Period the Property has not been conveyed to an unaffiliated third party
pursuant to a Binding Contract executed prior to the Interim Period Expiration
Date, then the Option may be exercised by RPLP during the remainder of the
Second Option Period, and (C) if on the Interim Period Expiration Date
less than eighty five percent (85%) of the rentable area of the Property is not
Rent Paying Space but thereafter at least eighty five percent (85%) of the
rentable area of the Property becomes Rent Paying Space at a time when the
Property Owner has not executed a Binding Contract for the sale of the Property
to an unaffiliated third party that has not been terminated without the
Property having been conveyed to an unaffiliated third party, then the Option
may be exercised by RPLP during such portion of the remainder of the Second
Option Period during which the Property Owner has not executed a contract for
the sale of the Property to an unaffiliated third party that has not been
terminated without the Property having been conveyed to an unaffiliated third
party.  For purposes hereof, a “Refinancing”
of the construction loan(s) for the Property means the replacement of the
construction loan(s) for the Property by new financing (whether or not with the
same lender or lenders that provided the prior financing) that has a maturity
date of at least five (5) years after the Construction Loan Maturity Date.
Time is of the essence in exercising the Option and failure to exercise the
Option during the Initial Option Period or (if the Second Option Period becomes
applicable) during the Second Option Period shall result in the termination and
lapse of the Option. For purposes hereof, a “Binding Contract” shall mean a
contract that is not terminable by the purchaser without the payment of
liquidated damages other than (i) by reason of a default by the seller or
the nonfulfillment of any closing conditions or the exercise of termination
rights (such as in the case of casualty or condemnation) that are of a type
that have been included in some, although not necessarily all or most,
arms-length transactions or are appropriate in an arms length transaction by
reason of factors related to the property or the property’s financing rather
than to internal matters relating to the purchaser or (ii) by reason of a
due diligence termination right for a period of not more than ninety (90) days
(extendable for a period of not more than an additional sixty days).

 

2

 

4.                                       Purchase Price if Property Attains 85% Rent Paying
Space.  In the event that
as of the date of conveyance of the Property to RPLP at least eighty five
percent (85%) of the rentable area of the Property is Rent Paying Space
(hereafter defined), then the Purchase Price payable for the Property shall be
the sum of the Initial Purchase Price (hereafter defined) and the Earn-Out
Purchase Price (hereafter defined).  For
all purposes of this Agreement, Rent Paying Space shall mean rentable space
that has been leased, pursuant to a lease having a term of at least three (3) years
that has been approved by the Property’s first mortgage lender, where the lease
commencement date has occurred and the obligation to pay rent (excluding any
rent abatement period) has commenced under the applicable lease.  For all purposes of this Agreement, the
rentable area of the Property shall be determined in accordance with the
Building Owners and Managers Association International Standard Method for
Measuring Floor Area in Office Buildings, ANSI/BOMA Z65.1-1996  excluding any area of the garage not used for
rentable office or retail space and any area of storage space not included
within a tenant’s rentable office or retail space.

 

(a)                                  For purposes hereof,
the “Initial Purchase Price” of the Property shall be the amount equal to, at
RPLP’s option (exercisable as hereinafter provided),  either (1)  the Annualized Net Operating
Income (hereafter defined) of the Property divided by the then prevailing
market capitalization rate for the Property, determined as provided in
paragraph (b) below (the “Market Capitalization Rate”), or  (2) the Annualized Net Operating Income
divided by six and one half percent (6.5%). 
For purposes hereof:

 

(i)                                     The “Applicable
Percentage Rate” shall mean (1) the Market Capitalization Rate in the
event that the Initial Purchase Price is determined pursuant to clause (1) of
Section 4(a) or (2) six and one half percent (6.5%) in the event
that the Initial Purchase Price is determined pursuant to clause (2) of Section 4(a).

 

(ii)                                  The “Annualized Net
Operating Income” of a Property shall mean the Net Operating Income (hereafter
defined) of the Property projected from executed leases and garage income for
the twelve (12) month period commencing on the first day of the month following
the date of conveyance of the Property to RPLP, but treating any period of rent
abatement as if such rent abatement did not exist and that the rent during each
month of such rent abatement period equaled the rent for the first month during
which full rent becomes payable; provided, however, that Annualized Net
Operating Income shall not include Annualized Net Operating Income from Rent
Paying Space constituting more than ninety five percent (95%) of the rentable
area of the Property.

 

(iii)                               The “Net Operating Income”
of the Property shall mean the excess of actual rents, parking garage income,
storage space income and other operating revenues from the Property over the
real estate taxes and operating expenses (excluding capital expenditures) for
the Property.

 

(iv)                              In computing Annualized
Net Operating Income, (A) projected income (other than garage income)  from space that is not Rent Paying Space as
of the date of conveyance of the Property to RPLP shall not be included, (B) if
the real estate taxes for the applicable twelve (12) month period do not
reflect a tax assessment based upon improvements 

 

3

 

producing revenues based on the Rent Paying Leases then in effect, such
real estate taxes shall be deemed equal to the real estate taxes that would be
payable based upon a tax assessment that reflects the Rent Paying Leases then
in effect, and (C) there shall be a deduction for property management fees
equal to what the property management fees would be based upon the property
management fee rate payable by the Property Owner prior to the date of
conveyance of the Property to RPLP.

 

(v)                                 RPLP shall engage
either its independent auditor or another accounting or valuation firm that is
not then providing, and has not performed during the prior three years,
services for the Property Owner, RPT or any of their respective affiliates (the
“Third Party Reviewer”) to review the calculations of Annualized Net Operating
Income and make its recommendations to RPLP and the Property Owner with respect
thereto; provided, however, that this sentence shall not be construed to
require the Property Owner or RPLP to accept the recommendations of the Third
Party Reviewer and shall not result in any delay in the date required for
Closing of the sale of the Property or the date required for payment of the
Initial Purchase Price or any installment of the Earn-Out Purchase Price.

 

(b)                                 The Market
Capitalization Rate shall be determined pursuant to the following procedures:

 

(i)                                     At any time after
the issuance of a certificate of occupancy for the base building of a Property
and prior to exercise of the Option with respect to the Property, RPLP may send
written notice (the “MCR Determination Notice”) to Property Owner requesting a
determination of the Market Capitalization Rate for the Property and delivering
to  Property Owner an executed copy of an
appraisal, dated no earlier than thirty (30) days prior to the date of such MCR
Determination Notice, obtained by RPLP from a independent appraiser setting
forth such appraiser’s determination of the Market Capitalization Rate for the
Property (the “RPLP MCR Determination”). 
Prior to the expiration of sixty (60) days from the date of receipt by
Property Owner of the MCR Determination Notice and RPLP MCR Determination,
Property Owner shall send written notice (the “Property Owner Reply Notice”) to
RPLP whether Property Owner accepts the RPLP MCR Determination as the Market
Capitalization Rate or whether Property Owner objects to such determination and
in the event of such objection, Property Owner shall include in the Property
Owner Reply Notice an executed copy of an appraisal, dated no earlier than
thirty (30) days prior to the date of the MCR Determination Notice, obtained by
Property Owner from an independent appraiser setting forth such appraiser’s
determination of the Market Capitalization Rate for the Property (the “Property
Owner MCR Determination”).  In the event
that prior to the expiration of the aforesaid sixty (60) day period, Property
Owner does not send a Property Owner Reply Notice to RPLP objecting to the RPLP
MCR Determination and containing a Property Owner MCR Determination, the Market
Capitalization Rate, and therefore the Applicable Percentage Rate, shall be
deemed to be the RPLP MCR Determination.

 

(ii)                                  In the event that the
Applicable Percentage Rate was not determined pursuant to clause (i) and
the RPLP MCR Determination and Property Owner MCR Determination are within ten
percent (10%) of the lower of such determinations, then the Market
Capitalization Rate shall be the average of the RPLP MCR Determination and the
Property Owner MCR Determination.  In the
event that the Applicable Percentage Rate was not 

 

4

 

determined pursuant to clause (i) and the RPLP MCR Determination
and the Property Owner MCR Determination are not within ten percent (10%) of
the lower of such determinations, then prior to the expiration of thirty (30)
days after RPLP’s receipt of the Property Owner Reply Notice and the Property
Owner MCR Determination, RPLP shall send written notice (the “RPLP Second
Notice”) to Property Owner advising RPLP whether (1) RPLP accepts the
Property Owner MCR Determination as the Market Capitalization Rate and the
Applicable Percentage Rate (the “Property Owner MCR Acceptance Determination”),
or (2) RPLP elects to determine that the Applicable Percentage Rate shall
be six and one half percent (6.5%) (the “6.5% Acceptance Determination”) or (3) RPLP
elects to determine that the Market Determination Rate and the Applicable
Percentage Rate shall be determined by a third appraiser as hereinafter
provided (the “Third Appraiser Approach Determination”).  In the event that RPLP does not deliver the
RPLP Second Notice to Property Owner prior to the expiration of such thirty
(30) day period, or such RPLP Second Notice does not elect either the 6.5%
Acceptance Determination or the Third Appraiser Approach Determination,  RPLP shall be deemed to have elected the Property
Owner MCR Acceptance Determination.

 

(iii)                               In the event that
pursuant to the RPLP Second Notice RPLP elects the Third Appraiser Approach
Determination, then within thirty (30) days after delivery of the RPLP Second
Notice, RPLP and  Property Owner shall
jointly appoint a third appraiser or if they fail to agree upon the appointment
of a third party, either party may send written notice to the first two
appraisers requesting them to jointly appoint a third appraiser.  A copy of each of the RPLP MCR Determination
and the Property Owner MCR Determination shall be delivered to the third
appraiser. Within thirty (30) days of its appointment, the third appraiser
shall deliver to RPLP and Property Owner the third appraiser’s written
determination of the Market Capitalization Rate (the “Third Appraiser MCR
Determination”).  The Third Appraiser MCR
Determination shall govern the Market Determination Rate and the Applicable
Percentage Rate; provided, however that in the event that the Third Appraiser
MCR Determination is lower than the lower determination of the first two
appraisers, the lower determination of the first two appraisers shall govern
the Market Determination Rate and the Applicable Percentage Rate and in the
event that the Third Appraiser MCR Determination is higher than the higher determination
of the first two appraisers, the higher determination of the first two
appraisers shall govern the Market Determination Rate and the Applicable
Percentage Rate.

 

(iv)                              All appraisers shall be
MAI appraisers with at least ten (10) years experience appraising office
building properties in the District of Columbia.  The fees and expenses of the appraiser
appointed by each party shall be paid by the party appointing such
appraiser.  The fees and expenses of the
third appraiser shall be paid in equal shares by RPLP and Property Owner.

 

(c)                                  For purposes hereof,
the “Earn-Out Purchase Price” of the Property shall mean the amount determined
by dividing (1) the Annualized Net Operating Income to be realized from
space (“Earn-Out Space”) in the Property that was not Rent Paying Space on the
date of conveyance of such Property to RPLP but which becomes Rent Paying Space
prior to the expiration of the Lease-Up Date (hereafter defined) by (2) the
Applicable Percentage Rate and then subtracting from such amount the leasing
costs (leasing commissions and landlord contributions for tenant improvements)
incurred by RPLP in leasing such space. 
For purposes 

 

5

 

hereof, the “Lease-Up Date” for the Property shall be the date that is
the earlier of (1) the date that ninety five percent (95%) of the rentable
area of the Property has first become Rent Paying Space or (2) the
expiration of two (2) years after the date of conveyance of the Property
to RPLP.  The Annualized Net Operating
Income for each Earn-Out Space shall be calculated, in accordance with Sections
4(a)(ii), (iii) and (iv) and reviewed in accordance with Section 4(a)(v),  for the twelve (12) month period commencing
on the first day of the month on or after which such Earn-Out Space becomes
Rent Paying Space and shall equal the aggregate amount of rent and other
revenue payable during such twelve (12) month period with respect to such
Earn-Out Space (including, without limitation, parking revenues), but treating
any period of rent abatement as if such rent abatement did not exist, reduced
by the amount of incremental operating expenses (such as janitorial service)
incurred by reason of the leasing of such Earn-Out Space that would not have
been incurred if such Earn-Out Space did not become Rent Paying Space.

 

(d)                                 Notwithstanding the
foregoing, in no event shall the Initial Purchase Price for the Property be
less than the sum, as of the date of conveyance of the Property to RPLP, of (i) the
unpaid indebtedness secured by a first mortgage or deed of trust on the
Property, (ii) the unpaid indebtedness secured by a pledge of the
ownership interests in the entity that, directly or indirectly through one or
more intermediary entities, owns the Property, (iii) any third party
obligations with respect to funds advanced with respect to the Property to the
extent not included in the preceding clauses (i) and (ii) (the
amounts referred to in the preceding clauses (i), (ii) and (iii) being
herein collectively referred to as “Property Indebtedness”), and (iv) the
amount of unpaid equity invested in the Property by parties other than Richard
L. Kramer, Steven A. Grigg or Mark Keller or any of their affiliates, together
with a return on such equity equal to the actual rate of return on such equity
funds that such parties are entitled to receive under the applicable investment
and ownership documents.

 

(e)                                  The
Initial Purchase Price shall be paid by RPLP assuming, and agreeing to
indemnify Property Owner and its affiliates and guarantors from, the Property’s
Property Indebtedness (or if and to the extent that such assumption of Property
Indebtedness  is not permitted by the
applicable lender, by RPLP discharging such Property Indebtedness) and by
paying the balance of the Initial Purchase Price to Property Owner by
delivering to Property Owner units in RPLP in accordance with the provisions of
Section 5; provided that Four Million Dollars ($4,000,000) of the Initial
Purchase Price shall be paid in cash rather than in Units.

 

(f)                                    The
Earn-Out Purchase Price shall be paid by RPLP in quarterly installments,
commencing as of the first day of each quarterly period commencing on or after
the expiration of three (3) months from the date of conveyance of the
Property to RPLP, based upon the amount of Earn-Out Space leased prior to the
expiration of such quarterly period. 
Installments of the Earn-Out Purchase Price shall be paid by RPLP by
delivering to Property Owner units in RPLP in accordance with the provisions of
Section 5. RPLP shall provide to Property Owner, within thirty (30) days
after the close of each calendar month, information (including a copy of any
executed leases and any applicable leasing brokerage commission agreement) as
to the additional leases executed for which an Earn-Out Purchase Price will be
payable and on a quarterly basis information and supporting documentation
necessary to enable Property Owner to determine and verify the calculation of
the Earn-Out Purchase Price.

 

6

 

(g)                                 Examples
illustrating the calculation of the Initial Purchase Price and the Earn-Out
Purchase Price are attached hereto as Exhibit B.

 

5.                                       Purchase Price Consideration Payable in Units of RPLP.   At the Closing (as defined below) with
respect to the Property, the Initial Purchase Price (net of any Property
Indebtedness being assumed pursuant to Section 4(e) above and after
deduction for the $4,000,00 cash payment to Property Owner) shall be payable by
RPLP in units of limited partnership interest in RPLP (“Units”).  Each installment of an Earn-Out Purchase
Price payable with respect to any quarter annual period shall be payable by
RPLP in Units. The value of Units payable at the Closing or with respect to any
installment of an Earn-Out Purchase Price shall be their “Market Value” as
defined in this Section 5, and the number of Units shall be rounded to the
nearest whole number of Units to avoid the issuance of fractional Units.  The term “Market Value” for purposes of this Section 5
shall mean the average closing price of the RPT Shares for the ten (10) consecutive
trading days immediately preceding, but not including, (i) in the case of
the Initial Purchase Price, the date of Closing, or (ii) in the case of
any installment of the Earn-Out Purchase Price, the date as of which such
quarterly installment of the Earn-Out Purchase Price is due and payable.  For purposes of determining Market Value, one
Unit shall equal one RPT Share, subject to any adjustments required under the
Amended and Restated Agreement of Limited Partnership of Republic Property
Limited Partnership, as may be amended and/or restated from time to time, or to
reflect stock splits, reclassifications, dividends in-kind and the like.

 

6.                                       Purchase Price if Property Does Not Attain 85% Rent
Paying Space.  In the
event that as of the date of conveyance of the Property to RPLP at least eighty
five percent (85%) of the rentable area of the Property is not Rent Paying
Space, then the purchase price payable for the Property shall be such amount as
is mutually determined by the Property Owner and by RPLP in the sole discretion
of each of them.

 

7.                                       Approval of Independent Members of Republic Property
Trust Board of Trustees. 
The exercise of the option to purchase the Property shall be subject to
obtaining the approval of a majority of the independent members of the Board of
Trustees of RPT (the “RPT Board”).  Prior
to or concurrently with the exercise of the option to purchase the Property,
RPLP shall deliver to Property Owner evidence of compliance with the provisions
of this Section 7.

 

8.                                       Additional Agreements and Covenants.

 

(a)                                  Sale of Property
to Third Party.   From the date
hereof and continuing until the expiration of the term of the Option as
described in Section 3,  Property
Owner shall not  consummate the closing
of any sale, conveyance or transfer of all or any portion of the Property
(other than the sale of the Property pursuant to RPLP’s exercise of the Option
or in accordance with the terms hereof) without the prior written consent of
RPLP, unless the transferee is an entity in which  Richard L. Kramer, Steven A. Grigg and/or
Mark Keller have an ownership and management interest and such transferee
agrees to assume all of the Property Owner’s obligations hereunder.

 

(b)                                 Consent to
Alternative Transaction.  The parties
understand that a party may desire to effectuate a transfer of the Property
other than through the direct acquisition of the 

 

7

 

Property as contemplated hereby, and that such party may determine that
it is more desirable or appropriate to accomplish the transfer of the Property
through one or more alternative transactions, including, without limitation,
the acquisition of 100% of the Property Owner’s interest (“Property Owner’s
Interests”) in an entity created or existing for the purpose of holding the
right, title and interest in the Property (a “Property Owner Interest
Acquisition”).   The parties agree to
cooperate with one another to effect and carry out any and all transactions necessary
to effectuate the Property Owner Interest Acquisition or any other alternative
transaction pursuant to this Section 8(b); provided that the Property
Owner receives, in the aggregate, the Purchase Price which the Property Owner
would have been entitled under Section 4 upon the sale of the Property
pursuant to this Agreement and RPLP receives a 100% direct or indirect interest
in the Property.

 

(c)                                  Further Assurance.  Each party shall execute and deliver to the
other party all such other and further instruments and documents and take or
cause to be taken all such other and further actions as any of them may
reasonably request in order to effect the transactions contemplated by this
Agreement, including, without limitation, instruments or documents reasonably
deemed necessary or desirable by RPLP to effect and evidence the acquisition of
the Property in accordance with the terms of this Agreement.

 

(d)                                 Inspection.  During the term of this Agreement, Property
Owner shall permit RPLP and its agents to enter upon the Property after
issuance of a certificate of occupancy for the base building for the Property,
subject to the rights of any tenants and in a manner that will not interfere
with any contractors performing work at the Property, at reasonable times and
after reasonable advance notice to Property Owner to make such surveys,
inspections and tests as may reasonably be necessary in connection with its
examination of the Property, provided that (i) no drilling or other
invasive inspections or tests may be made without Property Owner’s consent,
which may be withheld in Property Owner’s sole discretion, and (ii) Property
Owner may require that a representative of Property Owner or its management
company accompany RPLP and its agents conducting any such inspection.  RPLP hereby agrees to repair any damage it or
its agents may cause to the applicable Property as a result of any such
inspections or tests or any other related damage caused by RPLP or its agents,
and further shall indemnify, defend and hold Property Owner and Property Owner’s
managers harmless from and against any and all claims, losses, damages and
expenses, including, without limitation, reasonable attorneys’ fees, suffered
by Property Owner and Property Owner’s managers as a direct result of the entry
by RPLP or its agents upon, or acts upon, 
the Property in connection with any such inspections or tests or any
other related damage caused by RPLP or its agents.  In addition, each Property Owner shall permit
RPLP and its agents to review all books, records and other documentation
relating to the Property owned by Property Owner which are in Property Owner’s
possession and control and are reasonably requested by RPLP.

 

(e)  Property Owner will advise RPLP of
the material terms of any financing relating to the Property and material
changes thereto at least fifteen (15) days before such financing is effectuated
or such changes occur, as the case may be.

 

9.                                       Representations, Warranties and Covenants.  As a material inducement to RPLP to enter
into this Agreement, Property Owner hereby makes to RPLP each of the 

 

8

 

representations and warranties set forth in this Section 9, which
representations and warranties are true and correct as of the date hereof, and
hereby covenants as follows:

 

(a)                                  Organization;
Authority; Noncontravention. 
Property Owner is duly formed, validly existing and in good standing (to
the extent applicable) under the laws of its jurisdiction of formation.  Property Owner has full right, authority,
power and capacity: (i) to enter into this Agreement and each agreement,
document and instrument to be executed and delivered by or on behalf of
Property Owner pursuant to this Agreement, and (ii) to carry out the
transactions contemplated hereby and thereby. 
This Agreement and each agreement, document and instrument executed and
delivered by or on behalf of Property Owner pursuant to this Agreement
constitutes, or when executed and delivered will constitute, the legal, valid
and binding obligation of Property Owner, each enforceable in accordance with
its respective terms.    Nether the entry
into not the performance of, or compliance with, this Agreement by Property
Owner has resulted, or will result, in any violation of, or default under, or result
in the acceleration of, any obligation under its charter or any material
mortgage, indenture, lien, agreement, note, contract, permit, judgment, decree,
order, restrictive covenant, statute, rule or regulation applicable to
Property Owner.

 

(b)                                 Status as a United
States Person.  Property Owner is not
a foreign person within the meaning of Section 1445 of the Internal
Revenue Code (“Section 1445”). 
Property Owner’s U.S. taxpayer identification number that has previously
been provided to RPLP is correct. 
Property Owner’s current office address is the address that has
previously been provided to RPLP.  Upon
request by RPLP, Property Owner shall complete and provide to RPLP a
certificate of non-foreign status substantially in the form provided in Section 1.1445-5(b)(3)(ii)(D) of
the Treasury regulations.

 

(c)                                  No Brokers.  Property Owner has not entered into, and
covenants that it will not enter into, any agreement, arrangement or
understanding with any person or firm which will result in the obligation of
RPLP to pay any finder’s fee, brokerage commission or similar payment in
connection with the transactions contemplated hereby.

 

(d)                                 Securities Law
Matters; Transfer Restrictions.

 

(i)                                     Property Owner
acknowledges that RPLP intends the offer and issuance of any Units pursuant to
this Agreement to be exempt from registration under the Securities Act of 1933,
as amended (the “Securities Act”) and applicable state securities laws by
virtue of (1) the status of Property Owner as an “accredited investor”
within the meaning of the federal securities laws, and (2) Regulation D
promulgated under Section 4(2) of the Securities Act (“Regulation D”),
and that RPLP will rely in part upon the representations and warranties made by
the Property Owners in this Agreement in making the determination that the
offer and issuance of the Units qualify for exemption under Rule 506 of
Regulation D as an offer and sale only to “accredited investors.”

 

(ii)                                  Property Owner is an “accredited
investor” within the meaning of the federal securities laws.

 

9

 

(iii)                               Property Owner will
acquire the Units for its own account and not with a view to, or for sale in
connection with, any “distribution” thereof within the meaning of the
Securities Act.  Property Owner does not
intend or anticipate that Property Owner will rely on this investment as a
principal source of income.

 

(iv)                              Property Owner has
sufficient knowledge and experience in financial, tax and business matters to
enable it to evaluate the merits and risks of investment in the Units.  Property Owner has the ability to bear the
economic risk of acquiring the Units. Property Owner acknowledges that (1) the
transactions contemplated by this Agreement involve complex tax consequences
for Property Owner, and Property Owner is relying solely on the advice of
Property Owner’s own tax advisors in evaluating such consequences, (2) RPLP
has not made (nor shall it be deemed to have made) any representations or
warranties as to the tax consequences of such transaction to Property Owner,
and (3) references in this Agreement to the intended tax effect of the
transactions contemplated hereby shall not be deemed to imply any
representation by RPLP as to a particular tax effect that may be obtained by
Property Owner.  Each Property Owner
remains solely responsible for all tax matters relating to Property Owner.

 

(vi)                              Property Owner has been
supplied with, or had access to, information to which a reasonable investor
would attach significance in making an investment decision to acquire the Units
and any other information Property Owner has requested.  Property Owner has had an opportunity to ask
questions of, and receive information and answers from, RPLP and is affiliates
concerning RPLP, its affiliates, the Units, the IPO of Republic and the IPO
Transactions and the RPT Shares into which the Units may be redeemed, and to
assess and evaluate any information supplied to Property Owner by RPLP or its
affiliates, and all such questions have been answered, and all such information
has been provided to the full satisfaction of Property Owner.

 

(vii)                           Property Owner acknowledges
that it is aware that there are substantial restrictions on the transferability
of the Units and that the Units will not be registered under the Securities Act
or any state securities laws, and the Property Owner has no right to require
that they be so registered.  Property
Owner agrees that any Units it acquires will not be sold in the absence of
registration unless such sale is exempt from registration under the Securities
Act and applicable state securities laws.

 

(viii)                        Property Owner understands that
no federal agency (including the Securities and Exchange Commission) or state
agency has made or will make any finding or determination as to the fairness of
an investment in the Units.

 

(ix)                                Property Owner
understands that there is no established public, private or other market for
the Units acquired by Property Owner hereunder and it is not anticipated that
there will be any public, private or other market for such Units in the
foreseeable future.

 

(x)                                   Property Owner
understands that Rule 144 promulgated under the Securities Act is not
currently available with respect to the sale of Units.

 

10.                                 Change of Control of RPT.  Upon the occurrence of any Change of Control
(hereafter defined) of RPT, the Option granted by Property Owner shall, if not
previously 

 

10

 

exercised by RPLP, be terminable by Property Owner by delivering
written notice of termination to RPLP at any time prior to, or within thirty
(30) days after, the exercise of such option by RPLP.  For purposes hereof, a “Change of Control” of
RPT shall mean:

 

(a)                                  Any
“Person” (having the meaning ascribed to such term in Section 3(a)(9) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and used
in Sections 13(d) and 14(d) thereof, including a “group” within the
meaning of Section 13(d)(3)) has or acquires beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty
percent (50%) percent or more of the combined voting power of  RPT’s then outstanding voting securities
entitled to vote generally in the election of trustees (“Voting Securities”);
provided, however, that in determining whether a Change in Control has
occurred, Voting Securities which are held or acquired by the following: (i) RPT,
Richard L. Kramer (“Kramer”), Steven A. Grigg (“Grigg”) or Mark Keller or any
of their Affiliates (as defined below) or (ii) an employee benefit plan
(or a trust forming a part thereof) maintained by RPT or any of its Affiliates
(the persons or entities described in (i) and (ii) shall collectively
be referred to as the “Excluded Group”), shall not constitute a Change in
Control.

 

(b)                                 Kramer
or Grigg ceases to be a member of the RPT Board for any reason other than (1) death
or voluntary resignation by Kramer or Grigg, as the case may be, (2) removal
of Kramer or Grigg for cause in accordance with RPT’s charter, or (3) resignation
following a termination by RPT of the employment of Kramer or Grigg, as the
case may be, for “Cause” pursuant to any Employment Agreement executed by
Kramer or Grigg, as the case may be.

 

(c)                                  The
individuals who are members of the RPT Board as of date of the IPO of the RPT
Shares (the “Incumbent Board”) cease for any reason to constitute more than
fifty (50%) percent of the RPT Board; provided, however, that any individual
who becomes a member of the RPT Board subsequent to the IPO, whose election, or
nomination for election by RPT’s shareholders, was approved by a vote of at
least two-thirds of those individuals who are members of the RPT Board and who
were also members of the Incumbent Board (or deemed to be such pursuant to this
provision) shall be considered as though such individual were a member of the
Incumbent Board; and provided further, however, that any such individual whose
initial assumption of office occurs as a result of or in connection with an
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the RPT Board shall not be considered a member of the
Incumbent Board.

 

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

 

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

 

11

 

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

 

(iii)                               no
Person (other than a member of the Excluded Group or any Person who immediately
prior to such Business Combination had Beneficial Ownership of thirty percent
(30%) or more of the then Voting Securities) has Beneficial Ownership of fifty
percent (50%) percent or more of the then combined voting power of the
Surviving Company’s then outstanding voting securities;

 

(e)                                  The
assignment, sale, conveyance, transfer, lease or other disposition of all or
substantially all of the assets of RPT to any Person (other than RPT or any of
its Affiliates, or one or more members of the Excluded Group and their
respective Affiliates) unless, immediately following such disposition, the
conditions set forth in paragraph (d)(i), (ii) and (iii) above will
be satisfied with respect to the entity which acquires such assets.  For purposes of this Agreement, “Affiliate”
shall mean any entity that is directly or indirectly controlled by, in control
of or under common control with RPT or one or more members of the Excluded
Group; or

 

(f)                                    The
occurrence of a liquidation or dissolution of RPT not in connection with any
transaction described in paragraphs (d) and (e) above.

 

Notwithstanding the provisions of this Section 10,
neither the IPO or the IPO Transactions shall be considered a Change in
Control.

 

11.                                 Information to be Provided by Property Owner.  Property Owner shall deliver to RPLP with
respect to the Property the following information:

 

(a)                                  A copy of the certificate
of occupancy for the base building of the Property issued by the applicable
District of Columbia authorities, within thirty (30) days after the delivery
thereof to such Property Owner.

 

(b)                                 Notice of any change
in the Construction Loan Maturity Date within ten (10) days after the
occurrence of any such change.

 

(c)                                  A monthly leasing
report and Property Owner’s computation of the Property’s Annualized Net
Operating Income based upon executed leases, within thirty (30) days after the
expiration of each calendar month commencing after the date of issuance by the
applicable District of Columbia authorities of the certificate of occupancy for
the base building of the Property.

 

(d) Such other information relating to
the Property as RPLP may reasonably request from time to time, within thirty
(30) days after each such request.

 

12.                                 Taxes.  If the Option is exercised with respect to
the Property and the Closing of the purchase of the Property is consummated,
then the following shall apply with respect to the Property:

 

12

 

(a)                                  Acquisition is
Treated as Contribution.  The
transfer, assignment and exchange contemplated by this Agreement shall
constitute a “Capital Contribution” to RPLP pursuant to Article IV of the Amended
and Restated Agreement of Limited Partnership of Republic Property Limited
Partnership, as may be amended and/or restated from time to time (the “Partnership
Agreement”), and is intended to be governed by Section 721(a) of the
Internal Revenue Code of 1986, as amended (the “Code”), and Property Owner and
RPLP shall report this transaction consistent with such treatment.

 

(b)                                 Cooperation and Tax
Disputes.  Property Owner, on the one
hand, and RPLP, on the other hand, shall provide each other with such
cooperation and information relating to such Property Owner’s Property as the
parties reasonably may request in (i) filing any tax return, amended tax
return or claim for tax refund, (ii) determining any liability for taxes
or a right to a tax refund, or (iii) conducting or defending any
proceeding in respect of taxes.  RPLP
shall promptly notify Property Owner in writing upon receipt by RPLP or any of
its affiliates of notice of (i) any pending or threatened tax audits or
assessments with respect to Property Owner’s Property, and (ii) any
pending or threatened federal, state, local or foreign tax audits or
assessments of RPLP or any of its affiliates, in each case which may affect the
liabilities for taxes of Property Owner with respect to any tax period ending
on or before the Closing.  Property Owner
shall promptly notify RPLP in writing upon receipt by Property Owner of notice
of any pending or threatened federal, state, local or foreign tax audits or
assessments relating to the income, properties or operations of the Property
Owner.  RPLP, on the one hand, and
Property Owner, on the other hand, may participate at its own expense in the
prosecution of any claim or audit with respect to taxes attributable to any taxable
period ending on or before the Closing, provided, that Property Owner shall
have the right to control the conduct of any such audit or proceeding or
portion thereof for which Property Owner has acknowledged liability for the
payment of any additional tax liability, and RPLP shall have the right to
control any other audits and proceedings. 
Notwithstanding the foregoing, neither RPLP, on the one hand, nor
Property Owner, on the other hand, may settle or otherwise resolve any such
claim, suit or proceeding which could have an adverse tax effect on the other
party or its direct or indirect owners without the written consent of the other
party, such written consent not to be unreasonably withheld or delayed.  RPLP and Property Owner shall retain all tax
returns, schedules and work papers, and all material records and other
documents relating thereto, until the expiration of the statute of limitations
(and, to the extent notified by any party, any extensions thereof) of the
taxable years to which such tax returns and other documents relate and until
the final determination of any tax in respect of such years.

 

(c)                                  Tax Allocations.  With respect to the Property that is directly
or indirectly contributed to RPLP as provided in Section 12(a) above,
RPLP shall use the “traditional method”, as described in Treasury Regulation Section 1.704-3(b),
to make allocations of taxable income and loss among the partners of RPLP with
a provision for a “curative” allocation of gain to the Property Owner (or their
successors in interest) upon a taxable disposition of the Property in an amount
sufficient to eliminate any remaining disparities between the book items and
tax items of any other partners of RPLP with respect to the Property
attributable to the application of the “ceiling rule” under the “traditional
method.”

 

(d)                                 Survivability.  The provisions of this Section 12
applicable to the Property that is conveyed pursuant to this Agreement shall
survive the Closing of the acquisition of the Property 

 

13

 

for such period
of time that RPLP and the Property Owner are required to maintain their
respective tax returns,  records and
other documents with respect to the Property pursuant to the last sentence of Section 12(b).

 

(e)                                  Withholding.  Property Owner shall execute, upon the
conveyance of  the Property, such
certificates or affidavits reasonably necessary to document the inapplicability
of any federal or state tax withholding provisions, including, without
limitation, those referred to in Section 9(b) hereof.  If Property Owner fails to provide such
certificates or affidavits, RPLP may withhold a portion of the Initial Purchase
Price as required by the Code or applicable state law.

 

13.                                 Confidentiality of Information Provided by Property
Owner.  All information
provided by Property Owner to RPLP with respect to the Property shall be deemed
proprietary, privileged and confidential and shall not be disclosed by RPLP to
any other person or entity except to RPT and to each of RPT’s and RPLP’s
trustees, employees, attorneys, accountants, consultants and other
representatives and to any prospective investor or lender that may provide
funds for the acquisition of the Property and who shall in each case  maintain the confidentiality of such information.
Notwithstanding the foregoing, Purchaser shall not be deemed to have violated
the provisions of this Section 13 with respect to any information that is
in the public domain or if RPLP or any permitted recipient thereof is required
to disclose such information pursuant to a judicial order served upon such
party by a court of competent jurisdiction or to the extent that such
disclosure is required by applicable securities laws.  In the event that RPLP purchases the Property
from Property Owner the provisions of this Section 13 shall terminate upon
the conveyance of the Property to RPLP.

 

14.                                 Sale Terms and Conditions.  In the event that RPLP exercises the Option
to purchase the Property, the following provisions shall apply to the purchase
of the Property:

 

(a)                                  Closing of the
purchase of the sale and purchase of the Property (the “Closing”) shall occur
upon the expiration of thirty (30) days after the date of exercise of such
Option.  Time shall be of the essence of
the obligations of the parties to consummate the Closing.

 

(b)                                 At the Closing,
Property Owner (the “Seller”) shall deliver to RPLP or any RPLP Permitted
Designee (hereafter defined) (“Purchaser”) the following documents, duly
executed (and if required, acknowledged) by Seller:

 

(i)                                     A special warranty
deed conveying all of Seller’s right, title and interest in the Property to
Purchaser;

 

(ii)                                  A bill of sale
transferring to Purchaser all of Seller’s right, title and interest in any
personal property owned by Seller and used in connection with the ownership or
operation of the Property;

 

(iii)                               An affidavit (in the
form required by the Internal Revenue Code and the regulations thereunder) that
the Seller is not a “foreign person” within the meaning of the withholding
provisions of the Internal Revenue Code and the regulations issued thereunder;
and

 

14

 

(iv)                              An assignment of all of
Seller’s right, title and interest (to the extent assignable) in and to any
plans, specifications, permits, licenses and governmental approvals relating to
the Property.

 

(c)                                  At the Closing,
Seller and Purchaser shall execute an Assignment and Assumption of Leases and
Contract pursuant to which (i) Seller assigns and transfers to Purchaser
all of Seller’s right, title and interest in and to all leases and contracts
relating to the Property, including all tenant security deposits thereunder
held by Seller, and (ii) Purchaser shall assume, and indemnify Seller
from, all obligations arising under such leases and contracts on and after the
date of Closing, it being agreed that all property management agreements
relating to the Property shall be terminated as of the date of Closing without
penalty or cost to Purchaser.

 

(d)                                 At or prior to the
Closing, the Seller shall deliver to Purchaser and the title insurance company
(the “Title Insurer”) that has issued to Purchaser a title commitment with
respect to Purchaser’s purchase of the Property such documentation that
Purchaser and the Title Insurer may reasonably request to establish that Seller
is a legal entity in good standing in the state of its organization and in the
District of Columbia and that the individual executing all of the closing
documents on behalf of Seller has been duly authorized to do so by Seller.

 

(e)                                  After the exercise of
the Option by RPLP, the Seller shall not execute any document that would affect
title to the Property other than (i) any modification, extension or
increase in any financing related to the Property, (ii) any leases
relating to the Property, and (iii) any contracts relating to the Property
that are terminable on not more than sixty (60) days notice without penalty or
cost to Purchaser.

 

(f)                                    Rents (including
reimbursements for taxes and operating expenses or increases thereof) paid or
payable by tenants of the Property, real estate taxes, and other items of
income and expense shall be adjusted between Seller and Purchaser as of the
date of Closing.  Cash security deposits
of tenants under the leases held by Seller shall be delivered by Seller to Purchaser
(or credited against the Purchase Price) and non-cash security deposits of
tenants held by Seller (such as letters of credit) shall be delivered and
transferred to Purchaser. At the Closing, Seller and Purchaser shall execute
and deliver to each other and to the Title Insurer a closing statement setting
forth the Purchase Price and the adjustments and credits provided for in this
Agreement.

 

(g)                                 RPLP shall not have
the right to assign any Option but RPLP shall have the right to designate any
entity that controls, is controlled by or is under common control with RPLP (an
“RPLP Permitted Designee”) as the entity that will acquire title to the
Property as the Purchaser, but no such designation shall relieve RPLP of any of
its obligations under this Agreement.

 

(h)                                 The Closing shall be
consummated through an escrow closing conducted by the Title Insurer with all
documents and funds delivered to the Title Insurer.  Seller and Purchaser shall execute,
acknowledge and deliver to the Title Insurer the District of Columbia deed
recordation tax and transfer tax return required to be executed in respect of
the transaction.

 

15

 

(i)                                     The District of
Columbia transfer and recordation taxes and fees in respect of the deed of
conveyance shall be paid by Purchaser. 
The premium for any title insurance requested by Purchaser and any title
examination and settlement fees (if any) required to be paid to the Title
Insurer shall be paid by Purchaser. Each party shall pay the legal fees and
expenses of the attorneys engaged by such party in respect of the transaction.

 

(j)                                     At or prior to the
Closing, Seller and Purchaser shall execute a tax protection agreement on
substantially the terms set forth in the Form of Tax Protection Agreement
attached hereto as Exhibit C.

 

(k)                                  In the event that
Seller or Purchaser fail to perform any of their obligations with respect to
the purchase of the Property after the Option to purchase such Property has
been exercised by RPLP, the non-defaulting party shall be entitled to exercise
all remedies available to the non-defaulting party under applicable law,
including the remedy of specific performance.

 

15.                                 Miscellaneous.

 

(a)                                  Nothing contained in
this Agreement shall be construed to obligate any Property Owner to complete
the construction of the office building or other improvements on the Property
owned by Property Owner.

 

(b)                                 The provisions of this
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their successors and assigns; provided, however, that without the
consent of Property Owner, this Agreement shall not be assignable by RPLP
except as otherwise provided in Section 14(g).

 

(c)                                  In the event that any
lender providing financing to  Property
Owner or to any entity that owns, directly or indirectly through intermediary
entities, Property Owner requires as a condition of providing such financing
that the Option with respect to such Property be subordinated to the financing
provided by such lender, RPLP agree to execute and deliver to such lender such
documents as may be required by such lender to effectuate such subordination.

 

(d)                                 This Agreement and the
Exhibits attached hereto constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements
and understandings among the parties with respect thereto.  No addition to or modification of this
Agreement by RPLP or Property Owner shall be binding upon RPLP or  Property Owner unless made in writing and
signed by RPLP and such Property Owner.

 

(e)                                  This Agreement shall
be governed by and construed in accordance with the laws of the District of
Columbia.

 

(f)                                    This Agreement may
be executed by the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument.  Each counterpart may consist 

 

16

 

of a number of copies hereof, each signed by less than all, but
together signed by all of the parties hereto.

 

(g)                                 Headings of the
Articles and Sections of this Agreement are for the convenience of the parties
only, and shall be given no substantive or interpretive effect whatsoever.

 

(h)                                 All Exhibits attached
hereto and referred to herein are hereby incorporated herein and made a part
hereof for all purposes as if fully set forth herein.

 

(i)                                     Any term or
provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction.  If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.

 

(j)                                     RPLP represents
and warrants to Property Owner that RPLP has not entered into, and covenants
that it will not enter into, any agreement, arrangement or understanding with
any person or firm which will result in the obligation of Property Owner to pay
any finder’s fee, brokerage commission or similar payment in connection with
the transactions contemplated hereby

 

[Signature Page Follows]

 

17

 

IN WITNESS WHEREOF, the undersigned have
executed this Option Agreement as of the day and year first above written.

 

	
   

  	
  PARCEL 47D LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Steven A. Grigg

  	
   

  
	
   

  	
  Name:

  	
  Steven A. Grigg

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  REPUBLIC PROPERTY LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:    
  Republic Property Trust, its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Mark R. Keller

  	
   

  
	
   

  	
  Name: 

  	
  Mark Keller

  
	
   

  	
  Title:

  	
  Chief Executive
  Officer

  
					

 

18

 

EXHIBIT A

 

LEGAL DESCRIPTION OF PORTALS III PROPERTY

 

The real property described below as Parcel D
North and Parcel D South

 

PARCEL D  NORTH 
(LOT 806, SQUARE 267)

PORTALS PROJECT – LYING NORTH OF
MARYLAND AVENUE

WASHINGTON, DC

 

BEING the following three (3) parcels of
land:

 

(i)                                     part of Lot 40 in
Square 267 as per plat thereof recorded in the Office of the Surveyor for the
District of Columbia (Office of the Surveyor, D.C.) in Subdivision Book 171 at Page 162,
said lot  also being part of that land
conveyed to the District of Columbia Redevelopment Land Agency by deed dated July 2,
1962, recorded in Liber 11828 at Folio 514, and part of those lands accruing
from the closing of portions of 13th, 131⁄2 Streets, S.W. per plat
recorded in the Office of the Surveyor, D.C., in Subdivision Book 152 at Page 73;

 

(ii)                                  all of that certain
949 square feet parcel (A&T Lot 806, Sq. 268) conveyed to the District of
Columbia Redevelopment Land Agency by deed dated June 30, 1989, recorded June 30,
1989 as Instrument No. 38920, said parcel also found in Survey Book 201 at
Page 247 in the DC Surveyor’s Office; and

 

(iii)                               part of those lands
accruing from the closing of part of D Street as per Plat of Public Street,
Sidewalk, and Sewer Easements established and recorded September 23, 1992
in the Office of the Surveyor, D.C. in Book 185 at Page 88, and as stated
in a Declaration of Covenants by the District of Columbia Department of Housing
and Community Development recorded on September 17, 1992 as Instrument No. 53384,
more particularly described by bearings and distances in the 1929 Adjustment of
the Maryland State Grid System, as follows:

 

BEGINNING for the outline of said parcel at
an iron pipe found set in the ground at the easterly corner of said Lot 40,
Square 267, said pipe also lying at the beginning of the S 70° 00’ 00” W,
592.28 feet plat line of the residual portion of Maryland Avenue as shown on
said Subdivision Book 152 at Page 73, thence running with and along the
line lying between said Lot 41 and former Maryland Avenue

 

1)                                      South
70° 00’ West, 140.09 feet (record), South 70° 01’ 03” West, 140.09 feet
(measured) to a point; thence leaving said line and running with the lines of
division between said Lot 40 and Lot 41

 

2)                                      West
11.36  feet (record), North 89° 58’ 58”
West, 11.56 feet (measured) to a point; thence

 

 

3)                                      North
53.0  feet (record), North 00° 01’ 03”
East, 53.02 feet (measured) to a point; thence running with part of the East,
780.68 feet (record) plat line, reversed, lying between said Lots 40 and 41

 

4)                                      North
89° 58’ 57” West, 317.61 feet (measured); thence crossing the lands accruing
from the closure of part of D Street, SW per said Book 185 at Page 88

 

5)                                      North
00° 01’ 03” East, 75.00 feet (measured); thence running with the newly made
southerly right-of-way line of “D” Street, SW

 

6)                                      South
89° 58’ 57” East, 536.00 feet (measured) to a point on the westerly
right-of-way line of 12th Street, SW (85’ wide); thence running with said
westerly line

 

7)                                      South
00° 01’ 03” West, 40.43 feet (measured) ), thence running with and along the
line between said Subdivision Book 185 at Page 88 and said Subdivision
Book 152 at Page 73, said line being the original northerly right-of-way
line of Maryland Avenue

 

8)                                      South
70° 01’ 03” West, 104.73 feet (measured) to a point on the 38.85 feet arc line
of said Lot 40, said point also being the end of the 3rd or South 70° 01’ 03”
West, 18.27 feet line of said Instrument No. 38920; thence running with
and along the outline of said Lot 40

 

9)                                      23.82 feet
(record), 23.55 feet (measured) along the arc of a curve deflecting to the
left, having a radius of  811.27 feet and
a chord bearing and distance of South 80° 33’ 35” East, 23.55 feet to the point
of beginning, containing a measured area of 42,925 square feet or 0.9854 acres
of land.

 

PARCEL D  SOUTH (LOT 803, SQUARE 267)

PORTALS PROJECT – LYING NORTH OF
MARYLAND AVENUE

WASHINGTON, DC

 

BEING part of Lot 41 in Square 267 as per
plat thereof recorded in the Office of the Surveyor for the District of
Columbia (Office of the Surveyor, D.C.) in Subdivision Book 171 at Page 162,
said lots  also being part of that land
conveyed to the District of Columbia Redevelopment Land Agency by deed dated July 2,
1962, recorded in Liber 11828 at Folio 514, more particularly described by
bearings and distances in the 1929 Adjustment of the Maryland State Grid
System, as follows:

 

BEGINNING for the outline of said parcel at
the easterly corner of said Lot 41, Square 267, said point also lying at the
beginning of the S 70° 00’ 00” W, 452.19 feet plat line (record) of said
Subdivision Book 171 at Page 162; thence running with and along the line
lying between said Lot 41 and former Maryland Avenue

 

1)                                      South
70° 01’ 03” West, 350.30 feet (measured) to a point; thence leaving said line
and crossing said Lot 41

 

2)                                      North
00° 01’ 03” East, 172.83 feet (measured) to a point on the division line
between Lots 40 & 41; thence with and along a portion of the East 

 

 

780.68 feet plat line (record) of said
Book 171 at Page 162; thence running with part of said line

 

3)                                      South
89° 58’ 57” East, 317.61 feet (measured) to a point; thence continuing with the
lines between said Lots 40 and 41 by the following two (2) bearings and
distances

 

4)                                      South
53.0 feet (record), South 00° 01’ 03” West, 53.02 feet (measured) to a point;
thence

 

5)                                      East, 11.36 feet
(record), South 89° 58’ 58” East, 11.56 feet (measured) to the point of
beginning, containing a measured area of 36,558 square feet or 0.8392 acres of
land.

 

 

EXHIBIT B

 

EXAMPLES
ILLUSTRATING CALCULATION OF INITIAL PURCHASE PRICE AND EARN-OUT PURCHASE PRICE

 

Assumptions Applicable to All Examples:  The Property
Indebtedness to be assumed  is
$152,000,000 and the Market Value of the Units is $20.

 

Example One:  Assume that on the date of conveyance of the
Property to RPLP the Annualized Net Operating Income from Rent Paying Space
equal to 95% of the rentable area of the Property is $15,390,000, and that the
Market Capitalization Rate is 6.5%.  The
Initial Purchase Price would be $ 236,769,231 and the number of Units issued
would be  $4,238,462.  There would be no Earn-Out Purchase Price
since the Lease-Up Date has occurred.

 

Example Two  Assume that on the date of conveyance of the
Property to RPLP the Annualized Net Operating Income from Rent Paying Space
equal to 95% of the rentable area of the Property is $15,390,000,  and that the Market Capitalization Rate is
7%.  The Initial Purchase Price would be
$219,857,143 and the number of Units issued would be 3,392,857. There would be
no Earn-Out Purchase Price since the Lease-Up Date has occurred.

 

Example Three. Assume
that on the date of conveyance of the Property to RPLP the Annualized Net
Operating Income from Rent Paying Space equal to 85% of the rentable area of
the Property is $13,770,000, and that the Market Capitalization Rate is 6.5%.
The Initial Purchase Price would be $211,846,154 and the number of units issued
with respect to the Initial Purchase Price would be $2,992,308.   Assume that prior to the Lease-Up Date an
additional 10% of the rentable area of the property has become Rent Paying
Space producing additional Annualized Net Operating Income of $1,620,000; and
that the amount of additional leasing costs incurred by reason of leasing such
additional Rent Paying Space is $5,000,000. 
The Earn-Out Purchase Price would be $19,923,077 and the number of Units
issued with respect to the Earn-Out Purchase Price would be 996,154.

 

The foregoing examples were prepared assuming that the entire Initial
Purchase Price in excess of the Property Indebtedness is payable in Units, but
since $4,000,000 of the Initial Purchase Price will be payable in cash rather
than Units, the number of Units set forth in the foregoing examples shall be
reduced to reflect the $4,000,000 cash payment of a portion of the Initial
Purchase Price.

 

 

EXHIBIT C

 

FORM OF
TAX PROTECTION AGREEMENT

 

THIS FORM OF TAX PROTECTION AGREEMENT
(this “Agreement”) is dated as of                           ,
20[    ], by and between REPUBLIC PROPERTY LIMITED
PARTNERSHIP, a Delaware limited partnership (the “Partnership”), and PARCEL 47D
LLC, a Delaware limited liability company (the “LLC”).  All capitalized terms used herein without
definition shall have the meanings ascribed to them in the Option Agreement,
dated as of                             ,
20[    ], by and between the Partnership and the
Contributor (the “Option Agreement”). 
Covenants made herein by the Partnership shall be deemed to be made by
all of its Subsidiaries (as defined herein), as well.

 

WITNESSETH:

 

WHEREAS, pursuant to the Option Agreement,
the Partnership has agreed to enter into this Agreement if the Option is
exercised as an inducement for the LLC to enter into the Option Agreement and
to make the transfer to the Partnership contemplated by the Option Agreement;
and

 

WHEREAS, the Partnership and the other
parties hereto desire to enter into this Agreement regarding certain matters
with respect to the property identified on Exhibit A to the Option
Agreement that is being transferred, indirectly, to the Partnership pursuant to
the exercise of the Option pursuant to the Option Agreement (the “Protected
Property”) and other matters.

 

NOW THEREFORE, in consideration of the
foregoing and the mutual benefits to be derived from the covenants and
agreements herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:

 

1.                                       Definitions.

 

1.1                                 “Adjustment Amount”
means, for each Contributor, the amount that shall equal the sum of (a) the
Current Tax Cost and (b) the Gross-up Amount.

 

1.2                                 “Affected Person”
has the meaning set forth in Section 5.

 

1.3                                 “Closing Date”
means                           
[the date upon which the Partnership acquires title to the Protected Property
pursuant to the exercise of the Option].

 

1.4                                 “Code” means
the Internal Revenue Code of 1986, as amended.

 

1.5                                 “Consent” means
the prior written consent to do the act or thing for which the consent is
required or solicited, which consent shall be executed by a duly authorized
officer or agent of the party granting such consent.

 

 

1.6                                 “Contributor”
means the LLC and it also includes any individual or entity who, with the
Consent of the Partnership, which consent is granted by the Partnership, in its
sole and absolute discretion, acquires any of the Partnership Units issued to the
LLC pursuant to the exercise of the Option from a Contributor in a transaction
in which gain is not required to be recognized, in whole or in part, and in
which the successor’s adjusted tax basis in such Partnership Units is
determined by reference to either the Contributor’s adjusted tax basis in such
Partnership Units or such successor’s adjusted tax basis in its ownership
interest in the transferring Contributor. 
No person or entity who acquires Partnership Units that were issued to
the LLC pursuant to the exercise of the Option either (i) without the
consent of the Partnership or (ii) in a transaction or as the result of an
event in which the acquiring party takes a basis in such Partnership Units
equal to either the consideration paid therefor or the fair market value
thereof shall in any event be treated as a Contributor (or have the rights as a
Contributor) under this Agreement with respect to such Partnership Units.  For purposes of this definition, the
Partnership has consented to the transfer of the Partnership Units to Indirect
Owners of the LLC.

 

1.7                                 “Current Tax Cost”
means, for each Contributor or Indirect Owner, with respect to any Gain Event,
the amount, which amount shall be determined pursuant to Sections 3(b) and
3(c), equal to the aggregate of the federal, state and city income taxes, net
of the benefit of the deduction from federal income taxes for state and local
income taxes assumed paid, that would be incurred by such Contributor or
Indirect Owner as a result of the Gain Event, provided that for purposes
hereof, that parties shall only take into account income or gain required to be
recognized by a Contributor or Indirect Owner under Section 704(c) of
the Code as a result of, and in connection with, the acquisition of the
Property by the Partnership pursuant to the Option Agreement.  For purposes of this Section 1.7,
(x) all income arising from the Gain Event that is required to be
recognized under Section 704(c) of the Code as a result of, and in
connection with, the acquisition of the Property by the Partnership pursuant to
the Option Agreement and is treated as ordinary income under the applicable
provisions of the Code and all payments under Section 3(a) shall be
treated as subject to federal, state and city income taxes at an effective tax
rate imposed on ordinary income of individuals residing in the city and state
of residence of such Contributor (or Indirect Owner thereof), determined using
the maximum federal rate of tax on ordinary income and the maximum state and
city rates of tax on ordinary income then in effect in such city and state,
(y) all other income arising from the Gain Event that is required to be
recognized under Section 704(c) of the Code as a result of, and in
connection with, the acquisition of the Property by the Partnership pursuant to
the Option Agreement shall be subject to federal, state and city income tax at
the effective tax rate imposed on long-term capital gains of individuals
residing in the city and state of residence of such Contributor (or Indirect Owner
thereof), determined using the maximum federal, city and state rates on
long-term capital gains then in effect (including for this purpose with respect
to any Code Section 1245 or Section 1250 recapture, the maximum tax
rate imposed on such income), and (z) any amounts giving rise to a payment
pursuant to this provision will be determined assuming the Gain Event was the
only transaction or event reported on Contributor’s (or Indirect Owner’s) tax
return (i.e., without giving effect to any loss carryforwards or other
deductions attributable to such Contributor or Indirect Owner).

 

1.8                                 “Debt Protection”
means either (A) an opportunity for an Affected Person to undertake one or
more of the following, as selected by the Partnership, in its sole discretion: 

 

 

(i) a guarantee of indebtedness of the Partnership (as selected by
the Partnership, in its sole discretion), (ii) an indemnification of the
general partner of the Partnership with respect to recourse liabilities of the
Partnership, (iii) an agreement to restore a deficit in the negative
capital account of such Affected Person upon a liquidation of the Partnership
or a disposition of such Affected Person’s interest in the Partnership or (iv) another
arrangement with respect to indebtedness of the Partnership that, in the good
faith judgment of the Partnership, can reasonably be expected to cause the
Affected Person to be allocated such indebtedness for purposes of Section 752
of the Code, or (B) in the sole discretion of the Partnership, an
agreement by the Partnership to maintain nonrecourse indebtedness of the
Partnership (as selected by the Partnership, in its sole discretion) that would
be allocated to such Affected Person under Treasury Regulations § 1.752-3.

 

1.9                                 “Gain Event”
means the sale or disposition of all or any part of the Protected Property that
would be in violation of Section 2 of this Agreement.

 

1.10                           “Gross-up Amount”
means an amount equal to the federal, state and city income taxes payable by a
Contributor (determined as set forth in Section 1.7) as the result of the
receipt of an amount equal to the Current Tax Cost pursuant to Section 3(a),
so that, after the payment by such Contributor (or Indirect Owner thereof) of
all taxes on amounts received pursuant to Section 3(a), such Contributor
(or Indirect Owner thereof) retains an amount equal to its total tax liability
as a result of such Gain Event.  Schedule A
sets forth an example of a calculation of the Gross-up Amount.

 

1.11                           “Indirect Owner”
means, in the case of a Contributor that is an entity that is classified as a
partnership, a disregarded entity or a subchapter S corporation for federal
income tax purposes, any person owning an equity interest in such Contributor,
and in the case of any Indirect Owner that itself is an entity that is
classified as a partnership, a disregarded entity or a subchapter S
corporation for federal income tax purposes, any person owning an equity
interest in such entity.

 

1.12                           “Option” means the
Option referred to in Section 1 of the Option Agreement.

 

1.13                           “Option Agreement”
means the Option Agreement dated October [    ], 2005
between the LLC and the Partnership.

 

1.14                           “Partnership” means
Republic Property Limited Partnership, a Delaware limited partnership.

 

1.15                           “Partnership Agreement”
means the Agreement of Limited Partnership of Republic Property Partnership,
dated as of [                  ],
2005, as amended, and as the same may be further amended in accordance with the
terms thereof.

 

1.16                           “Partnership Units”
means the units of partnership interest in the Partnership issued to the
Contributors pursuant to the exercise of the Option.

 

 

1.17                           “Protected Property”
means the property identified on Exhibit A of the Option Agreement.

 

1.18                           “Subsidiary” means
any subsidiary of the Partnership that owns, directly or indirectly, the
Protected Property on the Closing Date, after giving effect to the transactions
contemplated by the Contribution Agreement, or that thereafter during the Term
is a successor to the Partnership’s direct or indirect interests in the
Protected Property.

 

1.19                           “Term of the Agreement”
means, the period commencing on the Closing Date and terminating on the earlier
of (i) the tenth (10th) anniversary of the Closing Date, and (ii) the
first date by which such Contributor (and any permitted transferees thereof)
shall have disposed of, in one or more taxable transactions (including upon
foreclosure with respect thereto), at least 90% of such Contributor’s
Partnership Units received pursuant to the exercise of the Option.

 

2.                                       Restrictions
on Sale of the Protected Property. 
Without the Consent of each Contributor and each Indirect Owner who
would be required to recognize gain for federal income tax purposes pursuant to
Section 704(c) of the Code as a result thereof (taking into account
only gain recognized pursuant to Section 704(c) as a result of, and
in connection with, the acquisition of the Property by the Partnership pursuant
to the Option Agreement), the Partnership shall not, directly or indirectly,
sell, exchange, or otherwise dispose of all or any portion of the Protected
Property (or any interest therein, including any interest in any Subsidiary)
during the Term of the Agreement, except as follows:

 

i.                  As permitted
pursuant to Section 3(a);

 

ii.               As a result of an
event described in Section 1033 of the Code, other than a disposition
resulting from the mere threat or imminence of a requisition or condemnation,
provided that the Partnership has first used commercially reasonable efforts to
structure such disposition as either a tax-free like-kind exchange under Section 1031
of the Code or a tax-free reinvestment under Section 1033 of the Code; or

 

iii.            Pursuant to a
transaction in which no gain is required to be recognized with respect to the
Protected Property by a Contributor or by the Partnership (which gain would be
required to be allocated to a Contributor (or Indirect Owner thereof) pursuant
to Section 704(c) of the Code as a result of, and in connection with,
the acquisition of the Property by the Partnership pursuant to the Option Agreement),
including, without limitation, a disposition of the Protected Property in a
transaction that qualifies for nonrecognition of gain pursuant to Section 1031
of the Code, provided that (x) in the event of a disposition under Section 1031
of the Code, any property that is acquired in exchange for the Protected
Property shall thereafter be considered the Protected Property for the balance
of the Term of the Agreement, and (y) if the Protected Property is transferred
to another entity in a transaction in which gain or loss is not required to be
recognized, the direct and indirect interest of the Partnership in such entity
thereafter also shall be 

 

 

considered the
Protected Property, and if the acquiring entity’s disposition of the Protected
Property would cause a Contributor to be required to recognize gain pursuant to
Section 704(c) of the Code as a result thereof, the transferred
Protected Property shall continue to be considered the Protected Property for
purposes of this Agreement.

 

3.                                       Exception to
Limitations in Section 2; Determination of Adjustment Amount.

 

(a)                                  Notwithstanding any
of the foregoing, Section 2 shall not apply to prohibit any transaction
not otherwise permitted under Section 2 if, within 90 days after the
consummation of such transaction (or if later, 90 days after the
determination that a transaction otherwise would not have been permitted under Section 2
if the Partnership believed in good faith that the transaction reasonably could
be expected to be permitted under Section 2 without regard to this Section 3),
the Partnership pays to each affected Contributor (or Indirect Owner thereof,
as applicable) an amount of cash equal to the Adjustment Amount, if any,
attributable to the Gain Event resulting from such transaction.

 

(b)                                 If a Gain Event is
contemplated by the Partnership or otherwise is determined to have occurred,
the Partnership shall select, with the Consent of Portals Development
Associates Limited Partnership, provided its partners are affected by the Gain
Event (which Consent shall not be unreasonably withheld, conditioned or
delayed), a qualified nationally recognized independent expert (the “Expert”)
to determine the applicable Adjustment Amount for each such affected
Contributor or Indirect Owner thereof. 
The Partnership shall pay the fees and expenses of the Expert.

 

4.                                       Section 704(c) Value;
Allocation of “Excess Nonrecourse Liabilities.”

 

(a)                                  The Contributor and
the Partnership agree that, for purposes of determining gain required to be
allocated under Section 704(c) of the Code and all related
allocations with respect to depreciation, the initial “book value” of the
Protected Property shall be the “Purchase Price” of the Protected Property as
determined in accordance with the Option Agreement, taking into account the value
of the Units received thereunder on the Closing Date.

 

(b)                                 With respect to the
Protected Property, the Partnership shall allocate (and cause any entity in
which Partnership has a direct or indirect interest to allocate) “excess non-recourse
liabilities,” as defined in Treasury Reg. § 1.752-3(a)(3), attributable to
the Protected Property according to the built-in gain under Section 704(c) of
the Code with respect to the Protected Property as of the Closing Date, to
extent of the amount of such built-in gain, reduced by the amount of any
liabilities attributable to the Property that are allocated pursuant to
Treasury Reg. § 1.752-3(a)(2).

 

5.                                       Debt
Protection.

 

At the time the Partnership exercises the
Option, if a Contributor or an Indirect Owner would have a “negative capital
account” with respect to the Units received in exchange for the Property upon
exercise of the Option (each an “Affected Person”), the Partnership shall
negotiate 

 

 

in good faith with such Affected Person to provide Debt Protection for
the Term (with such terms and exceptions as shall be determined by the
Partnership in good faith) so as to permit such Contributor or Indirect Owner
to avoid recognizing gain with respect to such “negative capital account”
during the Term (except upon a disposition of part or all such Contributor’s or
Indirect Owner’s direct or indirect interest in the Units issued by the
Partnership on the Closing Date).  As
used herein, the term “negative capital account” means, in the case of the
Contributor, the amount by which the Contributor’s allocable share (under Section 752
of the Code) of the liabilities to which the Property is subject or that are
assumed by the Partnership on the Closing Date exceed the Contributor’s
adjusted tax basis in the Property on the Closing Date (and in the case of an
Indirect Owner, such Indirect Owner’s proportionate share of such excess,
determined in accordance with the applicable income tax regulations).

 

6.                                       No
Limitations After Expiration of Term of the Agreement; Sole and Exclusive
Remedy; No Representations or Warranties.

 

(a)                                  After the expiration
of the Term of the Agreement, (i) the restrictions set forth in Section 2
with respect to the Protected Property shall be null and void and of no further
force and effect, (ii) neither the Partnership nor its general partner nor
any Subsidiary shall be under any restriction or limitation as to the actions
it can take with respect to the Protected Property or any indebtedness of the
Partnership or any Subsidiary, whether by reason of fiduciary duty or
otherwise, regardless of the tax consequences that such action (or any failure
to act) might have for one or more Contributors or Indirect Owners, (iii) the
undertaking set forth in Section 5 shall be of no force and effect, and (iv) the
Partnership and its general partner shall have no duty to consider the tax
consequences to the Contributors or any Indirect Owner of any action (or
failure to act) with respect to the Protected Property or any indebtedness of
the Partnership or any Subsidiary.

 

(b)                                 The sole and exclusive
remedy of the Contributors or the Indirect Owners against the Partnership and
its general partner and any affiliates thereof with respect to any breach or
alleged or prospective breach of the covenants set forth in Section 2
shall be to receive the payment from the Partnership provided in Section 3(a) hereof,
it being intended by the parties that in no event shall any Contributor have
any right to specific performance or equitable relief with respect to any
obligation of the Partnership under this Agreement or any right to money
damages of any nature, consequential or otherwise, for any breach under this
Agreement, except for the specific payment provided for in Section 3(a) hereof.

 

(c)                                  Each Contributor
acknowledges that neither the Partnership nor Republic Property Trust has made
or hereby makes any representation or warranty to any Contributor regarding the
federal income tax treatment of the Partnership (other than to the extent set
forth in the Option Agreement) or the federal income tax consequences of any of
the transactions contemplated by the Option Agreement, including, without
limitation (i) whether or not the transfer of the Protected Property to
the Partnership as contemplated under the Option Agreement will be effective to
avoid the recognition of all or any portion of the gain that otherwise would be
required to be recognized for federal income tax purposes upon a fully taxable
disposition of the Protected Property, and (ii) the tax consequences of
any attempted Debt Protection, and the Contributors shall bear the cost of
all income taxes associated therewith (except to the extent expressly provided
in this Agreement).

 

 

6.                                       Waiver and
Amendment.  Any party hereto may
waive its rights under this Agreement at any time, and no such waiver shall
operate to waive any party’s rights under this Agreement with respect to any
subsequent event.  Any agreement on the
part of any such party to any such waiver shall be valid only if set forth in
an instrument in writing signed by such party. 
This Agreement may be amended only by a written instrument signed by the
parties hereto.

 

7.                                       Invalid
Provision.  The invalidity or
unenforceability of any particular provision of this Agreement shall not affect
the other provisions hereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provisions were omitted.

 

8.                                       Notices and
Addresses.  Notices and other
communications to be given under the terms of this Agreement shall be in
writing and shall be either (i) delivered by hand against receipt, (ii) sent
by certified or registered mail, postage prepaid, return receipt requested, or (iii) sent
by a nationally recognized commercial delivery service or by “fax” machine
(provided that, in either case, a confirmatory copy is thereafter sent by
certified or registered mail):

 

	
  If to the Partnership:

  	
  Republic Property Limited Partnership

  
	
   

  	
   

  	
  1280 Maryland Avenue, SW

  
	
   

  	
   

  	
  Suite 280

  
	
   

  	
   

  	
  Washington, DC 20024

  
	
   

  	
   

  	
  Attention: Mark R. Keller

  
	
   

  	
   

  	
  Telecopy: (202) 863-0300

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to: Hogan & Hartson
  L.L.P.

  
	
   

  	
   

  	
  555 Thirteenth Street, N.W.

  
	
   

  	
   

  	
  Washington, DC 20004

  
	
   

  	
   

  	
  Attention: Stuart Barr, Esq.

  
	
   

  	
   

  	
  Telecopy: (202) 637-5910

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If to the Contributor:  Parcel 47 D

  
	
   

  	
   

  	
  [                                  ]

  
	
   

  	
   

  	
  [                                  ]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:
  [                              ]

  
	
   

  	
   

  	
  [                                    ]

  
	
   

  	
   

  	
  [                                    ]

  

 

or at such other address as is from time to time designated by the
party receiving the notice.   Any such
notice which is properly mailed, as described above, shall be deemed to have
been served as of three (3) business days after said posting.

 

9.                                       Governing
Laws; Binding Effect.  This Agreement
is governed by the laws of Delaware and shall be construed in accordance
therewith.  All parties to this Agreement
hereby 

 

 

consent to personal jurisdiction of the courts located in
Delaware.  This Agreement shall be
binding upon the heirs, personal representatives, successors and assigns of the
parties hereto.

 

10.                                 Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, and which shall
together constitute one and the same instrument.

 

11.                                 Successors and
Assigns.  This Agreement shall be
binding upon any successors and assigns of the Partnership who succeed directly
or indirectly to any interest in the Property, whether by a merger of the
Partnership or otherwise, unless and to the extent that the Term shall have
expired or such transaction shall have resulted in the recognition for federal
income tax purposes of all gain that could be required to be recognized
pursuant to Section 704(c) of the Code as a result of, and in
connection with, the acquisition of the Property by the Partnership pursuant to
the Option Agreement, and the Partnership shall have made all payments required
to be made under Section 3 hereof.

 

 

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

 

	
   

  	
  REPUBLIC
  PROPERTY LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Republic
  Property Trust, its sole general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mark R.
  Keller

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PARCEL 47D
  LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Steven A.
  Grigg

  
	
   

  	
   

  	
  Title:

  	
  President

  
					

 

 

Schedule A
to Form of Tax Protection Agreement

 

[Example
of Gross-up Calculation for Tax Indemnity]

 

	
  Total Gain
  Recognized

  	
   

  	
  7,000,000

  	
   

  
	
  Unrecaptured Section 1250 Gain

  	
   

  	
  3,000,000

  	
   

  
	
  Federal Tax Rate – Ordinary Income

  	
   

  	
  35

  	
  %

  
	
  Federal Tax Rate – Unrecaptured Section 1250
  Gain

  	
   

  	
  25

  	
  %

  
	
  Federal Tax Rate – Regular Capital Gain

  	
   

  	
  15

  	
  %

  
	
  Hypothetical Applicable State and Local Tax
  Rate

  	
   

  	
  6

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  State and Local Tax Due from Sale of
  Property ($7,000,000 * 6%)

  	
   

  	
  420,000

  	
   

  
	
  Federal Tax Benefit from State and Local
  Tax Deduction ($420,000 * 35%)

  	
   

  	
  (147,000

  	
  )

  
	
   

  	
   

  	
   

  	
   

  
	
  Federal Tax Due from Sale of Property
  ($3,000,000 * 25% plus $4,000,000*15%)

  	
   

  	
  1,350,000

  	
   

  
	
  Less: Federal Tax Benefit from State and
  Local Tax Deduction

  	
   

  	
  (147,000

  	
  )

  
	
   

  	
   

  	
   

  	
   

  
	
  Federal Tax Due

  	
   

  	
  1,203,000

  	
   

  
	
  State and Local Tax Due

  	
   

  	
  420,000

  	
   

  
	
  Total Tax Due

  	
   

  	
  1,623,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Gross–Up Calculation

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Tax Due by Contributors (net of any
  applicable deductions)

  	
   

  	
  1,623,000

  	
   

  
	
  Div by (1 – Federal, State and Local effective
  tax rate (1))

  	
   

  	
  61.1

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Result

  	
   

  	
  2,656,301

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Payment for Federal, State and Local Tax
  Due

  	
   

  	
  1,623,000

  	
   

  
	
  Gross–Up Payment

  	
   

  	
  1,033,301

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Payment

  	
   

  	
  2,656,301

  	
   

  

 

This Schedule A is intended to provide an example of the
gross up calculation used to determine the Gross-up Amount only and does not
reflect the actual tax due from the sale of the Protected Property.

 

(1)                                  The
foregoing assumes solely for purposes of the illustration that any tax payments
pursuant to Section 4 would be taxed as ordinary income.  The Expert shall be responsible for
determining the tax rate applicable to such payments.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00094-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00094-of-00352.parquet"}]]