Exhibit 10.12
LICENSE AND
NON-COMPETITION AGREEMENT
This LICENSE AND NON-COMPETITION
AGREEMENT (this “ Agreement ”), made as of
May 12, 2005, by and among BRESLER & REINER, INC.,
a Delaware corporation (“ B&R ”),
MIDLANTIC OFFICE TRUST, INC. , a Maryland corporation
(“ MDA ”), and, solely for purposes of
Sections 3, 5(c), 9 and 11, Charles S. Bresler, an individual
residing in the state of Maryland, recites and provides as
follows:
RECITALS
A. MDA has been formed to invest
in commercial office properties located in the Mid-Atlantic Region
(as hereinafter defined) and will acquire substantially all of its
initial properties from, and utilize the proprietary management
techniques of, B&R.
B. In furtherance thereof,
B&R and MDA or their Subsidiaries (as hereinafter defined) are,
or will become, parties to certain Purchase and Sale Agreements
further described on Schedule A attached hereto, pursuant to
which B&R will sell to MDA various commercial office properties
(collectively, the “ Properties ”) located in
the Mid-Atlantic Region (as hereinafter defined) for an aggregate
purchase price of approximately $270.6 million (the “
Purchase Agreements ”).
C. In addition, B&R and MDA
or their Subsidiaries are, or will become, parties to a certain
Assignment Agreement further described on Schedule B
attached hereto, pursuant to which B&R assigns to MDA or one of
its Subsidiaries its rights and interests (the “ Purchase
Rights ”) in a certain purchase and sale agreement to
acquire a certain commercial office property located in the
Mid-Atlantic Region.
D. MDA intends to file a
registration statement on Form S-11 (the “ Registration
Statement ”) with the Securities and Exchange Commission
to register its common stock, par value $.01 per share (“
Common Stock ”), in connection with its proposed
initial public offering (the “ Initial Public Offering
”).
E. MDA intends to utilize the
proceeds from its Initial Public Offering to, among other things,
acquire the Properties from B&R and B&R will materially
benefit from MDA’s acquisition of any of the Properties.
F. In connection with the
Initial Public Offering, acquisition of the Properties and
assignment of the Purchase Rights, B&R agrees to
(i) license to MDA certain intellectual property rights of
B&R that MDA and its Subsidiaries will utilize in connection
with their operations, (ii) not compete against MDA in the
commercial office property sector within New Jersey, Pennsylvania,
Delaware, Maryland, Virginia or Washington D.C. (the “
Mid-Atlantic Region ”), (iii) grant MDA certain
rights to acquire additional properties owned by B&R and
(iv) refer future opportunities to acquire additional
properties in the Mid-Atlantic Region to MDA, in each case in
accordance with, and subject to, the terms and conditions set forth
herein.
G. MDA will cause to be issued
to B&R in consideration for the benefits and protections
afforded hereunder and recited herein, long term incentive plan
(“LTIP”) units that
upon vesting and achieving
parity with units in MDA’s operating partnership, Midlantic
Partnership, LP, will be convertible into 2.0% of MDA’s
outstanding shares of Common Stock, excluding the shares issuable
upon exercise of such LTIP units and based upon the number of
shares of Common Stock outstanding immediately following completion
of the Initial Public Offering plus any shares issued by MDA within
30 days thereafter to cover over-allotments (the “
Green Shoe ”), if any, in accordance with the terms of
the applicable underwriting agreement between the Company and
Friedman, Billings, Ramsey & Co, Inc.
H. Charles S. Bresler will
receive substantial benefits, both directly and indirectly, upon
the successful completion of the Initial Public Offering and
MDA’s formation transactions contemplated in the Registration
Statement and in connection therewith agrees to (i) not
compete against MDA in the Mid-Atlantic Region and (ii) refer
future investment opportunities to MDA for additional properties in
the Mid-Atlantic Region, in each case in accordance with and
subject to the terms and conditions hereof.
I. B&R and Charles S.
Bresler acknowledge and agree that MDA would not proceed with its
Initial Public Offering or the acquisition of the Properties
without the benefits and protections afforded MDA under the terms
hereof.
AGREEMENT
The parties, in consideration of the
premises and of the mutual representations, warranties, covenants,
conditions and agreements set forth herein, intending to be legally
bound, agree as set forth below:
1. B&R’s
Representations and Warranties B&R represents and
warrants as follows:
(a)
Organization and Corporate Power . B&R is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware and is qualified to do business and
in good standing in the State of Delaware and in each other
jurisdiction where the character or location of its assets or its
properties owned, leased or operated by it, or the nature of its
activities makes such qualification necessary, except to the extent
that the failure to so qualify or be in good standing would not
reasonably be expected to have a material adverse effect on
B&R’s business, financial condition, operations or its
ability to perform its obligations under this Agreement. B&R
has the corporate power and authority necessary to own and operate
its properties, to conduct its business as conducted, and to
perform its obligations under this Agreement.
(b)
Authority for Agreement . B&R has the corporate power
and authority to enter into and perform its obligations under this
Agreement. The board of directors of B&R has approved of this
Agreement and the transactions contemplated hereby and has
authorized the execution, delivery and performance of this
Agreement. No other corporate proceedings on the part of B&R or
any of its stockholders is, or will be, necessary to approve and
authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby. This Agreement has been
duly executed and delivered by B&R and is a legal, valid and
binding obligation of B&R, enforceable against it in accordance
with its terms, except as such
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enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of creditors
generally.
(c)
No Violation . The execution, delivery and performance by
B&R of this Agreement, does not and will not, directly or
indirectly (with or without notice or lapse of time): (i) violate,
breach, conflict with, constitute a default under, accelerate or
permit the acceleration of the performance required by (x) any
of the terms of the Certificate of Incorporation or Bylaws of
B&R, as amended, or any resolution adopted by the board of
directors or stockholders of B&R, or (y) any note, debt
instrument, security agreement, mortgage or any other agreement or
contract (collectively, “ Contracts ”) to which
B&R is a party or by which it or its properties are bound, or
(z) any law, judgment, decree, order, rule, regulation,
permit, license or other legal requirement of any government
authority applicable to B&R; (ii) give any person or
entity the right to exercise any remedy under any such Contract or
cancel, terminate or modify any such Contracts; (iii) give any
government authority or other person or entity the right to
challenge any of the transactions contemplated by this Agreement;
(iv) give any government authority the right to revoke,
withdraw, suspend, cancel, terminate or modify, any permit or
license that is held by B&R or that otherwise relates to
B&R’s business or to any of the assets or properties
owned or used by B&R; or (v) result in the creation or
imposition of any material pledge, lien, restriction or other
encumbrance in favor of any person or entity. No notice to, filing
with, or consent of, any person or entity is necessary in
connection with the execution, delivery or performance by B&R
of this Agreement other than such notices, filings or consents that
have already been received, made or given, as the case may be.
2. MDA’s
Representations and Warranties MDA represents and warrants
as follows:
(a)
Organization and Corporate Power . MDA is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Maryland and is qualified to do business and in good
standing in the State of Maryland and in each other jurisdiction
where the character or location of its assets or its properties
owned, leased or operated by it, or the nature of its activities
makes such qualification necessary, except to the extent that the
failure to so qualify or be in good standing would not reasonably
be expected to have a material adverse effect on MDA’s
business, financial condition, operations or its ability to perform
its obligations under this Agreement. MDA has the corporate power
and authority necessary to own and operate its properties, to
conduct its business as conducted, and to perform its obligations
under this Agreement.
(b)
Authority for Agreement . MDA has the corporate power and
authority to enter into and perform its obligations under this
Agreement. The board of directors of MDA has approved of this
Agreement and the transactions contemplated hereby and has
authorized the execution, delivery and performance of this
Agreement. No other corporate proceedings on the part of MDA or any
of its stockholders is, or will be, necessary to approve and
authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby. This Agreement has been
duly executed and delivered by MDA and is a legal, valid and
binding obligation of MDA, enforceable against it in accordance
with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the rights of creditors generally.
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(c)
No Violation . The execution, delivery and performance by
MDA of this Agreement, does not and will not, directly or
indirectly (with or without notice or lapse of time): (i) violate,
breach, conflict with, constitute a default under, accelerate or
permit the acceleration of the performance required by (x) any
of the terms of the Certificate of Incorporation or Bylaws, as
amended, of MDA or any resolution adopted by the board of directors
or stockholders of MDA, or (y) any Contract to which MDA is a
party or by which it or its properties are bound, or (z) any
law, judgment, decree, order, rule, regulation, permit, license or
other legal requirement of any government authority applicable to
MDA; (ii) give any person or entity the right to exercise any
remedy under any such Contract or cancel, terminate or modify any
such Contracts; (iii) give any government authority or other
person or entity the right to challenge any of the transactions
contemplated by this Agreement; (iv) give any government
authority the right to revoke, withdraw, suspend, cancel, terminate
or modify, any permit or license that is held by MDA or that
otherwise relates to MDA’s business or to any of the assets
or properties owned or used by MDA; or (v) result in the
creation or imposition of any material pledge, lien, restriction or
other encumbrance in favor of any person or entity. No notice to,
filing with, or consent of, any person or entity is necessary in
connection with the execution, delivery or performance by MDA of
this Agreement other than such notices, filings or consents that
have already been received, made or given, as the case may be.
3. Bresler
Representations and Warranties Charles S. Bresler
represents and warrants as follows:
(a)
Binding Agreement. This Agreement has been duly executed and
delivered by him and is a legal, valid and binding obligation of
his, enforceable against him in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally.
(b)
No Violation. The execution, delivery and performance by him
of this Agreement, does not and will not, directly or indirectly
(with or without notice or lapse of time): (i) violate, breach,
conflict with, constitute a default under, accelerate or permit the
acceleration of the performance required by (x) any Contract
or (y) any law, judgment, decree, order, rule, regulation,
permit, license or other legal requirement of any government
authority applicable to him; (ii) give any person or entity
the right to exercise any remedy under any such Contract or cancel,
terminate or modify any such Contracts; (iii) give any
government authority or other person or entity the right to
challenge any of the transactions contemplated by this Agreement;
or (iv) result in the creation or imposition of any material
pledge, lien, restriction or other encumbrance in favor of any
person or entity. No notice to, filing with, or consent of, any
person or entity is necessary in connection with the execution,
delivery or performance by him of this Agreement other than such
notices, filings or consents that have already been received, made
or given, as the case may be.
4. License
(a)
Grant . B&R hereby grants to MDA and to current and
future subsidiaries (“ Subsidiaries ”) of MDA
and their Affiliates (as hereinafter defined), the license to use,
copy, modify, display, perform, make and distribute (with or
without consideration), all to the extent
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applicable, any and all
trade secrets, proprietary and confidential information or other
intellectual property of B&R now in existence (including,
without limitation, ideas, strategies, formulas, compositions,
know-how, processes, copyright works, techniques, methods, plans,
proposals, management guidelines, technical data, lease terms,
investment objectives, underwriting criteria and lists and
information regarding current and prospective tenants, property
owners, lenders, property managers, leasing agents, service
providers and suppliers) that relate to or that could benefit the
business of identifying, acquiring, financing, renovating, owning,
maintaining, managing, leasing or selling Target Properties (as
hereinafter defined), including, without limitation, any of the
foregoing that is explicitly or implicitly identified, referred to
or referenced in the registration statement filed by MDA on Form
S-11 with the Securities and Exchange Commission in connection with
its Initial Public Offering, as such may be amended from time to
time (collectively, the “ Intellectual Property
”).
(b)
Scope and Royalty . The license granted hereunder is paid-up
and royalty free, perpetual, irrevocable and worldwide in scope and
is also exclusive to MDA and its Subsidiaries and Affiliates within
the Mid-Atlantic Region. MDA and its Subsidiaries and Affiliates
may utilize the Intellectual Property in their sole discretion,
both within and outside of the Mid-Atlantic Region. MDA and any of
its Subsidiaries and Affiliates may sublicense to third parties any
or all of their rights hereunder. Notwithstanding the foregoing,
MDA and its Subsidiaries shall require any third party to whom it
discloses or sublicenses any Intellectual Property to keep such
Intellectual Property confidential to the maximum extent
practicable under the circumstances.
(c)
Further License by B&R . B&R may not license the
Intellectual Property to any third party or use the Intellectual
Property for the benefit of others within the Mid-Atlantic Region
without the prior written consent of MDA, which may be granted or
denied in MDA’s sole discretion. Subject to Section 5,
nothing contained in this Section 4 shall limit or restrict
B&R from utilizing the Intellectual Property for its own
benefit, including, but not limited to, with respect to the
activities and properties described on Schedule C
hereto and the Retained Target Properties (as hereinafter
defined).
5.
Non-Compete
(a)
Scope of B&R Non-Compete. Except as set forth on
Schedule C attached hereto or unless waived in writing
by MDA in its sole and absolute discretion following approval by a
majority of MDA’s independent directors, B&R, on behalf
of itself and on behalf of any of its Subsidiaries, agrees that it
and its Subsidiaries, during the Term (as hereinafter defined),
shall not, directly or indirectly, purchase, develop, lease,
manage, own, control or otherwise invest in any building or series
of buildings that (i) have, in any of the past three years,
derived at least 50% of their gross rental revenue from commercial
office rent or are reasonably expected (as determined in the
reasonable discretion of MDA) to derive at least 50% of their gross
rental revenue from commercial office rent presuming full occupancy
(collectively, the “ Target Properties ”) and
(ii) are located in the Mid-Atlantic Region. B&R shall be
deemed to be in breach of the terms hereof if any Affiliate of
B&R engages in conduct that would be in breach of the terms
hereof had such conduct been undertaken directly by B&R. For
purposes of this Agreement, (i) Affiliates shall mean any
other person or entity that, directly or indirectly through one or
more intermediaries, controls, is controlled by or is under common
control with the
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applicable person or
entity, whether by contract, voting equity, legal right, court
order or otherwise, and (ii) Term shall mean the period of
time which is the later of (a) five years following the
closing date of the Initial Public Offering or (b) such date
as when B&R and MDA have had no common directors or officers
for a period of 365 consecutive days.
(b)
Permitted Activities. MDA acknowledges and agrees that
B&R and its Subsidiaries shall not be restricted from
purchasing, developing, leasing, managing, owning or controlling
any Target Properties located out
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