Exhibit 10.12
REPUBLIC PROPERTIES
CORPORATION
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this
“ Agreement ”) is entered into as of December
20, 2005 by and between Republic Property Trust, a Maryland real
estate investment trust (the “ Company ”) and
Republic Properties Corporation (“ RPC ”), a
District of Columbia corporation.
WHEREAS, the Company and Republic
Property Limited Partnership, a Delaware limited partnership and
wholly owned operating partnership subsidiary of the Company (the
“ Operating Partnership ”), are engaging in
various related transactions pursuant to which, among other things,
(i) the Operating Partnership would acquire interests in
various limited liability companies that own real estate
properties, and (ii) the Company would effect an initial
public offering of its common shares of beneficial interest, par
value $0.01 per share, and contribute the proceeds therefrom for a
like number of units of partnership interest in the Operating
Partnership (the “ IPO ”, and together with the
other transactions in connection therewith, the “ IPO
Transactions ”);
WHEREAS, Richard L. Kramer (“
Kramer ”) is the Chairman of the Board of Trustees
(the “ Board ”) of the Company and also a
co-founder and co-owner of RPC;
WHEREAS, the Company’s
President and Chief Development Officer, Steven A. Grigg, is also a
co-founder and co-owner of RPC;
WHEREAS, the Company and RPC agree
that, as part of the IPO Transactions, RPC will not engage in
competition with the Company and will refrain from taking certain
other actions pursuant to the terms and conditions hereof in an
effort to protect the Company’s legitimate business interests
and goodwill and for other business purposes; and
WHEREAS, Kramer has also agreed to
enter an agreement not to engage in competition with the Company on
terms and conditions that are similar to this Agreement.
NOW, THEREFORE, in consideration of
the foregoing and other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, the
parties hereto agree as follows:
1.
Noncompetition . RPC agrees with the Company that for
the longer of: (i) the three-year period beginning on the date of
this Agreement, (ii) the period during which Kramer is a member of
the Board of the Company (or any successor thereto), or (iii) in
the event that Kramer is removed as a member of the Board of the
Company for cause, one and one-half (1-1/2) years thereafter (the
“ Restricted Period ”), RPC will not engage in
any business involving the development, construction, acquisition,
ownership or operation of institutional grade office property real
estate (the “ Company Business ”), whether such
business is conducted by RPC individually or as a principal,
partner, member, stockholder or independent contractor of any
Person (as defined below); provided, however , that this
Section 1
shall not be deemed to prohibit any
of the following: (a) any of the real estate (and real
estate-related) activities listed on Schedule A hereto and
RPC’s ownership, marketing, sale, transfer or exchange of any
of RPC’s interests in any of the properties or entities
listed on Schedule A hereto, (b) the direct or indirect
ownership by RPC of up to five percent of the outstanding equity
interests of any public company, (c) any activities with respect to
non-institutional grade office property real estate or Non-Office
Building Real Estate, including, without limitation, residential,
hotel, retail, industrial or recreational, and (d) a direct or
indirect ownership by RPC of equity or similar ownership interests
of any corporation, partnership, limited liability company, joint
venture, association or other entity that is not a public company,
provided that RPC is not involved in the management or operation of
such Person or its business and such Person is not engaged in the
Company Business. Notwithstanding the foregoing, during the
one and one-half (1-1/2) year “tail” period included in
the Restricted Period, the restrictions set forth in this Section 1
shall apply only within the following “ Restricted
Areas ”: (I) the District of Columbia and the states of
Maryland and Virginia; and (II) the area within a 50-mile radius of
any property owned or leased by the REIT, as of the date of
Kramer’s removal as a member of the Board. For purposes
of this Agreement, (i) “ Person ” means
any individual, firm, corporation, partnership, company, limited
liability company, trust, joint venture, association or other
entity, and (ii) “Non-Office Building Real
Estate” means any real estate which has an office space
component equal to five percent (5%) or less of such real
estate’s total net rentable square footage. Notwithstanding
the foregoing, the Restricted Period shall terminate, if not
earlier terminated in accordance with this Section 1, upon the
first to occur of (i) the consummation of a Change of Control of
the Company, as defined in Section 6 of this Agreement or (ii) the
failure of Kramer to be reelected as a member of the
Board.
2.
Nonsolicitation . RPC agrees with the Company that for the
longer of (i) the three-year period beginning on the date of this
Agreement or (ii) the period during which Kramer is a member of the
Board, and for eighteen months thereafter, Kramer will not (a)
directly or indirectly solicit, induce or encourage any employee or
independent contractor to terminate their employment with the REIT
or to cease rendering services to the REIT, and Kramer shall not
initiate discussions with any such Person for any such purpose or
authorize or knowingly cooperate with the taking of any such
actions by any other Person, or (b) hire (on behalf of itself or
any other person or entity) any employee who has left the
employment of the REIT (or any predecessor thereof) within one year
of the termination of such employee’s employment with the
REIT.
3.
Referrals . In addition, RPC agrees that for the
longer of (i) the three-year period beginning on the date of this
Agreement or (ii) the period during which the Kramer is a member of
the Board of the Company (or any successor thereto), RPC will refer
to the Company any investment and fee-based development
opportunities for commercial office properties in Greater
Washington, D.C. which are presented to the RPC.
4.
Reasonable and Necessary Restrictions . RPC
acknowledges that the restrictions, prohibitions and other
provisions hereof, including, without limitation, the Restricted
Area, the Restriction Period and the restriction period set forth
in Section 2, are reasonable, fair and equitable in terms of
duration, scope and geographic area, are necessary to protect the
legitimate business interests of the REIT.
2
5.
Specific Performance . RPC acknowledges that the
obligations undertaken by RPC pursuant to this Agreement are unique
and that the Company likely will have no adequate remedy at law if
RPC shall fail to perform any of RPC’s obligations hereunder,
and RPC therefore confirms that the Company’s right to
specific performance of the terms of this Agreement is essential to
protect the rights and interests of the Company. Accordingly,
in addition to any other remedies that the Company may have at law
or in equity, the Company shall have the right to have all
obligations, covenants, agreements and other provisions of this
Agreement specifically performed by RPC, and the Company shall have
the right to obtain preliminary and permanent injunctive relief to
secure specific performance and to prevent a breach or contemplated
breach of this Agreement by RPC. RPC hereby acknowledges and
agrees that the Company shall not be required to post bond as a
condition to obtaining or exercising such remedies, and RPC hereby
waives any such requirement or condition.
6.
Miscellaneous Provisions .
(a)
Assignment; Binding Effect . This Agreement may not be
assigned by RPC, but may be assigned by the Company to any
successor to its business or to any subsidiary or affiliate of the
Company and will inure to the benefit of and be binding upon any
such successor. Subject to the foregoing provisions
restricting assignment, all covenants and agreements in this
Agreement by or on behalf of any of the parties hereto shall bind
and inure to the benefit of the respective successors, assigns,
heirs, and personal representatives.
(b)
Entire Agreement . This Agreement constitutes the
entire agreement between the parties hereto with respect to the
matters set forth herein and supersedes and renders of no force and
effect all prior oral or written agreements, commitments and
understandings among the parties with respect to the matters set
forth herein. This Section 6(b) shall not be used to limit or
restrict the rights or remedies, whether express or implied, of any
noncompetition or nonsolicitation policies of the REIT applicable
to RPC.
(c)
Amendment . Except as otherwise express
