FIRST POTOMAC REALTY TRUST (NYSE:FPO) Files An 8-K Entry into a Material Definitive Agreement

Item1.01.

Agreement and Plan of Merger

On June 27, 2017, First Potomac Realty Trust, a Maryland real
estate investment trust (the Company), First
Potomac Realty Investment Limited Partnership, a Delaware limited
partnership (the Company LP and, together with
the Company, the First Potomac Parties) and
Government Properties Income Trust, a Maryland real estate
investment trust (GOV), GOV NEW OPPTY REIT, a
Maryland real estate investment trust and wholly-owned subsidiary
of GOV (REIT Merger Sub) and GOV NEW OPPTY LP, a
Delaware limited partnership, majority-owned subsidiary of REIT
Merger Sub and wholly-owned subsidiary of GOV
(Partnership Merger Sub and, together with GOV
and REIT Merger Sub, the GOV Parties), entered
into a definitive Agreement and Plan of Merger (the
Merger Agreement). The Merger Agreement provides
that, subject to the satisfaction or waiver of certain customary
conditions, Partnership Merger Sub will merge with and into the
Company LP (the Partnership Merger), and
immediately following the Partnership Merger, the Company will
merge with and into REIT Merger Sub (the REIT
Merger and, together with the Partnership Merger, the
Mergers). Upon completion of the REIT Merger,
REIT Merger Sub will survive and the separate corporate existence
of the Company will cease. Upon completion of the Partnership
Merger, the Company LP will survive as an indirect,
majority-owned subsidiary of GOV and the separate existence of
Partnership Merger Sub will cease. The Mergers and the other
transactions contemplated by the Merger Agreement are
collectively referred to herein as the
Transaction.

to the terms and subject to the conditions and limitations set
forth in the Merger Agreement: (i)at the effective time of the
REIT Merger (the REIT Merger Effective Time),
each of the common shares of beneficial interest of the Company,
par value $0.001 per share (the Company Common
Shares), issued and outstanding immediately prior to the
REIT Merger Effective Time (other than any Company Common Shares
held by a Company subsidiary) will be converted into the right to
receive an amount in cash equal to $11.15, without interest (the
REIT Per Share Merger Consideration); and (ii)at
the effective time of the Partnership Merger (the
Partnership Merger Effective Time), each unit of
limited partnership interests in the Company LP issued and
outstanding immediately prior to the Partnership Merger Effective
Time (other than any Company LP limited partnership units held by
the Company) will be converted into the right to receive an
amount in cash equal to the REIT Per Share Merger Consideration,
without interest (the Partnership Per Unit Merger
Consideration), except that each holder of Company LP
limited partnership interests may elect, in lieu of the
Partnership Per Unit Merger Consideration, to have such holders
units of limited partnership interests in the Company LP
converted into an equal number of preferred limited partnership
interests in the Company LP. In addition, at the REIT Merger
Effective Time, each outstanding option to purchase Company
Common Shares, each outstanding restricted Company Common Share
granted under the Companys equity compensation plans and each
award outstanding under the Companys legacy historical, long-term
incentive program shall become fully vested and exercisable, and
shall be cancelled in exchange for the right to receive a single,
lump sum cash payment in accordance with the Merger Agreement.

The Transaction is subject to approval by the holders of at least
a majority of the outstanding Company Common Shares, and each
partys obligation to consummate the Transaction is subject to
certain other customary conditions provided for in the Merger
Agreement, including the accuracy of the other partys
representations and warranties, subject to customary
qualifications, the other partys material compliance with its
covenants and agreements, and, with respect to GOVs obligations,
the absence of a Company material adverse effect and the receipt
by GOV of a tax opinion relating to the REIT status of the
Company. The Transaction is expected to close prior to
December31, 2017.

to the Merger Agreement, the Company has agreed that it will not
pay regular, quarterly distributions to the holders of Company
Common Shares prior to the closing of the Transaction, except to
the extent that dividends and other distributions are necessary
for each of the Company and its REIT subsidiary to maintain its
status as a REIT. to the Merger Agreement, upon request by GOV,
the parties will work in good faith (i)to effect the Transaction
by

means of a tender offer for all of the outstanding Company Common
Shares for the REIT Per Share Merger Consideration, and/or (ii)in
certain circumstances, to restructure the REIT Merger as a
reverse merger, subject to certain requirements including
reasonable and customary amendments to the Merger Agreement.

The closing of the Transaction is not subject to a financing
condition, and the parties to the Merger Agreement have the right
to specific performance to enforce the terms thereof, including
the obligation of GOV to consummate the Transaction in accordance
with the terms and conditions of the Merger Agreement.

The Merger Agreement contains certain customary representations,
warranties and covenants, including, among others, covenants with
respect to the conduct of the Companys business prior to closing,
subject to certain consent rights by GOV, covenants prohibiting
the Company from soliciting, providing information or entering
into discussions concerning proposals relating to an alternative
acquisition transaction (for 20% or more of the equity or assets
of the Company), subject to certain limited exceptions.

The Merger Agreement contains certain termination rights for the
Company and GOV. Under specified circumstances, the Company is
entitled to terminate the Merger Agreement to accept a superior
proposal (for 67% or more of the equity or assets of the
Company), which proposal the Companys Board of Trustees (the
Board) determines in its good faith judgment, if
consummated, would be more favorable to the shareholders of the
Company from a financial point of view, and if accepted, is
reasonably likely to be completed on the terms proposed on a
timely basis. Upon such a termination by the Company, or under
certain other specified circumstances, the Company will be
required to pay GOV a termination fee of $25million. If the
Merger Agreement is terminated by GOV for a material breach of
the Merger Agreement by the Company or terminated by either party
as a result of the failure to obtain the approval of the
Transaction by at least a majority of the holders of the Company
Common Shares, the Company will be required to reimburse GOV up
to $5million for expenses incurred by GOV in connection with the
Merger Agreement (although if the termination fee later becomes
payable, amounts reimbursed to GOV by the Company will be
credited against the termination fee payable).

The foregoing description of the Merger Agreement does not
purport to be complete, and is qualified in its entirety by
reference to the full text of the Merger Agreement, which is
attached hereto as Exhibit 2.1 and is incorporated herein by
reference. A copy of the Merger Agreement has been included to
provide shareholders with information regarding its terms and is
not intended to provide any factual information about the First
Potomac Parties or the GOV Parties. The representations,
warranties and covenants contained in the Merger Agreement have
been made solely for the purposes of the Merger Agreement and as
of specific dates; were solely for the benefit of parties to the
Merger Agreement; and are not intended as statements of fact to
be relied upon by the Companys shareholders or GOVs shareholders,
but rather as a way of allocating the risk between the parties to
the Merger Agreement in the event the statements therein prove to
be inaccurate; have been modified or qualified by certain
confidential disclosures that were made between the parties in
connection with the negotiation of the Merger Agreement, which
disclosures are not reflected in the Merger Agreement attached
hereto; may no longer be true as of a given date; and may apply
standards of materiality in a way that is different from what may
be viewed as material by shareholders. Accordingly, shareholders
should not rely on the representations, warranties and covenants
or any descriptions thereof as characterizations of the actual
state of facts or condition of the First Potomac Parties or the
GOV Parties. Moreover, information concerning the subject matter
of the representations and warranties may change after the date
of the Merger Agreement, which subsequent information may or may
not be fully reflected in the Companys public disclosures. The
Company acknowledges that, notwithstanding the inclusion of the
foregoing cautionary statements, it is responsible for
considering whether additional specific disclosures of material
information regarding material contractual provisions are
required to make the statements in this Current Report on Form
8-K not misleading.

Additional Information and Where to Find
It

In connection with the proposed merger transaction, the Company
expects to file with the Securities and Exchange Commission (the
SEC) a proxy statement, which proxy statement
will be mailed or otherwise

disseminated to the Companys shareholders when it becomes
available. The Company also plans to file other relevant
documents with the SEC regarding the proposed transactions.
INVESTORS ARE URGED TO READ THE PROXY STATEMENT AND OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC IF AND WHEN THEY BECOME
AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. You may obtain a free copy of the proxy
statement (if and when it becomes available) and other relevant
documents filed by the Company with the SEC at the SECs website
at www.sec.gov. Copies of the documents filed by the Company will
be available free of charge on its website at
www.first-potomac.com, or by directing a written request to First
Potomac Realty Trust, 7600 Wisconsin Avenue, 11th Floor,
Bethesda, MD 20814, Attention: Investor Relations.

The Company and its trustees and executive officers may be deemed
to be participants in the solicitation of proxies in respect of
the proposed merger transaction. You can find information about
the Companys trustees and executive officers in the Companys
definitive proxy statement filed with the SEC on April6, 2017 in
connection with its 2017 annual meeting of shareholders.
Additional information regarding the interests of such potential
participants will be included in the proxy statement and other
relevant documents filed with the SEC if and when they become
available. You may obtain free copies of these documents from the
Company using the sources indicated above.

Cautionary Statement Regarding Forward Looking
Statements

The forward-looking statements contained in this Current Report
on Form 8-K, including statements regarding the proposed
Transaction and the timing of such transaction, are subject to
various risks and uncertainties. Although the Company believes
the expectations reflected in any forward-looking statements
contained herein are based on reasonable assumptions, there can
be no assurance that our expectations will be achieved.
Forward-looking statements, which are based on certain
assumptions and describe future plans, strategies and
expectations of the Company, are generally identifiable by use of
the words believe, expect, intend, anticipate, estimate, project,
or other similar expressions. Such statements involve known and
unknown risks, uncertainties, and other factors that may cause
the actual results of the Company to differ materially from
future results, performance or achievements projected or
contemplated in the forward-looking statements. Certain factors
include, among others, the ability of the Company to obtain the
required shareholder approval to consummate the proposed merger
transaction; the satisfaction or waiver of other conditions in
the Merger Agreement; the Companys or GOVs ability to consummate
the proposed merger transaction; the outcome of any legal
proceedings that may be instituted against the Company and others
related to the Merger Agreement; the possibility that the
anticipated benefits and synergies from the proposed transaction
cannot be fully realized or may take longer to realize than
expected; the possibility that costs or difficulties related to
the integration of the Companys and GOVs operations will be
greater than expected; operating costs and business disruption
may be greater than expected; the ability of the Company, GOV, or
the combined company to retain and hire key personnel and
maintain relationships with providers or other business partners
pending the consummation of the transaction; changes in general
or regional economic conditions; and the impact of legislative,
regulatory and competitive changes and other risk factors
detailed in each of the Companys Annual Report on Form 10-K and
GOVs Annual Report on Form 10-K and described from time to time
in each of the Companys filings and GOVs filings with the SEC.

The risks set forth above are not exhaustive. Many of these
factors are beyond our ability to control or predict.
Forward-looking statements are not guarantees of performance. For
forward-looking statements herein, the Company claims the
protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of
1995. The Company assumes no obligation to update or supplement
forward-looking statements that become untrue because of
subsequent events. The Company does not intend to, and expressly
disclaims any duty to, update or revise the forward-looking
statements in this discussion to reflect changes in underlying
assumptions or factors, new information, future events, or
otherwise, after the date hereof, except as may be required by
law. In light of these risks and uncertainties, you should not
rely upon these forward-looking statements after the date of this
communication and should keep in mind that any forward-looking
statement made in this discussion, or elsewhere, might not occur.

On June 27, 2017, the Companys Board approved an amendment to the
Companys Third Amended and Restated Bylaws (the
Bylaws), effective as of such date (the
Bylaws

Amendment), to add a new Article XVI after
existing Article XV, which provides that, unless the Company
consents in writing to the selection of an alternative forum,
either the Circuit Court for Baltimore City, Maryland or the
United States District Court for the District of Maryland,
Baltimore Division, shall be the sole and exclusive forum for
(a)any derivative action or proceeding brought in the right or on
behalf of the Company, (b)any action asserting a claim of breach
of any duty owed by any trustee, officer, other employee or agent
of the Company to the Company or to the shareholders of the
Company, (c)any action asserting a claim against the Company or
any trustee, officer, other employee or agent of the Company
arising to any provision of Maryland General Corporation Law
(including, without limitation, Section2-401 thereof) or the
Companys Declaration of Trust or Bylaws, or (d)any action
asserting a claim against the Company or any trustee, officer,
other employee or agent of the Company that is governed by the
internal affairs doctrine.

The foregoing summary of the Bylaw Amendment does not purport to
be complete and is qualified in its entirety by reference to the
full text of the Bylaw Amendment, a copy of which is filed as
Exhibit 3.1 hereto, and is incorporated herein by reference.

On June 28, 2017, the Company issued a press release announcing
the execution of the Merger Agreement. The full text of the press
release is attached hereto as Exhibit 99.1 and is incorporated
herein by reference.

Also on June 28, 2017, the Company sent a letter to its employees
announcing the execution of the Merger Agreement. The full text
of the letter and the accompanying FAQ memorandum is attached
hereto as Exhibit 99.2 and is incorporated herein by reference.

The information furnished under this Item 7.01 of this Current
Report on Form 8-K, including Exhibit 99.1 and Exhibit 99.2,
shall not be deemed filed for purposes of Section18 of the
Securities Exchange Act of 1934, as amended (the Exchange
Act), or otherwise subject to the liabilities of that
section, nor shall it be deemed incorporated by reference into
any filing made by the Company under the Exchange Act or the
Securities Act of 1933, as amended, except as shall be expressly
set forth by specific reference in such a filing.

(d) Exhibits.

to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.

EXHIBIT INDEX

FIRST POTOMAC REALTY TRUST Exhibit
EX-2.1 2 d399859dex21.htm EX-2.1 EX-2.1 Exhibit 2.1 EXECUTION VERSION       AGREEMENT AND PLAN OF MERGER AMONG GOVERNMENT PROPERTIES INCOME TRUST,…
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About FIRST POTOMAC REALTY TRUST (NYSE:FPO)

First Potomac Realty Trust is engaged in the ownership, management, development and redevelopment of office and business park properties in the greater Washington, D.C. region. The Company’s segments include Washington, D.C., Maryland, Northern Virginia and Southern Virginia. It conducts its business through First Potomac Realty Investment Limited Partnership, the Company’s operating partnership (the Operating Partnership). The Company is the sole general partner of, and owns the preferred interest and approximately 95.7% of the common interest in the Operating Partnership. The Company’s portfolio consist a mix of single-tenant and multi-tenant office properties and business parks. The office properties are single-story and multi-story buildings that are primarily for office uses, and business parks consists of buildings with office features combined with some industrial property space. It also owns land that can support approximately 1.3 million square feet of additional development.