Exhibit 10.2
AMENDMENT, CONSENT AND WAIVER
AMENDMENT, CONSENT AND WAIVER (this "Amendment"), dated as of January
19, 2000, among VANTAS INCORPORATED, a corporation organized and existing
under the laws of the State of Nevada (the "Borrower"), the financial
institutions party to the Credit Agreement referred to below (the "Banks"),
and PARIBAS, as agent (the "Agent").
W I T N E S S E T H:
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WHEREAS, the Borrower, the Banks and the Agent are parties to an
Amended and Restated Credit Agreement, dated as of January 16, 1997, amended
and restated as of November 6, 1998, and further amended and restated as of
August 3, 1999 (as amended, modified and supplemented to the date hereof, the
"Credit Agreement");
WHEREAS, certain members of the management of the Borrower,
including Xxxxx X. Xxxxx, have exchanged (the "Exchange") shares of the
Borrower's capital stock for shares of common stock of Reckson Service
Industries, Inc. (d/b/a Frontline Capital Group, Inc.) ("Frontline");
WHEREAS, in connection with the Exchange, the Borrower has incurred
$10.9 million in cash compensation expense to compensate such members of
management for taxes incurred by them as a result of the exercise of options
surrendered in connection with the Exchange (the "Gross-Up") and $12,577,030
million in non-cash compensation expense (the "Non-Cash Expense");
WHEREAS, the Borrower funded the Gross-Up by issuing to Frontline
$10.9 million aggregate amount of shares of Series E Convertible Preferred
Stock of the Borrower (the "Series E Preferred Stock");
WHEREAS, the Borrower desires to use up to $4 million borrowed under
the Credit Agreement to make full recourse (subject to certain exceptions)
loans to its employees and to repurchase from its employees shares of its
capital stock under a long-term incentive program (the "Long-Term Incentive
Program);
WHEREAS, the Borrower desires to enter into an Agreement and Plan of
Merger by and among the Borrower and Frontline, on the one hand, and HQ Global
Workplaces, Inc. ("HQ") and Xxxx America Realty Corporation ("Xxxx") on the
other hand (the "Merger Agreement"), pursuant to which, inter alia, the
Borrower shall be merged with and into HQ and the separate existence of
Borrower shall cease (the "Merger");
WHEREAS, in connection with the Borrower entering into the Merger
Agreement, Xxxxx X. Xxxxx will resign as President and Chief Executive Officer
of the Borrower and will be appointed to the Merger transition team of the
Borrower;
WHEREAS, the Banks and the Agent wish to waive certain
provisions of the Credit Agreement to permit the Exchange, the Gross Up, the
Non-Cash Expense, the issuance of the shares of Series E Preferred Stock, the
Long-Term Incentive Program and the execution of the Merger Agreement and to
amend certain provisions of the Credit Agreement in connection with the
Long-Term Incentive Program and the resignation of Xxxxx X. Xxxxx;
NOW, THEREFORE, IT IS AGREED:
Section 1. Interpretation.
1.01 Defined Terms. In this Amendment, unless something in
the subject matter or context is inconsistent:
(i) terms defined in the description of the parties or
in the recitals have the meanings given to them in the description or
recitals, as applicable; and
(ii) all other capitalized terms have the respective
meanings given to them in the Credit Agreement.
1.02 References. All references to Sections, unless
otherwise specified, are to Sections of the Credit Agreement.
Section 2. Amendment.
2.01 Conditions Precedent to All Credit Events. Section
5.01 shall be amended by adding at the end thereof:
"and (iii) the Total Unutilized Revolving Loan Commitment
shall not be less than 50% of the balance of the amount that the Borrower
could be become obligated to spend on cash loans and repurchases of its
capital stock under its Long-Term Incentive Program and the Employee Loan
Program thereunder."
2.02 Change in Control. The definition of Change in Control
in Section 10.01 shall be deleted and replaced in its entirety with the
following definition:
"Change in Control" means the occurrence of one or more of
the following: (i) the Investor Group and their Affiliates shall cease to have
the power to elect a majority of the Board of Directors of the Borrower, (ii)
the Investor Group and their Affiliates shall cease to have record and
beneficial ownership of more than 50% of the voting stock of the Borrower on a
fully diluted basis, (iii) except for Interoffice Superholding LLC, Reckson
Office Centers LLC, RSI I/O Holdings, Inc., Vantas LLC, RSI or any of its
Affiliates (so long as there shall not otherwise exist a Change in Control
under clause (vii)) (a) if any Person, entity or "group" (within the meaning
of Section 13(d) and 14(d) of the Securities Exchange Act) shall become the
"beneficial owner" (as defined in Rules 13(d) and 13(d)-5 under the Exchange
Act, except that a Person shall be deemed to have "beneficial ownership" of
all securities that such Person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time) of 20% or more
of any outstanding class of capital stock of the Borrower having ordinary
voting power in the election of directors of the Borrower or (b) the directors
of the Borrower shall cease to consist of Continuing Directors (it being
understood that all directors of the Borrower on January 16, 2000 shall be
deemed to be Continuing Directors), (iv) the Borrower shall cease to own 100%
of the outstanding capital stock of each Subsidiary; (v) Xxxxx X. Xxxxx shall
cease to serve on the Board of Directors or shall cease to serve on the merger
transition team of the Borrower during the period prior to the merger of the
Borrower and HQ Global Workplaces, Inc. or the termination of the Agreement
and Plan of Merger by and among HQ Global Workplaces, Inc., CarrAmerica Realty
Corporation, the Borrower and RSI, (vi) (a) if at any time while RSI and its
Affiliates shall be the "beneficial owner" of 20% or more of the aggregate
voting power of all classes of capital stock of the Borrower having ordinary
voting power in the election of directors of the Borrower, any Person, entity
or "group" (other than Reckson Associates Realty Corp., any if its
Subsidiaries or any of its officers or directors on December 30, 1998 or any
of their Affiliates) shall become the "beneficial owner" of 20% or more of the
aggregate voting power of all classes of capital stock of RSI having ordinary
voting power in the election of directors of RSI or (b) the directors of RSI
shall cease to consist of Continuing Directors; provided, however, for
purposes of clauses (i) and (ii) above, the initial public offering of
Borrower Common Stock shall not constitute a Change in Control so long as
following such initial public offering (i) the Investor Group, their
Affiliates and the Persons who are members of the Board of Directors of the
Borrower on January 16, 2000 (A) continue to have record and beneficial
ownership of more than 50% of voting stock of the Borrower on a fully diluted
basis, and (B) shall continue to have the power to elect a majority of the
Board of Directors of the Borrower, and (ii) the Investor Group and their
Affiliates continue to have record and beneficial ownership of more than 45%
of the voting stock of the Borrower on a fully diluted basis."
Section 3. Waiver.
3.01 Consolidated EBITDA. (a) The undersigned hereby consent
to the Borrower excluding from its computation of Consolidated EBITDA one time
charges of $10.9 million for cash costs and expenses related to the Gross Up
(and accrued in accordance with generally accepted accounting principles) and
$12,577,030 million for non-cash costs and expenses related to the Non-Cash
Expense (and accrued in accordance with generally accepted accounting
principles), notwithstanding the definition of Consolidated EBITDA for all
purposes under the Credit Agreement. The foregoing consent shall not affect
any other merger or integration charges previously approved by the Required
Banks.
3.02 Series E Preferred Stock. The undersigned hereby
consent to the Borrower issuing 2,072,745 shares (plus any additional shares
issued or issuable in respect of any applicable preemptive rights) of Series E
Preferred Stock and utilizing the proceeds thereof in connection with the
Gross-Up, notwithstanding the following sections of the Credit Agreement which
are hereby waived with respect to the issuance of such shares of Series E
Preferred Stock:
(a) Section 3.02(A)(e)(i) (Mandatory Repayments);
(b) Section 8.07 (Transactions with Affiliates); and
(c) Section 8.15(b) (Limitation on Issuance of Capital Stock);
provided, that the issuance of such shares of Series E Preferred Stock is on
the same terms and conditions as the issuance of shares of Series E Preferred
Stock in the third quarter of 1999.
3.03 Long-Term Incentive Program. The undersigned hereby
consent to the Borrower (a) spending up to $2 million per quarter and $8
million total under the Long-Term Incentive Program (i) to make full recourse
(subject to certain exceptions) cash loans to the Borrower's employees and
(ii) to repurchase shares of the Borrower's capital stock from employees of
the Borrower and (b) making non-cash loans to its employees to buy shares of
the Borrower's capital stock, in each case, notwithstanding the following
sections of the Credit Agreement which are hereby waived with respect to the
Long-Term Incentive Program:
(a) Section 3.02(A)(e)(i) (Mandatory Repayments), to the
extent that such section would otherwise require the Borrower to use the
proceeds of equity issuances under the Long-Term Incentive Program to make
repayments under the Credit Agreement;
(b) Section 8.03 (Dividends), to the extent that the
repurchase of the Borrower's capital stock under the Long-Term Incentive
Program is a dividend;
(c) Section 8.06 (Advances, Investments and Loans);
(d) Section 8.07 (Transactions with Affiliates);
(e) Section 8.13(iv) (Limitation on Modification of Certain
Agreements), to the extent that the Long-Term Incentive Program is a new
agreement with respect to the Borrower's equity interests; and
(f) Section 8.13(vi) (Limitation on Modification of Certain
Agreements), to the extent that the Long-Term Incentive Program is a new
Employee Benefit Plan;
provided, that: (i) the Borrower shall pledge to the Agent all promissory
notes evidencing loans under the Long-Term Incentive Program, (ii) the
Borrower shall pledge or assign to the Agent all of its security interest in
collateral for such loans, (iii) the Borrower shall not issue any Borrower
Common Stock, make any loans to employees or repurchase any shares of its
capital stock if a Default or Event of Default occurs, (iv) cash loans and
repurchases shall be funded not more than 50% from Revolving Loans and not
less than 50% from issuances of Borrower Common Stock and (v) all actions of
the Borrower in connection with the Long-Term Incentive Plan shall be in
accordance with the terms of the Long-Term Incentive Program and the Employee
Loan Program thereunder attached hereto as Exhibit A.
Notwithstanding anything to the contrary contained herein or
in the Credit Agreement and without limiting the proviso set forth in the last
sentence of Section 3.02(A)(e), the undersigned hereby waive the provisions of
Section 3.02(A)(e)(i) with respect to the receipt by the Borrower of
$2,917,385 in respect of the exercise of options and warrants of the Company
and agree that such amounts, plus any additional amounts received by the
Borrower in respect of additional exercises of options and warrants by the
Company's officers, employees, directors and former officers, employees and
directors, may be applied by Borrower to satisfy its obligations hereunder to
fund the cash portion of the Employee Loan Plan and Long Term Incentive
Program through the issuance of additional equity.
3.04 Merger Agreement; Letter of Credit. (a) Notwithstanding
anything to the contrary contained in Section 8.02, the undersigned hereby
consent to the Borrower entering into the Merger Agreement (but do not consent
to the Merger); provided, that (i) the Merger Agreement shall explicitly
provide that (A) the Borrower has not obtained the requisite consents under
the Credit Agreement to the Merger and (B) in the event the Borrower does not
consummate the Merger because it is unable to obtain the requisite consents
under the Credit Agreement to effect the Merger and is unable to repay all
Obligations owing pursuant to the Credit Documents, the Borrower has the right
to terminate the Merger Agreement and all related documents and upon such
termination the aggregate liability of the Borrower and its Subsidiaries under
the Merger Agreement and all related documents shall be limited to no more
than $35 million; provided, that the only security or other credit support
provided by the Borrower or any of its Subsidiaries for such liability shall
be the Letter of Credit (as defined in Section 3.04(b) of this Amendment) or
the Initial Cash Deposit (as defined in the Merger Agreement) of $35 million
made by Frontline pursuant to the Merger Agreement; and (ii) the Merger is
consummated on or before July 31, 2000.
(b) Notwithstanding anything to the contrary contained in
Section 8.05, the undersigned hereby consent to the Borrower incurring a
reimbursement obligation with respect to the Initial Cash Deposit or a letter
of credit in the amount of not more than $35 million in support of the
Borrower's obligations under the Merger Agreement (the "Letter of Credit");
provided that (i) the reimbursement obligation of the Borrower with respect to
the Initial Cash Deposit shall be unsecured except that Frontline shall be
entitled to be secured solely by an equity purchase agreement, subscription
agreement or similar agreement from Frontline to the Borrower pursuant to
which Frontline agrees to purchase common stock or preferred stock of the
Borrower so long as any such common or preferred stock has the same terms and
conditions as any common or preferred stock outstanding on the date hereof and
so long as such capital stock has no mandatory cash pay provisions or
mandatory prepayment or redemption provisions of any type while any
Obligations under the Credit Agreement or any refinancings thereof remain
outstanding, (ii) the reimbursement obligation of the Borrower with respect to
the Letter of Credit shall be unsecured except that the issuer of the Letter
of Credit shall be entitled to be secured solely by a pledge of up to
15,840,469 shares of the Borrower owned by Frontline and (iii) the Letter of
Credit and any reimbursement agreement, equity purchase agreement,
subscription agreement, pledge agreement or similar agreement related to the
Letter of Credit or the Initial Cash Deposit shall be in form and substance
reasonably satisfactory to the Agent. Any proceeds received from the issuance
of such stock in accordance with this paragraph shall not be required to be
used to mandatorily repay Loans under Section 3.02(A)(e)(i) of the Credit
Agreement and the issuance of such stock shall not breach Section 8.07 or
8.15(b) of the Credit Agreement.
Section 4. General
4.01 Confirmation. In order to induce the Agent and the
Banks to enter into this Amendment, the Borrower hereby represents and
warrants that on the Amendment Effective Date, both before and after giving
effect to this Amendment and the transactions contemplated hereby, (i) no
Default or Event of Default shall exist, (ii) all of the representations and
warranties contained in the Credit Agreement shall be true and correct in all
material respects, with the same effect as though such representations and
warranties had been made on and as of the Amendment Effective Date and (iii)
the Merger Agreement and related documents conform to the requirements of
Section 3.04.
4.02 Amendment Effective Date. This Amendment shall become
effective on the date (the "Amendment Effective Date") when each of the
following conditions have been met:
(i) The Borrower and the Required Banks shall have executed
a copy hereof (whether the same or different copies) and shall have delivered
the same to the Agent and
(ii) The Borrower shall have paid to the Agent all cost and
expenses (including reasonable legal fees and expenses) then due and payable.
4.03 Conflicts. This Amendment is limited as specified and
shall not constitute a modification, acceptance or waiver of any other
provision of the Credit Agreement.
4.04 Counterpart. This Amendment may be executed in any
number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts when executed and delivered shall be
an original, but all of which shall together constitute one and the same
instrument. A complete set of counterparts shall be lodged with the Borrower
and the Agent.
4.05 Governing Law. THIS CONSENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Amendment as of the date first above
written.
VANTAS INCORPORATED
(formerly known as Alliance National
Incorporated)
By: /s/ Xxxxx Xxxxxx
----------------------------
Name: Xxxxx Xxxxxx
Title: EVP and COO
PARIBAS, Individually and as Agent
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
By: /s/ Xxxxxx X. Xxxxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Director/Merchant Banking
Group
FIRST SOURCE FINANCIAL LLP
By: First Source Financial, Inc.,
its Agent/Manager
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
IBJ WHITEHALL BANK & TRUST
COMPANY
(formerly, IBJ Xxxxxxxx Bank & Trust
Company)
By:
---------------------------
Name:
Title:
PILGRIM PRIME RATE TRUST
By: Pilgrim Investments, Inc.,
as its investment manager
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
PARIBAS CAPITAL FUNDING LLC
By:_________________________
Name:
Title:
EUROPEAN AMERICAN BANK
By:
---------------------
Name:
Title:
BHF (USA) CAPITAL CORPORATION
By: /s/ Xxxxxxx Xxxxxxxxx
----------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Assistant Vice President
By: /s/ Xxxxx Xx
-----------------------------
Name: Xxxxx Xx
Title: Associate
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE INC.
By:____________________
Name:
Title:
By:_____________________
Name:
Title:
XXXXXX-FINANCIAL, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
BALANCED HIGH-YIELD FUND II
LIMITED
By: BHF (USA) Capital Corporation,
as attorney-in-fact
By: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Assistant Vice President
By: /s/ Xxxxx Xx
-----------------------------
Name: Xxxxx Xx
Title: Associate
SRF TRADING, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
KZH ING-2 LLC
By: /s/ Xxxxx Xxxx
----------------------
Name: Xxxxx Xxxx
Title: Authorized Agent
THE ING CAPITAL SENIOR SECURED HIGH
INCOME FUND, L.P.
By: ING Capital Advisors LLC
as Investment Advisor
By: /s/ Xxxxxxx X. Xxxxxx
------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
PACIFICA PARTNERS I, L.P.
By: Imperial Credit Management, Inc.
as Investment Manager
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
XXXXX XXX & XXXXXXX CLO I, LTD.
By: Xxxxx Xxx & Farnham Incorporated
as Portfolio Manager
By: /s/ Xxxxx X. Xxxxxxx
-------------------------
--------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
