EMPLOYEE LEASE AND TRANSITION SERVICES AGREEMENT
Exhibit 10.10
This
EMPLOYEE LEASE AND TRANSITION SERVICES AGREEMENT (this
“Agreement”), made as of
August ___, 2005, by and among XXXXXXX & XXXXXX, INC., a Delaware corporation (the
“Seller”), MIDLANTIC OFFICE TRUST, INC., a Maryland corporation (the “Parent”) and
MIDLANTIC PARTNERSHIP, LP, a Delaware limited partnership (the “Partnership” and together
with Parent, the “Buyers”), recites and provides as follows:
RECITALS
A. Seller, or its affiliates, and Partnership are parties to certain Purchase and Sale
Agreements, each dated as of July 21, 2005, as filed as exhibits to Parent’s registration statement
on Form S-11 filed with the Securities and Exchange Commission, pursuant to which Seller or its
affiliates will sell to Partnership various commercial office properties (collectively, the
“Purchased Assets”) located in the Mid-Atlantic Region (as hereinafter defined) for an
aggregate purchase price of approximately $196.1 million (the “Purchase Agreements”).
B. Seller and Partnership are also parties to that certain Assignment and Assumption
Agreement, dated as of July 21, 2005, as filed as an exhibit to Parent’s registration statement on
Form S-11 filed with the Securities and Exchange Commission, pursuant to which Seller assigns to
Partnership its rights and interests (the “Purchase Rights”) in a purchase and sale
agreement to acquire a commercial office property located in the Mid-Atlantic Region (the
“Assignment Agreement”).
C. Pursuant to the terms of the Purchase Agreements and the Assignment Agreement, on the date
hereof, Seller or its affiliates have agreed to sell the Purchased Assets and assign the Purchase
Rights to Partnership.
D. Pursuant to the terms of that certain License, Noncompetition, Option and Referral
Agreement, dated as of May 12, 2005 (the “License Agreement”), Seller, among other things,
licenses to Buyers and their subsidiaries certain business processes that they will utilize in
their operations.
E. In order to assist Buyers with the management of the Purchased Assets and the property to
be acquired by the Purchase Rights (collectively, the “Assets and Liabilities”), and to
otherwise assist Buyers with respect to the operation of their business, Buyers desire that Seller
provides, and Seller is willing to provide, certain transition services to Buyers and their
subsidiaries, including the services of certain of Seller’s employees, in each case upon the terms
and subject to the conditions set forth in this Agreement.
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. Employee Services
(a) Leased Employees; Lease Period. During the Lease Period (as hereinafter defined)
and subject to the provisions of this Agreement, Seller agrees to provide to Buyers and their
subsidiaries and Buyers agree to purchase from Seller the services (the “Employee
Services”) of Seller’s employees set forth on Schedule A hereto (individually a
“Scheduled Employee”, and collectively, the “Scheduled Employees”) on an as needed
basis for the period commencing on the date of the closing of Parent’s initial public offering (the
“Closing Date”) and ending on the earlier of (i) the nine-month anniversary of the Closing
Date or (ii) on the effective date of termination by Buyers of the services of the last remaining
Scheduled Employee (the “Lease Period”). Seller acknowledges and agrees that Buyers may
terminate, for any reason, the right to obtain services from any individual Scheduled Employee upon
providing at least five (5) days advance written notice to Seller.
(b) Employee Services. Seller shall use commercially reasonable efforts to cause each
Scheduled Employee to provide Buyers and their subsidiaries with such services as Buyers may
reasonably request during the Lease Period in accordance with the terms of this Agreement. During
the Lease Period, unless otherwise agreed by the parties hereto, services shall be performed by
each Scheduled Employee at the offices of Seller, or such other place as Buyers may reasonably
request within the Mid-Atlantic region. During the Lease Period, the services to be performed by
the Scheduled Employees for Buyers and their subsidiaries shall generally be the same types of
services provided by such Scheduled Employees to Seller prior to the Closing Date, including but
not limited to, the Transition Services (as hereinafter defined), and subject to the same terms and
conditions of employment with Seller that existed immediately prior to the Closing Date. Seller
shall be solely responsible for performance of the services by the Scheduled Employees hereunder,
including day-to-day operations and the supervision of, and control over, the Scheduled Employees.
No act or direction of Buyers shall be deemed to be the exercise of supervision of, or control
over, Seller’s and the Scheduled Employees’ performance of the services contemplated hereunder.
(c) Payment and Employment Policies Seller shall have sole responsibility for (a)
establishment and payment of all wages, salaries and other forms of compensation to and for the
Scheduled Employees, (b) payment of all payroll, Social Security, unemployment and other taxes
related to the Scheduled Employees, (c) establishment of all personnel policies and employee
benefit programs for the Scheduled Employees, (d) severance benefits, if any, for the Scheduled
Employees and (e) maintaining insurance coverage for the Scheduled Employees as required by this
Agreement. The hourly compensation (calculated based on a 40 hour work week for salaried
employees) paid by Seller to each Scheduled Employee is set forth on Schedule A hereto and
Seller represents and warrants that such hourly compensation has not been increased outside the
ordinary course of business within one year from the date hereof. Buyers payment obligations to
Seller as set forth in Section 1(g) hereof shall not be increased as a result of any increase in
compensation for any Scheduled Employee during the Lease Period or otherwise.
(d) Cessation or Exchange of Scheduled Employee Seller shall use commercially
reasonable efforts to keep each of the Scheduled Employees as its employee during the shorter of
the Lease Period or such time as Buyers terminate utilization of the services
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of an applicable
Scheduled Employee. In the event that any Scheduled Employee ceases to be an employee of Seller
for any reason during such period of time, such individual shall immediately and automatically
cease to be a Scheduled Employee for purposes of Sections 1(a) and 1(b) and Seller shall use
commercially reasonable efforts to promptly provide Buyers with the services of another individual
at a similar compensation rate that is reasonably satisfactory to Buyers. Furthermore, Seller
shall have the right to substitute the services of another individual for any of the Scheduled
Employees provided that such substituted individual is at a similar compensation rate and is
reasonably satisfactory to Buyers. Upon the change of any Scheduled Employee in accordance with
the terms hereof, Schedule A shall be automatically updated to reflect such change.
(e) Compliance with Law Buyers and Seller represent and warrant to the other that
each is currently in substantial compliance with all applicable federal, state and local laws,
rules and regulations, including but not limited to Title VII, Americans with Disabilities Act, Age
Discrimination in Employment Act, Family and Medical Leave Act and Fair Labor Standards Act
relating to the employment of its employees. In addition, Buyers and Seller each agree that it
will continue to be in such substantial compliance during the Lease Period and Services Period (as
hereinafter defined).
(f) Insurance. Seller shall provide workmen’s compensation insurance coverage for its
Scheduled Employees engaged in performing services on behalf of Buyers under this Agreement in such
amounts as is consistent with its past practice. Seller shall provide Buyers with evidence of its
compliance with this Section upon written request
(g) Service Costs. For each Scheduled Employee, Buyers shall pay Seller a service
cost in an amount equal to two (2) times the Scheduled Employee’s normal hourly rate, as set forth
in Schedule A, for each hour the Scheduled Employee performs services on behalf of Buyers
during the Lease Period (the “Service Costs”). The parties hereto acknowledge and agree
that the maximum Service Costs payable by Buyers to Seller during any calendar month for all
Scheduled Employees shall not exceed $50,000.00 per month (pro-rated for any partial month). In
addition to the Service Costs, Buyers will reimburse Seller for any amounts paid or funded by
Seller to the applicable Scheduled Employee for out-of-pocket expenses incurred by such Scheduled
Employee (such amounts to be approved in advance, in writing by Buyers, prior to any payment to any
Scheduled Employee) (the “Reimburseable Expenses”), including but not limited to business
or travel expenses, or other similar costs in respect of such Scheduled Employee.
(h) Status. Nothing contained in this Agreement shall authorize or empower Seller or
any Scheduled Employee to act as the agent of Buyers in any manner whatsoever and Seller shall not,
and shall cause the Scheduled Employees to not, act as the agent of Buyers. Furthermore, nothing
contained in this Agreement shall authorize or empower Seller or any Scheduled Employee to assume
or create any obligation, responsibility or agency relationship, express or implied, on behalf of,
or in the name of Buyers, unless the same is approved in
advance and in writing by Buyers. The Scheduled Employees shall perform the services to
Buyers and any of their subsidiaries as independent contractors.
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(i) Invoicing and Settlement of Service Costs. Within thirty (30) days of the
presentation of an applicable statement supported by payroll data, time sheets, original receipts
and other reasonably satisfactory documentation, which presentation shall be provided to Buyers by
Seller in writing reasonably promptly after the end of each calendar month, Buyers shall reimburse
Seller for its Service Costs and Reimbursable Expenses for the statement period. If requested,
Buyers shall reimburse Seller by wire transfer to a bank account designated for such purpose.
2. Transition Services
(a) Transition Services; Services Period. The services to be rendered by Seller under
this Agreement are set forth on Schedule B attached hereto and made a part hereof and are
hereinafter referred to as the “Transition Services.” Seller agrees to provide to Buyers
and any of their subsidiaries the Transition Services commencing on the Closing Date and ending on
the earlier of (i) the nine-month anniversary of the Closing Date or (ii) on the effective date of
termination by Buyers of the particular Transition Services (the “Services Period”).
Buyers may terminate (in whole or in part) one or more of the categories of Transition Services
during the Services Period of this Agreement upon five (5) days prior written notice to Seller,
which notice shall specify the service(s) to be terminated and, if desired, the date of
termination.
(b) Fees. Seller agrees that for so long as the Service Costs payable by Buyers
pursuant to and in accordance with Section 1(g) hereof are at least $20,000 per month and at least
50% of the Employee Services involve the provision of Transition Services, that Seller shall
provide Buyers and their subsidiaries with the Transition Services without extra fee or expense to
Buyers or their subsidiaries. In the event, however, that the Service Costs payable by Buyers
pursuant to and in accordance with Section 1(g) hereof are less than $20,000 per month, then Buyers
shall pay an additional amount to Seller in consideration for the provision of the Transition
Services in the amounts set forth on Schedule B. Notwithstanding the foregoing, the
parties hereto acknowledge and agree that the maximum amount payable by Buyers to Seller in any
given calendar month for Service Costs and Transition Services combined shall not exceed $50,000
per month (pro-rated for any partial month). Should Buyers discontinue (in whole or in part) one
or more of the Transition Services during the Services Period pursuant to Section 2(a) or 3(a)
hereof, the applicable fee, if any, shall be reduced accordingly. Invoicing and settlement of
applicable fees, if any, shall be handled in the same manner as is set forth in Section 1(i)
hereof.
(c) Purpose and Timing of Services. The Transition Services shall be provided by
Seller to Buyers and their subsidiaries during the Services Period for the purpose of operating the
businesses of Buyers and their subsidiaries and Seller shall use commercially reasonable efforts to
promptly make such Transition Services available to Buyers and their subsidiaries at such times as
Buyers may reasonably request.
(d) Access to Resources. During the Services Period, Seller shall provide Buyers and
their subsidiaries or any representative thereof access to the resources utilized by Seller in
providing the Transition Services during normal business hours.
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(e) Independent Contractor. The Transition Services hereunder shall be rendered by
Seller to Buyers and their subsidiaries as an independent contractor.
3. Miscellaneous
(a) Standard of Service. Seller shall provide the Employee Services and Transition
Services in accordance with at least as high business standards as it performs similar services for
its own behalf and on behalf of Seller’s subsidiaries or affiliates.
(b) Facilities. During the Lease Period and Services Period and without further cost
to Buyers or their subsidiaries, Seller shall provide Buyers and their subsidiaries with access to,
and the use of, office space, computers, software, phone service, furniture, storage space,
utilities, restrooms, parking and such other facilities and accommodations as Buyers or their
subsidiaries may reasonably request. Buyers shall use commercially reasonable efforts to utilize
such resources in a manner that does not materially disrupt Seller’s business or operations.
Seller shall be under no obligation to expand its existing office space, storage space, restroom
facilities, parking privileges or utility service or to purchase additional computers, software,
phone service or furniture in order to accommodate Buyers’ requests.
(c) Termination. In addition to the termination rights provided in Sections 1(a) and
2(a) hereof, this Agreement may be terminated upon 5 days written notice from Buyers to Seller,
otherwise, this Agreement shall terminate upon the end of both the Lease Period and Services
Period. Termination of this Agreement for any reason shall not release any party from any
obligation which may have accrued prior to termination and shall not preclude any other party from
exercising any remedies it may have at law or in equity.
(d) Occurrence of Force Majeure. Seller shall not be liable to Buyers for any
interruption of service, delay or failure to perform under this Agreement when such interruption,
delay or failure results from causes beyond Seller’s reasonable control as the result of: (a) acts
of terrorism, war or other hostilities; or (b) fire, flood, earthquake, tornado, hurricane or other
natural disasters. In such event, the obligations hereunder of Seller shall be postponed for such
time as its performance is suspended or delayed on account thereof. Upon learning of the
occurrence of an event of force majeure, Seller shall promptly notify Buyers in writing. Following
a force majeure event, Seller shall use reasonable best efforts to resume its performance with the
least possible delay.
(e) Indemnification. Seller agrees to indemnify, defend and hold harmless Buyers and
their directors, officers, agents, employees and respective subsidiaries and affiliates from and
against any and all claims, demands, suits, proceedings, judgments, losses, liabilities, damages,
costs, fees, charges and expenses (including, but not limited to, reasonable attorneys’ fees)
(collectively, the “Losses”) to which such parties may become subject, insofar as such
Losses arise out of or are based upon either (i) Seller’s breach of a representation or warranty
contained herein or failure to perform its obligations hereunder and (ii) any acts, errors or
omissions of the Scheduled Employees or in the provision of the Transition Services during the
Lease Period or Services Period, as the case may be, that constitute gross negligence or willful
misconduct.
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(f) Access to Records. Seller also agrees to allow Buyers and their agents full and
complete access to all business records and files relating to the Scheduled Employees or the
Transition Services, as the case may be, upon reasonable advance notice during normal working hours
at any location where such records are stored, and Buyers shall have the right, at their own
expense, to make copies of any such records and files, provided however, that any such access or
copying shall be had or done in a manner so as not to materially interfere with the normal conduct
of business of Seller. Notwithstanding the foregoing, Seller shall not be obligated to maintain
such records and files for a period in excess of 5 years after the end of the later of the Lease
Period or Services Period.
(g) Relationship of the Parties. Nothing in this Agreement shall constitute or be
deemed to constitute a partnership or joint venture between the parties hereto or constitute or be
deemed to constitute any party as an agent or employee of the other party for any purpose
whatsoever and neither party shall have authority or power to bind the other or to contract in the
name of, or create a liability against, the other in any way or for any purpose.
(h) Amendment. This Agreement may not be amended or modified except by an instrument
in writing signed by all of the parties hereto.
(i) Waiver. The parties may waive compliance with any of the covenants, agreements or
conditions contained herein; provided that unless otherwise expressly set forth herein, any
agreement on the part of any party to any such waiver shall be valid only if set forth on an
instrument in writing signed on behalf of such party and any waiver shall only act with respect to
the specific matter waived and shall not be deemed a continuing waiver.
(j) Entire Agreement. This Agreement and the documents referred to herein or therein,
together with the Purchase Agreements, the Assignment Agreement and the License Agreement
constitute the entire agreement between the parties pertaining to the subject matter hereof, and
supersede all prior and contemporaneous agreements, understandings, negotiations and discussions of
the parties, whether oral or written, and there are no other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth herein and therein.
(k) Expenses. Each of the parties hereto shall pay their own fees and expenses
incident to the negotiation, preparation and performance of this Agreement.
(l) Governing Law. This Agreement shall be construed and interpreted according to the
laws of the State of Delaware without regard to the conflicts of law rules thereof.
(m) Assignment. This Agreement and each party’s respective rights and obligations
hereunder may not be assigned at any time except as expressly set forth herein without the prior
written consent of the other party hereto and any such attempt shall be null and void. The parties
acknowledge that Seller may (a) assign the performance of any services to be
provided by such party under this Agreement to one or more unrelated third parties who, now or
in the future, provide similar services, and (b) delegate the performance of any services to be
provided by such party under this Agreement to one or more of its affiliates that normally
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performs
such services; provided, however, that notwithstanding the foregoing, Seller shall remain fully
responsible for compliance with the terms of this Agreement the same as if such assignment,
delegation or designation were not effected.
(n) Binding Effect. This Agreement shall be binding upon each of the parties hereto
as well as their successors and permitted assigns.
(o) Notices. All communications, notices and disclosures required or permitted by
this Agreement shall be in writing and shall be deemed to have been given when delivered personally
or by messenger or by overnight delivery service, or when mailed by registered or certified United
States mail, postage prepaid, return receipt requested, or when received via facsimile, in all
cases addressed to the person for whom it is intended at his address set forth below or to such
other address as a party shall have designated by notice in writing to the other party in the
manner provided by this Section:
| If to Seller: | Xxxxxxx & Xxxxxx | |||
| Attn: Xxxxxx X. Xxxxxxxxx, Chief | ||||
| Operating Officer | ||||
| 00000 Xxxxxxxxx Xxxx, Xxxxx 000 | ||||
| Xxxxxxxxx, Xxxxxxxx 00000 | ||||
| Telecopy: 000-000-0000 | ||||
| In each case, with a copy to: | Shaiman Xxxxxxx Xxxxxxx Xxxxx & | |||
| Stutuman, LLP | ||||
| Attn: S. Xxxxxxxx Xxxxxxx | ||||
| 0000 Xxxxxx Xxxxxx, 00xx Xxxxx | ||||
| Xxxxxxxxxxxx, XX 00000 | ||||
| Telecopy: 000-000-0000 | ||||
| If to Buyers: | Midlantic Office Trust, Inc. | |||
| Attn: Xxxxxx X. Xxxxxxx, Chairman, Chief | ||||
| Executive Officer and President | ||||
| 00000 Xxxxxxxxx Xxxx, Xxxxx 000 | ||||
| Xxxxxxxxx, Xxxxxxxx 00000 | ||||
| Telecopy: 000-000-0000 | ||||
| In each case, with a copy to: | Hunton & Xxxxxxxx LLP | |||
| Attn: Xxxxxx XxXxx | ||||
| Riverfront Plaza, East Xxxxxx | ||||
| 000 X. Xxxx Xxxxxx | ||||
| Xxxxxxxx, Xxxxxxxx 00000 | ||||
| Telecopy: 000-000-0000 |
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(p) Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but such counterparts shall together constitute but one and the
same Agreement.
(q) Headings. The Section headings in this Agreement are inserted for convenience of
reference only and shall not constitute a part hereof.
(r) Specific Performance. In the event of a breach or threatened breach by Seller of
the provisions of this Agreement, Buyers shall be entitled to specific performance, and any other
legal and equitable relief to which they may be entitled (including monetary damages which Buyers
may incur as a result of such breach or threatened breach). Buyers may pursue any remedy
available, including declaratory relief, concurrently or consecutively in any order, and the
pursuit of any one remedy at any time will not be deemed an election of remedies or waiver of the
right to pursue any other remedy.
(s) Interpretation. Each party hereto has been represented by counsel and has had an
opportunity to negotiate the provisions hereof. Therefore, this Agreement shall not be read in a
light more favorable to one party rather than another by reason of the drafting of this Agreement
or otherwise. For purposes of this Agreement, the terms “Seller shall” or “Buyers shall” used
herein shall also mean “Seller shall cause” or “Buyers shall cause”, as the case may be, the
particular action to be performed.
(t) Severability. If any provision, clause or part of this Agreement, or the
application thereof under certain circumstances, is held invalid, the remainder of this Agreement,
or the application of such provision, clause or part under other circumstances, shall not be
affected thereby and the provision held invalid shall be re-construed to give such provision the
maximum effect as permitted under applicable law.
(u) No Reliance. No third party other than successors and permitted assigns of the
parties hereto is entitled to rely on any of the agreements contained in this Agreement, and the
parties hereto assume no liability to any third party because of any reliance on the agreements
contained herein.
[Signature Page Follows]
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This Agreement has been duly executed and delivered by each of the undersigned as of the date
first set forth above.
| XXXXXXX & XXXXXX, INC., a Delaware corporation | ||||
| By: | ||||
| Name: Xxxxxx X. Xxxxxxxxx | ||||
| Title: Chief Operating Officer | ||||
| MIDLANTIC OFFICE TRUST, INC., a Maryland corporation | ||||
| By: | ||||
| Name: Xxxxxx X. Xxxxxxx | ||||
| Title: Chairman, President and Chief Executive Officer | ||||
| MIDLANTIC PARTNERSHIP, LP, a Delaware limited partnership |
||||
| By: MIDLANTIC OFFICE PROPERTIES, LLC, a Delaware | ||||
| limited liability company, as the General Partner | ||||
| By: | ||||
| Name: Xxxxxx X. Xxxxxxx | ||||
| Title: Chief Executive Officer, President, Secretary and Treasurer | ||||
Signature Page to Employee Lease and Transition Services Agreement
