Exhibit 10.13
AGREEMENT
Agreement dated as of October 29, 1999 ("Agreement") among Xxxxx
Xxxxxxxxxx, an individual residing at 00 Xxxx 00xx Xxxxxx, Xxxxxxxxx 000, Xxx
Xxxx, Xxx Xxxx 00000 (the "Employee"), Reckson Service Industries, Inc., a
Delaware corporation ("RSI"), and VANTAS Incorporated, a Nevada corporation
("VANTAS"). Unless otherwise defined, capitalized terms used herein shall have
the meaning ascribed to such terms in the Stockholders' Agreement (as
hereinafter defined).
W I T N E S S E T H :
WHEREAS, the Employee is a stockholder of VANTAS and party to a
Fifth Amended and Restated Stockholders' Agreement dated as of July 29, 1999
(the "Stockholders' Agreement") by and among VANTAS and the other
Securityholders identified therein;
WHEREAS, the Employee is an "at will" employee of VANTAS;
WHEREAS, the Employee has requested that RSI and VANTAS enter into
this Agreement in order to encourage the Employee to maintain her equity
position in, and continue her employment with, VANTAS; and
WHEREAS, each of RSI and VANTAS is willing to enter into this
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and undertakings contained
in this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Ownership of VANTAS Equity Securities.
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(1) Schedule A to this Agreement sets forth the number of (i)
shares of Common Stock and Preferred Stock (the "Outstanding Shares"), (ii)
shares of Common Stock issuable under Warrants (the "Warrant Shares") and
(iii) shares of Common Stock issuable under vested and unvested Options
granted under the VANTAS 1996 Stock Option Plan beneficially owned (as such
term is defined under Rule 13d-3 promulgated under the Securities Exchange Act
of 1934, as amended) by the Employee as of October 14, 1999 (collectively, the
"Employee Securities"). The Employee hereby represents to RSI that the
information set forth on Schedule A to this Agreement is true, correct and
complete. The Employee hereby further represents and warrants to RSI that she
has not made any Transfer of any of her Shares, Warrants or Options to a
Permitted Transferee or otherwise.
(2) The Employee hereby acknowledges that in the event she
shall Transfer any of the Employee Securities to one or more Permitted
Transferees, the Employee Securities so Transferred shall continue to be
subject to the terms and conditions of this Agreement. The Employee hereby
covenants, for the benefit of RSI and VANTAS, that she shall cause each of her
Permitted Transferees to take all such action as shall be necessary in order
to enable the Employee to fully perform her obligations with respect to the
Employee Securities hereunder.
2. Exchange Transaction.
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(1) At the Exchange Closing (as hereinafter defined), RSI
shall issue the RSI Shares (as hereinafter defined) to the Employee in
exchange (the "Exchange Transaction") for the Exchange Securities (as
hereinafter defined). For purposes of this Agreement, the term "Exchange
Securities" means that number (which if not a whole number shall be rounded up
to the nearest whole number) of Option Shares (as hereinafter defined) equal
to the product obtained by multiplying (i) the number of shares of the
Employee Securities by (ii) thirty percent (30%); provided, however, that in
the event the number of Option Shares is insufficient to constitute all of the
Exchange Securities, the balance (but only the balance) of the Exchange
Securities shall be comprised of Outstanding Shares. For purposes of this
Agreement, the term "Option Shares" means shares of Common Stock issued as a
result of the exercise, at or prior to the effective time of the Exchange
Closing, of Options included within the Employee Securities. For purposes of
this Agreement, the term "RSI Shares" means that number (which if not a whole
number shall be rounded up to the nearest whole number) of shares of RSI's
common stock, $0.01 par value per share ("RSI Common Stock"), equal to the
quotient obtained by dividing (i) the Exchange Amount (as hereinafter defined)
by (ii) $19.00. For purposes of this Agreement, the term "Exchange Amount"
means thirty percent (30%) of the sum of the (i) product obtained by
multiplying (A) $8.00 by (B) the number of Outstanding Shares and Option
Shares and (ii) difference between the (A) product obtained by multiplying (1)
$8.00 by (2) the number of Warrant Shares and shares of Common Stock issuable
under Options included within the Employee Securities, if any, which have not
been exercised at or prior to the effective time of the Exchange Closing and
(B) aggregate exercise price of the Warrants included within the Employee
Securities and Options, if any, included within the Employee Securities which
have not been exercised at or prior to the effective time of the Exchange
Closing. The Employee hereby acknowledges that in order to receive the RSI
Shares at the Exchange Closing, she must first take all necessary action
(including, without limitation, delivery of the exercise price therefor and
all required exercise documentation to VANTAS) to exercise all or a portion of
her Options included within the Employee Securities at or prior to the
effective time of the Exchange Closing.
(2) Subject to the closing of the purchase of the equity
securities of VANTAS covered by the Transfer Offer (as such term is defined in
the Stockholders' Agreement) made by Xxxxxx, Xxxxxxx Strategic Partners Fund
L.P., Strategic Associates L.P. and Xxxxx X. Xxxxxxx, the closing (the
"Exchange Closing") for the Exchange Transaction shall be held at the offices
of Xxxxxxx, Xxxxxxxxx LLP, 0 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 11:00
a.m. (New York City time) on such date (which shall in no event be later than
December 31, 1999) as shall be designated in writing by RSI to the Employee.
At the Exchange Closing, RSI shall deliver to the Employee the stock
certificate evidencing the RSI Shares registered in the name of the Employee,
which shares shall have been duly authorized and validly issued, and shall be
fully paid and non-assessable and free of preemptive rights. At the Exchange
Closing, the Employee shall deliver to RSI the stock certificate(s) evidencing
the Exchange Securities, duly endorsed in blank or accompanied by stock powers
duly executed in blank in proper form for transfer and with all required stock
transfer stamps attached, free and clear of any title defect, objection,
security interest, pledge, encumbrance, mortgage, lien, charge, claim, option,
preferential arrangement or restriction of any kind, including, but not
limited to, any restriction on the use, voting, transfer, receipt of income or
other exercise of any attributes of ownership (collectively, "Liens"), other
than those Liens, if any, existing under the Stockholders' Agreement. At the
Exchange Closing, VANTAS, subject to (i) the proviso contained in Section 3(a)
hereof and (ii) Section 3(c) hereof, shall deliver to the Employee a check
payable to the order of the Employee in an amount equal to the Additional
Compensation (as hereinafter defined).
(3) In connection with each registration statement filed by
RSI under the Securities Act of 1933, as amended (the "Securities Act"), after
the date of the Exchange Closing registering a secondary offering ("Offering")
of equity securities of RSI, RSI shall use commercially reasonable efforts to
afford the Employee "piggy back" registration rights with respect to the RSI
Shares issued to the Employee pursuant to this Agreement. Notwithstanding the
foregoing, in connection with each such Offering effected pursuant to the
terms of a registration rights or underwriting agreement ("Offering
Agreement"), RSI shall not be obligated to provide the aforesaid "piggy back"
registration rights unless the Employee shall have entered into a registration
rights or underwriting agreement with RSI containing terms and conditions
similar to those contained in the Offering Agreement.
3. Additional Compensation.
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(1) In connection with the Employee's receipt of the Exchange
Securities at the Exchange Closing, VANTAS shall make a cash payment (the
"Additional Compensation") to the Employee, in the manner provided for in
Section 2(b) hereof, in an amount that after reduction for federal, state and
local personal income taxes owed by the Employee with respect to the
Additional Compensation is sufficient to pay the federal, state and local
personal income taxes of the Employee arising from her (i) exercise of the
Options underlying the Option Shares and (ii) receipt of the Exchange
Securities; provided, however, that VANTAS' obligation to pay the Additional
Compensation is expressly conditioned upon the Employee having demonstrated to
VANTAS' reasonable satisfaction (prior to the date of the Exchange Closing)
the basis for the calculation of the Additional Compensation. In the event
that the Employee shall receive a refund ("Refund") from any federal, state or
local taxing authority on account of the taxes associated with the Additional
Compensation, the Employee shall promptly remit the full amount of such Refund
to VANTAS and, following VANTAS' receipt thereof, the amount of the Additional
Compensation for all purposes of this Agreement shall be reduced by the amount
of such Refund.
(2) In the event that either the (i) employment of the
Employee is terminated for "cause" as such term is defined in the VANTAS 1999
Stock Option Plan or (ii) Employee voluntarily terminates her employment, in
either case, prior to the second anniversary of the date of the Exchange
Closing (each a "Repayment Event"), then the Employee shall be obligated to
repay the Additional Compensation to VANTAS within ninety (90) days after the
date of the Repayment Event. The Employee's obligation to repay the Additional
Compensation pursuant to this Section 3(b) shall be recourse only to the
VANTAS equity securities owned by the Employee and her Permitted Transferees
on the date of the occurrence of the Repayment Event and any proceeds realized
from the sale of any VANTAS equity securities pursuant to any long term
incentive program hereafter adopted by VANTAS, unless the Employee has
transferred such securities in violation of the Company's policy governing the
Employee's right to transfer such securities or in contravention of any
agreement between the Employee and the Company or RSI, in which event(s) the
Employee's obligation to repay the Additional Compensation shall be full
personal recourse against the Employee.
(3) To secure the prompt payment to VANTAS of the Additional
Compensation in the event that a Repayment Event shall occur, the Employee
shall, at the Exchange Closing, execute and deliver to VANTAS UCC-1 financing
statements and a pledge agreement, in each case in form and substance
satisfactory to VANTAS, pursuant to which the Employee shall pledge and
otherwise grant to VANTAS a security interest in all of her right, title and
interest in the Employee Securities (other than the Exchange Securities).
Concurrently with the Employee's execution and delivery of the aforesaid
pledge agreement, the Employee shall also deliver to VANTAS the certificates
and other instruments representing the Employee Securities (other than the
Exchange Securities) required to be pledged thereunder.
4. Accredited Investor. Each of the Employee and RSI
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represents and warrants to the other that she or it, as the case may be (i) is
an "accredited investor" (as that term is defined in Regulation D promulgated
under the Securities Act); (ii) has requested and received all information she
or it, as the case may be, considers necessary or appropriate for deciding
whether to engage in the Exchange Transaction; (iii) has such knowledge and
experience in financial or business matters that she or it, as the case may
be, is capable of evaluating the merits and risks of engaging in the Exchange
Transaction; (iv) has the ability to protect her or its, as the case may be,
own interests in the Exchange Transaction; and (v) is financially capable of
bearing the total loss of her or its, as the case may be, investment in any
securities acquired pursuant to the Exchange Transaction. Each of the Employee
and RSI shall not transfer or otherwise dispose of any of the securities
subject to the Exchange Transaction, except in accordance with applicable
federal and state securities laws or the rules and regulations promulgated
thereunder.
5. Adjustments. In the event of any change in the number of
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shares representing the shares of RSI Common Stock or any of the Employee
Securities by reason of any stock dividend, stock split, subdivision, merger,
recapitalization, consolidation, reorganization, combination, conversion or
exchange of shares, or any other change in the corporate or capital structure
of RSI or VANTAS (including, without limitation, the declaration or payment of
an extraordinary dividend of securities) which would have the effect of
increasing or decreasing the number of shares comprising the RSI Common Stock
or the Employee Securities, the number and kind of the shares subject to the
Exchange Transaction and the valuation and consideration payable in respect of
such shares shall be appropriately adjusted to restore to the parties hereto
their rights and privileges under this Agreement.
6. Specific Performance. The Employee recognizes and
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acknowledges that the market for the Shares of VANTAS is limited and that,
accordingly, in the event of a breach or default by the Employee of the terms
and conditions of this Agreement involving any of the Employee Securities, the
damages to RSI may be impossible to ascertain and RSI will not have an
adequate remedy at law. In the event of any such breach or default, RSI shall
be entitled to institute and prosecute proceedings in any court of competent
jurisdiction, either at law or in equity, to enforce the specific performance
of the terms and conditions of this Agreement, to enjoin further violations of
the provisions of this Agreement and/or to obtain damages. Such remedies shall
however be cumulative and not exclusive and shall be in addition to any other
remedies which RSI may have under this Agreement or at law.
7. Legend. Each certificate, instrument or agreement representing
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Employee Securities shall bear the following legend:
"THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND
CONDITIONS SET FORTH IN AN AGREEMENT DATED AS OF OCTOBER 29, 1999, A
COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER. NO TRANSFER OF SUCH
SECURITIES SHALL BE MADE ON THE BOOKS OF THE ISSUER UNLESS
ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF SUCH
AGREEMENT."
8. Covenants of VANTAS and RSI. VANTAS hereby covenants for
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the benefit of the Employee that it shall take all such necessary action to
adopt the long term incentive program (the "Program") substantially in the
form described on Schedule B to this Agreement no later than February 28,
2000. RSI hereby covenants for the benefit of the Employee that it shall
recommend to the individuals nominated by RSI and who are serving on the
VANTAS board of directors that they vote in favor of the adoption of the
Program.
9. Miscellaneous.
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(1) This Agreement contains, and is intended as, a complete
statement of all of the terms of the arrangements and understandings among the
parties with respect to the matters provided for herein, and supersedes any
previous agreements and understandings among the parties with respect to those
matters.
(2) This Agreement shall be governed by, and construed and
enforced in accordance with the laws of the State of New York without regard
to its principles of conflicts of law. All actions and proceedings arising out
of, or relating to, this Agreement shall be heard and determined in any state
or federal court sitting in New York, New York. In the event of any dispute as
to the terms of this Agreement, the prevailing party in any litigation or
other proceeding shall be entitled to its reasonable attorneys' fees, costs
and expenses in connection therewith.
(3) All notices and other communications under this Agreement
shall be in writing and shall be hand delivered, mailed by registered or
certified mail, return receipt requested (with a copy simultaneously by
ordinary mail), or recognized overnight delivery service to the parties at the
following addresses (or to such other address as a party may have specified by
notice given to the other parties pursuant to this provision):
If to RSI, to:
Reckson Service Industries, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Xxxxxxx X. Xxxxxxxx, Esq.
with a copy to:
Xxxxxxx, Xxxxxxxxx LLP
Xxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
If to VANTAS, to:
VANTAS Incorporated
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
If to the Employee, to the Employee's address
contained in the preamble of this Agreement.
Each such notice shall be deemed given at the time delivered by
hand, if personally delivered; five (5) business days after being deposited in
the mail, postage prepaid, if mailed; and the next business day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next
business day delivery.
(4) No provision of this Agreement may be amended or modified
except by an instrument or instruments in writing signed by the parties
hereto. The failure of a party at any time or times to require performance of
any provision hereof shall in no manner be deemed to affect the party's right
at a later time to enforce the same. No waiver by any party of the breach of
any term contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be or construed as a further or
continuing waiver of any such breach or of the breach of any other term or
provision of this Agreement.
(5) This Agreement shall be binding on, and shall inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns. The rights and obligations of any party hereto may not be assigned or
transferred without the prior written consent of the other parties hereto.
(6) From and after the date hereof, each of the parties hereto
agrees to execute and deliver such further documents and instruments and to do
such other acts and things any of them, as the case may be, may reasonably
request in order to effectuate the transactions contemplated by this
Agreement.
(7) Any word or term used in this Agreement in any form shall
be masculine, feminine, neuter, singular or plural, as proper reading
requires.
(8) Nothing contained in this Agreement shall confer upon the
Employee any right to continue to render services to VANTAS or affect the
right of VANTAS to terminate the employment of the Employee at any time with
or without cause, reason or justification. The Employee hereby acknowledges
for the benefit of VANTAS the "at will" nature of its employment with VANTAS.
(9) Time shall be of the essence with respect to all notices
required to be given, all payments and other deliveries required to be made
and all conditions required to be satisfied under this Agreement.
[REMAINDER OF PAGE INTENTIONALLY OMITTED; SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first written above.
VANTAS INCORPORATED
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: President,
Chief Executive Officer
RECKSON SERVICE INDUSTRIES, INC.
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Title: Executive Vice President
By: /s/ Xxxxx Xxxxxxxxxx
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Name: Xxxxx Xxxxxxxxxx
SCHEDULE A
Number of Shares of Common
Number of Shares of Number of Shares of Stock Issuable Under
Common Stock and Common Stock Issuable Options Granted Under the
Preferred Stock Under Warrants 1996 Stock Option Plan
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60,526 5,000 160,000
SCHEDULE B
LONG TERM INCENTIVE PROGRAM
FOR VANTAS EMPLOYEES
10. Loan Facility. The intent of this facility is to provide liquidity
for employees' needs while allowing them to maintain ownership of
VANTAS equity. The loans will be available for any purpose to all
employees. The loans will be administered by the compensation
committee or any subcommittee designated by the compensation
committee. The minimum loan will be $15,000. A maximum aggregate
loan amount shall be set each year by the compensation committee.
The loans will be full recourse (except for the employee's residence
and any assets in a living trust) and be secured by the employee's
equity (including vested options) in VANTAS and other securities
owned by the employee. The loans will not exceed 50% loan to value
at the time made and will be for a term of 3 years but payable in
full, in any event, 60 days after termination of employment for any
reason. If the value of the collateral falls such that the
collateral value is less than 120% of the dollar amount of the loan,
then the loan shall become immediately due and payable unless
additional securities are posted as collateral. Interest will accrue
at the applicable minimum federal rate and be paid with principal in
a balloon payment upon maturity. There will be no prepayment
penalty.
11. Phased Buyout. After an employee has been employed by the Company
for 12 consecutive months, commencing December 2000, the employee
can liquidate 25% of his vested equity holdings (the "Buyout
Amount") at the end of each calendar year (subject to repayment of
any outstanding loans for which this equity is collateral);
provided, however, an employee may not include within the Buyout
Amount any shares of VANTAS common stock acquired as a result of the
exercise of any option effected within the six-month period
immediately preceding the date on which the employee elects to
engage in a Buyout Amount liquidation. The employee must elect in
December, but can arrange to have this liquidation effectuated in
January. VANTAS will pay the fair market value for such shares as
determined by the last valuation made by the valuation committee.
Except as set forth below, upon termination of employment, VANTAS
will have no obligation to purchase the remaining vested equity in
the Company owned by the employee unless the employment was
terminated by the Company without cause (as defined under common law
or, in the case of an employee with an employment agreement, under
the terms of such employment agreement), in which case the employee
will be entitled, for 60 days thereafter, to sell all his vested
equity to the Company at fair market value as aforesaid.
Additionally, unless an employee's employment was terminated for
cause (as defined under common law or, in the case of an employee
with an employment agreement, under the terms of such employment
agreement), if the employee was employed by the Company for at least
36 consecutive months prior to termination of employment, then the
employee also will be entitled to sell all his vested equity to the
Company as aforesaid. Nothing contained herein shall limit the
rights of VANTAS to repurchase shares acquirable pursuant to the
exercise of options granted under the VANTAS 1999 Option Plan in
accordance with the terms of such plan. Subject to the employee's
right to sell VANTAS equity securities as provided above in this
Section 2, the Company will have the right, for a 6-month period
following the expiration of any period associated with the aforesaid
sale right of the employee, to purchase all of the employee's vested
equity securities at the fair market value as of the effective date
of termination of employment.
12. The Valuation Committee. The Compensation Committee will form a
valuation subcommittee, whose members initially will be: an
investment banker, an accountant, Xxxxx Xxxxx (who will remain a
member so long as he is a Director and the CEO of the Company),
Xxxxx Xxxxxxx and Xxxxx Xxxxxxxx. Every 6 months, the valuation
committee will meet and establish the fair market value of the
Company. The committee will establish fair market value by applying
a multiple to current EBITDA, which multiple will be based on
internal and external conditions at the time the committee meets. If
there is an equity sale to an arms length, bona fide third party,
the price paid would establish then current fair market value.
13. Section 5.4(e) Options and 5.4(e) Shares. Notwithstanding anything
to the contrary set forth in paragraphs 1 and 2 above, in the case
of the 793,075 options ("5.4(e) Options") that became vested in
accordance with Section 5.4(e) of the VANTAS 1996 Option Plan,
neither the net vested equity in the 5.4(e) Options nor the shares
("5.4(e) Shares") acquired by exercise of such options may be (a)
borrowed against under the loan facility, (b) included in the vested
equity holdings for calculation of the Buyout Amount, or (c) sold to
the Company upon termination of employment, except as follows: (i)
in December 2001, 50% of the 5.4(e) Shares will be subject to the
provisions of paragraphs 1 and 2 above; and (ii) in December 2002,
the remaining 50% of the 5.4(e) Shares will be subject to the
provisions of paragraphs 1 and 2 above.
14. Termination of Long Term Incentive Program. Upon a public offering
of VANTAS shares, the foregoing provisions shall all expire except
as to any loans outstanding at the time of such public offering and
the repayment of and security therefor.
