RECKSON SERVICES INDUSTRIES INC, DEF 14A, 1999-04-30

RECKSON SERVICES INDUSTRIES INC
DEF 14A, 1999-04-30
REAL ESTATE AGENTS & MANAGERS (FOR OTHERS)

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<PAGE>
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant /X/
Filed by a Party other than the Registrant / /

Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12

RECKSON SERVICE INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
RECKSON SERVICE INDUSTRIES, INC.

10 EAST 50(TH) STREET
NEW YORK, NEW YORK 10022

------------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON JUNE 24, 1999

------------------------

NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders (the
"Annual Meeting") of Reckson Service Industries, Inc. (the "Company" or "RSI")
will be held on June 24, 1999 at 9:30 a.m. at 395 North Service Road, Melville,
New York, for the following purposes:

1. To elect two Class I directors of the Company to serve until the 2002
Annual Meeting of Stockholders and until their respective successors are
duly elected and qualified;

2. To ratify the selection of Ernst & Young LLP as the independent auditors
of the Company for the fiscal year ending December 31, 1999;

3. To approve the 1999 Stock Option Plan; and

4. To consider and act upon any other matters that may properly be brought
before the Annual Meeting and at any adjournments or postponements
thereof.

Any action may be taken on the foregoing matters at the Annual Meeting on
the date specified above, or on any date or dates to which, by original or later
adjournment, the Annual Meeting may be adjourned or to which the Annual Meeting
may be postponed.

The Board of Directors has fixed the close of business on April 19, 1999 as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and at any adjournments or postponements thereof.
Only stockholders of record of the Company's common stock, $.01 par value per
share, at the close of business on that date will be entitled to notice of and
to vote at the Annual Meeting and at any adjournments or postponements thereof.

You are requested to fill in and sign the enclosed form of proxy, which is
being solicited by the Board of Directors, and to mail it promptly in the
enclosed postage-prepaid envelope. Any proxy may be revoked by delivery of a
later dated proxy. Stockholders of record who attend the Annual Meeting may vote
in person, even if they have previously delivered a signed proxy.

BY ORDER OF THE BOARD OF DIRECTORS

MITCHELL D. RECHLER
SECRETARY

New York, New York
April 30, 1999

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE
AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE
PROVIDED. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH,
EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE>
RECKSON SERVICE INDUSTRIES, INC.
10 EAST 50(TH) STREET
NEW YORK, NEW YORK 10022

------------------------

PROXY STATEMENT

------------------------

FOR 1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 24, 1999

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Reckson Service Industries, Inc. (the
"Company" or "RSI") for use at the 1999 Annual Meeting of Stockholders of the
Company to be held on June 24, 1999, and at any adjournments or postponements
thereof (the "Annual Meeting"). At the Annual Meeting, stockholders will be
asked to vote upon (1) the election of two Class I directors of the Company, (2)
to ratify the selection of Ernst & Young LLP as the independent auditors of the
Company for the fiscal year ending December 31, 1999, (3) to approve the 1999
Stock Option Plan and (4) to act upon any other matters that may properly be
brought before the Annual Meeting and at any adjournments or postponements
thereof.

This Proxy Statement and the accompanying Notice of Annual Meeting and Proxy
Card are first being sent to stockholders on or about May 10, 1999. The Board of
Directors has fixed the close of business on April 19, 1999 as the record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting (the "Record Date"). Only stockholders of record of the Company's
common stock, par value $.01 per share (the "Common Stock"), at the close of
business on the Record Date will be entitled to notice of and to vote at the
Annual Meeting. As of the Record Date, there were 24,686,834 shares of Common
Stock outstanding and entitled to vote at the Annual Meeting. Holders of Common
Stock outstanding as of the close of business on the Record Date will be
entitled to one vote for each share held by them on the Record Date.

The presence, in person or by proxy, of holders of a majority of the total
number of outstanding shares of Common Stock entitled to vote is necessary to
constitute a quorum for the transaction of business at the Annual Meeting. The
affirmative vote of the holders of a plurality of the shares of Common Stock
cast on the matter at the Annual Meeting (assuming a quorum is present) is
sufficient for the election of Class I directors, and the affirmative vote of
the Holders of a majority of the shares of Common Stock cast on the matter at
the Annual Meeting (assuming a quorum is present) is required for each of the
ratification of the Company's auditors, the approval of the 1999 Stock Option
Plan, and the approval of any other matters properly presented at the Annual
Meeting for stockholder approval. Under Delaware law, abstentions and broker
"non-votes," or proxies from brokers or nominees indicating that such person has
not received instructions from the beneficial owner or other person entitled to
vote such shares on a particular matter with respect to which the broker or
nominee does not have discretionary voting power, will not be counted as votes
cast and will have no effect on the results of the votes.

STOCKHOLDERS OF THE COMPANY ARE REQUESTED TO COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE. SHARES REPRESENTED BY A PROPERLY EXECUTED PROXY RECEIVED PRIOR TO THE
VOTE AT THE ANNUAL MEETING AND NOT REVOKED WILL BE VOTED AT THE ANNUAL MEETING
AS DIRECTED ON THE PROXY. IF A PROPERLY EXECUTED PROXY IS SUBMITTED AND NO
INSTRUCTIONS ARE GIVEN, THE PROXY WILL BE VOTED FOR THE ELECTION OF THE TWO
NOMINEES FOR CLASS I DIRECTORS OF THE COMPANY NAMED IN THIS PROXY STATEMENT, FOR
RATIFICATION OF THE BOARD OF DIRECTORS' SELECTION OF ERNST & YOUNG LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999 AND
FOR THE APPROVAL OF THE 1999 STOCK OPTION PLAN. IT IS NOT ANTICIPATED THAT ANY
MATTERS OTHER THAN THOSE SET FORTH IN THE PROXY STATEMENT WILL BE PRESENTED AT
THE ANNUAL MEETING. IF OTHER MATTERS ARE PRESENTED, PROXIES WILL BE VOTED IN
ACCORDANCE WITH THE DISCRETION OF THE PROXY HOLDERS.
<PAGE>
A stockholder of record may revoke a proxy at any time before it has been
exercised by filing a written revocation with the Secretary of the Company at
the address of the Company set forth above, by filing a duly executed proxy
bearing a later date, or by appearing in person and voting by ballot at the
Annual Meeting. Any stockholder of record as of the Record Date attending the
Annual Meeting may vote in person whether or not a proxy has been previously
given, but the presence (without further action) of a stockholder at the Annual
Meeting will not constitute revocation of a previously given proxy.

The Company's 1998 Annual Report, including financial statements for the
fiscal year ended December 31, 1998, accompanies the proxy solicitation
materials. The Annual Report, however, is not part of the proxy solicitation
material.

PROPOSAL 1: ELECTION OF DIRECTORS

The Board of Directors of the Company consists of eight members and is
divided into three classes, with the directors in each class serving for a term
of three years and until their successors are duly elected and qualified. The
term of one class expires at each annual meeting of stockholders.

At the Annual Meeting, two directors will be elected to serve until the 2002
Annual Meeting and until their successors are duly elected and qualified. The
Board of Directors has nominated Mr. Scott H. Rechler and Mr. Paul F. Amoruso to
serve as Class I directors (the "Nominees"). Each of the Nominees is currently
serving as a Class I director of the Company. The Board of Directors anticipates
that each of the Nominees will serve, if elected, as a director. However, if any
person nominated by the Board of Directors is unable to accept election, the
proxies will be voted for the election of such other person or persons as the
Board of Directors may recommend.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES.

INFORMATION REGARDING NOMINEES AND DIRECTORS

The following table and biographical descriptions set forth certain
information with respect to the two Nominees for election as Class I directors
at the Annual Meeting, the continuing directors whose terms expire at the annual
meetings of stockholders in 2000 and 2001 and the executive officers of the
Company, based upon information furnished to the Company by each director and
executive officer.

<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
DIRECTOR OWNERSHIP OF PERCENT OF
NAME AGE SINCE COMMON STOCK(1) CLASS(2)
- -------------------------------------------------------------- --- ----------- ------------------ -------------
<S> <C> <C> <C> <C>
CLASS I NOMINEES FOR ELECTION AT 1999 ANNUAL MEETING (TERM TO
EXPIRE IN 2002)
Scott H. Rechler.............................................. 31 1998 1,869,994(3) 7.4%
Paul F. Amoruso............................................... 38 1998 1,000(4) *

CLASS II CONTINUING DIRECTORS (TERM EXPIRES IN 2000)
Michael Maturo................................................ 37 1998 1,042,872(5) 4.1%
Mitchell D. Rechler........................................... 39 1998 1,589,623(6) 6.4%
Roger M. Rechler.............................................. 57 1998 1,267,751(7) 5.1%

CLASS III CONTINUING DIRECTORS (TERM EXPIRES IN 2001)
Donald J. Rechler............................................. 63 1998 1,623,360(8) 6.4%
Gregg M. Rechler.............................................. 32 1998 1,316,197(9) 5.3%
Ronald Cooper................................................. 60 1999 3,000(10) *
</TABLE>

- ------------------------

* Less than one percent.

2
<PAGE>
(1) All information has been determined as of April 19, 1999. For purposes of
this table a person is deemed to have "beneficial ownership" of the number
of shares of Common Stock that a person has the right to acquire pursuant
to the exercise of stock options exercisable within sixty days. See
"Executive Compensation" for a discussion of the vesting of stock options
granted to directors and officers.

(2) For purposes of computing the percentage of outstanding shares of Common
Stock held by each person, any shares of Common Stock which such person has
the right to acquire pursuant to the exercise of a stock option exercisable
within 60 days is deemed to be outstanding, but is not deemed to be
outstanding for the purpose of computing the percent ownership of any other
person.

(3) Includes (a) 984,471 shares of Common Stock owned directly, (b) 116,200
shares of Common Stock owned through trusts, (c) 11,505 shares of Common
Stock owned through corporations and partnerships and (d) options to
purchase 757,818 shares of Common Stock.

(4) Represents options to purchase 1,000 shares of Common Stock.

(5) Includes (a) 395,877 shares of Common Stock owned directly and (b) options
to purchase 646,995 shares of Common Stock.

(6) Includes (a) 774,157 shares of Common Stock owned directly, (b) 455,672
shares of Common Stock owned through trusts, (c) 36,297 shares of Common
Stock owned through corporations and partnerships and (d) options to
purchase 323,497 shares of Common Stock.

(7) Includes (a) 520,392 shares of Common Stock owned directly, (b) 331,585
shares of Common Stock owned through trusts, (c) 92,277 shares of Common
Stock owned through corporations and partnerships and (d) options to
purchase 323,497 shares of Common Stock.

(8) Includes (a) 448,181 shares of Common Stock owned directly, (b) 300,000
shares of Common Stock owned through trusts, (c) 117,361 shares of Common
Stock owned through corporations and partnerships and (d) options to
purchase 757,818 shares of Common Stock.

(9) Includes (a) 865,077 shares of Common Stock owned directly, (b) 116,201
shares of Common Stock owned through trusts, (c) 11,422 shares of Common
Stock owned through corporations and partnerships and (d) options to
purchase 323,497 shares of Common Stock.

(10) Includes (a) 2,000 shares of Common Stock owned directly and (b) options to
purchase 1,000 shares of Common Stock, which is subject to stockholder
approval of the 1999 Stock Option Plan.

CLASS I NOMINEES FOR ELECTION AT 1999 ANNUAL MEETING--TERM TO EXPIRE IN 2002

SCOTT H. RECHLER serves as the President, Chief Executive Officer and a
Director of RSI. Mr. Rechler also serves as President, Chief Operating Officer
and a Director of Reckson Associates Realty Corp. ("Reckson"). Mr. Rechler has
been employed at Reckson since 1989. He is responsible for day-to-day operations
and for directing RSI's corporate policy. Prior to the initial public offering
of Reckson (the "Reckson IPO"), he directed the financing of approximately $200
million of mortgage debt and the acquisition of property having a value in
excess of $100 million for Reckson. He is a member of the Board of Directors of
the Long Island Children's Museum. Mr. Rechler is a graduate of Clark University
and received a Masters Degree in Finance with a specialization in real estate
from New York University. He is the son of Roger Rechler and the brother of
Gregg Rechler.

PAUL F. AMORUSO serves as a Director of RSI. Since 1983, Mr. Amoruso has
been the President of Oxford & Simpson Realty, Inc. of Jericho, New York. Prior
to that time, he was President of Lanstar International Realty, Inc., a real
estate advisory services firm. Mr. Amoruso is a member of the Board of Directors
of the Nature Conservancy and has been appointed to the Task Force of the Empire
State Development Corp. He is a co-founder of the Long Island Commercial
Industrial Brokers Society and is a licensed real estate broker in New York and
Connecticut.

3
<PAGE>
CLASS II CONTINUING DIRECTORS--TERM EXPIRES IN 2000

MICHAEL MATURO serves as an Executive Vice President, Chief Financial
Officer and Treasurer of RSI, and also serves as a Director of RSI. He is
responsible for the Company's financing and capital markets activities and the
supervision of all financial, treasury, tax and reporting functions, as well as
investor relations. Mr. Maturo also serves in a similar executive capacity for
Reckson. During his tenure at Reckson, Mr. Maturo has led efforts to raise
approximately $800 million in six common stock offerings, $300 million in two
preferred stock offerings and $1 billion in several public and private unsecured
debt transactions. Prior to joining Reckson, Mr. Maturo was a Senior Manager at
E&Y Kenneth Leventhal Real Estate Group (formerly Kenneth Leventhal & Company),
a public accounting and consulting firm. He specialized in diverse phases of
real estate finance including corporate and property debt financings and
recapitalization transactions. Mr. Maturo is a graduate of Seton Hall University
with a degree in accounting and finance and is a certified public accountant.

MITCHELL D. RECHLER serves as Secretary and as a Director of RSI and is a
member of the Management Advisory Committee. Mr. Rechler also serves as an
Executive Vice President and a Director of Reckson and is President of Reckson
Management Group, Inc. (the "Management Company"). From 1981 to 1985, he was
employed by Reckson in various non-supervisory roles, including positions in
property management, construction, acquisitions and space leasing. Since 1986,
Mr. Rechler has served as an Executive Vice President of Reckson, responsible
for all leasing activities including the coordination of leasing and marketing
strategies and overseeing tenant relations. Mr. Rechler has served as President
of the Management Company since its organization in 1991. Mr. Rechler serves on
the Executive Committee of the Children's Medical Fund of Schneider Children's
Hospital of Long Island Jewish Medical Center and as a member of the Board of
Directors of the Long Island Friends of the Arts. He is a graduate of Emory
University. He is the son of Donald Rechler.

ROGER M. RECHLER serves as a Director of RSI and is a member of the
Management Advisory Committee. Mr. Rechler also serves as Vice-Chairman of the
Board and a Director of Reckson and as Executive Vice President of Development.
Prior to the Reckson IPO, Mr. Rechler was a co-founder and general partner of
Reckson Associates. Mr. Rechler is responsible for the supervision of
development, property construction, architectural and design services, interior
construction and property management for Reckson. Mr. Rechler attended the
University of Miami. Mr. Rechler is the father of Scott Rechler and Gregg
Rechler and the brother of Donald Rechler.

CLASS III CONTINUING DIRECTORS--TERM EXPIRES IN 2001

DONALD J. RECHLER serves as Chairman of the Board and Director of RSI and
Chairman of the Board, Chief Executive Officer and a Director of Reckson. Prior
to the Reckson IPO, Mr. Rechler was a co-founder and general partner of Reckson
Associates. He is a founder and former President and Chairman of the Association
For A Better Long Island, a founder of the Long Island Commercial & Industrial
Development Association, a member of the Board of Directors of the Development
Division of North Shore Hospital, and a member of the Council of Overseers of
Long Island University, C.W. Post College. Mr. Rechler is a graduate of the
University of Miami. Mr. Rechler is the father of Mitchell Rechler and the
brother of Roger Rechler.

GREGG M. RECHLER serves as a Director of RSI and is a member of the
Management Advisory Committee. Mr. Rechler also serves as an Executive Vice
President and Secretary of Reckson and is President of Reckson Construction
Group, Inc. (the "Construction Company"). Mr. Rechler is responsible for the
construction, architectural and property management activities of Reckson. Since
1985, he has been employed by Reckson and certain affiliates. From 1985 to 1988,
Mr. Rechler held non-supervisory roles in the construction and property
management areas. Beginning in 1989, as an Executive Vice President of Reckson,
he served as the person responsible for the construction of the Omni office
building and supervised all construction aspects of this project. In 1991, he
organized the Construction Company and

4
<PAGE>
has been responsible for its significant growth. Mr. Rechler is a member of the
Board of Directors of the Long Island chapter of the Building Owners and
Managers Association ("BOMA"). Mr. Rechler attended the New York Institute of
Technology. He is the son of Roger Rechler and the brother of Scott Rechler.

RONALD COOPER serves as a Director of RSI. Mr. Cooper was the Managing
Partner of the Long Island office of Ernst & Young LLP, one of the "Big 5"
accounting firms. A partner in that firm and its predecessors from 1973 through
1998, he held several positions including Partner-in-charge of the New York
office's Privately Owned Business Group. Mr. Cooper is well known in the Long
Island business community having served on numerous civic and charitable boards,
including the Long Island Association where he was Treasurer for eight years. He
has a significant contact base among the investment and banking communities and
spent much of his career working with growth oriented companies. In 1999, Mr.
Cooper co-founded LARC Strategic Concepts LLC, a management consulting firm
serving emerging and early stage companies.

THE BOARD OF DIRECTORS AND ITS COMMITTEES

The Company is managed by an eight member Board of Directors. The Board of
Directors held nine meetings during fiscal year 1998. Each of the directors
attended at least 75% of the total number of meetings of the Board of Directors
and of the committees of the Company of which he was a member during 1998.

AUDIT COMMITTEE. The Audit Committee, which consists of Mr. Amoruso, makes
recommendations concerning the engagement of independent public accountants,
reviews with the independent public accountants the plans and results of the
audit engagements, approves professional services provided by the independent
public accountants, reviews the independence of the independent public
accountants, considers the range of audit and non-audit fees and reviews the
adequacy of the Company's internal accounting controls. The Audit Committee held
its first meeting in March 1999.

EXECUTIVE COMMITTEE. As of April 19, 1999, the Company does not have an
Executive Committee.

COMPENSATION COMMITTEE. The Compensation Committee, which consists of
Donald J. Rechler, Scott H. Rechler and Paul F. Amoruso, makes recommendations
and exercises all powers of the Board of Directors in connection with
compensation matters, including incentive compensation and benefit plans. The
Compensation Committee also has authority to grant awards under the Company's
stock option plans. The Compensation Committee held four meetings during fiscal
year 1998.

The Board of Directors does not have a standing nominating committee. The
full Board of Directors performs the functions of such a committee.

DIRECTOR COMPENSATION

Each of the non-employee directors of the Company receives an annual
director's fee of $7,500. Each non-employee director also receives $500 for each
regular quarterly meeting of the Board of Directors attended, $500 for each
special meeting of the Board of Directors attended, $500 for each special
telephonic meeting of the Board of Directors participated in and $500 for each
committee meeting attended. Each non-employee director appointed or elected for
the first time receives an initial option to purchase 1,000 shares of Common
Stock at the market price of the Common Stock on the date of grant. In addition,
following each annual meeting of stockholders each of the Company's non-employee
directors will receive an option to purchase 500 shares of Common Stock at the
market price of the Common Stock on the date of grant. All options granted to
non-employee directors vest on the date of grant. On August 4, 1998, Mr. Amoruso
was granted an option to purchase 1,000 shares of Common Stock at $2.00 per
share. On March 24, 1999, Mr. Cooper was granted an option to purchase 1,000
shares of Common Stock at $4.625 per share.

5
<PAGE>
PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

The Board of Directors of the Company, upon the recommendation of the Audit
Committee, has selected the accounting firm of Ernst & Young LLP to serve as
independent auditors of the Company for the fiscal year ending December 31,
1999, subject to ratification of this appointment by the stockholders of the
Company. Ernst & Young LLP has served as the Company's independent auditors
since the Company's formation in July 1997 and is considered by management of
the Company to be well qualified. The Company has been advised by that firm that
neither it nor any member thereof has any financial interest, direct or
indirect, in the Company or any of its subsidiaries in any capacity. Ernst &
Young LLP also serves as the independent auditors of Reckson. Mr. Cooper was a
partner of Ernst & Young LLP and certain of its predecessors from 1973 through
1998. A representative of Ernst & Young LLP will be present at the Annual
Meeting, will be given the opportunity to make a statement if he or she so
desires and will be available to respond to appropriate questions.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE SELECTION
OF THE INDEPENDENT AUDITORS.

EXECUTIVE COMPENSATION

The Company does not have employment agreements with any executive officer
and does not currently contemplate paying a base salary to any executive officer
who is also an executive officer of Reckson for his services in such capacity,
although options have been, and in the future may be, granted to executive
officers, and it is contemplated that such executives will receive other
compensation including annual performance bonuses. The Company did not pay any
compensation prior to 1998.

The following table sets forth information regarding the compensation
awarded for the past fiscal year to Scott H. Rechler, the President and Chief
Executive Officer of the Company (the "Named Executive Officer"). The Company
did not pay a total annual salary and bonus in excess of $100,000 to any
executive officer of the Company for the fiscal year ended December 31, 1998.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
RESTRICTED
SALARY BONUSES STOCK LONG TERM ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) GRANTS(#)(2) OPTIONS ($)
- ----------------------------------------------- --------- ----------- --------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Scott H. Rechler...............................
President and Chief Executive Officer 1998 -- $ 22,500(1) 75,000 757,818 --
</TABLE>

- ------------------------

(1) Represents a grant of 50,000 shares of common stock in OnSite Access, Inc.
("OnSite"), a privately-held company which is approximately 33% owned by the
Company, at a price of $0.45 per share. Mr. Scott H. Rechler did not receive
cash compensation from the Company in respect of 1998.

(2) Represents an award of restricted Common Stock of the Company at a price of
$4.625 per share, the closing price on the date of grant. See "Report on
Executive Compensation" for the terms of the restricted stock award, which
is subject to stockholder approval of the 1999 Stock Option Plan.

6
<PAGE>
OPTION GRANTS FOR FISCAL YEAR 1998

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
PERCENT OF VALUE
TOTAL AT ASSUMED ANNUAL RATES
NUMBER OF OPTIONS OF COMMON STOCK PRICE
SHARES GRANTED TO EXERCISE PRICE APPRECIATION FOR OPTION
UNDERLYING EMPLOYEES PER SHARE OF TERM(1)
OPTIONS FOR COMMON ------------------------
NAME GRANTED FISCAL YEAR STOCK(2) EXPIRATION DATE 5% 10%
- ------------------------------ ----------- ------------- --------------- --------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Scott H. Rechler.............. 128,341 3.4% $ 1.10 1/10/2008 $ 88,555 $ 224,597
629,477 16.4% $ 1.04 3/30/2008 $ 409,160 $ 1,044,932
</TABLE>

- ------------------------

(1) Potential Realizable Value is based on the assumed annual growth rates shown
over their 10-year option term. For example, a 5% growth rate, compounded
annually, for Scott H. Rechler's grants results in stock prices of $1.79 per
share and $1.69 per share, respectively, and a 10% growth rate, compounded
annually, results in stock prices of $2.85 per share and $2.70 per share,
respectively. These Potential Realizable Values are listed to comply with
the regulations of the SEC, and the Company cannot predict whether these
values will be achieved. Actual gains, if any, on stock option exercises are
dependent on the future performance of the stock.

(2) The option grants were granted prior to the spin-off distribution of the
Company's shares and prior to the existence of any trading market and were
based upon the value which the Company's board of directors determined
represented the fair value as of the date of grant.

No options were exercised by the Named Executive Officer in 1998. The
following table sets forth the value of options held at the end of 1998 by the
Named Executive Officer.

AGGREGATED FISCAL YEAR-END 1998 OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SHARES UNDERLYING
UNEXERCISED OPTIONS AT VALUE OF UNEXERCISED
FISCAL IN-THE-MONEY OPTIONS AT
YEAR-END(#)(1) FISCAL YEAR-END($)(2)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------------------------------------------ --------------------------- -----------------------
<S> <C> <C>
Scott H. Rechler............................................ 757,818/0 $ 2,330,168/$0
</TABLE>

- ------------------------

(1) The value of unexercised in-the-money options at fiscal year-end based on
the fair market value of Common Stock of $4.125 per share, as of December
31, 1998.

EMPLOYMENT AND NONCOMPETITION AGREEMENTS

As of April 19, 1999, the Company has not entered into any employment
agreement or severance agreement with the Named Executive Officer.

REPORT ON EXECUTIVE COMPENSATION

The following is a report by the Company's Compensation Committee regarding
the Company's executive compensation objectives, executive compensation program
and the compensation of the Company's chief executive officer:

EXECUTIVE COMPENSATION OBJECTIVES. The objective of the Company's executive
compensation program is to attract, retain and motivate talented executives who
will maximize stockholder value. In order to achieve this objective, in addition
to annual base salaries, the executive compensation program utilizes a
combination of long-term incentives through equity-based compensation and annual
incentives through cash bonuses. The program is intended to align the interests
of executives with those of the Company's stockholders by linking a portion of
executive compensation directly to increases in stockholder value. The

7
<PAGE>
Company seeks to provide total compensation to its executive officers which is
competitive with total compensation paid by companies similar to RSI.

PROCEEDINGS OF THE COMPENSATION COMMITTEE. The Compensation Committee
determines compensation for the Company's executive officers and is comprised of
three directors, Scott H. Rechler, Donald J. Rechler and Paul F. Amoruso. Final
compensation determinations for each fiscal year will generally be made after
the end of the fiscal year. At that time, base salaries for the following fiscal
year will be set, cash or other bonuses, if any, will be determined for the past
year's performance, and option grants, if any, will generally be made.

In determining compensation for the Named Executive Officer and the other
executive officers of the Company for the fiscal year ended December 31, 1998,
the Compensation Committee noted several factors, including the Company's
operating performance for the 1998 fiscal year. The Compensation Committee also
considered the efforts of the Named Executive Officer and the other executive
officers in carrying out the Company's business plan. In addition, the
Compensation Committee considered the performance of its Common Stock relative
to other service companies as well as the market in general.

The Compensation Committee exercises independent discretion in respect of
executive compensation matters. With respect to the compensation of the chief
executive officer, Mr. Scott H. Rechler abstained from the discussions.

The following is a discussion of each element of the Company's executive
compensation:

ANNUAL BASE SALARY. For the fiscal year ended December 31, 1998, the
Company did not pay a base salary to any executive officer of the Company.

ANNUAL INCENTIVES. Annual incentives may be provided in the form of cash
bonuses or unrestricted stock award bonuses to be paid if certain performance
objectives are achieved. Bonuses may also be subject to adjustment based upon
the Compensation Committee's evaluation of an executive's personal performance.
For the fiscal year ended December 31, 1998, the Company did not award a cash
bonus to any executive officer of the Company.

LONG-TERM INCENTIVES. Long-term incentives may be provided through a
variety of means, including the grant of stock options, restricted stock awards
and stock loans. These awards are intended to align the executive's long-term
objectives with those of the Company's stockholders. The grant of stock options,
restricted stock awards and stock loans are made under the Company's stock
option plans which are administered by the Compensation Committee. The
Compensation Committee has the discretion to determine those individuals to whom
awards are made and the terms and conditions of the awards. Awards granted in
March 1999 in respect of 1998 to Mr. Scott H. Rechler and certain senior
officers of the Company were granted under the 1999 Stock Option Plan, subject
to the approval of the 1999 Stock Option Plan by the Company's stockholders at
the Annual Meeting. If the 1999 Stock Option Plan is not approved by
stockholders at the meeting, the awards conditionally granted in March 1999 will
be rescinded. The Compensation Committee is not precluded, however, from
granting additional or alternative awards to such persons.

1998 CHIEF EXECUTIVE OFFICER COMPENSATION. Scott H. Rechler did not receive
a base salary or a cash bonus for the fiscal year ended December 31, 1998.

In March 1999, the Compensation Committee awarded Scott H. Rechler 50,000
shares of common stock of OnSite Access, Inc., at a value of $0.45 per share.
The Compensation Committee also awarded Scott H. Rechler 75,000 shares of Common
Stock of RSI with an aggregate value of $346,875 in respect of the fiscal year
ended December 31, 1998 (the "RSI Stock Award"). The RSI Stock Award vests six
months after the date of grant. Mr. Scott H. Rechler will also receive tax
payments in respect of the OnSite and RSI stock awards.

8
<PAGE>
As a long-term incentive, in 1998 the Company granted Scott H. Rechler
options to purchase a total of 757,818 shares of the Company's Common Stock.

In approving these awards the Compensation Committee considered the same
factors it considered in determining annual and long-term incentives, including
the retention of the chief executive officer.

TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), limits the deductibility on the
Company's federal tax return of compensation over $1 million to the Named
Executive Officer of the Company unless, in general, the compensation is paid
pursuant to a plan which is performance-related and non-discretionary and has
been approved by the Company's stockholders. The Compensation Committee's policy
with respect to section 162(m) is to make every reasonable effort to ensure that
compensation is deductible to the extent permitted while simultaneously
providing Company executives with appropriate compensation for their
performance. The Company did not pay any compensation during 1998 that would be
subject to the limitations set forth in section 162(m).

Submitted by the Compensation
Committee
of the Board of Directors:
Donald J. Rechler
Scott H. Rechler
Paul F. Amoruso

9
<PAGE>
STOCK PERFORMANCE GRAPH

The following graph provides a comparison of the cumulative total
stockholder return on the Common Stock for the period from June 8, 1998 (the
date upon which the Company's Common Stock began trading) to December 31, 1998
with the cumulative total return on the Standard & Poor's 500 Composite Stock
Price Index (the "S&P 500") and the Russell 2000 Index. Total return values were
calculated based on cumulative total return assuming (i) the investment of $100
in the Common Stock on June 8, 1998 and in the S&P 500 and the Russell 2000
Index on June 8, 1998 and (ii) reinvestment of dividends, if any.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
RECKSON SERVICE INDUSTRIES
INC. RUSSELL 2000 S&P 500
<S> <C> <C> <C>
6/8/98 100 100 100
6/30/98 120 100 102
9/30/98 85 80 91
12/31/98 150 92 110
</TABLE>

10
<PAGE>
PRINCIPAL AND MANAGEMENT STOCKHOLDERS

The following table sets forth the beneficial ownership of Common Stock for
(i) each stockholder of the Company holding more than a 5% beneficial interest
in the Company and (ii) the directors and executive officers of the Company as a
group. Stock ownership of the Directors and executive officers of the Company
appears under the heading "Information Regarding Nominees and Directors" in this
Proxy Statement.

<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK BENEFICIALLY OWNED
AS OF APRIL 19, 1999(1)
-------------------------------
<S> <C> <C>
NAME OF BENEFICIAL OWNERS NUMBER PERCENT OF TOTAL(2)
- ---------------------------------------------------------------------------------- ---------- -------------------
Cohen & Steers Capital Management, Inc.(3)........................................ 2,783,916 11.28%
LaSalle Advisors Capital Management, Inc. and ABKB/LaSalle Securities Limited
Partnership(4).................................................................. 1,555,992 6.30%
Gotham Partners, L.P., Gotham Partners III, L.P. and Gotham International
Advisors, L.L.C.(5)............................................................. 1,278,316 5.18%
All directors and executive officers as a group (8 persons)....................... 8,713,797 31.32%
</TABLE>

- ------------------------

(1) All information has been determined as of April 19, 1999. For purposes of
this table a person is deemed to have "beneficial ownership" of the number
of shares of Common Stock that person has the right to acquire pursuant to
the exercise of stock options within 60 days. See "Executive Compensation"
for a discussion of the vesting of stock options granted to officers.

(2) For purposes of computing the percentage of outstanding shares of Common
Stock held by each person, any shares of Common Stock which such person has
the right to acquire pursuant to the exercise of a stock option exercisable
within 60 days is deemed to be outstanding, but is not deemed to be
outstanding for the purposes of computing the percent ownership of any other
person.

(3) This information is based upon information reported by the stockholder in
filings made with the SEC. The address of Cohen & Steers Capital Management,
Inc. is 757 Third Avenue, New York, New York 10017.

(4) This information is based upon information reported by the stockholder in
filings made with the SEC. LaSalle Advisors Capital Management, Inc.
("LaSalle") beneficially owns 674,460 shares of Common Stock of the Company
(2.7% of the total Common Stock outstanding) and ABKB/LaSalle Securities
Limited Partnership ("ABKB"), a subsidiary of LaSalle, beneficially owns
881,532 shares of Common Stock of the Company (3.6% of the total Common
Stock outstanding). The address of both LaSalle and ABKB is 200 East
Randolph Drive, Chicago, Illinois 60601.

(5) This information is based upon information reported by the stockholders in
filings made with the SEC. Gotham Partners, L.P. ("Gotham"), Gotham Partners
III, L.P. ("Gotham III") and Gotham International Advisors, L.L.C. ("Gotham
Advisors") filed a joint acquisition statement with the SEC pursuant to Rule
13d-1(f)1. Gotham beneficially owns 520,521 shares of Common Stock of the
Company (2.11% of the total Common Stock outstanding), Gotham III
beneficially owns 83,259 shares of Common Stock of the Company (.34% of the
total Common Stock outstanding) and Gotham Advisors beneficially owns
674,536 shares of Common Stock of the Company (2.73% of the total Common
Stock outstanding). The business address of Gotham, Gotham Advisors and
Gotham III is 110 East 42(nd) Street, 18(th) Floor, New York, NY 10017.

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors, and
persons who own more than 10% of a registered class of the Company's equity
securities ("10% Holders"), to file reports of ownership and changes in
ownership with the SEC. Officers, directors and 10% Holders are required by SEC
regulation to furnish the Company

11
<PAGE>
with copies of all Section 16(a) forms that they file. To the Company's
knowledge, based solely on review of the copies of such reports furnished to the
Company, all Section 16(a) filing requirements applicable to its executive
officers, directors and 10% Holders were satisfied during 1998, except that Paul
Amoruso, an independent director of the Company, was granted 1,000 options to
buy shares of common stock of the Company on August 4, 1998 and did not file
such a report until December 15, 1998 and that MDM Partnership, of which
Mitchell Rechler and Donald Rechler, directors of the Company, are partners,
purchased 100,000 shares of Common Stock of the Company on September 18, 1998
and Mitchell Rechler and Donald Rechler did not file such reports signifying
their interests in MDM Partnership until February 10, 1999. Additionally, during
1998 Donald Rechler purchased a total of 206,000 additional shares of Common
Stock of the Company and did not file a report until February 10, 1999.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

FORMATION AND EQUITY CAPITALIZATION OF RSI; OWNERSHIP OF RSI COMMON STOCK

During 1998, Reckson Operating Partnership L.P. ("Reckson Operating
Partnership") completed the spin-off distribution (the "Distribution") of the
shares of the Company. Reckson Operating Partnership and RSI have entered into
an intercompany agreement (the "Intercompany Agreement") to formalize their
relationship and to limit conflicts of interest.

Due to considerations relating to Reckson's status as a REIT under Federal
tax laws, RSI was initially formed as a subsidiary in which Reckson Operating
Partnership owned 95% of the outstanding capital stock in the form of non-voting
common stock and Lightpost LLC owned the remaining 5% of the outstanding capital
stock in the form of RSI Common Stock. Donald J. Rechler, Scott H. Rechler,
Michael Maturo, Roger M. Rechler, Mitchell D. Rechler and Gregg M. Rechler and
trusts controlled by certain of such persons owned 70% of the member interests
of Lightpost LLC and the other 30% of the member interests was owned by members
of Reckson management who were not executive officers or directors of Reckson
and a Rechler family member who was not a member of Reckson management. The
shares of capital stock of RSI owned by Reckson Operating Partnership and
Lightpost LLC were issued by RSI on the same dates and at the same price of
$1.10 per share. In connection with the Distribution, the shares of non-voting
common stock owned by Reckson Operating Partnership were exchanged for shares of
RSI Common Stock. RSI has granted the owners of Lightpost LLC certain
registration rights in respect of their RSI Common Stock.

Immediately following the Distribution, RSI granted holders of RSI Common
Stock subscription rights to purchase up to an aggregate of approximately
20,557,130 shares of RSI Common Stock (the "Rights Offering"). In connection
with the Rights Offering, RSI entered into a standby purchase agreement (the
"Standby Agreement") with RSI Standby LLC (the "Standby Purchaser") pursuant to
which the Standby Purchaser agreed to purchase at a price equal to the exercise
price in the Rights Offering (I.E., $1.03 per share), any and all shares of RSI
Common Stock that were the subject of subscription rights in the Rights Offering
but were not subscribed for by the termination of the Rights Offering (the
"Standby Commitment Shares"). The members of the Standby Purchaser included
Donald J. Rechler, Scott H. Rechler, Michael Maturo, Roger M. Rechler, Mitchell
D. Rechler, Gregg Rechler and certain other employees of Reckson and family
members of the foregoing persons. The Company entered into the Standby Agreement
to provide assurance that the Company would, with the sale of the Standby
Commitment Shares, sell all of the shares of RSI Common Stock that were the
subject of subscription rights in the Rights Offering and thereby achieve its
stated purposes.

As of March 10, 1999, Donald J. Rechler, Scott H. Rechler, Michael Maturo,
Gregg Rechler, Mitchell D. Rechler and Roger Rechler, each of whom serves as a
director and/or officer of RSI, serves as an officer and, in certain cases, a
director of Reckson, and collectively own approximately 14.3% of Reckson's
outstanding common stock (assuming the exercise of vested stock options and the
exchange of operating partnership units in Reckson Operating Partnership for
shares of common stock of Reckson).

12
<PAGE>
In June 1998, Reckson Operating Partnership established a credit facility
with RSI (the "RSI Facility") in the amount of $100 million for RSI's service
sector operations and other general corporate purposes. As of December 31, 1998,
borrowings under the RSI Facility aggregated $33.7 million.

In addition, during 1998 Reckson Operating Partnership approved the funding
of investments of up to $100 million in connection with Reckson Strategic
Venture Partners, LLC ("RSVP"), a real estate venture capital fund formed and
managed by a subsidiary of the Company (the "RSVP Commitment"). The RSVP
Commitment may be funded through either REIT-qualified investments made by
Reckson Operating Partnership in RSVP-controlled joint ventures or advances made
to RSI under a credit facility with terms similar to the RSI Facility. As of
December 31, 1998, Reckson Operating Partnership had made advances under the
RSVP Commitment aggregating approximately $17.3 million, including the
investment in Dominion Group LLC ("Dominion") described below.

JOINT VENTURES BETWEEN RSVP AND RECKSON OPERATING PARTNERSHIP

In July 1998, Reckson Operating Partnership made a joint venture investment
with RSVP in Dominion. Dominion owns and develops correctional facilities and
government office buildings. The total capital commitment made to Dominion by
the joint venture with RSVP aggregated $100 million, of which Reckson Operating
Partnership committed $25 million. As of December 31, 1998, Reckson Operating
Partnership had invested approximately $10.1 million into such joint venture
under the RSVP Commitment and RSI had invested $2.9 million.

LEASE OF CORPORATE OFFICES

The Company leases 2,018 square feet of office space at its corporate
offices located at 225 Broadhollow Road, Melville, New York 11747, at an annual
base rent of approximately $48,000 from a partnership in which Donald Rechler,
Mitchell Rechler, Roger Rechler and trusts established for Rechler family
members maintain an equity interest.

GENERAL AND ADMINISTRATIVE EXPENSES

RSI reimburses Reckson Operating Partnership for certain general and
administrative expenses (including payroll expenses and office space) incurred
by Reckson Operating Partnership for RSI's benefit. During 1998, RSI reimbursed
Reckson Operating Partnership approximately $400,000 for such expenses.

PROPOSAL 3: APPROVAL OF THE 1999 STOCK OPTION PLAN

The 1998 Stock Option Plan was previously adopted in order to provide a
means for the Company to implement its long-term incentive program for executive
officers and directors, as well as to provide incentives for other officers and
employees. The Company's objective in providing these incentives is to attract,
retain and motivate talented persons who will maximize stockholder value. In
this regard, the Company has sought to provide incentives for persons employed
by the Company in granting awards under the 1998 Stock Option Plan. The 1998
Stock Option Plan provides for the grant of awards under such plan (including
the grant of stock options and restricted and unrestricted shares of Common
Stock) in respect of up to an aggregate of 3,700,376 shares of Common Stock. As
of April 19, 1999, awards had been granted (and not relinquished) under the 1998
Stock Option Plan in respect of 3,700,376 shares of Common Stock. Of this
amount, awards in respect of 2,942,558 shares of Common Stock were issued to
persons other than the Named Executive Officer.

The Company has also adopted the 1998 Employee Stock Option Plan. The 1998
Employee Stock Option Plan provides for the grant of awards under such plan
(including the grant of stock options and restricted and unrestricted shares of
Common Stock) in respect of up to an aggregate of 100,000 shares of Common
Stock. Options granted under the 1998 Employee Stock Option Plan may be granted,
at the discretion of the Board of Directors, to officers, directors (excluding
non-employee directors) and key

13
<PAGE>
employees of the Company. As of April 19, 1999, awards had been granted under
the 1998 Employee Stock Option Plan in respect of 31,165 shares of Common Stock.

In March 1999, the Board of Directors approved the adoption of the 1999
Stock Option Plan. The following is a description of the 1999 Stock Option Plan:

The 1999 Stock Option Plan will be administered by the Compensation
Committee. Officers and key employees of the Company and its subsidiaries
generally will be eligible to participate in the 1999 Stock Option Plan. The
1999 Stock Option Plan will provide for the grant of awards under such plan
(including the grant of stock options and restricted and unrestricted shares of
Common Stock) in respect of up to an aggregate of 1,750,000 shares of Common
Stock. Non-employee directors of the Company will receive an initial stock
option grant to purchase 1,000 shares of Common Stock upon appointment as a
director and annual stock option grants to purchase 500 shares of Common Stock
under the 1999 Stock Option Plan.

The Stock Option Plan authorizes (i) the grant of stock options that qualify
as incentive stock options under section 422 of the Code ("ISOs"), (ii) the
grant of stock options that do not so qualify ("NQSOs"), (iii) the grant of
shares of Common Stock subject to certain restrictions on transfer and certain
risks of forfeiture ("Restricted Stock"), (iv) the grant of stock options in
lieu of cash Directors' fees and employee bonuses, (v) grants of unrestricted
shares of Common Stock in lieu of cash compensation and (vi) the making of loans
to acquire shares of Common Stock in lieu of compensation. The exercise price of
stock options is determined by the Compensation Committee and may be less than,
equal to or greater than the fair market value of the shares of Common Stock on
the date of grant; however, the exercise price generally may not be less than
100% of the fair market value of such shares on the date of grant in the case of
ISOs and in the case of the options automatically granted to non-employee
directors.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE 1999 STOCK OPTION PLAN. The
following is a brief summary of the principal Federal income tax consequences of
awards under the 1999 Stock Option Plan. The summary is based upon current
Federal income tax laws and interpretations thereof, all of which are subject to
change at any time, possibly with retroactive effect. This summary is not
intended to be exhaustive and, among other things, does not describe state,
local or foreign tax consequences.

A participant is not subject to Federal income tax either at the time of
grant or at the time of exercise of an ISO. However, upon exercise, the
difference between the fair market value of the Common Stock and the exercise
price is an item of tax preference subject to the possible application of the
alternative minimum tax. If a participant does not dispose of Common Stock
acquired through the exercise of an ISO in a "disqualifying disposition" (I.E.,
no disposition occurs within two years from the date of grant of the share
option nor within one year of the transfer of the Common Stock to the
participant), then the participant will be taxed only upon the gain, if any,
from the sale of such Common Stock, and such gain will be taxable as gain from
the sale of a capital asset.

The Company will not receive any tax deduction on the exercise of an ISO or,
if the above holding period requirements are met, on the sale of the underlying
Common Stock. If there is a disqualifying disposition (I.E., one of the holding
period requirements is not met), the participant will be treated as receiving
compensation subject to ordinary income tax in the year of the disqualifying
disposition and the Company will be entitled to a deduction for compensation
expense in an amount equal to the amount included in income by the participant.
The participant generally will be required to include in income an amount equal
to the difference between the fair market value of the Common Stock at the time
of exercise and the exercise price. Any appreciation in value after the time of
exercise will be taxed as capital gain and will not result in any deduction by
the Company.

If NQSOs are granted to a participant, there are no Federal income tax
consequences at the time of grant. Upon exercise of the option, the participant
must report as ordinary income an amount equal to the difference between the
exercise price and the fair market value of the Common Stock on the date of

14
<PAGE>
exercise. The Company will receive a tax deduction in like amount. Any
appreciation in value after the time of exercise will be taxed as capital gain
and will not result in any deduction by the Company.

If a participant is granted unrestricted shares of Common Stock, such
participant will have compensation income at the time of grant equal to the fair
market value of such shares. The company will receive a tax deduction in the
amount of the income recognized by the participant.

A participant who is awarded Restricted Stock that is subject to a
substantial risk of forfeiture (as defined in the Code) will not be taxed at the
time of the grant unless the participant makes a special election under section
83(b) of the Code. Assuming that no such election is made, the Company will
receive no tax deduction at the time of the grant. Upon the lapse of the
substantial risk of forfeiture associated with the Restricted Stock, a
participant will recognize ordinary income equal to the fair market value of the
Restricted Stock at the time of the lapse. At the same time, the Company will
receive a tax deduction in the amount of the ordinary income recognized by a
participant.

If a participant makes an election under section 83(b) of the Code or if the
Restricted Stock is subject to restrictions that do not comprise a substantial
risk of forfeiture, he or she will recognize ordinary income in an amount equal
to the fair market value of the Restricted Stock at the time of the grant
(determined without regard to any restrictions which may lapse). The Company
will receive a tax deduction in the equal amount at the same time. No tax will
be payable by a participant (and no additional deduction will be taken by the
Company) upon lapse of restrictions.

A participant who receives a Stock Loan generally will not be taxed at the
time of the grant of such a Loan. Similarly, the Company will receive no tax
deduction at the time of such Loan. Generally, any portion of a Stock Loan that
is forgiven by the Company will be treated as ordinary compensation income in
the year of forgiveness, and the Company will receive a tax deduction in equal
amount at the same time.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE 1999 STOCK
OPTION PLAN.

OTHER MATTERS

SOLICITATION OF PROXIES

The cost of solicitation of proxies in the form enclosed herewith will be
paid by the Company. In addition to the solicitation of proxies by mail, the
directors, officers and employees of the Company may also solicit proxies
personally or by telephone without additional compensation for such activities.
The Company will also request persons, firms and corporations holding shares in
their names or in the names of their nominees, which are beneficially owned by
others, to send proxy materials to and obtain proxies from such beneficial
owners. The Company will reimburse such holders for their reasonable expenses.

STOCKHOLDER PROPOSALS

For a proposal of a stockholder to be presented to an annual meeting, other
than a stockholder proposal included in the Company's proxy statement pursuant
to Rule 14a-8 of the Exchange Act ("Rule 14a-8"), the Secretary of the Company
must receive written notice thereof on or before the date specified in the
Company's Bylaws, and the proponent or a representative of the proponent must
attend the annual meeting. In addition, pursuant to Rule 14a-4 of the Exchange
Act, if a stockholder failed to notify the Company at least 45 days before the
date on which the Company first mailed its proxy materials for the prior year's
annual meeting, management proxies are allowed to use their discretionary voting
authority when the proposal is raised at the annual meeting, without any
discussion of the matter in the proxy statement.

For a proposal of a stockholder to be presented to the Company's 2000 annual
meeting of stockholders, other than a stockholder proposal included in the
Company's proxy statement pursuant to Rule 14a-8, it must be received at the
principal executive offices of the Company after March 26, 2000 and on or before

15
<PAGE>
April 10, 2000, unless the 2000 annual meeting of stockholders is scheduled to
take place before June 24, 2000. The Company's Bylaws provide that any
stockholder wishing to nominate a director or have a stockholder proposal other
than a stockholder proposal included in the Company's proxy statement pursuant
to Rule 14a-8 considered at an annual meeting must provide written notice of
such nomination or proposal and appropriate supporting documentation, as set
forth in the Bylaws, to the Company at its principal executive offices not less
than 75 days nor more than 90 days prior to the anniversary of the immediately
preceding annual meeting of stockholders (the "Anniversary Date"); provided,
however, that in the event that the annual meeting is scheduled to be held more
than seven calendar days prior, or more than 60 days subsequent, to the
Anniversary Date, such nominations or proposals must be delivered to the Company
not earlier than the 90th day prior to such meeting and not later than the later
of the 75th day prior to such annual meeting or the twentieth day following the
earlier of the day on which public announcement of the meeting is first made or
notice of the meeting is mailed to stockholders. Any such proposal should be
mailed to: Reckson Service Industries, Inc., 10 East 50(th) Street, New York,
New York 10022, Attn: Mitchell D. Rechler, Secretary.

OTHER MATTERS

The Board of Directors does not know of any matters other than those
described in this Proxy Statement that will be presented for action at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the best judgment of the proxy holders.

16
<PAGE>

Exhibit A

RECKSON SERVICE INDUSTRIES, INC.
1999 STOCK OPTION PLAN

ARTICLE 1. GENERAL

1.1. PURPOSE. The purpose of the Reckson Service Industries, Inc. 1999
Stock Option Plan (the "Plan") is to provide for a broad base of officers,
directors and key employees, as defined in Section 1.3, of Reckson Service
Industries, Inc. (the "Company") and certain of its Affiliates (as defined
below) an equity-based incentive to maintain and enhance the performance and
profitability of the Company. It is the further purpose of this Plan to permit
the granting of awards that will constitute performance-based compensation for
certain executive officers, as described in Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), and regulations promulgated
thereunder.

1.2. ADMINISTRATION.

(a) The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board"), which
Committee shall consist of two or more directors, or by the Board. It is
intended that from and after the initial public offering of Common Stock, the
directors appointed to serve on the Committee shall be "non-employee directors"
(within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act
of 1934 (the "Act")) and "outside directors" (within the meaning of Code Section
162(m)); however, the mere fact that a Committee member shall fail to qualify
under either of these requirements shall not invalidate any award made by the
Committee which award is otherwise validly made under the Plan. The members of
the Committee shall be appointed by, and may be changed at any time and from
time to time in the discretion of, the Board.

(b) The Committee shall have the authority (i) to exercise all of the
powers granted to it under the Plan, (ii) to construe, interpret and implement
the Plan and any Plan agreements executed pursuant to the Plan, (iii) to
prescribe, amend and rescind rules relating to the Plan, (iv) to make any
determination necessary or advisable in administering the Plan, and (v) to
correct any defect, supply any omission and reconcile any inconsistency in the
Plan. The Committee shall have no authority to interpret or administer Article 5
of the Plan or to take any action with respect to any awards thereunder.

(d) No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any award
hereunder.

(e) Notwithstanding anything to the contrary contained herein, the
Board may, in its sole discretion, at any time and from time to time, resolve to
administer the Plan, in which case, the term Committee as used herein shall be
deemed to mean the Board.

<PAGE>

1.3. PERSONS ELIGIBLE FOR AWARDS. Awards under the Plan may be made to
such officers, directors and key employees ("key personnel") of the Company or
its Affiliates as the Committee shall from time to time in its sole discretion
select. No member of the Board who is not an officer or employee of the Company
or an Affiliate (an "Independent Director") shall be eligible to receive any
Awards under the Plan, except for non-qualified stock options granted
automatically under the provisions of Article 5 of the Plan.

1.4. TYPES OF AWARDS UNDER PLAN.

(a) Awards may be made under the Plan in the form of (i) stock options
("options"), (ii) restricted stock awards, and (iii) unrestricted stock awards
in lieu of cash compensation, all as more fully set forth in Articles 2 and 3.

(b) Options granted under the Plan may be either (i) "nonqualified"
stock options ("NQSOs") or (ii) options intended to qualify for incentive stock
option treatment described in Section 422 of the Internal Revenue Code of 1986
(the "Code") ("ISOs"). Grants of options made under the Plan may also be made in
lieu of cash fees otherwise payable to Directors of the Company or cash bonuses
payable to employees of the Company or any Affiliate.

(c) All options when granted are intended to be NQSOs, unless the
applicable Plan agreement explicitly states that the option is intended to be an
ISO. If an option is intended to be an ISO, and if for any reason such option
(or any portion thereof) shall not qualify as an ISO, then, to the extent of
such nonqualification, such option (or portion) shall be regarded as a NQSO
appropriately granted under the Plan provided that such option (or portion)
otherwise meets the Plan's requirements relating to NQSOs.

1.5. SHARES AVAILABLE FOR AWARDS.

(a) Subject to Section 4.5 (relating to adjustments upon changes in
capitalization), as of any date the total number of shares of Common Stock with
respect to which awards may be granted under the Plan, shall equal the excess
(if any) of 1,750,000 shares of Common Stock, over (i) the number of shares of
Common Stock subject to outstanding awards under the Plan, (ii) the number of
shares in respect of which options have been exercised, or grants of restricted
or unrestricted Common Stock have been made pursuant to the Plan, and (iii) the
number of shares issued subject to forfeiture restrictions which have lapsed. In
any year, a person eligible for awards under the Plan may not be granted options
under the Plan covering a total of more than 1,000,000 shares of Common Stock.

In accordance with (and without limitation upon) the preceding
sentence, awards may be granted in respect of the following shares of Common
Stock: shares covered by previously-granted awards that have expired, terminated
or been cancelled for any reason whatsoever (other than by reason of exercise or
vesting).

(b) Shares of Common Stock that shall be subject to issuance pursuant
to the Plan shall be authorized and unissued or treasury shares of Common Stock,
or shares of Common Stock purchased on the open market or from shareholders of
the Company for such purpose.

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(c) Without limiting the generality of the foregoing, the Committee
may, with the grantee's consent, cancel any award under the Plan and issue a new
award in substitution therefor upon such terms as the Committee may in its sole
discretion determine, provided that the substituted award shall satisfy all
applicable Plan requirements as of the date such new award is made.

1.6. DEFINITIONS OF CERTAIN TERMS.

(a) The term "Affiliate" as used herein means RSI Fund Management, LLC,
RSVP Holdings, LLC and Reckson Strategic Venture Partners, LLC, and any person
or entity as subsequently approved by the Board which, at the time of reference,
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the Company.

(b) The term "Cause" shall mean a finding by the Committee that the
recipient of an award under the Plan has (i) acted with gross negligence or
willful misconduct in connection with the performance of his material duties to
the Company or its Affiliates; (ii) defaulted in the performance of his material
duties to the Company or its Affiliates and has not corrected such action within
15 days of receipt of written notice thereof; (iii) willfully acted against the
best interests of the Company or its Affiliates, which act has had a material
and adverse impact on the financial affairs of the Company or its Affiliates; or
(iv) been convicted of a felony or committed a material act of common law fraud
against the Company, its Affiliates or their employees and such act or
conviction has, or the Committee reasonably determines will have, a material
adverse effect on the interests of the Company or its Affiliates.

(c) The term "Common Stock" as used herein means the shares of common
stock of the Company as constituted on the effective date of the Plan, and any
other shares into which such common stock shall thereafter be changed by reason
of a recapitalization, merger, consolidation, split-up, combination, exchange of
shares or the like.

(d) The "fair market value" (or "FMV") as of any date and in respect of
any share of Common Stock shall be:

(i) if the Common Stock is listed for trading on the New
York Stock Exchange, the closing price, regular way, of the
Common Stock as reported on the New York Stock Exchange
Composite Tape, or if no such reported sale of the Common
Stock shall have occurred on such date, on the next preceding
date on which there was such a reported sale; or

(ii) if the Common Stock is not so listed but is listed on
another national securities exchange or authorized for
quotation on the National Association of Securities Dealers
Inc.'s NASDAQ National Market System ("NASDAQ/NMS"), the
closing price, regular way, of the Common Stock on such
exchange or NASDAQ/NMS, as the case may be, on which the
largest number of shares of Common Stock have been traded in
the aggregate on the preceding twenty trading days, or if no
such reported sale of the Stock shall have occurred on such
date on such exchange or NASDAQ/NMS, as the case may be, on
the preceding date on

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<PAGE>

which there was such a reported sale on such exchange or
NASDAQ/NMS, as the case may be; or

(iii) if the Common Stock is not listed for trading on a
national securities exchange or authorized for quotation on
NASDAQ/NMS, the average of the closing bid and asked prices as
reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or, if no such prices
shall have been so reported for such date, on the next
preceding date for which such prices were so reported; or

(iv) if the Common Stock is not listed for trading on a
national securities exchange or authorized for quotation on
NASDAQ/NMS or NASDAQ generally, the average of the closing bid
and asked prices as reported on the OTC Bulletin Board or, if
no such prices shall have been so reported for such date, on
the next preceding date for which such prices were so
reported.

1.7. AGREEMENTS EVIDENCING AWARDS.

(a) Options and restricted stock awards granted under the Plan shall be
evidenced by written agreements. Any such written agreements shall (i) contain
such provisions not inconsistent with the terms of the Plan as the Committee may
in its sole discretion deem necessary or desirable and (ii) be referred to
herein as "Plan Agreements."

(b) Each Plan agreement shall set forth the number of shares of Common
Stock subject to the award granted thereby.

(c) Each Plan agreement with respect to the granting of an option shall
set forth the amount (the "option exercise price") payable by the grantee to the
Company in connection with the exercise of the option evidenced thereby. Except
as otherwise provided in Sections 2.6 and 5.1, the option exercise price per
share may be less than, equal to or greater than the fair market value of a
share of Common Stock on the date the option is granted.

ARTICLE 2. STOCK OPTIONS

2.1. OPTION AWARDS.

(a) GRANT OF STOCK OPTIONS. The Committee may grant options to purchase
shares of Common Stock in such amounts and subject to such terms and conditions
as the Committee shall from time to time in its sole discretion determine,
subject to the terms of the Plan.

(b) DIVIDEND EQUIVALENT RIGHTS. To the extent expressly provided by the
Committee at the time of the grant, each NQSO granted under this Section 2.1
shall also generate Dividend Equivalent Rights ("DERs"), which shall entitle the
grantee to receive an additional share of Common Stock for each DER received
upon the exercise of the NQSO, at no additional cost, based on the formula set
forth herein. As of the last business day of each calendar quarter, the amount
of dividends paid by the Company on each share of Common Stock with respect to
that quarter shall be divided by the FMV per share to determine the actual
number of DERs accruing on each share subject to the NQSO. Such amount of DERs
shall be multiplied by the number of

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<PAGE>

shares covered by the NQSO to determine the number of DERs which accrued during
such quarter. The provisions of this Section 2.1(b) shall not be amended more
than once every six months other than to comport with changes in the Code, the
Employee Retirement Income Security Act ("ERISA") or the rules thereunder.

FOR EXAMPLE. Assume that a grantee holds a NQSO to purchase 600 shares
of Common Stock. Further assume that the dividend per share for the first
quarter was $0.10, and that the FMV per share on the last business day of the
quarter was $20. Therefore, .005 DER would accrue per share for that quarter and
such grantee would receive three DERs for that quarter (600 X .005). For
purposes of determining how many DERs would accrue during the second quarter,
the NQSO would be considered to be for 603 shares of Common Stock.

2.2. EXERCISABILITY OF OPTIONS. Subject to the other provisions of the
Plan:

(a) EXERCISABILITY DETERMINED BY PLAN AGREEMENT. Each Plan agreement
shall set forth the period during which and the conditions subject to which the
option shall be exercisable (including, but not limited to vesting of such
options), as determined by the Committee in its discretion.

(b) PARTIAL EXERCISE PERMITTED. Unless the applicable Plan agreement
otherwise provides, an option granted under the Plan may be exercised from time
to time as to all or part of the full number of shares for which such option is
then exercisable, in which event the DERs relating to the portion of the option
being exercised shall also be exercised.

(i) An option shall be exercisable by the filing of a written
notice of exercise with the Company, on such form and in such
manner as the Committee shall in its sole discretion
prescribe, and by payment in accordance with Section 2.4.

(ii) Unless the applicable Plan agreement otherwise provides,
or the Committee in its sole discretion otherwise determines,
the date of exercise of an option shall be the date the
Company receives such written notice of exercise and payment.

2.3. LIMITATION ON EXERCISE. Notwithstanding any other provision of the
Plan, no Plan agreement shall permit an ISO to be exercisable more than 10 years
after the date of grant.

2.4. PAYMENT OF OPTION PRICE.

(a) TENDER DUE UPON NOTICE OF EXERCISE. Unless the applicable Plan
agreement otherwise provides or the Committee in its sole discretion otherwise
determines, any written notice of exercise of an option shall be accompanied by
payment of the full purchase price for the shares being purchased.

(b) MANNER OF PAYMENT. Payment of the option exercise price shall be
made in any combination of the following:

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<PAGE>

(i) by certified or official bank check payable to the Company
(or the equivalent thereof acceptable to the Committee);

(ii) by personal check (subject to collection), which may in
the Committee's discretion be deemed conditional;

(iii) with the consent of the Committee in its sole
discretion, by delivery of previously acquired shares of
Common Stock owned by the grantee for at least six months
having a fair market value (determined as of the option
exercise date) equal to the portion of the option exercise
price being paid thereby, provided that the Committee may
require the grantee to furnish an opinion of counsel
acceptable to the Committee to the effect that such delivery
would not result in the grantee incurring any liability under
Section 16(b) of the Act and does not require any Consent (as
defined in Section 4.2); and

(iv) with the consent of the Committee in its sole discretion,
by the full recourse promissory note and agreement of the
grantee providing for payment with interest on the unpaid
balance accruing at a rate not less than that needed to avoid
the imputation of income under Code Section 7872 and upon such
terms and conditions (including the security, if any,
therefor) as the Committee may determine; and

(v) by withholding shares of Common Stock from the shares
otherwise issuable pursuant to the exercise.

(c) CASHLESS EXERCISE. Payment in accordance with Section 2.4(b) may be
deemed to be satisfied, if and to the extent provided in the applicable Plan
agreement, by delivery to the Company of an assignment of a sufficient amount of
the proceeds from the sale of Common Stock acquired upon exercise to pay for all
of the Common Stock acquired upon exercise and an authorization to the broker or
selling agent to pay that amount to the Company, which sale shall be made at the
grantee's direction at the time of exercise, provided that the Committee may
require the grantee to furnish an opinion of counsel acceptable to the Committee
to the effect that such delivery would not result in the grantee incurring any
liability under Section 16 of the Act and does not require any Consent (as
defined in Section 4.2).

(d) ISSUANCE OF SHARES. As soon as practicable after receipt of full
payment, the Company shall, subject to the provisions of Section 4.2, deliver to
the grantee one or more certificates for the shares of Common Stock so
purchased, which certificates may bear such legends as the Company may deem
appropriate concerning restrictions on the disposition of the shares in
accordance with applicable securities laws, rules and regulations or otherwise.

2.5. Default Rules Concerning Termination of Employment.

Subject to the other provisions of the Plan and unless the applicable
Plan agreement otherwise provides:

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<PAGE>

(a) GENERAL RULE. All options granted to a grantee shall terminate upon
the grantee's termination of employment for any reason except to the extent
post-employment exercise of the option is permitted in accordance with this
Section 2.5.

(b) TERMINATION FOR CAUSE. All unexercised or unvested options granted
to a grantee shall terminate and expire on the day a grantee's employment is
terminated for Cause.

(c) REGULAR TERMINATION; LEAVE OF ABSENCE. If the grantee's employment
terminates for any reason other than as provided in subsection (b), (d) or (f)
of this Section 2.5, any awards granted to such grantee which were exercisable
immediately prior to such termination of employment may be exercised, and any
awards subject to vesting may continue to vest, until the earlier of either: (i)
90 days after the grantee's termination of employment and (ii) the date on which
such options terminate or expire in accordance with the provisions of the Plan
(other than this Section 2.5) and the Plan agreement; provided that the
Committee may, in its sole discretion, determine such other period for exercise
in the case of a grantee whose employment terminates solely because the
grantee's employer ceases to be an Affiliate or the grantee transfers employment
with the Company's consent to a purchaser of a business disposed of by the
Company. The Committee may, in its sole discretion, determine (i) whether any
leave of absence (including short-term or long-term disability or medical leave)
shall constitute a termination of employment for purposes of the Plan and (ii)
the effect, if any, of any such leave on outstanding awards under the Plan.

(d) RETIREMENT. If a grantee's employment terminates by reason of
retirement (I.E., THE VOLUNTARY TERMINATION OF EMPLOYEE BY A GRANTEE AFTER
ATTAINING THE AGE OF 55), the options exercisable by the grantee immediately
prior to the grantee's retirement shall be exercisable by the grantee until the
earlier of (i) 12 months after the grantee's retirement and (ii) the date on
which such options terminate or expire in accordance with the provisions of the
Plan (other than this Section 2.5) and the Plan agreement.

(e) DEATH AFTER TERMINATION. If a grantee's employment terminates in
the manner described in subsections (c) or (d) of this Section 2.5 and the
grantee dies within the period for exercise provided for therein, the options
exercisable by the grantee immediately prior to the grantee's death shall be
exercisable by the personal representative of the grantee's estate or by the
person to whom such options pass under the grantee's will (or, if applicable,
pursuant to the laws of descent and distribution) until the earlier of (i) 12
months after the grantee's death and (ii) the date on which such options
terminate or expire in accordance with the provisions of subsections (c) or (d)
of this Section 2.5.

(f) DEATH BEFORE TERMINATION. If a grantee dies while employed by the
Company or any Affiliate, all options granted to the grantee but not exercised
before the death of the grantee, whether or not exercisable by the grantee
before the grantee's death, shall immediately become and be exercisable by the
personal representative of the grantee's estate or by the person to whom such
options pass under the grantee's will (or, if applicable, pursuant to the laws
of descent and distribution) until the earlier of (i) 12 months after the
grantee's death and (ii) the date on which such options terminate or expire in
accordance with the provisions of the Plan (other than this Section 2.5) and the
Plan agreement.

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<PAGE>

2.6. SPECIAL ISO REQUIREMENTS. In order for a grantee to receive
special tax treatment with respect to stock acquired under an option intended to
be an ISO, (i) the Plan must be approved by the Company's shareholders in
accordance with the requirements of Code Section 422(b) and (ii) the grantee of
such option must be, at all times during the period beginning on the date of
grant and ending on the day three months before the date of exercise of such
option, an employee of the Company or any of the Company's parent or subsidiary
corporations (within the meaning of Code Section 424), or of a corporation or a
parent or subsidiary corporation of such corporation issuing or assuming a stock
option in a transaction to which Code Section 424(a) applies. If an option
granted under the Plan is intended to be an ISO, and if the grantee, at the time
of grant, owns stock possessing more than 10% of the total combined voting power
of all classes of stock of the grantee's employer corporation or of its parent
or subsidiary corporation, then (i) the option exercise price per share shall in
no event be less than 110% of the fair market value of the Common Stock on the
date of such grant and (ii) such option shall not be exercisable after the
expiration of five years after the date such option is granted.

ARTICLE 3. RESTRICTED STOCK AND UNRESTRICTED STOCK AWARDS

3.1. RESTRICTED STOCK AWARDS.

(a) GRANT OF AWARDS. The Committee may grant restricted stock awards,
alone or in tandem with other awards, under the Plan in such amounts and subject
to such terms and conditions as the Committee shall from time to time in its
sole discretion determine; provided, however, that the grant of any such
restricted stock awards may be made only in lieu of cash compensation and
bonuses. The vesting of a restricted stock award granted under the Plan may be
conditioned upon the completion of a specified period of employment with the
Company or any Affiliate, upon the attainment of specified performance goals,
and/or upon such other criteria as the Committee may determine in its sole
discretion.

(b) PAYMENT. Each Plan agreement with respect to a restricted stock
award shall set forth the amount (if any) to be paid by the grantee with respect
to such award. If a grantee makes any payment for a restricted stock award which
does not vest, appropriate payment may be made to the grantee following the
forfeiture of such award on such terms and conditions as the Committee may
determine. The Committee shall have the authority to make or authorize loans to
finance, or to otherwise accommodate the financing of, the acquisition or
exercise of a restricted stock award.

(c) FORFEITURE UPON TERMINATION OF EMPLOYMENT. Unless the applicable
Plan agreement otherwise provides or the Committee otherwise determines, (i) if
a grantee's employment terminates for any reason (including death) before all of
his restricted stock awards have vested, such awards shall terminate and expire
upon such termination of employment, and (ii) in the event any condition to the
vesting of restricted stock awards is not satisfied within the period of time
permitted therefor, such unvested shares shall be returned to the Company.

(d) ISSUANCE OF SHARES. The Committee may provide that one or more
certificates representing restricted stock awards shall be registered in the
grantee's name and bear an appropriate legend specifying that such shares are
not transferable and are subject to the terms and conditions of the Plan and the
applicable Plan agreement, or that such certificate or

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<PAGE>

certificates shall be held in escrow by the Company on behalf of the grantee
until such shares vest or are forfeited, all on such terms and conditions as the
Committee may determine. Unless the applicable Plan agreement otherwise
provides, no share of restricted stock may be assigned, transferred, otherwise
encumbered or disposed of by the grantee until such share has vested in
accordance with the terms of such award. Subject to the provisions of Section
4.2, as soon as practicable after any restricted stock award shall vest, the
Company shall issue or reissue to the grantee (or to the grantee's designated
beneficiary in the event of the grantee's death) one or more certificates for
the Common Stock represented by such restricted stock award.

(e) GRANTEES' RIGHTS REGARDING RESTRICTED STOCK. Unless the applicable
Plan agreement otherwise provides: (i) a grantee may vote and receive dividends
on restricted stock awarded under the Plan; and (ii) any stock received as a
distribution with respect to a restricted stock award shall be subject to the
same restrictions as such restricted stock.

3.2. UNRESTRICTED SHARES. The Committee may issue stock under the Plan,
alone or in tandem with other awards, in such amounts and subject to such terms
and conditions as the Committee shall from time to time in its sole discretion
determine; provided, however, that the grant of any such unrestricted stock
awards may be made only in lieu of cash compensation and bonuses.

ARTICLE 4. MISCELLANEOUS

4.1. Amendment of the Plan; Modification of Awards.

(a) PLAN AMENDMENTS. The Board may, without stockholder approval, at
any time and from time to time suspend, discontinue or amend the Plan in any
respect whatsoever, except that (i) no such amendment shall impair any rights
under any award theretofore made under the Plan without the consent of the
grantee of such award and (ii) except as and to the extent otherwise permitted
by Section 4.5 or 4.11, no such amendment shall cause the Plan to fail to
satisfy any applicable requirement under Rule 16b-3 without stockholder
approval.

(b) AWARD MODIFICATIONS. Subject to the terms and conditions of the
Plan (including Section 4.1(a)), the Committee may amend outstanding Plan
agreements with such grantee, including, without limitation, any amendment which
would (i) accelerate the time or times at which an award may vest or become
exercisable and/or (ii) extend the scheduled termination or expiration date of
the award, provided, however, that no modification having a material adverse
effect upon the interest of a grantee in an award shall be made without the
consent of such grantee.

4.2. RESTRICTIONS.

(a) CONSENT REQUIREMENTS. If the Committee shall at any time determine
that any Consent (as hereinafter defined) is necessary or desirable as a
condition of, or in connection with, the granting of any award under the Plan,
the acquisition, issuance or purchase of shares or other rights hereunder or the
taking of any other action hereunder (each such action being hereinafter
referred to as a "Plan Action"), then such Plan Action shall not be taken, in
whole or in part, unless and until such Consent shall have been effected or
obtained to the full satisfaction of the Committee. Without limiting the
generality of the foregoing, the Committee shall be

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<PAGE>

entitled to determine not to make any payment whatsoever until Consent has been
given if (i) the Committee may make any payment under the Plan in cash, Common
Stock or both, and (ii) the Committee determines that Consent is necessary or
desirable as a condition of, or in connection with, payment in any one or more
of such forms.

(b) CONSENT DEFINED. The term "Consent" as used herein with respect to
any Plan Action means (i) any and all listings, registrations or qualifications
in respect thereof upon any securities exchange or other self-regulatory
organization or under any federal, state or local law, rule or regulation, (ii)
the expiration, elimination or satisfaction of any prohibitions, restrictions or
limitations under any federal, state or local law, rule or regulation or the
rules of any securities exchange or other self-regulatory organization, (iii)
any and all written agreements and representations by the grantee with respect
to the disposition of shares, or with respect to any other matter, which the
Committee shall deem necessary or desirable to comply with the terms of any such
listing, registration or qualification or to obtain an exemption from the
requirement that any such listing, qualification or registration be made, and
(iv) any and all consents, clearances and approvals in respect of a Plan Action
by any governmental or other regulatory bodies or any parties to any loan
agreements or other contractual obligations of the Company or any Affiliate.

4.3. NONTRANSFERABILITY. Except as set forth in any Plan Agreement, no
award granted to any grantee under the Plan or under any Plan agreement shall be
assignable or transferable by the grantee other than by will or by the laws of
descent and distribution. During the lifetime of the grantee, all rights with
respect to any award granted to the grantee under the Plan or under any Plan
agreement shall be exercisable only by the grantee.

4.4. WITHHOLDING TAXES.

(a) Whenever under the Plan shares of Common Stock are to be delivered
pursuant to an award, the Committee may require as a condition of delivery that
the grantee remit an amount sufficient to satisfy all federal, state and other
governmental withholding tax requirements related thereto. Whenever cash is to
be paid under the Plan, the Company may, as a condition of its payment, deduct
therefrom, or from any salary or other payments due to the grantee, an amount
sufficient to satisfy all federal, state and other governmental withholding tax
requirements related thereto or to the delivery of any shares of Common Stock
under the Plan.

(b) Without limiting the generality of the foregoing, (i) a grantee may
elect to satisfy all or part of the foregoing withholding requirements by
delivery of unrestricted shares of Common Stock owned by the grantee for at
least six months (or such other period as the Committee may determine) having a
fair market value (determined as of the date of such delivery by the grantee)
equal to all or part of the amount to be so withheld, provided that the
Committee may require, as a condition of accepting any such delivery, the
grantee to furnish an opinion of counsel acceptable to the Committee to the
effect that such delivery would not result in the grantee incurring any
liability under Section 16(b) of the Act and (ii) the Committee may permit any
such delivery to be made by withholding shares of Common Stock from the shares
otherwise issuable pursuant to the award giving rise to the tax withholding
obligation (in which event the date of delivery shall be deemed the date such
award was exercised).

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<PAGE>

4.5. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. If and to the extent
specified by the Committee, the number of shares of Common Stock which may be
issued pursuant to awards under the Plan, the maximum number of options which
may be granted to any one person in any year, the number of shares of Common
Stock subject to awards, the option exercise price of options theretofore
granted under the Plan, and the amount payable by a grantee in respect of an
award, shall be appropriately adjusted (as the Committee may determine) for any
change in the number of issued shares of Common Stock resulting from the
subdivision or combination of shares of Common Stock or other capital
adjustments, or the payment of a stock dividend after the effective date of the
Plan, or other change in such shares of Common Stock effected without receipt of
consideration by the Company; provided that any awards covering fractional
shares of Common Stock resulting from any such adjustment shall be eliminated
and provided further, that each ISO granted under the Plan shall not be adjusted
in a manner that causes such option to fail to continue to qualify as an ISO
within the meaning of Code Section 422. Adjustments under this Section shall be
made by the Committee, whose determination as to what adjustments shall be made,
and the extent thereof, shall be final, binding and conclusive.

4.6. RIGHT OF DISCHARGE RESERVED. Nothing in the Plan or in any Plan
agreement shall confer upon any person the right to continue in the employment
of the Company or an Affiliate or affect any right which the Company or an
Affiliate may have to terminate the employment of such person.

4.7. NO RIGHTS AS A STOCKHOLDER. No grantee or other person shall have
any of the rights of a stockholder of the Company with respect to shares subject
to an award until the issuance of a stock certificate to him for such shares.
Except as otherwise provided in Section 4.5, no adjustment shall be made for
dividends, distributions or other rights (whether ordinary or extraordinary, and
whether in cash, securities or other property) for which the record date is
prior to the date such stock certificate is issued. In the case of a grantee of
an award which has not yet vested, the grantee shall have the rights of a
stockholder of the Company if and only to the extent provided in the applicable
Plan agreement.

4.8. NATURE OF PAYMENTS.

(a) Any and all awards or payments hereunder shall be granted, issued,
delivered or paid, as the case may be, in consideration of services performed
for the Company or for its Affiliates by the grantee.

(b) No such awards and payments shall be considered special incentive
payments to the grantee or, unless otherwise determined by the Committee, be
taken into account in computing the grantee's salary or compensation for the
purposes of determining any benefits under (i) any pension, retirement, life
insurance or other benefit plan of the Company or any Affiliate or (ii) any
agreement between the Company or any Affiliate and the grantee.

(c) By accepting an award under the Plan, the grantee shall thereby
waive any claim to continued exercisability or vesting of an award or to damages
or severance entitlement related to non-continuation of the award beyond the
period provided herein or in the applicable Plan agreement, notwithstanding any
contrary provision in any written employment contract with the grantee, whether
any such contract is executed before or after the grant date of the award.

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<PAGE>

4.9. NON-UNIFORM DETERMINATIONS. The Committee's determinations under
the Plan need not be uniform and may be made by it selectively among persons who
receive, or are eligible to receive, awards under the Plan (whether or not such
persons are similarly situated). Without limiting the generality of the
foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations, and to enter into non-uniform and
selective Plan agreements, as to (a) the persons to receive awards under the
Plan, (b) the terms and provisions of awards under the Plan, and (c) the
treatment of leaves of absence pursuant to Section 2.7(c).

4.10. OTHER PAYMENTS OR AWARDS. Nothing contained in the Plan shall be
deemed in any way to limit or restrict the Company, any Affiliate or the
Committee from making any award or payment to any person under any other plan,
arrangement or understanding, whether now existing or hereafter in effect.

4.11. REORGANIZATION.

(a) In the event that the Company is merged or consolidated with
another corporation and, whether or not the Company shall be the surviving
corporation, there shall be any change in the shares of Common Stock by reason
of such merger or consolidation, or in the event that all or substantially all
of the assets of the Company are acquired by another person, or in the event of
a reorganization or liquidation of the Company (each such event being
hereinafter referred to as a "Reorganization Event") or in the event that the
Board shall propose that the Company enter into a Reorganization Event, then the
Committee may in its discretion, by written notice to a grantee, provide that
his options will be terminated unless exercised within 30 days (or such longer
period as the Committee shall determine in its sole discretion) after the date
of such notice; provided that if, and to the extent that, the Committee takes
such action with respect to the grantee's options not yet exercisable, the
Committee shall also accelerate the dates upon which such options shall be
exercisable. The Committee also may in its discretion by written notice to a
grantee provide that all or some of the restrictions on any of the grantee's
awards may lapse in the event of a Reorganization Event upon such terms and
conditions as the Committee may determine.

(b) Whenever deemed appropriate by the Committee, the actions referred
to in Section 4.11(a) may be made conditional upon the consummation of the
applicable Reorganization Event.

4.12. SECTION HEADINGS. The section headings contained herein
are for the purposes of convenience only and are not intended to define or limit
the contents of said sections.

4.13. EFFECTIVE DATE AND TERM OF PLAN.

(a) The Plan has been adopted and shall be effective as of March 24,
1999.

(b) The Plan shall terminate as of March 24, 2009, and no awards shall
thereafter be made under the Plan. Notwithstanding the foregoing, all awards
made under the Plan prior to such termination date shall remain in effect until
such awards have been satisfied or terminated in accordance with the terms and
provisions of the Plan and the applicable Plan agreement.

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<PAGE>

4.14. GOVERNING LAW. The Plan shall be governed by the laws of the
State of New York applicable to agreements made and to be performed entirely
within such state.

ARTICLE 5. STOCK OPTIONS GRANTED TO INDEPENDENT DIRECTORS

5.1. AUTOMATIC GRANT OF OPTIONS. Each Independent Director appointed or
elected for the first time shall automatically be granted a NQSO to purchase
1,000 shares of Common Stock on his date of appointment or election. Each
Independent Director who is serving as Director of the Company on the fifth
business day after each annual meeting of shareholders shall automatically be
granted on such day NQSOs to acquire 500 shares of Common Stock; provided,
however, that an Independent Director who is appointed or elected for the first
time shall not be eligible to receive NQSOs pursuant to this sentence for the
year of his initial appointment or election. The exercise price per share for
the Common Stock covered by a NQSO granted pursuant to this Section 5.1 shall be
equal to the FMV of the Common Stock on the date the NQSO is granted.

5.2. EXERCISE; TERMINATION; NON-TRANSFERABILITY

(a) All NQSOs granted under this Article 5 shall be immediately
exercisable. No NQSO issued under this Article 5 shall be exercisable after the
expiration of ten years from the date upon which such NQSO is granted.

(b) The rights of an Independent Director in a NQSO granted under this
Article 5 shall terminate twelve months after such Director ceases to be a
Director of the Company or the specified expiration date, if earlier; provided,
however, that such rights shall terminate immediately on the date on which an
Independent Director ceases to be a Director by reason of termination of his
directorship on account of any act of (i) fraud or intentional misrepresentation
or (ii) embezzlement, misappropriation or conversion of assets or opportunities
of the Company.

(c) No NQSO granted under this Article 5 shall be transferable by the
grantee otherwise than by will or by the laws of descent and distribution, and
such grantee shall be exercisable during the grantee's lifetime only by the
grantee. Any NQSO granted to an Independent Director and outstanding on the date
of his death may be exercised by the legal representative or legatee of the
grantee for the period of twelve months from the date of death or until the
expiration of the stated term of the option, if earlier.

(d) NQSOs granted under this Article 5 may be exercised only by written
notice to the Company specifying the number of shares to be purchased. Payment
of the full purchase price of the shares to be purchased may be made by
certified or official bank check payable to the Company. A grantee shall have
the rights of a stockholder only as to shares acquired upon the exercise of a
NQSO and not as to unexercised NQSOs.

5.3. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The number of shares
of Common Stock subject to awards and the option exercise price of NQSOs
theretofore granted under this Article 5, and the amount payable by a grantee in
respect of an award, shall be appropriately adjusted for any change in the
number of issued shares of Common Stock resulting from the subdivision or
combination of shares of Common Stock or other capital adjustments, or the
payment of a stock dividend after the effective date of the Plan, or other
change in such shares of

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<PAGE>

Common Stock effected without receipt of consideration by the Company; provided
that any awards covering fractional shares of Common Stock resulting from any
such adjustment shall be eliminated.

5.4 LIMITED TO INDEPENDENT DIRECTORS. The provisions of this Article 5
shall apply only to NQSOs granted or to be granted to Independent Directors,
shall be interpreted as if this Article 5 constituted a separate plan of the
Company and shall not be deemed to modify, limit or otherwise apply to any other
provision of this Plan or to any NQSO issued under this Plan to a participant
who is not an Independent Director of the Company. To the extent inconsistent
with the provisions of any other Section of this Plan, the provisions of this
Article 5 shall govern the rights and obligations of the Company and Independent
Directors respecting NQSOs granted or to be granted to Independent Directors.
The provisions of this Article 5 shall not be amended more than once every six
months other than to comport with changes in the Code, ERISA or the rules
thereunder.

<PAGE>

RECKSON SERVICE INDUSTRIES, INC.

PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 24, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.

The undersigned hereby appoints each of Scott H. Rechler and Paul F. Amoruso as
proxies, with full power of substitution in each, to vote all shares of common
stock, par value $0.01 per share (the "Common Stock"), of Reckson Service
Industries, Inc. (the "Company"), which the undersigned is entitled to vote at
the annual meeting of shareholders of the Company to be held on June 24, 1999,
at 9:30 A.M., Eastern Time, and at any adjournment thereof, on all matters set
forth herein.

THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED
"FOR" EACH OF THE MATTERS STATED.

1. ELECTION OF DIRECTORS:

Nominees: Scott H. Rechler and Paul F. Amoruso

[ ] FOR [ ] WITHHELD

[ ] INSTRUCTION: To withhold authority to vote
for any individual nominee, write that
nominee's name in the space provided below.

-----------------------------------------

2. RATIFICATION of the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 1999:

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. APPROVAL of the 1999 Stock Option Plan:

[ ] FOR [ ] AGAINST [ ] ABSTAIN

4. GRANT AUTHORITY to vote upon such other matters as may properly come
before the meeting, including the adjournment of meeting, as the
proxies determine to be in the best interest of the Company:

[ ] FOR [ ] AGAINST [ ] ABSTAIN

Dated: , 1999
--------------------------

--------------------------------------

--------------------------------------
Signature of Shareholder(s)

IMPORTANT: Please mark this Proxy, date, sign exactly as your name(s) appear(s),
and return in the enclosed envelope. If shares are held jointly,
signature need only include one name. Trustees and others signing in
a representative capacity should so indicate.