SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
`
CURRENT REPORT
-------------
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 19, 1999
RECKSON SERVICE INDUSTRIES, INC.
(Exact name of Registrant as specified in its Charter)
Delaware
(State of Incorporation)
0-30162 11-3383642
(Commission File Number) (IRS Employer Id. Number)
10 East 50th Street 10022
New York, New York (Zip Code)
(Address of principal executive offices)
(212) 931-8000
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events.
Reckson Service Industries, Inc. ("RSI" or the "Company") and a
wholly-owned subsidiary have entered into a stock purchase agreement (the
"Agreement") with Cahill, Warnock Strategic Partners Fund L.P., Strategic
Associates, L.P., and David L. Warnock (collectively, the "Sellers") to purchase
all of the 4,694,560 shares of Series A Convertible Preferred Stock, 626,202
shares of the Series B Convertible Preferred Stock and 704,184 warrants and
15,000 options to purchase Class A Common Stock of VANTAS Incorporated
("VANTAS") owned by the Sellers (the "Shares"). In connection with the
Agreement, the two director nominees of the Sellers on the Board of Directors of
VANTAS (the "Board") were replaced with individuals designated by RSI. As a
result, RSI increased its representation on the Board to six out of ten
directors.
VANTAS is the largest owner of executive office suites in the United
States, with 190 suites.
Subject to certain adjustments contained in the Agreement, the purchase
price for each transferred share is (i) $5.60 in cash and (ii) 0.1263 of a share
of common stock, par value $0.01 per share ("RSI Common Stock"), of the Company.
The Sellers will also receive registration rights in respect of the RSI Common
Stock.
The Sellers had previously entered into a stockholders agreement with
certain other holders of VANTAS securities (the "Tag Along Holders") under which
the Tag Along Holders have (i) a right of first refusal to acquire the Shares,
which right lapses on October 14, 1999 and (ii) "tag along" rights to sell their
VANTAS securities together with, and generally on the same terms as, the
Sellers. The Company has agreements in principle with certain of the Tag Along
Holders (the "Significant Tag Along Holders"), pursuant to which such
Significant Tag Along Holders will waive their rights of first refusal and
exercise their tag along rights. Under certain circumstances, the Sellers
receiving RSI common stock have the right to receive an additional payment
during the 13th month subsequent to the closing of the transaction, provided
that such right ceases to exist if the closing price of RSI common stock for any
consecutive 15 days is $19.00 per share or higher.
It is estimated that upon consummation of the transaction RSI's
ownership will increase from approximately 35% to between approximately 77% and
95%, depending upon whether the Tag Along Holders exercise their rights to sell
their shares. RSI's additional investment will range from $82 million of cash
and 2.0 million shares of RSI common stock to $121 million of cash and 3.0
million shares of RSI common stock, depending on the level of participation of
the Tag Along Holders.
RSI, through a subsidiary, has also entered into an agreement to
purchase an entity which indirectly owns shares of VANTAS, membership interests
in OnSite Commerce and Content LLC ("OnSite Commerce") and OnSite Access, Inc.
("OnSite Access") from certain affiliates of Jon L. Halpern in exchange for
2,452,570 shares of RSI Common Stock, $15,129,272 in cash and a promissory note
in the amount of $5,307,200 payable on or before December 30, 1999.
The purchase of the shares of OnSite Access will increase RSI's
ownership to approximately 42% and the purchase of the membership interests of
OnSite Commerce increased RSI's ownership in OnSite Commerce to 100%. The shares
of VANTAS owned by the affiliate of Mr. Halpern are included in the above
description of the Significant Tag Along Holders.
OnSite Access is a building-centric integrated communications provider
supplying high speed Internet access, digital voice, broadband data and enhanced
communications services to the tenants of commercial office buildings. OnSite
Commerce is a company through which RSI will seek to develop a portal for the
delivery of Internet-based business to business outsourced business services
offered by RSI or its partner companies.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
10.1 Stock Purchase Agreement, dated as of August 19, 1999, among
Reckson Service Industries, Inc., RSI I/O Holdings, Inc.,
Cahill, Warnock Strategic Partners Fund L.P., Strategic
Associates, L.P. and David L. Warnock.
10.2 Letter Agreement, dated as of September 23, 1999, among
Reckson Service Industries, Inc., RSI I/O Holdings, Inc.,
RSI-OnSite Holdings LLC, RSI-OSA Holdings, Inc., JAH Realties,
L.P., Veritech Ventures LLC and JAH I/O LLC.
10.3 Letter of Amendment to Letter Agreement, dated as of September
29, 1999, among Reckson Service Industries, Inc., RSI I/O
Holdings, Inc., RSI-OnSite Holdings LLC, RSI-OSA Holdings,
Inc., JAH Realties, L.P., Veritech Ventures LLC and JAH I/O
LLC.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RECKSON SERVICE INDUSTRIES, INC.
By: /s/ Michael Maturo
-----------------------------
Michael Maturo
Executive Vice President,
Chief Financial Officer and Treasurer
Date: October 12, 1999
<PAGE>
EXHIBIT 10.1
AGREEMENT
AGREEMENT, dated as of August 19, 1999 (this "Agreement"), by and
among RECKSON SERVICE INDUSTRIES, INC., a Delaware corporation ("RSI"), RSI
I/O HOLDINGS, INC., a Delaware corporation (together with its affiliates, the
"Buyer"), and CAHILL, WARNOCK STRATEGIC PARTNERS FUND L.P., a Delaware limited
partnership ("CW"), STRATEGIC ASSOCIATES, L.P., a Delaware limited partnership
("SA"), and DAVID L. WARNOCK, an individual ("DW"; and together with CW and
SA, the "Sellers").
RECITALS
WHEREAS, each of the Sellers is the record and beneficial owner of
the number of Series A Convertible Preferred Stock, par value $0.01 per share
("Series A Stock"), Series B Convertible Preferred Stock, par value $0.01 per
share ("Series B Stock"), warrants ("Warrants") to purchase Class A Common
Stock, par value $0.01 per share ("Class A Common Stock"), and options
("Options") to purchase Class A Common Stock, of VANTAS Incorporated, a Nevada
corporation, f/k/a/ALLIANCE National Incorporated (the "Company"), set forth
opposite their respective name on Schedule A annexed hereto; and
WHEREAS, a bona fide offer (a copy of which is attached hereto as
Exhibit A; the "Offer Notice") has been made by the Buyer to the Sellers to
purchase all of the Series A Stock, the Series B Stock, the Warrants and the
Options owned by each of the Sellers (collectively, the "Transferred Shares"),
and each of the Sellers desires to sell to the Buyer, and the Buyer desires to
purchase from each of the Sellers, the Transferred Shares, upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and undertakings contained
in this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Sellers and the Buyer hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE
SECTION 1.1 Purchase and Sale of the Transferred Shares. Upon the
terms and subject to the conditions set forth in this Agreement, the Buyer has
offered to purchase from the Sellers at the Closing (as defined below), the
Transferred Shares, free and clear of any title defect, objection, security
interest, pledge, encumbrance, mortgage, lien, charge, claim, option,
preferential arrangement or restriction of any kind, including, but not
limited to, any restriction on the use, voting, transfer, receipt of income or
other exercise of any attributes of ownership (collectively, "Liens"), other
than those Liens expressly created by the Fifth Amended and Restated
Stockholders' Agreement dated as of July 29, 1999 (the "Stockholders'
Agreement") by and among the Company and the Securityholders identified
therein, and the Sellers have agreed to accept such offer as provided in this
Agreement.
SECTION 1.2 Purchase Price; Deposit; Exercise of Options and
Warrants.
(a) The purchase price (the "Purchase Price") for each Transferred
Share shall be: (i) Five Dollars and sixty cents ($5.60) in cash and (ii)
0.1263 of a share (the "RSI Shares") of common stock, par value $.01 per
share, of Reckson Service Industries, Inc., a Delaware corporation ("RSI")
(which equates to a value of Nineteen Dollars ($19.00) per RSI Share) to each
Seller who is an "accredited investor," as that term is defined in Regulation
D under the Securities Act of 1933, as amended. If the Buyer does not deliver
to the Sellers an Exercise Notice (as defined in Section 1.2(c) below), the
cash portion of the Purchase Price shall be reduced by One Million Two Hundred
Twenty Eight Thousand Ninety Eight Dollars and sixty six cents
($1,228,098.66), which represents the aggregate exercise price of the Options
and Warrants.
(b) Simultaneous with the execution and delivery of this Agreement,
the Buyer is delivering Five Million ($5,000,000.00) Dollars (the "Deposit")
to Herrick, Feinstein LLP, counsel to the Buyer, to be held in escrow for the
benefit of the Sellers as a down payment towards the Purchase Price pursuant
to the Escrow Agreement attached hereto as Exhibit B. Sellers agree that the
Buyer, in its sole discretion, can substitute the cash Deposit with an
irrevocable letter of credit, in form acceptable to the Sellers in their
reasonable judgment, in the amount of the Deposit for the benefit of the
Sellers. Upon termination of this Agreement as a result of the failure of any
of the conditions contained in Section 6.1 of this Agreement being satisfied,
the Deposit shall be immediately returned to the Buyer. Upon execution and
delivery of this Agreement, Herrick, Feinstein LLP shall provide written
confirmation to the Sellers that it has received the Deposit and that it is
holding the Deposit for the benefit of the Sellers in accordance with the
terms of this Section 1.2(b). If this Agreement is terminated or not performed
by the Buyer for any reason other than the failure of any of the conditions
contained in Section 6.1 of this Agreement being satisfied, the Deposit shall
be immediately delivered to the Sellers. Upon Closing, the Deposit shall be
delivered to the Sellers.
(c) The Sellers agree that anytime after forty-five (45) days from
the date of this Agreement, the Buyer, in its sole discretion, can direct the
Sellers, upon notice (the "Exercise Notice") thereto, to exercise the Options
and Warrants. The Buyer, if it so determines, will deliver the Exercise Notice
with sufficient time to enable the Sellers to duly exercise the Options and
Warrants and obtain, prior to the Closing Date (as defined below), the stock
certificates evidencing the Class A Common Stock issued upon exercise of the
Options and Warrants. If the Sellers become the record and beneficial owners
of Class A Common Stock as a result of the exercise or conversion of the
Options and Warrants, all references in this Agreement to the Transferred
Shares shall be deemed to include such Class A Common Stock in lieu of the
Options and Warrants.
(d) Upon the one-year anniversary date of the Closing and for thirty
days thereafter (time being of the essence), the Sellers who owned shares of
Series A Stock that were transferred to the Buyer and have been paid the
Purchase Price, in part, with RSI Shares, may request, by written notice to
RSI, that RSI pay such Sellers the difference between $19.00 per RSI Share
received as part of the Purchase Price and held by such Sellers on the date
such notice is given and the closing price (if lower than $19.00) of the RSI
Shares on the date such notice is given, provided, however, that (i) the right
to give such notice to RSI shall automatically and irrevocably expire if the
average of the volume weighted average closing price of RSI Shares for any
consecutive fifteen (15) days commencing from the date of this Agreement prior
to the giving of the aforesaid notice is $19.00 per share or higher and (ii)
the right to such payment at all times shall be adjusted to take into account
any additional shares of RSI stock or other securities that are acquired by or
issuable to the Sellers after the Closing by reason of stock rights or
options, warrants, stock splits, stock distributions, stock dividends or other
similar mechanisms or events by which additional shares of stock are conveyed
or will be conveyed to the Sellers by reason of their holding or having held
the RSI Shares as part of the Purchase Price.
SECTION 1.3 Closing; Closing Date.
(a) Subject to the terms and conditions of this Agreement, the sale
and purchase of the Transferred Shares contemplated hereby shall take place at
a closing (the "Closing") to be held at the offices of Herrick, Feinstein LLP,
2 Park Avenue, New York, New York 10016 at 10:00 A.M. local time, on the
ninetieth (90th) day following the delivery of the Offer Notice to the Company
and the Securityholder Offerees (as such term is defined in the Stockholders'
Agreement), or at such other time or on such other date as the Buyer and the
Sellers may mutually agree upon in writing. The day upon which the Closing
shall occur is herein called the "Closing Date". On a date that the Buyer and
the Sellers mutually agree upon, but in no event later than the seventh (7th)
day from the date this Agreement is executed, the Sellers shall deliver, in
accordance with Section 9.7 of the Stockholders' Agreement, (i) to the Company
(x) the Offer Notice, (y) the resignation letters in the form attached hereto
as Exhibit C executed by each of DW and G. Lee Bohs, and (z) a written consent
and action ("Stockholders' Consent"), in the form annexed as Exhibit D
electing Jason M. Barnett and Jeffrey D. Neumann as directors in place of DW
and G. Lee Bohs, executed by the Sellers and RSI, Buyer, Interoffice
Superholdings, LLC and Reckson Office Centers, Inc. and (ii) to each of the
Securityholder Offerees, the Offer Notice and the Stockholders Consent.
(b) At the Closing, the Sellers shall deliver or cause to be
delivered to the Buyer the stock certificates evidencing all the Transferred
Shares, duly endorsed in blank or accompanied by stock powers duly executed in
blank, in proper form for transfer and with all required stock transfer tax
stamps affixed.
(c) At the Closing, the Buyer shall deliver or cause to be delivered
to the Sellers the Purchase Price less the Deposit, as indicated on Schedule A
annexed hereto.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers hereby jointly and severally represent and warrant to
the Buyer and RSI the following, which representations and warranties shall be
true and correct on the date of this Agreement and on the Closing Date:
SECTION 2.1 Ownership of the Transferred Shares.
(a) Each of the Sellers is the record and beneficial owner of the
number and type of Transferred Shares indicated opposite its or his respective
name on Schedule A annexed hereto and has good and marketable title to the
Transferred Shares, free and clear of all Liens, other than the restrictions
imposed by the Stockholders' Agreement, and neither CW, SA nor DW nor its or
his respective affiliates have any interest, directly or indirectly, in any
shares of capital stock, or other equity in the Company, or have any other
interest in any tangible or intangible property which the Company uses or has
used in the business conducted by the Company or otherwise, or have any
outstanding indebtedness to or from the Company. Upon consummation of the
transactions contemplated by this Agreement and payment of the Purchase Price,
(i) the Buyer shall be the lawful record and beneficial owner of the
Transferred Shares, including the Class A Common Stock issuable upon
conversion or exercise of the Transferred Shares in accordance with its
respective terms, free and clear of all Liens, other than the restrictions
imposed by the Stockholders' Agreement (except for the right of first refusal
pursuant to Section 4.3 thereof (the "Right of First Refusal") as such right
pertains to this Agreement), and (ii) the Transferred Shares, including the
Class A Common Stock issuable upon conversion or exercise of the Transferred
Shares in accordance with its respective terms, have been paid for by the
Sellers and the Sellers have received an opinion of the Company's counsel that
the shares of the Series A Stock were fully paid and nonassessable. Other than
the Stockholders' Agreement and as contemplated by this Agreement, there are
no stockholders' agreements, voting trusts, proxies, or other agreements or
understandings with respect to the Transferred Shares.
(b) The Options and Warrants are transferable to the Buyer, and if
the Options and Warrants are sold to the Buyer in accordance with this
Agreement, the Buyer shall have all right, title and interest in the Options
and the Warrants, including, without limitation, the right to exercise the
Options and Warrants in accordance with their respective terms.
SECTION 2.2 Authority. Each of CW and SA is duly organized and
validly existing under the laws of the state of its organization and is duly
registered and qualified to do business in each jurisdiction where such
registration or qualification is required and has been duly authorized by all
necessary and appropriate partnership action to enter this Agreement and
consummate the transactions contemplated herein, and the individuals executing
this Agreement on behalf of each of CW and SA have been duly authorized by all
necessary and appropriate action on behalf of CW and SA, respectively. Each of
the Sellers has the absolute and unrestricted right, power and authority to
execute and deliver this Agreement and all documents and instruments specified
herein, to carry out its or his obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of the Sellers and, assuming due authorization, execution
and delivery by the Buyer, this Agreement constitutes a legal, valid and
binding obligation of the Sellers, enforceable against each of the Sellers in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability,
to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement
is sought in a proceeding at law or in equity).
SECTION 2.3 Approval of Transaction; No Conflict. The execution and
delivery of this Agreement by the Sellers does not, and the performance of
this Agreement by the Sellers will not, require any consent, approval,
authorization or other action by, or filing with or notification to, any
person, entity, governmental authority or regulatory authority, other than
those required in connection with the Stockholders' Agreement. The General
Partner of each of CW and SA, and every partner whose consent is required, has
duly authorized the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and such authorization
shall not have been amended, modified or withdrawn in any manner prior to the
Closing Date. Furthermore, the execution, delivery and performance of this
Agreement by each of the Sellers does not and will not (x) conflict with or
violate any agreement, law, rule, regulation, order, writ, judgement,
injunction, decree, determination or award to which any of the Sellers is a
party or (y) result in the creation of any Liens on the Transferred Shares.
SECTION 2.4 Investment Intent. Each of the Sellers is acquiring the
RSI Shares for its or his own account, for investment purposes only and not
with a view to or for sale in connection with any distribution thereof. Each
of the Sellers is an "accredited investor", as that term is defined in
Regulation D under the Securities Act of 1933, as amended (the "Securities
Act"). Each of the Sellers has obtained all information it considers necessary
or appropriate for deciding whether to accept the RSI Shares. Each of the
Sellers acknowledges that it or he, as the case may be, is able to evaluate
and has such knowledge and experience in financial or business matters that it
or he, as the case may be, is capable of evaluating the merits and risks of
acquiring the RSI Shares, has the ability to protect its own interests in this
transaction and is financially capable of bearing the total loss of its
investment in the RSI Shares. Each of the Sellers understands that such Seller
must bear the economic risk of investment in the RSI Shares for an indefinite
period of time. Each Seller also understands that the RSI Shares have not been
registered under the Securities Act and, therefore, cannot be resold unless
they are registered under the Securities Act or unless an exemption from
registration is available. The Sellers will not transfer or otherwise dispose
of the RSI Shares except in accordance with applicable federal and state
securities laws or the rules and regulations promulgated thereunder.
SECTION 2.5 No Material Facts Omitted. No representation or warranty
of any of the Sellers in this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements contained herein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND RSI
Buyer and RSI hereby jointly and severally represent and warrant to
the Sellers the following, which representations and warranties shall be true
and correct on the date of this Agreement and on the Closing Date:
SECTION 3.1 Authority. Each of Buyer and RSI is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware. Each of Buyer and RSI has full corporate power and authority to
execute and deliver this Agreement and all documents and instruments specified
herein, to carry out its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Buyer and RSI, and assuming due authorization, execution and
delivery by the Sellers, constitutes a legal, valid and binding obligation of
the Buyer and RSI, enforceable against the Buyer and RSI in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
SECTION 3.2 Approval of Transaction; No Default. The execution and
delivery of this Agreement by the Buyer and RSI does not, and the performance
of this Agreement by the Buyer and RSI will not, require any consent,
approval, authorization or other action by, or filing with or notification to,
any person, entity, governmental authority or regulatory authority, other than
those required in connection with the Stockholders' Agreement. The Board of
Directors of each of the Buyer and RSI has duly authorized the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby, and such authorization shall not have been amended,
modified or withdrawn in any manner prior to the Closing Date. Furthermore,
the execution, delivery and performance of this Agreement by the Buyer and RSI
does not and will not conflict with or violate any agreement, law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
applicable to the Buyer or RSI.
SECTION 3.3 Investment Intent. The Buyer is acquiring the
Transferred Shares for its own account, for investment purposes only and not
with a view to distribution of the Transferred Shares. The Buyer is an
"accredited investor", as that term is defined in Regulation D under the
Securities Act. The Buyer has requested all information it considers necessary
or appropriate for deciding whether to acquire the Transferred Shares. The
Buyer acknowledges that it is able to evaluate and has such knowledge and
experience in financial or business matters that it is capable of evaluating
the merits and risks of acquiring the Transferred Shares, has the ability to
protect its own interests in this transaction and is financially capable of
bearing the total loss of its investment in the Transferred Shares. The Buyer
will not transfer or otherwise dispose of the Transferred Shares except in
accordance with applicable federal and state securities laws or the rules and
regulations promulgated thereunder.
SECTION 3.4 RSI Shares. The RSI Shares have been duly authorized
and, upon issuance therefor in accordance with the provisions of this
Agreement, will be validly issued, fully paid and non-assessable, and have
been issued in compliance with the registration requirements (or applicable
exemptions therefrom) of all applicable state and federal laws concerning the
issuance of securities.
SECTION 3.5 SEC Documents. RSI has filed all required reports, forms
and other documents required to be filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), with the Securities and Exchange
Commission ("SEC") since December 31, 1998 (the "RSI SEC Documents"). As of
their respective dates, the RSI SEC Documents complied in all material
respects with the requirements of the Exchange Act, and the rules and
regulations of the SEC promulgated thereunder applicable to such RSI SEC
Documents.
SECTION 3.6 Independent Analysis. The Buyer and RSI recognize that
the Sellers have not made any representation or warranty upon which the Buyer
is relying in respect to the operations or prospects of the Company. The Buyer
and RSI are entering into this Agreement and Buyer and RSI are purchasing the
Transferred Shares solely based upon its independent analysis of the Company
and the representations and warranties set forth in Article II.
SECTION 3.7 No Material Facts Omitted. No representation or warranty
of either the Buyer or RSI in this Agreement contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
statements contained herein not misleading.
ARTICLE IV
REGISTRATION RIGHTS
SECTION 4.1. Demand Registration Rights. If RSI shall receive a
written request from the Sellers that RSI file a registration statement under
the Securities Act, then RSI shall, within ninety (90) days of the receipt
thereof, file a registration statement under the Securities Act for the RSI
Shares that the Sellers requested to be registered, PROVIDED, HOWEVER, that if
RSI completes an underwritten offering of its securities and in connection
therewith agrees with the underwriter(s) not to file a registration statement
with respect to the sale of its securities for a certain period subsequent to
the offering (the "Lock-Up Period"), RSI's obligation to file a registration
statement hereunder shall be deferred until the expiration of the Lock-Up
Period, which Period shall in no event exceed six (6) months. All expenses
incurred by RSI in complying with the request of the Sellers, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel for RSI, shall be borne by RSI. All underwriting
discounts and selling commissions applicable to the sale of the RSI Shares
shall be borne by the Sellers pro rata on the basis of the number of RSI
Shares registered. All fees and disbursements of counsel for the Sellers, not
to exceed $20,000 in the aggregate, shall be borne by RSI. Sellers shall have
the right to two (2) requests for registration pursuant to this Section 4.1. A
holder of RSI Shares pursuant to this Agreement shall be entitled to the
registration rights granted hereunder so long as at the time the request for
registration is made, such request is made by the holders pursuant to this
Agreement of not less than 210,000 RSI Shares in the aggregate.
SECTION 4.2 Indemnification. In the event any RSI Shares are
included in a registration statement, to the extent permitted by law, the
Sellers shall jointly and severally indemnify and hold harmless RSI, each of
its directors, officers and each person, if any, who controls RSI within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities (joint or several), including, without limitation, reasonable
attorneys' fees and expenses (collectively, "Losses") to which RSI or any such
director, officer, or controlling person may become subject under the
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act") or other federal or state law, insofar as such Losses (or actions in
respect thereto) arise out of or are based upon any of the following
statements, omissions or violations (collectively, "Violations") by any of the
Sellers: (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the
statements therein not misleading, or (iii) any Violation or alleged Violation
by any of the Sellers of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law in connection with the offering
covered by the registration statement. If the indemnification provided for
hereunder is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any Loss, the Sellers, in lieu of
indemnifying such indemnified party, shall to the extent permitted by
applicable law contribute to the amount paid or payable by such indemnified
party as a result of such Loss in such proportion as is appropriate to reflect
the relative fault of the Sellers on the one hand and the indemnified party on
the other in connection with the Violations that resulted in the Loss, as well
as any other relevant equitable considerations.
SECTION 4.3 Termination of Registration Rights. The demand
registration rights granted hereunder shall terminate and be of no further
force and effect three (3) years from the Closing Date.
ARTICLE V
SELLERS' COVENANTS; BREAK-UP FEE; NO SOLICITATION; CONFIDENTIALITY
SECTION 5.1 Waiver of Right of First Refusal. Each of the Sellers
hereby unconditionally and irrevocably waives its or his, as the case may be,
right to purchase all or any portion of the Transferred Shares pursuant to the
Right of First Refusal.
SECTION 5.2 Voting with Respect to the Transferred Shares. Each of
the Sellers agrees that in each situation where it or he, as the case may be,
is entitled to vote at any meeting of stockholders of the Company (whether
annual or special and whether or not an adjourned or postponed meeting) or
consent in lieu of any such meeting or otherwise, the Seller shall not vote or
consent without first notifying the Buyer at least three business days prior
thereto as to how the Seller intends to vote. The Buyer shall have three
business days thereafter to notify the Seller of its objection, if any, to the
manner in which the Seller intends to vote or consent, and the failure of the
Buyer to notify the Seller within such period shall be deemed its approval of
the Seller's vote on such matter.
SECTION 5.3 Replacement of Directors; Break-Up Fee.
(a) The Sellers agree to cooperate with the Buyer and RSI in the
prompt election of Jason M. Barnett and Jeffrey D. Neumann to serve as members
of the board of directors of the Company (the "Successor Nominees") to replace
DW and G. Lee Bohs. The Sellers agree to take any and all actions necessary to
effectuate and continue the foregoing, including, without limitation, the
delivery of the resignation letters of DW and G. Lee Bohs to the Company
promptly after the date hereof, the nomination of the Successor Nominees and
to vote the Transferred Shares for the election of the Successor Nominees at
any special meeting or consent in lieu of a meeting called for the purpose
thereof.
(b) In the event that prior to the time the Successor Nominees are
elected to the board of directors of the Company in accordance with Section
5.2(a) above, (x) the Company exercises its Right of First Refusal to purchase
any or all of the Transferred Shares (which means that DW and G. Lee Bohs vote
in favor of such purchase) and the majority of the four directors of the
Company who have been designated by RSI do not vote in favor of such purchase,
and (y) the transaction contemplated by this Agreement is not consummated as a
result of the failure of the condition contained in Section 6.1(a) of this
Agreement being satisfied, then the Sellers hereby covenant and agree to pay
to the Buyer, simultaneously with the payment by the Company and/or the
Securityholder Offerees to the Sellers, the amount which is equal to (i) the
amount received by each Seller which is in excess of $5.25 per Transferred
Share multiplied by (ii) the aggregate number of Transferred Shares sold by
the Sellers.
SECTION 5.4 No Solicitation. Upon execution and delivery of this
Agreement until the Closing, none of the Sellers shall, directly or
indirectly, through any officer, director, partner, agent, employee,
representative or otherwise, except pursuant to Section 4.3 of the
Stockholders' Agreement, (i) solicit, initiate or encourage the submission of
any inquiries, proposals or offers from any person or entity relating to the
purchase of the Transferred Shares or any legal or interest therein or the
creation or imposition of any Lien thereon (collectively, a "Third Party
Purchase"); (ii) consider or accept any agreement, arrangement or
understanding with respect to a Third Party Purchase; (iii) participate in any
discussion, negotiations or other communications regarding any Third Party
Purchase; (iv) furnish to any person or entity other than the Buyer and its
representatives any information concerning the Transferred Shares; (v) grant,
issue or agree to grant or issue to any person or entity: (a) any direct or
indirect interest in CW or SA or (b) any right or option to acquire any such
interest; or (vi) cooperate in any way, assist or participate in, facilitate
or encourage any effort or attempt by any person or entity other than the
Buyer to seek to do any of the foregoing.
SECTION 5.5 Confidentiality.
(a) Each of the parties agrees, on behalf of themselves and himself,
as the case may be, and their respective affiliates and representatives, to
retain in strict confidence, and not to divulge, disseminate or disclose to
any third party (other than as may be required by the Stockholders' Agreement,
court order, law, rule or regulation) the existence of this Agreement or any
of the terms hereof, without the prior written consent of all the parties
hereto, which consent shall not be unreasonably withheld, conditioned or
delayed. The parties further agree to consult with each other prior to making
any public disclosure (other than as set forth herein) relating to the
transactions contemplated herein.
(b) In addition to any and all other remedies available at law or
equity, in the event any or all of the Sellers shall breach or threaten to
breach any of the provisions of this Article V of this Agreement, each of the
Sellers agrees and acknowledges that damages would be difficult to ascertain,
the Buyer and its affiliates will suffer immediate, irreparable harm, and the
Buyer and its affiliates shall be entitled, in addition to any and all other
remedies, to an injunction issued by a court of competent jurisdiction
restraining the aforesaid violations of any or all of the Sellers, as the case
may be, without the necessity of posting a bond. Nothing contained in this
Section 5.5(b) is intended to limit in any way any of the rights or remedies
of any party to this Agreement in respect of any breach or threatened breach
of this Article V or any other provision of this Agreement.
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.1 Conditions to the Obligation of the Buyer to Close. The
obligation of the Buyer to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, as at the Closing Date, of each
of the following conditions, any one or more of which may be waived by the
Buyer:
(a) Failure to Exercise the Right of First Refusal. The failure of
the Company and the Securityholder Offerees (i) to exercise their Right of
First Refusal to purchase the Transferred Shares or (ii) to close on such
purchase if exercised; upon occurrence of the first of such failures, there
shall be deemed an automatic acceptance by the Sellers of the offer contained
in this Agreement by operation of law.
(b) Vote of Stockholders. None of the Sellers has voted or consented
to any matter to which the Buyer has objected pursuant to Section 5.2 of this
Agreement.
(c) Vote of Directors. On every matter presented to the Company's
board of directors for a vote prior to the time that the Successor Nominees
are elected to the board in place of DW and G. Lee Bohs, the two directors
nominated by CW and SA have voted in the same way on the matter presented as
has been voted by the majority of the directors nominated by RSI.
(d) Performance of Covenants. Each of the Sellers shall have
performed and complied in all material respects with all covenants,
obligations and agreements to be performed or complied with by the Sellers on
or before the Closing Date pursuant to this Agreement, including, but not
limited to, the transfer of all of the Transferred Shares to Buyer in the
manner set forth in Section 1.1 of this Agreement.
(e) Accuracy of Representations and Warranties. The representations
and warranties of the Sellers contained in this Agreement are true and
accurate in all material respects on and as of the Closing Date, with the same
force and effect as if made on the Closing Date.
(f) Legal Opinion. A legal opinion, substantially in the form
annexed hereto, addressed to the Buyer and RSI from Sellers' counsel that each
of the Sellers has been duly authorized to enter into this Agreement and
consummate the transactions contemplated herein, that the Transferred Shares
are being transferred at Closing free and clear of all Liens, and that this
Agreement is valid and binding.
SECTION 6.2 Conditions to the Obligation of the Sellers to Close.
The obligations of the Sellers to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment, as at the Closing Date of
each of the following conditions, any one or more of which may be waived by
the Sellers, that (i) the representations and warranties of Buyer and RSI
contained in this Agreement are true and accurate in all material respects on
or as of the Closing Date, with the same force and effect as if made on the
Closing Date, (ii) the Buyer shall have performed and complied in all material
respects with all covenants, obligations and agreements to be performed or
complied with by the Buyer on or before the Closing Date pursuant to this
Agreement, including, but not limited to, the payment of the Purchase Price to
the Seller in the manner set forth herein, and (iii) the Sellers shall have
received a legal opinion or opinions, substantially in the form annexed
hereto, addressed to the Sellers from the Buyer's and RSI's counsel that each
of the Buyer and RSI has been duly authorized to enter into this Agreement and
consummate the transactions contemplated herein, that the RSI Shares are
issued in accordance with the registration requirements (or applicable
exemptions therefrom) of the Securities Act, and that this Agreement is valid
and binding.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 Indemnification by the Seller. The Buyer, RSI and its
respective directors, officers, employees, agents, stockholders, affiliates,
consultants, representatives and their respective successors and assigns shall
be indemnified and held harmless by the Sellers, jointly and severally, from
and against any and all damages, losses, liabilities, taxes (including any
deficiencies and penalties and interest thereon), and costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements)
(collectively, "Damages") resulting from any misrepresentation, breach of
warranty or nonfulfillment of any covenant or agreement on the part of any of
the Sellers.
SECTION 7.2 Indemnification by the Buyer and RSI. CW and SA and
their respective partners, directors, officers, employees, agents, affiliates,
consultants, representatives and their respective successors and assigns, and
DW and his legal representatives, heirs, successors and assigns shall be
indemnified and held harmless by the Buyer and RSI, jointly and severally,
from and against any and all Damages resulting from any misrepresentation,
breach of warranty or nonfulfillment of any covenant or agreement on the part
of the Buyer or RSI.
SECTION 7.3 Notices; Counsel. Each party hereto agrees to give to
the other prompt notice of any claim or action by a third party or occurrence
of any event which may give rise to a claim or action for indemnification
hereunder. The failure to provide such notice shall not release the
indemnifying party from its obligations under this Article VII except to the
extent that the indemnifying party is materially prejudiced by such failure.
The indemnifying party shall have the right to direct, through counsel of its
own choosing satisfactory to the indemnified party in the reasonable exercise
of the indemnified party's discretion, the defense or settlement of any claim
or proceeding at its own expense and agrees not to effect any settlement of
such claim which does not provide for a complete release of liability of the
indemnified party without the written consent of such party, which consent
shall not be unreasonably withheld or delayed. If the indemnifying party shall
fail to defend, or if, after commencing or undertaking any such defense, such
party fails to prosecute or withdraws from such defense, the indemnified party
shall have the right to undertake the defense or settlement thereof, at the
indemnifying party's expense. In the event of a dispute over the obligation to
provide indemnification hereunder, the prevailing party in such dispute shall
be entitled to its reasonable attorney's costs and expenses thereof.
ARTICLE VIII
TERMINATION; GENERAL PROVISIONS
SECTION 8.1 Termination. This Agreement shall automatically
terminate without any action on the part of any party hereof upon receipt by
any of the Sellers that the Company and/or the Securityholder Offerees is
exercising its or their Rights of First Refusal such that all of the
Transferred Shares will be purchased by the Company and/or the Securityholder
Offerees and such purchase is consummated. Within one business day after
receipt of a notice of the foregoing, the Sellers shall notify the Buyer
thereof. In the event that this Agreement is terminated as a result thereof,
neither the Sellers nor the Buyer shall be obligated to perform any of its
respective obligations under this Agreement, except as set forth in Section
5.3 and Article VII. Nothing contained herein shall relieve any party from
liability for any willful or material breach of such party's representations,
warranties or covenants.
SECTION 8.2 Entire Agreement. This Agreement contains, and is
intended as, a complete statement of all of the terms of the arrangements and
understandings between the parties with respect to the matters provided for,
and supersedes any previous agreements and understandings between the parties
with respect to those matters.
SECTION 8.3 Governing Law; Attorneys' Fees. This Agreement shall be
governed by, and construed and enforced in accordance with the laws of the
State of New York without regard to its principles of conflicts of law. All
actions and proceedings arising out of, or relating to, this Agreement shall
be heard and determined in any state or federal court sitting in New York, New
York. In the event of any dispute as to the terms of this Agreement, the
prevailing party in any litigation or other proceeding shall be entitled to
its reasonable attorneys' fees, costs and expenses in connection therewith.
SECTION 8.4 Notices. All notices and other communications under this
Agreement shall be in writing and shall be hand delivered, mailed by
registered or certified mail, return receipt requested (with a copy
simultaneously by ordinary mail), or recognized overnight delivery service to
the parties at the following addresses (or to such other address as a party
may have specified by notice given to the other parties pursuant to this
provision):
If to the Buyer or RSI, to:
Reckson Service Industries, Inc.
RSI I/O Holdings, Inc.
10 East 50th Street
New York, New York 10022
Attention: Jason M. Barnett, Esq.
Stephen M. Rathkopf, Esq.
with a copy to:
Herrick, Feinstein LLP
Two Park Avenue
New York, New York 10016
Attention: Irwin A. Kishner, Esq.
If to any of the Sellers, to:
c/o Cahill Warnock & Company, LLC
One South Street, Suite 2150
Baltimore, MD 21202
Attn: David L. Warnock
with a copy to:
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attn: George P. Stamas, Esq.
Gregorio B. Cater, Esq.
Each such notice shall be deemed given at the time delivered by
hand, if personally delivered; five business days after being deposited in the
mail, postage prepaid, if mailed; and the next business day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next
business day delivery.
SECTION 8.5 Amendment; Waiver. No provision of this Agreement may be
amended or modified except by an instrument or instruments in writing signed
by the parties hereto. The failure of a party at any time or times to require
performance of any provision hereof shall in no manner be deemed to affect the
party's right at a later time to enforce the same. No waiver by any party of
the breach of any term contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be or construed as
a further or continuing waiver of any such breach or of the breach of any
other term or provision of this Agreement.
SECTION 8.6 Assignment and Binding Effect. This Agreement shall be
binding on, and shall inure to the benefit of, the parties hereto and the
rights and obligations of the parties hereunder may not be assigned or
transferred without the prior written consent of the other parties.
SECTION 8.7 Further Assurances. From and after the Closing, the
Sellers and the Buyer agree to execute and deliver such further documents and
instruments and to do such other acts and things any of them, as the case may
be, may reasonably request in order to effectuate the transactions
contemplated by this Agreement.
SECTION 8.8 No Third Party Beneficiaries. This Agreement is intended
solely for the benefit of the parties hereto. No third party shall have any
claim or rights against any party hereto by reason of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY OMITTED; SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
CAHILL, WARNOCK STRATEGIC PARTNERS
FUND, L.P.
By: CAHILL, WARNOCK STRATEGIC
PARTNERS, L.P., its General Partner
By: /s/ David Warnock
___________________________
Name: David Warnock
Title: Partner
STRATEGIC ASSOCIATES, L.P.
By: CAHILL, WARNOCK & COMPANY, L.L.C.,
its General Partner
By: /s/ David Warnock
____________________________
Name: David Warnock
Title: Partner
/s/ David Warnock
--------------------------------
David L. Warnock
RSI I/O HOLDINGS, INC.
By: /s/ Jeffrey D. Neumann
____________________________
Name: Jeffrey D. Neumann
Title: Executive Vice President
RECKSON SERVICE INDUSTRIES, INC.
By: /s/ Jeffrey D. Neumann
_____________________________
Name: Jeffrey D. Neumann
Title: Executive Vice President
HERRICK, FEINSTEIN LLP,
as escrow agent
/s/ Arthur G. Jakoby
- ------------------------------
Arthur G. Jakoby
Partner
SCHEDULE A
<TABLE>
<CAPTION>
Securityholder Series A Shares Series B Shares Options/Warrants Cash Portion * RSI Shares**
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CW 4,448,096 593,327 667,214 warrants $31,968,367.20 721,091
SA 246,464 32,875 36,970 warrants $1,771,330.40 39,955
DW 15,000 options $84,000 1,895
</TABLE>
* The amount indicated herein as the Cash Portion does not reflect the
deduction of (i) the Deposit ($5,000,000.00) and (ii) the exercise price
of the Options and Warrants ($1,228,098.66).
** The certificates representing the RSI Shares shall bear the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD
OR OTHERWISE DISPOSED OF UNLESS (A) SUCH DISPOSITION IS PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) THE HOLDER HEREOF SHALL HAVE DELIVERED TO THE COMPANY AN
OPINION, FROM COUNSEL AND IN FORM AND SUBSTANCE REASONABLY SATISFACTORY
TO THE COMPANY, TO THE EFFECT THAT SUCH DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF THAT ACT."
<PAGE>
EXHIBIT 10.2
JAH REALTIES, L.P.
VERITECH VENTURES LLC
JAH I/O LLC
C/O JAH REALTIES, L.P.
2 MANHATTANVILLE ROAD, SUITE 205
PURCHASE, NEW YORK 10577
September 23, 1999
Reckson Service Industries, Inc.
RSI I/O Holdings, Inc.
RSI-OnSite Holdings LLC
RSI-OSA Holdings, Inc.
c/o Reckson Service Industries, Inc.
10 East 50th Street
New York, New York 10022
Gentlemen:
This letter agreement (this "Agreement") sets forth the agreement of
the parties hereto with respect to the acquisition (the "Acquisition") by
Reckson Service Industries, Inc. ("RSI") or its Affiliates (as defined below)
("Buyer") of all of the Sellers' (as defined below) right, title and interest
in and to the Securities (as defined below) and the other matters set forth
herein.
1. CERTAIN DEFINITIONS. For purposes of this Agreement:
(a) "Securities" means, collectively:
(i) all interests (equity, debt or otherwise)
(collectively, the "JAH I/O Interests") in JAH I/O,
LLC, a New York limited liability company ("JAH I/O"),
owned directly or indirectly, beneficially or of
record ("Owned"), by JAH Realties, L.P., a New York
limited partnership ("JAH"), or any of JAH's
Affiliates (collectively, "Halpern Realties"). JAH I/O
is the Halpern Realties' member of INTEROFFICE
SUPERHOLDINGS LLC, a Delaware limited liability
company ("ISC");
(ii) all interests (equity, debt or otherwise)
(collectively, the "OCC Interests") in ONSITE COMMERCE
AND CONTENT LLC, a Delaware limited liability company
("OCC"), Owned by Halpern Realties; and
<PAGE>
(iii) 2,597,396 shares of common stock, par value $0.01 per
share, as adjusted for any stock dividend, stock
split, other distribution or reclassification of
OnSite common stock applicable to all record holders
of OnSite common stock generally (the "OnSite Common
Stock" and together with the Series B Proceeds (as
defined below), the "OnSite Securities"), of ONSITE
ACCESS INC., a Delaware corporation ("OnSite"), Owned
by VERITECH VENTURES LLC, a New York limited liability
company ("Veritech") or any of Halpern Realties' or
Veritech's Affiliates. The sale of the OnSite Common
Stock by Veritech to Buyer together with such
registration rights in the OnSite Common Stock as are
transferable by Veritech are hereunder known as the
"OnSite Sale." In connection with the OnSite Sale,
Veritech agrees to transfer and assign to Buyer at the
closing of the OnSite Sale such registration rights in
the OnSite Common Stock as are transferable by
Veritech.
(b) "Series B Proceeds" means, collectively, fifty-eight
percent (58%) of the consideration due, paid or payable to
any Seller or its Permitted Successor (as defined below),
as the case may be, resulting from or in connection with:
(i) any sale, transfer or other disposition (other than to
a Permitted Successor) of any Series B Redeemable
Preferred Stock (the "Preferred Stock"), $0.01 par
value per share, of OnSite Owned by Veritech as of the
date hereof and any securities, rights, benefits or
entitlements distributed on or in exchange for such
shares of Preferred Stock (collectively, the "Series B
Stock"); and
(ii) any dividend payment not covered in section 1(b) (i)
above, interest payment, liquidation payment or other
payment or distribution accruing to holders of the
Series B Stock other than the 12% dividend on the
Preferred Stock accrued and unpaid from the date of
its issuance through the date of the acquisition by
Buyer of the OnSite Common Stock at closing.
The parties agree that the rights granted to Buyer by
Sellers under this Agreement to the Series B Stock consist
solely of the rights specified herein and that the terms of
this Agreement do not grant, convey or otherwise provide to
Buyer any other rights, beneficially or otherwise, in any
of the shares of the Series B Stock, including, without
limitation, the right to vote or dispose of such shares of
Series B Stock in any manner.
<PAGE>
(c) "Affiliate" means any person or entity that, directly or
indirectly, through one or more intermediaries, controls,
is controlled by or is under common control with a
specified person or entity, and, with respect to an
individual, shall include such person's immediate family
(i.e., parents, spouse and children) or a trust for the
benefit thereof.
(d) "Deemed Interest Credit" means the amount equal to
$1,513,433.25 multiplied by 12% per annum for the period
from the date of this Agreement to and including the
earlier of (x) the date of the closing of the Vantas Sale
(as defined below) or (y) January 31, 2000.
(e) "Permitted Successor" means any transferee or assignee of
Series B Stock or RSI Stock received upon the closing of
the Vantas Sale who is a person or entity that (i) on the
date of this Agreement is a partner in JAH, a member of
Veritech or an Affiliate of such persons or entities, and
(ii) concurrently with such transfer or assignment executes
a supplement to this Agreement in form and substance
reasonably acceptable to Buyer pursuant to which such
transferee or assignee irrevocably agrees to be bound by
the terms and conditions of this Agreement in all respects
(including with respect to the Series B Stock, the
obligations relating to the payment of the Series B
Proceeds) as if such transferee or assignee is a Seller in
this Agreement.
(f) "Sellers" means, collectively, Veritech and JAH; each such
entity is referred to in this Agreement, individually, as a
"Seller".
The parties hereto, in exchange for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, covenant and
agree that the Acquisition shall be consummated as follows:
2. FORM OF ACQUISITION. The transaction will take the form of a
purchase by Buyer of all of the Securities (except the Series B
Proceeds) from the Sellers. Concurrent with the execution and
delivery of this Agreement, unless noted below, in addition to
the other documents specified in this Agreement, the parties
shall receive a duplicate original of the agreements, documents
and/or instruments listed in clauses (i), (ii), (iii), (iv) and
(vi) below and a certified copy of the agreements, documents
and/or instruments listed in clause (v) below:
<PAGE>
(i) Waiver and Amendment from each of Rieger I/O LLC,
RFIA, LLC, JAH I/O, RSI I/O LLC and ISC attached
hereto as Exhibit I providing, inter alia, that the
sale of the JAH I/O Interests is a Permitted Transfer
and not a Syndication (as each such term is defined by
the ISC LLC Agreement (as defined below));
(ii) Agreement between Martin Rabinowitz and OCC in the
form attached hereto as Exhibit II providing, inter
alia, that all of the interests of Martin Rabinowitz
("MR") and his Affiliates in OCC have been, or
effective on the date of the closing of the
Acquisition will be, terminated (the "Rabinowitz
Acquisition Agreement");
(iii)Certificates certifying the charter documents and
attaching evidence of the good standing of each party
to this Agreement;
(iv) At each closing, legal opinions from counsel to
Sellers and counsel to Buyer as to power and
authority;
(v) At the closing, documentation evidencing the
termination of (x) that certain promissory note
payable by JAH to Union State Bank ("USB") in the
principal amount of $3 million dated February 25,
1998, and (y) the security interest of USB in and to
any of the Securities which were pledged to USB in
order to secure such promissory note;
(vi) Attached to this Agreement as Schedule 20(i) are
resolutions by the parties' respective boards of
directors or managers or partner consents, as the case
may be, authorizing the execution and delivery of this
Agreement and the consummation of the transactions
contemplated herein; and
(vii)Sellers will represent and warrant as provided in
Schedule 9 paragraph (a) that Schedule 20(ii) sets
forth all of the shares in RSI and Reckson Associates
Realty Corp. ("RARC") and units in Reckson Operating
Partnership, L.P. ("ROP") Owned by any of Sellers or
their respective Affiliates as of the date of this
Agreement and at each closing.
3. PURCHASE PRICE.
(a) Subject to the terms and conditions of this Agreement, the
purchase price for the Securities (the "Purchase Price")
shall consist of:
<PAGE>
(i) 2,423,148 shares of newly issued common stock, $0.01
par value per share, of RSI ("RSI Stock"), as adjusted
for any stock dividend, stock split, other
distribution or reclassification of RSI Stock
applicable to all record holders of RSI Stock
generally, on the date hereof through the closing
date;
(ii) a promissory note (the "Promissory Note") in the
principal amount of $5,596,572 issued to JAH; and
(iii) cash in an aggregate amount equal to $13,535,501 less
the Deemed Interest Credit, such aggregate amount to
be paid by Buyer to JAH in immediately available funds
by federal funds bank wire transfer on the closing of
the Vantas Sale.
(b) The Promissory Note shall be in the form of Exhibit III
attached hereto.
(c) The Purchase Price shall be allocated as follows:
(i) for the JAH I/O Interests: (x) cash in the amount of
$13,535,501 less the Deemed Interest Credit, and (y)
431,551 shares of RSI Stock;
(ii) for the OCC Interests: (x) issuance and delivery of
the Promissory Note in the aggregate amount of
$5,596,572, and (y) 260,000 shares of RSI Stock;
provided, however, that on the closing of the
Acquisition of the OCC Interests, the remaining amount
of previously paid capital contributions to OCC shall
be used to fund the purchase price payable to MR under
the Rabinowitz Acquisition Agreement, it being
understood that any such amounts which are payable to
MR in excess of amounts which are properly
distributable to MR and JAH under the terms of OCC
limited liability company agreement shall be
reimbursed to OCC by JAH at the closing of the
Rabinowitz Acquisition Agreement; and
(iii) for the OnSite Common Stock: 1,731,597 shares of RSI
Stock, provided, however, that as a subsequent credit
to the purchase price being paid by Buyer for the
OnSite Common Stock, Buyer shall be entitled to the
Series B Proceeds, if any, which Series B Proceeds
shall be paid to Buyer by Sellers in accordance with
Section 9(c) of this Agreement.
4. CLOSING.
(a) The closing of the Acquisition (other than the Vantas Sale)
shall occur on September 30, 1999, or such earlier date as
the parties may agree, provided that the conditions set
forth in Section 4(b) of this Agreement (the "Conditions")
<PAGE>
have been satisfied or waived. In the event the closing of
the OnSite Sale does not occur on or prior to September 30,
1999 based solely on the precondition that the requirements
of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act") be satisfied or other
regulatory approvals be obtained, then the closing shall be
postponed until all such approvals (the HSR Act approval
and the other approvals) have been obtained, provided,
however, that if all such approvals (including HSR Act
approval) have not been obtained on or prior to December
17, 1999, then Sellers shall have the right, in their sole
discretion, to elect by written notice to Buyer delivered
on or before December 22, 1999, to (i) sell all of the JAH
I/O Interests, the OCC Interests and the OnSite Common
Stock to Buyer with a closing (except for the Vantas Sale)
to occur on or prior to December 30, 1999, but with the
OnSite Common Stock consisting of only 1,499,000 shares of
OnSite Common Stock (with an adjustment to the Purchase
Price and the Series B Proceeds credit to the Purchase
Price) if the only approval not obtained is HSR Act
approval, or (ii) terminate this Agreement and all of the
transactions contemplated hereby in their entirety.
(b) The Conditions to closing are:
(i) to the extent necessary, regulatory approval(s) with
respect to the transfer of the OnSite Securities;
(ii) to the extent described in the last sentence in
Section 4(a), HSR Act approval (and the parties agree
that, in the event that such approval is necessary,
Buyer shall pay all fees and costs, including
reasonable attorney's fees of the attorneys designated
by Buyer to represent Buyer and the Sellers in
connection with preparing, filing and processing the
application under the HSR Act);
(iii)the simultaneous closing under the Rabinowitz
Acquisition Agreement (and if for any reason Sellers
fail to close under the Rabinowitz Acquisition
Agreement, then Buyer may, at its option, close on
behalf of Sellers); and
(iv) as an additional condition to the closing of the
Vantas Sale, HSR Act approval, if necessary (and the
parties agree that, in the event that such approval is
necessary, Buyer shall pay all fees and costs,
<PAGE>
including reasonable attorney's fees of the attorneys
designated by Buyer to represent Buyer and the Sellers
in connection with preparing, filing and processing
the application under the HSR Act).
5. VANTAS SALE. JAH shall sell (the "Vantas Sale") to Buyer all of
the JAH I/O Interests on the following terms:
(a) At the time this Agreement is executed and delivered, the
Buyer shall deposit into escrow with the Buyers' counsel,
Herrick, Feinstein LLP ("HF"), pursuant to an escrow
agreement in the form annexed hereto as Exhibit IV, a $2.3
million principal amount irrevocable standby letter of
credit in a form reasonably acceptable to Sellers, such
deposit representing part of the Vantas Sale purchase
price.
(b) The Vantas Sale shall close concurrently with the
consummation of the purchase (the "Cahill Sale") by Buyer
of the VANTAS Incorporated ("Vantas") securities (the
"Cahill Shares") of Warnock Strategic Partners Fund L.P.,
Strategic Associates, L.P. and David L. Warnock
(collectively, "Cahill") whether the Cahill Sale is
consummated in whole or in part; provided, however, that
JAH may elect to postpone the closing until any date up to
and including January 14, 2000, by giving a notice to Buyer
not later than five (5) business days after receipt by JAH
of written notice of the scheduled closing date of the
Cahill Sale. In the event the Cahill Sale is not
consummated, in whole or in part, prior to January 5, 2000,
then the Vantas Sale shall be consummated not later than
January 14, 2000.
(c) With respect to 345,241 shares of RSI Stock received upon
the closing of the Vantas Sale: upon the one-year
anniversary of the closing date and for thirty days
thereafter (time being of the essence), JAH (or, if
applicable, JAH's Permitted Successor) may request, by
written notice to Buyer, that Buyer pay to such party an
amount equal to (x) the difference between $19 per share of
RSI Stock and the closing price (if lower than $19) of RSI
Stock on the date such notice is given multiplied by (y)
the lesser of 345,241 and the number of shares of RSI Stock
Owned by such party on the date such notice is given,
provided, however, that (i) this right shall automatically
and irrevocably expire if the average of the volume
weighted average closing price (the "VWAP") of RSI Stock
for any consecutive fifteen day period (the "15 Day
Period") commencing from the date of this Agreement prior
to the giving of the aforesaid notice is $19 per share or
higher, and (ii) the right to such payment shall at all
times be adjusted for any stock dividend, stock split,
other distribution or reclassification of RSI Stock
applicable to all record holders of RSI Stock generally;
and provided further, however, that if the underwriter
<PAGE>
lock-up agreement referred to in Section 13(c) is in effect
and precludes Sellers from selling 345,241 shares of RSI
Stock during the effectiveness of such lock-up agreement,
then the RSI Stock closing price during such lock-up period
shall be excluded in calculating the VWAP, and the day
immediately preceding the effectiveness of such lock-up
period and the day immediately following the termination of
such lock-up period shall be deemed to be consecutive days
for purposes of calculating the 15 Day Period.
(d) With respect to 86,310 shares of RSI Stock received upon
the closing of the Vantas Sale: upon the one-year
anniversary of the closing date and for thirty days
thereafter (time being of the essence), JAH (or, if
applicable, JAH's Permitted Successor) may request, by
written notice to Buyer, that Buyer pay to such party an
amount equal to (x) the difference between $15 per share of
RSI Stock and the closing price (if lower than $15) of RSI
Stock on the date such notice is given multiplied by (y)
the lesser of 86,310 and the number of shares of RSI Stock
Owned by such party on the date such notice is given,
provided, however, that (i) this right shall automatically
and irrevocably expire if the average of the VWAP of RSI
Stock for any 15 Day Period prior to the giving of the
aforesaid notice is $15 per share or higher, and (ii) the
right to such payment shall at all times be adjusted for
any stock dividend, stock split, other distribution or
reclassification of RSI Stock applicable to all record
holders of RSI Stock generally; and provided further,
however, that if the underwriter lock-up agreement referred
to in Section 13(c) is in effect and precludes Sellers from
selling 86,310 shares of RSI Stock during the effectiveness
of such lock-up agreement, then the RSI Stock closing price
during such lock-up period shall be excluded in calculating
the VWAP, and the day immediately preceding the
effectiveness of such lock-up period and the day
immediately following the termination of such lock-up
period shall be deemed to be consecutive days for purposes
of calculating the 15 Day Period.
(e) Effective upon the closing of the Vantas Sale, JAH and its
partners, Affiliates, agents and representatives shall be
indemnified and held harmless by Buyer from all
liabilities, obligations, claims or damages brought or
asserted by third parties or otherwise arising out of, in
connection with or as a result of JAH I/O being or having
been a member of ISC for acts or omissions by the
indemnified party other than acts or omissions for which
Sellers are indemnifying Buyer. Effective upon the closing
of the Vantas Sale, Buyer and its Affiliates, agents and
<PAGE>
representatives shall be indemnified and held harmless by
Sellers, jointly and severally, from all liabilities,
obligations, claims or damages brought or asserted by third
parties or otherwise arising out of, in connection with or
as a result of wilful acts or wilful omissions or gross
negligence of JAH I/O in respect of ISC prior to the
closing date of the Vantas Sale.
(f) Effective upon the closing of the Vantas Sale, JAH, JAH
I/O, ISC, RSI I/O Holdings, Inc. and RSI hereby each
release the other and their respective Affiliates, agents
and representatives from any and all claims arising prior
to the closing date of the Vantas Sale that they have or
may have with respect to ISC except for the obligations set
forth in this Agreement.
(g) For a period of three years after the closing date of the
Vantas Sale, RSI shall cause Jon Halpern to be elected a
director and named Vice Chairman of the Vantas board of
directors (the "Vantas Board"). As a director of Vantas,
Jon Halpern: (i) shall be subject to the laws of fiduciary
duty applicable to a director under the corporate law of
the jurisdiction where Vantas is then incorporated and
applicable securities laws and may be removed from the
Vantas Board for any breach of any such duties; (ii) may be
removed from the Vantas Board if he refuses to execute a
registration statement for a public offering of securities
of Vantas that has been approved by the requisite number of
directors of Vantas to authorize such act and each other
director appointed by RSI has signed or has agreed to sign
the applicable registration statement; and (iii) may be
removed from the Vantas Board for any misappropriation of
any corporate opportunity of Vantas; provided, however that
Jon Halpern may not be removed from the Vantas Board
pursuant to this clause (iii) for engaging in any activity
which is then engaged in by RSI or its Affiliates other
than through Vantas.
(h) For a period of three years after the closing date of the
Vantas Sale, RSI shall cause Jon Halpern to be appointed to
the RSI Strategic Steering Committee. Notwithstanding the
foregoing, RSI may remove Jon Halpern from such appointment
for cause.
(i) Notwithstanding any provision of this Agreement to the
contrary, the parties agree that Sellers shall not be
liable for (i) any obligations paid or payable to the
holder of the Class B Units in ISC (the "Rieger Profits
Interest") pursuant to the Interoffice Superholdings LLC
Limited Liability Company Agreement dated August 14, 1998
(the "ISC LLC Agreement") and/or that certain letter
agreement dated January 29, 1998 by and among Interoffice
Superholdings Corporation, Robert Rieger and Rieger I/O
LLC;. (ii) any obligations paid or payable to any holder of
options to purchase Class A Units in ISC pursuant to the
ISC LLC Agreement and/or any employment or option agreement
with such option holder and (iii) any obligations for which
ISC has indemnified Vantas at the time of the January, 1999
merger with Vantas.
<PAGE>
6. WAIVER REGARDING THE SERIES D STOCK, THE SERIES E STOCK AND THE
CAHILL SALE. Notwithstanding anything herein to the contrary, on
the date hereof, each Seller hereby irrevocably waives any
rights that it may have to acquire any direct or indirect
securities of Vantas or ISC by reason of (i) the Cahill Sale,
(ii) the offer and sale of the Series D Convertible Preferred
Stock of Vantas ("Series D Stock"), or (iii) the offer and sale
of the Series E Convertible Preferred Stock of Vantas ("Series E
Stock"), including, without limitation, any rights or claimed
rights of any of the Sellers under the Side Letter (as defined
below) and/or the ISC LLC Agreement; provided, however, that if
the Vantas Sale does not close, then JAH I/O shall have the
right, by giving notice to Buyer by on or before January 21,
2000 and by paying in full to Buyer by on or before January 30,
2000 all amounts required to be paid (including, without
limitation, the Deemed Interest Credit), to acquire: (a) an
additional interest in ISC representing indirect beneficial
ownership of 288,273 shares of Series D Stock at $5.25 per share
(subject to upward adjustment to $6.25 per share as provided in
the Certificate of Designation and related purchase
documentation for such Series D Stock) and (b) 27.35991% of the
Class A Units in ISC (subject to reduction in accordance with
Section 14(i) of the ISC LLC Agreement) that it would have been
entitled to acquire if RSI, Reckson Office Centers LLC, RSI I/O
Holdings, Inc. and ISC had each exercised in full all of their
preemptive rights, as regards the Series D Stock and Series E
Stock, and the right of first refusal rights of each such entity
to all of the Cahill Shares (to the extent the Cahill Shares are
actually purchased by any or all of RSI, Reckson Office Centers
LLC, RSI I/O Holdings, Inc. and ISC and/or their respective
Affiliates, designees or assigns, whether under the right of
first refusal or under the Cahill purchase agreement) and the
appropriate capital call shall be deemed made as if made at the
time of such acquisitions.
7. OCC. JAH shall sell (the "OCC Sale") to Buyer all of the OCC
Interests on the following terms:
(a) Effective upon the closing of the OCC Sale, JAH and its
partners, Affiliates, agents and representatives shall be
indemnified and held harmless by Buyer from all
liabilities, obligations, claims or damages brought or
asserted by third parties or otherwise, arising out of, in
connection with or as a result of JAH being or having been
a member of OCC for acts or omissions of the indemnified
party except for acts or omissions which Seller is
indemnifying Buyer. Effective upon the closing of the OCC
Sale, Buyer and its Affiliates, agents and representatives
shall be indemnified and held harmless by Sellers, jointly
<PAGE>
and severally, from all liabilities, obligations, claims or
damages brought or asserted by third parties or otherwise,
arising out of, in connection with or as a result of any
wilful acts or wilful omissions or gross negligence of JAH
arising out of, in connection with or as a result of JAH
being or having been a member of OCC prior to the closing
date; and
(b) Effective on the closing of the OCC Sale, JAH, OCC, RSI-OSA
Holdings, Inc. and RSI hereby each release the other and
their respective Affiliates, agents and representatives
from any and all claims arising prior to the closing of the
OCC Sale that they have or may have with respect to OCC
except for obligations set forth in this Agreement.
8. [INTENTIONALLY OMITTED]
9. REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of Buyer to the Sellers, and the joint and
several representations and warranties of the Sellers to the
Buyer, in each case set forth on Schedule 9, annexed hereto, are
hereby incorporated by reference herein with the same force and
effect as if fully set forth herein. All representations and
warranties of the Sellers and the Buyer shall expire upon the
15th month anniversary date of the closing for which such
representation or warranty relates (the OCC Sale, the Vantas
Sale and/or the OnSite Sale, as the case may be) except for the
representations and warranties contained in paragraphs (b), (c),
(d), (e), (g), (h), (j), (l) and (m) of Schedule 9 for the
Sellers and paragraphs (a), (b), (d) and (e) of Schedule 9 for
the Buyer, which shall survive the respective closing until
expiration of the applicable statute of limitations period. In
addition to the other covenants and agreements included in this
Agreement, the parties hereto agree as follows:
(a) Sellers agree that from and after the closing date of the
Acquisition (other than the Vantas Sale), no Seller shall,
without the prior consent of at least a majority of the
board of directors of RSI (except as provided below) and a
majority of the board of directors of RARC, directly or
indirectly acquire any additional securities of RSI or
RARC, which upon such acquisition would result in the
Sellers (determined at the time of such acquisition)
together beneficially owning (including ownership by
attribution under Section 856(d)(5) of the Internal Revenue
Code of 1986, as amended (the "Code")) more than 9.9% of
the outstanding common stock or capital stock of RSI or
more than 9.0% of the outstanding common stock or capital
stock of RARC; provided, however, that this limitation
shall not prohibit nor limit in any respect the Sellers
from owning the number of shares set forth on the Schedule
20(ii) annexed to this Agreement (as adjusted for any stock
dividend, stock split, other distribution or
reclassification of RSI Stock and/or RARC securities
<PAGE>
applicable to all record holders of RSI Stock and/or RARC
securities generally); and provided further, however, that
in the event that Code Section 856(d)(5) is altered,
amended or modified so that the reference therein to "10
percent" is increased, RSI shall endeavor to provide an
ownership limit exception that makes a corresponding
increase to the ownership limit with respect to the common
stock of RSI and capital stock of RSI for the Sellers upon
their request, to be effective not earlier than five years
after the closing date of the Acquisition (other than the
Vantas Sale). Notwithstanding the foregoing, no approval of
the RSI board of directors shall be required if any Seller
only acquires additional securities in RARC.
(b) Buyer shall use its commercially reasonable efforts (which
efforts shall not include the payment of money or granting
of other consideration) upon the closing of the Vantas Sale
to modify the Fifth and Amended and Restated Vantas
Stockholders' Agreement to remove the non-competition
covenants applicable to Sellers and, to the extent
applicable, their Affiliates.
(c) Any and all amounts payable to Buyer in respect of Series B
Proceeds shall be paid (or, if applicable, assigned) by
Sellers within two business days after receipt.
(d) In addition to any rights that Buyer may have arising from
or in connection with any breach by Sellers of a
representation, warranty or covenant set forth in this
Agreement, Buyer shall have the right to deduct and set-off
from any amounts payable to Sellers an amount equal to the
costs, liabilities, damages and expenses, including
attorneys' fees, resulting from such breach or which Buyer
in good faith reasonably anticipates will result from such
breach; provided, however, that prior to such deduction or
set-off Buyer (i) provides JAH with a notice describing the
alleged breach and the calculation of the amount of such
deduction and/or set-off, and (ii) provides a letter of
credit or other comparable security so that if Sellers
prevail in a litigation concerning such breach, Sellers can
be paid from such security. In any litigation pursuant to
this provision, the prevailing party shall recover all
legal fees and costs including, in the case of Buyer, all
costs of the letter of credit or other security. The
parties understand that this Section 9(d) contemplates that
each sale (i.e., the OCC Sale, the OnSite Sale and the
Vantas Sale) provides a separate right to set-off for
breaches of representations, warranties and covenants
relating exclusively to that particular sale and that a
breach claimed under one sale cannot give rise to a right
of set-off pertaining to another sale.
<PAGE>
10. INDEMNIFICATION. Buyer and Sellers agree to indemnify each other
from any and all costs, liabilities, damages and expenses,
including attorneys' fees, resulting from breach of the
representations and warranties and covenants set forth in this
Agreement.
11. REGISTRATION RIGHTS. Effective on the closing date of the
Acquisition (other than the Vantas Sale), the Sellers shall have
the right to require that RSI register under the Securities Act
of 1933, as amended, the shares of RSI Stock issued to the
Sellers pursuant to this Agreement on such closing date, in
accordance with the terms of the Registration Rights Agreement
annexed hereto as Exhibit V (the "Registration Rights
Agreement"), which agreement shall be executed and delivered in
the form annexed hereto on the closing date. Effective on the
closing date of the Vantas Sale, the Sellers shall have the
right to include the RSI Stock issued to Sellers pursuant to the
Vantas Sale in the registration statement contemplated by the
Registration Rights Agreement.
Subject to Section 13, nothing in this Section 11 shall affect the
rights, if any, of Sellers to sell shares of RSI Stock under Rule 144 under
the Securities Act of 1933, as amended, or any successor rule or regulation.
12. TERMINATION OF AGREEMENTS.
(a) Concurrently with the closing of the OCC Sale and the
OnSite Sale without any further action by Buyer or Sellers,
the following agreement is terminated and of no further
force or effect:
the letter agreement dated December 24, 1997 by and among
Reckson Associates Realty Corp., Jon L. Halpern and Martin
Rabinowitz; provided, however, that the termination of such
letter agreement shall not modify or otherwise effect that
letter's provisions set forth in Sections 1.c., 2.a., 2.b.
and 2.f., which provisions shall not be modified by this
Agreement and shall continue in full force and affect.
(b) Concurrently at the closing of the Vantas Sale and without
any further action by Buyer or Sellers, the following
agreements are terminated and of no further force or
effect:
(i) the letter agreement dated November 9, 1998 (the "Side
Letter") among JAH I/O, Reckson Management Group,
Inc., Buyer, RSI I/O Holdings, Inc. and Reckson Office
Centers, LLC; and
<PAGE>
(ii) Interoffice/Jon Halpern Terms Sheet dated September
24, 1998 by and among Reckson Management Group, Inc.,
Reckson Service Industries, Inc. and JAH I/O LLC.
13. LOCK-UP AGREEMENTS
(a) Sellers agree that so long as the members of the senior
management of RSI on the date hereof and their respective
Affiliates (such persons and entities, collectively, being
the "Rechler Persons"), Own, in the aggregate, more than
fifty percent (50%) of the RSI Stock (as adjusted for any
stock dividend, stock split, other distribution or
reclassification of RSI Stock applicable to all record
holders of RSI Stock generally) Owned by them in the
aggregate on the date of this Agreement, they will not,
without the prior written consent of Buyer, directly or
indirectly, other than as provided herein, for a period of
twelve (12) months after the date of the issuance of the
RSI Stock to the Sellers, offer, sell, contract to sell or
otherwise dispose of or transfer any shares of RSI Stock
received pursuant to this Agreement other than the
aggregate of 431,551 shares of the RSI Stock (received
under the Vantas Sale). This lock-up agreement shall not
prohibit (i) the Sellers from transferring RSI Stock to any
Affiliate of the Sellers, to any charitable organization,
or to any other party in connection with any family or
estate planning by Sellers or their Affiliates or by gift,
will or the laws of descent and distribution, provided that
such transferee agrees in writing to the transfer
restrictions described herein or (ii) the Sellers from
transferring during any three month period an amount of
shares of RSI Stock that does not exceed 10% of the RSI
Stock Owned by Sellers pursuant to this Agreement;
provided, however, that in no event during the 12 month
lock-up period of this Section 13, shall the Sellers sell
an aggregate of more than 1,000,000 shares of RSI Stock
(whether such shares are registered or not registered under
the registration statement contemplated by the Registration
Rights Agreement), including the RSI Stock received by
Sellers pursuant to the Vantas Sale;
(b) Sellers agree that so long as: (i) the Rechler Persons Own,
in the aggregate, more than fifty percent (50%) of the RSI
Stock (as adjusted for any stock dividend, stock split,
other distribution or reclassification of RSI Stock
applicable to all record holders of RSI Stock generally)
Owned by them on the date of this Agreement, and (ii)
Sellers and/or their respective Affiliates Own five percent
(5%) or more of the issued and outstanding RSI Stock, in
the aggregate, then Sellers and their respective Affiliates
will vote such stock on "change of control" issues
pertaining to RSI only (i) in such manner as the majority
of the RSI board of directors recommends or (ii) by
<PAGE>
abstaining; provided, however, that nothing contained in
this Section 13(b) shall prevent (i) Sellers or their
respective Affiliates from selling such shares to any
person or entity making a tender offer, exchange offer or
similar transaction for RSI Stock whether or not such sale
is recommended by a majority of the RSI board of directors
or (ii) Sellers from voting on any other matter for which
RSI stockholders are entitled to vote generally. For
purposes of this Section 13, "change of control" issues
consist solely of the following: (1) any proposed merger or
consolidation of RSI with or into any person, or any
proposed sale, transfer or other conveyance, whether direct
or indirect, of all or substantially all of the assets of
RSI, in one transaction or a series of related
transactions, if, immediately after giving effect to such
transaction any "person" or "group" (as such terms are used
for purposes of Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),
whether or not applicable), is or becomes the beneficial
owner, directly or indirectly, of more than thirty-five
percent (35%) of the shares of the total voting power of
RSI, (2) a proposal under which any "person" or "group" (as
such terms are used for purposes of Section 13(d) and 14(d)
of the Exchange Act, whether or not applicable) would
become the beneficial owner, directly or indirectly, of
more than thirty-five percent (35%) of the total voting
power of RSI, or (3) a proposal under which any party would
receive the right to elect a majority of the RSI board of
directors or to control, directly or indirectly, a majority
of the RSI board of directors; and
(c) Notwithstanding the provisions of Section 13(a) above, if
RSI sells common stock or securities convertible into
common stock through an underwritten public offering during
the 12 month lock-up period, the Sellers (including their
successors and assigns) shall agree to enter into standard
underwriter lock-up agreements providing that the Sellers
(and/or such successors and assigns) will not offer, sell,
contract to sell or otherwise dispose of or transfer any
shares of RSI Stock for the identical lock-up period
provided for in the underwriter lock-up agreements entered
into by members of RSI's senior management; provided, that
in no event shall such period exceed 120 days; provided
however that (i) the Sellers shall be permitted in any
event to make the transfers provided for in Section
13(a)(i) above and Section 14 below without restriction or
limitation, (ii) that the term of the Registration Rights
Agreement shall be extended by the number of days by which
<PAGE>
the Sellers are subject to the underwriter's lock-up in
excess of sixty (60) days and (iii) that after the
expiration of the underwriter's lock-up, the Sellers shall
be permitted to increase the number of shares which they
may transfer in the next three month period under Section
13(a)(ii) by the number of shares which Sellers could not
transfer during the prior three month period because of the
underwriter's lock-up.
14. PLEDGES AND MARGIN. The lock-up agreements referred to in
Section 13 of this Agreement shall not prohibit the Sellers
and/or their Affiliates and their permitted successors and
assigns from pledging their RSI Stock to any nationally
recognized financial institution as collateral for a bona fide
third party loan or from using the RSI Stock as margin
collateral with a nationally recognized financial institution or
broker/dealer pursuant to a bona fide third party transaction,
provided, however, that such financial institution or
broker/dealer shall not be subject to the lock-up provisions of
Section 13 of this Agreement if and only if the aggregate fair
market value of the collateral securing such loan or
indebtedness is, as of the first day of such pledge or use, not
more than 2 times the amount of such loan or indebtedness.
Provided that Sellers have complied with the foregoing, Buyer
will cooperate with effectuating the purposes of this Section
14, including at Sellers' request, Buyer will promptly complete
and sign any certificate, instrument or other document or
perform any other action or thing that is reasonably requested
or desired by any lender, Seller or its Affiliates in connection
with the use of RSI stock as collateral for a loan and otherwise
promptly take all other actions to carry out the provisions
under this Section 14, all at Sellers' sole cost and expense
(including Buyer's reasonable attorneys fees).
15. RIGHTS TO CERTAIN INFORMATION. Subject to RSI's fiduciary duties
and any confidentiality obligations it may have, Jon Halpern
will have the right to receive any and all information, reports,
analysis and other access relating to the business, operations
and prospects of RSI and its Affiliates which would be afforded
to any institutional investor of RSI without becoming an
"insider".
16. TIME OF THE ESSENCE. Time shall be of the essence with respect
to all notices required to be given, all payments required to be
made and all conditions required to be satisfied under this
Agreement.
17. BROKER. Each of the parties agrees that no finder's fee or
broker's commission shall by reason of its actions be payable by
any other party in connection with the transactions contemplated
hereby and no party knows of any such fees payable by any party.
18. FEES AND EXPENSES. Sellers and Buyer hereby agree that they will
pay their own (and their representatives') respective fees and
advances incurred in connection with the negotiation,
preparation, execution and delivery of this Agreement and any
other agreements or documents contemplated hereby or thereby.
<PAGE>
19. PUBLICITY. No press release or other public statement shall be
issued, nor shall the terms of this Agreement be disclosed to
third parties other than the representatives of the parties,
without the mutual consent of Buyer and Sellers; provided,
however, that nothing herein shall prohibit Buyer from making
any public statement that, on the advice of counsel, is required
or advisable to make in order to comply with its obligations
under applicable securities laws or stock exchange agreements.
20. BINDING AGREEMENT. This Agreement constitutes a binding
agreement among the parties hereto and supercedes all prior
agreements or understandings, written or oral, concerning the
subject matter of this Agreement.
21. REMEDIES. The parties agree that damages may not be an adequate
remedy in the event of a breach or threatened breach of this
Agreement and, accordingly, each agrees that either party, their
agents, representatives or the Affiliates of any of them, as the
case may be, shall be entitled to equitable relief, including
injunction and specific performance, in the event of any breach
or threatened breach of the provisions of this Agreement, in
addition to all other remedies available at law or in equity.
22. SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under such
law, such provision shall be ineffective to the extent of such
prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
23. FURTHER ASSURANCES. At any time, and from time to time after the
date hereof, each party shall, without further consideration and
at its own cost and expense, execute and deliver such additional
agreements, instruments, documents or certificates and take such
further action as shall reasonably be requested by any other
party to this Agreement in order to carry out the provisions of
this Agreement, including, without limitation, taking any and
all necessary actions reasonably requested by any party hereto
to satisfy any regulatory filing requirements whether under the
HSR Act, telecommunications regulations or otherwise.
24. ASSIGNS. Neither this Agreement nor any of the rights or
obligations of any party shall be assignable or transferable by
such party without the prior written consent of the other party.
Subject to the foregoing, this Agreement shall be binding upon
and inure to the benefit of the successors and assigns of each
party.
<PAGE>
25. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable
to contracts made and to be performed entirely in the State of
New York.
26. AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to
departures from the provisions of this Agreement may not be
given without the written consent of Buyer and Sellers.
27. NOTICES. All notices, requests, demands and other communications
which are required to be given under this Agreement shall be in
writing and shall be deemed to have been duly given: (i) upon
receipt if personally delivered; (ii) one business day after
being transmitted with confirmation of transmission, if
transmitted by telecopy or facsimile; (iii) one business day
after it is sent, if sent for next day delivery by a recognized
overnight courier service with signed receipt; and (iv) upon
receipt, if sent by certified or registered mail, return receipt
requested. In each case notice shall be sent to the address set
forth on the signature page of this Agreement or to such other
address provided by a party by delivering appropriate notice.
28. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the
same agreement. This Agreement may be executed and delivered via
facsimile machine by the parties, which shall be deemed for all
purposes as original.
[SIGNATURE PAGES FOLLOW]
<PAGE>
If the foregoing terms and conditions are satisfactory to you, please
signify your agreement thereto by signing and returning the enclosed copy of
this Agreement.
Very truly yours,
JAH Realties, L.P.
2 Manhattanville Road
Suite 205
Purchase, New York 10577
Tel: 914-460-0660
Fax: 914-460-0662
By: JLH Realty Management Service, Inc.,
its general partner
By: /s/ Jon L. Halpern
_______________________________
Name: Jon L. Halpern
Title: President
Veritech Ventures LLC
2 Manhattanville Road
Suite 205
Purchase, New York 10577
Tel: 914-460-0660
Fax: 914-460-0662
By: JAH Realties, L.P., its managing member,
By: JLH Realty Management Service, Inc.,
its general partner
By: /s/ Jon L. Halpern
_______________________________
Name: Jon L. Halpern
Title: President
(SIGNATURE PAGE CONTINUES)
<PAGE>
JAH I/O, LLC
2 Manhattanville Road
Suite 205
Purchase, New York 10577
Tel: 914-460-0660
Fax: 914-460-0662
By: JAH Realties, L.P., its managing member,
By: JLH Realty Management Service, Inc.,
its general partner
By: /s/ Jon L. Halpern
_____________________________
Name: Jon L. Halpern
Title: President
(SIGNATURE PAGE CONTINUES)
<PAGE>
Accepted and agreed to this
23rd day of September, 1999
Reckson Service Industries, Inc.
10 East 50th Street
New York, NY 10022
Tel: (212) 931-8000
Fax: (212) 931-8001
By: /s/ Scott Rechler
________________________________
Name: Scott Rechler
Title: Chief Executive Officer
RSI I/O Holdings, Inc.
10 East 50th Street
New York, NY 10022
Tel: (212) 931-8000
Fax: (212) 931-8001
By: /s/ Scott Rechler
________________________________
Name: Scott Rechler
Title: Chief Executive Officer
RSI-OnSite Holdings LLC
10 East 50th Street
New York, NY 10022
Tel: (212) 931-8000
Fax: (212) 931-8001
By: Reckson Service Industries, Inc.
Its' sole member
By: /s/ Scott Rechler
___________________________
Name: Scott Rechler
Title: Chief Executive Officer
(SIGNATURE PAGE CONTINUES)
<PAGE>
RSI-OSA Holdings, Inc.
10 East 50th Street
New York, NY 10022
Tel: (212) 931-8000
Fax: (212) 931-8001
By: /s/ Scott Rechler
________________________________
Name: Scott Rechler
Title: President
(FINAL SIGNATURE PAGE)
<PAGE>
Exhibit I to the Letter Agreement dated September 23, 1999
Form of Waiver and Amendment
<PAGE>
Exhibit II to the Letter Agreement dated September 23, 1999
Form of the Rabinowitz Acquisition Agreement
<PAGE>
Exhibit III to the Letter Agreement dated September 23, 1999
Form of Promissory Note
<PAGE>
Exhibit IV to the Letter Agreement dated September 23, 1999
Form of the Escrow Agreement
<PAGE>
Exhibit V to the Letter Agreement dated September 23, 1999
Form of the Registration Rights Agreement
<PAGE>
Schedule 9 to the Letter Agreement dated September 23, 1999
Representations and Warranties
<PAGE>
Schedule 20(i) to the Letter Agreement dated September 23, 1999
Copies of Resolutions
<PAGE>
Schedule 20(ii) to the Letter Agreement dated September 23, 1999
Number and ownership of shares in RSI, RARC and units in Reckson Operating
Partnership, L.P. Owned by any of Sellers.
EXHIBIT 10.3
JAH REALTIES, L.P.
VERITECH VENTURES LLC
JAH I/O LLC
C/O JAH REALTIES, L.P.
2 MANHATTANVILLE ROAD, SUITE 205
PURCHASE, NEW YORK 10577
September 29, 1999
Reckson Service Industries, Inc.
RSI I/O Holdings, Inc.
RSI-OnSite Holdings LLC
RSI-OSA Holdings, Inc.
c/o Reckson Service Industries, Inc.
10 East 50th Street
New York, New York 10022
Gentlemen:
This letter of amendment (this "Amendment") sets forth amendments to
the letter agreement dated September 23, 1999 (the "Letter Agreement") among
JAH Realties, L.P., Veritech Ventures LLC, JAH I/O LLC, Reckson Service
Industries, Inc., RSI I/O Holdings, Inc., RSI-OnSite Holdings LLC and RSI-OSA
Holdings, Inc. All capitalized terms not defined herein have the same meanings
herein as in the Letter Agreement.
The parties hereto, in exchange for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, agree that the
Letter Agreement is amended as provided herein.
1. Section 4(a) and Section 4(b) of the Letter Agreement are hereby
deleted in their entirety and replaced with the following:
"(a) The closing of the OCC Sale (as defined below) shall occur
on September 29, 1999, provided that simultaneous with the
closing of the OCC Sale the transactions set forth in the
Rabinowtiz Acquisition Agreement shall also close. The
closing of the OnSite Sale shall occur on October 15, 1999,
or such earlier date as the parties may agree.
(b) Intentionally omitted."
2. Section 5 of the Letter Agreement is hereby amended by inserting
a new paragraph after paragraph (i) thereof, which shall state
as follows:
<PAGE>
"(j) As an additional condition to the closing of the Vantas
Sale, Hart-Scott- Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act") approval, if necessary
(and the parties agree that, in the event such approval is
necessary, Buyer shall pay all fees and costs, including
reasonable attorney's fees of the attorneys designated by
Buyer to represent Buyer and the Sellers, in connection
with preparing, filing and processing the application under
the HSR Act)."
3. Section 9(a) of the Letter Agreement is hereby amended by
deleting the words "Acquisition (other than the Vantas Sale)"
that appear twice in the first sentence thereof and replacing
them with the words "OCC Sale" in each place.
4. Section 9 of the Letter Agreement is hereby amended by inserting
a new paragraph after paragraph (d) thereof, which shall state
as follows:
"(e) The parties agree that in the event that Buyer determines
that HSR Act approval is necessary or such HSR Act approval
is otherwise required in connection with the OnSite Sale,
then Buyer shall pay all fees and costs, including
reasonable attorney's fees of the attorneys designated by
Buyer to represent Buyer and the Sellers, in connection
with preparing, filing and processing any application under
the HSR Act."
5. Section 11 of the Letter Agreement is hereby amended by deleting
the words "Acquisition (other than the Vantas Sale)" in the
first sentence thereof and replacing them with the words"OnSite
Sale".
6. Section 12(a) of the Letter Agreement is hereby amended by
deleting the words "Concurrently with the closing of the OCC
Sale and the OnSite Sale" and replacing them with the words
"Concurrently with the closing of the OnSite Sale".
7. Section 13 of the Letter Agreement is hereby amended by
inserting a new paragraph after paragraph (c) thereof, which
shall state as follows:
"(d) Notwithstanding anything contained herein to the contrary,
in the event that the OnSite Sale shall not close on or
prior to October 15, 1999, then JAH shall be entitled to
dispose of the 260,000 shares of RSI Stock issued to JAH in
connection with the OCC Sale in accordance with law and
without restriction imposed under this Agreement."
8. Other than as specifically set forth in this Amendment, all of
the terms and conditions of the Letter Agreement shall remain in
full force and effect. All references to the Letter Agreement
after the date hereof shall automatically be
<PAGE>
deemed to include this Amendment, and, accordingly, without
limiting the generality of this sentence, it is understood
and agreed that the defined term "Agreement" includes,
collectively, the Letter Agreement and this Amendment.
9. This Amendment shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts
made and to be performed entirely in the State of New York.
10. This Amendment may be executed in any number of counterparts and
by the parties hereto in separate counterparts, each of which
when so executed shall be deemed an original and all of which
taken together shall constitute one and the same agreement. This
Agreement may be executed and delivered via facsimile machine by
the parties, which shall be deemed for all purposes as original.
[SIGNATURE PAGES FOLLOW]
<PAGE>
If the foregoing terms and conditions are satisfactory to you, please
signify your agreement thereto by signing and returning the enclosed copy of
this Amendment.
Very truly yours,
JAH Realties, L.P.
2 Manhattanville Road
Suite 205
Purchase, New York 10577
Tel: 914-460-0660
Fax: 914-460-0662
By: JLH Realty Management Service, Inc.,
its general partner
By: /s/ Jon L. Hallpern
_______________________________
Name: Jon L. Halpern
Title: President
Veritech Ventures LLC
2 Manhattanville Road
Suite 205
Purchase, New York 10577
Tel: 914-460-0660
Fax: 914-460-0662
By: JAH Realties, L.P., its managing member,
By: JLH Realty Management Service, Inc.,
its general partner
By: /s/ Jon L. Halpern
_______________________________
Name: Jon L. Halpern
Title: President
(SIGNATURE PAGE CONTINUES)
<PAGE>
JAH I/O, LLC
2 Manhattanville Road
Suite 205
Purchase, New York 10577
Tel: 914-460-0660
Fax: 914-460-0662
By: JAH Realties, L.P., its managing member,
By: JLH Realty Management Service, Inc.,
its general partner
By: /s/ Jon L. Halpern
_____________________________
Name: Jon L. Halpern
Title: President
Accepted and agreed to this
29th day of September, 1999
Reckson Service Industries, Inc.
10 East 50th Street
New York, NY 10022
Tel: (212) 931-8000
Fax: (212) 931-8001
By: /s/ Jason Barnett
________________________________
Name: Jason Barnett
Title: Executive Vice President
RSI I/O Holdings, Inc.
10 East 50th Street
New York, NY 10022
Tel: (212) 931-8000
Fax: (212) 931-8001
By: /s/ Jason Barnett
________________________________
Name: Jason Barnett
Title: Vice President
(SIGNATURE PAGE CONTINUES)
<PAGE>
RSI-OnSite Holdings LLC
10 East 50th Street
New York, NY 10022
Tel: (212) 931-8000
Fax: (212) 931-8001
By: Reckson Service Industries, Inc.
Its sole member
By: /s/ Jason Barnett
___________________________
Name: Jason Barnett
Title: Executive Vice President
RSI-OSA Holdings, Inc.
10 East 50th Street
New York, NY 10022
Tel: (212) 931-8000
Fax: (212) 931-8001
By: /s/ Jason Barnett
________________________________
Name: Jason Barnett
Title: Executive Vice President
(FINAL SIGNATURE PAGE)
