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): January 20, 2000
VANTAS INCORPORATED
(Exact name of Registrant as specified in its Charter)
Nevada
(State of Incorporation)
0-18274 13-3353508
(Commission File Number) (IRS Employer Id. Number)
90 Park Avenue
New York, New York 10016
(Address of principal executive offices) (Zip Code)
(212) 907-6400
(Registrant's telephone number, including area code)
Item 5. Other Events.
On January 20, 2000, VANTAS Incorporated ("VANTAS") executed an
agreement and plan of merger (the "Merger Agreement") pursuant to which VANTAS
will be merged (the "Merger") with and into HQ Global Workplaces, Inc. ("HQ"),
at an agreed enterprise value of approximately $1 billion. The surviving
corporation will do business as HQ Global Workplaces, Inc. (the "Surviving
Corporation"). Both VANTAS and HQ are companies engaged in the business of
owning and operating executive office suites and providing related business
support services. CarrAmerica Realty Corporation ("CarrAmerica") currently
owns approximately 93% of the equity interests of HQ. VANTAS is an
approximately 84% owned subsidiary of Reckson Service Industries, Inc.
("RSI"), assuming the acquisition of VANTAS interests currently under
contract.
Upon consummation of the Merger and the transactions contemplated
thereby, current holders of VANTAS convertible preferred stock will own
approximately 81% of the Surviving Corporation and current holders of the
stock of HQ ("HQ Holders") will own approximately 19%. RSI anticipates that
one or more third-party investors will purchase an equity interest in the
Surviving Corporation, which will decrease RSI's percentage ownership. It is
presently anticipated that RSI's ownership percentage in the Surviving
Corporation will not be reduced below 50%. RSI will control a majority of the
board of directors and the Surviving Corporation's executive management team
will be led by the current chief executive officer of HQ. VANTAS has obtained
a commitment letter for $350 million in debt financing necessary to complete
the Merger, subject to satisfaction of various conditions.
In connection with the Merger, (i) each share of VANTAS common stock
will be converted into the right to receive $8.00 per share in cash and (ii)
each share of VANTAS convertible preferred stock outstanding will be converted
into the right to receive that number of shares of the Surviving Corporation
that equals the product of the number of shares of VANTAS common stock that
such stockholder would have been entitled to receive had it converted its
shares immediately prior to the Merger and the Conversion Ratio (as defined in
the Merger Agreement which is attached hereto as Exhibit 10.1), subject, in
each case, to adjustment as provided in the Merger Agreement.
Simultaneously with the execution of the Merger Agreement, RSI
deposited $35 million in cash to collateralize VANTAS's obligations under the
Merger Agreement. Such deposit will be paid to HQ if the Merger fails to close
for certain specified reasons, in which event, after such payment, VANTAS and
RSI will have no further obligations in connection with the transactions.
VANTAS is obligated to reimburse RSI in the form of additional shares of
VANTAS (valued at fair market value at the time of issuance) for any loss of
the deposit, provided that such loss was not a result of RSI's gross
negligence.
Simultaneously with the execution of the Merger Agreement, RSI,
CarrAmerica and certain others executed two stock purchase agreements pursuant
to which (a) RSI will purchase from HQ Holders certain of their securities in
the Surviving Corporation and (b) the Surviving Corporation will purchase from
CarrAmerica all of the stock in two companies engaged in the executive office
suites business outside the United States that is not already owned by the
Surviving Corporation. As a result of the foregoing transactions, HQ Holders
will receive cash in an amount equal to $380 million less any amounts
necessary to pay-off indebtedness of HQ existing at the time of the Merger and
an approximately 19% interest in the Surviving Corporation.
RSI has also agreed to enter into a stockholders agreement (the
"Stockholders Agreement") with certain of the HQ Holders which will provide
the HQ Holders with a right to put their shares of the Surviving Corporation
(the "Surviving Corporation Shares") to RSI at various times during the two
years subsequent to the Merger. The put right provides that up to $20 million
of the HQ Holders' Surviving Corporation Shares may be put to RSI in November
2000. If an initial public offering of the Surviving Corporation has not
occurred during the two years subsequent to the Merger, up to 50% of the HQ
Holders' remaining Surviving Corporation Shares may be put to RSI in December
2001 and any remaining Surviving Corporation Shares of the HQ Holders may be
put to RSI in July 2002. The put is payable in cash or RSI common stock
(valued at the time of closing under the put) at RSI's option.
The Stockholders Agreement also provides for participation rights,
tag-along rights, board representation and a limited right of first offer to
the HQ Holders and contains certain tax-related provisions. The Stockholders
Agreement also grants RSI a right of first offer with respect to the HQ
Holders' Surviving Corporation Shares.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
10.1 Agreement and Plan of Merger by and among HQ Global Workplaces,
Inc., CarrAmerica Realty Corporation, VANTAS Incorporated and
Reckson Service Industries, Inc., dated as of January 20, 2000
10.2 Form of Stockholders Agreement among Reckson Service Industries,
Inc., HQ Global Workplaces, Inc., CarrAmerica Realty Corporation
and the other parties named therein
10.3 Stock Purchase Agreement between CarrAmerica Realty Corporation
and Reckson Service Industries, Inc., dated as of January 20,
2000
10.4 Stock Purchase Agreement among CarrAmerica Realty Corporation,
OmniOffices (UK) Limited, OmniOffices (Lux) 1929 Holding
Company S.A., VANTAS Incorporated and Reckson Service Industries,
Inc., dated as of January 20, 2000
10.5 Form of Indemnification and Escrow Agreement by and among
Reckson Service Industries, Inc., CarrAmerica Realty Corporation
and the other parties named therein
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.
VANTAS INCORPORATED
By: /s/ David Rupert
---------------------
David Rupert
Chief Executive Officer
Date: February 4, 2000
Exhibit 10.1
AGREEMENT AND PLAN OF MERGER
by and among
HQ Global Workplaces, Inc.,
and
CarrAmerica Realty Corporation
(solely for purposes of Sections 4(B), 6(c), 6(d), 6(e), 8,
10, 11, 12, 14, 15, 16, 17, 23 and 25),
on the one hand,
and
VANTAS Incorporated,
and
Reckson Service Industries, Inc.
(solely for purposes of Sections 5(B), 7(a), 7(c), 7(e), 7(g), 7(h), 8, 10,
11, 12, 14, 15, 16, 17, 23 and 25),
on the other hand.
----------------------------
Dated as of January 20, 2000
----------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
Section 1. The HQ Merger...................................................2
(a) The HQ Merger...................................................2
(b) Effective Time..................................................2
(c) Effects of the HQ Merger........................................2
(d) Certificate of Incorporation and By-Laws........................2
(e) Directors and Officers..........................................2
(f) Existing Shares.................................................2
(g) Payment for VANTAS Common Stock.................................3
(h) Conversion of VANTAS Preferred Stock............................3
(i) Stock Options and Warrants; Payment Rights......................4
(j) Closing.........................................................5
Section 2. Distribution of Stock...........................................5
Section 3. Exchange for Cash...............................................6
(a) Exchange Agent..................................................6
(b) Exchange Procedures.............................................6
(c) Termination of Exchange Fund....................................7
(d) No Liability....................................................7
(e) Withholding Rights..............................................7
(f) Lost, Stolen or Destroyed Certificates..........................8
(g) Stock Transfer Books............................................8
Section 4. (A) Representations and Warranties of the Company...............8
(a) Organization and Standing; Books and Records....................8
(b) Authority.......................................................9
(c) No Conflicts; Consents..........................................9
(d) Capital Stock of the Company...................................10
(e) Issued Shares..................................................11
(f) Disclosure.....................................................11
(g) Equity Interests...............................................11
(h) Investment Company.............................................11
(i) Restrictions and Agreements....................................11
(j) Financial Statements; Undisclosed Liabilities..................12
(k) Absence of Changes or Events...................................12
(l) Taxes..........................................................13
(m) Assets Other than Real Property Interests......................14
(n) Real Property..................................................15
(o) Contracts......................................................16
(p) Litigation.....................................................18
(q) Insurance......................................................18
(r) Benefit Plans..................................................19
(s) Compliance with Applicable Laws................................20
(t) Labor Matters..................................................20
(u) Transactions with Affiliates...................................21
(v) Corporate Name.................................................21
(w) Customers......................................................22
(x) Intellectual Property..........................................22
(y) Company Actions................................................22
(z) Environmental Liability........................................22
(aa) Brokers........................................................23
(bb) Organization and Standing; Capitalization......................23
(cc) No Prior Activities............................................24
(dd) Investment Representation......................................24
(B) Representations and Warranties of CarrAmerica.........................24
(a) Authority......................................................24
(b) No Conflicts; Consents.........................................25
Section 5. (A) Representations and Warranties of VANTAS...................25
(a) Organization and Standing; Books and Records..................25
(b) Authority.....................................................26
(c) No Conflicts; Consents........................................26
(d) Capital Stock of VANTAS.......................................27
(e) VANTAS Actions................................................27
(f) VANTAS Financial Statements...................................27
(g) Real Property.................................................28
(h) Litigation....................................................29
(i) Insurance.....................................................30
(j) Taxes.........................................................30
(k) Benefit Plans.................................................31
(l) Disclosure....................................................32
(m) Equity Interests..............................................32
(n) Investment Company............................................32
(o) Contracts.....................................................32
(p) Restrictions and Agreements...................................32
(q) Absence of Changes or Events..................................33
(r) Compliance with Applicable Laws...............................33
(s) Transactions with Affiliates..................................33
(t) Environmental Liability.......................................34
(u) SEC Documents.................................................34
(v) Financial Capability..........................................34
(w) Brokers.......................................................34
(x) Investment Representations....................................34
(y) Stockholders Agreement........................................35
(B) Representations and Warranties of RSI.................................35
(a) Authority.....................................................35
(b) No Conflicts; Consents........................................35
Section 6. Covenants of the Company......................................36
(a) Access........................................................36
(b) Ordinary Conduct..............................................36
(c) Confidentiality...............................................39
(d) Other Transactions............................................40
(e) Supplemental Disclosure.......................................40
(f) Interim Financial Statements..................................40
(g) Corporate Name................................................41
(h) Stockholders Agreement........................................41
(i) M Sub and Holdco..............................................41
(j) Holdco Board of Directors.....................................41
(k) Line of Credit................................................41
(l) Assumption of Obligations.....................................42
Section 7. Covenants of VANTAS...........................................42
(a) Access........................................................42
(b) Ordinary Conduct..............................................42
(c) Confidentiality...............................................45
(d) Interim Financial Statements..................................45
(e) Funding.......................................................45
(f) Line of Credit................................................46
(g) Supplemental Disclosure.......................................46
(h) Adjustment Conditions.........................................46
(i) Intentionally Omitted.........................................47
(j) Tax Makewhole.................................................47
(k) Second Step Certificate of Merger.............................47
(l) Third Party Investments.......................................47
(m) Assumption of Obligations.....................................48
Section 8. Mutual Covenants..............................................48
(a) Consummation of the Transactions..............................48
(b) Publicity.....................................................48
(c) Antitrust Notification........................................48
(d) Other Matters.................................................49
Section 9. Conditions to Closing.........................................49
(a) Each Party's Obligation.......................................50
(b) The Company's Obligations.....................................50
(c) VANTAS' Obligations...........................................52
(d) Frustration of Closing Conditions.............................53
Section 10. Tax Matters...................................................53
Section 11. Further Assurances............................................53
Section 12. Assignment....................................................54
Section 13. No Third-Party Beneficiaries..................................54
Section 14. Termination....................................................54
Section 15. Expenses.......................................................57
Section 16. Litigation Costs...............................................57
Section 17. Specific Performance...........................................57
Section 18. Amendments.....................................................57
Section 19. Notices........................................................57
Section 20. Interpretation; Exhibits and Schedules.........................59
Section 21. Counterparts...................................................59
Section 22. Entire Agreement...............................................59
Section 23. Exclusive Remedy...............................................59
Section 24. Severability...................................................59
Section 25. Consent to Jurisdiction........................................59
Section 26. Governing Law..................................................60
Section 27. Disclosure Schedules...........................................60
Annex A Conversion Ratio Recalculation Mechanism
Exhibit A Form of Second Step Plan of Merger
Exhibit B-1 and B-2 Recapitalization of the Company -- Amendments to Company
Certificate of Incorporation
Exhibit C Form of Second Step Certificate of Merger
Exhibit D Form of Stockholders Agreement
Exhibit E Form of Indemnification Escrow Agreement
Exhibit F-1-F-3 Form of CarrAmerica Intercompany Agreements
Exhibit G Form of Holdco Registration Rights Agreement
Exhibit H Form of RSI Registration Rights Agreement
Exhibit I Form of Cash Escrow Agreement
Exhibit J-1-J-3 Form of RSI Intercompany Agreements
Schedule 1(e) Directors
Schedule 1(i)(i) 1999 VANTAS Stock Options
Schedule 1(i)(ii) 1996 VANTAS Stock Options
Schedule 1(i)(iii) VANTAS Out of Plan Options
Schedule 4(a) Organization and Standing; Books and Records
Schedule 4(c) No Conflicts; Consents
Schedule 4(d) Capital Stock of the Company
Schedule 4(g) Equity Interests
Schedule 4(i) Restrictions and Agreements
Schedule 4(j) Financial Statements; Undisclosed Liabilities
Schedule 4(k) Absence of Changes or Events
Schedule 4(l) Taxes
Schedule 4(m) Assets Other than Real Property Interests
Schedule 4(n) Real Property
Schedule 4(o) Contracts
Schedule 4(p) Litigation
Schedule 4(q) Insurance
Schedule 4(r)(i) Benefit Plans
Schedule 4(r)(ii) Pension Plans
Schedule 4(s) Compliance with Applicable Laws
Schedule 4(t) Labor Matters
Schedule 4(u) Transactions with Affiliates
Schedule 4(v) Corporate Name
Schedule 4(w) Customers
Schedule 4(x) Intellectual Property
Schedule 4(z) Environmental Liability
Schedule 4A(1)(iii)
Schedule 4A(1)(iv) Taxes
Schedule 4(B)(b) No Conflicts; Consents
Schedule 5(a) Organization and Standing; Books and Records
Schedule 5(c) No Conflict; Consents
Schedule 5(d) Capital Stock of VANTAS
Schedule 5(f) VANTAS Financial Statements
Schedule 5(g) Real Property
Schedule 5(h) Litigation
Schedule 5(i) Insurance
Schedule 5(j) Taxes
Schedule 5(k) Benefit Plans
Schedule 5(m) Equity Interests
Schedule 5(o) Contracts
Schedule 5(p) Restrictions and Agreements
Schedule 5(q) Absence of Changes or Events
Schedule 5(r) Compliance with Applicable Laws
Schedule 5(s) Transactions with Affiliates
Schedule 5(t) Environmental Liability
Schedule 5(u) SEC Documents
Schedule 5(B)(b) No Conflicts; Consents
Schedule 6(b) Ordinary Conduct
Schedule 7(b) Ordinary Conduct
<PAGE>
INDEX TO DEFINED TERMS
PAGE
Adjustment Conditions.........................................................46
Affiliate.....................................................................21
Alternative Proposal..........................................................40
Applicable Laws...............................................................21
Benefit Plans.................................................................19
CapEx Budget..................................................................36
Carr Intercompany Agreements..................................................51
CarrAmerica....................................................................1
Cash Escrow Agent.............................................................51
Cash Escrow Agreement.........................................................51
Certificates...................................................................6
Class B Non-Voting Stock......................................................10
Closing .......................................................................5
Closing Date...................................................................5
Code ..........................................................................2
Commitment Letter.............................................................34
Common Stock Transmittal Documents.............................................6
Company .......................................................................1
Company Contracts.............................................................18
Company Financial Statements..................................................12
Company Intellectual Property.................................................22
Company Material Adverse Effect................................................8
Company Property..............................................................15
Company Real Property Lease...................................................15
Company Transaction Value Impairment..........................................50
Conversion Ratio...............................................................3
Customers.....................................................................22
Delaware Law...................................................................2
DOJ ..........................................................................48
Effective Time.................................................................2
Environmental Law.............................................................23
ERISA ........................................................................19
Exchange Agent.................................................................6
Exchange Agent Agreement.......................................................6
Exchange Fund..................................................................6
Financing Materials...........................................................36
FTC ..........................................................................48
Governmental Entity...........................................................10
Hazardous Materials...........................................................23
Holdco Charter................................................................41
Holdco Non-Voting Common Stock................................................23
Holdco Registration Rights Agreement..........................................51
Holdco Voting Common Stock....................................................23
HQ Global Workplaces, Inc......................................................2
HQ Merger......................................................................1
HQ Merger Consideration........................................................6
HQ Stockholders Agreement.....................................................41
HQ Surviving Corporation.......................................................1
HSR Act ......................................................................10
Indemnification Escrow Agent..................................................51
Indemnification Escrow Agreement..............................................51
Initial Deposit................................................................2
Investment Company Act........................................................11
IRS ..........................................................................13
Letter of Credit..............................................................56
LuxCo ........................................................................51
M Sub .........................................................................1
M Sub Charter.................................................................41
M Sub Voting Common Stock.....................................................23
Morgan Line...................................................................37
Nevada Law.....................................................................2
Non-Voting Common Stock........................................................3
Note .........................................................................47
OmniUK .......................................................................51
Paribas Line..................................................................43
Pension Plans.................................................................46
Permitted Liens...............................................................14
Pre-Closing Tax Period........................................................13
RA ...........................................................................51
RSI ...........................................................................1
Recapitalization..............................................................37
RSI Intercompany Agreements...................................................51
RSI Registration Rights Agreement.............................................51
Second Step Certificate of Merger.............................................47
Second Step Merger.............................................................1
Second Step Plan of Merger.....................................................1
Second Step Surviving Corporation..............................................1
Section 14(a) Outside Termination Time........................................54
Securities Act................................................................24
Series A Stock.................................................................3
Series B Stock.................................................................3
Series C Stock.................................................................3
Series D Stock.................................................................4
Series E Stock.................................................................4
Shares ........................................................................3
Stock Purchase Agreement......................................................50
Stock Sale Taxes..............................................................47
Stockholders Agreement........................................................51
Subsidiary.....................................................................8
Tax or Taxes..................................................................13
Tax Return....................................................................13
Total Sold Shares.............................................................47
UK Agreement..................................................................51
VANTAS ........................................................................1
VANTAS Balance Sheet..........................................................27
VANTAS CapEx Budget...........................................................42
VANTAS Common Stock............................................................3
VANTAS Contracts..............................................................32
VANTAS Equity Awards...........................................................5
VANTAS Financial Statements...................................................27
VANTAS Material Adverse Effect................................................29
VANTAS 1996 Stock Options......................................................4
VANTAS 1999 Stock Options......................................................4
VANTAS Out Of Plan Options.....................................................5
VANTAS Preferred Stock.........................................................4
VANTAS Property...............................................................28
VANTAS Real Property Lease....................................................28
VANTAS SEC Docments...........................................................34
VANTAS Transaction Value Impairment...........................................52
Voting Common Stock............................................................3
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 20, 2000, by and
among VANTAS Incorporated, a Nevada corporation ("VANTAS"), and Reckson
Service Industries, Inc., a Delaware corporation ("RSI") (solely for Sections
5(B), 7(a), 7(c), 7(e), 7(g), 7(h), 7(j), 8, 10, 11, 12, 14, 15, 16, 17, 23
and 25), on the one hand, and HQ Global Workplaces, Inc., a Delaware
corporation (the "Company"), and CarrAmerica Realty Corporation, a Maryland
corporation ("CarrAmerica") (solely for Sections 4(B), 6(c), 6(d), 6(e), 8,
10, 11, 12, 14, 15, 16, 17, 23 and 25), on the other hand.
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Company and VANTAS are engaged in the business of
owning and operating executive office suites and providing related business
support services;
WHEREAS, the Boards of Directors of the Company and VANTAS
have approved the merger of VANTAS with and into the Company (the "HQ Merger")
in accordance with the provisions of applicable corporate law and each of
VANTAS and the Company have received requisite shareholder approval of the HQ
Merger;
WHEREAS, immediately following the consummation of the HQ Merger,
the Stock Purchase Agreement (as herein defined) and the UK Agreement (as
herein defined) will be consummated;
WHEREAS, upon the consummation of the HQ Merger, the Stockholders
Agreement (as defined herein), the CarrAmerica Intercompany Agreements (as
defined herein), the Parent Intercompany Agreements (as defined herein) and
the Registration Rights Agreements (as defined herein) will be executed;
WHEREAS, immediately following the consummation of the HQ Merger and
the transactions contemplated by the Stock Purchase Agreement and the UK
Agreement, a to be formed Delaware corporation ("M Sub") that will be a
wholly-owned subsidiary of another to be formed Delaware corporation
("Holdco"), which will be wholly-owned by the Company, will merge (the "Second
Step Merger") with and into the Company (being sometimes referred to as the
"HQ Surviving Corporation" following the HQ Merger) pursuant to the terms and
conditions of a Plan of Merger, substantially in the form of Exhibit A hereto
(the "Second Step Plan of Merger"), with HQ Surviving Corporation being the
surviving corporation (being sometimes referred to as the "Second Step
Surviving Corporation") in the Second Step Merger;
WHEREAS, on the date hereof the Company and Gary Kusin have executed
an amendment to his employment agreement with the Company, with such amendment
to be effective as of the Closing Date and immediately following the Second
Step Merger such employment agreement, by operation of law, will be binding on
the Second Step Surviving Corporation;
WHEREAS, as a deposit, VANTAS has caused to be delivered to the
Company immediately available funds in the aggregate amount of $35,000,000
(the "Initial Deposit") , which Initial Deposit shall be retained by the
Company or returned to VANTAS in accordance with the terms and conditions of
Sections 14(d), 14(e) and14(f); and
WHEREAS, the parties hereto wish to provide for, among other things,
the terms and conditions upon which the HQ Merger will be consummated.
NOW, THEREFORE, in consideration of the aforesaid and the respective
warranties, representations, covenants and agreements hereinafter set forth,
the parties, intending to be legally bound, agree as follows:
Section 1. The HQ Merger.
(a) The HQ Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the Nevada
Corporation Law (the "Nevada Law") and the Delaware General Corporation Law
(the "Delaware Law"), VANTAS shall be merged with and into the Company.
Following the HQ Merger, the Company shall continue as the surviving
corporation under the name "HQ Global Workplaces, Inc" and shall continue its
corporate existence under the laws of the State of Delaware, and the separate
corporate existence of VANTAS shall cease.
(b) Effective Time. The HQ Merger shall be consummated by filing
with the Secretary of State of each of the States of Delaware and Nevada
certificates of merger in such form as is required by, and executed in
accordance with, the relevant provisions of the Delaware Law and the Nevada
Law (the time of such filing being the "Effective Time").
(c) Effects of the HQ Merger. The HQ Merger shall have the effects
set forth in Section 259 of the Delaware Law and Section 92A.250 of the Nevada
Law. For federal income tax purposes, it is intended that the HQ Merger shall
qualify as a reorganization within the meaning of Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended (the "Code").
(d) Certificate of Incorporation and By-Laws. The Certificate of
Incorporation of the Company at the Effective Time shall be the Certificate of
Incorporation of the HQ Surviving Corporation, and the name of the HQ
Surviving Corporation shall be "HQ Global Workplaces, Inc." The By-Laws of the
Company at the Effective Time shall be the By-Laws of the HQ Surviving
Corporation, in each case until modified in accordance with applicable law.
(e) Directors and Officers. At the Effective Time, the board of
directors of HQ Surviving Corporation shall consist of those Persons set forth
on Schedule 1(e) hereto with such directors being designated to such classes
as are set forth opposite their respective names until their respective
successors are duly elected and qualified. The officers of the Company at the
Effective Time shall be the officers of the HQ Surviving Corporation until
replaced in accordance with the By-Laws of the HQ Surviving Corporation.
(f) Existing Shares.
(i) Each share of (a) voting common stock, par value $.01 per
share, of the Company (the "Voting Common Stock"), and (b) Class C
convertible non-voting common stock, par value $.01 per share, of the
Company (the "Non-Voting Common Stock"), issued and outstanding
immediately prior to the Effective Time shall remain outstanding by
virtue of the HQ Merger and without any action on the part of the holder
thereof. The shares of the Voting Common Stock and the Non-Voting Common
Stock are collectively referred to herein as the "Shares".
(ii) Each share of Voting Common Stock and Non-Voting Common
Stock held in the treasury of the Company immediately prior to the
Effective Time shall, by virtue of the HQ Merger, be cancelled without
any payment therefor.
(g) Payment for VANTAS Common Stock
(i) Each share of common stock, par value $.01 per share, of
VANTAS ("VANTAS Common Stock") that is issued and outstanding immediately
prior to the Effective Time (other than VANTAS Common Stock held in the
treasury of VANTAS) shall, by virtue of the HQ Merger and without any
action on the part of the holder thereof, be converted into the right to
receive $8.00 per share in cash.
(ii) Each share of VANTAS Common Stock held in the treasury of
VANTAS immediately prior to the Effective Time shall, by virtue of the HQ
Merger, be cancelled without any payment therefor.
(h) Conversion of VANTAS Preferred Stock.
(i) Other than as set forth in Section 1(h)(ii), by virtue of
the HQ Merger and without any action of the holder thereof, each share of
(i) Series A Convertible Preferred Stock, par value $.01 per share, of
VANTAS (the "Series A Stock") shall be converted into the right to
receive the number of shares of Voting Common Stock equal to the product
of (x) the number of shares of VANTAS Common Stock that would be received
upon the conversion of one share of Series A Stock immediately prior to
the Effective Time pursuant to the Series A Stock certificate of
designation and (y) .21956 (as recalculated at Closing pursuant to
Section 1(h)(iii), the "Conversion Ratio"); (ii) Series B Convertible
Preferred Stock, par value $.01 per share (the "Series B Stock"), shall
be converted into the right to receive the number of shares of Voting
Common Stock equal to the product of (x) the number of shares of VANTAS
Common Stock that would be received upon the conversion of one share of
Series B Stock immediately prior to the Effective Time pursuant to the
Series B Stock certificate of designation and (y) the Conversion Ratio;
(iii) each share of Series C Convertible Preferred Stock, par value $.01
per share (the "Series C Stock"), shall be converted into the right to
receive the number of shares of Voting Common Stock equal to the product
of (x) the number of shares of VANTAS Common Stock that would be received
upon the conversion of one share of Series C Stock immediately prior to
the Effective Time pursuant to the Series C Stock certificate of
designation and (y) the Conversion Ratio; (iv) each share of Series D
Convertible Preferred Stock, par value $.01 per share (the "Series D
Stock"), shall be converted into the right to receive the number of
shares of Voting Common Stock equal to the product of (x) the number of
shares of VANTAS Common Stock that would be received upon the conversion
of one share of Series D Stock immediately prior to the Effective Time
pursuant to the Series D Stock certificate of designation and (y) the
Conversion Ratio; and (v) each share of Series E Convertible Preferred
Stock, par value $.01 per share (the "Series E Stock" and together with
the Series A Stock, the Series B Stock, the Series C Stock and the Series
D Stock, collectively, the "VANTAS Preferred Stock") shall be converted
into the right to receive the number of shares of Voting Common Stock
equal to the product of (x) the number of shares of VANTAS Common Stock
that would be received upon the conversion of one share of Series E Stock
immediately prior to the Effective Time pursuant to the Series E Stock
certificate of designation and (y) the Conversion Ratio.
(ii) Each share of VANTAS Preferred Stock held in treasury of
VANTAS immediately prior to the Effective Time shall, by virtue of the HQ
Merger, be cancelled without any payment therefor.
(iii) On the Closing Date, the Conversion Ratio shall be
recalculated at Closing as provided in Annex A.
(iv) Fractional Shares. No fractional shares of Voting Common
Stock shall be issued pursuant to this Section 1(h). In lieu of the
issuance of any fractional shares of Voting Common Stock that would
otherwise be issuable, holders of such fractional shares shall receive
cash adjustments for such fractional shares, with such cash adjustment
being based on a price of $8.00 per share for each share of VANTAS
Preferred Stock, subject to recalculation at Closing in accordance with
the Stock Purchase Agreement.
(i) Stock Options and Warrants; Payment Rights.
(i) Each outstanding stock option to purchase or acquire a
share of VANTAS Common Stock under the VANTAS 1999 Stock Option Plan as
set forth on Schedule 1(i)(i) hereto (collectively, the "VANTAS 1999
Stock Options"), shall become immediately exercisable, and each holder
thereof shall receive as soon as practicable after the Effective Time an
amount in cash equal to the product of (A) the amount by which $8.00
exceeds the applicable exercise price per share of such option or award,
and (B) the number of shares of VANTAS Common Stock that would have been
issuable upon the exercise of such option or award. Upon payment of the
amount set forth in the preceding sentence, all options, awards or other
rights to acquire VANTAS Common Stock pursuant to VANTAS 1999 Stock
Options shall be terminated and cancelled. All amounts payable pursuant
to this Section 1(i) shall be subject to any required income tax
withholding.
(ii) At the Effective Time, each outstanding option to purchase
shares of VANTAS Common Stock granted under the VANTAS 1996 Stock Option
Plan, as set forth in Schedule 1(i)(ii) hereto (the "VANTAS 1996 Stock
Options "), shall be automatically amended to constitute an option to
acquire the number of shares of Voting Common Stock as the holder of such
VANTAS 1996 Stock Option would have been entitled to receive as Merger
Consideration in the HQ Merger had such holder exercised such VANTAS 1996
Stock Option (free of and without regard to any limitation on the vesting
of the right to exercise such VANTAS 1996 Stock Option) immediately prior
to the Effective Time at an exercise price equal to the quotient of (a)
the applicable exercise price for each such VANTAS 1996 Stock Option
immediately prior to the Effective Time divided by (b) the Conversion
Ratio.
(iii) Each other outstanding stock option to purchase or
acquire a share of VANTAS Common Stock or other award denominated in or
the value of which is determined by reference to the VANTAS Common Stock
under benefit plans, programs or arrangements and non-employee director
plans presently maintained by VANTAS or other outstanding rights to
purchase or acquire a share of VANTAS Common Stock, in each case as
described on Schedule 1(i)(iii) hereto (collectively, "VANTAS Out of Plan
Options"; and together with VANTAS 1999 Stock Options and VANTAS 1996
Stock Options, collectively, "VANTAS Equity Awards"), shall become
immediately exercisable, and each holder thereof shall receive as soon as
practicable after the Effective Time an amount in cash determined by (A)
subtracting the applicable exercise price per share of such right or
award from $8.00, and (B) multiplying the difference by the number of
shares of VANTAS Common Stock that would have been issuable upon the
exercise of such right or award or, if such right or any VANTAS Out of
Plan Options do not have an exercise price, an amount in cash determined
by multiplying (x) $8.00 by (y) the number of shares of VANTAS Common
Stock that would have been issuable upon the exercise of such award. Upon
payment of the amount set forth in the preceding sentence, all options,
awards or other rights to acquire VANTAS Common Stock pursuant to VANTAS
Out of Plan Options shall be terminated and cancelled. All amounts
payable pursuant to this Section 1(i) shall be subject to any required
income tax withholding.
(iv) In connection with the Closing of the Merger, each option
to acquire shares of the Company that is outstanding under a stock option
plan of the Company immediately prior to the Effective Time will
terminate, and the Company shall be authorized to enter into agreements
with the holders of any such options to terminate those options, without
exercise, prior to the Effective Time for payment of amounts that the
Company deems appropriate.
(j) Closing. Upon the terms and subject to the conditions hereof
(or, if permitted, waiver), a closing (the "Closing") shall take place at (i)
the offices of Brown & Wood LLP, One World Trade Center, 59th Floor, New York,
New York 10048 at 10:00 a.m., New York City time, on the second business day
after the satisfaction of the conditions set forth in Section 9 hereof, or
(ii) such other place and/or time and/or on such other date as the parties
hereto may agree in writing (the "Closing Date"). At the Closing, the Company
shall return to VANTAS the Initial Deposit or the Letter of Credit, as
applicable.
Section 2. Distribution of Stock.
(a) The HQ Surviving Corporation shall cause certificates
representing the Voting Common Stock to be issued pursuant to Section 1(h)(i)
to be issued and delivered to each holder of VANTAS Preferred Stock; provided,
however, that upon the consummation of the Second Step Merger, HQ Surviving
Corporation shall cause certificates representing shares of Holdco Voting
Common Stock (as herein defined) and Holdco Non-Voting Common Stock (as herein
defined) to be issued and delivered, in lieu of certificates representing
shares of Voting Common Stock, to each former holder of VANTAS Preferred Stock
and to each holder of Voting Common Stock or Non-Voting Common Stock of the
Company, as applicable, who surrenders certificates which immediately prior to
the Effective Time evidenced outstanding shares of VANTAS Preferred Stock,
Voting Common Stock or Non-Voting Common Stock, as applicable. The cash
payable pursuant to Section 1(g)(i) and the Voting Common Stock and Non-Voting
Common Stock issued to former holders of VANTAS Preferred Stock, together with
cash in lieu of fractional shares to be issued pursuant to Section 1(h)(iv),
are from time to time referred to herein collectively as the "HQ Merger
Consideration".
Section 3. Exchange for Cash.
(a) Exchange Agent. Payment of cash pursuant to Section 1(g) shall
be made in accordance with the following procedures. Immediately prior to the
Effective Time, VANTAS shall enter into an agreement providing for the payment
of cash pursuant to Section 1(g), such agreement to be on terms reasonably
acceptable to the Company (the "Exchange Agent Agreement") with an exchange
agent mutually agreed upon by the parties (the "Exchange Agent"), authorizing
such Exchange Agent to act as Exchange Agent in connection with the HQ Merger.
Immediately prior to the Effective Time, VANTAS shall deposit or shall cause
to be deposited with or for the account of the Exchange Agent, for the benefit
of the holders of shares of VANTAS Common Stock (other than shares to be
canceled pursuant to Section 1(g)(ii)), an amount in cash equal to the Merger
Consideration payable pursuant to Section 1(g)(i) (such cash funds are
hereafter referred to as the "Exchange Fund").
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, HQ Surviving Corporation will instruct the Exchange Agent to
mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time evidenced outstanding shares of VANTAS
Common Stock (other than shares to be canceled pursuant to Section 1(g)(ii))
(the "Certificate"), (1) a form letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as the
HQ Surviving Corporation may reasonably specify) and (2) instructions for use
in effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by the HQ
Surviving Corporation, together with a letter of transmittal, duly executed,
and such other customary documents as may be required pursuant to such
instructions (collectively, the "Common Stock Transmittal Documents"), the
holder of such Certificate shall be entitled to receive in exchange therefor
its proportionate share of the Merger Consideration payable pursuant to
Section 1(g)(i) for each share of VANTAS Common Stock, formerly represented by
such Certificate, without any interest thereon, less any required withholding
of Taxes, and the Certificate so surrendered shall thereupon be canceled. In
the event of a transfer of ownership of shares of VANTAS Common Stock, which
is not registered in the transfer records of VANTAS, the Merger Consideration
payable pursuant to Section 1(g)(i) may be issued and paid in accordance with
this Section 3 to the transferee of such shares if the Certificate evidencing
such shares of VANTAS Common Stock is presented to the Exchange Agent and is
properly endorsed or otherwise in proper form for transfer. The signature on
the Certificate or any related stock power must be properly guaranteed and the
person requesting payment of the Merger Consideration must either pay any
transfer or other taxes required by reason of the payment to a person other
than the registered holder of the Certificate so surrendered or establish to
the HQ Surviving Corporation that such tax has been paid or is not applicable.
The Merger Consideration will be delivered by the Exchange Agent as promptly
as practicable following surrender of a Certificate and the related Common
Stock Transmittal Documents. In no event will interest be payable on the
Merger Consideration. Until surrendered in accordance with this Section 3,
each Certificate shall be deemed at any time after the Effective Time to
evidence only the right to receive, upon such surrender, the Merger
Consideration for each share of VANTAS Common Stock formerly represented by
such Certificate. The Exchange Fund shall not be used for any purpose other
than as set forth in this Section 3. Any interest, dividends or other income
earned on the investment of cash held in the Exchange Fund shall be for the
account of the HQ Surviving Corporation.
(c) Termination of Exchange Fund. Any portion of the Exchange Fund
(including the proceeds of any investments thereof) which remains
undistributed to the holders of VANTAS Common Stock, as applicable, for six
months following the Effective Time shall be delivered to the HQ Surviving
Corporation, upon demand. Any holders of VANTAS Common Stock who have not
theretofore complied with this Section 3 shall thereafter look only to the HQ
Surviving Corporation for payment of their proportionate share of the Merger
Consideration.
(d) No Liability. Neither the HQ Surviving Corporation nor the
Exchange Agent shall be liable to any holder of shares of VANTAS Common Stock
for any cash delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificate shall not have
been surrendered prior to seven years after the Effective Time (or immediately
prior to such earlier date on which any Merger Consideration would otherwise
escheat to or become the property of any Governmental Entity) any such Merger
Consideration in respect of such Certificate shall, to the extent permitted by
Applicable Laws, become the property of the HQ Surviving Corporation, free and
clear of all claims or interest of any person previously entitled thereto.
(e) Withholding Rights. The HQ Surviving Corporation and the
Exchange Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of VANTAS
Common Stock, such amounts as the HQ Surviving Corporation or the Exchange
Agent is required to deduct and withhold with respect to the making of such
payment under the Code, or any provision of state, local or foreign tax law.
To the extent that amounts are so withheld by the HQ Surviving Corporation or
the Exchange Agent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the shares of VANTAS
Common Stock in respect of which such deduction and withholding was made by
the HQ Surviving Corporation or the Exchange Agent.
(f) Lost, Stolen or Destroyed Certificates. In the event any
Certificates evidencing shares of VANTAS Common Stock shall have been lost,
stolen or destroyed, the holder of such lost, stolen or destroyed
Certificate(s) shall execute an affidavit of that fact upon request. The
holder of any such lost, stolen or destroyed Certificate(s) shall also deliver
a reasonable indemnity against any claim that may be made against the HQ
Surviving Corporation or the Exchange Agent with respect to the Certificate(s)
alleged to have been lost, stolen or destroyed. The affidavit and any
indemnity which may be required hereunder shall be delivered to the Exchange
Agent, who shall be responsible for making payment of the Merger Consideration
for such lost, stolen or destroyed Certificates(s) pursuant to the terms
hereof.
(g) Stock Transfer Books. At the Effective Time, the stock transfer
books of VANTAS shall be closed, and there shall be no further registration of
transfers of shares of VANTAS Common Stock thereafter on the records of
VANTAS. Any Certificates presented to the Exchange Agent or the HQ Surviving
Corporation for any reason at or after the Effective Time shall be canceled
and exchanged for the Merger Consideration pursuant to the terms in this
Section 3.
Section 4. (A) Representations and Warranties of the Company. The
Company hereby represents and warrants to VANTAS as follows:
(a) Organization and Standing; Books and Records.
(i) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
Schedule 4(a) sets forth each Subsidiary (as defined below) of the
Company and sets forth for each Subsidiary the state or other
jurisdiction of organization of such Subsidiary and the percentage
ownership of the Company with respect to each such Subsidiary. The
Company and each of its Subsidiaries have all requisite corporate power
and authority necessary to carry on their respective business as
presently conducted and to enable each to own, lease or otherwise hold
their respective properties and assets. The Company and each of its
Subsidiaries are duly qualified to do business and in good standing as a
foreign corporation in each jurisdiction in which the conduct or nature
of their respective businesses or the ownership, leasing or holding of
their respective properties or assets makes such qualification necessary,
except such jurisdictions where the failure to be so qualified or in good
standing, individually or in the aggregate, would not have a material
adverse effect on the business, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole (a
"Company Material Adverse Effect"). The term "Subsidiary", for any
Person, means each person of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or
indirectly, by such Person, provided, however, notwithstanding anything
to the contrary contained herein, for purposes of this Agreement, in the
case of the Company, both Omni Offices (UK) Limited and Omni Offices
(LUX) 1929 Holding Company S.A. (and their respective Subsidiaries) shall
be deemed to not be Subsidiaries of the Company.
(ii) The Company has delivered to VANTAS true and complete
copies of the Certificate of Incorporation and By-laws, each as amended
to date, of the Company. The stock certificate and transfer books and the
minute books of the Company (which have been made available for
inspection by VANTAS prior to the execution and delivery of this
Agreement) are true and complete.
(b) Authority. The Company has all requisite corporate power and
authority to enter into this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. Prior to the execution
and delivery of the Second Step Plan of Merger, the Company will have all
requisite corporate power and authority to enter into the Second Step Plan of
Merger, to perform its obligations thereunder and to consummate the
transactions contemplated thereby. This Agreement and the consummation of the
transactions contemplated hereby have been, and prior to its execution and
delivery the Second Step Plan of Merger and the consummation of the
transactions contemplated thereby will have been, approved by the Board of
Directors of the Company and have been, in the case of this Agreement, and
will have been, in the case of the Second Step Plan of Merger, duly authorized
by all other necessary corporate action on the part of the Company, including
the requisite approval of the shareholders of the Company required under
applicable law, the Certificate of Incorporation and the Bylaws of the
Company. This Agreement has been, and prior to its execution the Second Step
Plan of Merger will be, duly executed and delivered by a duly authorized
officer of the Company and constitutes, and in the case of the Second Step
Plan of Merger will constitute, a legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
insofar as enforcement thereof may be limited by bankruptcy, insolvency or
other laws relating to or affecting enforcement of creditors' rights generally
including such general equitable principles as may apply in the enforcement of
creditors' rights. The Company has delivered in the case of this Agreement,
and will deliver in the case of the Second Step Plan of Merger, to VANTAS true
and correct copies of resolutions adopted by the Board of Directors of the
Company and the shareholders of the Company, respectively, approving this
Agreement, the Second Step Plan of Merger and the transactions contemplated
hereby and thereby, as applicable.
(c) No Conflicts; Consents. Except as set forth on Schedule 4(c) and
except with respect to the transfer of any Company Real Property Leases to
Holdco, the execution and delivery of this Agreement by the Company does not,
and upon the execution and delivery of the Second Step Plan of Merger, the
Second Step Plan of Merger will not, and the consummation of the transactions
contemplated hereby and thereby and compliance with the terms hereof and
thereof will not, conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to a
material loss of a benefit under, or result in the creation of any lien,
charge or encumbrance of any kind upon any of the properties or assets of the
Company or its Subsidiaries under, any provision of (i) the Certificate of
Incorporation or By-laws of the Company and its Subsidiaries, (ii) any note,
bond, mortgage, indenture, deed of trust, license, lease, contract,
commitment, agreement or arrangement to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their respective
properties or assets is bound or (iii) subject to the governmental filings and
other matters referred to in the following sentence, any judgment, order or
decree, or statute, law, ordinance, rule or regulation, applicable to the
Company or any of its Subsidiaries or any of their respective properties or
assets. Except as set forth on Schedule 4(c), no consent, approval, license,
permit, order or authorization of, or registration, declaration or filing
with, any Federal, state, local or foreign government or any court of
competent jurisdiction, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, or any
national securities or commodities exchange or other regulatory or
self-regulatory body or association (a "Governmental Entity") is required to
be obtained or made by or with respect to the Company or any of its
Subsidiaries in connection with the execution, delivery and performance by the
Company of this Agreement or the Second Step Plan of Merger or the
consummation of the transactions contemplated hereby and thereby other than
(I) compliance with and filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"), if applicable, (II) filing a
certificate of merger or certificate of ownership and merger with the
Secretary of State of each of the States of Delaware and Nevada and (III) such
other consents, approvals, orders, authorizations, registrations, declarations
and filings (A) as are set forth on Schedule 4(c) or (B) as may be required
under the "blue sky" laws of various states, to the extent applicable.
(d) Capital Stock of the Company.
(i) As of the date hereof, the authorized capital stock of the
Company consists of 20,000,000 shares of voting common stock, par value
$.01 per share, non-voting common stock, $.01 per share, and shares of
Class B Convertible Non-Voting Common Stock, par value $.01 per share
("Class B Non-Voting Stock"), of which 360,526 shares of such voting
common stock, 6,999,000 shares of such non-voting common stock and no
shares of Class B Non-Voting Stock are duly authorized and validly issued
and outstanding, fully paid and nonassessable. Except as set forth on
Schedule 4(d), upon the filing of the Recapitalization Amendments and
immediately prior to the Effective Time, the authorized capital stock of
the Company shall consist of 50,000,000 shares of Voting Common Stock and
Non-Voting Common Stock, of which 7,359,526 shares of Voting Common Stock
and Non-Voting Common Stock will be duly authorized and validly issued
and outstanding, fully paid and nonassessable. Except as set forth in the
two preceding sentences, there are, and after the filing of the
Recapitalization Amendments there will be, no shares of capital stock or
other equity securities of the Company outstanding. Except as set forth
on Schedule 4(d), no such shares have been issued in violation of, or are
subject to, any purchase option, call, right of first refusal,
preemptive, subscription or similar right under any provision of
applicable law, the Certificate of Incorporation or By-laws of the
Company or any agreement, contract or instrument to which the Company is
a party or by which it or any of its properties or assets is bound.
Except as set forth on Schedule 4(d), there are no outstanding warrants,
options, rights, "phantom" stock rights, agreements, convertible or
exchangeable securities or other commitments (other than this Agreement)
(i) pursuant to which the Company is or may become obligated to issue,
sell, purchase, return or redeem any shares of capital stock or other
securities of the Company or (ii) that give any person the right to
receive any benefits or rights similar to any rights enjoyed by or
accruing to the holders of shares of capital stock of the Company. There
are no equity securities of the Company reserved for issuance for any
purpose except for securities reserved for issuance for the purposes set
forth on Schedule 4(d). There are no outstanding bonds, debentures, notes
or other indebtedness having the right to vote on any matters on which
shareholders of the Company may vote.
(ii) The names and addresses of, and number of Shares held by,
all holders of Shares are set forth on Schedule 4(d).
(e) Issued Shares. At the Closing, the shares of Voting Common Stock
issued to holders of the VANTAS Preferred Stock pursuant to the HQ Merger (i)
will be validly issued, fully paid and nonassessable, (ii) will be free and
clear of all Liens, other than any created by the holder thereof, and (iii)
assuming the accuracy of the representations and warranties set forth in
Section 5(A)(x), will be issued in compliance with the registration and
qualification requirements of all applicable federal securities laws, as
presently in effect. Upon the consummation of the Second Step Merger, the
shares of Holdco Voting Common Stock issued to holders of Voting Common Stock
pursuant to the Second Step Plan of Merger (i) will be validly issued, fully
paid and nonassessable, (ii) will be free and clear of all Liens, other than
any created by the Holder thereof and the restrictions imposed by the
Stockholders Agreement and (iii) assuming the accuracy of the representations
and warranties set forth in Sections 5(A)(x), will be issued in compliance
with the registration and qualification requirements of all applicable federal
securities laws, as presently in effect.
(f) Disclosure. No statement contained in any document to be
furnished by the Company to any holder of Voting Common Stock, Non-Voting
Common Stock or Class B Non-Voting Common Stock for purposes of apprising the
holders thereof of the execution and delivery of this Agreement and the
transactions contemplated hereby will contain any untrue statement of a
material fact or will omit to state any material fact necessary, in the light
of the circumstances under which it will be made, in order to make the
statements therein not misleading or in order to provide any information
required to be provided in such document.
(g) Equity Interests. Except as set forth in Schedule 4(g) and the
other schedules hereto, none of the Company or any of its Subsidiaries
directly or indirectly owns any capital stock of or other equity interests in
any corporation, partnership or other person, and neither the Company nor any
of its Subsidiaries is a member of or participant in any partnership, joint
venture or similar person.
(h) Investment Company. None of the Company or any of its
Subsidiaries is registered or required to be registered as an investment
company under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), nor is the Company or any of its Subsidiaries registered or
required to be registered as an investment company in any similar capacity
under the laws of any state.
(i) Restrictions and Agreements. Except as set forth in Schedule
4(i), (i) none of the Company or any of its Subsidiaries is a party to, nor is
the Company or any of its Subsidiaries or any of their respective properties
or assets subject to or bound by, any judgment, order or decree of any
Governmental Entity which has or is reasonably likely to have, individually or
in the aggregate, a Company Material Adverse Effect, and (ii) none of the
Company or any of its Subsidiaries is a party to nor are any of their
respective properties or assets subject to or bound by, any contract,
agreement or other instrument, which, as a result of the execution of this
Agreement or the Second Step Plan of Merger or the consummation of the
transactions contemplated hereby or thereby, has or is reasonably likely to
have, individually or in the aggregate, a Company Material Adverse Effect.
(j) Financial Statements; Undisclosed Liabilities.
(i) Schedule 4(j) sets forth (A) the unaudited consolidated
balance sheet of the Company as of September 30, 1999 (the "Company
Balance Sheet"), and the unaudited consolidated statement of income of
the Company for the 9 month period ended September 30, 1999, and (B) the
audited consolidated balance sheets of the Company as of December 31,
1997 and 1998, and the audited consolidated statements of income of the
Company for the period August 25 to December 31, 1997 and for the year
ended December 31, 1998, together with the notes to such financial
statements (the financial statements described in clauses (A) and (B)
above, together with any notes to such financial statements, are
collectively referred to herein as the "Company Financial Statements").
The Company Financial Statements are in all material respects in
accordance with the books and records of the Company and its consolidated
Subsidiaries and have been prepared in conformity with generally accepted
accounting principles consistently applied throughout the periods
indicated (except in each case as described in the notes thereto) and on
that basis fairly present in all material respects (subject, in the case
of the unaudited statements referred to in (A) above, to normal,
recurring year-end adjustments) the financial condition and results of
operations of the Company and its consolidated Subsidiaries as of the
respective dates thereof and for the respective periods indicated.
(ii) The Company and its consolidated Subsidiaries do not have
any liabilities or obligations of any nature (whether accrued, absolute,
contingent, threatened or otherwise), except (A) as disclosed, reflected
or reserved against in the Company Balance Sheet, (B) items set forth in
Schedule 4(j), (C) liabilities and obligations incurred in the ordinary
course of business consistent with past practice since the date of the
Company Balance Sheet that would not, individually or in the aggregate,
result in a Company Material Adverse Effect and (D) Taxes (as defined in
Section 4(A)(l)) with respect to the period after the date of the Company
Balance Sheet. Without limiting the generality of the foregoing, the
Company has no contingent obligations in excess of $60,000 with respect
to any assets purchased by the Company pursuant to the agreement between
the Company and DeKalb Office Environments with respect to purchases of
Steelcase furniture.
(iii) Except as set forth in Schedule 4(j), the amount of all
accounts receivable, including unbilled invoices which are reflected as
accounts receivable on the Company Financial Statements, due, or recorded
in the Company Balance Sheet as being due to the Company and its
Subsidiaries (less the amount of any provision or reserve therefor made
in the Company Balance Sheet), are fully collectible in the normal course
of business.
(k) Absence of Changes or Events. Since the date of the Company
Balance Sheet, there has not been any Company Material Adverse Effect or any
development or change in circumstances that is reasonably likely to result in
a Company Material Adverse Effect. Except as set forth in Schedule 4(k) or as
otherwise contemplated or permitted by this Agreement, since the date of the
Company Balance Sheet, the business of the Company and its Subsidiaries has
been conducted in the ordinary course and in substantially the same manner as
previously conducted, and none of the Company or any of its Subsidiaries has
(i) declared or paid any dividend or made any other distribution to its
shareholders whether or not upon or in respect of any shares of its capital
stock, (ii) redeemed or otherwise acquired any shares of its capital stock or
issued any capital stock or any option, warrant or right relating thereto or
any securities convertible into or exchangeable for any shares of capital
stock, (iii) adopted or materially amended any Benefit Plan (as defined in
Section 4(A)(r)), except as required by law, or entered into or amended any
employment, severance or consulting agreement, contract or similar
arrangement, (iv) granted to any director, officer or employee any increase in
compensation or benefits, except for increases for any such director, officer
or employee in the ordinary course of business consistent with past practice
or as may be required under existing agreements, (v) incurred or assumed any
liability, obligation or indebtedness for borrowed money or guaranteed any
such liability, obligation or indebtedness, (vi) permitted, allowed or
suffered any of its assets to become subject to any mortgage, security
interest, lien or other similar restriction of any nature whatsoever, (vii)
cancelled any indebtedness or waived any claims or rights of substantial
value, except for customer trade adjustments in the ordinary course of
business that do not exceed $25,000 individually or $200,000 in the aggregate,
or (viii) entered into, or modified, amended, terminated or permitted the
lapse of, any Company Real Property Lease (as defined herein) or other
material agreement relating to real property.
(l) Taxes.
(i) For purposes of this Agreement, (A) "Tax" or "Taxes" shall
mean all taxes, charges, fees, levies or other assessments, including,
without limitation, income, gross receipts, excise, property, sales,
withholding, social security, occupation, use, service, license, payroll,
franchise, transfer and recording taxes, fees and charges, including
estimated taxes, imposed by the United States or any taxing authority
(domestic or foreign), whether computed on a separate, consolidated,
unitary, combined or any other basis; and such term shall include any
interest, fines, penalties or additional amounts attributable to, or
imposed upon, or with respect to any such taxes, charges, fees, levies or
other assessments; (B) "Tax Return" shall mean any return, report or
other document or information required to be supplied to a taxing
authority in connection with Taxes; (C) "IRS" shall mean the Internal
Revenue Service and (D) "Pre-Closing Tax Period" shall mean all taxable
periods ending on or before the Closing Date and the portion ending on
the Closing Date of any taxable period that includes (but does not end
on) such day.
(ii) The Company is a Subchapter C corporation as defined in
the Code.
(iii) In the last two years, the only jurisdictions
where the Company and its Subsidiaries have filed any income tax
returns are with the Federal government of the United States of
America and those States set forth on Schedule 4(A)(iii).
(iv) Except as set forth on Schedule 4A(l)(iv), (A)
the Company and its Subsidiaries have (x) duly filed with the
appropriate Governmental Entities all Tax Returns required to be
filed by them on or prior to the date hereof (after giving effect to
any filing extension properly granted by a Governmental Entity having
authority to do so), and such Tax Returns are true, correct and
complete in all material respects and (y) duly paid in full or made
provision in accordance with generally accepted accounting principles
for the payment of all Taxes for all periods ending through the date
hereof, except where the failure to file such Tax Returns or pay such
Taxes would not have a Company Material Adverse Effect; (B) there are
no liens for Taxes upon the assets of the Company and its
Subsidiaries, except for statutory liens for current Taxes not yet
due; (C) the Company and its Subsidiaries have complied in all
material respects with all applicable laws, rules and regulations
relating to the payment and withholding of Taxes (including, without
limitation, withholding of Taxes pursuant to Sections 1441, 1442,
3121 and 3402 of the Code or similar provisions under any foreign
laws) and have, within the time and the manner prescribed by law,
withheld from and paid over to the proper Governmental Entities all
amounts required to be so withheld and paid over under applicable
laws; (D) no Federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending
with regard to any Taxes or Tax Returns of the Company or its
Subsidiaries, and none of the Company and its Subsidiaries have
received notice of any pending audits or proceedings; (E) there are
no outstanding written requests, agreements, consents or waivers to
extend the statutory period of limitations applicable to the
assessment of any Taxes or deficiencies against the Company or its
Subsidiaries; (F) none of the Company or its Subsidiaries is a party
to any agreement providing for the allocation or sharing of Taxes;
and (G) no power of attorney has been executed by the Company or its
Subsidiaries with respect to any matter relating to Taxes which is
currently in force.
(m) Assets Other than Real Property Interests.
(i) The Company has good and valid title to all assets (other
than real property interests) reflected on the Company Balance Sheet or
acquired after the date thereof, except those sold or otherwise disposed
of since the date of the Company Balance Sheet in bona fide arm's length
transactions made in the ordinary course of business consistent with past
practice and not in violation of this Agreement and, except as permitted
by Section 6(b)(ii) hereof, in each case free and clear of all liens,
charges or encumbrances of any kind except (A) such as are set forth in
Schedule 4(m), (B) mechanics', carriers', workmen's, repairmen's or other
like liens arising or incurred in the ordinary course of business, liens
arising under original purchase price conditional sales contracts and
equipment leases with third parties entered into in the ordinary course
of business and liens for Taxes that are not due and payable or that may
thereafter be paid without penalty and (C) other imperfections of title
or encumbrances, if any, that do not, individually or in the aggregate,
materially impair the continued use and operation of the assets to which
they relate in the business of the Company and its Subsidiaries as
presently conducted (the liens and imperfections of title described in
clauses (B) and (C) above are hereinafter referred to collectively as
"Permitted Liens").
(ii) All the material tangible personal property of the Company
has been maintained in accordance with the past practice of the Company
and generally accepted industry practice. Each item of material tangible
personal property of the Company is in reasonably good operating
condition and repair, ordinary wear and tear excepted. All leased
personal property of the Company is in all material respects the
condition required of such property by the terms of the lease applicable
thereto during the term of the lease and upon the expiration thereof, and
the Company has made all payments required by all such leases.
(n) Real Property.
(i) None of the Company or any of its Subsidiaries owns any
real property or interests in real property, other than the Company Real
Property Leases (as defined below). Schedule 4(n) sets forth a complete
list of all real property and interests in real property leased or
otherwise held by the Company or any of its Subsidiaries (individually, a
"Company Real Property Lease") and the real properties specified in such
leases, being referred to herein individually as a "Company Property" and
collectively as the "Company Properties") as lessee, and the Company has
provided a true and accurate summary of the Company Real Property Leases
that indicate, for each such Company Real Property Lease (i) location,
(ii) rent, (iii) term, (iv) square footage of the space demised
thereunder and (v) whether or not the consent of the landlord is required
in order for the HQ Surviving Corporation to be able to succeed to the
rights of the tenant under such Company Real Property Lease. The Company
Property constitutes all interests in real property currently used or
currently held for use in connection with the business of the Company and
its Subsidiaries and which are necessary for the continued operation of
the business of Company and its Subsidiaries as the business is currently
conducted. Each Company Real Property Lease is valid, binding,
enforceable and in full force and effect, except insofar as enforcement
thereof may be limited by bankruptcy, insolvency or other laws relating
to or affecting enforcement of creditors' rights generally including such
general equitable principles as may apply in the enforcement of
creditors' rights. The Company and each of its Subsidiaries has performed
in all material respects all obligations required to be performed by them
under each Company Real Property Lease. Other than the consents set forth
on the summary referred to above, no event or condition exists which
constitutes or, after notice or lapse of time or both, would constitute a
default in any material respect on the part of the Company or any of its
Subsidiaries under any such Company Real Property Lease. To the Company's
knowledge, each other party to each Company Real Property Lease has in
all material respects performed all obligations required to be performed
by it and no event or condition exists which constitutes or, after notice
or lapse of time or both, would constitute a default in any material
respect on the part of such other party under any such Company Real
Property Lease. All of the Company Properties, buildings, fixtures and
improvements thereon owned or leased by the Company or any of its
Subsidiaries are in good operating condition and repair (subject to
normal wear and tear).
(ii) The Company and its Subsidiaries have all material
certificates of occupancy and material permits and licenses of any
Governmental Entity necessary for the current use and operation of the
Company Properties, and the Company and its Subsidiaries have complied
with all material conditions of such permits and licenses applicable to
them. No default or violation, or event which, with the lapse of time or
giving of notice or both would become a default or violation, has
occurred in the due observance of any such material permit or license,
other than defaults or violations which, individually or in the
aggregate, would not be reasonably likely to have a Company Material
Adverse Effect.
(iii) There does not exist any actual or, to the knowledge of
the Company, threatened or contemplated condemnation or eminent domain
proceedings that affect any Company Property or any part thereof, and
none of the Company or any of its Subsidiaries has received any notice,
oral or written, of the intention of any Governmental Entity or other
Person to take or use all or any part thereof.
(iv) None of the Company or any of its Subsidiaries has
received any written notice from any insurance company that has issued a
policy with respect to any Company Property requiring performance of any
structural or other repairs or alterations to such Company Property.
(v) Except as set forth on Schedule 4(m), none of the Company
or any of its Subsidiaries owns or holds, and is not obligated under or a
party to, any option, right of first refusal or other contractual right
to purchase, acquire, sell, assign or dispose of any real estate or any
portion thereof or interest therein.
(o) Contracts. Except as set forth in Schedule 4(n), Schedule 4(o)
or Schedule 4(r), none of the Company or any of its Subsidiaries is a party to
or otherwise bound by any:
(i) employment, severance or consulting agreement, contract or
other arrangement;
(ii) covenant not to compete or covenant restricting the
development, marketing or distribution of the products and services of
the Company or any of its Subsidiaries including without limitation,
franchise agreements providing for geographic or name exclusivity;
(iii) agreement, contract or other arrangement with (A) any
stockholder of the Company or any Affiliate (as defined herein) of any
such stockholder or (B) any current or former officer, director or
employee of the Company or its Subsidiaries;
(iv) lease or similar agreement or other arrangement with any
person under which (A) the Company or any of its Subsidiaries is lessee
of, or holds or uses, any machinery, equipment, vehicle or other tangible
personal property owned by any person or (B) the Company or any of its
Subsidiaries is a lessor or sublessor of, or makes available for use by
any person, any tangible personal property owned or leased by the Company
or any of its Subsidiaries, in the case of either (A) or (B) which has an
aggregate future liability or receivable, as the case may be, of more
than $100,000 individually or is not terminable by the Company or any of
its Subsidiaries by notice of not more than 60 days for a cost of not
more than $100,000 individually;
(v) (A) continuing agreement, contract or other arrangement for
the future purchase of supplies or equipment, (B) management, service,
consulting or other similar type of agreement, contract or other
arrangement or (C) advertising agreement, contract or other arrangement,
in the case of any of (A), (B) or (C) which has an aggregate future
liability to any person of more than $100,000 individually or is not
terminable by the Company or any of its Subsidiaries by notice of not
more than 60 days for a cost of not more than $100,000 individually;
(vi) license, option or similar agreement, contract or other
arrangement relating in whole or in part to Intellectual Property (as
defined in Section 4(x)) (including any license or other agreement under
which the Company or any of its Subsidiaries is licensee or licensor of
any such Intellectual Property) or to trade secrets, confidential
information or proprietary rights and processes of the Company or any
other person, in any such case, which has an aggregate future liability
or receivable, as the case may be, of more than $100,000 individually or
is not terminable by the Company or any of its Subsidiaries by notice of
not more than 60 days for a cost of not more than $100,000 individually;
(vii) agreement, contract or other instrument or arrangement
under which the Company or any of its Subsidiaries has borrowed any money
from, or issued any note, bond, debenture, guarantee or other evidence of
indebtedness to, any person in any such case which has an aggregate
future liability to any person of more than $100,000 individually or is
not terminable by the Company or any of its Subsidiaries by notice of not
more than 60 days for a cost of not more than $100,000 individually;
(viii) agreement, contract or other instrument or arrangement
under which the Company or any of its Subsidiaries has, directly or
indirectly, made any advance, loan, extension of credit or capital
contribution to, or other investment in, any person in any such case
which has an aggregate future liability to any person of more than
$100,000 individually or is not terminable by the Company or any of its
Subsidiaries by notice of not more than 60 days for a cost of not more
than $100,000 individually;
(ix) agreement, contract or other instrument or arrangement
providing for indemnification of any person with respect to liabilities
relating to any current or former business of the Company or any of its
Subsidiaries or any predecessor person in any such case which has an
aggregate future liability to any person of more than $100,000
individually or is not terminable by the Company or any of its
Subsidiaries by notice of not more than 60 days for a cost of not more
than $100,000 individually; or
(x) other agreement, contract or other arrangement to which the
Company or any of its Subsidiaries is a party or by which they or any of
their respective properties or assets is bound which has an aggregate
future liability or receivable to or from any person of more than
$100,000 individually or is not terminable by the Company or any of its
Subsidiaries by notice of not more than 60 days for a cost of not more
than $100,000 individually.
; provided, however, that notwithstanding anything to the contrary contained
herein, other than with respect to any contract relating to office equipment,
maintenance or services for any individual business center of the Company or
any of its Subsidiaries which does not require annual payments in excess of
$25,000, the sum of the aggregate future liabilities and costs of termination
associated with all contracts, arrangements, agreements or understandings to
which the Company or any of its Subsidiaries is a party or by which they or
any of their respective properties or assets is bound which are not set forth
on Schedule 4(n), 4(o) or 4(r) does not exceed $5,000,000.
Except as set forth in Schedule 4(o), all agreements, contracts,
leases, subleases, licenses, options, instruments or arrangements of the
Company or any of its Subsidiaries listed in the Schedules hereto
(collectively, the "Company Contracts") are valid, binding and in full force
and effect and are enforceable by the Company and each of its Subsidiaries
parties thereto in accordance with its terms, except insofar as enforcement
thereof may be limited by bankruptcy, insolvency or other laws relating to or
affecting enforcement of creditors' rights generally including such general
equitable principles as may apply in the enforcement of creditors' rights.
Except as set forth in Schedule 4(o), the Company and its Subsidiaries have
performed in all material respects all obligations required to be performed by
them to date under material Company Contracts and none are (with or without
the lapse of time or the giving of notice, or both) in breach or default in
any material respect thereunder and, to the Company's knowledge, no other
party to any material Company Contracts is (with or without the lapse of time
or the giving of notice, or both) in breach or default in any material respect
thereunder.
(p) Litigation. Except as set forth in Schedule 4(p), there is no
claim, action, suit, proceeding, arbitration, investigation or inquiry before
any Governmental Entity or any private arbitration tribunal now pending, or,
to the knowledge of the Company, threatened, against, relating to or affecting
the Company or any of its Subsidiaries or any of their respective properties,
employees, assets or business or the transactions contemplated by this
Agreement. Except as set forth in Schedule 4(p), to the knowledge of the
Company, there is no basis for any such claim, action, suit, proceeding,
arbitration, investigation or inquiry which, individually or in the aggregate,
may reasonably be expected to have a Company Material Adverse Effect. None of
the Company, any of its Subsidiaries or any of the directors, officers or
employees of the Company or any of its Subsidiaries have been permanently or
temporarily enjoined or prohibited by judgment, order or decree of any
Governmental Entity from engaging in or continuing any conduct or practice in
connection with the businesses engaged in by the Company and its Subsidiaries.
The Company is not operating under, subject to or in default with respect to
any judgment, order or decree of any Governmental Entity enjoining or
prohibiting the Company or any of its Subsidiaries from taking, or requiring
the Company or any of its Subsidiaries to take, any action of any kind or to
which the Company or any of its Subsidiaries or any of their respective
properties or assets is subject or bound.
(q) Insurance. Schedule 4(q) lists all policies of fire and
casualty, liability and other forms of insurance maintained or held by the
Company or any of its Subsidiaries, which policies are in such amounts, and
with such deductibles and which insure against such risks and losses as are
customary for the business conducted by the Company and its Subsidiaries. All
such policies are in full force and effect and are sufficient for compliance
by the Company and its Subsidiaries with all their respective agreements, all
premiums due and payable thereon have been paid (other than retroactive or
retrospective premium adjustments that are not yet, but may be, required to be
paid with respect to any period ending prior to the Closing Date), and no
notice of cancellation or termination has been received with respect to any
such policy which has not been replaced on substantially similar terms prior
to the date of such cancellation. The activities and operations of the Company
and its Subsidiaries have been conducted in a manner so as to conform in all
material respects to all applicable provisions of such insurance policies.
(r) Benefit Plans.
(i) Schedule 4(r)(i) sets forth a list and brief description of
all "employee benefit plans" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), and all
other retirement, deferred compensation, health, fringe benefit,
severance or similar employee benefit or compensation arrangements (all
the foregoing being herein called "Benefit Plans") maintained by the
Company or any of its Subsidiaries for the benefit of any director,
officer or employee of the Company or any of its Subsidiaries. The
Company has delivered or made available to VANTAS true, complete and
correct copies of (A) each Benefit Plan (or, in the case of any unwritten
Benefit Plans, descriptions thereof), including all amendments and
summaries of material modifications, (B) the most recent annual report on
Form 5500 (together with all schedules and exhibits filed therewith)
filed with the IRS with respect to each Benefit Plan (if any such report
was required) and the most recent summary annual report distributed to
participants with respect to each Benefit Plan for which a summary annual
report is required and (C) the most recent summary plan description for
each Benefit Plan for which such a summary plan description is required.
None of the Benefit Plans are subject to Title IV of ERISA or the minimum
funding requirements of Section 412 of the Code and the Company and its
Subsidiaries have not previously maintained or contributed to (or been
required to maintain or contribute to) any plan which was subject to
Title IV of ERISA or the minimum funding requirements of Section 412 of
the Code with respect to which the Company or its Subsidiaries could have
any liability therefor.
(ii) Each Benefit Plan has been administered in all material
respects in accordance with its terms. The Company, its Subsidiaries and
all the Benefit Plans are in compliance in all material respects with the
applicable provisions of ERISA and the Code and all other applicable law
and all employer and employee contributions have been timely made to such
plans. There are no lawsuits, actions, termination proceedings or other
proceedings pending, or, to the knowledge of the Company, threatened
against or involving any Benefit Plan and, to the knowledge of the
Company, there are no investigations by any Governmental Entity or other
claims (except claims for benefits payable in the normal operation of the
Benefit Plans) pending or threatened against or involving any Benefit
Plan or asserting any rights to benefits under any Benefit Plan.
(iii) Except as provided in Schedule 4(r)(ii), all Benefit
Plans which are "employee pension benefits plans" (as defined in Section
3(2) of ERISA) (the "Pension Plans") have been the subject of
determination letters from the IRS to the effect that such Pension Plans
are qualified and exempt from Federal income taxes under Sections 401(a)
and 501(a), respectively, of the Code, or timely applications for such
letters are currently pending with the IRS, and no such determination
letter has been revoked nor, to the knowledge of the Company, has
revocation been threatened, nor has any such Pension Plan been amended
since the date of its most recent determination letter or application
therefor in any respect that would adversely affect its qualification.
(iv) None of the Benefit Plans which are "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA) provide for
post-retirement medical or dental insurance benefits, the cost of which
is not entirely borne by the retirees eligible therefor.
(v) Except as set forth in Schedule 4(r)(ii), no director,
officer or employee or former director, officer or employee of the
Company or its Subsidiaries will become entitled to payment or
accelerated vesting of any bonus, retirement, severance, job security or
similar benefit or any enhanced benefit solely as a result of the
transactions contemplated hereby.
(s) Compliance with Applicable Laws. The Company and its
Subsidiaries are in compliance in all material respects with all applicable
statutes, laws, ordinances, rules, orders and regulations of any Governmental
Entity ("Applicable Laws"). Except as set forth in Schedule 4(s), none of the
Company or any of its Subsidiaries has received any written communication
during the past two years from a Governmental Entity that alleges that the
Company or any of its Subsidiaries are not in compliance in any material
respect with any Applicable Laws.
(t) Labor Matters. (i) Except as disclosed on Schedule 4(t):
(A) neither the Company nor any Subsidiary is a party to
any labor or collective bargaining agreement with respect to its
employees; no employees of the Company or any of its Subsidiaries
are represented by any labor organization; no labor organization or
group of employees of the Company or any of its Subsidiaries has
made a pending demand for recognition or certification to the
Company or any of its Subsidiaries; and there are no representation
or certification proceedings or petitions seeking a representation
proceeding presently pending or, to the knowledge of the Company,
threatened, to be brought or filed with the National Labor Relations
Board or other labor relations tribunal involving the Company or any
of its Subsidiaries;
(B) there are no strikes, lockouts, work stoppages or
slowdowns pending or, to the knowledge of the Company, threatened
against or involving the Company or any of its Subsidiaries;
(C) there are no unfair labor practice charges,
arbitrations or grievances pending or threatened in writing against
or involving the Company or any of its Subsidiaries relating to the
employment or termination of employment of any individual by the
Company or any of its Subsidiaries;
(D) there are no complaints, charges or claims against the
Company or any of its Subsidiaries pending or, to the knowledge of
the Company or any of its Subsidiaries, threatened in writing to be
brought or filed with any Governmental Entity based on or arising
out of the employment by the Company of any employee;
(E) the Company and each of its Subsidiaries is in
compliance in all material respects with all laws relating to the
employment of labor, including all such Laws relating to wages,
hours, collective bargaining, discrimination, civil rights, safety
and health, workers' compensation and the collection and payment of
withholding and/or Social Security Taxes and similar Taxes; and
(F) none of the Company or any of its Subsidiaries is a
party to, or otherwise bound by, any consent decree with, or
citation by, any Governmental Entity relating to employees or
employment practices.
(u) Transactions with Affiliates. Except as set forth in Schedule
4(u) and as contemplated by the Second Step Plan of Merger, (i) none of the
Company Contracts between the Company and/or any of its Subsidiaries, on the
one hand, and any Affiliate of the Company, on the other hand, will continue
in effect subsequent to the Closing; (ii) after the Closing no Affiliate of
the Company will have any interest in any property (real or personal, tangible
or intangible) or contract used in or pertaining to the business of the
Company and (iii) no Affiliate of the Company has any direct or indirect
ownership interest in any Person in which the Company and/or its Subsidiaries
has any direct or indirect ownership interest. As used herein the term
"Affiliate" shall mean, with respect to any Person, (i) any Person directly or
indirectly controlling, controlled by or under common control with such
Person, or (ii) any officer, director, general partner, managing member or
trustee of such Person or any Person referred to in clause (i) above. For
purposes of this definition of Affiliate, "control," when used with respect to
any Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
(v) Corporate Name. Except as set forth in Schedule 4(v), the
Company (i) has the exclusive right in the United States to use the name "HQ
Global Workplaces, Inc." and "OmniOffices," as the name of a corporation in
any jurisdiction in which the Company does business and (ii) has not received
any notice of conflict during the past two years with respect to the rights of
others regarding such name. Except as set forth in Schedule 4(v), no person
(other than the Company and its Subsidiaries and franchisees) is authorized by
the Company to use, or otherwise has the right to use, the name "HQ Global
Workplaces, Inc." (or any variation thereof using the words "HQ Global
Workplaces, Inc.") or "OmniOffices, Inc." (or any variation thereof) in the
United States for any purposes whatsoever.
(w) Customers. Except for the Persons contracting for space or
otherwise having rights to occupy those properties subject to the Company Real
Property Leases (collectively, the "Customers") set forth in Schedule 4(w) and
franchisees of the Company, the Company and its Subsidiaries do not have any
Customer from which any received more than 2% of its respective revenues
during their most recent full fiscal year. Since the date of the Company
Balance Sheet, there has not been any material adverse change in the business
relationship of the Company and its Subsidiaries with any Customers set forth
in Schedule 4(w).
(x) Intellectual Property. Except as set forth on Schedule 4(x), the
Company has good title to or the right to use all material copyrights,
patents, trademarks (registered or unregistered), trade names and service
marks and applications therefor and other material intellectual property and
proprietary rights, whether or not subject to statutory registration or
protection, necessary for the conduct of the Company's or any of its
Subsidiary's business as currently conducted (collectively, "Company
Intellectual Property"). Schedule 4(x) sets forth a list of the registered and
unregistered trademarks owned or used by the Company and all jurisdictions in
which such trademarks are registered or applied for and all registration and
application numbers. Except as set forth in Schedule 4(x), the consummation of
the transactions contemplated hereby will not conflict with, alter or impair
any such rights.
Except as set forth on Schedule 4(x), neither the Company nor any
Subsidiary has granted any options, licenses or agreements of any kind
relating to Company Intellectual Property listed in Schedule 4(x) or the
marketing or distribution thereof. Neither the Company nor any Subsidiary is
bound by or a party to any options, licenses or agreements of any kind
relating to the Intellectual Property of any other person, except as set forth
in Schedule 4(x) and except for agreements relating to computer software
licensed to the Company or any of its Subsidiaries in the ordinary course of
business. Subject to the rights of third parties set forth in Schedule 4(x),
and all Company Intellectual Property is free and clear of the claims of
others and of all liens, security interests and encumbrances whatsoever. The
conduct of the business of the Company as presently conducted does not
violate, conflict with or infringe the intellectual property of any other
person except where such infringement would not have a Company Material
Adverse Effect. Except as set forth in Schedule 4(x), (i) no claims are
pending, or to the knowledge of the Company, threatened, against the Company
by any person with respect to the ownership, validity, enforceability,
effectiveness or use of any Company Intellectual Property and (ii) during the
past two years the Company has not received any communications alleging that
the Company or any of its Subsidiaries has violated any rights relating to
intellectual property of any Person.
(y) Company Actions. The Company has taken in the case of this
Agreement and the HQ Merger, and in the case of the Second Step Plan of Merger
and the Second Step Merger will take, all actions necessary on its part to
render the restriction on business combinations contained in Section 203 of
the Delaware Law inapplicable to this Agreement, the HQ Merger, the Second
Step Plan of Merger and the Second Step Merger.
(z) Environmental Liability. Except as set forth in Schedule 4(z),
there are no legal, administrative or arbitral proceedings, claims, actions,
causes of action or, to the Company's knowledge, private environmental
investigations or remediation activities or governmental investigations of any
nature seeking to impose, or that reasonably could be expected to result in
the imposition, on the Company or any of its Subsidiaries of any liability or
obligation arising under any Environmental Laws, pending or, to the knowledge
of the Company, threatened against the Company or any of its Subsidiaries, nor
to the knowledge of the Company is there any reasonable basis for any of the
foregoing. During and to the knowledge of the Company prior to, the period of
(i) the Company's or any of its Subsidiaries' ownership or operation of any of
their respective current properties, (ii) the Company's or any of its
Subsidiaries' participation in the management of any property, or (iii) the
Company's or any of its Subsidiaries' holding of a security interest in any
property, there were no releases or threatened releases of Hazardous Materials
in, on, under or affecting any such property other than releases made in
accordance with applicable law. Neither the Company nor any of its
Subsidiaries is subject to any agreement, order, judgment, decree, letter or
memorandum by or with any court, governmental authority, regulatory agency or
third party imposing any material liability or obligation pursuant to or under
any Environmental Law. As used in this Agreement, the term "Environmental Law"
shall mean common law standards relating to environmental protection, human
health or safety, and any local, state or federal environmental statute,
regulation or ordinance, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended. As
used in this Agreement, the term "Hazardous Materials" means any substance,
material or waste that is regulated under any provision of Environmental Law
by the United States, the foreign jurisdictions in which the party in question
conducts business, or any state or local governmental authority including,
without limitation, petroleum and its by-products, asbestos, and any material
or substance that is defined as a "hazardous waste," "hazardous substance,"
"hazardous material," "restricted hazardous waste," "industrial waste," "solid
waste," "contaminant," "pollutant," "toxic waste" or "toxic substance" under
any provision of Environmental Law. This Section contains the sole
representation of the Company with respect to environmental matters.
(aa)Brokers. No brokers or finders have acted for the Company in
connection with this Agreement except for Hoak, Breedlove, Wesneski & Co.
(bb)Organization and Standing; Capitalization. Immediately prior to
the Effective Time, each of M Sub and Holdco will be a corporation duly
organized, validly existing and in good standing under the laws of Delaware.
The authorized capital stock of M Sub will consist of 1,000 shares of voting
common stock, par value $.01 per share (the "M Sub Voting Common Stock"), of
which 100 shares of M Sub Voting Common Stock will be duly authorized for
issuance, and upon such issuance will be validly issued and outstanding, fully
paid and nonassessible. All such issued and outstanding shares of M Sub Voting
Common Stock will be owned as of record by Holdco. The authorized capital
stock of Holdco will consist of 50,000,000 shares of voting common stock, par
value $.01 per share ("Holdco Voting Common Stock"), and non-voting common
stock, par value $.01 per share ("Holdco Non-Voting Common Stock"), and the
shares of Holdco capital stock issued pursuant to the Second Step Merger will
be validly issued and outstanding, fully paid and nonassessible. Prior to the
effective time of the Second Step Merger, only Holdco Voting Common Stock will
be issued and outstanding and all of such outstanding shares will be owned of
record by the Company.
(cc)No Prior Activities. Each of M Sub and Holdco will be formed for
the purpose of effecting the Second Step Merger and the transactions
contemplated by this Agreement and the Second Step Plan of Merger, and at the
Effective Time neither M Sub nor Holdco will have any Subsidiaries (except
that M Sub will be a Holdco Subsidiary) and neither will have undertaken any
business or other activities other than in connection with this Agreement and
the Second Step Plan of Merger and engaging in the transactions contemplated
hereby and thereby.
(dd)Investment Representation. Each stockholder of the Company who
will be receiving Shares in the Second Step Merger will be receiving the
shares of Holdco Voting Common Stock and/or Holdco Non-Voting Common Stock, as
applicable, for his or its own account for investment only and not with a view
towards distribution or resale. The Company reasonably believes that each such
stockholder will either be an "accredited" investor within the meaning of Rule
501 promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), or will have such knowledge and experience in financial and business
matters that such stockholder is capable of evaluating the merits and risks of
investment in the shares of Holdco Voting Common Stock and/or Holdco
Non-Voting Common Stock, as applicable, and will be able to bear the economic
risk of its investment in the Holdco Voting Common Stock or Holdco Non-Voting
Common Stock. The Company will inform each such stockholder that any routine
sale of such shares of Holdco Voting Common Stock and/or Holdco Non-Voting
Common Stock, as applicable, made in reliance upon Rule 144 promulgated under
the Securities Act can be made only in accordance with the terms and
conditions of such Rule and further, that in case such Rule is not applicable
to any sale of the shares of Holdco Voting Common Stock and/or Holdco
Non-Voting Common Stock, as applicable, resale thereof may require compliance
with some other exemption under the Securities Act prior to resale. The
Company will inform such stockholder that certificates representing the Shares
issued pursuant to this Agreement shall bear the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE, TRANSFERRED,
HYPOTHECATED OR OTHERWISE ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT THERETO UNDER SUCH ACT OR AN OPINION
OF COUNSEL THAT AN EXEMPTION FROM REGISTRATION FOR SUCH SALE, OFFER,
TRANSFER, HYPOTHECATION OR OTHER ASSIGNMENT IS AVAILABLE UNDER SUCH ACT."
(ee)There are no contingent payment obligations or "earn-outs" which
are or may become payable in connection with center acquisitions made by the
Company or any of its Subsidiaries prior to the date of this Agreement.
(B) Representations and Warranties of CarrAmerica. CarrAmerica hereby
represents and warrants to VANTAS as follows:
(a) Authority. CarrAmerica has all requisite corporate power
and authority to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. This
Agreement and the consummation of the transactions contemplated hereby have
been approved by the Board of Directors of CarrAmerica and have been duly
authorized by all other necessary corporate action on the part of CarrAmerica,
including any requisite approval of the shareholders of CarrAmerica required
under applicable law, the Certificate of Incorporation and the Bylaws of
CarrAmerica. This Agreement has been duly executed and delivered by a duly
authorized officer of CarrAmerica and constitutes a legal, valid and binding
agreement of CarrAmerica, enforceable against CarrAmerica in accordance with
its terms, except insofar as enforcement thereof may be limited by bankruptcy,
insolvency, or other laws relating to or affecting enforcement of creditors'
rights generally including such general equitable principles as may apply in
the enforcement of creditors' rights.
(b) No Conflicts; Consents. Except as set forth on Schedule 4(B)(b),
the execution and delivery of this Agreement by CarrAmerica does not, and the
consummation of the transactions contemplated hereby and compliance with the
terms hereof will not, conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any lien,
charge or encumbrance of any kind upon any of the properties or assets of
CarrAmerica under, any provision of (i) the Certificate of Incorporation or
By-laws of CarrAmerica, (ii) any note, bond, mortgage, indenture, deed of
trust, license, lease, contract, commitment, agreement or arrangement to which
CarrAmerica is a party or by which it or any of its properties or assets is
bound or (iii) subject to the expiration and termination of the applicable
waiting periods under the HSR Act, any judgment, order or decree, or statute,
law, ordinance, rule or regulation, applicable to CarrAmerica or any of its
properties or assets.
Section 5. (A) Representations and Warranties of VANTAS. VANTAS hereby
represents and warrants to the Company as follows:
(a) Organization and Standing; Books and Records.
(i) VANTAS is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada. Schedule 5(a)
sets forth each Subsidiary of VANTAS and sets forth for each Subsidiary
the state or other jurisdiction of organization of such Subsidiary and
the percentage ownership of the Company with respect to each such
Subsidiary. VANTAS and each of its Subsidiaries have all requisite
corporate power and authority necessary to carry on their respective
businesses as presently conducted and to enable each to own, lease or
otherwise hold their respective properties and assets. VANTAS and each of
its Subsidiaries are duly qualified to do business and in good standing
as a foreign corporation in each jurisdiction in which the conduct or
nature of their respective business or the ownership, leasing or holding
of their respective properties or assets makes such qualification
necessary, except such jurisdictions where the failure to be so qualified
or in good standing, individually or in the aggregate, would not have a
VANTAS Material Adverse Effect (as herein defined).
(ii) VANTAS has delivered to the Company true and complete
copies of the Certificate of Incorporation and By-laws, each as amended
to date, of VANTAS. The stock certificate and transfer books and the
minute books of VANTAS (which have been made available for inspection by
the Company prior to the execution and delivery of this Agreement) are
true and complete.
(b) Authority. VANTAS has all requisite corporate power and
authority to enter into this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. This Agreement and the
consummation of the transactions contemplated hereby have been approved by the
Board of Directors of the Company and have been duly authorized by all other
necessary corporate action on the part of VANTAS, including the requisite
approval of the shareholders of VANTAS required under applicable law, the
Certificate of Incorporation and the By-laws of VANTAS. This Agreement has
been duly executed and delivered by a duly authorized officer of VANTAS and
constitutes a legal, valid and binding agreement of VANTAS, enforceable
against VANTAS in accordance with its terms, except insofar as enforcement
thereof may be limited by bankruptcy, insolvency, or other laws relating to or
affecting enforcement of creditors' rights generally including such general
equitable principles as may apply in the enforcement of creditor's rights.
VANTAS has delivered to the Company true and correct copies of resolutions
adopted by the Board of Directors of VANTAS and the shareholders of VANTAS,
respectively, approving this Agreement and the transactions contemplated
hereby.
(c) No Conflicts; Consents. Except as set forth on Schedule 5(c),
the execution and delivery of this Agreement by VANTAS does not, and the
consummation of the transactions contemplated hereby and compliance with the
terms hereof and thereof will not, conflict with, or result in any violation
of or default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or acceleration of any
obligation or to a material loss of a benefit under, or result in the creation
of any lien, charge or encumbrance of any kind upon any of the properties or
assets of VANTAS or its Subsidiaries under, any provision of (i) the
Certificate of Incorporation or By-laws of VANTAS and its Subsidiaries (ii)
any note, bond, mortgage, indenture, deed of trust, license, lease, contract,
commitment, agreement or arrangement to which VANTAS or any of its
Subsidiaries is a party or by which any of them or any of their respective
properties or assets is bound or (iii) subject to the governmental filings and
other matters referred to in the following sentence, any judgment, order or
decree, or statute, law, ordinance, rule or regulation, applicable to VANTAS
or any of its Subsidiaries or any of their respective properties or assets.
Except as set forth on Schedule 5(c), no consent, approval, license, permit,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity is required to be obtained or made by or with respect to
VANTAS or any of its Subsidiaries in connection with the execution, delivery
and performance by VANTAS of this Agreement or the consummation of the
transactions contemplated hereby, other than (A) compliance with and filings
under the HSR Act, if applicable, (B) compliance with and filings under
Section 13(a) or 15(d), as the case may be, of the Exchange Act, (C) filing a
certificate of merger or certificate of ownership and merger with the
Secretary of States of the State of Delaware and the State of Nevada and (D)
such other consents, approvals, orders, authorizations, registrations,
declarations and filings (i) as are set forth on Schedule 5(c) and (ii) as may
be required under the "blue sky" laws of various states, to the extent
applicable.
(d) Capital Stock of VANTAS. The authorized capital stock of VANTAS
consists (i) of 43,500,000 shares of VANTAS Common Stock, (ii) 33,500,000
shares of VANTAS Preferred Stock, of which the following shares have been
designated: (a) 7,574,711 shares of Series A Stock; (b) 3,222,851 shares of
Series B Stock; (c) 13,325,424 shares of Series C Stock; (d) 5,109,873 shares
of Series D Stock; and (e) 2,677,158 shares of Series E Stock, of which
7,064,222 shares of VANTAS Common Stock, 7,574,711 shares of Series A Stock,
3,222,851 shares of Series B Stock, 13,325,424 shares of Series C Stock,
5,109,873 shares of Series D Stock and 2,677,158 shares of Series E Stock are
duly authorized and validly issued and outstanding, fully paid and
nonassessable. Except as set forth in the previous sentence, there are no
shares of capital stock or other equity securities of VANTAS outstanding.
Except as set forth in Schedule 5(d), none of the shares of capital stock of
VANTAS have been issued in violation of, or are subject to, any purchase
option, call, right of first refusal, preemptive, subscription or similar
right under any provision of applicable law, the certificate of incorporation
or by-laws of VANTAS or any agreement, contract or instrument to which VANTAS
is a party or by which it or any of its properties or assets is bound. Except
as set forth on Schedule 5(d), there are no outstanding warrants, options,
rights, "phantom" stock rights, agreements, convertible or exchangeable
securities or other commitments (other than this Agreement) (i) pursuant to
which VANTAS is or may become obligated to issue, sell, purchase, return or
redeem any shares of capital stock or other securities of VANTAS or (ii) that
give any person the right to receive any benefits or rights similar to any
rights enjoyed by or accruing to the holders of shares of capital stock of
VANTAS. There are no equity securities of VANTAS reserved for issuance for any
purpose except for securities reserved for issuance for the purposes set forth
on Schedule 5(d). There are no outstanding bonds, debentures, notes or other
indebtedness having the right to vote on any matters on which shareholders of
VANTAS may vote.
(e) VANTAS Actions. VANTAS has taken all actions necessary on its
part to render the restriction on business combinations contained in Section
78.438 of the Nevada Law inapplicable to this Agreement and the HQ Merger.
(f) VANTAS Financial Statements. (i) Schedule 5(f) sets forth (A)
the consolidated unaudited balance sheet of VANTAS as of September 30, 1999
(the "VANTAS Balance Sheet"), and the consolidated unaudited statement of
income of VANTAS for the 9 month period ended September 30, 1999, together
with the notes to such financial statements, and (B) the consolidated audited
balance sheets of VANTAS as of June 30, 1997, June 30, 1998 and December 31,
1998, and the consolidated audited statements of income of VANTAS for the six
months ended December 31, 1998 and the years ended June 30, 1997 and June 30,
1998, together with the notes to such financial statements (the financial
statements described in clauses (A) and (B) above, together with the notes to
such financial statements, are collectively referred to herein as the "VANTAS
Financial Statements"). The VANTAS Financial Statements are in all material
respects in accordance with the books and records of VANTAS and its
consolidated Subsidiaries and have been prepared in conformity with generally
accepted accounting principles consistently applied throughout the periods
indicated (except in each case as described in the notes thereto) and on that
basis fairly present in all material respects (subject, in the case of the
unaudited statements referred to in (A) above, to normal, recurring year-end
adjustments) the financial condition and results of operations of VANTAS as of
the respective dates thereof and for the respective periods indicated.
(ii) VANTAS and its consolidated Subsidiaries do not have any
liabilities or obligations of any nature (whether accrued, absolute,
contingent, threatened or otherwise), except (A) as disclosed, reflected
or reserved against in the VANTAS Balance Sheet and the notes thereto,
(B) items set forth in Schedule 5(f), (C) liabilities and obligations
incurred in the ordinary course of business consistent with past practice
since the date of the VANTAS Balance Sheet that would not, individually
or in the aggregate, result in a VANTAS Material Adverse Effect and (D)
Taxes (as defined in Section 4(l)) with respect to the period after the
date of the VANTAS Balance Sheet.
(iii) Except as set forth in Schedule 5(f), the amount of all
accounts receivable, including unbilled invoices which are reflected as
accounts receivable on the VANTAS Financial Statements, due, or recorded
in the VANTAS Balance Sheet as being due to VANTAS and its Subsidiaries
(less the amount of any provision or reserve therefor made in the VANTAS
Balance Sheet), are fully collectible in the normal course of business.
(g) Real Property.
(i) None of VANTAS or any of its Subsidiaries owns any real
property or interests in real property, other than VANTAS Real Property
Leases (as defined below). Schedule 5(g) sets forth a complete list of
all real property and interests in real property leased or otherwise held
by VANTAS or any of its Subsidiaries (individually, a "VANTAS Real
Property Lease" and the real properties specified in such leases, being
referred to herein individually as a "VANTAS Property" and collectively
as the "VANTAS Properties") as lessee, and VANTAS has provided a true and
accurate summary of the VANTAS Real Property Leases that indicate for
each such VANTAS Real Property Lease (i) location, (ii) rent, (iii) term,
(iv) square footage of space demised thereunder, and (v) whether or not
the consent of the landlord is required in order for the HQ Surviving
Corporation to be able to succeed to the rights of the tenant under such
VANTAS Real Property Lease. VANTAS Property constitutes all interests in
real property currently used or currently held for use in connection with
the business of VANTAS and its Subsidiaries and which are necessary for
the continued operation of the business of VANTAS and its Subsidiaries as
the business is currently conducted. Each VANTAS Real Property Lease is
valid, binding, enforceable and in full force and effect, except insofar
as enforcement thereof may be limited by bankruptcy, insolvency or other
laws relating to or affecting enforcement of creditors' rights generally
including such general equitable principles as may apply in the
enforcement of creditors' rights. VANTAS and each of its Subsidiaries has
performed in all material respects all obligations required to be
performed by them under each VANTAS Real Property Lease. Other than the
consents set forth on the summary referred to above, no event or
condition exists which constitutes or, after notice or lapse of time or
both, would constitute a default in any material respect on the part of
VANTAS or any of its Subsidiaries under any such VANTAS Real Property
Lease. To VANTAS' knowledge, each other party to each VANTAS Real
Property Lease has in all material respects performed all obligations
required to be performed by it and no event or condition exists which
constitutes or, after notice or lapse of time or both, would constitute a
default in any material respect on the part of such other party under any
such VANTAS Real Property Lease. All of the VANTAS Properties, buildings,
fixtures and improvements thereon owned or leased by VANTAS or any of its
Subsidiaries are in good operating condition and repair (subject to
normal wear and tear).
(ii) VANTAS and its Subsidiaries have all material certificates
of occupancy and material permits and licenses of any Governmental Entity
necessary for the current use and operation of VANTAS Properties, and
VANTAS and its Subsidiaries have complied with all material conditions of
such permits and licenses applicable to them. No default or violation, or
event which, with the lapse of time or giving of notice or both would
become a default or violation, has occurred in the due observance of any
such material permit or license, other than defaults or violations which,
individually or in the aggregate, would not be reasonably likely to have
a VANTAS Material Adverse Effect. For purposes of this Agreement, a
"VANTAS Material Adverse Effect" means a material adverse effect on the
business, financial condition or results of operations of VANTAS and its
Subsidiaries, taken as a whole, other than any such effect which could
reasonably be expected to result from the disclosure of the existence of
this Agreement and the transactions contemplated hereby (which shall not
include any effect on the operation of the business of VANTAS or on the
continued compliance by VANTAS and its Subsidiaries with Applicable Laws
and their respective contracts) to the persons set forth on Schedule
5(h).
(iii) There does not exist any actual or, to the knowledge of
VANTAS, threatened or contemplated condemnation or eminent domain
proceedings that affect any VANTAS Property or any part thereof, and none
of VANTAS or any of its Subsidiaries has received any notice, oral or
written, of the intention of any Governmental Entity or other Person to
take or use all or any part thereof.
(h) Litigation. Except as set forth in Schedule 5(h), there is no
claim, action, suit, proceeding, arbitration, investigation or inquiry before
any Governmental Entity or any private arbitration tribunal now pending, or,
to the knowledge of VANTAS, threatened, against, relating to or affecting
VANTAS or its Subsidiaries or any of their respective properties, employees,
assets or business or the transactions contemplated by this Agreement. Except
as set forth in Schedule 5(h), to the knowledge of VANTAS there is no basis
for any such claim, action, suit, proceeding, arbitration, investigation or
inquiry which, individually or in the aggregate, may reasonably be expected to
have a VANTAS Material Adverse Effect. Except as set forth in Schedule 5(h),
none of VANTAS, its Subsidiaries or any of the directors, officers or
employees of VANTAS or its Subsidiaries have been permanently or temporarily
enjoined or prohibited by judgment, order or decree of any Governmental Entity
from engaging in or continuing any conduct or practice in connection with the
businesses engaged in by VANTAS and its Subsidiaries. VANTAS is not operating
under, subject to or in default with respect to any judgment, order or decree
of any Governmental Entity enjoining or prohibiting VANTAS or its Subsidiaries
from taking, or requiring VANTAS or any of its Subsidiaries to take, any
action of any kind or to which VANTAS, any of its Subsidiaries or any of their
respective properties or assets is subject or bound.
(i) Insurance. Schedule 5(i) lists all policies of fire and
casualty, liability and other forms of insurance maintained or held by VANTAS
and its Subsidiaries, which policies are in such amounts, and with such
deductibles and which insure against such risks and losses as are customary
for the business conducted by VANTAS and its Subsidiaries. All such policies
are in full force and effect and are sufficient for compliance by VANTAS and
its Subsidiary with all their respective agreements, all premiums due and
payable thereon have been paid (other than retroactive or retrospective
premium adjustments that are not yet, but may be, required to be paid with
respect to any period ending prior to the Closing Date), and no notice of
cancellation or termination has been received with respect to any such policy
which has not been replaced on substantially similar terms prior to the date
of such cancellation. The activities and operations of VANTAS and its
Subsidiaries have been conducted in a manner so as to conform in all material
respects to all applicable provisions of such insurance policies.
(j) Taxes.
(i) VANTAS is a Subchapter C corporation as defined in the
Code.
(ii) In the last two years, the only jurisdictions where VANTAS
and its Subsidiaries have filed any income tax returns are with the
Federal government of the United States of America and with the States
set forth on Schedule 5(j).
(iii) (A) VANTAS and its Subsidiaries have (x) duly filed with
the appropriate Governmental Entities all Tax Returns required to be
filed by them on or prior to the date hereof (after giving effect to any
filing extension properly granted by a Governmental Entity having
authority to do so), and such Tax Returns are true, correct and complete
in all material respects and (y) duly paid in full or made provision in
accordance with generally accepted accounting principles for the payment
of all Taxes for all periods ending through the date hereof, except where
the failure to file such Tax Returns or pay such Taxes would not have a
VANTAS Material Adverse Effect; (B) there are no liens for Taxes upon the
assets of VANTAS and its Subsidiaries, except for statutory liens for
current Taxes not yet due; (C) VANTAS and its Subsidiaries have complied
in all material respects with all applicable laws, rules and regulations
relating to the payment and withholding of Taxes (including, without
limitation, withholding of Taxes pursuant to Sections 1441, 1442, 3121
and 3402 of the Code or similar provisions under any foreign laws) and
have, within the time and the manner prescribed by law, withheld from and
paid over to the proper Governmental Entities all amounts required to be
so withheld and paid over under applicable laws; (D) no Federal, state,
local or foreign audits or other administrative proceedings or court
proceedings are presently pending with regard to any Taxes or Tax Returns
of VANTAS or its Subsidiaries, and none of VANTAS and its Subsidiaries
have received notice of any pending audits or proceedings; (E) there are
no outstanding written requests, agreements, consents or waivers to
extend the statutory period of limitations applicable to the assessment
of any Taxes or deficiencies against VANTAS or its Subsidiaries; (F) none
of VANTAS or its Subsidiaries is a party to any agreement providing for
the allocation or sharing of Taxes; and (G) no power of attorney has been
executed by VANTAS or any of its Subsidiaries with respect to any matter
relating to Taxes which is currently in force.
(k) Benefit Plans.
(i) Schedule 5(k) sets forth a list and brief description of
all "employee benefit plans" (as defined in Section 3(3) of ERISA) and
all other Benefit Plans maintained by VANTAS or any of its Subsidiaries
for the benefit of any director, officer or employee of VANTAS or any of
its Subsidiaries. VANTAS has delivered or made available to the Company
true, complete and correct copies of (A) each Benefit Plan (or, in the
case of any unwritten Benefit Plans, descriptions thereof) including all
amendments and summaries of material modifications, (B) the most recent
annual report on Form 5500 (together with all schedules and exhibits
filed therewith) filed with the IRS with respect to each Benefit Plan (if
any such report was required) and the most recent summary annual report
distributed to participants with respect to each Benefit Plan for which a
summary annual report is required and (C) the most recent summary plan
description for each Benefit Plan for which such a summary plan
description is required. None of the Benefit Plans are subject to Title
IV of ERISA or the minimum funding requirements of Section 412 of the
Code and VANTAS and its Subsidiaries have not previously maintained or
contributed to (or been required to maintain or contribute to) any plan
which was subject to Title IV of ERISA or the minimum funding
requirements of Section 412 of the Code with respect to which VANTAS or
any of its Subsidiaries could have any liability therefor.
(ii) Each Benefit Plan has been administered in all material
respects in accordance with its terms. VANTAS, its Subsidiaries and all
the Benefit Plans are in compliance in all material respects with the
applicable provisions of ERISA and the Code and all other applicable law
and all employer-employee contributions have been timely made to such
plans. There are no lawsuits, actions, termination proceedings or other
proceedings pending, or, to the knowledge of VANTAS, threatened against
or involving any Benefit Plan and, to the knowledge of VANTAS, there are
no investigations by any Governmental Entity or other claims (except
claims for benefits payable in the normal operation of the Benefit Plans)
pending or threatened against or involving any Benefit Plan or asserting
any rights to benefits under any Benefit Plan.
(iii) Except as provided in Schedule 5(k), all Benefit Plans
that are "employee pension benefits plans" (as defined in Section 3(2) of
ERISA) (the "Pension Plans") have been the subject of determination
letters from the IRS to the effect that such Pension Plans are qualified
and exempt from Federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, or timely applications for such letters are
currently pending with the IRS, and no such determination letter has been
revoked nor, to the knowledge of VANTAS, has revocation been threatened,
nor has any such Pension Plan been amended since the date of its most
recent determination letter or application therefor in any respect that
would adversely affect its qualification.
(iv) None of the Benefit Plans that are "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA) provide for
post-retirement medical or dental insurance benefits, the cost of which
is not entirely borne by the retirees eligible therefor.
(v) Except as set forth in Schedule 5(k), no director, officer
or employee or former director, officer or employee of VANTAS or any of
its Subsidiaries will become entitled to payment or accelerated vesting
of any bonus, retirement, severance, job security or similar benefit or
any enhanced benefit solely as a result of the transactions contemplated
hereby.
(l) Disclosure. No statement contained in any document to be
furnished by VANTAS to any holder of VANTAS Common Stock or VANTAS Preferred
Stock for purposes of apprising the holders thereof of the execution and
delivery of this Agreement and the transactions contemplated hereby will
contain any untrue statement of a material fact or will omit to state any
material fact necessary, in the light of the circumstances under which it will
be made, in order to make the statements therein not misleading or in order to
provide any information required to be provided in such document.
(m) Equity Interests. Except as set forth in Schedule 5(m)
and the other schedules hereto, none of VANTAS or its Subsidiaries directly or
indirectly owns any capital stock of or other equity interests in any
corporation, partnership or other person, and neither VANTAS nor any of its
Subsidiaries is a member of or participant in any partnership, joint venture
or similar person.
(n) Investment Company. None of VANTAS or any of its Subsidiaries is
registered or required to be registered as an investment company under the
Investment Company Act nor is VANTAS or any of its Subsidiaries registered or
required to be registered as an investment company in any similar capacity
under the laws of any state.
(o) Contracts. Except as set forth in Schedule 5(o) or 5(k), none of
VANTAS or its Subsidiaries is a party to or otherwise bound by any contract,
agreement or arrangement which has an aggregate future liability in excess of
$250,000 individually. Except as set forth in Schedule 5(o), all agreements,
contracts, leases, subleases, licenses, options, instruments or arrangements
of VANTAS or any of its Subsidiaries parties thereto listed in the Schedules
hereto (collectively, the "VANTAS Contracts") are valid, binding and in full
force and effect and are enforceable by VANTAS and each of its Subsidiaries in
accordance with its terms, except insofar as enforcement thereof may be
limited by bankruptcy, insolvency or other laws relating to or affecting
enforcement of creditors' rights generally including such general equitable
principles as may apply in the enforcement of creditors' rights. Except as set
forth in Schedule 5(o), VANTAS and its Subsidiaries have performed in all
material respects all obligations required to be performed by them to date
under material VANTAS Contracts and none are (with or without the lapse of
time or the giving of notice, or both) in breach or default in any material
respect thereunder and, to the VANTAS's knowledge, no other party to any
material VANTAS Contract is (with or without the lapse of time or the giving
of notice, or both) in breach or default in any material respect thereunder.
(p) Restrictions and Agreements. Except as set forth in Schedule
5(p), (i) none of VANTAS or any of its Subsidiaries is a party to, nor is
VANTAS or any of its Subsidiaries or any of their respective properties or
assets subject to or bound by, any judgment, order or decree of any
Governmental Entity which has or is reasonably likely to have, individually or
in the aggregate, a VANTAS Material Adverse Effect, and (ii) none of VANTAS or
any of its Subsidiaries is a party to nor are any of their respective
properties or assets subject to or bound by, any contract, agreement or other
instrument, which, as a result of the execution of this Agreement or the
consummation of the transactions contemplated hereby, has or is reasonably
likely to have, individually or in the aggregate, a VANTAS Material Adverse
Effect.
(q) Absence of Changes or Events. Since the date of the VANTAS
Balance Sheet, there has not been any VANTAS Material Adverse Effect or any
development or change in circumstances that is reasonably likely to result in
a VANTAS Material Adverse Effect. Except as set forth in Schedule 5(q) or as
otherwise contemplated or permitted by this Agreement, since the date of the
VANTAS Balance Sheet, the business of VANTAS and its Subsidiaries has been
conducted in the ordinary course and in substantially the same manner as
previously conducted, and none of VANTAS or any of its Subsidiaries has (i)
declared or paid any dividend or made any other distribution to its
shareholders whether or not upon or in respect of any shares of its capital
stock, (ii) redeemed or otherwise acquired any shares of its capital stock or
issued any capital stock or any option, warrant or right relating thereto or
any securities convertible into or exchangeable for any shares of capital
stock, (iii) adopted or materially amended any Benefit Plan (as defined in
Section 4(r)), except as required by law, or entered into or amended any
employment, severance or consulting agreement, contract or similar
arrangement, (iv) granted to any director, officer or employee any increase in
compensation or benefits, except for increases for any such director, officer
or employee in the ordinary course of business consistent with past practice
or as may be required under existing agreements, (v) incurred or assumed any
liability, obligation or indebtedness for borrowed money or guaranteed any
such liability, obligation or indebtedness, (vi) permitted, allowed or
suffered any of its assets to become subject to any mortgage, security
interest, lien or other similar restriction of any nature whatsoever, (vii)
cancelled any indebtedness or waived any claims or rights of substantial
value, except for customer trade adjustments in the ordinary course of
business that do not exceed $25,000 individually or $200,000 in the aggregate,
or (viii) entered into, or modified, amended, terminated or permitted the
lapse of, any VANTAS Real Property Lease (as defined herein) or other material
agreement relating to real property.
(r) Compliance with Applicable Laws. Except as set forth on Schedule
5(r), VANTAS and its Subsidiaries are in compliance in all material respects
with all Applicable Laws. Except as set forth in Schedule 5(r), none of VANTAS
or any of its Subsidiaries has received any written communication during the
past two years from a Governmental Entity that alleges that VANTAS or any of
its Subsidiaries are not in compliance in any material respect with any
Applicable Laws.
(s) Transactions with Affiliates. Except as set forth in Schedule
5(s), none of the VANTAS Contracts between VANTAS and/or its Subsidiaries, on
the one hand, and any Affiliate of VANTAS, on the other hand, will continue in
effect subsequent to the Closing. Except as set forth in Schedule 5(s), after
the Closing no Affiliate of VANTAS will have any interest in any property
(real or personal, tangible or intangible) or contract used in or pertaining
to the business of VANTAS. Except as set forth in Schedule 5(s), no Affiliate
of VANTAS has any direct or indirect ownership interest in any person in which
VANTAS and/or any of its Subsidiaries has any direct or indirect ownership
interest or with which VANTAS and/or any of its Subsidiaries competes.
(t) Environmental Liability. Except as set forth in Schedule 5(t),
there are no legal, administrative or arbitral proceedings, claims, actions,
causes of action or, to VANTAS' knowledge, private environmental
investigations or remediation activities or governmental investigations of any
nature seeking to impose, or that reasonably could be expected to result in
the imposition, on VANTAS or any of its Subsidiaries of any liability or
obligation arising under any Environmental Laws, pending or, to the knowledge
of VANTAS, threatened against VANTAS or any of its Subsidiaries, nor to the
knowledge of VANTAS is there any reasonable basis for any of the foregoing.
During and to the knowledge of VANTAS prior to, the period of (i) VANTAS' or
any of its Subsidiaries' ownership or operation of any of their respective
current properties, (ii) VANTAS' or any of its Subsidiaries' participation in
the management of any property, or (iii) VANTAS' or any of its Subsidiaries'
holding of a security interest in any property, there were no releases or
threatened releases of Hazardous Materials in, on, under or affecting any such
property other than releases made in accordance with applicable law. Neither
VANTAS nor any of its Subsidiaries is subject to any agreement, order,
judgment, decree, letter or memorandum by or with any court, governmental
authority, regulatory agency or third party imposing any material liability or
obligation pursuant to or under any Environmental Law. This section contains
the sole representation of VANTAS with respect to environmental matters.
(u) SEC Documents. Except as set forth on Schedule 5(u), VANTAS has
timely filed all required reports, forms and other documents with the SEC
since January 8, 1999 (the "VANTAS SEC Documents"). Except as set forth on
Schedule 5(u), as of their respective dates, and giving effect to any
amendments thereto, (a) the VANTAS SEC Documents complied in all material
respects with the requirements of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder and (b) none of the VANTAS
SEC Documents contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
(v) Financial Capability. VANTAS has received and accepted a
commitment letter (the "Commitment Letter") from UBSAG, Stamford Branch, dated
as of January 20, 2000, to make available credit facilities to the HQ
Surviving Corporation of between $350 million and $400 million which, when
taken together with equity investments of RSI or potential third parties, will
provide sufficient funds to consummate the Merger and the other transactions
contemplated by this Agreement, the Stock Purchase Agreement and the UK
Agreement. The Commitment Letter is in full force and effect and VANTAS has
performed in all material respects its obligations thereunder.
(w) Intentionally Omitted.
(x) Investment Representations. Each stockholder of VANTAS who will
be receiving Shares in the HQ Merger will be receiving the Shares for his or
its own account for investment only and not with a view towards distribution
or resale. VANTAS reasonably believes that each such stockholder will either
be an "accredited" investor within the meaning of Rule 501 promulgated under
the Securities Act or will have such knowledge and experience in financial and
business matters that such stockholder is capable of evaluating the merits and
risks of an investment in, and is able to bear the economic risk of an
investment in, and bearing the risk of investment in the Shares. VANTAS will
inform each such stockholder that any routine sale of such Shares made in
reliance upon Rule 144 promulgated under the Securities Act can be made only
in accordance with the terms and conditions of such Rule and further, that in
case such Rule is not applicable to any sale of the Shares, resale thereof may
require compliance with some other exemption under the Securities Act prior to
resale. VANTAS will inform such stockholder that certificates representing the
Shares issued pursuant to this Agreement shall bear the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE, TRANSFERRED,
HYPOTHECATED OR OTHERWISE ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT THERETO UNDER SUCH ACT OR AN OPINION
OF COUNSEL THAT AN EXEMPTION FROM REGISTRATION FOR SUCH SALE, OFFER,
TRANSFER, HYPOTHECATION OR OTHER ASSIGNMENT IS AVAILABLE UNDER SUCH ACT."
(y) Stockholders Agreement. On or prior to the Effective Time, the
Fifth Amended and Restated Stockholders' Agreement, dated as of July 29, 1999,
by and among VANTAS and certain other parties thereto shall be of no further
force and effect.
(B) Representations and Warranties of RSI. RSI hereby represents and
warrants to the Company as follows:
(a) Authority. RSI has all requisite corporate power and authority
to enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. This Agreement and the
consummation of the transactions contemplated hereby have been approved by the
Board of Directors of RSI and have been duly authorized by all other necessary
corporate action on the part of RSI, including the requisite approval of the
shareholders of RSI required under applicable law, the Certificate of
Incorporation and the Bylaws of RSI. This Agreement has been duly executed and
delivered by a duly authorized officer of RSI and constitutes a valid and
binding agreement of RSI, enforceable against RSI in accordance with its
terms, except insofar as enforcement thereof may be limited by bankruptcy,
insolvency, or other laws relating to or affecting enforcement of creditors'
rights generally including such general equitable principles as may apply in
the enforcement of creditors' rights.
(b) No Conflicts; Consents. Except as set forth on Schedule 5(B)(b),
the execution and delivery of this Agreement by RSI does not, and the
consummation of the transactions contemplated hereby and compliance with the
terms hereof will not, conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or result in the creation of any lien,
charge or encumbrance of any kind upon any of the properties or assets of RSI
under, any provision of (i) the Certificate of Incorporation or By-laws of
RSI, (ii) any note, bond, mortgage, indenture, deed of trust, license, lease,
contract, commitment, agreement or arrangement to which RSI is a party or by
which it or any of its properties or assets is bound or (iii) subject to the
expiration and termination of the applicable waiting periods under the HSR
Act, any judgment, order or decree, or statute, law, ordinance, rule or
regulation, applicable to RSI or any of its properties or assets.
Section 6. Covenants of the Company. The Company and, as applicable,
CarrAmerica covenant and agree as follows:
(a) Access. Prior to the Closing, the Company shall, and shall cause
its Subsidiaries to, give RSI and VANTAS and their respective officers,
employees, representatives, counsel financing sources and accountants and
their respective counsel, auditors and authorized representatives full access,
during normal business hours and upon reasonable notice, to the personnel,
properties, financial statements, contracts, books, records, working papers
and other relevant information pertaining thereto of the Company and its
Subsidiaries and shall request, and shall use commercially reasonable efforts
to cause, its employees, counsel, auditors and financial advisors to cooperate
with RSI and VANTAS in their preparation of any rating agency presentation
materials, private placement prospectus or offering memorandum, syndication
book or similar marketing materials ("Financing Materials") in connection with
a transaction to sell securities of the Company in connection with the HQ
Merger or obtain a credit facility to finance VANTAS's obligations pursuant to
the UK Agreement and RSI's obligations pursuant to the Stock Purchase
Agreement and in their investigation of the business of the Company and its
Subsidiaries, including by furnishing copies of data or information pertaining
to the business of the Company and its Subsidiaries on a confidential basis
for purposes of due diligence or, with the prior written approval of the
Company, which approval will not be unreasonably withheld, for inclusion in
any Financing Materials in connection with a transaction to sell securities of
the Company in connection with the HQ Merger or obtain a bank credit facility
to finance VANTAS's obligations pursuant to the UK Agreement and RSI's
obligations pursuant to the Stock Purchase Agreement. Prior to the Closing,
the Company shall, and shall cause its Subsidiaries, officers and employees
to, furnish to RSI and VANTAS and their respective officers, employees,
representatives, counsel and accountants such financial, tax and operating
data and other information with respect to the business, properties and assets
of the Company and its Subsidiaries as RSI and VANTAS or any such person shall
from time to time reasonably request, and the Company shall, and shall cause
its Subsidiaries, directors, officers and employees to, cooperate with, and
the Company shall request its independent public accountants and independent
legal counsel to cooperate with, RSI and VANTAS and their respective officers,
employees, representatives, counsel and accountants so as to enable VANTAS to
be kept fully informed with respect to the business, assets, financial
condition, results of operations and prospects of the Company.
(b) Ordinary Conduct. Except as set forth in the capital expenditure
and operating budget (the "CapEx Budget") of the Company attached hereto as
part of Schedule 6(b) or otherwise expressly permitted by the terms of this
Agreement, from the date hereof to the Closing, the Company and each of its
Subsidiaries shall continue to conduct their business in the ordinary course
in substantially the same manner as presently conducted and shall make all
reasonable efforts consistent with past practices to preserve its
relationships with customers and others with whom it deals, including the
incurrence of expenditures in connection with the continued development of
committed centers covered by the CapEx Budget. Notwithstanding anything to the
contrary herein, the Company may use available cash to repay indebtedness of
the Company on which it is the primary obligor, including without limitation
outstanding principal and accrued and unpaid interest under the Company's line
of credit with Morgan Guaranty Trust Company ("the Morgan Line"). The Company
and its Subsidiaries shall not take any action that would, or that could
reasonably be expected to, result in (A) any of the representations and
warranties (including, but not limited to, those set forth in Section 4(A)(j))
of the Company set forth in this Agreement that are qualified as to
materiality becoming untrue or incorrect, (B) any of such representations and
warranties that are not so qualified becoming untrue or incorrect in any
material respect or (C) any of the conditions to the HQ Merger set forth in
Section 9 not being satisfied. In addition, except as set forth in the Company
CapEx Budget or Schedule 6(b) or otherwise expressly permitted by the terms of
this Agreement, the Company and its Subsidiaries shall not do any of the
following without the prior written consent of VANTAS:
(i) Except in connection with the amendments to its certificate
of incorporation to be implemented by the Company prior to the Effective
Time, such amendments being substantially in the form attached hereto as
Exhibit B-1 and Exhibit B-1 (the "Recapitalization Amendments"), adjust,
split, combine or reclassify any of its capital stock; make, declare or
pay any dividend or make any other distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock, membership or partnership interests or any securities or
obligations convertible into or exchangeable for any shares of its
capital stock or membership or partnership interests; issue, deliver or
sell any shares of its capital stock or membership or partnership
interests or any securities convertible into or exercisable for, or any
rights, options or warrants to acquire, any such shares or securities
(whether for cash or property) to any person;
(ii) sell, lease, transfer, or otherwise dispose of, or subject
to any Lien, any of its properties or assets, or cancel, release or
assign any material indebtedness owed to it or any material claim held by
it, except (i) in bona fide arm's length transactions made in the
ordinary course of business consistent with past practice or (ii)
pursuant to contracts or agreements in force as of the date of this
Agreement and listed in Schedule 4(o);
(iii) incur or assume any liabilities or incur any indebtedness
for borrowed money, assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other
individual, corporation or entity (other than a wholly owned Subsidiary)
except pursuant to contracts or agreements listed in Schedule 4(o);
(iv) make any material acquisition or investment either by
purchase of stock or securities, merger or consolidation, contributions
to capital, property transfers, or purchases of any property or assets of
any other individual, corporation or other entity except pursuant to
contracts or agreements in force as of the date of this Agreement and
listed in Schedule 4(o);
(v) make any material change in any Company Real Property Lease
or other contracts or enter into, renew, terminate or permit to be
terminated any Company Real Property Lease or any other contract or
agreement that calls for aggregate annual payments of $25,000 or more and
which either (i) is not terminable by the Company or its Subsidiary, as
applicable, at will on 60 days or less notice without payment of a
penalty or (ii) has a term of more than six months;
(vi) except in the ordinary course of business consistent with
past practices (but in no event greater than 10% as to any employee
(other than senior management that is entitled to increases of up to 30%
of their respective base salaries)) increase the compensation or fringe
benefits of any of its employees or pay any bonus, pension or retirement
allowance not required by any existing plan or agreement to which any
such employees are or become a party, materially amend or commit itself
to any pension, retirement, profit-sharing or welfare benefit plan or
agreement or employment agreement with or for the benefit of any employee
or accelerate the vesting of any stock options or other stock-based
compensation except for accelerations required by any existing plan or
agreement set forth on Schedule 4(r);
(vii) make any loans, advances or capital contributions to any
other person, other than loans and advances to Subsidiaries;
(viii) make any capital expenditures in excess of (A) $25,000
individually or (B) $100,000 in the aggregate, other than expenditures
necessary to maintain existing assets in good repair not to exceed in the
aggregate $250,000;
(ix) disburse any cash held in acquisition indemnity escrows
other than in accordance with the terms thereof;
(x) settle any claim, action or proceeding involving money
damages except in the ordinary course of business consistent with past
practice for settlements for monetary damages that in any event do not,
individually or in the aggregate with any other such settlements, exceed
$100,000; provided, however, that notwithstanding the foregoing, in no
event may the Company settle such claim, action or proceeding without
VANTAS' prior written consent if such settlement imposes any ongoing
duties, obligations or liabilities on the Company which can reasonably be
expected to require the Company to incur liabilities in excess of
$100,000 or unduly impair the conduct of the Company's business;
(xi) take any action that would prevent or impede the HQ Merger
from qualifying as a reorganization within the meaning of Section
368(a)(1) of the Code; provided that, entering into this Agreement and/or
consummating the HQ Merger and the other transactions contemplated by
this Agreement and the other agreements entered into in connection
herewith and referenced herein shall not in any event be considered to
result in a breach of this covenant;
(xii) except in connection with the filing of the
Recapitalization Amendments, amend (a) its Certificate of Incorporation,
By-laws or similar governing documents or (b) upon their respective
filing or adoption, as applicable, any of the Holdco Charter (as herein
defined), the M Sub Charter (as herein defined), the Holdco By-Laws (as
herein defined) or the M Sub By-Laws (as herein defined), as the case may
be;
(xiii) enter into any new line of business;
(xiv) enter into or perform any commitment, contractual
obligation, borrowing, capital expenditure or other transaction (except
pursuant to agreements in force as of the date of this Agreement and
listed on Schedule 4(u)) with any officer, director, consultant or
Affiliate of the Company or any of its Subsidiaries;
(xv) make any changes in its accounting methods, except as may
be required under law, rule, regulation or GAAP, in each case as
concurred in by such party's independent public accountants; or
(xvi) agree to, or make any commitment to, do any of the
foregoing.
The Company recognizes that the agreements contained in this Section
6(b) are an integral part of the transactions contemplated by this Agreement
and that without these agreements, VANTAS would not enter into this Agreement;
accordingly, in the event of the breach by the Company of the terms of this
Section 6(b), VANTAS shall be entitled, if it so elects, to institute and
prosecute proceedings in any court of competent jurisdiction, to enforce the
specific performance thereof by the Company, to enjoin the Company from
actions or omissions in violation of this Section 6(b) or to otherwise obtain
preliminary injunctive relief (without the necessity to post a bond) from such
actions or omissions.
(c) Confidentiality. Each of CarrAmerica and the Company shall keep
all information provided to it or any of its representatives pursuant to this
Agreement confidential, and each of CarrAmerica and the Company shall not
disclose such information to any Persons other than the directors, officers,
employees, financial advisors, legal advisors, accountants and consultants of
CarrAmerica and/or the Company who reasonably need to have access to the
confidential information and (i) in the case of directors, officers,
employees, legal advisors and the principal accountants of CarrAmerica and/or
the Company, who are advised of the confidential nature of such information,
and (ii) in the case of any financial advisors, other accountants or
consultants of CarrAmerica and/or the Company, who execute an agreement with
RSI agreeing to maintain confidentiality of such information; provided,
however, the foregoing obligation of CarrAmerica and the Company shall (A) not
relate to any information that (i) is or becomes generally available other
than as a result of unauthorized disclosure by CarrAmerica and/or the Company
or by Persons to whom CarrAmerica and/or the Company has made such information
available, or (ii) is or becomes available to CarrAmerica and/or the Company
on a non-confidential basis from a third party that is not, to CarrAmerica's
and the Company's knowledge, bound by any other confidentiality agreement with
VANTAS of CarrAmerica and/or RSI or (B) not prohibit disclosure of any
information if CarrAmerica and/or the Company believe in good faith that
disclosure is required by law, rule, regulation, court order or other legal or
governmental process (including SEC or GAAP reporting requirements) or if
CarrAmerica and/or the Company believe in good faith that disclosure is
advisable to explain a material deviation from its expected financial results
that arises from the transactions contemplated hereby; provided, further that
in the case of a disclosure described in clause (B) above, CarrAmerica and/or
the Company shall (i) give prior notice to RSI of any such disclosure and (ii)
consult with RSI prior to making such disclosure. Notwithstanding anything to
the contrary contained herein, the covenant of CarrAmerica set forth in this
Section 6(c) shall terminate 3 years after the Closing Date.
(d) Other Transactions. From the date of execution and delivery of
this Agreement until the earlier of the termination of this Agreement pursuant
to Section 14 or the Closing, neither CarrAmerica nor the Company shall, nor
shall either of them permit any of their respective employees, directors,
officers or representatives to, directly or indirectly, solicit, initiate,
encourage or otherwise facilitate, any proposal from any person (other than
VANTAS or RSI) concerning a merger with or consolidation of the Company, a
sale of securities of the Company, a sale of all or a substantial portion of
the assets of the Company, or any similar transaction (an "Alternative
Proposal"). Unless all of the stockholders of the Company have entered into
the Stock Purchase Agreement or otherwise consented to this Agreement, the
foregoing will not prevent the Company, or any of its officers, directors,
employers, or representatives, from engaging in discussions with anyone making
an unsolicited proposal for an Alternative Proposal for the purpose of
ascertaining the price and other material terms being offered in an
Alternative Proposal to the extent not apparent on the face of the Alternative
Proposal in the form submitted or for the purpose of determining whether the
Adjustment Conditions have been satisfied; provided, however, that no such
discussion with any third party shall occur without a representative of RSI
attending (but not participating in) such discussions. Notwithstanding
anything to the contrary contained herein, in no event shall CarrAmerica or
the Company or any of their respective employees, directors, officers, or
representatives enter into negotiations with any third party in connection
with or concerning any Alternative Proposal. It is understood that any
violation of the restrictions set forth in the preceding sentence by any
employee, director, officer or representative of the Company, whether or not
such person is purporting to act on behalf of the Company or otherwise, shall
be deemed to be a breach of this Section 6(d) by CarrAmerica and the Company.
In the event that CarrAmerica or the Company receives a proposal for an
Alternative Proposal, CarrAmerica and the Company shall promptly notify VANTAS
of such proposal. CarrAmerica and the Company acknowledge and agree that
nothing in this Section 6(d) shall be construed to alter, amend, limit or
otherwise modify the obligations of CarrAmerica and the Company to consummate
the HQ Merger and the transactions contemplated by the Stock Purchase
Agreement, the UK Agreement and this Agreement in accordance with the terms
and conditions hereof and thereof.
(e) Supplemental Disclosure. Each of CarrAmerica and the Company
shall give prompt notice to VANTAS and RSI of (i) any representation or
warranty made by CarrAmerica or the Company contained in this Agreement that
is qualified as to materiality becoming untrue or inaccurate or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by the Company or
CarrAmerica to comply with or satisfy in any material respect any covenant,
agreement or condition to be complied with or satisfied by it under this
Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
(f) Interim Financial Statements. Within 45 days after the end of
each calendar month beginning with the month ended December 31, 1999 until the
Closing, the Company will furnish to VANTAS an unaudited balance sheet of the
Company as of the last day of such period and the comparable period in the
preceding fiscal year and the related statements of income for the period then
ended and the comparable period in the preceding fiscal year, in each case
certified by the chief financial officer of the Company. All such financial
statements shall be in all material respects in accordance with the books and
records of the Company and prepared in conformity with generally accepted
accounting principles consistently applied throughout the periods indicated
and on that basis fairly present in all material respects, subject to normal,
recurring year-end adjustments, the financial condition and results of
operations of the Company as of the dates thereof and for the periods
indicated.
(g) Corporate Name. The Company shall not permit or suffer any other
person (other than itself and any person authorized by the HQ Surviving
Corporation) to use the name "HQ Global Workplaces, Inc." and "OmniOffices,
Inc." or any variation thereof using the words "HQ Global Workplaces, Inc." or
"OmniOffices, Inc." for any purpose whatsoever.
(h) Stockholders Agreement. The Company shall cause the Amended and
Restated Stockholders Agreement, dated September 29, 1998, by and among the
Company, CarrAmerica and certain other stockholders (the "HQ Stockholders
Agreement") to be terminated and of no further force or effect at or prior to
the Effective Time.
(i) M Sub and Holdco. The Company shall cause the formation of each
of Holdco and M Sub by filing with the Secretary of State of the State of
Delaware a certificate of incorporation in substantially the same form as the
certificate of incorporation, as amended, of HQ Surviving Corporation for
Holdco (the "Holdco Charter") and a certificate of incorporation for M Sub
(the "M Sub Charter") mutually satisfactory to the parties hereto, and shall
cause each of M Sub and Holdco to adopt by-laws, substantially in the form of
the by-laws of HQ Surviving Corporation. The Company shall cause M Sub and
Holdco to have a sufficient number of shares of M Sub Voting Common Stock,
Holdco Voting Common Stock and Holdco Non-Voting Common Stock to be authorized
and unissued to effectuate the terms and conditions of the Second Step Merger.
Other than the shares of M Sub Voting Common Stock issued to Holdco and the
shares of Holdco Voting Common Stock issued to the Company and shares of
Holdco Voting Common Stock and Holdco Non-Voting Common Stock to be issued in
the Second Step Merger, the Company shall cause no additional shares of M Sub
Voting Common Stock, Holdco Voting Common Stock or Holdco Non-Voting Common
Stock to be issued by M Sub or Holdco.
(j) Holdco Board of Directors. On or prior to the time the Second
Step Certificate of Merger (as herein defined) is filed with the Secretary of
State of the State of Delaware, the Company shall cause those persons set
forth on Schedule 1(e) hereto to be appointed to the Holdco Board of Directors
to serve until such time as their successors are duly elected or qualified.
(k) Line of Credit. If and only to the extent funds or credit
provided by VANTAS are available therefor, at or immediately prior to the
Effective Time, the Company shall repay all indebtedness for borrowed money
(which shall not include capitalized lease obligations of the Company),
including any accrued and unpaid interest thereon, of the Company that is
outstanding as of the Closing Date, including without limitation amounts due
and owing under the Morgan Line.
(l) Assumption of Obligations. The Company shall not assume, pay or
otherwise satisfy any liability or obligation for which, as of the date
hereof, CarrAmerica is primarily liable.
Section 7. Covenants of VANTAS. VANTAS and, as applicable, RSI covenant
and agree as follows:
(a) Access. Prior to the Closing, RSI shall cause VANTAS and its
Subsidiaries to give CarrAmerica and the Company and their respective
officers, employees, representatives, counsel and accountants full access,
during normal business hours and upon reasonable notice, to the personnel,
properties, financial statements, contracts, books, records, working papers
and other relevant information pertaining thereto of VANTAS and its
Subsidiaries. Prior to the Closing, RSI shall cause VANTAS and its
Subsidiaries, officers and employees to furnish to CarrAmerica and the Company
and their respective officers, employees, representatives, counsel and
accountants such financial, tax and operating data and other information with
respect to the business, properties and assets of VANTAS and its Subsidiaries
as CarrAmerica and the Company shall from time to time reasonably request, and
shall cause VANTAS and its Subsidiaries, directors, officers and employees to
cooperate with, and VANTAS shall request its independent public accountants
and independent legal counsel to cooperate with, CarrAmerica and the Company
and their respective officers, employees, representatives, counsel and
accountants so as to enable CarrAmerica and the Company to become fully
informed with respect to the business, assets, financial condition, results of
operations and prospects of VANTAS and its Subsidiaries.
(b) Ordinary Conduct. Except as set forth in the capital expenditure
and operating budget of VANTAS (the "VANTAS CapEx Budget") attached hereto as
part of Schedule 7(b) or otherwise expressly permitted by the terms of this
Agreement, from the date hereof to the Closing, VANTAS and each of its
Subsidiaries shall continue to conduct their business in the ordinary course
in substantially the same manner as presently conducted and shall make all
reasonable efforts consistent with past practices to preserve its
relationships with customers and others with whom it deals, including the
incurrence of expenditures in connection with the continued development of
committed centers covered by the VANTAS CapEx Budget. Notwithstanding anything
to the contrary contained herein, VANTAS may use available cash to repay
indebtedness of VANTAS on which it is the primary obligor, including, without
limitation, outstanding principal and accrued and unpaid interest pursuant to
the Paribas Line (as herein defined). VANTAS and each of its Subsidiaries
shall not take any action that would, or that could reasonably be expected to,
result in (A) any of the representations and warranties (including, but not
limited to, those set forth in Section 5(f)) of VANTAS set forth in this
Agreement that are qualified as to materiality becoming untrue or incorrect,
(B) any of such representations and warranties that are not so qualified
becoming untrue or incorrect in any material respect or (C) any of the
conditions to the HQ Merger set forth in Section 9 not being satisfied. In
addition, except as set forth in the VANTAS Cap Ex Budget or Schedule 7(b),
VANTAS and its Subsidiaries shall not do any of the following without the
prior written consent of the Company:
(i) adjust, split, combine or reclassify any of its capital
stock; make, declare or pay any dividend or make any other distribution
on, or directly or indirectly redeem, purchase or otherwise acquire, any
shares of its capital stock, membership or partnership interests or any
securities or obligations convertible into or exchangeable for any shares
of its capital stock or membership or partnership interests; issue,
deliver or sell any shares of its capital stock or membership or
partnership interests or any securities convertible into or exercisable
for, or any rights, options or warrants to acquire, any such shares or
securities (whether for cash or property) to any person;
(ii) sell, lease, transfer, or otherwise dispose of, or subject
to any Lien, any of its properties or assets, or cancel, release or
assign any material indebtedness owed to it or any material claim held by
it, except (i) in bona fide arm's length transactions made in the
ordinary course of business consistent with past practice or (ii)
pursuant to contracts or agreements in force as of the date of this
Agreement and listed in Schedule 7(b);
(iii) incur or assume any liabilities or incur any indebtedness
for borrowed money, assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other
individual, corporation or entity (other than a wholly owned Subsidiary)
except (i) pursuant to contracts or agreements listed in Schedule 7(b) or
(ii) to finance any transaction permitted under Section 7(b)(iv)(ii) or
pursuant to agreements entered into in connection with the financing of
any transaction set forth in Schedule 7(b)(iv);
(iv) make any material acquisition or investment either by
purchase of stock or securities, merger or consolidation, contributions
to capital, property transfers, or purchases of any property or assets of
any other individual, corporation or other entity except (i) pursuant to
contracts or agreements in force as of the date of this Agreement and
listed in Schedule 7(b) or (ii) such acquisitions or investments not to
exceed $10 million in the aggregate;
(v) make any material change in any VANTAS Real Property Lease
or other contracts or enter into, renew, fail to renew, terminate or
permit to be terminated any VANTAS Real Property Lease or any other
contract or agreement that calls for aggregate annual payments of $25,000
or more and which either (i) is not terminable by the Company or its
Subsidiary, as applicable, at will on 60 days or less notice without
payment of a penalty or (ii) has a term of more than six months;
(vi) except in the ordinary course of business consistent with
past practices (but in no event greater than 10% as to any employee
(other than senior management that is entitled to increases of up to 30%
of their respective base salaries)), increase the compensation or fringe
benefits of any of its employees or pay any bonus, pension or retirement
allowance not required by any existing plan or agreement to which any
such employees are or become a party, materially amend or commit itself
to any pension, retirement, profit-sharing or welfare benefit plan or
agreement or employment agreement with or for the benefit of any employee
or accelerate the vesting of any stock options or other stock-based
compensation except for accelerations required by any existing plan or
agreement set forth on Schedule 5(k);
(vii) make any loans, advances or capital contributions to any
other person, other than loans and advances to Subsidiaries;
(viii) make any capital expenditures in excess of (A) $25,000
individually or (B) $100,000 in the aggregate, other than expenditures
necessary to maintain existing assets in good repair not to exceed in the
aggregate $250,000;
(ix) Intentionally Omitted;
(x) settle any claim, action or proceeding involving money
damages except in the ordinary course of business consistent with past
practice for settlements for monetary damages that in any event do not,
individually or in the aggregate with any other such settlements, exceed
$100,000;
(xi) take any action that would prevent or impede the HQ Merger
from qualifying as a reorganization within the meaning of Section
368(a)(1) of the Code; provided that, entering into this Agreement and/or
consummating the HQ Merger and the other transactions contemplated by
this Agreement and the other agreements entered into in connection
herewith and referenced herein shall not in any event be considered to
result in a breach of this covenant;
(xii) amend its Certificate of Incorporation, By-laws or
similar governing documents, as the case may be;
(xiii) enter into any new line of business other than related
e-commerce services;
(xiv) enter into or perform any commitment, contractual
obligation, borrowing, capital expenditure or other transaction (except
pursuant to agreements in force as of the date of this Agreement and
listed on Schedule 5(s)) with any officer, director, consultant or
Affiliate of VANTAS or any of its Subsidiaries;
(xv) make any changes in its accounting methods, except as may
be required under law, rule, regulation or GAAP, in each case as
concurred in by such party's independent public accountants; or
(xvi) agree to, or make any commitment to, do any of the
foregoing.
VANTAS recognizes that the agreements contained in this Section 7(b) are
an integral part of the transactions contemplated by this Agreement and that
without these agreements, the Company would not enter into this Agreement;
accordingly, in the event of the breach by the VANTAS of the terms of this
Section 7(b) the Company shall be entitled, if it so elects, to institute and
prosecute proceedings in any court of competent jurisdiction, to enforce the
specific performance thereof by VANTAS, to enjoin VANTAS from actions or
omissions in violation of this Section 7(b) or to otherwise obtain preliminary
injunctive relief (without the necessity to post a bond) from such actions or
omissions.
(c) Confidentiality. Each of VANTAS and RSI shall keep all
information provided to it or any of their respective representatives pursuant
to this Agreement confidential, and each of VANTAS and RSI shall not disclose
such information to any Persons other than the directors, officers, employees,
financial advisors, legal advisors, accountants and consultants of VANTAS
and/or RSI who reasonably need to have access to the confidential information
and (i) in the case of directors, officers, employees, legal advisors and the
principal accountants of VANTAS and/or RSI, who are advised of the
confidential nature of such information, and (ii) in the case of any financial
advisors, other accountants or consultants of VANTAS and/or RSI, who execute
an agreement with CarrAmerica agreeing to maintain confidentiality of such
information; provided, however, the foregoing obligation of VANTAS and/or RSI
shall not (A) relate to any information that (i) is or becomes generally
available other than as a result of unauthorized disclosure by VANTAS and/or
RSI or by Persons to whom VANTAS and/or RSI has made such information
available, or (ii) is or becomes available to VANTAS and/or RSI on a
non-confidential basis from a third party that is not, to VANTAS' and RSI's
knowledge, bound by any other confidentiality agreement with CarrAmerica
and/or the Company, or (B) prohibit disclosure of any information if VANTAS
and/or RSI believe in good faith that disclosure is required by law, rule,
regulation, court order or other legal or governmental process (including SEC
or GAAP reporting requirements) or if VANTAS and/or RSI believe in good faith
that disclosure is advisable to explain a material deviation from its expected
financial results that arises from the transactions contemplated hereby;
provided, further, that in the case of a disclosure described in clause (B)
above, VANTAS and/or RSI shall (i) give prior notice to CarrAmerica of any
such of RSI disclosure and (ii) consult with CarrAmerica prior to making such
disclosure. Notwithstanding anything to the contrary contained herein, the
covenant of RSI set forth in this Section 7(c) shall terminate 3 years after
the Closing Date.
(d) Interim Financial Statements. Within 45 days after the
end of each calendar month beginning December 31, 1999 until the Closing,
VANTAS will furnish to the Company an unaudited balance sheet of VANTAS as of
the last day of such period and the comparable period in the preceding fiscal
year and the related statements of income for the period then ended and the
comparable period in the preceding fiscal year, in each case certified by the
chief financial officer of VANTAS. All such financial statements shall be in
all material respects in accordance with the books and records of VANTAS and
prepared in conformity with generally accepted accounting principles
consistently applied throughout the periods indicated (except in each case as
described in the notes thereto) and on that basis fairly present, in all
material respects, subject to normal, recurring year-end adjustments, the
financial condition and results of operations of VANTAS as of the dates
thereof and for the periods indicated.
(e) Funding. On the Closing Date, RSI shall deposit or cause to be
deposited with the Cash Escrow Agent (as defined herein) cash in an amount
sufficient to enable VANTAS to perform its obligations under this Agreement
and the UK Agreement, for RSI (and VANTAS if it is an assignee of any of RSI's
rights or obligations thereunder) to perform its obligations under the Stock
Purchase Agreement and for the Company to perform its obligations under
Section 6(k) hereof (including without limitation financing costs and expenses
to be incurred by the HQ Surviving Corporation), of which amount no less than
$350 million and no more than $400 million shall be obtained through the
credit facilities contemplated by the Commitment Letter from or through any
other non-convertible debt facility provided by a third party; provided,
however, that all costs and expenses payable in connection with such debt
financing (other than warrants issued in connection therewith, the aggregate
of which may not exceed 7.5% of the total number of shares of Voting Common
Stock and Non-Voting Common Stock outstanding, calculated on a fully diluted
basis) in excess of 2.5% of the maximum amount available thereunder (in no
event to exceed $10 million) shall be paid by RSI. RSI and VANTAS shall obtain
such debt financing (including the substitution of letters of credit
outstanding under the Morgan Line at Closing) and equity investments required
to consummate the Merger and the other transactions contemplated by this
Agreement, the Stock Purchase Agreement and the UK Agreement and shall cause
the funding thereof as soon as practical after the date hereof, but in no
event later than the Effective Time.
(f) Line of Credit. At or immediately prior to the Effective
Time, VANTAS shall repay all indebtedness for borrowed money (which shall not
include capitalized lease obligations of VANTAS), including unpaid interest
thereon, of VANTAS that is outstanding immediately prior to the Effective
Time, including, without limitation, (i) amounts due and owing pursuant to the
Amended and Restated Credit Agreement, dated January 16, 1997, as amended and
restated as of November 6, 1998 and August 3, 1999, by and among VANTAS,
various banks and Paribas (the "Paribas Line") and (ii) the $10 million note
payable to RSI for $10 million advanced to VANTAS prior to the Effective Time
relating to the HQ Merger transactions costs of VANTAS.
(g) Supplemental Disclosure. Each of RSI and VANTAS shall give
prompt notice to CarrAmerica and the Company of (i) any representation or
warranty made by VANTAS or RSI contained in this Agreement that is qualified
as to materiality becoming untrue or inaccurate or any such representation or
warranty that is not so qualified becoming untrue or inaccurate in any
material respect or (ii) the failure by VANTAS or RSI to comply with or
satisfy in any material respect any covenant, agreement or condition to be
complied with or satisfied by it under this Agreement; provided, however, that
no such notification shall affect the representations, warranties, covenants
or agreements of the parties or the conditions to the obligations of the
parties under this Agreement.
(h) Adjustment Conditions. In the event the Company receives a
proposal for an Alternative Proposal as contemplated in Section 6(d) above,
then RSI shall pay to each shareholder of the Company that is not or does not
become a party to the Stock Purchase Agreement and has not consented to the
merger of VANTAS into the Company, the product of (A) the amount by which the
value per share of the Company of a Alternative Proposal exceeds $35.13 and
(B) the number of shares of the Company owned by each such shareholder,
provided that no such payment shall be made unless the Alternative Proposal
satisfies the following conditions (the "Adjustment Conditions"):
(i) receipt by the Board of Directors of the Company of written
advice from a nationally recognized investment banking firm that the
Alternative Proposal represents a financially superior transaction for
the stockholders of the Company when compared to the transactions
contemplated by this Agreement, the Stock Purchase Agreement and the UK
Agreement;
(ii) the absence of a financing condition in the Alternative
Proposal; and
(iii) a determination by the Board of Directors of the Company,
based upon consultation with a nationally recognized investment banking
firm, that the party making the Alternative Proposal is likely to obtain
financing, if any, for the Alternative Proposal.
(i) Intentionally Omitted.
(j) Tax Makewhole. To the extent that the HQ Surviving Corporation,
as an assignee under the Stock Purchase Agreement for a portion of the Shares
to be purchased thereunder, purchases any shares of the HQ Surviving
Corporation held by CarrAmerica or any other selling stockholder pursuant to
the Stock Purchase Agreement (or provides, directly or indirectly, the funds
for the purchase of such shares by RSI), HQ Surviving Corporation will loan to
CarrAmerica and such other selling stockholders cash in exchange for
CarrAmerica and each such selling stockholder issuing its note (each a "Note")
to HQ Surviving Corporation. The amount of cash and the face amount of each
such Note will equal the excess of (i) the amount of Taxes (other than stock
transfer Taxes) payable by CarrAmerica or such other stockholder (the "Stock
Sale Taxes") on the sale of the total number of shares of Voting Common Stock
and/or Non-Voting Common Stock sold to RSI, a third party and/or the HQ
Surviving Corporation (the "Total Sold Shares") over (i) the amount of Taxes
(other than stock transfer Taxes) that would have been payable by CarrAmerica
or such other stockholder if CarrAmerica or such other selling stockholder had
sold the Total Sold Shares directly to a third party for cash (provided solely
by such third party) in an amount equal to the aggregate amount of cash
received by CarrAmerica or such other stockholder from the sales to RSI, a
third party and/or the HQ Surviving Corporation. Such amount shall be
certified to by an independent accountant selected by CarrAmerica or such
other selling stockholder as may be reasonably acceptable to HQ Surviving
Corporation. The Note will be non-interest bearing. For purposes hereof, any
shares purchased by RSI with funds directly or indirectly provided by the HQ
Surviving Corporation shall be deemed to have been purchased by the HQ
Surviving Corporation. The Note will be issued on the date on which
CarrAmerica or such other selling stockholder makes an estimated tax payment
or any other payment of the Stock Sale Taxes to the proper governmental
authority. The outstanding face amount of the Note will be repayable on
January 1, 2003, or earlier on a pro rata basis in proportion to the number of
the remaining shares of HQ Surviving Corporation owned by CarrAmerica or such
other stockholder that are sold by CarrAmerica or such other selling
stockholder prior to January 1, 2003.
(k) Second Step Certificate of Merger. Upon consummation of the HQ
Merger, the UK Agreement and the Stock Purchase Agreement, the HQ Surviving
Corporation shall cause the certificate of merger, substantially in the form
of Exhibit C hereto (the "Second Step Certificate of Merger"), to be filed
with the Secretary of State of the State of Delaware.
(l) Third Party Investments. In the event either HQ Surviving
Corporation or Holdco directly issues shares of capital stock to a third party
investor at or in connection with the HQ Merger or the Second Step Merger, the
Conversion Ratio shall be adjusted (for all purposes other than the adjustment
to the exercise price of the VANTAS 1996 Stock Options set forth in Schedule
1(i)(ii)) such that the aggregate number of such shares issued to such third
party investor shall reduce the number of shares of HQ Surviving Corporation
or Holdco, as applicable, to be issued to the holders of VANTAS Preferred
Stock on a one-for-one basis.
(m) Assumption of Obligations. VANTAS shall not assume, pay or
otherwise satisfy any liability or obligation for which, as of the date
hereof, RSI is primarily liable.
Section 8. Mutual Covenants.
(a) Consummation of the Transactions. Subject to the terms
and conditions of this Agreement, RSI and VANTAS, on the one hand, and
CarrAmerica and the Company, on the other hand, shall use their respective
commercially reasonable efforts to cause the HQ Merger and the Closing to
occur upon the terms and conditions hereof. RSI and VANTAS, on the one hand,
and CarrAmerica and the Company, on the other hand, shall cooperate with one
another in filing any necessary applications, reports or other documents with,
giving any notices to, and seeking any consents from, all Governmental
Entities and all third parties as may be necessary or desirable in connection
with the consummation of the transactions contemplated by this Agreement and
the performance by the HQ Surviving Corporation and each of its Subsidiaries
of its business after such consummation, and in seeking necessary consultation
with and prompt favorable action by any such Governmental Entity or third
party.
(b) Publicity. From the date of the execution and delivery of this
Agreement through the Closing, no public release or announcement concerning
the transactions contemplated hereby shall be issued by RSI and VANTAS, on the
one hand, and CarrAmerica and the Company, on the other hand, without the
prior consent of (i) RSI and VANTAS in the case of a release or an
announcement by CarrAmerica or the Company or (ii) CarrAmerica and the Company
in the case of a release or an announcement by RSI or VANTAS (in each case
which consent shall not be unreasonably withheld), except as such release or
announcement may be required by law or the rules or regulations of any United
States or foreign securities exchange, in which case the party required to
make the release or announcement shall, if practicable, allow RSI and VANTAS
or CarrAmerica and the Company, as the case may be, reasonable time to comment
on such release or announcement in advance of such issuance.
(c) Antitrust Notification. The Company, CarrAmerica, RSI and VANTAS
shall, as promptly as practicable, but in no event later than fifteen (15)
business days following the execution and delivery of this Agreement, file (i)
with the United States Federal Trade Commission (the "FTC") and the United
States Department of Justice (the "DOJ") the notification and report form, if
any, required for the transactions contemplated hereby and any supplemental
information requested in connection therewith pursuant to the HSR Act and (ii)
any report or document required to be filed by any other Governmental Entity
resulting from the consummation of the transactions contemplated hereby being
deemed a change of control of either VANTAS or the Company. Any such
notification and report form and supplemental information shall be in
substantial compliance with the requirements of the HSR Act. The Company and
CarrAmerica shall furnish to VANTAS and RSI, and VANTAS and RSI shall furnish
to the Company and CarrAmerica, such necessary information and reasonable
assistance as may be requested in connection with the preparation of any
filing or submission which is necessary under the HSR Act. The Company and
CarrAmerica shall keep VANTAS and RSI informed, and VANTAS and RSI shall keep
the Company and CarrAmerica informed, of the status of any communications
with, and any inquiries or requests for additional information from, the FTC
and the DOJ and shall comply promptly with any such inquiry or request.
(d) Other Matters
(i) The Company has posted letters of credit to secure its
obligations under certain leases and the Company's reimbursement
obligations under certain of these letters of credit are secured by cash
or certificates of deposit of the Company. With respect to the $7,680,249
of cash or certificates of deposit shown in the Company's December 31,
1999 draft balance sheet (with respect to which the Company makes no
representation or warranty) and except for the letters of credit
(corresponding to such cash and certificates of deposit) that have
expired in accordance with their terms prior to the date of this
Agreement, on the 6 month anniversary of the Closing Date, the Company
and the Second Step Surviving Corporation shall pay to CarrAmerica, for
the benefit of all stockholders of the Company immediately prior to the
Effective Time, an amount equal to fifty percent (50%) of all such cash
and certificates of deposit. On the first anniversary of the Closing
Date, the Company and the Second Step Surviving Corporation shall pay to
CarrAmerica the remaining amount of such cash and certificates of
deposit.
(ii) On or prior to the Closing, the Company shall pay all
amounts payable to CarrAmerica with respect to services rendered by
CarrAmerica prior to the Closing Date (other than lease procurement
services and construction management services which shall be paid to
CarrAmerica in the normal course of business).
(iii) In the event VANTAS shall not acquire and pay the
acquisition cost of the remaining two Western Business Centers prior to
the Closing, RSI and the other shareholders of VANTAS immediately prior
to the Merger shall pay all acquisition costs thereof upon the closing of
such acquisitions.
(iv) Prior to the Closing, (A) the Company shall pay or provide
funds for the payment of all deferred payment obligations (whether
evidenced by a note or an agreement) incurred in connection with center
acquisitions by the Company and its Subsidiaries prior to the Closing,
and (B) VANTAS shall pay or provide funds for the payment of all deferred
payment obligations (whether evidenced by a note or an agreement)
incurred in connection with center acquisitions by VANTAS and its
Subsidiaries prior to the Closing. Any amounts described in the preceding
sentence remaining unpaid on the Closing Date shall be treated as
provided in Section 9(c)(xiv). From and after the date hereof, RSI and
the other shareholders of VANTAS immediately prior to the Merger shall
pay when due all contingent payment obligations (or "earnouts") of VANTAS
and its Subsidiaries relating to center acquisitions made by VANTAS and
its Subsidiaries prior to the date of this Agreement and CarrAmerica
shall pay when due all "earnouts" of the Company relating to center
acquisitions made by the Company and its Subsidiaries prior to the date
of this Agreement.
(v) RSI has made a $10.9 million loan to VANTAS attributable to
certain payments to employees under an agreement dated October 29, 1999,
as amended to the date hereof. VANTAS and the HQ Surviving Corporation
shall make repayments of such loan to RSI only as and when it realizes
income tax savings as a result of deductions attributable to such
employee payments. In no event shall payments to RSI exceed the actual
income tax savings realized.
Section 9. Conditions to Closing.
(a) Each Party's Obligation. The respective obligation of each party
hereto to effect the transactions contemplated hereby is subject to the
satisfaction or waiver as of the Closing of the following conditions:
(i) No statute, rule, regulation, executive order, decree,
temporary restraining order, preliminary or permanent injunction or other
order shall have been enacted, entered, promulgated, enforced or issued
by any Governmental Entity that prohibits the HQ Merger or any of the
other material transactions contemplated by this Agreement, and no
action, claim, proceeding or investigation shall be pending or threatened
by any Governmental Entity (other than a court acting in response to an
action, claim or proceeding brought by a non-Governmental Entity) that,
if successful, would result in any of the foregoing effects.
(ii) The waiting period under the HSR Act, if applicable to the
transaction contemplated hereby, shall have expired or been terminated.
(b) The Company's Obligations. The obligation of the Company to
VANTAS to effect the transactions contemplated hereby is subject to the
satisfaction or the Company's waiver as of the Closing of the following
conditions:
(i) The representations and warranties of VANTAS and RSI made
in this Agreement shall be true and correct as of the date hereof and as
of the time of the Closing as though made as of such time, except to the
extent such representations and warranties expressly relate to an earlier
date (in which case such representations and warranties shall be true and
correct on and as of such earlier date), and VANTAS and RSI shall have
duly performed, complied with and satisfied in all material respects all
covenants, agreements and conditions required by this Agreement to be
performed, complied with or satisfied by VANTAS or RSI, as applicable, by
the time of the Closing except where the failure of such representations
and warranties to be true and correct and/or the failure to perform,
comply with and satisfy such covenants, agreements and conditions would
not constitute a material impairment of the aggregate value of (i) the
consideration to be paid under the UK Agreement and the Stock Purchase
Agreement and (ii) the capital stock to be retained by the persons who
are stockholders of the Company immediately prior to the HQ Merger after
giving pro forma effect to the HQ Merger (such impairment being a
"Company Transaction Value Impairment"). VANTAS and RSI shall have
delivered to the Company a certificate dated the Closing Date and signed
by an officer of each of VANTAS and RSI, as applicable, confirming the
foregoing.
(ii) All of the conditions to the obligations of CarrAmerica
and all additional selling stockholder parties to close under the Stock
Purchase Agreement dated as of the date hereof by and among certain of
the stockholders of the Company and RSI (the "Stock Purchase Agreement"),
shall have been satisfied or waived (other than the condition that the HQ
Merger be consummated) and the transactions contemplated thereunder shall
be scheduled to close immediately upon the Closing.
(iii) The Stockholders Agreement by and among Holdco, RSI,
CarrAmerica and the other parties thereto, substantially in the form of
Exhibit D hereto (the "Stockholders Agreement"), shall have been duly
executed and delivered by Holdco and RSI and deemed effective
simultaneously with the Second Step Merger.
(iv) The Indemnification and Escrow Agreement, by and among
certain stockholders of Holdco, RSI and such escrow agent as shall be
mutually agreed to by the parties (the "Indemnification Escrow Agent"),
substantially in the form of Exhibit E hereto (the "Indemnification
Escrow Agreement"), shall have been duly executed and delivered by such
stockholders of Holdco, RSI and the Indemnification Escrow Agent and the
shares required to be delivered by RSI pursuant thereto shall have been
delivered to the Indemnification Escrow Agent pursuant thereto.
(v) VANTAS shall have executed and delivered the CarrAmerica
Intercompany Agreements, substantially in the form of Exhibit F-1,
Exhibit F-2 and Exhibit F-3, respectively, hereto (collectively, the
"Carr Intercompany Agreements").
(vi) the Registration Rights Agreement by and among Holdco and
certain holders of the Shares, substantially in the form of Exhibit G
hereto (the "Holdco Registration Rights Agreement"), shall have been
executed at the Closing;
(vii) The Registration Rights Agreement by and among RSI and
certain holders of the Shares, substantially in the form of Exhibit H
hereto ( the "RSI Registration Rights Agreement"), shall have been
executed at the Closing.
(viii) The Escrow Agreement, by and among CarrAmerica, RSI,
VANTAS and such escrow agent as shall be mutually agreed to by the
parties, as escrow agent (the "Cash Escrow Agent"), substantially in the
form of Exhibit I hereto (the "Cash Escrow Agreement"), shall have been
duly executed and delivered by RSI, VANTAS and the Cash Escrow Agent and
the cash required to be delivered to the Cash Escrow Agent by RSI and/or
VANTAS pursuant hereto and thereto shall have been delivered to the Cash
Escrow Agent.
(ix) All actions required to be taken by RSI and the HQ
Surviving Corporation to implement the Second Step Merger shall have been
taken.
(x) Intentionally Omitted.
(xi) Reckson Associates Realty Corp. ("RA") and RSI, as the
case may be, shall have executed and delivered the RA/RSI Intercompany
Agreements, substantially in the form of Exhibits J-1, J-2 and J-3,
respectively, hereto (collectively, the "RSI Intercompany Agreements").
(xii) All of the conditions to the obligations of VANTAS to
close under the Stock Purchase Agreement, dated as of the date hereof
(the "UK Agreement"), by and among VANTAS, CarrAmerica, Omni Offices (UK)
Limited ("OMNI UK")and Omni Offices (LUX) 1929 Holding Company S.A.
("LuxCo"), shall have been satisfied or waived (other than the condition
that the HQ Merger be consummated) and the transactions contemplated
thereunder shall be scheduled to close immediately upon the Closing.
(xiii) RSI and VANTAS shall have performed and satisfied the
covenants contained in Section 7(e) and Section 7(f).
(c) VANTAS' Obligations. The obligations of VANTAS to the Company to
effect the transactions contemplated hereby are subject to the satisfaction or
VANTAS' waiver as of the Closing of the following conditions:
(i) The representations and warranties of the Company and
CarrAmerica made in this Agreement shall be true and correct as of the
date hereof and as of the time of the Closing, as though made as of such
time, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and
warranties shall be true and correct on and as of such earlier date), and
CarrAmerica and the Company shall have duly performed, complied with and
satisfied in all material respects all covenants, agreements and
conditions required by this Agreement to be performed, complied with or
satisfied by CarrAmerica or the Company, as applicable, by the time of
the Closing except where the failure of such representations and
warranties to be true and correct and/or the failure to perform, comply
with and satisfy such covenants, agreements and conditions would not
constitute a material impairment of the aggregate cash and the value of
the capital stock to be received by RSI and the other former VANTAS
stockholders, after giving pro forma effect to the HQ Merger and the
consummation of the UK Agreement and the Stock Purchase Agreement (such
impairment being a "VANTAS Transaction Value Impairment"). The Company
and CarrAmerica shall have delivered to VANTAS a certificate dated the
Closing Date and signed by an officer of CarrAmerica and the Company, as
applicable, confirming the foregoing.
(ii) Intentionally Omitted.
(iii) All of the conditions to the obligations of VANTAS to
close under the UK Agreement shall have been satisfied or waived (other
than the condition that the HQ Merger be consummated) and the
transactions contemplated thereunder shall be scheduled to close
immediately upon the Closing.
(iv) The Stockholders Agreement shall have been duly executed
by CarrAmerica and the other parties thereto other than RSI and deemed
effective simultaneously with the Second Step Merger.
(v) The Company shall have filed the Recapitalization
Amendments with the Secretary of State of the State of Delaware.
(vi) The Indemnification Escrow Agreement shall have been duly
executed by the Indemnification Escrow Agent and the shares of Holdco
required to be delivered by the shareholders of the Company immediately
prior to the Effective Time who are parties thereto shall have been
delivered to the Indemnification Escrow Agent.
(vii) The Company shall have received resignation letters from
the following individuals, pursuant to which each such individual shall
have resigned, effective as of the Closing Date, as a member of the
Company's Board of Directors: Ronald Blankenship; Oliver Carr; and Philip
Hawkins.
(viii) CarrAmerica shall have executed and delivered the
CarrAmerica Intercompany Agreements.
(ix) The Cash Escrow Agreement shall have been duly executed
and delivered by CarrAmerica.
(x) All actions required to be taken by the Company,
CarrAmerica, M Sub and Holdco prior to the Closing to implement the
Second Step Merger shall have been taken.
(xi) The RSI Registration Rights Agreement shall have been
executed by CarrAmerica.
(xii) The Company shall have executed the RSI Intercompany
Agreements.
(xiii) The HQ Stockholders Agreement shall have been
terminated.
(xiv) At the time of the Closing, the Company shall have cash
on hand in an amount equal to (A) $3,000,000, plus (B) any amounts
described in Section 8(d)(iv)(A) remaining unpaid at the Closing Date
(which amount shall be determined based upon a certificate dated the
Effective Time and signed by an officer of the Company), minus (C) any
amounts described in Section 8(d)(iv)(B) remaining unpaid at the Closing
Date (which amount shall be determined based upon a certificate dated the
Effective Time and signed by an officer of VANTAS).
(d) Frustration of Closing Conditions. Neither the Company nor
VANTAS may rely on the failure of any condition set forth in Section 9(a),
Section 9(b) or Section 9(c), respectively, to be satisfied if such failure
was caused by such party's failure to perform its obligations hereunder or to
use its commercially reasonable efforts to cause the Closing to occur as
required by Section 8(a).
Section 10. Tax Matters. Each of CarrAmerica, RSI, VANTAS and the Company
agrees to report the HQ Merger on all Tax Returns and, if applicable, other
filings as a reorganization under Section 368(a)(1) of the Code.
Section 11. Further Assurances. From time to time, as and when
requested by another party hereto, a party hereto shall execute and deliver,
or cause to be executed and delivered, all such documents and instruments and
shall take, or cause to be taken, all such further or other actions as such
other party may reasonably deem necessary or desirable to consummate the
transactions contemplated by this Agreement.
Section 12. Assignment. This Agreement and the rights and obligations
hereunder shall not be assignable or transferable by the Company or VANTAS
(including by operation of law in connection with a merger, consolidation or
sale of all or substantially all of the assets of the Company or VANTAS) or
CarrAmerica or RSI (other than by operation of law in connection with a
merger, consolidation or sale of all or substantially all of the assets of
CarrAmerica or RSI) without the prior written consent of the Company or
VANTAS, as the case may be. Any attempted assignment in violation of this
Section 12 shall be void ab initio and of no further force and effect.
Section 13. No Third-Party Beneficiaries. This Agreement is for the sole
benefit of the parties hereto and their successors and permitted assigns, and
nothing herein expressed or implied shall give or be construed to give to any
person, other than the parties hereto and such successors and assigns, any
legal or equitable rights hereunder.
Section 14. Termination.
(a) Anything contained herein to the contrary notwithstanding, this
Agreement shall terminate automatically upon termination of the Stock Purchase
Agreement or the UK Agreement in accordance with either of their respective
terms. In addition, anything contained herein to the contrary notwithstanding,
this Agreement may be terminated and the transactions contemplated hereby
abandoned:
(i) at any time prior to the Closing Date by mutual written
consent of the Company and VANTAS;
(ii) by the Company or VANTAS (provided, however, in the case
of VANTAS, only if VANTAS has given the Company and CarrAmerica at least
five business days' prior written notice of its intention to terminate
pursuant to this Section 14(a)(ii), which notice may not be given prior
to May 1, 2000), if the Closing does not occur on or prior to April 30,
2000; provided, however, that the right to terminate this Agreement
pursuant to this Section 14(a)(ii) shall not be available to the Company
or VANTAS, as the case may be, if VANTAS or RSI, on the one hand, or the
Company or Carr America, on the other hand, has failed to perform any of
their respective obligations under this Agreement and such failure was
the cause of the Closing not having occurred on or before such date;
(iii) by the Company or VANTAS at any time prior to the
Closing, if any Governmental Entity shall have issued a judgment, order
or decree or taken any other action permanently enjoining, restraining or
otherwise prohibiting the HQ Merger or any of the other material
transactions contemplated by this Agreement, and such judgment, order or
decree or other action shall have become final and nonappealable;
(iv) Intentionally Omitted.
(v) by the Company upon a breach of any representation,
warranty or covenant on the part of VANTAS or RSI set forth in this
Agreement, or if any representation or warranty of VANTAS or RSI shall
become untrue, and such breach or subsequent failure to remain true
constitutes a Company Transaction Value Impairment with the result that,
in either such case, the condition set forth in Section 9(b)(i) shall
have become incapable of being satisfied by April 30, 2000 (or as
otherwise extended); or
(vi) by VANTAS upon a breach of any representation, warranty or
covenant of the Company or CarrAmerica set forth in this Agreement, or if
any representation or warranty of Company or CarrAmerica shall become
untrue, and such breach or subsequent failure to remain true constitutes
a VANTAS Transaction Value Impairment with the result that, in either
such case, the condition set forth in Section 9(c)(i) shall have become
incapable of being satisfied by April 30, 2000 (or as otherwise
extended).
(b) In the event of termination by the Company or VANTAS pursuant to
this Section 14, written notice thereof setting forth the reasons therefor
shall forthwith be given to the other parties and the transactions
contemplated by this Agreement shall be terminated, without further action by
any party. If the transactions contemplated by this Agreement are terminated
as provided herein:
(i) VANTAS shall return all documents and other materials
received from the Company relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the
Company;
(ii) all confidential information received by VANTAS with
respect to the business of the Company shall be treated in accordance
with Section 6(c) hereof;
(iii) the Company shall return all documents and other
materials received from VANTAS relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to
VANTAS; and
(iv) all confidential information received by the Company with
respect to the business of VANTAS shall be treated in accordance with
Section 6(c) hereof.
(c) If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this Section 14, this
Agreement shall become void ab initio and of no further force or effect,
except for the provisions of (i) Sections 6(c) and 7(c) relating to the
obligation of CarrAmerica and the Company, on the one hand, and VANTAS and
RSI, on the other hand, to keep confidential certain information and data
obtained by them, (ii) Section 8(b) relating to publicity, (iii) this Section
14 and (iv) Section 15 relating to certain expenses. Nothing in this Section
14(c) shall be deemed to release any party from any liability for any breach
by such party of the terms and provisions of this Agreement, the UK Agreement
or the Stock Purchase Agreement.
(d) If and only if (i) (A) this Agreement shall have been terminated
as a result of the termination of the Stock Purchase Agreement or the UK
Agreement in accordance with its terms and conditions and such termination was
not a result of CarrAmerica's, OMNI UK's or LuxCo's breach of or failure to
perform any of their respective obligations thereunder, (B) this Agreement
shall have been terminated by the Company pursuant to Section 14(a)(ii) (other
than as a result of a failure of the condition set forth in Section 9(a)(i) to
be satisfied) or 14(a)(v), or (C) the condition set forth in Section 9(a)(i)
has not been satisfied and this Agreement is terminated by VANTAS pursuant to
Section 14(a)(ii), (ii) the condition set forth in Section 9(a)(ii) has been
satisfied or has not been satisfied as a result of a failure by VANTAS or RSI
to perform their obligations under Section 8(c), and (iii) VANTAS cannot
invoke Sections 14(a)(iii) or 14(a)(vi) to terminate this Agreement, then the
Company shall have the irrevocable and unconditional right to draw under any
Letter of Credit (as herein defined) delivered to, and accepted by, the
Company in partial or complete substitution of the Initial Deposit or to
retain the Initial Deposit (to the extent not theretofore returned to RSI
pursuant to this Section14(d)), any restrictions contained in this Agreement
or in any Letter of Credit on the ability of the Company to draw under any
Letter of Credit or to hold the Initial Deposit as a deposit hereunder shall
be of no further force or effect and RSI and VANTAS and their respective
Affiliates, on the one hand, and CarrAmerica and the Company and their
respective Affiliates, on the other hand, shall each be irrevocably and
unconditionally released from any and all further liabilities and obligations
to one another under this Agreement, the Stock Purchase Agreement and the UK
Agreement except with respect to the provisions enumerated in clauses (i)
through (iv) of Section 14(c). If on any date on which this Agreement remains
in effect the expiry date of any Letter of Credit (including any replacement
thereof) is not at least 15 days after such date, then the Company shall have
the irrevocable and unconditional right to draw under such Letter of Credit,
in which event it shall place the funds received upon such draw as a deposit
for disposition under the first sentence of this Section 14(d) or as provided
in Section 14(e), as applicable. Such escrow shall be on the same terms and
conditions as the escrow established pursuant to the Deposit Escrow Agreement
dated the date hereof with respect to the Initial Deposit. RSI and VANTAS
shall have the option to substitute one or more irrevocable letters of credit
in favor of the Company issued by a Bank (and having terms) satisfactory to
the Company in its reasonable judgment (each, a "Letter of Credit"), which
will expire no earlier than May 15, 2000 and will be available to be drawn
upon by the Company at sight. Upon the delivery of any such Letter of Credit,
the Company shall contemporaneously remit to RSI such portion of the Initial
Deposit as is equal to the face amount of such Letter of Credit.
(e) If this Agreement shall have been terminated in accordance with
Section 14(a) and the conditions set forth in Section 14(d) have not been met,
then the Company shall deliver any Letter of Credit and the Initial Deposit
(to the extent not theretofore returned to RSI pursuant to Section 14(f)) to
VANTAS and RSI and VANTAS and their respective Affiliates, on the one hand,
and CarrAmerica and Company and their respective Affiliates, on the other
hand, shall each be irrevocably and unconditionally released from any and all
further liabilities and obligations to one another under this Agreement, the
Stock Purchase Agreement and the UK Agreement except with respect to the
provisions enumerated in clauses (i) through (iv) of Section 14(c).
(f) The Company shall hold the Initial Deposit and any Letter of
Credit delivered in partial or complete substitution thereof for the benefit
of the Company and CarrAmerica (and each other stockholder of the Company that
becomes an additional stockholder party to the Stock Purchase Agreement) in
accordance with a separate agreement between the Company and CarrAmerica.
Section 15. Expenses. Whether or not the transactions contemplated hereby
are consummated, and except as otherwise specifically provided in this
Agreement, (i) all legal, accounting and financial advisors costs and expenses
incurred by the Company shall be paid by the Company prior to the Closing, and
by RSI in the case of such costs and expenses incurred by VANTAS and (ii) all
other costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
costs or expenses.
Section 16. Litigation Costs. If any litigation with respect to the
obligations of the parties under this Agreement results in a final
nonappealable order of a court of competent jurisdiction that results in a
final disposition of such litigation, the prevailing party, as determined by
the court ordering such disposition, shall be entitled to reasonable
attorneys' fees as shall be determined by such court. Contingent or other
percentage compensation arrangements shall not be considered reasonable
attorneys' fees.
Section 17. Specific Performance. Each of the parties hereto acknowledges
and agrees that in the event of any breach of this Agreement, each
non-breaching party would be irreparably and immediately harmed and could not
be made whole by monetary damages. It is accordingly agreed that the parties
hereto (i) waive, in any action for specific performance or injunctive relief,
the defense of adequacy of a remedy at law and (ii) shall be entitled, in
addition to any other remedy to which they may be entitled at law or in
equity, to compel specific performance of this, or injunctive relief under,
this Agreement.
Section 18. Amendments. No amendment, modification or waiver in respect
of this Agreement shall be effective unless it shall be in writing and signed
by the parties hereto.
Section 19. Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent by prepaid telex, cable or telecopy or sent, postage prepaid, by
registered, certified or express mail or reputable overnight courier service
and shall be deemed given when so delivered by hand, telexed, cabled or
telecopied, or if mailed, three days after mailing (one business day in the
case of express mail or overnight courier service), as follows:
(i) if to the Company,
HQ Global Workplaces, Inc.
15950 N. Dallas Parkway
Suite 350
Dallas, TX 75248
Telecopy No: 972-361-8216
Attention: Jill Louis, General Counsel
with a copy to:
Gibson, Dunn & Crutcher
1717 Main Street
Suite 5500
Dallas, TX 75201-7390
Telecopy No: 214-571-2983
Attention: Harlan Cohen
(ii) if to CarrAmerica,
1850 K Street, NW
Washington, D.C. 20006
Telecopy No: 202-729-1160
Attention: Linda Madrid, General Counsel
with a copy to:
Hogan & Hartson, L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Telecopy No: (202) 637-5910
Attention: J. Warren Gorrell, Jr.
David W. Bonser; and
(iii) if to VANTAS or RSI,
Reckson Service Industries, Inc.
10 East 50th Street
Suite 2700
New York, NY 10022
Telecopy No: (212) 931-8001
Attention: Scott H. Rechler
Jason Barnett
with copies to:
Brown & Wood LLP
One World Trade Center
New York, NY 10048
Telecopy No: (212) 839-5599
Attention: Joseph W. Armbrust, Jr.
J. Gerard Cummins
or such other address as any party may from time to time specify by written
notice to the other parties hereto.
Section 20. Interpretation; Exhibits and Schedules. The headings
contained in this Agreement, in any Exhibit or Schedule hereto and the Table
of Contents are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. All Exhibits and Schedules
annexed hereto or referred to herein are hereby incorporated in and made a
part of this Agreement as if set forth in full herein. Any capitalized terms
used in any Schedule or Exhibit but not otherwise defined therein, shall have
the meaning as defined in this Agreement. This Agreement is gender neutral.
Any word in this Agreement that refers to a particular gender shall also refer
to all other genders, including masculine, feminine and neuter.
Section 21. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts have
been signed by each of the parties and delivered to the other parties.
Section 22. Entire Agreement. This Agreement and the exhibits hereto
contains the entire agreement and understanding between the parties hereto
with respect to the subject matter hereof and supersede all prior agreements
and understandings relating to such subject matter. The parties hereto shall
not be liable or bound to any other party in any manner by any
representations, warranties or covenants relating to such subject matter
except as specifically set forth herein.
Section 23. Exclusive Remedy. The parties hereto acknowledge and
agree that after the Effective Time, the terms and conditions of the
Indemnification Escrow Agreement shall be the sole remedy for any breach of
any of the representations and warranties contained herein or in the Stock
Purchase Agreement or the UK Agreement (other than breaches arising out of
fraud) and in no event shall the HQ Surviving Corporation have any claim
against Carr America with respect to any such breach.
Section 24. Severability. If any provision of this Agreement (or any
portion thereof) or the application of any such provision (or any portion
thereof) to any person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other
provision hereof (or the remaining portion thereof) or the application of such
provision to any other persons or circumstances.
Section 25. Consent to Jurisdiction. CarrAmerica and the Company, on the
one hand, and VANTAS and RSI, on the other hand, agree to commence any action,
suit or proceeding arising out of this Agreement or transaction contemplated
hereby against the other party, either in a federal court located in the State
of Delaware or if such suit, action or other proceeding may not be brought in
such court for jurisdictional reasons, in a Delaware state court. Each party
to this Agreement submits and consents to personal jurisdiction in any such
litigation. CarrAmerica and the Company, on the one hand, and VANTAS and RSI,
on the other hand, further agree that service of any process, summons, notice
or document delivered by U.S. registered mail to such party's respective
address set forth above shall be effective service of process for any action,
suit or proceeding in Delaware with respect to any matters to which it has
submitted to jurisdiction in this Section 25. CarrAmerica and the Company, on
the one hand, and VANTAS and RSI, on the other hand, irrevocably and
unconditionally waive any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) any Delaware state court or (ii) any federal court located in
the State of Delaware, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought in any such court has been brought in an
inconvenient forum. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT.
Section 26. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware
applicable to agreements made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
Section 27. Disclosure Schedules. Any fact, circumstance, condition,
document or other matter disclosed in any Schedule referenced herein shall be
deemed to have been disclosed for all purposes under the Merger Agreements
including all other relevant Schedules, provided that the relevance of the
disclosure to such other Schedules can be reasonably discerned from the
applicable Schedule.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
HQ GLOBAL WORKPLACES, INC.
By: /s/ Jill B. Louis
_________________________________
Name: Jill B. Louis
Title: Vice President and
General Counsel
VANTAS INCORPORATED
By: /s/ Stephen M. Rathkopf
___________________________________
Name: Stephen M. Rathkopf
Title: Secretary
CARRAMERICA REALTY CORPORATION,
solely for purposes of
Sections 4(B), 6(c),
6(d), 6(e), 8, 10, 11,
12, 14, 15, 16, 17, 23
and 25
By: /s/ Karen B. Dorigan
_________________________________
Name: Karen B. Dorigan
Title: Managing Director
RECKSON SERVICES INDUSTRIES, INC. ,
solely for purposes of Sections 5(B),
7(a), 7(c), 7(e), 7(g), 7(h), 7(j), 8,
10, 11, 12, 14, 15, 16, 17, 23 and 25
By: /s/ Jason Barnett
___________________________________
Name: Jason Barnett
Title: E.V.P.
Exhibit 10.2
- --------------------------------------------------------------------------------
FORM OF
STOCKHOLDERS AGREEMENT
by and among
RECKSON SERVICE INDUSTRIES, INC.,
HQ GLOBAL WORKPLACES, INC.,
CARRAMERICA REALTY CORPORATION
and
certain other stockholders of HQ GLOBAL WORKPLACES, INC.
dated as of
_____________ __, 2000
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
1. DEFINITIONS..............................................................1
2. BOARD OF DIRECTORS OF THE COMPANY........................................3
2.1. Number of Directors...............................................3
2.2. Holder Nominees...................................................3
2.3. Independent Directors.............................................5
2.4. Termination.......................................................5
3. INFORMATION RIGHTS.......................................................5
3.1. Information Rights of All Holders.................................5
3.2. Information Rights of 10% Holders.................................6
3.3. Confidentiality...................................................6
3.4. Termination.......................................................7
4. LIMITATIONS ON CORPORATE ACTIONS.........................................7
4.1. REIT Restrictions.................................................7
4.2. No Acquisition of Common Stock from RSI or its Affiliates........11
4.3. No Contravening Agreement........................................11
4.4. Termination......................................................12
5. PARTICIPATION RIGHTS....................................................12
5.1. Right to Participate.............................................12
5.2. Notice...........................................................12
5.3. Abandonment of Sale or Issuance..................................13
5.4. Terms of Sale....................................................13
5.5. Timing of Sale...................................................14
5.6. Termination of Participation Right...............................14
6. TAG-ALONG RIGHTS........................................................15
6.1. Rights and Notice................................................15
6.2. Abandonment of Sale..............................................16
6.3. Timing of Sale...................................................16
6.4. Termination of Tag-Along Right...................................16
7. PUT RIGHTS..............................................................16
7.1. 2000 Put Right...................................................16
7.2. 2001 Put Right...................................................17
7.3. 2002 Put Right...................................................19
7.4. Procedures to Determine Fair Market Value........................20
7.5. Indemnification of Designated Holder.............................21
8. TRANSFER RESTRICTIONS...................................................21
8.1. RSI Right of First Offer.........................................21
8.2. Holder Right of First Offer......................................22
8.3. No Obligation to Purchase........................................23
8.4. Termination of the Rights of First Offer.........................24
8.5. IPO Lock-Up......................................................24
9. LEASE GUARANTEE INDEMNIFICATION.........................................24
10. PURCHASE RIGHT AGREEMENT ANTI-DILUTION PROTECTION.......................25
11. MISCELLANEOUS...........................................................25
11.1. RSI Assurance....................................................25
11.2. Assignment.......................................................25
11.3. Entire Agreement; Amendment......................................25
11.4. Waiver...........................................................26
11.5. Limitation on Benefit............................................26
11.6. Binding Effect...................................................26
11.7. Governing Law....................................................26
11.8. Notices..........................................................26
11.9. Headings.........................................................28
11.10. Execution in Counterparts........................................28
11.11. Interpretation; Absence of Presumption...........................29
11.12. Severability.....................................................29
11.13. Specific Performance.............................................29
11.14. Consent to Jurisdiction..........................................29
11.15. Litigation Costs.................................................30
EXHIBIT A
<PAGE>
FORM OF
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of __________
__, 2000, is made by and among Reckson Service Industries, Inc., a Delaware
corporation ("RSI"), HQ Global Workplaces, Inc., a Delaware corporation (the
"Company"), CarrAmerica Realty Corporation, a Maryland corporation
("CarrAmerica" or the "Designated Holder"), and the undersigned holders of
Common Stock of the Company (together with CarrAmerica, the "Holders").
WHEREAS, RSI and the Holders have entered into that certain
Stock Purchase Agreement, dated as of January 20, 2000 pursuant to which RSI is
acquiring on the date hereof certain shares of Common Stock of the Company owned
by the Holders (the "Transaction");
WHEREAS, the parties believe it is in their best interests to enter
into this Agreement and provide for certain rights and restrictions with respect
to the continuing investment by RSI and each Holder in the Company and the
corporate governance of the Company; and
WHEREAS, it is a condition precedent to the completion of the
Transaction that the parties enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, certain capitalized terms not otherwise
defined herein shall have the following respective meanings:
"10% Holder" shall mean any Holder hereunder who, together
with any Affiliates, holds more than ten percent (10%) of the total number of
issued and outstanding shares of Common Stock of the Company.
"Affiliate" shall mean, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person, or (ii) any officer, director, general partner, managing member or
trustee of such Person or any Person referred to in clause (i) above. For
purposes of this definition, "control," when used with respect to any Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Board" shall mean the board of directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended
(including for this purpose the amendments made to Section 856(c)(4)(B)(iii) of
the Code by Pub. L. No. 106-170, The Ticket to Work and Work Incentives
Improvement Act of 1999, 113 Stat. 1860 (the "RMA")), and any successor thereto,
including all of the rules and regulations promulgated thereunder.
"Common Stock" shall mean any common stock of the Company, including,
without limitation, the Voting Common Stock and the Nonvoting Common Stock.
"Director" shall mean a member of the Board.
"Government Authority" shall mean any government or state (or
any subdivision thereof) of or in the United States or any foreign nation, or
any agency, authority, bureau, commission, department or similar body or
instrumentality thereof, or any governmental court or tribunal.
"Immediate Family Member" shall mean, with respect to any natural
Person, (i) such natural Person's spouse, parents, descendants, nephews, nieces,
brothers and sisters, and (ii) any trust established by such Person or any of
the persons listed in clause (i) above, the sole beneficiaries of which are such
Person or any of the persons listed in clause (i) above.
"Independent Director" shall mean any Director who (i) is not an
officer or employee of the Company, (ii) is not an officer, employee or director
of RSI, (iii) does not have a material financial interest in or relationship
with RSI (it being agreed that for purposes of this definition, any Director who
owns less than five percent (5%) of the issued and outstanding RSI common stock
shall be deemed not to have a material financial interest in or relationship
with RSI by virtue of such stock ownership), and (iv) is not an Affiliate or an
Immediate Family Member of any Person covered by clauses (i), (ii) or (iii)
above.
"IPO" shall mean one or more sales of Common Stock by the Company
pursuant to one or more registration statements effective under the Securities
Act of 1933, as amended (the "1933 Act") that results in (i) gross proceeds to
the Company of not less than $150,000,000 and (ii) the listing for trading on
either the NASDAQ Stock Market or a national securities exchange of all shares
of Voting Common Stock of the Company.
"Majority Consent of the Holders" shall mean the approval of
Holders owning at least a majority of all of the issued shares of Voting Common
Stock owned by the Holders at such time.
"Nonvoting Common Stock" shall mean the Nonvoting Common Stock, par
value $.01 per share, of the Company.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization, other form
of business or legal entity or Government Authority.
"SEC" shall mean the Securities and Exchange Commission.
"RSI Board" shall mean the board of directors of RSI.
"transfer" means a sale, gift, assignment, exchange or other
disposition (including a voluntary or involuntary disposition under judicial
order, legal process, execution, attachment or enforcement of an encumbrance) or
any other transfer of beneficial interest of shares of Common Stock. A
"transfer" shall not include (i) in the case of an individual, a transfer to an
Immediate Family Member, (ii) in the case of a partnership, a transfer by the
partnership to an Affiliate or to its partners in connection with a dissolution
of the partnership, (iii) in the case of a corporation, a transfer by the
corporation to an Affiliate or to its stockholders in connection with the
dissolution of the corporation, (iv) in the case of a limited liability company,
a transfer by the limited liability company to an Affiliate or to its members in
connection with the dissolution of the limited liability company, or (v) in the
case of any entity referred to in clause (ii), (iii) or (iv) above, any transfer
of an interest in the securities of such entity or any other indirect transfer
that may occur as a result of either a consolidation, merger or other business
combination involving such entity or a sale, lease, exchange or other transfer
of all or substantially all of the assets of such entity; provided, that a
transferee under (i) -(v) above agrees in writing to be bound by all of the
terms of this Agreement by executing and delivering to the Company a counterpart
signature page to this Agreement.
"U.S. Stock Purchase Agreement" shall mean the Stock Purchase
Agreement between CarrAmerica and RSI dated as of January 20, 2000.
"Voting Common Stock" shall mean the Voting Common Stock, par value
$.01 per share, of the Company.
2. BOARD OF DIRECTORS OF THE COMPANY
2.1. Number of Directors
From and after the date hereof, the Board shall consist of
eleven (11) Directors. The number of Directors may not be decreased unless such
decrease is approved by a Majority Consent of the Holders.
2.2. Holder Nominees
(a) Nomination of Directors. At each annual or special meeting of
stockholders of the Company at, or the taking of action by written consent of
stockholders of the Company with respect to, which any Directors are to be
elected, each Holder (a "Nominating Holder") shall have the right (but not the
obligation) to nominate for election to the Board that number of Directors which
represents the same proportion of the total number of Directors as is
represented by the number of shares of Voting Common Stock which such Holder
then owns, as of the applicable record date for such meeting or consent (or, in
the case of the first annual meeting of stockholders of the Company following
the Closing, if the record date for such annual meeting is prior to the date of
the Closing, then as of the date of the Closing), relative to the number of
shares of Voting Common Stock outstanding as of such date (such Directors,
"Holder Nominees"). Notwithstanding the foregoing, if a Holder shall make an
equity investment, through a joint venture or otherwise, in Regus Business
Corp., Servcorp or a company that, at the time such investment is made, is a
significant regional competitor of the Company in the executive suites business,
such Holder's right under this Section 2.2(a) shall terminate. In computing the
number of Holder Nominees, any fraction shall be rounded down to the nearest
whole number (and, if such fraction shall be less than one, then such Holder
shall have no right to nominate any Director for election). If Directors are
placed into two or more classes pursuant to the Company's certificate of
incorporation, the Holder Nominees shall be placed in as many different classes
as possible.
(b) Qualification of Holder Nominees. No Nominating Holder shall name
any person as a Holder Nominee if (i) such person is not reasonably experienced
in business or financial matters, (ii) such person has been convicted of, or has
pled nolo contendere to, a felony, (iii) the election of such person would
violate any applicable law, (iv) any event described in Item 401(f) of
Regulation S-K promulgated under the 1933 Act has occurred with respect to such
person, or (v) such person is an Affiliate of, or has a material financial
interest in, (A) any individual or entity that engages, as the principal
component of its business, in activities that are directly competitive with the
Company in the executive suites business, or (B) any entity whose primary
business is to invest in business to business e-commerce companies, which has
invested an aggregate of at least $50 million in such companies.
(c) Support of Holder Nominees by RSI and the Company. RSI shall
support, and the Board and any nominating committee (or any other committee
exercising a similar function) thereof shall recommend, the nomination of each
Holder Nominee to the Board. The Board shall recommend to the stockholders of
the Company the election of each Holder Nominee, and the Company and RSI shall
exercise all authority under applicable law to cause each Holder Nominee to be
elected to and to remain a member of the Board for the term for which the Holder
Nominee is nominated. Without limiting the generality of the foregoing, with
respect to each meeting of stockholders of the Company at which Directors are to
be elected, (i) the Company shall use its commercially reasonable efforts to
solicit from the stockholders of the Company eligible to vote in the election of
Directors proxies in favor of each Holder Nominee, and (ii) RSI shall vote its
shares of Voting Common Stock in favor of each Holder Nominee at any
stockholders meeting (or written consent in lieu thereof).
(d) Support of RSI Nominees by CarrAmerica. Provided that the nominees
proposed by RSI meet the qualifications set forth in Section 2.2(b)(i)-(iv)
above (each, an "RSI Nominee"), CarrAmerica shall support and the Board or any
nominating committee (or any other committee exercising a similar function)
thereof shall recommend, the nomination of each RSI Nominee to the Board. RSI
shall have the right to nominate all of the directors other than the Holder
Nominees. The Board shall recommend to the stockholders of the Company the
election of each RSI Nominee and the Company shall exercise all authority under
applicable law to cause each RSI Nominee to be elected to and to remain a member
of the Board for the term for which the RSI Nominee is nominated. With respect
to each meeting of stockholders of the Company at which Directors are to be
elected, CarrAmerica shall vote its shares of Voting Common Stock in favor of
each RSI Nominee at any stockholders meeting (or written consent in lieu
thereof).
(e) Vacancies. In the event that any Holder Nominee shall
cease to serve as a Director for any reason other than the fact that the
Nominating Holder no longer has a right to nominate a Director, as provided in
Section 2.2(a), the vacancy resulting thereby shall be filled by a Holder
Nominee designated by the Nominating Holder which nominated the vacating
Director; provided, however, that any Holder Nominee so designated shall satisfy
the qualification requirements set forth in Section 2.2(b).
2.3. Independent Directors
(a) Number of Independent Directors. From and after the date hereof,
the Board shall include at least two (2) Independent Directors.
(b) RSI and Holder Support of Independent Director Nominees. RSI shall
nominate and the Holders shall support, and the Board and any nominating
committee (or any other committee exercising a similar function) thereof shall
recommend, the nomination of at least two (2) Independent Directors at all
times, and the Company, the Holders and RSI shall exercise all authority under
applicable law to cause each Independent Director nominee so supported to be
elected to and remain a member of the Board for the term for which such
Independent Director is nominated. Without limiting the generality of the
foregoing, with respect to each meeting of stockholders of the Company at which
Directors are to be elected, (i) the Company shall use its commercially
reasonable efforts to solicit from the stockholders of the Company eligible to
vote in the election of Directors proxies in favor of each Independent Director
nominee that is nominated pursuant to this Section 2.3(b), and (ii) RSI and the
Holders shall vote their respective shares of Voting Common Stock in favor of
each Independent Director nominee that is nominated pursuant to this Section
2.3(b).
2.4. Termination
The rights of the Holders pursuant to this Section 2 shall terminate
on the first date on which no Holder has a right to Board representation
pursuant to Section 2.2(a) hereof.
3. INFORMATION RIGHTS
3.1. Information Rights of All Holders
(a) Quarterly Financial Information. From and after the date hereof,
the Company shall deliver to each Holder as soon as available and in any event
within thirty (30) days after the close of each of the first, second and third
fiscal quarters of the Company, the unaudited consolidated balance sheet of the
Company and its subsidiaries as at the end of such period and the related
unaudited consolidated statements of income, retained earnings and cash flows of
the Company and its subsidiaries for such period, setting forth in each case in
comparative form the figures for the corresponding periods of the previous
fiscal year, all of which shall be certified by the chief financial officer or
the chief accounting officer of the Company, in his or her opinion, to present
fairly in all material respects and in accordance with generally accepted
accounting principles ("GAAP"), the consolidated financial position of the
Company and its subsidiaries as at the date thereof and the results of
operations for such period (subject to normal year-end adjustments).
(b) Annual Financial Information. From and after the date hereof, the
Company shall deliver to each holder as soon as available and in any event
within seventy-five (75) days after the end of each fiscal year of the Company,
the audited consolidated balance sheet of the Company and its subsidiaries as at
the end of such fiscal year and the related audited consolidated statements of
income, retained earnings and cash flows of the Company and its subsidiaries for
such fiscal year, setting forth in comparative form the figures as at the end of
and for the previous fiscal year, all of which shall be certified by (A) the
chief financial officer or the chief accounting officer of the Company, in his
or her opinion, to present fairly in all material respects and in accordance
with GAAP, the financial position of the Company and its subsidiaries as of the
date thereof and the result of operations for such period and (B) independent
certified public accountants of recognized national standing.
3.2. Information Rights of 10% Holders
In addition to the information rights set forth in Section 3.1 hereof,
from and after the date hereof, the Company shall:
(a) Financial Reports. Deliver to each 10% Holder, as soon as
practicable after the end of each month, an operating and financial statement
and management report of the Company and its subsidiaries (including each
subsidiary, if any, not consolidated with the Company) as at and for the end of
such month, all in such form as may be prepared by the Company for internal use
by management.
(b) Securities Filings. Deliver to each 10% Holder, as promptly as
practicable following filing, a copy of each report, schedule or other document
filed by the Company pursuant to the requirements of any federal or state
securities laws (collectively, the "Securities Filings").
(c) Opportunity to Review Securities Filings. Afford each 10%
Holder a reasonable opportunity to review any portion of any Securities Filing
which refers to, describes or mentions such 10% Holder prior to the time that
such Securities Filing is filed with or sent to the applicable Government
Authority.
(d) Delivery of Annual Budget of the Company. Deliver to each 10%
Holder a copy of the approved annual operating budget for the Company and its
subsidiaries.
3.3. Confidentiality
Each Holder shall keep all information provided to it or any of its
representatives pursuant to this Agreement confidential, and such Holder shall
not disclose such information to any Persons other than the directors, officers,
employees, financial advisors, legal advisors, accountants and consultants of
any Holder who reasonably need to have access to the confidential information
and (i) in the case of directors, officers, employees, legal advisors and the
principal accountants of such Holder, who are advised of the confidential nature
of such information, and (ii) in the case of any financial advisors, other
accountants or consultants of such Holder, who execute an agreement with the
Company agreeing to maintain the confidentiality of such information; provided,
however, the foregoing obligation of each Holder shall not (A) relate to any
information that (i) is or becomes generally available other than as a result of
unauthorized disclosure by such Holder or by Persons to whom such Holder has
made such information available, or (ii) is or becomes available to such Holder
on a non-confidential basis from a third party that is not, to such Holder's
knowledge, bound by any other confidentiality agreement with the Company or RSI,
or (B) prohibit disclosure of any information if such Holder believes in good
faith that disclosure is required by law, rule, regulation, court order or other
legal or governmental process (including SEC or GAAP reporting requirements) or
if such Holder believes in good faith that disclosure is advisable to explain a
material deviation from its expected financial results that arises from its
investment in the Company; provided further, that in the case of a disclosure
described in clause (B) above, such Holder shall (i) give prior notice to the
Board of any such disclosure and (ii) consult with the Board prior to making
such disclosure.
3.4. Termination
The rights granted to the Holders pursuant to Section 3.1 and Sections
3.2(a) and 3.2(d) shall terminate upon such date that the Company's Common Stock
is listed for trading on either the NASDAQ Stock Market or a national securities
exchange. The obligations assumed by the Holders pursuant to Section 3.3 shall
remain in full force and effect until the first anniversary of the consummation
of an IPO.
4. LIMITATIONS ON CORPORATE ACTIONS
4.1. REIT Restrictions
(a) Taxable REIT Subsidiary Election. Effective as of January 1, 2001
and for so long thereafter as CarrAmerica continues to make the election to be
taxed as a real estate investment trust ("REIT") under Sections 856 through 860
of the Code, the Company and any corporation in which the Company owns at least
35% of vote or value of the stock (including OmniOffices (UK) Limited, a company
incorporated in England, and OmniOffices (Lux) 1929 Holding Company S.A., a
company organized under the laws of the Grand Duchy of Luxembourg), shall elect
to be treated as a "taxable REIT subsidiary" pursuant to Section 856(l) of the
Code. If CarrAmerica's ownership of the Common Stock of the Company is (i)
reduced below five percent (5%) for a continuous period of six months or longer
or (ii) is reduced below ten percent (10%) for a continuous period of twelve
months or longer, CarrAmerica shall, at the request of the Company, consent to
the revocation of such election for the first taxable year following the taxable
year in which the last month of such six month or twelve month period, as
applicable, occurs.
(b) Ten Percent Voting Securities Limitation.
(i) From the period commencing on the date hereof and ending on
January 1, 2001, the Company shall not undertake any transaction (including,
without limitation, a merger, reorganization, recapitalization, stock dividend,
split-off, stock repurchase or otherwise) that would result in CarrAmerica
owning (or being deemed for own) more that 10% of the outstanding "voting
securities" of any issuer (as determined under Section 856(c)(4)(B) of the
Code). For these purposes, in no event shall CarrAmerica be deemed to own voting
securities of an issuer merely as a result of the ownership of such securities
by the Company or by an entity in which the Company owns an interest.
Notwithstanding the foregoing, if the exception in Section 856(c)(4)(B)(iii)
with respect to stock of "taxable REIT subsidiaries" which was enacted as part
of the RMA, and is to become effective on January 1, 2001, is repealed, the
prohibitions contained in this paragraph (b) shall not expire on January 1,
2001, but shall continue to apply (x) if such repeal occurs prior to June 16,
2002, through the date (the "Put Expiration Date") that is either (I) if
CarrAmerica does not exercise its 2002 Put Right, June 15, 2002, or (II) if
CarrAmerica exercises its 2002 Put Right, July 31, 2002, or (y) if such repeal
occurs on or after June 16, 2002, then, if CarrAmerica is a REIT and still holds
securities of the Company, until 30 days following the first to occur of (I) an
IPO, (II) the acquisition of the Company by a publicly-traded company, or (III)
such other transaction pursuant to which the Company securities held by
CarrAmerica become or are exchanged for securities of a publicly traded company,
provided that, in the case of any transaction described in clause (I) or (III)
above in which CarrAmerica is required (or at the request of the Company agrees)
to enter into a lock-up, whether pursuant to Section 8.5 or otherwise, the
commencement of the 30 days shall begin on the last day of such lock-up period.
For these purposes, the relevant provision of the Code shall be considered to
have been repealed upon the passage of legislation that would repeal such
provision by both houses of Congress (prior to such legislation being signed
into law and regardless of whether such passage occurs prior to the effective
date of such legislation). In no event shall the provisions of this paragraph
apply to a transaction that takes place or to which the Company becomes
contractually committed after December 31, 2000 but prior to the repeal of
Section 856(c)(4)(B)(iii) (determined as set forth in the preceding sentence).
(ii) In the event of any transaction that would otherwise result
in a violation of this paragraph (b), the Company shall have the option to cause
CarrAmerica to be offered and, if offered, CarrAmerica shall accept,
consideration in the form of nonvoting securities rather than voting securities
to the extent necessary to reduce CarrAmerica's voting interest to no more than
10% of the outstanding voting securities of such issuer; provided, however, that
CarrAmerica shall be required to accept such nonvoting securities (or waive the
restrictions set forth in this paragraph (b)) only if (x) such nonvoting
securities have economic terms that are at least as favorable to CarrAmerica as
the economic terms of the voting securities that would otherwise be received by
CarrAmerica, (y) CarrAmerica receives an opinion of nationally recognized tax
counsel to the effect that the securities to be received will not be treated as
voting securities for purposes of Section 856(c)(4) of the Code, and (z) the
nonvoting securities shall be convertible into voting securities under the same
circumstances that the Nonvoting Common Stock is convertible into Voting Common
Stock.
(c) Limitation on Acquisition of Securities.
(i) The Company shall not undertake any transaction (including,
without limitation, a merger, reorganization, distribution of securities, or
otherwise) prior to the Put Expiration Date that would cause CarrAmerica to be
considered to have acquired (as determined for purposes of Section 856(c)(4)(B)
of the Code) any security of any issuer if, as a result thereof and immediately
after such transaction, CarrAmerica would not meet one or more of the assets
tests set forth in Section 856(c)(4) of the Code (the "Asset Tests").
(ii) For purposes of determining whether a violation of one or
more of the Asset Tests would occur for purposes of subparagraph (i) above, (A)
the date of the transaction shall be treated as if it were the last day of the
calendar quarter in which the transaction would occur, (B) the value of
securities that CarrAmerica would be considered to have acquired in connection
with the transaction for purposes of the Asset Tests shall be deemed to be the
value of such securities as of the date of the transaction, increased to reflect
deemed appreciation in value at an annual rate of 25%, for the period of time
from the date of the transaction to the close of the calendar quarter in which
the transaction takes place, and (C) CarrAmerica shall be treated as having
acquired or disposed of, as the case may be, on the date of the transaction any
other assets that CarrAmerica is contractually committed, on the later of the
time it receives written notice of the transaction or twenty (20) business days
prior to the transaction, to acquire or dispose of, as the case may be, at some
future date during such calendar quarter.
(iii) The Company shall have the option to provide to CarrAmerica
at least twenty (20) business days' prior notice of a potential transaction that
could be subject to the prohibition in this Section 4.1(c). Such notice shall
contain a detailed description of the potential transaction, including the
maximum reasonably expected value of any securities to be received by
CarrAmerica in connection with such transaction as of the date the transaction
is expected to be completed. If the Company provides such notice to CarrAmerica,
CarrAmerica may, within ten (10) business days after receipt of such notice,
provide the Company an opinion of counsel or its independent accountants to the
effect that the execution of such transaction (taking into account the
principles set forth in subparagraph (ii) above) would reasonably be expected to
result in a violation of one or more of the Asset Tests (which opinion may be
based upon customary representations of CarrAmerica as to factual matters). If
the Company shall provide such notice to CarrAmerica, and CarrAmerica shall fail
to deliver such an opinion within the requisite ten (10) business days, the
Company shall be entitled to complete such transaction without any liability
under this subparagraph (c).
(iv) From and after the Put Expiration Date through December 31,
2003, so long as CarrAmerica owns any securities of the Company, the Company
shall provide to CarrAmerica twenty (20) business days' prior notice of any
transaction involving the Company that would result in CarrAmerica being deemed
to have acquired additional securities of any issuer for purposes of Section
856(c)(4) of the Code, provided that such notice would not violate any
confidentiality obligations of the Company. If the notice requirement set forth
in this subparagraph (iv) would violate any confidentiality obligations of the
Company, the Company shall use commercially reasonable efforts to obtain an
exception to such confidentiality requirements in order to provide the notice to
CarrAmerica.
(v) CarrAmerica shall maintain strict confidentiality with
respect to any potential transaction of which it receives notice under
subparagraph (iii) or subparagraph (iv) above, and CarrAmerica shall join in any
confidentiality obligations to which the Company is subject with respect to such
transaction.
(vi) Notwithstanding any of the above, in the event of any
transaction that would otherwise result in a violation of this subparagraph (c),
CarrAmerica shall (x) accept consideration in the form of cash rather than
securities (or waive the restrictions set forth in this paragraph (c));
provided, that CarrAmerica shall not be obligated to accept cash (or waive the
restrictions set forth in this paragraph (c)) if the receipt of such cash would
reasonably be expected to cause CarrAmerica to violate any of the income tests
set forth in Section 856(c)(2) or 856(c)(3) of the Code for either of the
taxable years ending December 31, 2000 or December 31, 2001; and (y) at the
request of the Company, join to elect that the Company (or any successor) be
treated as a "taxable REIT subsidiary" of CarrAmerica (to the extent that such
an election is not then in effect and would be effective to avoid a violation of
this paragraph (c) or to minimize the amount of cash that CarrAmerica must
receive in order to avoid a violation of this paragraph (c)).
(d) Limitations on Transactions that Produce Gain.
(i) The Company shall not undertake any transaction (including,
without limitation, a dividend, merger, reorganization, distribution of
securities, or otherwise) (A) that shall result in the recognition of more than
$25 million of taxable income or gain by CarrAmerica during the taxable year
ending December 31, 2000 (in addition to any gain that will be recognized by
CarrAmerica by reason of the consummation of the transactions contemplated by
the Merger Agreement (the "Merger Agreement") dated as of January 20, 2000, by
and among the Company, CarrAmerica, RSI and Vantas Incorporated, a Nevada
corporation, and all ancillary agreements related thereto), or (B) that shall
result in the recognition of more than $75 million of taxable income or gain for
CarrAmerica during the taxable year ending December 31, 2001.
(ii) In the event that the Company contemplates undertaking any
transaction (including, without limitation, a dividend, merger, reorganization,
distribution of securities, or otherwise) that is reasonably likely to result in
the recognition of taxable income or gain for CarrAmerica in any single calendar
year through 2003 that equals or exceeds $25 million (other than any gain that
will be recognized by CarrAmerica by reason of the consummation of the
transactions contemplated by the Merger Agreement and all ancillary agreements
related thereto), the Company shall provide CarrAmerica with not less than
seventy-five (75) calendar days' prior written notice thereof; provided,
however, that if using commercially reasonable efforts it is not practicable for
the Company to provide at least seventy-five (75) calendar days prior written
notice of such proposed transaction, then the Company shall provide written
notice to CarrAmerica as soon as practicable prior to the proposed transaction,
but in no event less than thirty (30) calendar days prior to the transaction,
provided further, that such notice would not violate any confidentiality
obligations of the Company. If the notice requirement set forth in this
subparagraph (ii) would violate any confidentiality obligations of the Company,
the Company shall use commercially reasonable efforts to obtain an exception to
such confidentiality requirements in order to provide the required notice to
CarrAmerica.
(iii) For purposes of this paragraph (d), the Company may assume
that CarrAmerica's aggregate adjusted tax basis in its Common Stock is $20 per
share.
(iv) Failure by CarrAmerica to cooperate fully and promptly with
respect to any reasonable request made by the Company for information in order
to determine the applicability of this paragraph (d) to any potential
transaction under consideration by the Company shall relieve the Company from
its obligations under this paragraph (d).
(v) CarrAmerica shall maintain strict confidentiality with
respect to any potential transaction of which it receives notice hereunder, and
CarrAmerica shall join in any confidentiality obligations to which the Company
is subject with respect to such transaction.
(e) Successors and Assigns. For purposes of this Section 4.1, the term
"Company" refers both to the Company itself and to all successors and assigns
(direct or indirect) of the Company (including, without limitation, any entity
that acquires some or all of the outstanding capital stock of the Company by
reason of a merger or otherwise in which CarrAmerica thereafter would own
securities of such acquiror or any affiliate thereof), and any direct or
indirect subsidiaries of the Company (or such a successor or assign thereto).
This Section 4.1(e) is included to avoid any ambiguity in the interpretation of
this Section 4.1 and shall not limit or otherwise affect the generality of
Sections 11.2, 11.5 and 11.6 or the interpretation of other Sections of this
Agreement.
4.2. No Acquisition of Common Stock from RSI or its Affiliates
Without a Majority Consent of the Holders, the Company shall
not redeem, purchase or otherwise acquire any of the Common Stock of the Company
held by RSI or any entity controlled by RSI; provided, however, that no Majority
Consent of the Holders shall be required if such redemption, purchase or
acquisition is pursuant to a tender offer or other offer made on the same terms
to all holders of Common Stock, including, without limitation, the Holders.
4.3. No Contravening Agreement
Each of RSI, each Holder and the Company covenants that, from
and after the date hereof, it will not enter into any contract, agreement or
other arrangement that would impair, limit or restrict its ability to perform
any of its obligations under this Agreement.
4.4. Termination
The rights granted to Holders pursuant to Section 4.2 shall terminate
on the closing date of an IPO.
5. PARTICIPATION RIGHTS
5.1. Right to Participate
Subject to Section 5.6 hereof, from and after the date hereof, if the
Company proposes to issue or sell any equity securities of the Company or
securities convertible into equity securities of the Company ("Company
Interests") other than Company Interests issued pursuant to employee benefit
plans approved by the Company's stockholders, each Holder and RSI (each a
"Participant" and collectively, the "Participants") shall have the right to
purchase or subscribe for its "pro rata share" (as defined below), and no less
than all of such Participant's pro rata share, of such Company Interests;
provided, however, each Participant shall be entitled, on one (1) occasion only,
to purchase or subscribe for less than all of such Participant's pro rata share
or not to participate in such issuance or sale. For purposes of this Section
5.1, each Participant's "pro rata share" of the Company Interests to be issued
or sold in a transaction giving rise to the participation rights described in
this Section 5.1 (inclusive of the Company Interests to be purchased or
subscribed for by all Participants pursuant to the participation rights provided
for by this Section 5.1) shall equal the percentage of outstanding Common Stock
owned by such Participant as of the date immediately preceding such issuance or
sale. Notwithstanding the foregoing, each Participant shall be permitted to
designate that any or all of the Company Interests that it is entitled to
purchase pursuant to this Section 5.1 shall be of a separate class or series
with the same designations, preferences and rights as the Company Interests
proposed to be issued, except that any such separate class or series (i) shall
have no voting rights except as required by law, and (ii) shall be convertible
into the Company Interests under the same circumstances that the Nonvoting
Common Stock is convertible into Voting Common Stock.
5.2. Notice
If the Company proposes to issue any Company Interests in a
transaction giving rise to the participation rights provided for in Section 5.1,
the Company shall send a written notice (the "Participation Notice") to each
Participant setting forth (a) the number of the Company Interests which the
Company proposes to issue, (b) the price (before any commission or discount) at
which such the Company Interests are proposed to be issued (or, in the case of
an underwritten or privately placed offering in which the price is not known at
the time the Participation Notice is given, the method of determining such price
and an estimate thereof), (c) such Participant's "pro rata share" as of the date
of the Participation Notice, and (d) all other relevant information as to such
proposed transaction as may be necessary for each Participant to determine
whether or not to exercise the rights granted pursuant to Section 5.1. At any
time within ten (10) days after its receipt of the Participation Notice, each
Participant may exercise its participation rights to purchase or subscribe for
the Company Interests, as provided for in this Section 5, by so informing the
Company in writing (an "Exercise Notice"). Each Exercise Notice shall state the
percentage of the proposed sale or issuance that such Participant elects to
purchase. Each Exercise Notice shall be irrevocable, subject to the conditions
to the closing of the transaction giving rise to the participation right
provided for in Section 5.1.
5.3. Abandonment of Sale or Issuance
The Company shall have the right, in its sole discretion, at all times
prior to consummation of any proposed issuance or sale giving rise to the
participation right granted by Section 5.1, to abandon, rescind, annul, withdraw
or otherwise terminate such issuance or sale, whereupon all participation rights
in respect of such proposed issuance or sale shall become null and void, and the
Company shall not have any liability or obligation to any Participant by virtue
of such abandonment, rescission, annulment, withdrawal or termination.
5.4. Terms of Sale
The purchase or subscription by any Participant pursuant to Section
5.1 above shall be at the same price and such other terms and conditions,
including the date of sale or issuance, as are applicable to the purchasers or
subscribers of the Company Interests whose purchases or subscriptions give rise
to the participation rights, which price and other terms and conditions shall be
substantially as stated in the relevant Participation Notice (which standard
shall be satisfied if the price is not greater than 110% of the estimated price
set forth in the relevant Participation Notice); provided, however, that if the
consideration to be received by the Company in connection with the issuance of
the Company Interests giving rise to participation rights hereunder is other
than cash or cash equivalents, the price at which the participation rights may
be exercised shall be the price set forth in the Participation Notice or
determined in the manner set forth in the Participation Notice (which shall in
either event be the price as set forth in the agreement pursuant to which such
Company Interests are to be issued, with the consideration to be received
therefor being valued based upon the fair market value thereof); provided
further, that if the consideration to be received by the Company in connection
with the issuance of the Company Interests giving rise to participation rights
hereunder is other than cash or cash equivalents, and the fair market value of
the consideration to be received is not determinable, the price at which the
participation rights may be exercised shall, (i) in the event that shares of
capital stock with an established trading market are being issued or sold, be
the average ten-day trailing market price of such shares as of the date of
receipt of the Participation Notice, and (ii) in the event any other interests
are being issued or sold, be determined by reference to the amount set forth
above, adjusted as may be appropriate to reflect the relationship between those
interests with an established trading market and those interests to be issued in
the relevant transaction; and provided, finally, that in the event the purchases
or subscriptions giving rise to the participation rights are effected by an
offering of securities registered under the 1933 Act and in which offering it is
not practical in the judgment of the Company for the securities to be purchased
by any Participant to be included, such securities to be purchased by such
Participant or Participants will be purchased in a concurrent private placement
if legally permissible.
5.5. Timing of Sale
If, with respect to any Participation Notice, any Participant fails to
deliver an Exercise Notice within the requisite time period, the Company shall
have one hundred fifty (150) days after the expiration of the time in which the
Exercise Notice is required to be delivered in which to sell or issue not more
than the number of the Company Interests described in the Participation Notice
and at a price and on terms not materially less favorable to the Company than
were set forth in the Participation Notice. If, at the end of one hundred fifty
(150) days following the expiration of the time in which the Exercise Notice is
required to be delivered, the Company has not completed the issuance or sale of
the Company Interests in accordance with the terms described in the
Participation Notice (or, in the case of the price, at a price which is at least
90% of the estimated price set forth in the Participation Notice, which price
shall be deemed not to be materially less favorable to the Company than the
price set forth in the Participation Notice), the Company shall again be
obligated to comply with the provisions of Section 5.2 with respect to, and
provide Participants with the opportunity to participate in, any proposed
issuance or sale of the Company Interests; provided, however, that
notwithstanding the foregoing, if the price at which such the Company Interests
is to be sold in an underwritten offering is not at least 90% of the estimated
price set forth in the Participation Notice, the Company may inform such
Participant or Participants of such fact and such Participant or Participants
shall be entitled to elect, by written notice delivered within two business days
following receipt of such notice from the Company, to participate in such
offering in accordance with the provisions of this Section 5.
5.6. Termination of Participation Right
The participation rights granted to Participants pursuant to this
Section 5 shall terminate on the earlier of (i) with respect to each Participant
on an individual basis, the first date on which such Participant's ownership of
Common Stock of the Company, together with any shares of Common Stock
transferred by such Participant to a majority owned subsidiary or an Immediate
Family Member of such Participant and still owned by such transferee or any
other permitted transferee, shall have been (x) in the case of any Holder, less
than 90% of the number of shares of Common Stock of the Company set forth
opposite the name of such Holder on the signature page hereto (as the same may
be increased pursuant to a prior exercise of a participation right granted
pursuant to Section 5.1 and subject to adjustment in the event of stock splits,
stock dividends and similar events) for a continuous period of ninety (90) days,
and (y) in the case of RSI, less than 65% of the number of shares of Common
Stock of the Company set forth opposite RSI's name on the signature page hereto
(as the same may be increased pursuant to a prior exercise of a participation
right granted pursuant to Section 5.1 and subject to adjustment in the event of
stock splits, stock dividends and similar events), (ii) the closing date of an
IPO, or (iii) if such Participant has previously elected either to purchase or
subscribe for less than such Participant's pro rata share or not to participate
in such issuance or sale in accordance with the proviso set forth in the first
sentence of Section 5.1, the date on which the Company subsequently consummates
a transaction which was subject to this Section 5 and such Participant did not
elect to purchase or subscribe for all of its pro rata share of the Company
Interests. The participation rights granted pursuant to Section 5.1 shall not
apply to an IPO and shall not be assignable or transferable to a third party;
provided, however, that any party hereto that is an entity may assign its rights
and obligations pursuant to this Section 5 in connection with a transfer of all
or substantially all of its assets or a merger, consolidation or other similar
business combination transaction. Notwithstanding anything to the contrary
contained herein, if a Participant delivers an Exercise Notice to the Company,
and the Company has not otherwise abandoned the transaction to which the
Exercise Notice applies, and such Participant fails to fulfill its obligations
to purchase the shares set forth in the Exercise Notice on the date set for
closing the transaction to which the Exercise Notice applies, such Participant's
rights under this Section 5 will terminate and such Participant shall pay to the
Company any expenses (including reasonable attorneys' fees) incurred by the
Company in connection with the transaction with the Participant.
6. TAG-ALONG RIGHTS
6.1. Rights and Notice
Subject to Section 6.4 of this Agreement and the last sentence of this
Section 6.1, if RSI receives a bona fide offer to purchase from it, whether in
one transaction or in a series of related transactions, shares of Common Stock
of the Company from any person other than an Affiliate of RSI (a "Purchase
Offer"), RSI shall not accept such Purchase Offer unless each of the Holders is
entitled to sell pursuant to the Purchase Offer that percentage of the shares of
Common Stock owned by such Holder equal to the percentage of the number of
shares of Common Stock owned by RSI proposed to be included in the Purchase
Offer. Sales by the Holders pursuant to the Purchase Offer shall be on the same
terms and conditions as the Purchase Offer, without reduction for minority
interest, absence of voting rights, illiquidity or otherwise. Not later than
fifteen (15) days prior to consummation of the Purchase Offer, RSI shall send a
notice (the "Tag-Along Notice") to each Holder, which notice shall include,
among other things, (a) the number of shares of Common Stock that are the
subject of the Purchase Offer, (b) the price at which the bona fide purchaser is
willing to purchase the Common Stock, and (c) all other relevant information as
to such proposed transaction as may be necessary for each Holder to determine
whether or not to exercise the Tag-Along Right. Upon receipt of the Tag-Along
Notice, each Holder shall have the right (the "Tag-Along Right") to sell in
accordance with the terms of the Purchase Offer up to the number of shares of
Common Stock equal to the product of (a) the total number of shares of Common
Stock proposed to be sold by all of the Holders pursuant to the Purchase Offer
and (b) a fraction, the numerator of which shall be the number of shares of
Common Stock owned by such Holder and the denominator of which shall be the
number of shares of Common Stock owned by all Holders electing to participate in
such purchase. A Holder may exercise the Tag-Along Right by delivering, not
later than ten (10) days after receipt of the Tag-Along Notice, a written notice
to RSI (a "Holder Tag-Along Notice") stating the number of shares of Common
Stock that such Holder wishes to sell pursuant to the Purchase Offer.
Notwithstanding the foregoing, RSI shall have the right to sell up to an
aggregate of twenty-five percent (25%) of the total number of shares of Common
Stock of the Company owned by RSI as of the date hereof (subject to future
adjustment in the event of stock splits, stock dividends and similar events)
prior to the second anniversary hereof without triggering any rights under this
Section 6.
6.2. Abandonment of Sale
RSI shall have the right, in its sole discretion, at all times prior
to consummation of the proposed transaction giving rise to the Tag-Along Rights,
to abandon, withdraw or otherwise terminate its participation in the proposed
transaction, and RSI shall not have any liability or obligation to the Holders
as a result of such abandonment, withdrawal or other termination.
6.3. Timing of Sale
If any Holder fails to deliver a Holder Tag-Along Notice within the
requisite time period, RSI shall have one hundred fifty (150) days after the
expiration of the time in which the Holder Tag-Along Notice is required to be
delivered to consummate the proposed transaction identified in the Holder
Purchase Offer at the price and on the terms that are not more favorable to RSI
than those set forth in the Holder Tag-Along Notice (except that the price may
be increased by up to 10% from the price set forth in the Holder Tag-Along
Notice). If, at the end of such one hundred fifty (150)-day period, RSI has not
consummated the proposed transaction, RSI shall again be obligated to comply
with the provisions of this Section 6.
6.4. Termination of Tag-Along Right
The Tag-Along Rights granted to Holders pursuant to this Section 6
shall terminate upon the closing of an IPO.
7. PUT RIGHTS
7.1. 2000 Put Right
(a) 2000 Put Right. At any time during the period commencing
on October 31, 2000 and ending on November 15, 2000 (the "2000 Put Period"),
each Holder shall have the right (the "2000 Put Right") to require that RSI
purchase up to [__%][percentage to be equal to (i) the amount by which the total
dollar value of the Common Stock held by all Holders immediately following the
Closing exceeds $100 million, divided by (ii) the total dollar value of the
Common Stock held by all Holders immediately following the Closing] of the
Common Stock owned by such Holder, for a price per share equal to the 2000 Put
Price (as defined below). The "2000 Put Price" of each share of Common Stock to
be sold pursuant to the 2000 Put Right shall be the greater of: (i) the Fair
Market Value (as defined below) of such Common Stock, determined in accordance
with the procedures set forth Section 7.4; (ii) the Consideration (as defined in
the U.S. Stock Purchase Agreement, subject to future adjustment in the event of
stock splits, stock dividends and similar events); or (iii) the highest price
per share of Common Stock (or the implied value of the Common Stock in
connection with the issuance of any convertible security of the Company)
(subject to future adjustment in the event of stock splits, stock dividends and
similar events) received by RSI or the Company in any sale or issuance thereof
from and after the date hereof through the last day of the 2000 Put Period. Each
Holder electing to exercise the 2000 Put Right (a "2000 Put Exercising Holder")
shall exercise such right by a written notice (the "2000 Put Notice") delivered
to RSI and the Company during the 2000 Put Period.
(b) Consideration.
(i) Cash. The consummation of the sale and purchase of Common
Stock pursuant to Section 7.1(a) shall occur on December 7, 2000 (the "2000 Put
Right Closing"). RSI shall pay the 2000 Put Price in cash in full at the 2000
Put Right Closing unless it elects the alternative consideration payment set
forth in clause (ii) below. The Designated Holder (as defined below) shall have
the right to inquire by notice to RSI as to the form of the consideration to be
paid by RSI at any time from the twelfth day prior to the 2000 Put Right Closing
up to and including the fifth day preceding the 2000 Put Right Closing. RSI
shall inform the Designated Holder of the form of the consideration not later
than the second day prior to the 2000 Put Right Closing. If RSI fails to so
inform the Designated Holder, RSI shall be responsible for any actual damages
incurred by the Holders as a result of such failure.
(ii) Alternative Consideration - RSI Stock. Subject to the
following sentence, at RSI's option, all or a portion of the consideration
payable upon exercise of the 2000 Put Right may be paid by delivery of a number
of shares of common stock of RSI equal to (x) the 2000 Put Price, less any cash
paid pursuant to Section 7.1(b)(i) hereof, divided by (y) 98% of the volume
weighted average price of a share of common stock of RSI on the NASDAQ Stock
Market or other national securities exchange on which RSI's shares are then
traded for the ten (10) trading days ending on the third trading day prior to
the date of the 2000 Put Right Closing. RSI may pay all or a portion of the 2000
Put Price in shares of common stock of RSI only if (i) RSI's common stock is
then listed on the NASDAQ Stock Market or other national securities exchange on
which RSI's shares are then traded, and (ii) the shares to be issued to the 2000
Put Exercising Holder shall be eligible for immediate sale, subject to a resale
registration statement under the 1933 Act being declared effective by the SEC.
RSI covenants and agrees that it will file within thirty (30) days after receipt
of such 2000 Put Notice and will use its best efforts to have declared effective
within ninety (90) days of receipt of such 2000 Put Notice a resale registration
statement for the RSI common stock issued pursuant hereto.
(c) Minimum Put Requirement. No exercise by any Holder of the 2000 Put
Right shall be permitted unless such exercise is with respect to the lesser of
(i) 200,000 shares of Common Stock or (ii) all of the shares of Common Stock
owned by such Holder.
7.2. 2001 Put Right
(a) 2001 Put Right. Unless an IPO has occurred prior to July
31, 2001, at any time during the period commencing on October 31, 2001 and
ending on November 15, 2001 (the "2001 Put Period"), each Holder shall have the
right (the "2001 Put Right") to require that RSI purchase up to 50% of the
Common Stock owned by such Holder (but subject to the minimum put requirement
set forth in Section 7.2(c)), for a price per share equal to the Fair Market
Value of such Common Stock (the "2001 Put Price"), determined in accordance with
the procedures set forth in Section 7.4. Each Holder electing to exercise the
2001 Put Right (a "2001 Put Exercising Holder") shall exercise such right by a
written notice (the "2001 Put Notice") delivered to RSI and the Company during
the 2001 Put Period.
(b) Consideration.
(i) Cash. The consummation of each sale and purchase of Common
Stock pursuant to Section 7.2(a) shall occur on December 7, 2001 (the "2001 Put
Right Closing"). RSI shall pay the 2001 Put Price in cash in full at the 2001
Put Right Closing, unless it elects either (but not both) of the alternative
consideration payments set forth in clauses (ii) and (iii) below. The Designated
Holder (as defined below) shall have the right to inquire by notice to RSI as to
the form of the consideration to be paid by RSI at any time from the twelfth day
prior to the 2001 Put Right Closing up to and including the fifth day preceding
the 2001 Put Right Closing. RSI shall inform the Designated Holder of the form
of the consideration not later than the second day prior to the 2001 Put Right
Closing. If RSI fails to so inform the Designated Holder, RSI shall be
responsible for any actual damages incurred by the Holders as a result of such
failure.
(ii) Alternative Consideration - Promissory Note. At RSI's
option, all or a portion of the consideration payable upon exercise of the 2001
Put Right may be paid by delivery of a promissory note (the "Note") payable in
cash to a 2001 Put Exercising Holder in the amount of the 2001 Put Price payable
to such 2001 Put Exercising Holder, less any cash paid pursuant to Section
7.2(b)(i). The Note shall mature on July 31, 2002, shall be non-interest
bearing, and shall be prepayable at any time, at RSI's option.
(iii) Alternative Consideration - RSI Stock. Subject to the
following sentence, at RSI's option, all or a portion of the consideration
payable upon exercise of the 2001 Put Right may be paid by delivery of a number
of shares of common stock of RSI equal to (x) the 2001 Put Price, less any cash
paid pursuant to Section 7.2(b)(i) hereof, divided by (y) 98% of the volume
weighted average price of a share of common stock of RSI on the NASDAQ Stock
Market or other national securities exchange on which RSI's shares are then
traded for the ten (10) trading days ending on the third trading day prior to
the date of the 2001 Put Right Closing. RSI may pay all or a portion of the 2001
Put Price in shares of common stock of RSI only if (i) RSI's common stock is
then listed on the NASDAQ Stock Market or other national securities exchange on
which RSI's shares are then traded, and (ii) the shares to be issued to the 2001
Put Exercising Holder shall be eligible for immediate sale, subject to a resale
registration statement under the 1933 Act being declared effective by the SEC.
RSI covenants and agrees that it will file within thirty (30) days after receipt
of such 2001 Put Notice and will use its best efforts to have declared effective
within ninety (90) days of receipt of such 2001 Put Notice a resale registration
statement for the RSI common stock issued pursuant hereto.
(c) Minimum Put Requirement. No exercise by any Holder of the 2001 Put
Right shall be permitted unless such exercise is with respect to the lesser of
(i) 200,000 shares of Common Stock or (ii) all of the shares of Common Stock
owned by such Holder.
7.3. 2002 Put Right
(a) 2002 Put Right. Unless an IPO has occurred prior to April 1, 2002,
at any time during the period commencing on May 31, 2002 and ending on June 17,
2002 (the "2002 Put Period" and, together with the 2000 Put Period and the 2001
Put Period, a "Put Period"), each Holder shall have the right (the "2002 Put
Right") to require that RSI purchase any or all of the Common Stock owned by
such Holder (but subject to the minimum put requirement set forth in Section
7.3(c)), for a price per share equal to the Fair Market Value of such Common
Stock (the "2002 Put Price"), determined in accordance with the procedures set
forth in Section 7.4. Each Holder electing to exercise the 2002 Put Right (a
"2002 Put Exercising Holder" and together with a 2001 Put Exercising Holder, the
"Exercising Holders") shall exercise such right by a written notice (the "2002
Put Notice") delivered to RSI during the 2002 Put Period.
(b) Consideration.
(i) Cash. The consummation of each sale and purchase of Common
Stock pursuant to Section 7.3(a) shall occur on July 31, 2002 (the "2002 Put
Right Closing"). RSI shall pay the 2002 Put Price in cash in full at the 2002
Put Right Closing, unless it elects the alternative consideration payment set
forth in clause (ii) below. The Designated Holder (as defined below) shall have
the right to inquire by notice to RSI as to the form of the consideration to be
paid by RSI at any time from the twelfth day prior to the 2002 Put Right Closing
up to and including the fifth day preceding the 2002 Put Right Closing. RSI
shall inform the Designated Holder of the form of the consideration not later
than the second day prior to the 2002 Put Right Closing. If RSI fails to so
inform the Designated Holder, RSI shall be responsible for any actual damages
incurred by the Holders as a result of such failure.
(ii) Alternative Consideration. Subject to the following
sentence, at RSI's option, all or a portion of the consideration payable upon
exercise of the 2002 Put Right may be paid by delivery of a number of shares of
common stock of RSI equal to (x) the 2002 Put Price, less any cash paid pursuant
to Section 7.3(b)(i) hereof, divided by (y) 98% of the volume weighted average
price of a share of common stock of RSI on the NASDAQ Stock Market or other
national securities exchange on which RSI's shares are then traded for the ten
(10) trading days ending on the third trading day prior to the date of the 2002
Put Right Closing. RSI may pay all or a portion of the 2002 Put Price in shares
of common stock of RSI only if (i) RSI's common stock is then listed on the
NASDAQ Stock Market or other national securities exchange on which RSI's shares
are then traded, and (ii) the shares to be issued to the 2002 Put Exercising
Holder shall be eligible for immediate sale, subject to a resale registration
statement under the 1933 Act being declared effective by the SEC. RSI covenants
and agrees that it will file within thirty (30) days after receipt of such 2002
Put Notice and will use its best efforts to have declared effective within
ninety (90) days of receipt of such 2002 Put Notice a resale registration
statement for the RSI common stock issued pursuant hereto.
(c) Minimum Put Requirement. No exercise by any Holder of the 2002 Put
Right shall be permitted unless such exercise is with respect to the lesser of
(i) 200,000 shares of Common Stock or (ii) all of the shares of Common Stock
owned by such Holder.
7.4. Procedures to Determine Fair Market Value
(a) Not later than sixty (60) days prior to the commencement of a Put
Period, the Designated Holder, on behalf of all Holders, and RSI shall each
select an independent investment banking firm of nationally recognized expertise
in the valuation of companies comparable to the Company. The agreement pursuant
to which each such firm is retained shall require such firm to deliver to each
of the Designated Holder and RSI a valuation report setting forth its
determination of the total equity value of the Company not later than thirty
(30) days prior to the commencement of a Put Period. The total equity value
shall be calculated as of October 31, 2000 (in the case of the 2000 Put Right),
October 31, 2001 (in the case of the 2001 Put Right) or May 31, 2002 (in the
case of the 2002 Put Right). If the lower valuation of the two investment
banking firms so selected by the Designated Holder and RSI is 90% or more of the
higher valuation, then the average of two valuations shall be considered the
"total equity value" of the Company for purposes of this Section 7.4. If the
lower valuation is not at least 90% of the higher valuation, then such
investment banking firms shall select a third independent investment banking
firm of nationally recognized expertise in the valuation of companies comparable
to the Company, which shall choose, not later than the commencement of a Put
Period, one of the values determined by the investment banking firms so selected
by the Designated Holder and RSI, which shall be the "total equity value" of the
Company for purposes of this Section 7.4. Any determination of the "total equity
value" of the Company in accordance with the provisions of this paragraph shall
be final and binding. The costs of the investment bankers retained in accordance
with this Section 7.4 shall be borne equally by RSI and the Exercising Holders
(pro rata based on the respective number of shares sold), or, in the case of the
2000 Put Right or if there shall be no Exercising Holders, equally by RSI and
CarrAmerica. The "Fair Market Value" of each share of Common Stock for purposes
of determining the 2000 Put Price, the 2001 Put Price or the 2002 Put Price, as
applicable, shall be determined by dividing (i) the total equity value of the
Company as of October 31, 2000 (in the case of the 2000 Put Right), October 31,
2001 (in the case of the 2001 Put Right) or May 31, 2002 (in the case of the
2002 Put Right), as determined in the manner described above, by (ii) the number
of shares of Common Stock outstanding as of October 31, 2000, October 31, 2001
or May 31, 2002, as applicable (including any securities convertible into Common
Stock calculated on a fully diluted basis). The Fair Market Value of each share
of Common Stock shall be determined without giving effect to any factor
specifically relating to the Common Stock, including, without limitation,
liquidity premiums or discounts relating to the Common Stock, minority position
or lack of voting power.
(b) During the 2000 Put Period, the 2001 Put Period, the 2002 Put
Period and the ten trading days ending on the 3rd business day prior to the date
of the applicable Put Right Closing (each such period, a "Measuring Period"),
neither CarrAmerica nor any of its controlled Affiliates shall, directly or
indirectly, engage in short sales of (and, during the ten trading days prior to
the date of the applicable Put Right Closing, engage in sales of), or purchase
put options on, shares of RSI common stock or securities convertible into or
exchangeable for shares of RSI common stock, or otherwise enter into or execute
hedging or arbitrage transactions on the NASDAQ Stock Market, or on any national
securities exchange on which RSI common stock is listed or with third party
intermediaries with the purpose or intention, or having the effect, of
decreasing the market price of RSI common stock during each Measuring Period.
7.5. Indemnification of Designated Holder
Each Holder hereby irrevocably appoints the Designated Holder as its
representative under Section 7 hereof for purposes of determining the Fair
Market Value of the Common Stock. Each Holder hereby indemnifies the Designated
Holder for, and holds the Designated Holder harmless against, any loss,
liability, disbursements, expenses, losses, costs or cash damages (including
reasonable attorneys' fees) incurred on the part of the Designated Holder,
arising out of or in connection with Designated Holder carrying out its duties
herein, including costs and expenses of defending the Designated Holder against
any claim of liability with respect thereto, provided that the Designated Holder
has acted in good faith.
8. TRANSFER RESTRICTIONS
8.1. RSI Right of First Offer
(a) Subject to Section 8.4 hereof, before any Holder shall transfer
any shares of capital stock of the Company, such Holder shall first deliver a
written notice (the "Holder Notice of Offer") to RSI offering to sell the number
of shares proposed to be sold by such Holder to RSI (the "RSI Right of First
Offer"). The Holder Notice of Offer shall specify (i) the number and classes of
all shares of Common Stock proposed to be sold by such Holder to RSI (the
"Holder Offered Securities"), (ii) the minimum proposed cash consideration per
share that Holder desires to receive for the Holder Offered Securities (the
"Holder Offer Price"), and (iii) any other terms and conditions of the offer.
The Holder Notice of Offer shall constitute an irrevocable offer by such Holder
to sell to RSI all, but not less than all, of the Holder Offered Securities at
the Holder Offer Price, in accordance with this Section 8.
(b) Within thirty (30) days following its receipt of the Holder Notice
of Offer, RSI shall notify such Holder whether it intends to exercise its right
to purchase all (but not less than all) of the Holder Offered Securities (the
"RSI Notification"). A RSI Notification that indicates that RSI intends to
purchase the Holder Offered Securities shall be deemed to be an irrevocable
commitment of RSI to purchase the Holder Offered Securities. Should RSI elect to
exercise the RSI Right of First Offer, the RSI Notification shall include a
subscription for the offered shares and RSI shall purchase the Holder Offered
Securities on the date for closing specified in the Holder Notice of Offer,
which date shall be no less than thirty (30) days after the date of the RSI
Notification. If RSI does not subscribe for and purchase all of the Holder
Offered Securities pursuant to this Section 8.1(b), such Holder may thereafter
sell the Holder Offered Securities to any third party on the terms and
conditions (including, but not limited to, the number of shares of Holder
Offered Securities and the Holder Offer Price) as specified in the Holder Notice
of Offer, provided, that such sale is consummated within one hundred fifty (150)
days of the date of the Holder Notice of Offer; and provided further, that the
fair market value of the price paid for such shares by a third party (which
price may consist of cash, securities, other non-cash consideration or a
combination thereof) is at least 90% of the Holder Offer Price. If the price to
be paid for such shares by a third party is payable in whole or in part in
consideration other than cash or securities traded on a national securities
exchange or the NASDAQ Stock Market, and RSI objects to the Holder's
determination of the cash fair market value of the non-cash portion of the
consideration, then such determination shall be made by (i) Goldman, Sachs &
Co., (ii) Merrill Lynch & Co., if Goldman, Sachs & Co. is unable or unwilling to
make such determination, or (iii) if neither of the foregoing firms is able or
willing to deliver such valuation, such other independent investment banking
firm or other qualified appraiser mutually agreeable to and promptly selected by
the Holder and RSI, such determination shall be final and binding on the
parties. After the expiration of such 150-day period, such Holder shall again
comply with the provisions of this Section 8.1 before selling any shares of the
Company.
8.2. Holder Right of First Offer
(a) Subject to Section 8.4 hereof, the second sentence of this
paragraph and provided that the Holders collectively own at least 95% of the
total number of shares of Common Stock of the Company set forth opposite the
names of such Holders on the signature page hereto (subject to future adjustment
in the event of stock splits, stock dividends and similar events), if RSI
desires to transfer, in a single transaction or a series of related
transactions, a number of shares of Common Stock of the Company not in excess of
twenty percent (20%) of the total shares of Common Stock of the Company
outstanding as of such date, RSI shall first deliver a written notice (the "RSI
Notice of Offer") to the Designated Holder offering to sell the lesser of (i)
the number of shares proposed to be sold by RSI or (ii) 20% of the number of
shares of issued and outstanding Common Stock of the Company as of the date of
the RSI Notice of Offer, to Holders (the "Holder Right of First Offer" and,
together with the RSI Right of First Offer, the "Rights of First Offer").
Notwithstanding the foregoing, RSI shall have the right to sell up to an
aggregate of twenty-five percent (25%) of the total number of shares of Common
Stock of the Company owned by RSI as of the date hereof (subject to future
adjustment in the event of stock splits, stock dividends and similar events)
prior to the second anniversary hereof without triggering any rights under this
Section 8.2. The RSI Notice of Offer shall specify (i) the number and classes of
all shares of Common Stock proposed to be sold by RSI to the Holders (the "RSI
Offered Securities"), (ii) the minimum proposed cash consideration per share
that RSI desires to receive for the RSI Offered Securities (the "RSI Offer
Price"), and (iii) any other terms and conditions of the offer. The RSI Notice
of Offer shall constitute an irrevocable offer by RSI to sell to the
Participating Holders (as defined below), as the case may be, all, but not less
than all, of the RSI Offered Securities at the RSI Offer Price, in accordance
with this Section 8.2(a).
(b) Within ten (10) days following its receipt of the RSI Notice of
Offer, the Designated Holder shall determine whether it intends to exercise its
right to purchase all (but not less than all) of the RSI Offered Securities. If
the Designated Holder elects to exercise the Holder Right of First Offer, it
shall send all of the other Holders a copy of the RSI Notice of Offer not later
than the eleventh (11th) day after the Designated Holder's receipt thereof. If,
but only if, the Designated Holder elects to exercise the Holder Right of First
Offer, each Holder shall have the right to purchase all, but not less than all,
of its "pro rata share" of the RSI Offered Securities. As used herein, a
Holder's "pro rata share" means a fraction, the numerator of which is the number
of shares of Common Stock owned by such Holder and the denominator of which is
the number of shares of Common Stock owned by all of the Holders (including the
Designated Holder). Each Holder shall have ten (10) days to notify the
Designated Holder of the number of shares such Holder elects to purchase
pursuant to the RSI Right of First Offer. Within thirty (30) days of receipt of
the RSI Notice of Offer, the Designated Holder shall notify RSI whether the
Holders are exercising the Holder Right of First Offer (the "Designated Holder
Notification"). A Designated Holder Notification that indicates that
Participating Holders intend to purchase the RSI Offered Securities shall be
deemed to be an irrevocable commitment of such Participating Holders to purchase
the RSI Offered Securities. Should all or any portion of the Holders (the
"Participating Holders") elect to exercise the Holder Right of First Offer, the
Designated Holder Notification shall include a subscription for the offered
shares and the Participating Holders shall purchase the Offered Securities on
the date for closing specified in the RSI Notice of Offer, which date shall be
no less than thirty (30) days after the date of the Designated Holder
Notification. If the Holders do not subscribe for and purchase all of the RSI
Offered Securities pursuant to this Section 8.2(b), RSI may thereafter sell the
RSI Offered Securities to any third party on the terms and conditions
(including, but not limited to, the number of shares of RSI Offered Securities
and the RSI Offer Price) as specified in the RSI Notice of Offer, provided, that
such sale is consummated within one hundred fifty (150) days of the date of the
RSI Notice of Offer; and provided further, that the fair market value of the
price paid for such shares by a third party (which price may consist of cash,
securities, other non-cash consideration or a combination thereof) is at least
90% of the RSI Offer Price. If the price to be paid for such shares by a third
party is payable in whole or in part in consideration other than cash or
securities traded on a national securities exchange or the NASDAQ Stock Market,
and Designated Holder objects to RSI's determination of the cash fair market
value of the non-cash portion of the consideration, then such determination
shall be made by (i) Goldman, Sachs & Co., (ii) Merrill Lynch & Co., if Goldman,
Sachs & Co. is unable or unwilling to make such determination, or (iii) if
neither of the foregoing firms is able or willing to deliver such valuation,
such other independent investment banking firm or other qualified appraiser
mutually agreeable to and promptly selected by the Designated Holder and RSI,
such determination shall be final and binding on the parties. After the
expiration of such 150-day period, RSI shall again comply with the provisions of
this Section 8.2 before selling any shares of the Company.
8.3. No Obligation to Purchase
RSI shall not be obligated to purchase any Holder Offered Securities
pursuant to any Holder Notice of Offer in accordance with the provisions of
Section 8.1 and no Holder shall be obligated to purchase any RSI Offered
Securities pursuant to any RSI Notice of Offer in accordance with the provisions
of Section 8.2.
8.4. Termination of the Rights of First Offer
The Rights of First Offer granted pursuant to this Section 8 shall
terminate upon the closing of an IPO.
8.5. IPO Lock-Up
Each Holder hereby agrees, and will any cause any transferee who
acquires shares of Common Stock from Holder during the applicable period to
agree, that, if requested by the underwriters in connection with an IPO, such
Holder (or transferee) will agree not to sell, pledge, make any short sale of,
loan, grant any option for the purchase of any shares of Common Stock owned by
it (whether pursuant to a registration statement or otherwise) either through
the agency of a broker-dealer or the facilities of the national securities
exchange on which the Company's shares of Common Stock are listed for a
reasonable period following the IPO, such period not to exceed ninety (90) days.
If the Company determines in good faith that it would be advantageous to the
Company for any Holder to be subject to a lock-up in accordance with the terms
and conditions of the preceding sentence for a period in excess of ninety (90)
days, such Holder shall agree to such lock-up, not to exceed an additional
ninety (90) days; provided, that (i) such Holder shall be permitted to sell as a
selling stockholder in the IPO up to fifty percent (50%) (the exact amount to be
determined by such Holder) of the shares of Common Stock held by such Holder as
of the closing date of the IPO; (ii) RSI shall acquire, at the closing of the
IPO, up to fifty percent (50%) (the exact amount to be determined by such
Holder) of the shares of Common Stock held by such Holder as of the closing date
of the IPO, either (y) for cash at the IPO price, or (z) for a number of shares
of common stock of RSI equal to (A) the value of the shares of Common Stock
proposed to be sold by such Holder (such value being deemed equal to the initial
public offering price in the IPO), divided by (B) the average closing trading
price of a share of common stock of RSI on the NASDAQ Stock Market or other
national securities exchange on which RSI's shares are traded for the ten (10)
trading days ending on the third trading day prior to the closing date of the
IPO; provided that RSI's common stock is then listed on the NASDAQ Stock Market
or other national securities exchange on which RSI's shares are then traded, and
the shares to be issued to such Holder shall be eligible for immediate sale,
subject to a resale registration statement under the 1933 Act being declared
effective by the SEC; or (iii) any combination of (i) or (ii) above which
results in such Holder disposing of up to fifty percent (50%) (the exact amount
to be determined by such Holder) of its shares of Common Stock. With respect to
the proviso set forth in clause (ii) above, RSI covenants and agrees that it
will file within thirty (30) days after the closing of the IPO and will use its
best efforts to have declared effective within ninety (90) days after the
closing of the IPO a resale registration statement for the RSI common stock
issued pursuant hereto.
9. LEASE GUARANTEE INDEMNIFICATION
RSI indemnifies CarrAmerica for, and holds it harmless against, any
loss, liability, disbursements, expenses, losses, costs or cash damages
(including reasonable attorneys' fees) arising from and after the date hereof
and incurred by, arising out of or in connection with those certain guarantees
of Company obligations listed on Exhibit A, including costs and expenses of
defending CarrAmerica against any claim of liability with respect thereto.
10. PURCHASE RIGHT AGREEMENT ANTI-DILUTION PROTECTION
In the event of an IPO, the Company hereby assigns to CarrAmerica, and
CarrAmerica hereby assumes, the obligation of the Company to sell 100% of the
shares of Common Stock required to be sold under the Purchase Right Agreement,
dated as of March 4, 1998, among the Company, Robert A. Arcoro and Joseph
Kaidanow with respect to each percentage point decrease in the Debt Ratio (as
defined in such Purchase Right Agreement) below 55% and above and including 40%.
11. MISCELLANEOUS
11.1. RSI Assurance
RSI unconditionally, absolutely and irrevocably guarantees and assures
the due and punctual performance and observance by the Company of all terms,
covenants and conditions of Section 4.1 of this Agreement, whether according to
the present terms hereof or pursuant to any amendment in the terms, covenants
and conditions hereof now or at any time hereafter made or granted, and
regardless of whether recovery on such liability may be or hereafter become
barred by any statute of limitations or such liability may otherwise be or
become unenforceable; provided, that, such guarantee and assurance shall be
applicable to a transaction giving rise to a violation of Section 4.1(b), 4.1(c)
or 4.1(d) only to the extent such transaction has been approved by the Board,
and; provided, further, such guarantee shall terminate on the closing date of an
IPO.
11.2. Assignment
None of the parties hereto shall be permitted to assign any of their
respective rights or obligations hereunder to any third party, except that each
Holder shall be permitted to assign its rights and obligations hereunder to any
other Person in connection with a transfer of shares of Common Stock by such
Holder made in accordance with Section 8 hereof; provided, that such Person
agrees to be bound by this Agreement; and provided further, that any party
hereto that is an entity may assign its rights and obligations hereunder in
connection with a transfer of all or substantially all of its assets or a
merger, consolidation or other similar business combination transaction. Any
agreement in violation hereof shall be void ab initio and of no force or effect.
11.3. Entire Agreement; Amendment
This Agreement, including the Appendices and Exhibits hereto
and other writings referred to herein or delivered pursuant hereto, constitutes
the entire agreement among the parties hereto with respect to the transactions
contemplated herein, and it supersedes all prior oral or written agreements,
commitments or understandings with respect to the matters provided for herein.
No amendment, modification or discharge of this Agreement shall be valid or
binding unless set forth in writing and duly executed by the Company, RSI and a
Majority Consent of the Holders.
11.4. Waiver
No delay or failure on the part of any party hereto in exercising any
right, power or privilege under this Agreement or under any other instruments
given in connection with or pursuant to this Agreement shall impair any such
right, power or privilege or be construed as a waiver of any default or any
acquiescence therein. No single or partial exercise of any such right, power or
privilege shall preclude the further exercise of such right, power or privilege,
or the exercise of any other right, power or privilege. No waiver shall be valid
against any party hereto unless made in writing and signed by the party against
whom enforcement of such waiver is sought and then only to the extent expressly
specified therein.
11.5. Limitation on Benefit
It is the explicit intention of the parties hereto that no person or
entity other than the parties hereto is or shall be entitled to bring any action
to enforce any provision of this Agreement against any of the parties hereto and
their respective successors, heirs, executors, administrators, legal
representatives and permitted assigns, and the covenants, undertakings and
agreements set forth in this Agreement shall be solely for the benefit of, and
shall be enforceable only by, the parties hereto or their respective successors,
heirs, executors, administrators, legal representatives and permitted assigns.
11.6. Binding Effect
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, heirs, executors,
administrators, legal representatives and permitted assigns.
11.7. Governing Law
This Agreement, the rights and obligations of the parties hereto, and
any claims or disputes relating thereto, shall be governed by and construed in
accordance with the laws of Delaware (excluding the choice of law rules
thereof).
11.8. Notices
All notices, demands, requests, or other communications which
may be or are required to be given, served, or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be
hand-delivered, sent by documented overnight delivery service or mailed by
first-class, registered or certified mail, return receipt requested, postage
prepaid, or, to the extent receipt is confirmed, transmitted by telegram,
telecopy, facsimile or other electronic transmission or telex, addressed as
follows:
(i) If to the Company:
HQ Global Workplaces, Inc.,
15950 North Dallas Parkway, Suite 400
Dallas, Texas 75248
Attn.: Jill B. Louis, General Counsel
Facsimile No.: 972/361-8101
with a copy (which shall not constitute notice) to:
Gibson, Dunn & Crutcher
1717 Main Street, Suite 5500
Dallas, Texas 75201
Attn.: Harlan Cohen, Esq.
Facsimile No.: 214/698-3400
(ii) If to RSI:
Reckson Service Industries, Inc.
10 East 50th Street
Suite 2700
New York, New York 10022-6881
Attn.: Jason Barnett, General Counsel
Facsimile No.: 212/931-8001
with a copy (which shall not constitute notice) to:
Brown & Wood, LLP
One World Trade Center
New York, New York 10048-0057
Attn.: Joseph W. Armbrust, Jr.
J. Gerard Cummins
Facsimile No.: 212/839-5599
(iii) If to CarrAmerica:
CarrAmerica Realty Corporation
1700 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Attn.: Linda A. Madrid, General Counsel
Facsimile No.: 202/729-1160
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Attn.: J. Warren Gorrell, Jr.
David W. Bonser
Facsimile No.: 202/637-5910
Notice to each Holder, other than CarrAmerica, shall be delivered to
such Holder at the address indicated on the signature page hereof.
Each party may designate by notice in writing a new address to which
any notice, demand, request, or communication may thereafter be so given, served
or sent. Each notice, demand, request, or communication which shall be
hand-delivered, sent by documented overnight delivery service, mailed,
transmitted, telecopied, faxed, e-mailed, or telexed in the manner described
above, or which shall be delivered to a telegraph company, shall be deemed
sufficiently given, served, sent, received, or delivered for all purposes at
such time as it is delivered to the addressee (with the return receipt, the
delivery receipt, or the answerback being deemed conclusive, but not exclusive,
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation.
11.9. Headings
Article and Section headings contained in this Agreement are inserted
for convenience of reference only, shall not be deemed to be a part of this
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions thereof. All references
to Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated.
11.10. Execution in Counterparts
To facilitate execution, this Agreement may be executed in as many
counterparts as may be required; and it shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party appear on one or
more of the counterparts. Copies of executed counterparts transmitted by
telecopy, facsimile or other electronic transmission service shall be considered
original executed counterparts for purposes of this Section 11.10; provided,
that receipt of copies of such counterparts is confirmed. All counterparts shall
collectively constitute a single agreement. It shall not be necessary in making
proof of this Agreement to produce or account for more than a number of
counterparts containing the respective signatures of, or on behalf of, all of
the parties hereto.
11.11. Interpretation; Absence of Presumption
(a) For the purposes hereof, (i) words in the singular shall
be held to include the plural and vice versa and words of one gender shall be
held to include the other gender as the context requires, (ii) the terms
"hereof," "herein," and "herewith" and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Article, Section and paragraph
references are to the Articles, Sections and paragraphs to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import when
used in this Agreement shall mean "including, without limitation," unless the
context otherwise requires or unless otherwise specified, (iv) the word "or"
shall not be exclusive, and (v) provisions shall apply, when appropriate, to
successive events and transactions.
(b) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.
11.12. Severability
Any provision hereof which is invalid or unenforceable shall
be ineffective to the extent of such invalidity or unenforceability, without
affecting in any way the remaining provisions hereof.
11.13. Specific Performance
Each of the Company, RSI and each Holder acknowledges that, in
view of the uniqueness of arrangements contemplated by this Agreement, the
parties hereto would not have an adequate remedy at law for money damages in the
event that this Agreement were not performed in accordance with its terms, and
therefore agrees that the parties hereto shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which the
parties hereto may be entitled at law or in equity.
11.14. Consent to Jurisdiction
Each party to this Agreement: (v) agrees to commence any action, suit
or proceeding relating hereto either in a federal court located in the State of
Delaware or in a Delaware state court; (w) irrevocably submits and consents to
personal jurisdiction in any such suit; (x) agrees that any service of process,
summons, notice or document delivered by U.S. registered mail to such party's
respective address set forth in Section 11.8 above shall be effective service of
process for any action, suit or proceeding in Delaware with respect to any
matters to which such party has submitted to jurisdiction in this Section 11.14;
(y) irrevocably and unconditionally waives any objection to the laying of venue
of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in (i) any Delaware state court or (ii) any
federal court located in the State of Delaware; and (z) irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES TRIAL
BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT.
11.15. Litigation Costs
If any litigation with respect to the obligations of the
parties under this Agreement results in a final nonappealable order of a court
of competent jurisdiction that results in a final disposition of such
litigation, the prevailing party, as determined by the court ordering such
disposition, shall be entitled to reasonable attorneys' fees as shall be
determined by such court. Contingent or other percentage compensation
arrangements shall not be considered reasonable attorneys' fees.
[signature pages follow]
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the parties hereto as of the day first above written.
RECKSON SERVICE INDUSTRIES, INC.
By: _____________________________________
Name: ____________________________________
Title: __________________________________
Number of Shares of Common Stock
Owned of Record: _______________________
HQ GLOBAL WORKPLACES, INC.,
By: _____________________________________
Name: ____________________________________
Title: __________________________________
HOLDERS
CARRAMERICA REALTY CORPORATION
By: _____________________________________
Name: ____________________________________
Title: __________________________________
Number of Shares of Common Stock
Owned of Record: _______________________
__________________________________________
[Stockholder Name]
Date of Execution: ______________________
Number of Shares of Common Stock
Owned of Record: ______________________
__________________________________________
[Stockholder Name]
Date of Execution: ______________________
Number of Shares of Common Stock
Owned of Record: ______________________
__________________________________________
[Stockholder Name]
Date of Execution: ______________________
Number of Shares of Common Stock
Owned of Record: ______________________
__________________________________________
[Stockholder Name]
Date of Execution: ______________________
Number of Shares of Common Stock
Owned of Record: ______________________
__________________________________________
[Stockholder Name]
Date of Execution: ______________________
Number of Shares of Common Stock
Owned of Record: ______________________
__________________________________________
[Stockholder Name]
Date of Execution: ______________________
Number of Shares of Common Stock
Owned of Record: ______________________
<PAGE>
EXHIBIT A
Lease Guarantees
1. San Mateo
Metro Corporation Center - Landlord
1840 Gateway Drive, 2nd Floor
Lease Ends: 3/31/05
Renewal Option: 3/31/12
2. San Jose
Kattelus Development Corp. - Landlord
2550 N. First St., Suite 301
Lease Ends: 10/31/08
Renewal Option: 10/31/13
3. One Liberty Plaza
New York, New York
Bank of Nova Scotia - Landlord
Lease Ends: 3/31/08
Renewal Option: 9/30/13
4. 590 Madison Avenue
590 Madison Avenue Associates L.P. - Landlord
Lease Ends: 9/30/07
Renewal Option: None
Exhibit 10.3
---------------------------------------------------
STOCK PURCHASE AGREEMENT
between
CARRAMERICA REALTY CORPORATION
and
RECKSON SERVICE INDUSTRIES, INC.
---------------------------------------------------
Dated as of January 20, 2000
---------------------------------------------------
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of January 20, 2000, by and among
CarrAmerica Realty Corporation, a Maryland corporation ("CarrAmerica" or
"Seller"), and any additional stockholders who become parties to this
Agreement pursuant to Section 24 hereof, on the one hand, and Reckson Service
Industries, Inc., a Delaware corporation (the "Buyer"), on the other hand.
WHEREAS, Seller desires to sell to the Buyer, and the Buyer desires
to purchase from the Seller, a total of 4,226,116 shares of nonvoting common
stock, par value $.01 per share (the "Non-Voting Common Stock"), of HQ Global
Workplaces Inc., a Delaware corporation (the "Company") for an amount in cash
equal to $35.13 per share (such amount, as recalculated at Closing pursuant to
Annex A, the "Consideration"), such number of shares of Non-Voting Common
Stock being subject to adjustment as hereinafter provided.
WHEREAS, simultaneously with the execution and delivery of this
Agreement, (i) HQ and CarrAmerica, on the one hand, and VANTAS Incorporated, a
Nevada Corporation ("VANTAS"), and Buyer, on the other hand, have entered into
an Agreement and Plan of Merger (the "Merger Agreement") that provides for the
merger, subject to and upon the terms and conditions set forth therein, of
VANTAS with and into the Company immediately prior to the closing of the
transactions contemplated hereby and (ii) CarrAmerica and VANTAS have entered
into that certain Stock Purchase Agreement providing for the acquisition,
subject to and upon the terms and conditions set forth therein, of certain
shares of nonvoting common stock of OmniOffices (UK) Limited ("Omni UK") and
OmniOffices (Lux) 1929 Holding Company S.A. ("LuxCo") owned by CarrAmerica and
certain promissory notes evidencing loans made by CarrAmerica to Omni UK and
LuxCo simultaneously with the closing of the transactions contemplated hereby.
WHEREAS, capitalized words and phrases used but not otherwise defined
herein shall have the meanings ascribed to them under the Merger Agreement.
Accordingly, the Seller and the Buyer hereby agree as follows:
1. Purchase and Sale of the Shares. On the terms and subject to the
conditions of this Agreement, Seller shall sell, transfer and deliver or cause
to be sold, transferred and delivered to the Buyer, and the Buyer shall
purchase from Seller, free and clear of all liens, charges, claims, rights and
encumbrances of any kind, the number of shares of Non-Voting Common Stock set
forth opposite Seller's name on Exhibit A attached hereto (for Seller, such
number of shares being Seller's "Shares") for the Consideration, payable as
set forth below in Section 2.
2. Closing. The closing (the "Closing") of the purchase and sale of
the Shares shall be held at the offices of Brown & Wood LLP, One World Trade
Center, New York, New York 10048, immediately after and on the same date as
the Closing under the Merger Agreement, subject to the satisfaction or waiver
of the conditions set forth in Section 8 hereof. The date on which the Closing
shall occur is hereinafter referred to as the "Closing Date." At the Closing,
(i) the Buyer shall deliver to Seller, by wire transfer to a bank account
designated in writing by Seller at least two business days prior to the
Closing Date, immediately available funds in an amount equal to the product of
the Consideration and the number of Seller's Shares, subject to adjustment as
hereinafter provided, and (ii) Seller shall deliver or cause to be delivered
to the Buyer one or more certificates representing Seller's Shares, duly
endorsed in blank or accompanied by stock powers duly endorsed in blank in
proper form for transfer, with appropriate transfer stamps, if any, affixed.
3. Recalculation of Number of Shares and Consideration.
Notwithstanding anything to the contrary contained herein, at the Closing and
as of the Closing Date, the number of Shares to be sold in the aggregate by
the Seller and each additional stockholder who becomes a party hereto pursuant
to Section 24 and the Consideration shall be adjusted in accordance with Annex
A.
4. Representations and Warranties of Seller. Seller hereby represents
and warrants to the Buyer as follows:
(a) Organization and Standing. Seller is duly organized, validly
existing and in good standing under the laws of its state of organization; has
all requisite corporate power and authority necessary to carry on its business
as presently conducted and to enable it to own, lease or otherwise hold its
properties and assets; and is duly qualified to do business and is in good
standing in each jurisdiction in which the conduct or nature of its business
or the ownership, leasing or holding of its properties or assets makes such
qualification necessary, except such jurisdictions where the failure to be so
qualified or in good standing, individually or in the aggregate, would not
have a material adverse effect on the business, financial condition or results
of operations of Seller and its subsidiaries, taken as a whole (a "Seller
Material Adverse Effect").
(b) Authority. Seller has all requisite corporate power and
authority to enter into this Agreement, to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby. All
corporate acts and other proceedings required to be taken by Seller to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
properly taken. This Agreement has been duly executed and delivered by Seller
and constitutes a legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms except insofar as enforcement
thereof may be limited by bankruptcy, insolvency or other laws relating to or
affecting enforcement of creditors' rights generally including such general
equity principles as may apply in the enforcement of creditors' rights.
(c) Ownership of Capital Stock of the Company; the Shares. (i)
Seller is the record and beneficial owner of the number of Shares set forth
opposite Seller's name on Exhibit A hereto. Seller has good and valid title to
Seller's Shares, in each case free and clear of any liens, charges, claims,
rights or encumbrances of any kind, except as may have been created by the
Buyer.
(ii) Assuming the Buyer is a "bona fide purchaser" within
the meaning of the Uniform Commercial Code of the State of New York, upon
delivery to the Buyer at the Closing of certificates representing such Shares,
duly endorsed by Seller for transfer to the Buyer, and upon the Seller's
receipt of the Consideration, good and valid title to such Shares will pass to
the Buyer, free and clear of any liens, charges, claims, rights or
encumbrances of any kind except as may have been created by the Buyer. Other
than (i) this Agreement, (ii) the Amended and Restated Stockholders Agreement
dated as of September 29, 1998 by and among the Company, Seller and certain
other stockholders of the Company (the "Existing Stockholders Agreement") and
(iii) the Stockholders Agreement to be executed in connection with the Closing
hereunder, none of the Shares are subject to any agreement, contract,
commitment, understanding or arrangement, including any such agreement,
contract, commitment, understanding or arrangement restricting or otherwise
relating to the voting, dividend rights or disposition of the Shares.
(d) No Conflicts; Consents. The execution and delivery of this
Agreement by Seller does not, and the consummation of the transactions
contemplated hereby and compliance by Seller with the terms hereof will not,
conflict with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any lien, charge or
encumbrance of any kind upon any of the Shares being sold by Seller under, any
provision of (i) the articles of incorporation or by-laws or equivalent
organizational document of Seller, (ii) except for the Existing Stockholders
Agreement, which shall have been terminated by the Effective Time, any
material note, bond, mortgage, indenture, deed of trust, loan document,
license, lease, contract, commitment, agreement or arrangement to which Seller
is a party or by which Seller or any of its properties or assets is bound or
(iii) any judgment, order or decree, or statute, law, ordinance, rule or
regulation, applicable to Seller or any of its properties or assets. No
consent, approval, license, permit, order or authorization of, or
registration, declaration or filing with, any Federal, state, local or foreign
government or any court of competent jurisdiction, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, or any national securities or commodities exchange or other
regulatory or self-regulatory body or association (a "Governmental Entity") is
required to be obtained or made by or with respect to such Seller in
connection with the execution, delivery and performance of this Agreement by
such Seller or the consummation of the transactions contemplated hereby, other
than compliance with and filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"), if applicable.
5. Representations and Warranties of the Buyer. The Buyer hereby
represents and warrants to the Seller as follows:
(a) Organization and Standing. The Buyer is duly organized,
validly existing and in good standing under the laws of the State of Delaware;
has all requisite power and authority necessary to carry on its business as
presently conducted and to enable it to own, lease or otherwise hold its
properties and assets; and is duly qualified to do business and is in good
standing in each jurisdiction in which the conduct or nature of its business
or the ownership, leasing or holding of its properties or assets makes such
qualification necessary, except such jurisdictions where the failure to be so
qualified or in good standing, individually or in the aggregate, would not
have a material adverse effect on the business, financial condition or results
of operations of the Buyer and its Subsidiaries, taken as a whole (a "Buyer
Material Adverse Effect").
(b) Authority. The Buyer has all requisite corporate power and
authority to enter into this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. All corporate acts and
other proceedings required to be taken by the Buyer to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly and properly taken. This
Agreement has been duly executed and delivered by the Buyer and constitutes a
legal, valid and binding obligation of the Buyer, enforceable against the
Buyer in accordance with its terms except insofar as enforcement thereof may
be limited by bankruptcy, insolvency or other laws relating to or affecting
enforcement of creditors' rights generally including such general equity
principles as may apply in the enforcement of creditors' rights.
(c) No Conflicts; Consents. The execution and delivery of this
Agreement by the Buyer does not, and the consummation of the transactions
contemplated hereby and compliance by the Buyer with the terms hereof will
not, conflict with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any lien, charge or
encumbrance of any kind upon any of the properties or assets of the Buyer
under, any provision of (i) the certificate of incorporation or by-laws of the
Buyer, (ii) any material note, bond, mortgage, indenture, deed of trust, loan
document, license, lease, contract, commitment, agreement or arrangement to
which the Buyer is a party or by which it or any of its properties or assets
is bound or (iii) any judgment, order or decree, or statute, law, ordinance,
rule or regulation, applicable to the Buyer or any of its properties or
assets. No consent, approval, license, permit, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required
to be obtained or made by or with respect to the Buyer in connection with the
execution, delivery and performance of this Agreement by the Buyer or the
consummation of the transactions contemplated hereby, other than compliance
with and filings under the HSR Act.
6. Covenants of the Seller.
(a) Seller agrees that (other than pursuant to the Merger
Agreement) it shall not, and shall not agree to, (i) sell, assign, dispose of,
encumber, mortgage, hypothecate or otherwise transfer (collectively,
"Transfer") any of its Shares to any person or entity.
(b) Each holder of Voting Common Stock (as defined herein) who
becomes a party hereto pursuant to Section 24 hereof hereby irrevocably and
unconditionally agrees (a) to vote or to cause to be voted all shares of
Voting Common Stock owned by such Seller at any annual or special meeting of
shareholders of the Company where such matters arise in favor of, and, if
applicable, deliver a consent in lieu of a meeting to, the approval and
adoption of the Merger Agreement and the transactions contemplated by the
Merger Agreement, and (b) to vote or to cause to be voted all shares of Voting
Common Stock owned by such Seller at any annual or special meeting of
shareholders of the Company where such matters arise, against, and if
applicable, withhold its consent in lieu of a meeting to (i) any proposal made
in opposition to or in competition with the Merger or any of the other
transactions contemplated by the Merger Agreement, (ii) any merger,
consolidation, sale of assets, business combination, share exchange,
reorganization or recapitalization of the Company or any of its subsidiaries,
with or involving any party other than Buyer (iii) any liquidation or winding
up of the Company (iv) any extraordinary dividend by the Company, (v) any
change in the capital structure of the Company (other than as contemplated by
the Recapitalization pursuant to the Merger Agreement) and (vi) any other
action that may reasonably be expected to impede, interfere with, delay,
postpone or attempt to discourage the Merger or the other transactions
contemplated by the Merger Agreement or result in a breach of any of the
covenants, representations, warranties or other obligations or agreements of
the Company under the Merger Agreement which would cause the Company not to
satisfy the condition set forth in Section 9(c)(i) of the Merger Agreement.
(c) Publicity. From the date of the execution and delivery of
this Agreement through the Closing, no public release or announcement
concerning the transactions contemplated hereby shall be issued by Seller
without the prior consent of the Buyer (which consent shall not be
unreasonably withheld), except as such release or announcement may be required
by law or the rules or regulations of any United States or foreign securities
exchange, in which case the party required to make the release or announcement
shall, if practicable, allow the Buyer, as the case may be, reasonable time to
comment on such release or announcement in advance of such issuance.
7. Mutual Covenants.
(a) Consummation of the Transactions. Subject to the terms and
conditions of this Agreement, each party shall use its commercially reasonable
efforts to cause the Closing to occur upon the terms and conditions hereof.
The Seller shall cooperate with the Buyer, and the Buyer shall cooperate with
the Seller and the Company in filing any necessary applications, reports or
other documents with, giving any notices to, and seeking any consents from,
all Governmental Entities and all third parties as may be required in
connection with the consummation of the transactions contemplated by this
Agreement.
8. Conditions to Closing.
(a) Each Party's Obligation. The respective obligation of each
party hereto to effect the transactions contemplated hereby is subject to the
satisfaction or waiver as of the Closing of the following conditions: (i) no
statute, rule, regulation, executive order, decree, temporary restraining
order, preliminary or permanent injunction or other order shall have been
enacted, entered, promulgated, enforced or issued by any Governmental Entity
that prohibits the purchase and sale of the Shares or any of the other
material transactions contemplated by this Agreement and (ii) no action,
claim, proceeding or investigation shall be pending or threatened by any
Governmental Entity (other than a court acting in response to an action, claim
or proceeding brought by a non-Governmental Entity) that, if successful, would
result in any of the foregoing effects.
(b) The Seller's Obligation. The obligation of the Seller to
sell and deliver the Shares to the Buyer is subject to the satisfaction (or
waiver by the Seller) as of the Closing of the following conditions:
(i) The representations and warranties of the Buyer made in
this Agreement shall be true and correct as of the date hereof and as of the
time of the Closing as though made as of such time except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties shall be true and correct on and as
of such earlier date), and the Buyer shall have duly performed, complied with
and satisfied in all material respects all covenants, agreements and
conditions required by this Agreement to be performed, complied with or
satisfied by the Buyer by the time of Closing except where the failure of such
representations and warranties to be true and correct and/or the failure to
perform, comply with and satisfy such covenants, agreements and conditions
would not constitute a Company Transaction Value Impairment. The Buyer shall
have delivered to the Seller a certificate dated the Closing Date and signed
by an officer of the Buyer confirming the foregoing.
(ii) The transactions contemplated by the Merger Agreement
shall have been consummated immediately prior to the Closing hereunder.
(c) The Buyer's Obligation. The obligation of the Buyer to
purchase the Shares from the Seller is subject to the satisfaction (or waiver
by the Buyer) as of the Closing of the following conditions:
(i) The representations and warranties of the Seller made
in this Agreement shall be true and correct as of the date hereof and as of
the time of the Closing as though made as of such time, except to the extent
such representations and warranties expressly relate to an earlier date (in
which case such representations and warranties shall be true and correct on
and as of such earlier date), and the Seller shall have duly performed,
complied with and satisfied in all material respects all covenants, agreements
and conditions required by this Agreement to be performed, complied with or
satisfied by the Seller by the time of Closing except where the failure of
such representations and warranties to be true and correct and/or the failure
to perform, comply with and satisfy such covenants, agreements and conditions
would not constitute a VANTAS Transaction Value Impairment (other than those
contained in Sections 4(b) and 4(c), which shall be true and correct). Seller
shall have delivered to the Buyer a certificate dated the Closing Date and
signed by Seller confirming the foregoing.
(ii) The transactions contemplated by the Merger Agreement
shall have been consummated immediately prior to the Closing hereunder.
(d) Frustration of Closing Conditions. Neither Seller nor the
Buyer may rely on the failure of any condition set forth in Section 8(a),
Section 8(b) or Section 8(c), respectively, to be satisfied if such failure
was caused by such party's failure to perform its obligations hereunder or to
use its commercially reasonable efforts to cause the Closing to occur as
required by Section 7(a).
9. Further Assurances. From time to time, as and when requested by
another party hereto, a party hereto shall execute and deliver, or cause to be
executed and delivered, all such documents and instruments and shall take, or
cause to be taken, all such further or other actions as such other party may
reasonably deem necessary or desirable to consummate the transactions
contemplated by this Agreement.
10. Assignment. This Agreement and the rights and obligations
hereunder shall not be assignable or transferable by (i) Seller without the
prior written consent of the Buyer or (ii) by the Buyer without the prior
written consent of Seller; provided, however, that the Buyer may assign its
right to purchase the Shares hereunder without the prior written consent of
the Seller including without limitation an assignment to the HQ Surviving
Corporation; provided, that such assignment shall not limit or affect Buyer's
obligations hereunder; and provided, further, that any party hereto may assign
its rights and obligations hereunder in connection with a merger,
consolidation or other similar business combination involving such party or a
sale of all or substantially all of such party's assets. Any attempted
assignment in violation of this Section 10 shall be void ab initio and of no
further force and effect.
11. No Third-Party Beneficiaries. This Agreement is for the sole
benefit of the parties hereto and their successors and permitted assigns, and
nothing herein expressed or implied shall give or be construed to give to any
person, other than the parties hereto and such permitted successors and
assigns, any legal or equitable rights hereunder.
12. Termination. (a) Anything contained herein to the contrary
notwithstanding, this Agreement shall automatically terminate upon termination
of either the Merger Agreement or the UK Agreement. In addition, anything
contained herein to the contrary notwithstanding, this Agreement may be
terminated and the transactions contemplated hereby abandoned at any time
prior to the Closing:
(i) by mutual written consent of the Seller and the Buyer;
(ii) by the Seller if the Company has the right to
terminate the Merger Agreement in accordance with its terms;
(iii) by RSI if VANTAS has the right to terminate the
Merger Agreement in accordance with its terms;
(iv) by the Seller or Buyer (provided, however, in the case
of Buyer, only if Buyer has given the Seller at least five business days'
prior written notice of its intention to terminate pursuant to this Section
12(a)(iv), which notice may not be given prior to May 1, 2000), if the Closing
does not occur on or prior to April 30, 2000;
(v) by the Seller or Buyer at any time prior to the
Closing, if any Governmental Entity shall have issued a judgment, order or
decree or taken any other action permanently enjoining, restraining or
otherwise prohibiting the purchase of the Shares or any of the other material
transactions contemplated by this Agreement, and such judgment, order or
decree or other action shall have become final and nonappealable;
(vi) by the Buyer, to the extent that the representations
made by the Seller and one or more Additional Stockholder Parties hereto, if
any, contained in Sections 4(b) and 4(c) relating (i) to any Shares of Voting
Common Stock or (ii) to any Shares of Non-Voting Common Stock representing in
the aggregate 5% or more of the outstanding shares of Non-Voting Common Stock,
are not true and correct or become untrue and correct and are incapable of
being rendered true and correct.
(b) In the event of termination of this Agreement by Seller or
the Buyer pursuant to this Section 12, written notice thereof setting forth
the reasons therefor shall forthwith be given to the other parties (including
any Additional Stockholder Parties hereto) and the transactions contemplated
by this Agreement shall be terminated, without further action by any party.
(c) If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this Section 12, this
Agreement shall become void ab initio and of no further force or effect,
except for the provisions of (i) Section 6(c) relating to publicity, (ii) this
Section 12 and (iii) Section 13 relating to certain expenses. Nothing in this
Section 12 shall be deemed to release any party from any liability for any
breach by such party of the terms and provisions of this Agreement, the UK
Agreement or the Merger Agreement.
13. Expenses. Whether or not the transactions contemplated hereby are
consummated, and except as otherwise specifically provided in this Agreement,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
costs or expenses.
14. Amendments. No amendment, modification or waiver in respect of
this Agreement shall be effective unless it shall be in writing and signed by
the party against whom such amendment, modification or waiver is asserted.
15. Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent by prepaid telex, cable or telecopy or sent, postage prepaid, by
registered, certified or express mail or reputable overnight courier service
and shall be deemed given when so delivered by hand, telexed, cabled or
telecopied, or if mailed, three days after mailing (one business day in the
case of express mail or overnight courier service), as follows:
(i) if to the Seller,
CarrAmerica Realty Corporation
1850 K Street, NW
Washington, D.C. 20006
Telecopy No: 202-729-1160
Attention: Linda Madrid, General Counsel
with a copy to:
Hogan & Hartson, L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Telecopy No: (202) 637-5910
Attention: J. Warren Gorrell, Jr.
David W. Bonser; and
(ii) if to the Buyer,
Reckson Service Industries, Inc.
10 East 50th Street
Suite 2700
New York, NY 10022
Telecopy No: (212) 931-8001
Attention: Scott H. Rechler
Jason M. Barnett
with copies to:
Brown & Wood LLP
One World Trade Center
New York, NY 10048
Telecopy No: (212) 839-5599
Attention: Joseph W. Armbrust, Jr.
J. Gerard Cummins
or such other address as any party may from time to time specify by written
notice to the other parties hereto.
16. Interpretation; Exhibits and Schedules. The headings contained in
this Agreement and in any Exhibit to this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. All Exhibits and Annexes annexed hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth in
full herein. Any capitalized term used in any Exhibit or Annex but not
otherwise defined therein shall have the meaning ascribed to it in this
Agreement. This Agreement is gender neutral. Any word in this Agreement that
refers to a particular gender shall also refer to all other genders, including
masculine, feminine and neuter.
17. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other parties.
18. Litigation Costs. If any litigation with respect to the
obligations of the parties under this Agreement results in a final
nonappealable order of a court of competent jurisdiction that results in a
final disposition of such litigation, the prevailing party, as determined by
the court ordering such disposition, shall be entitled to reasonable
attorneys' fees as shall be determined by such court. Contingent or other
percentage compensation arrangements shall not be considered reasonable
attorneys' fees.
19. Entire Agreement. This Agreement contains the entire agreement
and understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating
to such subject matter. The parties hereto shall not be liable or bound to any
other party in any manner by any representations, warranties or covenants
relating to such subject matter except as specifically set forth herein.
20. Brokers. Each party hereto hereby represents and warrants that no
brokers or finders have acted for such party in connection with this Agreement
except for Goldman, Sachs & Co. on behalf of CarrAmerica and Warburg Dillon
Read on behalf of the Buyer.
21. Severability. If any provision of this Agreement (or any portion
thereof) or the application of any such provision (or any portion thereof) to
any person or circumstance shall be held invalid, illegal or unenforceable in
any respect by a court of competent jurisdiction, such invalidity, illegality
or unenforceability shall not affect any other provision hereof (or the
remaining portion thereof) or the application of such provision to any other
persons or circumstances.
22. Consent to Jurisdiction. The Buyer and the Seller agree to
commence any action, suit or proceeding arising out of this Agreement or
transactions contemplated hereby against the other party either in a federal
court located in the State of Delaware or if such suit, action or other
proceeding may not be brought in such court for jurisdictional reasons, in a
Delaware state court. Each party to this Agreement submits and consents to
personal jurisdiction in any such litigation. The Buyer and the Seller further
agree that service of any process, summons, notice or document delivered by
U.S. registered mail to such party's respective address set forth above shall
be effective service of process for any action, suit or proceeding in Delaware
with respect to any matters to which it has submitted to jurisdiction in this
Section 22. The Buyer and the Seller irrevocably and unconditionally waive any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement or the transactions contemplated hereby in (i) any Delaware
state court or (ii) any federal court located in the State of Delaware, and
hereby further irrevocably and unconditionally waives and agrees not to plead
or claim in any such court that any such action, suit or proceeding brought in
any such court has been brought in an inconvenient forum. EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT.
23. Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Delaware applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
24. Additional Signature Parties. At any time after the date hereof
and prior to five (5) business days prior to the Closing, any other holder of
Non-Voting Common Stock or any holder of voting common stock, par value $.01
per share (the "Voting Common Stock "), of the Company as of the date hereof
shall be permitted to execute and deliver to the Buyer an Additional Party
Signature Page substantially in the form of Annex B hereto (each such
stockholder who executes and delivers to the Buyer such document, an
"Additional Stockholder Party"), pursuant to which such Additional Stockholder
Party shall be entitled, subject to the terms and conditions herein, to become
a "Seller" for all purposes of this Agreement, and shall be entitled to sell
to Buyer the number of shares of Non-Voting Common Stock or Voting Common
Stock, as applicable, held by such Additional Stockholder Party and set forth
on such Additional Party Signature Page on the same terms as set forth in this
Agreement, and shall be deemed to have made the representations and warranties
of Seller herein and be bound by the other agreements of Seller herein. To the
extent that any Additional Stockholder Party elects to sell shares of
Non-Voting Common Stock or Voting Common Stock, as applicable, the number of
shares of Non-Voting Common Stock to be sold by CarrAmerica pursuant to this
Agreement shall be decreased by the number of shares to be sold by such
Additional Stockholder Party, it being intended that the Buyer shall be
entitled to and required to purchase only the number of shares, in the
aggregate including CarrAmerica and all Additional Stockholder Parties, shown
as being proposed to be sold by CarrAmerica on Exhibit A as delivered on the
date hereof; provided that, notwithstanding anything to the contrary contained
herein, in the event any Additional Stockholder Party shall breach any
representation or warranty or otherwise fail to perform any of its obligations
under this Agreement, CarrAmerica shall have the right to make such
representation or warranty and otherwise perform such obligations on behalf of
such Additional Stockholder Party.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first written above.
CARRAMERICA REALTY CORPORATION
By: /s/ Karen Dorigan
_________________________________
Name: Karen Dorigan
Title: Managing Director
RECKSON SERVICE INDUSTRIES, INC.
By: /s/ Jason Barnett
____________________________
Name: Jason Barnett
Title: E.V.P.
<PAGE>
Exhibit A
Number of Shares Sold
---------------------
CarrAmerica Realty Corporation 4,226,116 shares of non-voting
common stock
<PAGE>
Annex A
The total Consideration payable to the Seller and any additional stockholder
who becomes a party hereto pursuant to Section 24 shall be increased by the
product of (x) ___% and (y) the sum of (i) all severance payments paid or
payable by VANTAS to employees pursuant to written employment agreements in
effect on the date hereof, and (ii) the total amount of cash paid pursuant to
Section 1(i)(i) of the Merger Agreement, and shall be decreased by the product
of (w)___% and (z) the sum of (i) all severance payments paid or payable by
the Company to employees pursuant to written employment agreements in effect
on the date hereof and (ii) the total amount of cash paid or payable to the
holders of Company stock options and/or warrants who have become entitled to
such payments as a result of the execution of the Merger Agreement or the
consummation of the Merger to such payments (the net effect of such increase
and decrease is referred to herein as the "Net Adjustment"). In the event
additional stockholders of the Company become parties to this Agreement
pursuant to Section 24, the Net Adjustment shall be allocated among the Seller
and all such additional stockholders pro rata in the same proportion that the
total Consideration to be paid to Seller and each such stockholder bears to
the aggregate amount payable under this Agreement before giving effect to this
Annex A.
<PAGE>
Annex B
The undersigned, desiring to sell _____ shares of its [Voting Common
Stock/Non-Voting Common Stock] to Reckson Service Industries, Inc., a Delaware
corporation ("RSI"), pursuant to the terms and conditions of that certain
Stock Purchase Agreement (the "Stock Purchase Agreement"; capitalized terms
not defined herein having the meanings ascribed therein), dated as of January
__, 2000, by and between RSI and CarrAmerica, hereby agrees, pursuant to
Section 24 of the Stock Purchase Agreement, to (i) become a party to the Stock
Purchase Agreement, and to be bound to all of the terms and conditions thereof
as a Seller, including without limitation the representations, warranties and
agreements therein and (ii) pay its pro rata share of expenses incurred by the
Company [and CarrAmerica on behalf of the Company] in connection with the
consummation of the transactions contemplated by the Stock Purchase Agreement.
Notwithstanding anything to the contrary contained in the Stock Purchase
Agreement, in the event the undersigned shall breach any representation or
warranty or otherwise fail to perform one of its obligations under the Stock
Purchase Agreement, CarrAmerica shall have the right to make such
representation or warranty and otherwise perform such obligations on behalf of
the undersigned. The undersigned agrees that this signature page may be
attached to any counterpart of said Stock Purchase Agreement.
------------------------------------
By: _________________________________
Name:
Title:
As of _____________, 2000
Exhibit 10.4
- --------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
Among
CarrAmerica Realty Corporation,
OmniOffices (UK) Limited (solely for purposes of Article II,
Article IV and Article V)
and
OmniOffices (Lux) 1929 Holding Company S.A. (solely for purposes of Article II,
Article IV
and Article V),
on the one hand
and
VANTAS Incorporated,
Reckson Services Industries, Inc.
(solely for purposes of Section 5.4, 6.2 and Article XXI)
on the other hand
Dated as of January 20, 2000
- --------------------------------------------------------------------------------
Table of Contents
PAGE
ARTICLE I
The Transactions
Section 1.1 The Transactions...................................................2
Section 1.2 The Closing........................................................2
ARTICLE II
Representations and Warranties of CarrAmerica, OMNI UK and LuxCo
Section 2.1 Organization and Standing; Books and Records.......................2
Section 2.2 Authority..........................................................3
Section 2.3 No Conflicts; Consents.............................................3
Section 2.4 Capital Stock of the Companies.....................................4
Section 2.5 Equity Interests...................................................5
Section 2.6 Investment Companies...............................................5
Section 2.7 Restrictions and Agreements........................................5
Section 2.8 Financial Statements; Undisclosed Liabilities......................5
Section 2.9 Absence of Changes or Events.......................................6
Section 2.10 Taxes.............................................................7
Section 2.11 Assets Other than Real Property Interests.........................8
Section 2.12 Real Property.....................................................8
Section 2.13 Contracts........................................................11
Section 2.14 Litigation.......................................................13
Section 2.15 Insurance........................................................13
Section 2.16 Benefit Plans....................................................13
Section 2.17 Compliance with Applicable Laws..................................15
Section 2.18 Labor Matters....................................................15
Section 2.19 Transactions with Affiliates.....................................16
Section 2.20 Corporate Name...................................................16
Section 2.21 Customers........................................................16
Section 2.22 Intellectual Property............................................16
Section 2.24 Brokers..........................................................19
Section 2.25 Competition......................................................19
Section 2.26 Data Protection..................................................19
Section 2.27 Equivalence......................................................19
ARTICLE III
Representations and Warranties of VANTAS
Section 3.1 Organization and Standing.........................................20
Section 3.2 Authority.........................................................21
Section 3.3 No Conflicts; Consents............................................21
ARTICLE IV
Agreements of OMNI UK and LuxCo
Section 4.1...................................................................21
ARTICLE V
Mutual Covenants
Section 5.1 Consummation of the Transactions..................................25
Section 5.2 Publicity.........................................................25
ARTICLE VI
Conditions to Closing
Section 6.1 Each Party's Obligation...........................................26
Section 6.2 CarrAmerica's Obligation..........................................26
Section 6.3 VANTAS' Obligation................................................26
Section 6.4 Frustration of Closing Conditions.................................27
ARTICLE VII
Further Assurances............................................................27
ARTICLE VIII
Assignment....................................................................27
ARTICLE IX
Third-Party Beneficiaries.....................................................28
ARTICLE X
Termination...................................................................28
ARTICLE XI
Intentionally Omitted
ARTICLE XII
Amendments....................................................................29
ARTICLE XIII
Notices.......................................................................29
ARTICLE XIV
Interpretation; Exhibits and Schedules........................................31
ARTICLE XV
Counterparts..................................................................31
ARTICLE XVI
Litigation Costs..............................................................31
ARTICLE XVII
Entire Agreement..............................................................32
ARTICLE XVIII
Intentionally Omitted
ARTICLE XIX
Severability..................................................................32
ARTICLE XX
Consent to Jurisdiction.......................................................32
ARTICLE XXI
Governing Law.................................................................33
ARTICLE XXII
Disclosure Schedules..........................................................33
ARTICLE XXIII
Exclusive Remedy..............................................................33
<PAGE>
SCHEDULES AND EXHIBITS
Exhibit A Shares
Exhibit B Notes
Schedule 2.1 Organization and Standing; Books and Records
Schedule 2.4 Capital Stock of the Companies
Schedule 2.5 Equity Interests
Schedule 2.7 Restrictions and Agreements
Schedule 2.8 Financial Statements; Undisclosed Liabilities
Schedule 2.9 Absence of Changes or Events
Schedule 2.11 Assets Other than Real Property Interests
Schedule 2.12 Real Property
Schedule 2.13 Contracts
Schedule 2.14 Litigation
Schedule 2.15 Insurance
Schedule 2.16 Benefit Plans
Schedule 2.17 Compliance with Applicable Laws
Schedule 2.18 Labor Matters
Schedule 2.19 Transactions with Affiliates
Schedule 2.21 Customers
Schedule 2.22 Intellectual Property
Schedule 2.23 Environmental Liability
<PAGE>
INDEX TO DEFINED TERMS
Term Page Number
- ---- -----------
Affiliate 16
Agreement 1
Applicable Laws 14
Assumption Agreement 26
Balance Sheets 6
Benefit Plans 14
Bona Fide Purchaser 4
Buyer 1
Cap Ex Budgets 22
CarrAmerica 1
Closing 2
Closing Date 2
Companies 1
Consideration
Contracts 13
Control 16
Controlled 16
Controlling 16
Customers 16
Environment 17
Financial Statements 6
Financing Materials 21
Governmental Entity 4
Hazardous Substance 17
HQ 1
HQ Merger 1
Inland Revenue 7
Intellectual Property 16
Investment Company Act 5
Lambert Smith Hampton 16
Lambert Smith Hampton Group Limited 16
Loan Consideration 2
Loan Notes 26
Loans 1
LuxCo 1
LuxCo Owned Properties 9
LuxCo Property(ies) 9
LuxCo Real Property Lease 9
Lux Non-Voting Common Stock 1
MAM Investment 19
Material Adverse Effect 3
Merger Agreement 1
Notes 1
Offices in the City of Vienna 16
Omni Offices 16
Omni Offices (LUX) 1929 Holding Company S.A. 16
OmniUK 1
OmniUK Property(ies) 9
OmniUK Real Property Lease 9
Permit 17
Permitted Liens 8
Phantom 3
Pre-Closing Tax Period 7
Relevant Law 17
RSI 1
Seller 1
Share Consideration 1
Shares 1
Summary 25
Stock Purchase Agreement 1
Subsidiary 3
Tax 7
Taxes 7
Tax Return 7
Total Consideration 2
UK Non-Voting Common Stock 1
VANTAS 1
<PAGE>
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of January 20, 2000
between CarrAmerica Realty Corporation, a Maryland corporation ("CarrAmerica"
or "Seller"), OmniOffices (UK) Limited, a corporation formed under the laws of
England ("Omni UK") (solely for purposes of Article II, Article IV and Article
V) and OmniOffices (Lux) 1929 Holding Company S.A., a corporation formed under
the laws of Luxembourg, ("LuxCo" and together with Omni UK, collectively, the
"Companies") (solely for purposes of Article II, Article IV and Article V) on
the one hand, and VANTAS Incorporated, a Nevada corporation ("Buyer" or
"VANTAS"), and Reckson Services Industries, Inc., a Delaware corporation
("RSI") (solely for purposes of Section 5.4, 6.2 and Article XXI), on the
other hand.
W I T N E S S E T H:
WHEREAS, CarrAmerica own shares of the capital stock of each of (i) OMNI
UK and (ii) LuxCo;
WHEREAS, CarrAmerica has made certain loans to OMNI UK and LuxCo as
described on Exhibit B attached hereto (the "Loans") which Loans are evidenced
by promissory notes, the dates and denominations of which are set forth on
Exhibit B (the "Notes");
WHEREAS, CarrAmerica desires to sell and transfer to VANTAS and VANTAS
desires to purchase from CarrAmerica (i) 2,006,066 shares of non-voting common
stock, par value (pound).01 per share, of OMNI UK (which represents
approximately 95% of the equity interest in Omni UK) (the "UK Non-Voting
Common Stock") and 144 shares of non-voting common stock, par value $250 per
share, of LuxCo (which represents approximately 95% of the equity interest in
LuxCo) (the "Lux Non-Voting Common Stock"; and together with the UK Non-Voting
Common Stock, collectively, the "Shares") owned of record by the Seller for
$23,972,306 in cash payable in accordance with Section 1.2 (such amount based
on assumed Loan Consideration of $44,995,277 and subject to recalculatation at
Closing pursuant to Annex A, the "Share Consideration") and (ii) the Notes in
exchange for an amount equal to the principal amount of, and any accrued and
unpaid interest with respect to, the Notes as of the Closing Date in
accordance with Section 1.2 (the "Loan Consideration");
WHEREAS, CarrAmerica desires to assume certain obligations of Omni UK
upon the terms set forth in Section 5.3;
WHEREAS, simultaneously with the execution and delivery of this
Agreement, (i) Buyer, Seller, RSI and HQ Global Workplaces, Inc. ("HQ") have
entered into an Agreement and Plan of Merger (the "Merger Agreement") that
provides for the merger, subject to and upon the terms and conditions set
forth therein, of VANTAS with and into HQ (the "HQ Merger") immediately prior
to the closing of the transactions contemplated hereby and (ii) Seller and RSI
have entered into that certain Stock Purchase Agreement (the "Stock Purchase
Agreement") providing for the acquisition by RSI from Seller of certain shares
of voting common stock and non-voting common stock of HQ simultaneously with
the closing of the transactions contemplated hereby;
WHEREAS, capitalized terms not defined herein have the meanings ascribed
to them in the Merger Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
contained herein, and subject to and on the terms and conditions herein set
forth, the parties hereto agree as follows:
ARTICLE I
The Transactions
Section 1.1 The Transactions. (a) Upon the terms and subject to the
conditions contained herein, on the Closing Date (as hereinafter defined),
CarrAmerica will sell, convey, transfer, assign and deliver to VANTAS, and
VANTAS will purchase and acquire from CarrAmerica, the number of Shares set
forth opposite its name on Exhibit A attached hereto for the Share
Consideration, payable as set forth below in Section 1.2.
(b) Upon the terms and subject to the conditions contained herein, on the
Closing Date, CarrAmerica will sell, convey, transfer, assign and deliver to
VANTAS, and VANTAS will purchase and acquire from CarrAmerica, the Notes for
the Loan Consideration, payable as set forth below in Section 1.2.
Section 1.2 The Closing. The Closing (the "Closing") of the purchase and
sale of the Shares shall be held at the offices of Brown & Wood LLP, One World
Trade Center, New York, New York 10048, immediately after the Effective Time
of the HQ Merger and immediately prior to the Effective Time of the Second
Step Merger, subject to the satisfaction or waiver of the conditions set forth
in Article VII herein. The date on which the Closing shall occur is
hereinafter referred to as the "Closing Date." At the Closing, (i) VANTAS
shall deliver to CarrAmerica, by wire transfer to a bank account designated in
writing by CarrAmerica at least two business days prior to the Closing Date,
immediately available funds in an amount equal to the sum of (A) the Loan
Consideration and (B) the Share Consideration (such sum of (A) and (B) being
referred to herein as, collectively, the "Total Consideration") and (ii)
CarrAmerica shall deliver or cause to be delivered to VANTAS (a) certificates
representing the Shares, duly endorsed in blank or accompanied by stock powers
duly endorsed in blank in proper form for transfer, with appropriate transfer
stamps, if any, affixed and (b) the originally executed Notes, duly endorsed
by the Seller, without recourse, for transfer to VANTAS.
ARTICLE II
Representations and Warranties of CarrAmerica, OMNI UK and LuxCo
(A) OMNI UK and LuxCo hereby severally with respect to itself and its
Subsidiaries represent and warrant to VANTAS as follows:
Section 2.1 Organization and Standing; Books and Records.
(a) Each of the Companies is a corporation duly organized and validly
existing under the laws of its jurisdiction of incorporation. Schedule 2.1
sets forth each Subsidiary (as defined below) of each of the Companies and the
state or other jurisdiction of organization of such Subsidiary and the
percentage ownership of each of the Companies with respect to each such
Subsidiary. Each of the Companies and each of its respective Subsidiaries have
all requisite corporate power and authority necessary to carry on their
respective businesses as presently conducted and to enable each to own, lease
or otherwise hold their respective properties and assets. Each of the
Companies and their respective Subsidiaries are duly qualified to do business
as a foreign corporation in each jurisdiction in which the conduct or nature
of their respective business or the ownership, leasing or holding of their
respective properties or assets makes such qualification necessary, except
such jurisdictions where the failure to be so individually or in the
aggregate, would not have a material adverse effect on the business, financial
condition or results of operations of either of the Companies and their
respective Subsidiaries, taken as a whole (a "Material Adverse Effect"). The
term "Subsidiary", for any Person, means each person of which a majority of
the voting power of the voting equity securities or equity interest is owned,
directly or indirectly, by such Person.
(b) Each of the Companies has made available to VANTAS true and complete
copies of its respective certificate of incorporation and by-laws (or
equivalent organizational document), each as amended to date. The stock
certificate and transfer books and the minute books of the Companies (which
have been made available for inspection by VANTAS prior to the execution and
delivery of this Agreement) are true and complete.
Section 2.2 Authority. Each of the Companies has all requisite corporate
power and authority to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. All acts and
other proceedings required to be taken by the Companies to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly and properly taken. This
Agreement has been duly executed and delivered by a duly authorized officer of
each of the Companies and constitutes a legal, valid and binding obligation of
each of the Companies, enforceable against each of the Companies in accordance
with its terms except insofar as enforcement thereof may be limited by
bankruptcy, insolvency or other laws relating to or affecting enforcement of
creditors' rights generally including such general equity principles as may
apply in the enforcement of creditors' rights.
Section 2.3 No Conflicts; Consents. Except as set forth on Schedule 2.3,
the execution and delivery of this Agreement by each of the Companies does
not, and the consummation of the transactions contemplated hereby and
compliance by the Companies with the terms hereof will not, conflict with, or
result in any violation of or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to material loss of a benefit under, or
result in the creation of any lien, charge or encumbrance of any kind upon any
of the properties or assets of either of the Companies under, any provision of
(i) the certificate of incorporation or by-laws (or equivalent organizational
document) of either of the Companies, (ii) any material note, bond, mortgage,
indenture, deed of trust, loan document, license, lease, contract, commitment,
agreement or arrangement to which either of the Companies is a party or by
either of the Companies or any of their respective properties or assets is
bound or (iii) any judgment, order or decree, or statute, law, ordinance, rule
or regulation, applicable either of the Companies or any of their respective
properties or assets. Except as set forth on Schedule 2.3, no consent,
approval, license, permit, order or authorization of, or registration,
declaration or filing with, any Federal, state, local or foreign government or
any court of competent jurisdiction, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, or any
national securities or commodities exchange or other regulatory or
self-regulatory body or association (a "Governmental Entity") is required to
be obtained or made by or with respect to either of the Companies in
connection with the execution, delivery and performance of this Agreement by
the Companies or the consummation of the transactions contemplated hereby,
other than compliance with any filings under the HSR Act.
Section 2.4 Capital Stock of the Companies.
(a) As of the date hereof, the authorized share capital of (i) OMNI UK
consists of 200,000 shares of UK Voting Common Stock and 3,800,000 shares of
UK Non-Voting Common Stock, one share of Class C Redeemable Preference Share,
(pound).01 per share par value, and one share of Class D Redeemable Preference
Share, (pound).01 per share par value ("Class D Stock") of which 105,582
shares of UK Voting Common Stock, 2,006,066 shares of UK Non-Voting Common
Stock, one share of Class C Stock and one share of Class D Stock are duly
authorized and validly issued and outstanding, fully paid and nonassessable
and (ii) LuxCo consist of 1000 shares of LUX Voting Common Stock and 1000
shares of Lux Non-Voting Common Stock, of which 144 shares of Lux Voting
Common Stock and 144 shares of Lux Non-Voting Common Stock are duly authorized
and validly issued and outstanding, fully paid and non-assessable. Except as
set forth on Schedule 2.4, no such shares have been issued in violation of, or
are subject to, any purchase option, call, right of first refusal, preemptive,
subscription or similar right under any provision of applicable law, the
certificate of incorporation or by-laws (or equivalent organizational
document) of either of the Companies or any agreement, contract or instrument
to which either of the Companies is a party or by which either or any of their
respective properties or assets is bound. Except as set forth on Schedule 2.4
and except for the Notes made by LuxCo which are convertible at the holder's
option into Lux Non-Voting Common Stock, there are no outstanding warrants,
options, rights, "phantom" stock rights, agreements, convertible or
exchangeable securities or other commitments (other than this Agreement) (i)
pursuant to which either of the Companies is or may become obligated to issue,
sell, purchase, return or redeem any shares of capital stock or other
securities of either of the Companies or (ii) that give any person the right
to receive any benefits or rights similar to any rights enjoyed by or accruing
to the holders of shares of capital stock of either of the Companies. There
are no equity securities of either of the Companies reserved for issuance for
any purpose except for securities reserved for issuance for the purposes set
forth on Schedule 2.4. There are no outstanding bonds, debentures, notes or
other indebtedness having the right to vote on any matters on which
shareholders of either Company may vote.
(b) Ownership of Capital Stock of the Companies; the Shares. CarrAmerica
is the record and beneficial owner of the number of Shares set forth opposite
it's name on Exhibit A hereto. CarrAmerica has good and valid title to the
Shares and the Notes, in each case free and clear of any liens, charges,
claims, rights or encumbrances of any kind. Other than the Shares owned by HQ
and as otherwise set forth on Schedule 2.4(b) and except for 1 Class C Share
(par value $.01) of Omni UK and 1 Class D Share (par value $.01) of Omni UK,
the Shares represent all of the issued and outstanding shares of capital stock
of each of the Companies.
(c) Assuming VANTAS is a "bona fide purchaser" within the meaning of the
Uniform Commercial Code of the State of New York, upon delivery to VANTAS at
the Closing of certificates representing the Shares and the Notes, in each
case duly endorsed by the Seller for transfer to VANTAS, and upon the Seller's
receipt of the Total Consideration, good and valid title to the Shares and
Notes will pass to VANTAS, free and clear of any liens, charges, claims,
rights or encumbrances of any kind. Except as set forth in Schedule 2.17 with
respect to Brook Street or in Schedule 2.4(c), other than this Agreement, none
of the Shares or Notes are subject to any agreement, contract, commitment,
understanding or arrangement, including any such agreement, contract,
commitment, understanding or arrangement restricting or otherwise relating to
the voting, dividend rights or disposition of the Shares or, in the case of
the Notes, subordinating the payment obligations under the Notes to any other
indebtedness or otherwise limiting any of the Seller's rights to enforce the
Notes.
Section 2.5 Equity Interests. Except as set forth in Schedule 2.5 and the
other Schedules hereto, neither of the Companies nor any of their respective
Subsidiaries directly or indirectly owns any capital stock of or other equity
interests in any corporation, partnership or other person, and neither of the
Companies are members of or participants in any partnership, joint venture or
similar person.
Section 2.6 Investment Companies. Neither of the Companies nor any of
their respective Subsidiaries is registered or required to be registered as an
Investment Company under the Investment Company Act of 1940, as amended (the
"Investment Company Act").
Section 2.7 Restrictions and Agreements. Except as set forth in Schedule
2.7, (i) neither of the Companies nor any of their respective Subsidiaries is
a party to, nor are the Companies or any of their respective Subsidiaries or
any of their respective properties or assets subject to or bound by, any
judgment, order or decree of any Governmental Entity which has or is
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect, and (ii) neither of the Companies nor any of their respective
Subsidiaries is a party to, nor are any of their respective properties or
assets subject to or bound by, any contract, agreement or other instrument,
which, as a result of the execution of this Agreement or the consummation of
the transactions contemplated hereby, has or is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect.
Section 2.8 Financial Statements; Undisclosed Liabilities.
(a) Schedule 2.8 sets forth (A) the unaudited consolidated balance sheets
of each of the Companies as of September 30, 1999 (collectively, the "Balance
Sheets"), and the unaudited consolidated statements of income of each of the
Companies for the 9 month period ended September 30, 1999, and (B) the audited
consolidated balance sheets of Omni UK as of December 31, 1998, and the
audited consolidated statements of income of Omni UK for the period April to
December 31, 1998, (for Omni UK, the financial statements described in clauses
(A) and (B) above, together with the notes to such financial statements, are
collectively referred to herein as the "Financial Statements"). The Financial
Statements are in all material respects in accordance with the respective
books and records of the Companies and have been prepared in conformity with
generally accepted accounting principles applying in the country or state of
incorporation consistently applied throughout the periods indicated (except in
each case as described in the notes thereto) and on that basis fairly present
in all material respects (subject, in the case of the unaudited statements
referred to in (A) above, to normal, recurring year-end adjustments) the
financial condition and results of operations of Omni UK and its Subsidiaries
as of the respective dates thereof and for the respective periods indicated.
(b) Neither of the Companies nor any of their respective Subsidiaries
have any liabilities or obligations of any nature (whether accrued, absolute,
contingent, threatened or otherwise), except (A) as disclosed, reflected or
reserved against in the respective Balance Sheets and the notes thereto, (B)
items set forth on Schedule 2.8, (C) liabilities and obligations incurred in
the ordinary course of business consistent with past practice since the date
of the respective Balance Sheets that would not, individually or in the
aggregate, result in a Material Adverse Effect and (D) Taxes.
(c) Except as set forth in Schedule 2.8, the amount of all accounts
receivable, including unbilled invoices which are reflected as accounts
receivable on the respective Financial Statements, due, or recorded in the
respective Balance Sheets as being due to the respective Companies and their
respective Subsidiaries (less the amount of any provision or reserve therefor
made in the respective Balance Sheets), are fully collectible in the normal
course of business.
Section 2.9 Absence of Changes or Events. Since the date of the
respective Balance Sheets, there has not been any Material Adverse Effect or
any development or change in circumstances that is reasonably likely to result
in a Material Adverse Effect. Except as set forth in Schedule 2.9 or as
otherwise contemplated or permitted by this Agreement, since the date of the
respective Balance Sheets, the business of each of the Companies and their
respective Subsidiaries has been conducted in the ordinary course and in
substantially the same manner as previously conducted, and neither of the
Companies nor any of their respective Subsidiaries has (i) declared or paid
any dividend or made any other distribution to its respective shareholders
whether or not upon or in respect of any shares of their respective capital
stock, (ii) redeemed or otherwise acquired any shares of their respective
capital stock or issued any capital stock or any option, warrant or right
relating thereto or any securities convertible into or exchangeable for any
shares of their respective capital stock, (iii) adopted or materially amended
any Benefit Plan (as defined in Section 2.16), except as required by law, or
entered into or amended any employment, severance or consulting agreement,
contract or similar arrangement, (iv) granted to any their respective
directors, officers or employees any increase in compensation or benefits,
except for increases for any such director, officer or employee in the
ordinary course of business consistent with past practice or as may be
required under existing agreements, (v) incurred or assumed any liability,
obligation or indebtedness for borrowed money or guaranteed any such
liability, obligation or indebtedness, (vi) permitted, allowed or suffered any
of their respective assets to become subject to any mortgage, security
interest, lien or other similar restriction of any nature whatsoever, (vii)
cancelled any indebtedness or waived any claims or rights of substantial
value, except for customer trade adjustments in the ordinary course of
business that for either Company do not exceed $25,000 individually or
$100,000 in the aggregate, (viii) entered into, or modified, amended,
terminated, or permitted the lapse of, any real property lease or other
material agreement relating to real property, or (ix) incurred any
indebtedness that is senior to the Notes in terms of rights of payment.
Section 2.10 Taxes.
(a) For purposes of this Agreement, (A) "Tax" or "Taxes" shall mean all
taxes, and all other charges, fees, levies or other assessments of a fiscal
nature, including, without limitation, income, gross receipts, excise,
property, sales, withholding, social security, national insurance, franchise,
transfer and recording taxes, subscription taxes, fees and charges, including
estimated taxes, imposed by the United Kingdom or any taxing authority
(domestic or foreign), whether computed on a separate, consolidated, unitary,
combined or any other basis; and such term shall include any interest, fines,
penalties or additional amounts attributable to, or imposed upon, or with
respect to any such taxes, charges, fees, levies or other assessments; (B)
"Tax Return" shall mean any return, report or other document or information
required to be supplied to a taxing authority in connection with Taxes; (C)
"Inland Revenue" shall mean the U.K. Inland Revenue and (D) "Pre-Closing Tax
Period" shall mean all taxable periods ending on or before the Closing Date
and the portion ending on the Closing Date of any taxable period that includes
(but does not end on) such day.
(b) In the last five years, the only jurisdictions where either of the
Companies and their respective Subsidiaries have filed any income or
subscription tax returns, as applicable, are the United Kingdom, Germany and
Luxembourg, and certain of the Companies' Subsidiaries have filed payroll
related (but not income) tax returns in Austria).
(c) Except as set forth on Schedule 2.10, (A) Each of the Companies and
their respective Subsidiaries have (x) duly filed with the appropriate
Governmental Entities all Tax Returns required to be filed by them on or prior
to the date hereof (after giving effect to any filing extension properly
granted by a Governmental Entity having authority to do so), and such Tax
Returns are true, correct and complete in all material respects and (y) duly
paid in full or made provision in accordance with generally accepted
accounting principles for the payment of all Taxes for all periods ending
through the date hereof; (B) there are no liens for Taxes upon the assets of
any of the Companies and their respective Subsidiaries, except for statutory
liens for current Taxes not yet due; (C) each of the Companies and their
respective Subsidiaries have complied in all respects with all applicable
laws, rules and regulations relating to the payment and withholding of Taxes
and have, within the time and the manner prescribed by law, withheld from and
paid over to the proper Governmental Entities all amounts required to be so
withheld and paid over under applicable laws; (D) no audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of any of the Companies and their
respective Subsidiaries and none of the Companies and their respective
Subsidiaries have received notice of any pending audits or proceedings; (E)
there are no outstanding written requests, agreements, consents or waivers to
extend the statutory period of limitations applicable to the assessment of any
Taxes or deficiencies against either of the Companies or their respective
Subsidiaries; (F) neither of the Companies nor their respective Subsidiaries
is a party to any agreement providing for the allocation or sharing of Taxes;
and (G) no power of attorney has been executed by either of the Companies or
their respective Subsidiaries with respect to any matter relating to Taxes
which is currently in force.
Section 2.11 Assets Other than Real Property Interests.
(a) Each of the Companies has good and valid title to all assets (other
than real property interests) reflected on their respective Balance Sheets or
acquired after the date thereof, except those sold or otherwise disposed of
since the date of their respective Balance Sheets in bona fide arm's length
transactions made in the ordinary course of business consistent with past
practice and not in violation of this Agreement in each case free and clear of
all liens, charges or encumbrances of any kind except those subject to the
rights of suppliers under retention of title clauses or similar provisions and
except (A) such as are set forth in Schedule 2.11, (B) mechanics', carriers',
workmen's, repairmen's or other like liens arising or incurred in the ordinary
course of business, liens arising under original purchase price conditional
sales contracts and equipment leases with third parties entered into in the
ordinary course of business and liens for Taxes that are not due and payable
or that may thereafter be paid without penalty and (C) other imperfections of
title or encumbrances, if any, that do not, individually or in the aggregate,
materially impair the continued use and operation of the assets to which they
relate in the businesses of the Companies and their respective Subsidiaries as
presently conducted (the liens and imperfections of title described in clauses
(B) and (C) above are hereinafter referred to collectively as "Permitted
Liens").
(b) All of the Companies' respective material tangible personal property
has been maintained in accordance with the past practice of each such Company
and generally accepted industry practice. Each item of the Companies'
respective material tangible personal property is in reasonably good operating
condition and repair, ordinary wear and tear excepted. All of the Companies'
respective leased personal property is in all material respects in the
condition required of such property by the terms of the lease applicable
thereto during the term of the lease and upon the expiration thereof, and each
such Company has made all payments required by all such respective leases.
Section 2.12 Real Property.
(a) Neither of the Companies nor any of their respective Subsidiaries
owns any real property or interests in real property, other than OmniUK Real
Property Leases (as defined below) or LuxCo Real Property Leases (as defined
below), and the OmniUK Owned Property (as defined below), as applicable.
Schedule 2.12 sets forth a complete list of all real property and interests in
real property owned, leased or otherwise held by OmniUK and its Subsidiaries
(such leased properties, individually, an "OmniUK Real Property Lease," and
the real properties specified in such leases being referred to herein
individually as an "OmniUK Property" and collectively as the "OmniUK
Properties," and the owned property, the "OmniUK Owned Property") and LuxCo
and its Subsidiaries (such leased properties, individually, a "LuxCo Real
Property Lease," and the real properties specified in such leases being
referred to individually as an "LuxCo Property" and collectively as the "LuxCo
Properties" as respective lessees. Each of the Companies has made available
true and complete copies of the OmniUK Real Property Leases and the LuxCo Real
Property Leases. The OmniUK Property, LuxCo Property and OmniUK Owned Property
constitute all interests in real property currently used or currently held for
use in connection with the respective businesses of the Companies and their
respective Subsidiaries and which are necessary for the continued operation of
the respective businesses of the Companies and their respective Subsidiaries
as such businesses are currently conducted. Each OmniUK Real Property Lease
and LuxCo Real Property Lease is valid, binding, enforceable and in full force
and effect, except insofar as enforcement thereof may be limited by
bankruptcy, insolvency or other laws relating to or affecting enforcement of
creditors' rights generally including such general equitable principles as may
apply in the enforcement of creditors' rights. Each of the Companies and each
of their respective Subsidiaries has performed in all material respects all
obligations required to be performed by them, if any, under each OmniUK Real
Property Lease and LuxCo Real Property Lease. Other than the consents set
forth on the Summary (as herein defined), at Closing no event or conditions
will exist which will constitute or, after notice or lapse of time or both,
would constitute a default in any material respect on the part of the
Companies or any of their respective Subsidiaries under any such OmniUK Real
Property Lease or LuxCo Real Property Lease, as applicable. To each Company's
knowledge, each other party to each OmniUK Real Property Lease or LuxCo Real
Property Lease, as applicable, has in all material respects performed all
obligations required to be performed by it, and no event or condition exists
which constitutes or, after notice or lapse of time or both, would constitute
a default in any material respect on the part of such other party under any
such OmniUK Real Property Lease or LuxCo Real Property Lease, as applicable.
All of the OmniUK Properties, LuxCo Properties, buildings, fixtures and
improvements thereon owned or leased by the Companies or any of their
respective Subsidiaries are in good operating condition and repair (subject to
normal wear and tear).
(b) Except as set forth on Schedule 2.12, the Companies and their
respective Subsidiaries have all material certificates of occupancy and
material permits and licenses of any Governmental Entity necessary for the
current use and operation of the OmniUK Property, the LuxCo Property and the
OmniUK Owned Property, and the Companies and their respective Subsidiaries
have complied with all material conditions of such material permits and
licenses applicable to them. No default or violation, or event which, with the
lapse of time or giving of notice or both would become a default or violation,
has occurred in the due observance of any such material permit or license,
other than defaults or violations which, individually or in the aggregate,
would not be reasonably likely to have a Material Adverse Effect.
(c) There does not exist any actual or, to the knowledge of each
Company, threatened or contemplated condemnation or eminent domain proceedings
that affect any of the OmniUK Property, the LuxCo Property, the OmniUK Owned
Property or any part thereof, and none of the Companies or any of their
respective Subsidiaries has received any written notice, of the intention of
any Governmental Entity or other Person to take or use all or any part
thereof.
(d) None of the Companies or any of their respective Subsidiaries has
received any written notice from any insurance company that has issued a
policy with respect to any of the OmniUK Property, the LuxCo Property or the
OmniUK Owned Property requiring performance of any structural or other
substantial repairs or alterations to such OmniUK Property, LuxCo Property and
the OmniUK Owned Property.
(e) Except as set forth on Schedule 2.12, none of the Companies or any of
their respective Subsidiaries owns or holds, and is not obligated under or a
party to, any option, right of first refusal or other contractual right to
purchase, acquire, sell, assign or dispose of any real estate or any portion
thereof or interest therein.
(f) There is no actual or contingent liability on the part of either of
the Companies in relation to any real property other than as set forth on
Schedule 2.12 including any actual or contingent liability as previous lessee
or underlessee or guarantor or surety or covenant in relation to any Omni UK
Real Property Leases or LuxCo Real Property Leases.
(g) There is no mortgage debt secured by Wyvol's Court, which is the only
UK Owned Property.
Section 2.13 Contracts. Except as set forth in Schedule 2.13, neither of
the Companies nor any of their respective Subsidiaries is a party to or
otherwise bound by any:
(a) employment, severance or consulting agreement, contract or other
arrangement;
(b) covenant not to compete or covenant restricting the development,
marketing or distribution of the products and services of either of the
Companies or any of their respective Subsidiaries including without
limitation, franchise agreements providing for geographic or name exclusivity;
(c) agreement, contract or other arrangement with (A) any stockholder of
either Company or any Affiliate (as defined herein) of any such stockholder or
(B) any current or former officer, director or employee of either of the
Companies or their respective Subsidiaries;
(d) lease or similar agreement or other arrangement with any person under
which (A) either of the Companies or any of their respective Subsidiaries is
lessee of, or holds or uses, any machinery, equipment, vehicle or other
tangible personal property owned by any person or (B) either of the Companies
or any of their respective Subsidiaries is a lessor or sublessor of, or makes
available for use by any person, any tangible personal property owned or
leased by either of the Companies or any of their respective Subsidiaries, in
the case of either (A) or (B) which has an aggregate future liability or
receivable, as the case may be, of more than $100,000 individually or is not
terminable by such Company or any of such Company's Subsidiaries by notice of
more than 60 days for a cost of not more than $100,000 individually;
(e) (A) continuing agreement, contract or other arrangement for the
future purchase of supplies or equipment, (B) management, service, consulting
or other similar type of agreement, contract or other arrangement or (C)
advertising agreement, contract or other arrangement, in the case of any of
(A), (B) or (C) which has an aggregate future liability to any person of more
than $100,000 individually or is not terminable by such Company or any of such
Company's Subsidiaries by notice of not more than 60 days for a cost of not
more than $100,000 individually;
(f) license, option or similar agreement, contract or other arrangement
relating in whole or in part to intellectual property (including any license
or other agreement under which either of the Companies or any of their
respective Subsidiaries is licensee or licensor of any such intellectual
property) or to trade secrets, confidential information or proprietary rights
and processes of the either of Companies or any other person, in any such
case, which has an aggregate future liability or receivable, as the case may
be, of more than $100,000 individually or is not terminable by such Company or
any of such Company's Subsidiaries by notice of not more than 60 days for a
cost of not more than $100,000 individually;
(g) except for the Notes and certain inter-company loans made between the
Companies and their Subsidiaries, agreement, contract or other instrument or
arrangement under which either of the Companies or any of their respective
Subsidiaries has borrowed any money from, or issued any note, bond, debenture,
guarantee or other evidence of indebtedness to, any person in any such case
which has an aggregate future liability to any person of more than $100,000
individually or is not terminable by such Company or any of such Company's
Subsidiaries by notice of not more than 60 days for a cost of not more than
$100,000 individually;
(h) except for certain inter-company loans made between the Companies and
their Subsidiaries, agreement, contract or other instrument or arrangement
under which either of the Companies or any of their respective Subsidiaries
has, directly or indirectly, made any advance, loan, extension of credit or
capital contribution to, or other investment in, any person in any such case
which has an aggregate future liability to any person of more than $100,000
individually or is not terminable by such Company or any of such Company's
Subsidiaries by notice of not more than 60 days for a cost of not more than
$100,000 individually;
(i) agreement, contract or other instrument or arrangement providing for
indemnification of any person with respect to liabilities relating to any
current or former business of either of the Companies or any of their
respective Subsidiaries or any predecessor person in any such case which has
an aggregate future liability to any person of more than $100,000 individually
or is not terminable by such Company or any of such Company's Subsidiaries by
notice of not more than 60 days for a cost of not more than $100,000
individually; or
(j) other agreement, contract or other arrangement to which either of the
Companies or any of their respective Subsidiaries is a party or by which they
or any of their respective properties or assets is bound which has an
aggregate future liability or receivable to or from any person of more than
$100,000 individually or is not terminable by such Company or any of such
Company's Subsidiaries by notice of not more than 60 days for a cost of not
more than $100,000 individually.
; provided, however, that notwithstanding anything to the contrary contained
herein other than any contracts relating to office equipment, maintenance or
service for any individual business center of the Companies or their
respective Subsidiaries which does not require annual payments in excess of
$25,000, the sum of the aggregate future liabilities and costs of termination
associated with all contracts, arrangements, agreements or understandings to
which either of the Companies or any of their respective Subsidiaries is a
party or by which they or any of their respective properties or assets which
are not set forth on Schedule 5.2, 2.13 or 2.16 is bound exceed $5,000,000.
Except as set forth in Schedule 2.13, all agreements, contracts, leases,
subleases, licenses, options, instruments or arrangements of the Companies or
any of their respective Subsidiaries listed in the Schedules hereto
(collectively, "Contracts") are valid, binding and in full force and effect
and are enforceable by the respective Company which is a party to such
Contract and each of its Subsidiaries in accordance with its terms, except
insofar as enforcement thereof may be limited by bankruptcy, insolvency or
other laws relating to or affecting enforcement of creditors' rights generally
including such general equitable principles as may apply in the enforcement of
creditors' rights. Except as set forth in Schedule 2.13, the Companies and
their respective Subsidiaries have performed in all material respects all
obligations required to be performed by them to date under material Contracts
and none of the Companies or their respective Subsidiaries are (with or
without the lapse of time or the giving of notice, or both) in breach or
default in any material respect thereunder and, to each Company's knowledge,
no other party to any material Contracts is (with or without the lapse of time
or the giving of notice, or both) in breach or default in any material respect
thereunder.
Section 2.14 Litigation. Except as set forth in Schedule 2.14, there is
no claim, action, suit, proceeding, arbitration, investigation or inquiry
before any Governmental Entity or any private arbitration tribunal now
pending, or, to the knowledge of each Company, threatened, against, relating
to or affecting either of the Companies or any of their respective
Subsidiaries or any of their respective properties, employees, assets or
business or the transactions contemplated by this Agreement. Except as set
forth in Schedule 2.14, to the knowledge of each Company, there is no basis
for any such claim, action, suit, proceeding, arbitration, investigation or
inquiry which, individually or in the aggregate, may reasonably be expected to
have a Material Adverse Effect. None of the Companies, any of their respective
Subsidiaries or any of their respective directors, officers or employees or
any of their respective Subsidiaries have been permanently or temporarily
enjoined or prohibited by judgment, order or decree of any Governmental Entity
from engaging in or continuing any conduct or practice in connection with the
businesses engaged in by the Companies and their respective Subsidiaries. None
of the Companies is operating under, subject to or in default with respect to
any judgment, order or decree of any Governmental Entity enjoining or
prohibiting either of the Companies or any of their respective Subsidiaries
from taking, or requiring either of the Companies or any of their respective
Subsidiaries to take, any action of any kind or to which either of the
Companies or any of their respective Subsidiaries or any of their respective
properties or assets is subject or bound.
Section 2.15 Insurance. Schedule 2.15 lists all policies of fire and
casualty, liability and other forms of insurance maintained or held by each of
the Companies or any of their respective Subsidiaries, which policies are in
such amounts, and with such deductibles and which insure against such risks
and losses as are customary for the businesses conducted by the Companies and
their respective Subsidiaries. All such policies are in full force and effect
and are sufficient for compliance by each of the Companies and their
respective Subsidiaries with all their respective agreements, all premiums due
and payable thereon have been paid (other than retroactive or retrospective
premium adjustments that are not yet, but may be, required to be paid with
respect to any period ending prior to the Closing Date), and no notice of
cancellation or termination has been received with respect to any such policy
which has not been replaced on substantially similar terms prior to the date
of such cancellation. The activities and operations of each of Companies and
their respective Subsidiaries have been conducted in a manner so as to conform
in all material respects to all applicable provisions of such insurance
policies.
Section 2.16 Benefit Plans.
(a) Schedule 2.16 sets forth a list and brief description of all
retirement, health, life fringe benefit, severance or similar employee benefit
arrangements (all the foregoing being herein called "Benefit Plans")
maintained by each of the Companies or any of their respective Subsidiaries
for the benefit of any director, officer or employee of any of the Companies
or their respective Subsidiaries. Each of the Companies has made available to
VANTAS true, complete and correct copies of each Benefit Plan.
(b) Each Benefit Plan has been administered in all material respects in
accordance with its terms. Each of the Companies, their respective
Subsidiaries and all the Benefit Plans are in compliance in all material
respects with the applicable provisions of applicable law, and all employer
and employee contributions have been timely made under such Benefit Plans.
There are no lawsuits, actions, termination proceedings or other formal
proceedings pending, or, to the knowledge of each Company, threatened against
or involving any Benefit Plan and, to the knowledge of each Company, there are
no investigations by any Governmental Entity or other claims (except claims
for benefits payable in the normal operation of the Benefit Plans) pending or
threatened against or involving any Benefit Plan or asserting any rights to
benefits under any Benefit Plan.
(c) None of the Benefit Plans provide for post-retirement medical or
dental insurance benefits, the cost of which is not entirely borne by the
retirees eligible therefor.
(d) Except as set forth in Schedule 2.16, no director, officer or
employee or former director, officer or employee of either the Companies or
their respective Subsidiaries will become entitled to payment or accelerated
vesting of any bonus, retirement, severance, job security or similar benefit
or any enhanced benefit solely as a result of the transactions contemplated
hereby.
Section 2.17 Compliance with Applicable Laws. Each of the Companies and
their respective Subsidiaries are in compliance in all material respects with
all applicable statutes, laws, ordinances, rules, orders and regulations of
any Governmental Entity ("Applicable Laws"). Except as set forth in Schedule
2.17, none of the Companies or any of their respective Subsidiaries has
received any written communication during the past two years from a
Governmental Entity that alleges that either of the Companies or any of their
respective Subsidiaries are not in compliance in any material respect with any
Applicable Laws.
Section 2.18 Labor Matters. (i) Except as disclosed on Schedule 2.18:
(i) neither of the Companies nor any of their respective
Subsidiaries is a party to any labor or collective bargaining agreement
with respect to its employees; no employees of either of the Companies or
any of their respective Subsidiaries are represented by any labor
organization; no labor organization or group of employees of either of
the Companies or any of their respective Subsidiaries has made a pending
demand for recognition or certification to either of the Companies or any
of their respective Subsidiaries; and there are no representation or
certification proceedings or petitions seeking a representation
proceeding presently pending or, to the knowledge of each Company,
threatened, to be brought or filed with the National Labor Relations
Board or other labor relations tribunal involving either of the Companies
or any of their respective Subsidiaries;
(ii) there are no strikes, lockouts, work stoppages or slowdowns
pending or, to the knowledge of each of the Companies, threatened against
or involving either of the Companies or any of their respective
Subsidiaries;
(iii) there are no unfair labor practice charges, arbitrations or
grievances pending or threatened in writing against or involving either
of the Companies or any of their respective Subsidiaries relating to the
employment or termination of employment of any individual by either of
the Companies or any of their respective Subsidiaries;
(iv) there are no complaints, charges or claims against either of
the Companies or any of their respective Subsidiaries pending or, to the
knowledge of each of the Companies or any of their respective Subsidiaries,
threatened in writing to be brought or filed with any Governmental Entity
based on or arising out of the employment by the Companies of any employee;
(v) the Companies and each of their respective Subsidiaries are in
compliance in all material respects with all laws relating to the
employment of labor, including all such Laws relating to wages, hours,
collective bargaining, discrimination, civil rights, safety and health,
workers' compensation and the collection and payment of withholding
and/or Social Security Taxes and similar Taxes; and
(vi) none of the Companies or any of their respective
Subsidiaries is a party to, or otherwise bound by, any consent decree with,
or citation by, any Governmental Entity relating to employees or employment
practices.
Section 2.19 Transactions with Affiliates. Except as set forth in
Schedule 2.19 and excluding the Notes, (i) none of the Contracts between
either of the Companies and/or any of their respective Subsidiaries, on the
one hand, and any Affiliate of either such Company, on the other hand, will
continue in effect subsequent to the Closing, (ii) after the Closing no
Affiliate of either of the Companies will have any interest in any property
(real or personal, tangible or intangible) or contract used in or pertaining
to the business of such Company, and (iii), no Affiliate of either of the
Companies has any direct or indirect ownership interest in any person in which
either of the Companies and/or their respective Subsidiaries has any direct or
indirect ownership interest. As used herein the term "Affiliate" shall mean,
with respect to any Person, (i) any Person directly or indirectly controlling,
controlled by or under common control with such Person, or (ii) any officer,
director, general partner, managing member or trustee of such Person or any
Person referred to in clause (i) above. For purposes of this definition of
Affiliate, "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
Section 2.20 Corporate Name. Schedule 2.22 sets out the rights of OmniUK,
LuxCo and their respective subsidiaries in "OmniOffices", "HQ", "Lambert Smith
Hampton", "Lambert Smith Hampton Group Limited" and "Offices in the City of
Vienna" and none of the Companies and their respective Subsidiaries has
received any notice of conflict during the past two years with respect to the
rights of others regarding such names. LuxCo has the exclusive right in
Luxembourg to use the name "OmniOffices (Lux) 1929 Holding Company S.A. Except
as set forth in Schedule 2.22, no person (other than each of the Companies and
their respective Subsidiaries) is authorized by either of the Companies to
use, or otherwise has the right to use, the names in England, Germany, Austria
and Luxembourg.
Section 2.21 Customers. Except for the Persons leasing or otherwise
having rights to occupy those properties subject to real property leases
(collectively, the "Customers") set forth in Schedule 2.21, neither of the
Companies nor their respective Subsidiaries have any Customer from which any
received more than 2% of its respective revenues during their most recent full
fiscal year. Since the date of the respective Balance Sheets, there has not
been any material adverse change in the business relationships of either of
the Companies and their respective Subsidiaries with any Customers set forth
in Schedule 2.21.
Section 2.22 Intellectual Property. (a) Except as set forth on Schedule
2.22, each of the Companies has good title to or the right to use all material
copyrights, patents, trademarks (registered or unregistered), trade names and
service marks and applications therefor and other material intellectual
property and proprietary rights, whether or not subject to statutory
registration or protection, necessary for the conduct of any of their
respective businesses as currently conducted (collectively, "Intellectual
Property"). Schedule 2.22 sets forth a list of the registered and unregistered
trademarks owned or used by each of the Companies and all jurisdictions in
which such trademarks are registered or applied for and all registration and
application numbers. Except as set forth in Schedule 2.22, the consummation of
the transactions contemplated hereby will not conflict with, alter or impair
any such rights.
(b) Except as set forth on Schedule 2.22, neither the Companies nor any
of their respective Subsidiaries has granted any options, licenses or
agreements of any kind relating to Intellectual Property listed in Schedule
2.22 or the marketing or distribution thereof. Neither of the Companies nor
any of their respective Subsidiaries is bound by or a party to any options,
licenses or agreements of any kind relating to the Intellectual Property of
any other person, except as set forth in Schedule 2.22 and except for
agreements relating to computer software licensed to any of the Companies or
any of their respective Subsidiaries in the ordinary course of business.
Subject to the rights of third parties set forth in Schedule 2.22, all
Intellectual Property is free and clear of the claims of others and of all
liens, security interests and encumbrances whatsoever. The conduct of the
business of each of the Companies as presently conducted does not violate,
conflict with or infringe the intellectual property of any other person except
where such infringement would not have a Material Adverse Effect. Except as
set forth in Schedule 2.22, (i) no claims are pending, or to the knowledge of
each Company, threatened, against either of the Companies by any person with
respect to the ownership, validity, enforceability, effectiveness or use of
any Intellectual Property and (ii) during the past two years neither of the
Companies have received any communications alleging that the Companies or any
of their respective Subsidiaries has violated any rights relating to
intellectual property of any Person.
Section 2.23 Environmental Liability.
For purposes of this Section 2.23, the following definitions shall apply:
In this paragraph, where the context admits--
"Environment" means air (including, without limitation, that within
buildings or natural or man-made structures, whether above or below
ground), water (including, without limitation, inland fresh waters and
ground waters as defined in Section 104(1)(d) of the Water Resources Act
1991) and land (including, without limitation, soil and river beds under
any water as described above, surface land and sub-surface land) and all
other matter and energy, in whatever form, state, compositions or
combinations, at whatever level and in or under whatever forces, systems,
cycles or other conditions occurring (whether as elements or compounds,
whether as radioactivity, heat, light, sound or other electromagnetic
radiation or wave forms, whether in solid, liquid or gaseous state,
whether in animal, vegetable, mineral, organic or inorganic forms and
whether in a state of equilibrium or reactivity) anywhere in, on, around
or affecting the world or any part of it (including without limitation
its atmosphere and orbital path);
"Hazardous Substance" means any waste and/or any substance (whether
solid, liquid, gas, noise, ion, vapour, electromagnetic or radiation)
which alone or in combination with any other substance is hazardous,
toxic, radioactive, explosive or capable of polluting, damaging or
otherwise adversely affecting or impairing the Environment or causing
harm to the health, well-being or existence (now or in the future) of any
human being or any other living organism;
"Permit" means any consent, approval, authorisation, exemption, licence,
order or permission;
"Relevant Law" means a requirement of or duty imposed by international
law, EU law, the common law, United Kingdom legislation and subordinate
or delegated legislation, a judgement, order or award of any court, or
European Community regulations or directives having the force of law in
the United Kingdom, which in any case relate to the protection of the
Environment (or any part of it), the control of discharges or emissions,
the prevention of harm to or impairment of the health, well-being or
existence (now or in the future) of any human being or of any other
living organism, or to the storage, disposal, handling or transport of
any Hazardous Substance.
(a) To the knowledge of the Companies, except as set forth or referred to
in Schedule 2.23 no allegation or claim of any violation or failure to comply
with the requirements of any Relevant Law has been received by either of the
Companies or any of their respective Subsidiaries and to the knowledge of the
Companies there are no circumstances which might give rise to such a claim.
Except as set forth or referred to in Schedule 2.23, the Company has not
received any notice of equivalent nature, or any judgement, order, decree,
award, demand or decision in respect of the Environmental from any court,
tribunal, arbitrator or governmental or regulatory authority and to the
knowledge of the Companies there have been no complaints, investigations,
enquiries, requests for information or other indications of any possible
claims or legal actions in respect of the Environment from any Person.
(b) To the knowledge of the Companies and except as set forth or referred
to in Schedule 2.23 during or prior to the period of its or any of its
Subsidiaries' ownership or operation of their respective current properties
there were no releases or threatened releases of Hazardous Substances in or
under or affecting any such property.
(c) Except as set forth or referred to in Schedule 2.23, each of the
Companies and their respective Subsidiaries has obtained all material Permits
required by all Relevant Laws in relation to the conduct of its business and
has complied with the material terms of the such Permits in all material
respects.
Section 2.24 Brokers. No brokers or finders that have acted for
CarrAmerica in connection with this Agreement except for Goldman Sachs & Co.
Section 2.25 Competition. Neither of the Companies has been nor is it
concerned in any agreements or arrangements which infringed or infringes or
which have or should have been registered under or which have or to the
Companies' knowledge may become the subject of any reference, inquiry,
proceeding, report, assurance or undertaking under or in respect of the
Restrictive Trade Practices Acts 1976 and 1977, the Fair Trading Act 1973,
Article 81, 82, 85 or Article 86, if applicable, of the Treaty of Rome, the
Competition Act 1980, the Competition Act 1998 or any other anti-trust,
anti-restrictive practice or similar legislation within the United Kingdom and
neither of the Companies has made or, to each of the Companies' knowledge,
threatened to make any complaint against any other person to any relevant
authority under any law or legislation referred to in this paragraph.
Section 2.26 Data Protection. Except as set forth in Schedule 2.17,
the Companies and each of their Subsidiaries hold all necessary United Kingdom
data protection registrations as required under United Kingdom legislation in
respect of all personal data (as that expression is defined in the United
Kingdom data protection legislation) other than those the absence of which
would have Material Adverse Effect.
Section 2.27 Equivalence. For the purpose of construction, the references
in the representations and warranties contained herein to (i) any statutory
provision enacted, or accounting principles applying, in the United States
shall be deemed to include references to any corresponding provision in the
local legislation and (where relevant) to generally accepted accounting
principles applying in the country or state of incorporation, (ii) any
governmental or administrative authority or agency shall be deemed to include
references to the equivalent federal state or local governmental or
administrative authority or agency; and (iii) certificates of incorporations
or by-laws shall be deemed to include references to the equivalent documents
(including memoranda and articles of association or statutes) which describe
the governance of the Companies.
Section 2.28 MAM Investment. OmniUK and certain of its Subsidiaries have
agreed to invest up to Lire 20 million in Mercury Executive Offices, L.P. on
the terms and conditions set forth in the limited partnership agreement, dated
November 16, 1998 (the "MAM Investment"), of which at least Lire 15,594,241
has been funded. So long as VANTAS satisfies its obligations under Section
5.4, no consent is necessary under the Limited Partnership Agreement, dated 16
November, 1998, constituting the Mercury Executive Offices, L.P. or the
Management Agreement with respect thereto, in order to maintain such contracts
or arrangements in full force and effect following the Closing.
Section 2.29 Contingent Payments. Except as set forth in Section 5.3,
there are no contingent payment obligations or "earn-outs" which are or may
become payable in connection with center acquisitions made by the Companies or
any of their respective Subsidiaries prior to the date of this Agreement.
(B) CarrAmerica hereby represents and warrants to VANTAS as follows:
Section 2.1 Authority. CarrAmerica has all requisite corporate power and
authority to enter into this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. All acts and other
proceedings required to be taken by CarrAmerica to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and properly taken. This
Agreement has been duly executed and delivered by a duly authorized officer of
CarrAmerica and constitutes a legal, valid and binding obligation of
CarrAmerica, enforceable against CarrAmerica in accordance with its terms
except insofar as enforcement thereof may be limited by bankruptcy, insolvency
or other laws relating to or affecting enforcement of creditors' rights
generally including such general equity principles as may apply in the
enforcement of creditors' rights.
Section 2.2. No Conflicts; Consents. The execution and delivery of this
Agreement by CarrAmerica does not, and the consummation of the transactions
contemplated hereby and compliance by CarrAmerica with the terms hereof will
not, conflict with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to material
loss of a benefit under, or result in the creation of any lien, charge or
encumbrance of any kind upon any of the properties or assets of such Seller
under, any provision of (i) the certificate of incorporation or by-laws (or
equivalent organizational document) of CarrAmerica, (ii) any material note,
bond, mortgage, indenture, deed of trust, loan document, license, lease,
contract, commitment, agreement or arrangement to which CarrAmerica is a party
or by which CarrAmerica or any of its properties or assets is bound or (iii)
any judgment, order or decree, or statute, law, ordinance, rule or regulation,
applicable to CarrAmerica or any of its properties or assets. No consent,
approval, license, permit, order or authorization of, or registration,
declaration or filing with, any Federal, state, local or foreign government or
any court of competent jurisdiction, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, or any
national securities or commodities exchange or other regulatory or
self-regulatory body or association is required to be obtained or made by or
with respect to CarrAmerica in connection with the execution, delivery and
performance of this Agreement by CarrAmerica or the consummation of the
transactions contemplated hereby, other than compliance with any filings under
the HSR Act.
ARTICLE III
Representations and Warranties of VANTAS
VANTAS hereby represents and warrants to CarrAmerica as follows:
Section 3.1 Organization and Standing. VANTAS is duly organized, validly
existing and in good standing under the laws of the State of Delaware; has all
requisite power and authority necessary to carry on its business as presently
conducted and to enable it to own, lease or otherwise hold its properties and
assets; and is duly qualified to do business and is in good standing in each
jurisdiction in which the conduct or nature of its business or the ownership,
leasing or holding of its properties or assets makes such qualification
necessary, except such jurisdictions where the failure to be so qualified or
in good standing, individually or in the aggregate, would not have a material
adverse effect on the business, financial condition or results of operations
of VANTAS and its Subsidiaries, taken as a whole.
Section 3.2 Authority. VANTAS has all requisite corporate power and
authority to enter into this Agreement, to perform its obligations hereunder
to consummate the transactions contemplated hereby. All acts and other
proceedings required to be taken by VANTAS to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and properly taken. This
Agreement has been duly executed and delivered by a duly authorized officer of
VANTAS and constitutes a legal, valid and binding obligation of VANTAS,
enforceable against VANTAS in accordance with its terms except insofar as
enforcement thereof may be limited by bankruptcy, insolvency or other laws
relating to or affecting enforcement of creditors' rights generally including
such general equity principles as may apply in the enforcement of creditors'
rights.
Section 3.3 No Conflicts; Consents. The execution and delivery of this
Agreement by VANTAS does not, and the consummation of the transactions
contemplated hereby and compliance by VANTAS with the terms hereof will not,
conflict with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to a material
loss of a benefit under, or result in the creation of any lien, charge or
encumbrance of any kind upon any of the properties or assets of VANTAS under,
any provision of (i) the Certificate of Incorporation or By-Laws of VANTAS,
(ii) any material note, bond, mortgage, indenture, deed of trust, loan
document, license, lease, contract, commitment, agreement or arrangement to
which VANTAS is a party or by which it or any of its properties or assets is
bound or (iii) any judgment, order or decree, or statute, law, ordinance, rule
or regulation, applicable to VANTAS or any of its properties or assets. No
consent, approval, license, permit, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required
to be obtained or made by or with respect to VANTAS in connection with the
execution, delivery and performance of this Agreement by VANTAS or the
consummation of the transactions contemplated hereby, other than compliance
with any filings under the HSR Act.
ARTICLE IV
Agreements of OMNI UK and LuxCo
Section 4.1 Each of Omni UK and LuxCo and, as applicable, CarrAmerica
covenants and agrees as follows:
(a) Access. Prior to the Closing, the Companies shall, and shall cause
their respective Subsidiaries to, give VANTAS and its respective officers,
employees, representatives, counsel financing sources and accountants and
their respective counsel, auditors and authorized representatives full access,
during normal business hours and upon reasonable notice, to the personnel,
properties, financial statements, contracts, books, records, working papers
and other relevant information pertaining thereto each of the Companies and
their respective Subsidiaries and shall request and use commercially
reasonable efforts to cause their respective employees, counsel, auditors and
financial advisors to cooperate with VANTAS in their preparation of any rating
agency presentation materials, private placement prospectus or offering
memorandum, syndication book or similar marketing materials ("Financing
Materials") in connection with a transaction to sell securities of HQ in
connection with the HQ Merger or obtain a credit facility to finance VANTAS'
obligations pursuant to this Agreement and RSI's obligations pursuant to the
Stock Purchase Agreement and in their investigation of the businesses of each
of the Companies and their respective Subsidiaries on a consolidated basis,
including by furnishing copies of data or information pertaining to the
businesses of the Companies and their respective Subsidiaries for purposes of
due diligence or, with the prior written approval of CarrAmerica, which
approval will not be reasonably withheld, for inclusion in any Financing
Materials in connection with a transaction to sell securities of HQ in
connection with the HQ Merger or obtain a bank credit facility to finance
VANTAS's obligations pursuant to this Agreement and RSI's obligations pursuant
to the Stock Purchase Agreement. Prior to the Closing, the Companies shall,
and shall cause their respective Subsidiaries, officers and employees to,
furnish to VANTAS and its respective officers, employees, representatives,
counsel and accountants such financial, tax and operating data and other
information with respect to the business, properties and assets of each of the
Companies and their respective Subsidiaries as VANTAS or any such person shall
from time to time reasonably request, and the Companies shall, and shall cause
their respective Subsidiaries, directors, officers and employees to, cooperate
with, and the Companies shall request their respective independent public
accountants and independent legal counsel to cooperate with, VANTAS and its
respective officers, employees, representatives, counsel and accountants so as
to enable VANTAS to be kept fully informed with respect to the business,
assets, financial condition, results of operations and prospects of the
Companies.
(b) Ordinary Conduct. Except as set forth in the capital expenditure and
operating budgets (the "CapEx Budgets") of each of the Companies attached
hereto as part of Schedule 4.1(b) or otherwise expressly permitted by the
terms of this Agreement, from the date hereof to the Closing, the Companies
and each of their respective Subsidiaries shall continue to conduct their
business in the ordinary course in substantially the same manner as presently
conducted and shall make all reasonable efforts consistent with past practices
to preserve their respective relationships with customers and others with whom
they deal. The Companies and their respective Subsidiaries shall not take any
action that would, or that could reasonably be expected to, result in (A) any
of the representations and warranties (including, but not limited to, those
set forth in Article II) of the Companies set forth in this Agreement that are
qualified as to materiality becoming untrue or incorrect, (B) any of such
representations and warranties that are not so qualified becoming untrue or
incorrect in any material respect or (C) any of the conditions to the Closing
set forth in Section 6.3 not being satisfied. In addition, except as set forth
in the CapEx Budgets or Schedule 4.1(b) or otherwise expressly permitted by
the terms of this Agreement, each of the Companies and their respective
Subsidiaries shall not do any of the following without the prior written
consent of VANTAS:
(i) adjust, split, combine or reclassify any of their respective
capital stock; make, declare or pay any dividend or make any other
distribution on, or directly or indirectly redeem, purchase or otherwise
acquire, any shares of its capital stock, membership or partnership
interests or any securities or obligations convertible into or
exchangeable for any shares of their respective capital stock or
membership or partnership interests; issue, deliver or sell any shares of
its capital stock or membership or partnership interests or any
securities convertible into or exercisable for, or any rights, options or
warrants to acquire, any such shares or securities (whether for cash or
property) to any person;
(ii) sell, lease, transfer or otherwise dispose of, or subject to
any Lien, any of their respective properties or assets, or cancel, release
or assign any material indebtedness owed to either of the Companies or any
material claim held by either of the Companies, except (i) in bona fide
arm's length transactions made in the ordinary course of business
consistent with past practice or (ii) pursuant to contracts or agreements
in force as of the date of this Agreement and listed in Schedule 2.13;
(iii) incur or assume any liabilities or incur any indebtedness for
borrowed money, assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other
individual, corporation or entity (other than a wholly owned Subsidiary)
except pursuant to contracts or agreements listed in Schedule 2.13 or
except for loans by CarrAmerica necessary to fund the business of the
Companies in the ordinary course or to fund committed developments;
(iv) make any material acquisition or investment either by purchase
of stock or securities, merger or consolidation, contributions to
capital, property transfers, or purchases of any property or assets of
any other individual, corporation or other entity except pursuant to
contracts or agreements in force as of the date of this Agreement and
listed in Schedule 2.13;
(v) make any material change in any Omni UK Real Property Lease or
LuxCo Real Property Lease, as applicable, or other contracts or enter
into, renew, fail to renew, terminate or permit to be terminated any Omni
UK Real Property Lease or LuxCo Real Property Lease, as applicable, any
other contract or agreement that calls for aggregate annual payments of
$25,000 or more and which either (i) is not terminable by either of the
Companies or their respective Subsidiary, as applicable, at will on 60
days or less notice without payment of a penalty or (ii) has a term of
more than six months;
(vi) except in the ordinary course of business consistent with past
practices (but in no event greater than 10% with respect to any
employees), increase the compensation or fringe benefits of any of their
respective employees or pay any bonus, pension or retirement allowance
not required by any existing plan or agreement to which any such
employees become a party, materially amend or commit themselves to any
pension, retirement, profit-sharing or welfare benefit plan or agreement
or employment agreement with or for the benefit of any employee or
accelerate the vesting of any stock options or other stock-based
compensation except for accelerations required by any existing plan or
agreement set forth on Schedule 2.16;
(vii) other than with respect to the MAM Investment, make any loans,
advances or capital contributions to any other person, other than loans
and advances to their respective Subsidiaries;
(viii) make any capital expenditures in excess of (A) $25,000
individually or (B) $100,000 in the aggregate, other than expenditures
necessary to maintain existing assets in good repair not to exceed in the
aggregate $250,000;
(ix) Intentionally Omitted;
(x) settle any claim, action or proceeding involving money damages
except in the ordinary course of business consistent with past practice
for settlements for monetary damages that in any event do not,
individually or in the aggregate with any other such settlements, exceed
$100,000; provided, however, that notwithstanding the foregoing, in no
event may either of the Companies settle such claim, action or proceeding
without VANTAS' prior written consent if such settlement imposes any
ongoing duties, obligations or liabilities on the Companies which can
reasonably be expected to require either of the Companies to incur
liabilities in excess of $100,000 or unduly impair the conduct of either
of the Companies' business;
(xi) Intentionally Omitted;
(xii) amend their respective Certificates of Incorporation, By-laws
or similar governing documents, as the case may be;
(xiii) enter into any new line of business;
(xiv) enter into or perform any commitment, contractual obligation,
borrowing, capital expenditure or other transaction (except pursuant to
the Notes or agreements in force as of the date of this Agreement and
listed on Schedule 2.13) with any officer, director, consultant or
Affiliate of either of the Companies or any of their respective
Subsidiaries;
(xv) make any changes in their respective accounting methods,
except as may be required under law, rule, regulation or generally accepted
accounting principles in the jurisdiction of incorporation of the
applicable Company, in each case as concurred in by such party's
independent public accountants; or
(xvi) agree to, or make any commitment to, do any of the foregoing.
Each of the Companies recognizes that the agreements contained in this
Section 4.1(b) are an integral part of the transactions contemplated by this
Agreement and that without these agreements, VANTAS would not enter into this
Agreement; accordingly, in the event of the breach by either of the Companies
of the terms of this Section 4.1(b), VANTAS shall be entitled, if it so
elects, to institute and prosecute proceedings in any court of competent
jurisdiction, to enforce the specific performance thereof by either of the
Companies, to enjoin either of the Companies from actions or omissions in
violation of this Section 4.1(b) or to otherwise obtain preliminary injunctive
relief (without the necessity to post a bond) from such actions or omissions.
(c) Confidentiality. Each of the Companies shall keep all information
provided to it or any of its representatives pursuant to this Agreement
confidential, and each of the Companies shall not disclose such information to
any Persons other than the directors, officers, employees, financial advisors,
legal advisors, accountants and consultants of the respective Companies who
reasonably need to have access to the confidential information and (i) in the
case of directors, officers, employees, legal advisors and the principal
accountants of each of the Companies, who are advised of the confidential
nature of such information, and (ii) in the case of any financial advisors,
other accountants or consultants of each of the Companies, who execute an
agreement with VANTAS agreeing to maintain confidentiality of such
information; provided, however, the foregoing obligation of each of the
Companies shall (A) not relate to any information that (i) is or becomes
generally available other than as a result of unauthorized disclosure by each
of the Companies or by Persons to whom each of the Companies has made such
information available, or (ii) is or becomes available to each of the
Companies on a non-confidential basis from a third party that is not, to
either of the Companies' knowledge, bound by any other confidentiality
agreement with VANTAS or (B) prohibit disclosure of any information of each of
the Companies believes in good faith that disclosure is required by law, rule,
regulation, court order or other legal or governmental process (including SEC
or GAAP reporting requirements) or if each of the Companies believes in good
faith that disclosure is advisable to explain a material deviation from either
of the Companies' expected financial results that arises from the transactions
contemplated hereby; provided, further that in the case of a disclosure
described in clause (B) above, each of the Companies shall (i) give prior
notice to VANTAS of any such disclosure and (ii) consult with VANTAS prior to
making such disclosure. Notwithstanding anything to the contrary contained
herein, the covenant of VANTAS set forth in this Section 4.1(c) shall
terminate 3 years after the Closing Date.
(d) Supplemental Disclosure. Each of the Companies shall give prompt
notice to VANTAS of (i) any representation or warranty made by either of the
Companies, contained in this Agreement that is qualified as to materiality
becoming untrue or inaccurate or any such representation or warranty that is
not so qualified becoming untrue or inaccurate in any material respect or (ii)
the failure by either of the Companies to comply with or satisfy in any
material respect any covenant, agreement or condition to be complied with or
satisfied by either of the Companies under this Agreement; provided, however,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
(e) Summaries. Not later than two weeks prior to the Closing Date,
CarrAmerica shall deliver to VANTAS a true and accurate summary (the
"Summary") of the OmniUK Real Property Leases and the LuxCo Real Property
Leases indicating for each such lease (i) location, (ii) rent, (iii) term,
(iv) square footage of space demised thereunder, and (v) whether or not the
consent of the landlord is required in order for VANTAS to be able to succeed
to the rights of the tenant under such OmniUK Real Property Lease and LuxCo
Real Property Lease.
ARTICLE V
Mutual Covenants
Section 5.1 Consummation of the Transactions. Subject to the terms and
conditions of this Agreement, each party shall use its commercially reasonable
efforts to cause the Closing to occur upon the terms and conditions hereof.
CarrAmerica and the Companies shall cooperate with VANTAS, and VANTAS shall
cooperate with CarrAmerica and the Companies, in filing any necessary
applications, reports or other documents with, giving any notices to, and
seeking any consents from, all Governmental Entities and all third parties as
may be required in connection with the consummation of the transactions
contemplated by this Agreement.
Section 5.2 Publicity. From the date of the execution and delivery of
this Agreement through the Closing, no public release or announcement
concerning the transactions contemplated hereby shall be issued by any party
hereto without the prior consent of (i) VANTAS in the case of a release or an
announcement by CarrAmerica or (ii) CarrAmerica in the case of a release or an
announcement by VANTAS (in each case which consent shall not be unreasonably
withheld), except as such release or announcement may be required by law or
the rules or regulations of any United States or foreign securities exchange,
in which case the party required to make the release or announcement shall, if
practicable, allow VANTAS or CarrAmerica, as the case may be, reasonable time
to comment on such release or announcement in advance of such issuance.
Section 5.3 Payment for and Assumption of the Loan Notes. At the Closing,
CarrAmerica will assume the obligations under those certain loan notes dated
as of May 15, 1998 and January 8, 2000 (the "Loan Notes"), and concurrently
therewith, VANTAS shall pay CarrAmerica an amount equal to $21,229,327
(reduced by the amount of any payments thereon prior to Closing). At Closing,
the parties shall enter into an assumption agreement in the form and substance
reasonably acceptable to the parties hereto (the "Assumption Agreement"). At
Closing, CarrAmerica shall deliver to VANTAS collateral reasonably
satisfactory to VANTAS to secure CarrAmerica's obligations under the
Assumption Agreement which collateral shall be released at such time as VANTAS
is released from the obligation or at the time such obligation is satisfied or
expires.
Section 5.4 MAM Investment. Prior to Closing, RSI shall execute a
replacement letter(s) of undertaking to replace that certain letter(s) of
undertaking delivered by CarrAmerica to the MAM in connection with its
investment in MAM.
Section 5.5 Brook Street or Hammersmith Collateral. At the Closing, RSI
shall provide $922,530 to OmniUK to replace the cash or certificate of deposit
securing OmniUK's reimbursement obligation to Barklays Bank with respect to a
letter of credit securing the Brook Street or Hammersmith lease, as
applicable, and OmniUK shall pay such funds to Carr America at the Closing.
ARTICLE VI
Conditions to Closing
Section 6.1 Each Party's Obligation. The respective obligation of each
party hereto to effect the transactions contemplated hereby is subject to the
satisfaction or waiver of the following conditions: (i) no statute, rule,
regulation, executive order, decree, temporary restraining order, preliminary
or permanent injunction or other order shall have been enacted, entered,
promulgated, enforced or issued by any Governmental Entity that prohibits the
purchase and sale of the Shares or the Notes or any of the other material
transactions contemplated by this Agreement and (ii) no action, claim,
proceeding or investigation shall be pending or threatened by any Governmental
Entity (other than a court acting in response to an action, claim or
proceeding by a non-Governmental Entity) that, if successful, would result in
any of the foregoing effects.
Section 6.2 CarrAmerica's Obligation. The obligations of CarrAmerica to
sell and deliver the Shares and the Notes to VANTAS and assume the Loan Notes
are subject to the satisfaction (or waiver by CarrAmerica) as of the Closing
of the following conditions:
(a) The representations and warranties of VANTAS made in this Agreement
shall be true and correct as of the date hereof and as of the time of the
Closing as though made as of such time, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties shall be true and correct on and as
of such earlier date) and VANTAS and RSI shall have duly performed, complied
with and satisfied in all material respects all covenants, agreements and
conditions required by this Agreement to be performed, complied with or
satisfied by VANTAS or RSI, as applicable, by the time of Closing, except
where the failure of such representations and warranties to be true and
correct and/or the failure to perform, comply with and satisfy such covenants,
agreements and conditions would not constitute a Company Transaction Value
Impairment. VANTAS and RSI shall have delivered to CarrAmerica a certificate
dated the Closing Date and signed by an officer of each of VANTAS and RSI
confirming the foregoing.
(b) VANTAS shall have delivered to CarrAmerica the cash required by
Sections 1.2 and 5.3.
(c) The HQ Merger shall have been consummated immediately prior to the
Closing hereunder.
Section 6.3 VANTAS' Obligation. The obligation of VANTAS to purchase the
Shares and the Notes from CarrAmerica is subject to the satisfaction (or
waiver by VANTAS) as of the Closing of the following conditions:
(a) The representations and warranties of CarrAmerica made in this
Agreement shall be true and correct, as of the time of the Closing as though
made as of such time, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations and
warranties shall be true and correct on and as of such earlier date), and each
of CarrAmerica and the Companies shall have duly performed, complied with and
satisfied in all material respects all covenants, agreements and conditions
required by this Agreement to be performed, complied with or satisfied by
CarrAmerica and/or the Companies, as applicable, by the time of the Closing,
except where the failure of such representations and warranties to be true and
correct and/or the failure to perform, comply with and satisfy such covenants,
agreements and conditions would not constitute a VANTAS Transaction Value
Impairment (other than those contained in Sections 2.4(b) and 2.4(c), which
shall be true and correct). CarrAmerica shall have delivered to VANTAS a
certificate dated the Closing Date and signed by an officer of CarrAmerica
confirming the foregoing.
(b) CarrAmerica shall have delivered the stock certificates representing
the Shares duly endorsed for transfer and the Notes pursuant to Section 1.2.
(c) The HQ Merger shall have been consummated immediately prior to the
Closing hereunder.
(d) CarrAmerica shall have executed and delivered the Assumption
Agreement, in form and substance reasonably satisfactory to the parties hereto
and otherwise satisfying the requirements of Section 5.3.
Section 6.4 Frustration of Closing Conditions. None of CarrAmerica or
VANTAS may rely on the failure of any condition set forth in Section 6.1,
Section 6.2 or Section 6.3, respectively, to be satisfied if such failure was
caused by such party's failure to perform its obligations hereunder or to use
its commercially reasonable efforts to cause the Closing to occur as required
by Section 5.1.
ARTICLE VII
Further Assurances
From time to time, as and when requested by another party hereto, a party
hereto shall execute and deliver, or cause to be executed and delivered, all
such documents and instruments and shall take, or cause to be taken, all such
further or other actions as such other party may reasonably deem necessary or
desirable to consummate the transactions contemplated by this Agreement.
ARTICLE VIII
Assignment
This Agreement and the rights and obligations hereunder shall not be
assignable or transferable by (i) the Seller without the prior written consent
of VANTAS or (ii) by VANTAS without the prior written consent of Seller;
provided, that such assignment shall not limit or affect VANTAS's obligations
hereunder; and provided, further, that the Seller may assign its rights and
obligations hereunder in connection with a merger, consolidation or other
similar business combination involving Seller or a sale of all or
substantially all of Seller's assets. Any attempted assignment in violation of
this Section 8 shall be void ab initio and of no further force and effect.
ARTICLE IX
No Third-Party Beneficiaries
This Agreement is for the sole benefit of each of the parties hereto and
their successors and permitted assigns, and nothing herein expressed or
implied shall give or be construed to give to any person, other than the
parties hereto and such successors and assigns, any legal or equitable rights
hereunder.
ARTICLE X
Termination
(a) Anything contained herein to the contrary notwithstanding this
Agreement shall terminate automatically upon the termination of the Merger
Agreement or the Stock Purchase Agreement in accordance with its terms. In
addition, anything contained herein to the contrary notwithstanding this
Agreement may be terminated and the transactions contemplated hereby abandoned
at any time prior to the Closing:
(i) by mutual written consent of CarrAmerica and VANTAS;
(ii) by CarrAmerica if the Company has the right to terminate the
Merger Agreement in accordance with its terms;
(iii) by RSI if VANTAS has the right to terminate the Merger
Agreement in accordance with its terms;
(iv) by CarrAmerica or Buyer (provided, however, in the case of
Buyer, only if Buyer has given CarrAmerica at least five business days'
prior written notice of its intention to terminate pursuant to this
Section 12(a)(iv), which notice may not be given prior to May 1, 2000),
if the Closing does not occur on or prior to April 30, 2000;
(v) by CarrAmerica or the Buyer at any time prior to the Closing if
any Governmental Entity shall have issued a judgment, order or decree or
taken any other action permanently enjoining, restraining or otherwise
prohibiting the purchase of the Shares or Notes or any of the other
material transactions contemplated by this Agreement, and such judgment,
order or decree or other action shall have become final and
nonappealable;
(vi)by CarrAmerica upon a breach of any representation, warranty or
covenant on the part of the Buyer set forth in this Agreement, or if any
representation or warranty shall become untrue, and such breach or
subsequent failure to remain true constitutes a Company Transaction Value
Impairment with the result that, in either such case, the conditions set
forth in Section 6.2 shall have become incapable of being satisfied by
April 30, 2000 (or otherwise extended); or
(vii) by the Buyer upon a breach of any representation, warranty or
covenant of the Companies or CarrAmerica set forth in this Agreement, of
if any representation or warranty of CarrAmerica shall become untrue, and
such breach or subsequent failure to remain true constitutes a VANTAS
Transaction Value Impairment with the result that, in either such case,
the conditions set forth in Section 6.3 shall have become incapable of
being satisfied by April 30, 2000 (or as otherwise extended).
(b) In the event of termination by CarrAmerica or VANTAS pursuant to this
Article X, written notice thereof setting forth the reasons therefore shall
forthwith be given to the other party and VANTAS, and the transactions
contemplated by this Agreement shall be terminated, without further action by
any party.
(c) If this Agreement is terminated and the transactions contemplated
hereby are abandoned as described in this Article X, this Agreement shall
become void ab initio and of no further force or effect, except for the
provisions of (i) Section 5(b) relating to publicity and (ii) this Article X.
Nothing in this Article X shall be deemed to release any party from any
liability for any breach by such party of the terms and provisions of this
Agreement, the Stock Purchase Agreement or the Merger Agreement.
ARTICLE XI
Intentionally Omitted
ARTICLE XII
Amendments
No amendment, modification or waiver in respect of this Agreement shall
be effective unless it shall be in writing and signed by the party against
whom such amendment, modification or waiver is asserted.
ARTICLE XIII
Notices
All notices or other communications required or permitted to be given
hereunder shall be in writing and shall be delivered by hand or sent by
prepaid telex, cable or telecopy or sent, postage prepaid, by registered,
certified or express mail or reputable overnight courier service and shall be
deemed given when so delivered by hand, telexed, cabled or telecopied, or if
mailed, three days after mailing (one business day in the case of express mail
or overnight courier service), as follows:
(i) if to the Seller,
CarrAmerica Realty Corporation
1850 K Street, NW
Washington, D.C. 20006
Telecopy No: 202-729-1160
Attention: Linda Madrid, General Counsel
with a copy to:
Hogan & Hartson, L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Telecopy No: (202) 637-5910
Attention: J. Warren Gorrell, Jr.
David W. Bonser; and
(ii) if to the Companies:
OmniUK
5 Park Place
London, England SW1A 1LP
Attention: Peter Kershaw
LuxCo
7 Val Sainte Croix
L-2015 Luxembourg
Attention: Helene Muller
with copies to:
HQ Global Workplaces, Inc.
15950 N. Dallas Parkway, Suite 350
Dallas, Texas 75248
Telecopy: (972) 361-8216
Attention: Jill Louis, General Counsel
and
Hogan & Hartson, L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Telecopy No: (202) 637-5910
Attention: J. Warren Gorrell, Jr.
David W. Bonser; and
(iii) if to VANTAS
c/o Reckson Service Industries, Inc.
10 East 50th Street
Suite 2700
New York, NY 10022
Telecopy No: (212) 931-8001
Attention: Scott H. Rechler
Jason M. Barnett
with copies to:
Brown & Wood LLP
One World Trade Center
New York, NY 10048
Telecopy No: (212) 839-5599
Attention: Joseph W. Armbrust, Jr.
J. Gerard Cummins
or such other address as any party may from time to time specify by written
notice to the other parties hereto.
ARTICLE XIV
Interpretation; Exhibits and Schedules
The headings contained in this Agreement and in any Exhibit to this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. All Exhibits and Schedules
annexed hereto or referred to herein are hereby incorporated in and made a
part of this Agreement as if set forth in full herein. Any capitalized terms
used in any Schedule or Exhibit but not otherwise defined therein, shall have
the meaning as defined in this Agreement. This Agreement is gender neutral.
Any word in this Agreement that refers to a particular gender shall also refer
to all other genders, including masculine, feminine and neuter.
ARTICLE XV
Counterparts
This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement, and shall become effective
when one or more such counterparts have been signed by each of the parties and
delivered to the other parties.
ARTICLE XVI
Litigation Costs
If any litigation with respect to the obligations of the parties under
this Agreement results in a final nonappealable order of a court of competent
jurisdiction that results in a final disposition of such litigation, the
prevailing party, as determined by the court ordering such disposition, shall
be entitled to reasonable attorneys' fees as shall be determined by such
court. Contingent or other percentage compensation arrangements shall not be
considered reasonable attorneys' fees.
ARTICLE XVII
Entire Agreement
This Agreement contains the entire agreement and understanding between
the parties hereto with respect to the subject matter hereof and supersedes
all prior agreements and understandings relating to such subject matter. The
parties hereto shall not be liable or bound to any other party in any manner
by any representations, warranties or covenants relating to such subject
matter except as specifically set forth herein.
ARTICLE XVIII
Intentionally Omitted
ARTICLE XIX
Severability
If any provision of this Agreement (or any portion thereof) or the
application of any such provision (or any portion thereof) to any person or
circumstance shall be held invalid, illegal or unenforceable in any respect by
a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof (or the remaining
portion thereof) or the application of such provision to any other persons or
circumstances.
ARTICLE XX
Consent to Jurisdiction
The Buyer and RSI, on the one hand, and the Companies and CarrAmerica, on
the other hand, agree to commence any action, suit or proceeding arising out
of this Agreement or the transactions contemplated hereby against the other
party either in a federal court located in the State of Delaware or if such
suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in a Delaware state court. Each party to this
Agreement submits and consents to personal jurisdiction in any such
litigation. The Buyer and RSI, on the one hand, and the Companies and
CarrAmerica, on the other hand, further agree that service of any process,
summons, notice or document delivered by U.S. registered mail to such party's
respective address set forth above shall be effective service of process for
any action, suit or proceeding in Delaware with respect to any matters to
which it has submitted to jurisdiction in this Article XX. The Buyer, on the
one hand, and the Companies, on the other hand, irrevocably and
unconditionally waive any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) any Delaware state court or (ii) any federal court located in
the State of Delaware, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought in any such court has been brought in an
inconvenient forum. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT.
ARTICLE XXI
Governing Law
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Delaware applicable to agreements made and to be
performed entirely within such State, without regard to the conflicts of law
principles of such State.
ARTICLE XXII
Disclosure Schedules
Any fact, circumstance, condition, document or other matter disclosed in
any Schedule referenced herein shall be deemed to have been disclosed for all
purposes under the Agreement including all other relevant Schedules, provided
that the relevance of the disclosure to such other Schedules can be reasonably
discerned from the applicable Schedule.
ARTICLE XXIII
Exclusive Remedy
The parties hereto acknowledge and agree that after the Closing, the
terms of the Indemnification Escrow Agreement shall be the sole remedy for any
breach of any of the representations and warranties contained herein (other
than breaches arising out of fraud) and in no event shall VANTAS or RSI have
any claim against OmniUK or LuxCo with respect to any such breach.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
CARRAMERICA REALTY CORPORATION
By: /s/ Karen B. Dorigan
_________________________________
Name: Karen B. Dorigan
Title: Managing Director
RECKSON SERVICES INDUSTRIES, INC.,
solely for the purposes of Section 5.4
By: /s/ Jason Barnett
____________________________
Name: Jason Barnett
Title: E.V.P.
VANTAS INCORPORATED
By: /s/ Stephen M. Rathkopf
____________________________
Name: Stephen M. Rathkopf
Title: Secretary
OmniOffices (UK) Limited (solely for
purposes of Article II, Article IV
and Article V)
By: /s/ Thomas A. Carr
____________________________
Name: Thomas A. Carr
Title: Director
OmniOffices (Lux) 1929 Holding Company
S.A. (solely for purposes of
Article II, Article IV and Article V)
By: /s/ Thomas A. Carr
____________________________
Name: Thomas A. Carr
Title: Director
By: /s/ Gary Kusin
____________________________
Name: Gary Kusin
Title: Director
<PAGE>
Exhibit A
OmniOffices (UK) Limited 2,006,066 Class B Shares
OmniOffices (Lux) 1929 Holding Company S.A. 144 Class B Shares
<PAGE>
[Exhibit B]
[List of Notes]
EXHIBIT 10.5
INDEMNIFICATION AND ESCROW AGREEMENT
THIS INDEMNIFICATION AND ESCROW AGREEMENT (this "Agreement") is
entered into as of the ____ day of ____________, 2000 by and among Reckson
Service Industries, Inc., a Delaware corporation ("RSI"), CarrAmerica Realty
Corporation, a Maryland corporation ("CarrAmerica") and [other shareholders to
be added per CarrAmerica's instructions, collectively, the "Shareholders" and
individually a "Shareholder")] and ____________________, a __________
corporation, as escrow agent (the "Escrow Agent") hereunder.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, RSI, CarrAmerica, VANTAS Incorporated, a Nevada corporation
("VANTAS"), and HQ Global Workplaces, Inc., a Delaware corporation ("HQGW"),
have entered into an Agreement and Plan of Merger dated as of January __, 2000
(the "Merger Agreement") pursuant to which VANTAS will merge with and into
HQGW ("the Merger");
WHEREAS, on the date hereof, pursuant to an agreement among
[the/certain] Shareholders and RSI dated as of January __, 2000 (the "Stock
Purchase Agreement"), [certain/each] of the Shareholders are selling to RSI,
and RSI is purchasing from such Shareholders, that number of the shares of
voting common stock, par value $.01 per share (the "Voting Common Stock"), and
non-voting common stock, par value $.01 per share (the "Non-Voting Common
Stock" and together with the Voting Common Stock, collectively, the "Shares"),
of HQGW as set forth in, and subject to the terms and conditions of, the Stock
Purchase Agreement for $____ per share in cash for an aggregate purchase price
of $______ (the "Share Consideration");
WHEREAS, on the date hereof, pursuant to the Merger Agreement, each
issued and outstanding share of (A) Common Stock, par value $.01 per share
("VANTAS Common Stock"), of VANTAS shall be converted into the right to
receive $_____ per share in cash and (B) (i) Series A Convertible Preferred
Stock, par value $ ___ per share, of VANTAS (the "Series A Stock"), (ii)
Series B Convertible Preferred Stock, par value $____ per share, of VANTAS
(the "Series B Stock"), (iii) Series C Convertible Preferred Stock, par value
$ _______ per share, of VANTAS (the "Series C Stock"), (iv) Series D
Convertible Preferred Stock, par value $ _______ per share, of VANTAS (the
"Series D Stock"), and (v) Series E Convertible Preferred Stock, par value
$____ per share of VANTAS (the "Series E Stock"), other than shares of Series
A Stock, Series B Stock, Series C Stock, Series D Stock and Series E Stock
held in the treasury of VANTAS, are, by virtue of the Merger and without any
action on the part of the holder thereof, being converted into the right to
receive ______ shares of Voting Common Stock ("VANTAS' Share Consideration");
WHEREAS, as a condition to the consummation by VANTAS and/or RSI, as
applicable, of the transactions contemplated by the Merger Agreement, the
Stock Purchase Agreement and that certain agreement by and between VANTAS and
CarrAmerica with respect to the purchase and sale of all of the outstanding
capital stock of Omni Offices (UK) Limited ("HQ UK") and Omni Offices (Lux)
1929 Holding Company, S.A. ("HQ LuxCo") (the "UK Agreement"), the Shareholders
hereby have agreed to indemnify and hold harmless RSI from and against certain
losses from certain matters upon the terms and conditions provided herein;
WHEREAS, as a condition to the consummation by HQGW and the
applicable Shareholders of the transactions contemplated by the Merger
Agreement, the Stock Purchase Agreement and the UK Agreement, RSI has agreed
to indemnify and hold harmless the Shareholders from and against certain
losses from certain matters upon the terms and conditions provided herein;
WHEREAS, in connection with the Shareholders' indemnification
obligations, the parties have agreed that the Shareholders are depositing an
aggregate of ___ shares of Voting Common Stock and ____ shares of Non-Voting
Common Stock (collectively, the "Shareholder Indemnification Shares") and/or
certain cash (the "Shareholder Cash Collateral") with the Escrow Agent to be
held and disbursed by the Escrow Agent in accordance with this Agreement;
WHEREAS, in connection with RSI's indemnification obligations, the
parties have agreed that RSI is depositing an aggregate of ____ shares of
Voting Common Stock (the "RSI Indemnification Shares", and together with the
Shareholder Indemnification Shares, the "Indemnification Shares") with the
Escrow Agent to be held and disbursed by the Escrow Agent in accordance with
this Agreement;
WHEREAS, capitalized words and phrases used and not defined herein
shall have the meanings ascribed to them in the Merger Agreement; and
WHEREAS, the Escrow Agent is willing to establish and administer
this escrow on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Certain Definitions. As used in this Agreement, certain
capitalized terms not otherwise defined herein shall have
the following respective meanings:
"Cash Collateral" shall mean the Shareholder Cash Collateral and any
cash deposited by RSI or any Shareholder in its Escrow Account in substitution
of RSI Indemnification Shares or Shareholder Indemnification Shares in
accordance with Section 2(b).
"Company Level Loss" shall mean any loss, liability, claim, damage
or expense (including reasonable legal fees and expenses) directly or
indirectly incurred by HQGW or its Subsidiaries and VANTAS or its Subsidiaries
respectively; it being understood that a Company Level Loss shall not include
any consequential, incidental or punitive damages or any Direct Loss.
"Loss" or "Losses" shall mean a Company Level Loss or a Direct Loss.
"Direct Loss" shall mean any loss, liability, claim, damage or
expense (including reasonable legal fees and expenses) incurred by (i) any
Shareholder Indemnitee arising from, relating to or as a result of the
inaccuracy at the time made or deemed made of any of the representations or
warranties set forth in: (a) Section 5(B) of the Merger Agreement; and (b)
Section 5 of the Stock Purchase Agreement; or (ii) RSI Indemnitees arising
from, relating to, or as a result of the inaccuracy at the time made or deemed
made of any of the representations or warranties set forth in: (a) Section
4(B) of the Merger Agreement; (b) Section 4 of the Stock Purchase Agreement
and (c) Article II, Section (B) of the UK Agreement; it being understood that
a Direct Loss shall not include (x) any consequential, incidental or punitive
damages, (y) any loss or damages suffered by such party as a result of the
diminution in value (either directly or indirectly) of the interest held by
such party in the Surviving Corporation, or (z) any Company Level Loss.
"Market Value" shall mean $_____ per share [the price of a share of
Common Stock under the Stock Purchase Agreement].
"Ownership Percentage" shall mean, with respect to a Shareholder,
the percentage set forth opposite such Shareholder's name on Schedule A
attached hereto [calculated as a fraction, the numerator of which is the
number of shares of all classes of capital stock of HQGW held by such person
immediately prior to the Effective Time, and the denominator of which is the
total number of shares of all classes of capital stock of HQGW held by all
Shareholders who are parties to this Agreement immediately prior to the
Effective Time].
"RSI Indemnitees" shall mean RSI and its directors, officers,
employees, shareholders, agents and representatives.
"RSI's Indemnification Share" shall mean one (1) minus the
Shareholder's Indemnification Share.
"Shareholder Indemnitees" shall mean each Shareholder and its
directors, officers, employees, shareholders, agents and representatives.
"Shareholder Litigation" shall mean the legal proceedings disclosed
in Schedule 4(p) of the Merger Agreement under the caption "Omni Offices, Inc.
and CarrAmerica Realty Corporation v. Joseph Kaidanow and Robert Arcoro" and
any and all other future claims, counterclaims, causes of actions or other
proceedings threatened or initiated by or on behalf of Robert Arcoro
("Arcoro") or Joseph Kaidanow ("Kaidanow") that relate to facts or
circumstances or alleged facts or alleged circumstances arising on or prior to
the Closing Date, other than any such claims, causes of action or other
proceedings with respect to and only to the extent of allegations thereon that
any information supplied in writing by RSI to CarrAmerica for inclusion in
materials that HQGW delivers to Arcoro or Kaidanow in connection with the
Merger contains any untrue statement of a material fact with respect to RSI or
VANTAS or omits to state a material fact necessary in order to make the
statements therein with respect to RSI or VANTAS not misleading.
"Shareholders' Indemnification Share" shall mean the
aggregate percentage ownership interest of the Voting Common Stock and
Non-Voting Common Stock of Holdco owned by the Shareholders immediately after
the Closing.
2. Establishment of Escrow Account.
(a) Each Shareholder and RSI are contemporaneously with the
execution and delivery of this Agreement by each of the parties delivering the
number of Indemnification Shares and/or the amount of Cash Collateral set
forth opposite its name on Schedule A hereto to the Escrow Agent for deposit
into separate escrow accounts (each, an "Escrow Account" and collectively, the
"Escrow Accounts") by the Escrow Agent and the Escrow Agent hereby
acknowledges receipt of the same. All Indemnification Shares and Cash
Collateral in the Escrow Accounts shall be available for distribution by the
Escrow Agent, subject to the provisions of this Agreement, to reimburse any
RSI Indemnitee or any Shareholder Indemnitee, as the case may be, in respect
of any Losses that are indemnifiable pursuant to this Agreement.
Notwithstanding the escrow of the Indemnification Shares, dividends and other
distributions declared and paid on Indemnification Shares held in escrow shall
continue to be paid by HQGW to the respective Shareholders and RSI, all voting
rights with respect to such shares shall inure to the benefit of and be
enjoyed by the respective Shareholders and RSI, and such Shareholders and RSI
shall be the legal and beneficial owners of such shares for all purposes
subject to the terms of this Agreement; provided, that the parties agree that
(i) the Surviving Corporation shall deposit with the Escrow Agent any
securities issued to the Shareholders or RSI in respect of any Indemnification
Shares held in escrow as a result of a stock split or combination of shares of
Voting Common Stock or Non-Voting Common Stock, as the case may be, payment of
a stock dividend or other stock distribution made without receipt of
consideration therefor in or on the Voting Common Stock or Non-Voting Common
Stock, as the case may be, or change of shares of the Voting Common Stock or
Non-Voting Common Stock, as the case may be, into any other securities
pursuant to or as part of a business combination or otherwise, and (ii) such
securities shall be held by the Escrow Agent as, and shall be included within
the definition of, Indemnification Shares, as the case may be; provided,
however, notwithstanding the foregoing proviso, to the extent that any such
distribution of securities is properly taxable as a dividend for federal
income tax purposes, HQGW shall distribute such securities to the respective
Shareholders and RSI. The Escrow Agent agrees that it shall invest any Cash
Collateral in an interest-bearing money market account. The Escrow Agent shall
not have any liability for any loss sustained as a result of any investment
made pursuant to the preceding sentence or as a result of any liquidation of
any such investment prior to its maturity. Any interest earned on any Cash
Collateral shall not be used to increase the amount of the Escrow Account of
any party hereto and shall be paid to the applicable depositor of the Escrow
Account from time to time upon demand, to the extent possible.
(b) At any time and from time to time after the Closing Date, any or
all of the Indemnification Shares deposited by any Shareholder or RSI in its
Escrow Account on the Closing Date may be withdrawn upon at least five (5)
business days' prior notice by RSI or the Shareholders, as applicable, to the
other, but if and only if simultaneously with such withdrawal the withdrawing
party delivers immediately available funds to the Escrow Agent for deposit
into such party's Escrow Account in an amount equal to the aggregate Market
Value of the number of Indemnification Shares so withdrawn.
3. Tax Indemnification.
(a) Tax Indemnification by Shareholders. Subject to the limitations
of indemnification pursuant to Section 5, the Shareholders severally, based on
each such Shareholder's Ownership Percentage, shall indemnify the RSI
Indemnitees against and hold them harmless from (i) any Loss incurred by
reason of any liability of HQGW and its Subsidiaries for Taxes for any
Pre-Closing Tax Period, (ii) any Loss incurred by reason of any liability for
Taxes of the Shareholders or any other person (other than HQGW) which is or
has ever been affiliated with HQGW and its Subsidiaries, and (iii) any Loss
incurred by reason of any liability for reasonable legal, accounting,
appraisal, consulting or similar fees and expenses for any item attributable
to any item in clause (i) or (ii) above.
(b) Tax Indemnification by RSI. Subject to the limitations of
indemnification pursuant to Section 5, RSI shall indemnify the Shareholder
Indemnitees against and hold them harmless from (i) any Loss incurred by
reason of any liability of VANTAS and its Subsidiaries for Taxes for any
Pre-Closing Tax Period, (ii) any Loss incurred by reason of any liability for
Taxes of RSI or any other person (other than VANTAS and its Subsidiaries)
which has ever been affiliated with RSI and its Subsidiaries, and (iii) any
Loss incurred by reason of any liability for reasonable legal, accounting,
appraisal, consulting or similar fees and expenses for any item attributable
to any item in clause (i) or (ii) above.
(c) Straddle Period. For purposes of subparagraphs (a) and (b)
above, in the case of any taxable period that includes (but does not end on)
the Closing Date (a "Straddle Period"):
(i) real, personal and intangible property Taxes ("Property Taxes")
of HQGW and its Subsidiaries and VANTAS and its Subsidiaries,
respectively, for any Pre-Closing Tax Period (other than Taxes imposed in
connection with the Merger or otherwise in connection with this Agreement
or the transactions contemplated hereby) shall be equal to the amount of
such Property Taxes of HQGW and its Subsidiaries and VANTAS and its
Subsidiaries, respectively, for the entire Straddle Period (limited,
however, to those Taxes attributable to the assets of HQGW and its
Subsidiaries and VANTAS and its Subsidiaries, respectively, owned prior
to the Closing Date) multiplied by a fraction, the numerator of which is
the number of days during the Straddle Period that are in the Pre-Closing
Tax Period and the denominator of which is the number of days in the
Straddle Period; and
(ii) the Taxes of HQGW and its Subsidiaries and VANTAS and its
Subsidiaries, respectively (other than Property Taxes and other than
Taxes referred to in Section 6(e) of this Agreement, which Taxes will be
governed by such Section), for the Pre-Closing Tax Period shall be
computed as if such taxable period ended as of the close of business on
the Closing Date. The indemnity obligations of the Shareholders in
respect of Taxes for a Straddle Period shall, subject to the limitations
on indemnification pursuant to Section 5, equal the excess of (x) such
Taxes for the Pre-Closing Tax Period over (y) the sum of (i) the amount
of such Taxes for the Pre-Closing Tax Period paid by the Shareholders or
any of their affiliates (other than HQGW) at any time and (ii) the amount
of such Taxes paid by HQGW and its Subsidiaries on or prior to the
Closing Date (which includes any payments of estimated taxes or similar
amounts made by HQGW and its Subsidiaries on or prior to the Closing Date
and any amounts of Taxes for which a reserve has been reflected on the
Company Balance Sheet, even though the amount reflected for such reserve
has not yet been paid, based on each such Shareholder's Ownership
Percentage, to the applicable taxing authority). The Shareholders
severally, based on each such Shareholder's Ownership Percentage, shall
initially pay such excess to RSI upon the later of (A) five days prior to
the date on which the Tax Return (including any Tax Return with respect
to estimated Taxes) with respect to the liability for such Taxes is
required to be filed (and if no such Tax Return is required to be filed,
five days prior to the date satisfaction of the Tax liability is required
by the relevant taxing authority) or (B) ten days after the receipt from
RSI of notice that such amount is required to be paid pursuant hereto.
The payments to be made pursuant to this paragraph by the Shareholders
with respect to a Straddle Period shall be appropriately adjusted to
reflect any final determination (which shall include the execution of
Form 870-AD or any successor form) with respect to Taxes for the Straddle
Period.
RSI shall cause the Surviving Company to within 10 days of the
receipt thereof, pay to each of the Shareholders an amount equal to such
Shareholder's Ownership Percentage, an amount equal to 100% of any refund
of any Taxes of HQGW with respect to any Pre-Closing Tax Period received
by HQGW, any of its Subsidiaries or the Surviving Company at any time
after the Closing Date (including for this purpose any credit against
Taxes owed for any taxable period ending after the Closing Date, if such
credit is attributable to a taxable period ending on or prior to the
Closing Date, any refund of estimated tax payments made on or prior to
the Closing Date or any application of such payments to either a taxable
period commencing after the Closing Date or a portion of a Straddle
Period that is subsequent to the Closing Date, and any interest received
by HQGW, any of its Subsidiaries or the Surviving Company with respect to
any of the foregoing from the applicable taxing authority) unless (and
only to the extent) that the amount of such refund for Taxes was
reflected as an asset on the Company Balance Sheet.
4. Other Indemnification.
(a) Other Indemnification by the Shareholders. (W) The Shareholders
severally, based on each such Shareholder's respective Ownership Percentage,
shall indemnify the RSI Indemnitees against and hold them harmless from any
Company Level Loss (other than any relating to Taxes, for which
indemnification provisions are set forth in Section 3(a), and any relating to
Shareholder Litigation, for which indemnification provisions are set forth in
Section 4)(a)(X)) arising from, relating to or otherwise in respect of any
inaccuracy of any representation or warranty of HQGW contained in the Merger
Agreement (other than the representations set forth in Sections 4(A)(b) and
4(A)(ee) of the Merger Agreement, for which indemnification provisions are set
forth in Section 4(a)(X) below) or in any certificate delivered pursuant
thereto at the time made or deemed made (regardless of whether or not VANTAS
or RSI was aware of such failure on or prior to the Effective Time).
(X) All Shareholders severally, based on each such Shareholder's
respective Ownership Percentage, shall indemnify the RSI Indemnitees against
and hold them harmless from any claims, causes of action or other proceedings
arising from, relating to, or otherwise in respect of (i) the failure to
obtain any consent required from the Mercury Executive Offices L.P. (unless as
a result of a breach by RSI of Section 5.4 of the UK Agreement) in connection
with the transactions contemplated by the Merger Agreement or the UK Agreement
(unless VANTAS or RSI fails to perform its obligations under Section 5.4 of
the UK Agreement) or (ii) any inaccuracy of the representations set forth in
Sections 4(A)(b) and 4(A)(ee) of the Merger Agreement. CarrAmerica shall
indemnify the RSI Indemnitees against and hold them harmless from any claims,
causes of action or other proceedings arising from, relating to, or otherwise
in respect of the Shareholder Litigation.
(Y) Each Shareholder severally with respect to any Direct Loss
attributable to itself only shall indemnify the RSI Indemnitees against and
hold them harmless from any such Direct Loss directly or indirectly suffered
or incurred by any such RSI Indemnitee.
(Z) CarrAmerica shall indemnify the RSI Indemnitees against and hold
them harmless from any Company Level Loss directly or indirectly suffered or
incurred by any such RSI Indemnitee arising from, relating to or otherwise in
respect of any inaccuracy of the representations and warranties of HQ UK and
HQ LuxCo contained in the UK Agreement or in any certificate delivered
pursuant thereto at the time made or deemed made (regardless of whether or not
VANTAS or RSI was aware of such failure on or prior to the Closing Date).
(b) Other Indemnification by RSI. (Y) RSI shall indemnify the
Shareholder Indemnitees against and hold them harmless from any Company Level
Loss or Direct Loss (other than any relating to Taxes, for which
indemnification provisions are set forth in Section 3(a)) directly or
indirectly suffered or incurred by them arising from, relating to or otherwise
in respect of any inaccuracy of any representation or warranty of RSI or
VANTAS contained in the Merger Agreement (other than the representations set
forth in Section 5(A)(b) of the Merger Agreement, for which indemnification
provisions are set forth in Section 5(b)(Z) below), the UK Agreement or the
Stock Purchase Agreement or in any certificate delivered pursuant to either of
the foregoing at the time made or deemed made (regardless of whether or not
any Shareholders were aware of such failure on or prior to the Effective
Time).
(Z) RSI shall indemnify the Shareholder Indemnitees against and hold
them harmless from any claims, causes of actions or other proceedings (i)
arising from, relating to, or otherwise in respect of the matter disclosed in
clause (ii) of Schedules 5(r) or 5(u) to the Merger Agreement or any
inaccuracy of the representations set forth in Section 5(A)(b) of the Merger
Agreement or (ii) threatened or initiated by or on behalf of any holder of
VANTAS Common Stock or Preferred Stock that relate to the execution and
delivery of the Merger Agreement or to any of the transactions contemplated
therein.
5. Limitations on Indemnification. Any claim brought under Section 3
or 4 is subject in each case to the following limitations and restrictions:
(a) Damages Net of Insurance, etc. The amount of any Company Level
Loss for which indemnification is provided under this Agreement shall be net
of any amounts actually recovered by the Surviving Corporation under insurance
policies with respect to such Company Level Loss (which the Surviving
Corporation shall use commercially reasonable efforts to recover under such
policies) and the amount of any Loss shall be (i) increased to take account of
any net Tax cost incurred by the indemnified party arising from the receipt of
indemnity payments hereunder (grossed up for such increase), and (ii) reduced
to take account of any net Tax benefit realized by the Surviving Company
arising from the incurrence or payment of any such Loss. In computing the
amount of any such Tax cost or Tax benefit, the indemnified party or the
Surviving Company, as the case may be, shall be deemed to recognize all other
items of income, gain, loss, deduction or credit before recognizing any item
arising from the receipt of any indemnity payment hereunder or the incurrence
or payment of any indemnified Loss. Any indemnity payment under this Agreement
shall be treated as an adjustment to the Merger Consideration for tax
purposes, unless a final determination (which shall include the execution of a
Form 870-AD or successor form) with respect to the indemnified party causes
any such payment not to be treated as an adjustment to the Merger
Consideration for United States Federal income tax purposes.
(b) Minimum Claim Amounts.
(i) Claims made by the RSI Indemnitees with respect to Losses for
which indemnification is provided pursuant to Section 3(a), 3(c), 4(a)(W)
or 4(a)(Z) shall be required to be paid if and only if the aggregate
amount of all such Losses, but for this Section 5(b)(i), exceed on a
cumulative basis $_________ [$5,000,000 divided by RSI's Indemnification
Share] (the "Holder Basket"), in which event the entire amount of such
Losses shall be recoverable; it being understood that claims with respect
to Losses or damages arising from claims, causes of action or other
proceedings for which indemnification is provided pursuant to Section
4(a)(X) and 4(a)(Y) shall not be subject to the foregoing limitation.
(ii) Claims made by the Shareholder Indemnitees with respect to
Losses for which indemnification is provided pursuant to Section 3(b),
3(c) or 4(b)(Y) (with respect to claims for Company Level Losses) shall
be required to be paid if and only if the aggregate amount of all such
Losses, but for this Section 5(b)(ii), exceed on a cumulative basis
$_________ [$5,000,000 divided by fraction representing the Shareholders'
Indemnification Share] (the "RSI Basket"), in which event the entire
amount of such Losses shall be recoverable; it being understood that
claims with respect to Direct Losses for which indemnification is
provided pursuant to Section 4(b)(Y) or Losses, claims, causes of action
or other proceedings pursuant to Section 4(b)(Z) shall not be subject to
the foregoing limitation.
(iii) In determining whether the Shareholder Indemnitees or RSI
Indemnitees, as the case may be, is or are entitled to indemnification
under Section 4, the representations and warranties of the Shareholders
and HQGW, or RSI and VANTAS, as applicable, shall not be deemed qualified
by any references to material or materiality contained therein and any
inaccuracies therein shall be determined without regard to whether such
inaccuracy constitutes a Company Material Adverse Effect or a VANTAS
Material Adverse Effect; provided, however, in no event will any
Shareholder Indemnitees or RSI Indemnitees, as the case may be, be
entitled (A) to recovery for any Loss relating to or arising out of an
inaccuracy of any representation or warranty of VANTAS, RSI, HQGW or any
Shareholder, as the case may be, even if such Shareholder Indemnitee or
RSI Indemnitee, as applicable, would be entitled to indemnification
pursuant to Section 5(b)(i) or 5(b)(ii), but for this Section 5(b)(iii),
unless the Loss related thereto exceeds $50,000, (B) to aggregate items
referred to in clause (A) of this Section 5(b)(iii) for the purpose of
exceeding the limitation set forth in clause (A) of this Section
5(b)(iii), or (C) to otherwise submit the items referred to in clause (A)
of this Section 5(b)(iii) as Losses reimbursable pursuant to this Section
5.
(c) Percentage Recovery.
(i) If cumulative Company Level Losses under Sections 3(a), 3(c),
4(a)(W) and 4(a)(Z) exceed the Holder Basket, the indemnification amount
to be paid to the applicable RSI Indemnitees shall be equal to RSI's
Indemnification Share of the entire amount of Company Level Losses. In
all events, 100% of the entire amount of Losses under Sections (4)(a)(X)
and 4(a)(Y) shall be paid to the applicable RSI Indemnitees.
(ii) If cumulative Company Level Losses under Sections 3(b), 3(c)
and 4(b)(Y) exceed the RSI Basket, the indemnification amount to be paid
to the applicable Shareholder Indemnitees shall be equal to the
Shareholders' Indemnification Share of the entire amount of Company Level
Losses. In all events, 100% of the entire amount of Losses that
constitute Direct Losses of any Shareholder Indemnitee shall be paid to
the applicable Shareholder Indemnitees.
(d) Other Limitations on Recovery.
(i) Except as otherwise provided in the immediately following
sentence, claims made by any RSI Indemnitee against any Shareholder
pursuant to this Agreement shall be made solely against the Shareholder
Indemnification Shares or Cash Collateral deposited into the Escrow
Account by such Shareholder. Claims made by any RSI Indemnitee against
any Shareholder with respect to Direct Losses shall be made first against
the Shareholder Indemnification Shares or Cash Collateral deposited into
the Escrow Account by such Shareholder in accordance with Section 7, but
only after any and all amounts in respect of Valid Claims with respect to
the Company Level Losses shall have first been disbursed in accordance
with Section 7; provided, that if the amount available in such Escrow
Account (valuing any Indemnification Shares in accordance with Section 7)
is less than the full amount of the claim, or if the Escrow Accounts have
been terminated, a claim may be made directly against such Shareholder,
which shall be personally liable for the remaining amount of the claim.
Except as set forth in the preceding sentence, no Shareholder shall have
any personal liability to any RSI Indemnitee in any respect pursuant to
this Agreement or otherwise.
(ii) Except as otherwise provided in the immediately following
sentence, claims made by any Shareholder Indemnitee against RSI pursuant
to this Agreement shall be made solely against the RSI Indemnification
Shares or Cash Collateral deposited into the Escrow Account by RSI.
Claims made by any Shareholder Indemnitee against RSI with respect to
Direct Losses shall be made first against the RSI Indemnification Shares
or cash collateral deposited into the Escrow Account by RSI in accordance
with Section 7, but only after any and all amounts in respect of Valid
Claims with respect to Company Level Losses shall have first been
disbursed in accordance with Section 7; provided that if the amount
available in such Escrow Account (valuing any Indemnification Shares in
accordance with Section 7) is less than the full amount of the claim, or
if the Escrow Accounts have been terminated, a claim may be made directly
against RSI, which shall be personally liable for the remaining amount of
the claim. Except as set forth in the immediately preceding sentence, RSI
shall not have any personal liability to any Shareholder Indemnitee in
any respect pursuant to this Agreement or otherwise.
(e) Termination of Indemnities. Notwithstanding anything in this
Agreement to the contrary, the obligations of the Shareholders and RSI to
provide indemnification under this Agreement shall terminate and be
extinguished forever at the close of business on June 30, 2001, except for (i)
claims under Section 3 hereof and claims under Section 4 hereof that relate to
the representations concerning authorization and benefit plan matters set
forth in Sections 4(b), 4(r), 5(b) and 5(k) of the Merger Agreement and
Sections 2.2 and 2.16 of the UK Agreement and the representations set forth in
the Stock Purchase Agreement, which claims may be made until the expiration of
the applicable statute of limitations; provided, however, that the obligations
of the Shareholders and/or RSI to provide indemnification under this Agreement
shall not terminate at such time with respect to any claim that has been
properly asserted by delivering a notice of such claim to the indemnifying
party in accordance with the terms hereof and such claim has not been paid or
otherwise resolved as of the date on which such indemnity obligation would
otherwise terminate pursuant to this Section 5(e). If a claim has been
properly asserted and not paid or resolved as described above, the indemnity
obligations of the Shareholders or RSI, as applicable, shall continue beyond
June 30, 2001, but (i) the indemnity obligation shall continue only with
respect to the claim in question, and only until such claim is paid or
otherwise finally resolved, and (ii) any amounts in the Escrow Account not
reasonably determined by the indemnified party to be needed to cover the
disputed claim shall be released from the Escrow Account to the Shareholders
or RSI, as applicable.
6. Other Tax Matters
(a) For any taxable period of HQGW that includes (but does not end
on) the Closing Date, RSI shall, or shall cause the Surviving Company to,
timely prepare and file with the appropriate taxing authorities all Tax
Returns required to be filed; provided, however, that no such Tax Return shall
be filed without the written consent of the Representative, which consent
shall not be unreasonably withheld. The Shareholders shall reimburse RSI (in
accordance with the procedures set forth in Sections 3(a) and 3(c)) for any
amount owed by the Shareholders to RSI pursuant to such Sections (subject to
the limitation set forth in Section 5) with respect to the taxable periods
covered by such Tax Returns. For any taxable period of HQGW that ends on or
before the Closing Date, HQGW shall timely prepare and file with the
appropriate taxing authorities all Tax Returns required to be filed and shall
pay all Taxes due with respect to such Tax Returns; provided, however, that no
such Tax Return shall be filed without the prior written consent of RSI and
the Represntative, which consent shall not be unreasonably withheld. RSI and
the Shareholders agree to cause HQGW to file all Tax Returns for the taxable
period including the Closing Date on the basis that the relevant taxable
period ended as of the close of business on the Closing Date, unless the
relevant taxing authority will not accept a Tax Return filed on that basis.
(b) The Shareholders shall cause HQGW to, and the Shareholders, RSI
and the Surviving Company shall, reasonably cooperate, and cause their
respective Affiliates, officers, employees, agents, auditors and other
representatives reasonably to cooperate, in preparing and filing all Tax
Returns and in resolving all disputes and audits with respect to all taxable
periods relating to Taxes, including by maintaining and making available to
each other all records necessary in connection with Taxes, provided, however,
in no event shall RSI be required to provide any Tax Return to the
Shareholders and the Shareholders shall not be required to provide to RSI any
Tax Return not actually in their possession. RSI recognizes that the
Shareholders will need access, from time to time, after the Closing Date, to
certain accounting and Tax records and information held by the Surviving
Company to the extent such records and information pertain to events occurring
prior to the Closing Date acting as representative for the Shareholders;
therefore, RSI agrees after the Closing to cause the Surviving Company to
allow the Representative, and its agents and other representatives, at times
and dates mutually acceptable to the parties, reasonable access to such
records from time to time, during normal business hours and at the
Shareholders' expense.
(c) An amount equal to 100% of the amount or economic benefit of any
refunds, credits or offsets of Taxes of HQGW for any Pre-Closing Tax Period
(including that portion of a Straddle Period ending on the Closing Date) shall
be for the account of the Shareholders. Notwithstanding the foregoing, (i) any
such refunds, credits or offsets of Taxes shall be for the account of the
Surviving Company and RSI to the extent such refunds, credits or offsets of
Taxes are attributable (determined on a marginal basis) to the carryback from
a taxable period beginning after the Closing Date (or the portion of a
Straddle Period that begins on the day after the Closing Date) of items of
loss, deduction or credit, or other tax items, of the Surviving Company (or
any of its Affiliates, including RSI) and (ii) to the extent RSI or the
Surviving Company, depending on which entity made such payment, pays after the
Closing Date any amount with respect to Taxes for any such Pre-Closing Tax
Period, refunds of such Taxes (determined on a first-in, first-out basis)
shall be for the account of RSI or the Surviving Company, depending on which
entity made such payment. The amount or economic benefit of any refunds,
credits or offsets of Taxes of HQGW or the Surviving Company for any taxable
period beginning after the Closing Date shall be for the account of the
Surviving Company and RSI. The amount or economic benefit of any refunds,
credits or offsets of Taxes of HQGW or the Surviving Company for any Straddle
Period shall be equitably apportioned between the Shareholders, on the one
hand, and RSI and the Surviving Company, on the other hand. Each party shall
forward, and shall cause its Affiliates to forward, to the party entitled
pursuant to this Section 6(c) to receive the amount or economic benefit of a
refund, credit or offset to Tax the amount of such refund, or the economic
benefit of such credit or offset to Tax, within 30 days after such refund is
received or after such credit or offset is allowed or applied against other
Tax liability, as the case may be; provided, however, that any such amounts
payable pursuant to this Section 6(c) shall be net of any Tax cost or Tax
benefit to the party making payment pursuant to this Section 6(c) and its
Affiliates attributable to the receipt of such refund, credit or offset to Tax
and/or the payment of such amounts pursuant to this Section 6(c). RSI and the
Shareholders shall treat any amounts payable pursuant to this Section 6(c) as
an adjustment to the Merger Consideration unless a final determination (which
shall include the execution of a Form 870-AD or successor form) causes any
such payment not to be treated as an adjustment to the Merger Consideration
for United States Federal income Tax purposes.
(d) The Shareholders shall supply any necessary information to
enable the Surviving Corporation to file any amended consolidated, combined or
unitary Tax Returns for taxable years ending on or prior to the Closing Date
which are required as a result of examination adjustments made by the IRS or
by the applicable state, municipal, provincial, local or foreign taxing
authorities for such taxable years as finally determined; provided, however,
that no such Tax Return shall be filed without the prior written consent of
the Representative and RSI, which consent shall not be unreasonably withheld.
For those jurisdictions in which separate Tax Returns are filed by
HQGW, any required amended returns resulting from such examination
adjustments, as finally determined, shall be prepared by the Surviving Company
or RSI and furnished to the Representative, for approval at least 30 days
prior to the due date for filing such Tax Returns.
(e) All transfer, documentary, sales, use, registration and other
such Taxes (including all applicable real estate transfer or gains Taxes and
stock transfer Taxes) and related fees (including any penalties, interest and
additions to Tax) incurred in connection with the Merger or otherwise in
connection with this Agreement and the transactions contemplated hereby that
are attributable to the assets of HQGW and its Subsidiaries shall be paid by
the Shareholders and that are attributable to the assets of VANTAS and its
Subsidiaries shall be paid by RSI. The Representative and RSI shall cooperate
in timely preparing and filing all Tax Returns as may be required to comply
with the provisions of such Tax laws.
7. Indemnification Procedures
(a) Notice of a Claim. In order for a party to be entitled to
indemnification pursuant to this Agreement, the indemnified party shall notify
the indemnifying party in writing of any claim that it reasonably believes is
likely to result in a Loss within ten (10) days of the date such party
receives written notice or otherwise becomes aware of the claim, describing in
reasonable detail the claim (including whether such claim is for Direct Losses
or Company Level Losses) and the estimated amount of the claim; provided,
however, that the failure of an indemnified party so to notify the
indemnifying party of the claim shall not relieve the indemnifying party of
its obligations under this Agreement except to the extent the indemnifying
party shall have been actually prejudiced as a result of such failure (except
that the indemnifying party shall not be liable for any expenses incurred
during the period in which the indemnified party failed to give notice). The
indemnified party shall deliver to the indemnifying party copies of all
notices and documents (including court papers) received by the indemnified
party relating the claim along with the notice referred to above. If the
indemnifying party does not object in writing to the availability of the
indemnity under this Agreement within twenty (20) days after receiving such
notice, then the claim set forth in the notice by such party shall be
considered a valid claim under this Agreement (a "Valid Claim"), and such
Valid Claim (to the extent payable after giving effect to the limitations set
forth in Section 5(b)) shall be paid in accordance with Section 7 hereof. If
any indemnifying party objects in writing as to the availability of the
indemnity with respect to such claim within such twenty (20) day period, then
the indemnifying party and the indemnified party shall proceed in good faith
to negotiate a resolution of such dispute and, if not resolved through
negotiations, such dispute shall be resolved by litigation in an appropriate
court of competent jurisdiction.
(b) Defense of Third Party Claims. If any Valid Claim arises out of
or involves a claim or demand made by any person against the Surviving
Corporation or the indemnified party (a "Third Party Claim"), then the
indemnifying party shall be entitled to participate in the defense thereof
and, if it so chooses and acknowledges its obligation to indemnify the
indemnified party therefor, to assume the defense thereof with counsel
selected by the indemnifying party; provided, that such counsel is not
reasonably objected to by the indemnified party; and provided further, that if
either (i) any indemnified party reasonably concludes that there may be one or
more legal defenses available to it that are different from or in addition to
(and are inconsistent with) those available to the indemnifying party, or that
a conflict or potential conflict exists between any indemnified party, on the
one hand, and any indemnifying party, on the other hand (a "Conflicting
Matter"), or (ii) the Third Party Claim seeks an order, injunction or other
equitable relief or relief for other than money damages which the indemnified
party reasonably concludes cannot be separated from any related claim for
money damages (a "Specific Performance Matter"), the indemnifying party will
not have the right to direct the defense of such action on behalf of such
indemnified party with respect to such Conflicting Matter or Specific
Performance Matter, and the indemnified party shall direct the defense of the
portion of such claim that constitutes a Conflicting Matter or Specific
Performance Matter through counsel (including a local counsel, if necessary)
of its choosing, at the expense of the indemnified party. Should the
indemnifying party so elect to assume the defense of a Third Party Claim, the
indemnifying party shall not be liable to the indemnified party for legal
expenses subsequently incurred by the indemnified party in connection with the
defense thereof. If the indemnifying party assumes such defense, the
indemnified party shall have the right to participate in the defense thereof
and to employ counsel, at its own expense, separate from the counsel employed
by the indemnifying party, it being understood that the indemnifying party
shall control such defense. Notwithstanding the foregoing, the indemnifying
party shall be liable for the fees and expenses of counsel employed by the
indemnified party for any period during which the indemnifying party has
failed to assume the defense thereof (other than during the period prior to
the time the indemnified party shall have given notice of the Third Party
Claim as provided above).
If the indemnifying party so elects to assume the defense of any
Third Party Claim, the indemnified party shall cooperate with the indemnifying
party in the defense or prosecution thereof. Such cooperation shall include
the retention and (upon the indemnifying party's request) the provision to the
indemnifying party of records and information which are reasonably relevant to
such Third Party Claim, and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. Whether or not the indemnifying party shall have
assumed the defense of a Third Party Claim, the indemnified party shall not
admit any liability with respect to, or settle, compromise or discharge, such
Third Party Claim without the indemnifying party's prior written consent
(which consent shall not be unreasonably withheld). If the indemnifying party
shall have assumed the defense of a Third Party Claim, the indemnified party
shall agree to any settlement, compromise or discharge of a Third Party Claim
which the indemnifying party may recommend and which by its terms obligates
the indemnifying party to pay the full amount of the liability in connection
with such Third Party Claim, which releases the indemnifying party completely
in connection with such Third Party Claim and which would not otherwise
adversely affect the Indemnified Party.
(c) Procedures Unique to Tax Claims. With respect to any claim made
by any taxing authority (a "Tax Claim") covered by Section 3(a) hereof, the
Representative shall control all proceedings and may make all decisions taken
in connection with such Tax Claim (including selection of counsel) and,
without limiting the foregoing, may in its sole discretion pursue or forego
any and all administrative appeals, proceedings, hearings and conferences with
any taxing authority with respect thereto, and may, in its sole discretion,
either pay the Tax claimed and sue for a refund where applicable law permits
such refund suits or contest the Tax Claim in any permissible manner;
provided, however, that the Representative must first consult in good faith
with RSI before taking any action with respect to the conduct of a Tax Claim.
Notwithstanding the foregoing, (i) the Representative shall not settle any Tax
Claim without the prior written consent of RSI, which consent shall not be
unreasonably withheld, (ii) RSI, and counsel of its own choosing, shall have
the right to participate fully in all aspects of the defense of such Tax
Claim, (iii) the Representative shall inform RSI, reasonably promptly in
advance, of the date, time and place of all administrative and judicial
meetings, conferences, hearings and other proceedings relating to such Tax
Claim, (iv) RSI shall be entitled to have its representatives (including
counsel, accountants and consultants) attend and participate in any such
administrative and judicial meetings, conferences, hearings and other
proceedings relating to such Tax Claim and (v) the Representative shall
provide to RSI all information, document requests and responses, proposed
notices of deficiency, notices of deficiency, revenue agent's reports,
protests, petitions and any other documents relating to such Tax Claim
promptly upon receipt from, or in advance of submission to (as the case may
be), the relevant taxing authority.
With respect to any Tax Claim covered by Section 3(b) hereof, RSI
shall control all proceedings and may make all decisions taken in connection
with such Tax Claim (including selection of counsel) and, without limiting the
foregoing, may in its sole discretion pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with any taxing
authority with respect thereto, and may, in its sole discretion, either pay
the Tax claimed and sue for a refund where applicable law permits such refund
suits or contest the Tax Claim in any permissible manner; provided, however,
that RSI must first consult in good faith with the Representative before
taking any action with respect to the conduct of a Tax Claim. Notwithstanding
the foregoing, (i) RSI shall not settle any Tax Claim without the prior
written consent of the Representative, which consent shall not be unreasonably
withheld, (ii) the Representative, and counsel of its own choosing, shall have
the right to participate fully in all aspects of the defense of such Tax
Claim, (iii) RSI shall inform the Representative, reasonably promptly in
advance, of the date, time and place of all administrative and judicial
meetings, conferences, hearings and other proceedings relating to such Tax
Claim, (iv) the Representative shall be entitled to have its representatives
(including counsel, accountants and consultants) attend and participate in any
such administrative and judicial meetings, conferences, hearings and other
proceedings relating to such Tax Claim and (v) RSI shall provide to the
Representative all information, document requests and responses, proposed
notices of deficiency, notices of deficiency, revenue agent's reports,
protests, petitions and any other documents relating to such Tax Claim
promptly upon receipt from, or in advance of submission to (as the case may
be), the relevant taxing authority.
The Representative and RSI shall jointly control and participate in
all proceedings taken in connection with any Tax Claim relating to Taxes of
HQGW and its Subsidiaries for a Straddle Period. Neither the Representative
nor RSI shall settle any such Tax Claim without the prior written consent of
the other.
RSI, on the one hand, and each Shareholder, on the other hand,
shall, reasonably cooperate in contesting any Tax Claim, which cooperation
shall include the retention and, upon request, the provision to the requesting
person of records and information which are reasonably relevant to such Tax
Claim, and making employees available on a mutually convenient basis to
provide additional information or explanation of any material provided
hereunder or to testify at proceedings relating to such Tax Claim.
8. Escrow Disbursements in Respect of Valid Claims.
(a) Upon receipt of (i) a written notice signed jointly by a duly
authorized officer of the Representative and a duly authorized officer of RSI
or (ii) a certified copy of a final, non-appealable judgment of a court of
competent jurisdiction specifying the amount of Loss to be paid to RSI or the
Shareholders, as the case may be, the Escrow Agent shall, subject to the terms
of this Agreement, distribute to the RSI Indemnitee or the Shareholder
Indemnitee, as the case may be, from each Shareholder's or RSI's, as the case
may be, Escrow Account, a number of Indemnification Shares (each such share
being deemed to have a value equal to the Market Value) and any Cash
Collateral equal in value to such Shareholders' or RSI's, as the case may be,
share of the total amount of Loss specified in such notice (taking into
account the limitations set forth in Section 5(b) hereof). If there are
insufficient Indemnification Shares (based on the Market Value) and Cash
Collateral remaining in such Shareholder's or RSI's, as the case may be,
Escrow Account to satisfy of the total amount of Loss specified in such
notice, the Escrow Agent shall, subject to the terms of this Agreement,
distribute to the RSI Indemnitee or the Shareholder Indemnitee, as the case
may be, all Indemnification Shares and Cash Collateral held in such
Shareholder's or RSI's, as the case may be, Escrow Account.
(b) Notwithstanding anything herein to the contrary, to the extent
that Indemnification Shares and/or Cash Collateral are to be distributed to
the RSI Indemnitee or the Shareholder Indemnitee, as the case may be, to pay a
Loss, in the absence of instructions pursuant to the proviso to this sentence
(of which the Escrow Agent shall have no duty or obligation to inquire about)
given through written notice to the Escrow Agent by the Shareholder or RSI
with respect to the Indemnification Shares and Cash Collateral in the relevant
Escrow Account, the Escrow Agent will satisfy the portion of such Loss payable
by such Shareholder or RSI, as the case may be, (i) first, by distributing to
the RSI Indemnitee or the Shareholder Indemnitee, as the case may be, the
Indemnification Shares deposited by such Shareholder or RSI, as the case may
be, in its Escrow Account on the Closing Date, and (ii) second, by
distributing any Cash Collateral in such Shareholder's or RSI's, as the case
may be, Escrow Account; provided, that any Shareholder or RSI, as the case may
be, by written notice to the Escrow Agent, may direct that Cash Collateral
referred to in clause (ii) above be distributed from its Escrow Account prior
to the distribution of Indemnification Shares. This provision shall be
controlling at all times unless such instructions have been received prior to
such distributions.
9. Final Distribution. At the close of business on June 30, 2001,
any Indemnification Shares and Cash Collateral remaining in an Escrow Account,
and which are not subject to retention pursuant to Section 5(e), shall be
returned by the Escrow Agent to the respective Shareholders or RSI who
contributed such Indemnification Shares or Cash Collateral upon joint
notification by the Representative and RSI.
10. Rights and Liabilities of Escrow Agent. The acceptance by the
Escrow Agent of its duties under this Agreement is subject to the following
terms and conditions.
(a) The Escrow Agent shall in no event be liable for any failure of
the conditions of this escrow or any damage caused by the exercise of its
discretion or the performance of its other duties under this Agreement, except
to the extent that such failure or damage arises from its own gross negligence
or willful misconduct.
(b) The Escrow Agent shall be protected in acting upon any written
notice, instruction, waiver, consent, receipt or other paper or document which
the Escrow Agent in good faith believes to be genuine and what it purports to
be.
(c) The Escrow Agent is neither party to nor is bound by or charged
with notice of the terms, provisions, legality, validity or sufficiency of the
documents delivered to it other than this Agreement, and it shall not be
liable or responsible for its failure to ascertain the terms or conditions, or
to comply with any of the provisions of any such document.
(d) If any dispute arises between the parties or with any third
person with respect to this escrow or its terms or conditions, the Escrow
Agent shall not be required to determine the same or take any action in
connection therewith but it may await the settlement of the same in accordance
with the provisions of this Agreement, unless it receives instructions to the
contrary signed by both RSI and the Representative.
(e) In consideration of ___________________________ acting as Escrow
Agent, RSI and the Shareholders mutually agree to indemnify
___________________________ and hold it harmless from and against any and all
losses, claims, costs, liabilities, obligations, damages and expenses
(including, without limitation, reasonable attorneys' fees) reasonably
incurred by ___________________________ resulting from any commenced or
threatened litigation or administrative proceeding which arises out of or is
in any way based on any action taken or not taken by the Escrow Agent pursuant
to this Agreement; provided, however, that RSI and the Shareholders shall not
be obligated to so indemnify the Escrow Agent for its own gross negligence or
willful misconduct.
(f) In no event shall the Escrow Agent be liable for special,
indirect or consequential loss or damage of any kind whatsoever (including but
not limited to lost profits), even if the Escrow Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action.
(g) The Escrow Agent may resign at any time by giving 60 days
written notice thereof to RSI and the Representative at the addresses referred
to in Section 7 below. Upon notice of resignation of the Escrow Agent, the
parties agree to find a replacement escrow agent within 60 days. The Escrow
Agent agrees to deliver the Indemnification Shares and any substitute
collateral in the Escrow Accounts to such replacement escrow agent upon
written notification by both the parties and the replacement escrow agent. In
the event a successor is not found within 60 days, the Escrow Agent may
petition any court of competent jurisdiction for the appointment of a
successor escrow agent or for instructions as to the disposition of the
Indemnification Shares and any substitute collateral in the Escrow Accounts
and it shall thereby be released from any and all responsibility and/or
liability to the parties.
(h) The parties understand and agree that the Escrow Agent cannot
give legal advice as to any conditions or requirements in this escrow. Each
party will seek legal counsel for any legal opinion or advice that each party
needs.
(i) The Escrow Agent may seek the advice of counsel as to any
decision required to be taken hereunder and shall be held harmless for any
such actions taken in accordance with the advice of such counsel.
(j) All fees and related expenses of the Escrow Agent for its
service hereunder (including fees of its legal counsel) shall be paid equally
by RSI and the Shareholders. Such fees and expenses shall be determined in
accordance with the fee schedule attached hereto as Schedule B or as otherwise
provided to RSI and the Representative.
11. Fractional Shares. No fractional shares shall be delivered to
satisfy any claims. If the Indemnification Shares to be so delivered from any
Shareholder's or RSI's, as the case may be, Escrow Account would include a
fractional share, the parties hereto agree that the Representative and RSI may
round such fraction to the nearest whole share.
12. Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent by prepaid telex, cable or telecopy or sent, postage prepaid, by
registered, certified or express mail or reputable overnight courier service
and shall be deemed given when so delivered by hand, telexed, cabled or
telecopied, or if mailed, three days after mailing (one business day in the
case of express mail or overnight courier service), as follows:
If to the Shareholders:
At the address set forth opposite
such Shareholder's name on the
signature page hereto
with a copy to:
Hogan & Hartson, L.L.P.,
Columbia Square
555 Thirteenth Street, N.W.
Washington, DC 20004
Telecopy No: (202) 637-5910
Attention: Warren Gorrell
David Bonser; and
(ii) if to RSI:
Reckson Service Industries, Inc.
10 East 50th Street
Suite 2700
New York, NY 10022
Telecopy No: (212) 931-8001
Attention: Scott H. Rechler
with copies to:
Brown & Wood LLP
One World Trade Center
New York, NY 10048
Telecopy No: (212) 839-5599
Attention: Joseph W. Armbrust, Jr.
J. Gerard Cummins
If to the Escrow Agent:
[To come]
or such other address as any party may from time to time specify by written
notice to the other parties hereto.
13. No Assignment or Benefit to Third Parties. This Agreement may
not be assigned by operation of law or otherwise, except by RSI to one or more
entities controlled by RSI (with RSI remaining responsible for its obligations
under this Agreement). Notwithstanding the foregoing, the rights or duties of
each of the parties under this Agreement may be assigned by such party in
connection with a sale of all or substantially all of its assets or a merger,
consolidation or other similar business combination transaction. Nothing
expressed or implied in this Agreement is intended, nor shall be construed, to
confer (a) any rights, remedies, obligations or liabilities, legal or
equitable, other than as provided in this Agreement or (b) otherwise
constitute any person (other than the Representative) a third party
beneficiary under or by reason of this Agreement (it being acknowledged that
the Representative is a third party beneficiary of this Agreement and is
entitled to enforce the relevant provisions of this Agreement).
14. Headings. The headings of the Sections of this Agreement are for
convenience only and do not constitute a part of this Agreement.
15. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each party and delivered to the others.
16. Applicable Law. This Agreement shall be construed and enforced
in accordance with, and governed by the laws of the State of
Delaware, without application of any choice of law provisions that would apply
any law other than the laws of Delaware.
17. Conflicts. In the event of any conflicts with respect to the
duties and obligations of the Escrow Agent between this Agreement
and the Merger Agreement, the provisions of this Agreement shall be deemed to
control.
18. Several Liability. Anything in this Agreement to the contrary
notwithstanding, the representations, warranties, covenants
and agreements of the Shareholders set forth herein are several and not joint.
19. Powers of the Representative. Each Shareholder by executing this
Agreement hereby appoints CarrAmerica as such Shareholder's agent and attorney
in fact (the "Representative") hereunder with full irrevocable power and
authority in the place and stead of such Shareholder and in the name of such
Shareholder to take any and all actions, and to execute any and all
instruments and other documents, which in the sole judgment of the
Representative are necessary or appropriate in handling claims for Losses made
pursuant to Section 3, 4(a)(W), 4(a)(X) and 4(b) of this Agreement. Said power
of attorney shall not be affected by the subsequent incapacity of any
Shareholder. Without limiting the generality of the foregoing, each of the
Shareholders agrees that the Representative (1) has full power and authority
to take such action on behalf of the Shareholders with respect to any
Indemnification Shares and Cash Collateral held by the Escrow Agent and with
respect to any and all claims for Losses (including, without limitation, any
decisions to accept or to challenge any claims for Losses) as the
Representative in its sole discretion may determine (except to the extent that
this Agreement provides for any action with respect to such Indemnification
Shares or Cash Collateral to be taken by the Shareholders themselves) and (2)
shall represent the Shareholders for all purposes in connection with the
claims specified above, including the receipt of notices and the exercise or
wavier of any rights with respect to RSI's obligations under this Agreement,
and resolution of disputes or uncertainties arising hereunder and thereunder
(except to the extent that any such agreement expressly provides for any
action to be taken or other matter to be dealt with by the Shareholders
themselves). The Representative shall forward the Shareholders copies of all
notices of Claims received from any RSI Indemnitee and of the disposition of
all such Claims. The Shareholders also agree that the Shareholders shall be
bound by all decisions of the Representative pursuant to the authority granted
hereunder, and that such authority may not be revoked during the term of this
Agreement.
Except as expressly set forth in this Agreement, it is understood
that the Representative is not assuming any responsibility or liability to any
person by virtue of the powers granted by the Shareholders hereby. The
Representative shall not make any representations with respect to and shall
have no responsibility for the transactions contemplated by the Merger
Agreement, the Stock Purchase Agreement or the U.K. Purchase Agreement or any
aspect thereof except as expressly set forth in such agreements. The
Representative shall not be liable to any other Shareholder for any error of
judgment or for any act done or omitted or for any mistake of fact or law
except for such Representative's own gross negligence or bad faith. Each
Shareholder agrees to indemnify the Representative and to hold the
Representative harmless against any loss, claim, damage or liability incurred
by him arising out of or in connection with acting as the Representative
pursuant to this Agreement, as well as the cost and expense of investigating
and defending against any such loss, claim, damage or liability, except to the
extent such loss, claim, damage or liability is due to the gross negligence or
bad faith of the Representative. Each Shareholder agrees that the
Representative may consult with counsel of its own choice (who may be counsel
for CarrAmerica or any affiliate thereof) and it shall have full and complete
authorization and protection for any action taken or suffered by it hereunder
in good faith and in accordance with the opinion of such counsel. It is
understood that the Representative may, without breaching any express or
implied obligation to any Shareholder hereunder, release, amend or modify any
other power of attorney granted by any other person under any related
agreement.
20. Litigation Costs. If any litigation with respect to the
obligations of the parties under this Agreement results in a final
nonappealable order of a court of competent jurisdiction that results in a
final disposition of such litigation, the prevailing party, as determined by
the court ordering such disposition, shall be entitled to reasonable
attorneys' fees as shall be determined by such court. contingent or other
percentage compensation arrangements shall not be considered reasonable
attorneys' fees.
21. Consent to Jurisdiction. CarrAmerica, on the one hand, and RSI,
on the other hand, agree to commence any action, suit or proceeding relating
hereto against the other party either in a federal court located in the State
of Delaware or if such suit, action or other proceeding may not be brought in
such court for jurisdictional reasons, in a Delaware state court. Each party
to this Agreement submits and consents to personal jurisdiction in any such
litigation. CarrAmerica, on the one hand, and RSI, on the other hand, further
agree that service of any process, summons, notice or document delivered by
U.S. registered mail to such party's respective address set forth above shall
be effective service of process for any action, suit or proceeding in Delaware
with respect to any matters to which it has submitted to jurisdiction in this
Section 21. CarrAmerica, on the one hand, and RSI, on the other hand,
irrevocably and unconditionally waive any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in (i) any Delaware state court or (ii) any
federal court located in the State of Delaware, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT.
22. Amendment. This Agreement may be amended by written agreement
signed by RSI and each Shareholder that would be adversely affected by such
amendment. The parties furthermore agree that the Merger Agreement will not be
amended or otherwise modified to increase the duties or liabilities of the
Escrow Agent without obtaining the prior written consent of the Escrow Agent
in each instance.
23. Waiver. Any party to this Agreement may extend the time for the
performance of any of the obligations or other acts of any other party hereto,
or waive compliance with any of the agreements of any other party or with any
condition to the obligations hereunder, in each case only to the extent that
such obligations, agreements and conditions are intended for its benefit, each
Shareholder hereby severally agreeing that any such extension or waiver by
such Shareholder may be given by the Representative and each Shareholder
hereby severally confirming that it has appointed the Representative as its
attorney-in-fact to give any such extension or waiver on behalf of such
Shareholder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first written above.
CARRAMERICA REALTY CORPORATION
By: __________________________
Name:
Title:
RECKSON SERVICE INDUSTRIES, INC.
By: __________________________
Name:
Title:
[ESCROW AGENT]
as Escrow Agent
[OTHER ADDITIONAL
STOCKHOLDERS, AS APPLICABLE]
<PAGE>
Schedule A
[List of Indemnification Shares]
<PAGE>
Schedule B
Reckson Service Industries, Inc.
Escrow Agent Fees
ACCEPTANCE FEE $[ ]
Includes examination of the Escrow Agreement and establishment of the security
safekeeping records.
ADMINISTRATION FEE, per year or portion thereof: $[ ]
Includes performance of duties outlined in the escrow agreement. Payable on
receipt of the shares and each year thereafter.
THIS FEE SCHEDULE IS CONFIDENTIAL AND MAY NOT BE REVEALED TO ANY
PARTY OUTSIDE THE WORKING GROUP IN THIS TRANSACTION
