Exhibit 10.5
EXCHANGE AGREEMENT
EXCHANGE AGREEMENT, dated as of May 31, 2000, by and between HQ Global
Holdings, Inc., a Delaware corporation ("Holdco"), and FrontLine Capital
Group, a Delaware corporation ("FCG").
WHEREAS, HQ Global Workplaces Inc., a Delaware corporation ("Old HQ"),
and CarrAmerica Realty Corporation, a Maryland corporation ("CarrAmerica"), on
the one hand, and VANTAS Incorporated, a Nevada corporation ("VANTAS"), and
FCG, on the other hand, have entered into that certain Agreement and Plan of
Merger, dated as of January 20, 2000, as amended as of April 29, 2000 and as
of May 31, 2000 (as amended, the "Merger Agreement").
WHEREAS, pursuant to the Merger Agreement, VANTAS will merge with and
into Old HQ with Old HQ continuing as the surviving corporation with the name
"HQ Global Workplaces, Inc." (the "HQ Merger").
WHEREAS, FCG and CarrAmerica have entered into that certain Stock
Purchase Agreement, dated as of January 20, 2000, as amended as of April 29,
2000 (as amended, the "Stock Purchase Agreement"), whereby FCG agreed to
purchase from CarrAmerica 4,226,116 (subject to recalculation as provided
therein) shares of non-voting common stock, par value $.01 per share (the "Old
HQ Common Stock"), of Old HQ.
WHEREAS, immediately following the consummation of the HQ Merger and the
transactions contemplated by the Stock Purchase Agreement and that certain
Stock Purchase Agreement, dated as of January 20, 2000, as amended as of April
29, 2000, among FCG, VANTAS, CarrAmerica, Omni Offices UK Limited and Omni
Offices (Lux) 1929 Holding Company S.A., Old HQ, as the surviving corporation
of the HQ Merger ("HQ Surviving Corporation"), will merge (the "Second Step
Merger") with and into newly formed HQ Merger Subsidiary, Inc., a Delaware
corporation ("M-Sub") that is a wholly owned subsidiary of Holdco, which will
theretofore be wholly owned by HQ Surviving Corporation, with M-Sub continuing
as the surviving corporation under the name "HQ Global Workplaces, Inc."
pursuant to the Agreement and Plan of Merger related thereto (the "Second Step
Merger Agreement").
WHEREAS, Holdco and FCG desire to exchange 4,130,530 shares of common
stock of Holdco (the "Common Exchange Shares") to be received by FCG in the
Second Step Merger in exchange for the Old HQ Common Stock to be purchased by
FCG from CarrAmerica pursuant to the Stock Purchase Agreement for
3,704,933.820 newly issued shares (the "Preferred Shares") of Series A
Convertible Cumulative Preferred Stock (the "Preferred Stock") of Holdco and
warrants (the "Warrants") to purchase up to 1,660,341.752 shares of voting
common stock, par value $.01 per share (the "Voting Common Stock"), of Holdco.
WHEREAS, capitalized words and phrases used but not otherwise defined
herein shall have the meanings ascribed to them under the Merger Agreement.
Accordingly, Holdco and FCG hereby agree as follows:
1. Exchange of Securities. (a) On the terms and subject to the conditions
of this Agreement, (i) Holdco shall deliver to FCG (A) the Preferred Shares,
the terms of which are contained in the certificate of designations to
Holdco's certificate of incorporation (the "Certificate of Designations") in
the form attached as Exhibit A hereto, and (B) the Warrants, the terms of
which are in the form attached as Exhibit B hereto in respect of Warrants to
purchase 1,119,660.807 shares of Common Stock (the "Initial Warrants") and in
Exhibit C hereto in respect of Warrants to purchase 540,680.945 shares of
Common Stock (the "Subsequent Warrants"), all in exchange for the Common
Exchange Shares and, simultaneously, (ii) FCG shall deliver to Holdco the
Common Exchange Shares in exchange for the Preferred Shares and the Warrants.
The Common Exchange Shares shall contain a legend reading substantially as
follows:
These shares represent common stock of HQ Global Holdings, Inc. that
was received by FrontLine Capital Group ("FCG"), upon the merger of
HQ Global Workplaces, Inc. with and into HQ Merger Subsidiary, Inc.,
in exchange for shares of HQ Global Workplaces, Inc. that had been
purchased by FCG from CarrAmerica Realty Corporation ("Xxxx") and
certain other persons pursuant to that certain Stock Purchase
Agreement, dated as of January 20, 2000, as amended as of April 29,
2000, between Xxxx and FCG.
(b) The closing (the "Closing") of the exchange of the securities
referred to in clause (a) above shall be held at the offices of Xxxxx & Xxxx
LLP, Xxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, 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 5 hereof. The
date on which the Closing shall occur is hereinafter referred to as the
"Closing Date." At the Closing, (i) FCG shall deliver to Holdco one or more
certificates representing the Common Exchange Shares with a properly executed
instrument of transfer and (ii) Holdco shall deliver to FCG certificates
issued in FCG's name representing Preferred Shares and the Warrants, all as
contemplated in clause (a) above. The delivery of securities referred to in
the preceding sentence shall be part of a simultaneous transaction, and
delivery by one party hereto shall not be deemed to be effective without
delivery from the other party hereto.
(c) It is intended that the exchange described in this Section 1
shall qualify as a reorganization described in Section 368(a)(1)(E) of the
Internal Revenue Code of 1986, as amended.
2. Representations and Warranties of Holdco. Holdco hereby represents and
warrants to FCG as of the date hereof and as of the Closing Date that the
representations and warranties applicable to Old HQ and VANTAS contained in
Sections 4(A) and 5(A), respectively, of the Merger Agreement are true and
correct with the same force and effect as though made at and as of the date
hereof. In addition, Holdco represents and warrants to FCG as of the date
hereof and as of the Closing Date as to the following matters:
(a) Organization and Standing. Holdco is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware. Holdco and its subsidiaries have all requisite corporate power
and authority necessary to carry on their respective businesses as presently
conducted and to enable them to own, lease or otherwise hold their respective
properties and assets. Holdco and its subsidiaries are duly qualified to do
business and in good standing 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 any such jurisdiction 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 Holdco
and its subsidiaries taken as a whole (a "Holdco Material Adverse Effect").
(b) Authority. Holdco has all requisite corporate power and
authority to enter into this Agreement, that certain Registration Rights
Agreement, in the form attached as Exhibit D hereto, and the Stockholders
Agreement, in the form attached as Exhibit E hereto, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. All corporate acts and other proceedings
required to be taken by Holdco to authorize the execution, delivery and
performance of this Agreement, the Registration Rights Agreement and the
Stockholders Agreement and the consummation of the transactions contemplated
hereby and thereby have been duly and properly taken. This Agreement has been,
and, at the Closing, the Registration Rights Agreement and the Stockholders
Agreement will have each been, duly executed and delivered by Holdco and each
constitutes or will constitute, as applicable, a legal, valid and binding
agreement of Holdco, enforceable against Holdco 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 or by general equitable principles.
(c) No Conflicts; Consents. The execution and delivery of this
Agreement, the Registration Rights Agreement and the Stockholders Agreement by
Holdco does 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 Holdco or its subsidiaries
under, any provision of (i) the certificate of incorporation or by-laws of
Holdco and its subsidiaries, (ii) any note, bond, mortgage, indenture, deed of
trust, license, lease, contract, commitment, agreement or arrangement to which
Holdco 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 succeeding sentence,
any judgment, order or decree, or statute, law, ordinance, rule or regulation,
applicable to Holdco or any of its subsidiaries or any of their respective
properties or assets. Except as set forth on Schedule 2(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 Holdco or any of its subsidiaries in connection
with the execution, delivery and performance by Holdco of this Agreement, the
Registration Rights Agreement and the Stockholders Agreement or the
consummation of the transactions contemplated hereby and thereby, other than
such other consents, approvals, orders, authorizations, registrations,
declarations and filings (i) as are set forth on Schedule 2(c), (ii) as may be
required under the "blue sky" laws of various states and (iii) as otherwise
contemplated in the Registration Rights Agreement.
Capital Stock. The authorized capital stock of Holdco consists of 75,000,000
shares of Voting Common Stock, 25,000,000 shares of non-voting common stock,
par value $.01 per share (the "Nonvoting Common Stock," and together with the
Voting Common Stock, the "Common Stock"), and 7,800,000 shares of preferred
stock. At the Closing, there shall only be 9,972,827 shares of Voting Common
Stock, 2,152,988 shares of Nonvoting Common Stock and 4,782,692 Preferred
Shares issued and outstanding. All of the outstanding shares of Common Stock
have been, and at the Closing, all of the shares of Common Stock issued
pursuant to the Second Step Merger Agreement will be, validly issued and
outstanding, fully paid and nonassessable. At the Closing, (a) the Initial
Warrants and the warrants to purchase 325,707.193 shares of Voting Common
Stock in the form attached as Exhibit B to the Purchase Agreement, dated as of
the date hereof (the "EOP Purchase Agreement"), among Holdco, FCG and EOP
Operating Limited Partnership, entitle holders thereof to purchase 1,445,368
shares of the Common Stock of Holdco, representing 7.875% of the shares of
Common stock of Holdco on a fully-diluted basis, and (b) the Subsequent
Warrants and the warrants to purchase 157,283.055 shares of Voting Common
Stock in the form of Exhibit C to the EOP Purchase Agreement will entitle
holders thereof to purchase 697,964 shares of the Common Stock of Holdco,
representing 3.375% of the shares of Common Stock of Holdco on a fully-diluted
basis. Except as set forth in Schedule 2(d), none of the outstanding shares of
Common Stock have been issued in violation of, or are subject to, any
preemptive or similar rights under any provision of applicable law, the
certificate of incorporation or by-laws of Holdco or any agreement, contract
or instrument to which Holdco is a party or by which it or any of its
properties or assets is bound. Except as set forth on Schedule 2(d), there are
no outstanding warrants, options, rights, convertible or exchangeable
securities or other commitments (other than those contemplated by this
Agreement) (i) pursuant to which Holdco is or may become obligated to issue,
sell, purchase, return or redeem any shares of Common Stock or its preferred
stock 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
Common Stock or its preferred stock of Holdco. There are no shares of Common
Stock or preferred stock reserved for issuance by Holdco for any purpose
except for securities reserved for issuance for the purposes set forth on
Schedule 2(d). Except as set forth in Schedule 2(d), there are no outstanding
bonds, debentures, notes or other indebtedness having the right to vote on any
matters on which stockholders of Holdco may vote.
(d) Preferred Shares. The Preferred Shares have been duly authorized
for issuance by Holdco pursuant to the terms of this Agreement and, at
Closing, (i) will be validly issued, fully paid and nonassessable, (ii) will
be free and clear of all Liens, other than transfer restrictions relating to
the federal securities laws, (iii) will not be issued in violation of any
preemptive or similar rights under any provisions of applicable law, the
certificate of incorporation or by-laws of Holdco or any agreement, contract
or instrument to which Holdco is a party or by which it or any of its
properties or assets is bound and (iv) assuming the accuracy of the
representations and warranties set forth in Section 3 will be issued in
compliance with the registration and qualification requirements of all
applicable federal securities laws as presently in effect.
(e) Warrants. The Warrants have been duly authorized for issuance by
Holdco pursuant to the terms of this Agreement and, at Closing, will be legal,
valid and binding obligations of Holdco, enforceable against Holdco in
accordance with their terms, except insofar as enforcement thereof may be
limited by bankruptcy, insolvency or other laws relating to or affecting
enforcement of creditors' rights generally or by general equity principles.
(f) Common Stock. The shares of Common Stock issuable upon
conversion of the Preferred Shares or upon exercise of the Warrants have been
duly authorized by Holdco and, when issued and delivered in accordance with
the terms of the Preferred Shares or the Warrants, as the case may be, will be
validly issued, fully paid and nonassessable and will not be subject to any
preemptive or similar rights under any provision of applicable law, the
certificate of incorporation or by-laws of Holdco or any agreement, contract
or instrument to which Holdco is a party or by which it or any of its
properties or assets is bound.
(g) Financial Statements. (i) The audited consolidated balance
sheets of VANTAS as of June 30, 1997, June 30, 1998, December 31, 1998 and
December 31, 1999 and the related consolidated statements of income,
stockholder's equity and cash flows of VANTAS for the fiscal years ended as of
such dates, which financial statements have been examined by
PricewaterhouseCoopers LLP, independent certified public accountants, (ii) the
unaudited consolidated balance sheet of VANTAS as of March 31, 2000 and
related consolidated statements of income, stockholder's equity and cash flows
of VANTAS for the fiscal quarter ended as of such date, (iii) the audited
consolidated balance sheets of Old HQ as of December 31, 1997, December 31,
1998 and December 31, 1999 and the related statements of earnings and cash
flows of Old HQ and its subsidiaries for the fiscal years ended as of such
dates, which financial statements have been examined by KPMG LLP, independent
certified public accountants, (iv) the unaudited consolidated balance sheet of
Old HQ as of March 31, 2000 and the related statements of earnings and cash
flows of Old HQ and its subsidiaries for the fiscal quarter ended as of such
date, and (v) the pro forma (after giving effect to the consummation of the HQ
Merger, the Second Step Merger and related financing and other related
matters) consolidated balance sheets and statements of income and cash flows
of the Holdco and its subsidiaries as of December 31, 1999, copies of all of
which financial statements referred to in the preceding clauses (i), (ii),
(iii), (iv) and (v) have heretofore been made available to the Investor,
present fairly the financial position of the respective entities at the dates
of said statements and the results of operations for the period covered
thereby (or, in the case of the pro forma financial statements, present a good
faith estimate of the pro forma financial condition of Holdco and its
subsidiaries (after giving effect to the consummation of the HQ Merger, the
Second Step Merger and related financing and other related matters) on a
consolidated basis at the date thereof). All such financial statements have
been prepared in accordance with generally accepted accounting principles
consistently applied except to the extent provided in the notes to said
financial statements and with respect to interim financial statements, subject
to normal year end adjustments.
3. Representations and Warranties of FCG. FCG hereby represents and
warrants to Holdco as follows:
(a) Organization and Standing. FCG is duly organized, validly
existing and in good standing as a corporation under the laws of the State of
Delaware. FCG and its subsidiaries have all requisite corporate or other power
and authority necessary to carry on their respective businesses as presently
conducted and to enable them to own, lease or otherwise hold their respective
properties and assets. FCG and its subsidiaries are duly qualified to do
business and are in good standing 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 any such jurisdiction 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 FCG
and its subsidiaries taken as a whole (a "FCG Material Adverse Effect").
(b) Authority. FCG 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 and other acts
and other proceedings required to be taken by FCG 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 FCG and constitutes a legal,
valid and binding obligation of FCG, enforceable against FCG 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 or by general equity principles.
(c) No Conflicts; Consents. The execution and delivery of this
Agreement by FCG does not, and the consummation of the transactions
contemplated hereby and compliance by FCG 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 FCG or its
subsidiaries under, any provision of (i) the declaration of trust, partnership
agreement, certificate of limited partnership, limited liability company
agreement, charter or by-laws of FCG and its subsidiaries, (ii) any note,
bond, mortgage, indenture, deed of trust, loan document, license, lease,
contract, commitment, agreement or arrangement to which FCG 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) any judgment, order or decree, or
statute, law, ordinance, rule or regulation, applicable to FCG or any of its
subsidiaries or any of their respective properties or assets. Except for
disclosure in any reports required pursuant to the Securities Exchange Act of
1934, 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 FCG in connection with the
execution, delivery and performance of this Agreement by FCG or the
consummation of the transactions contemplated hereby.
(d) Investment Representation. FCG is receiving Preferred Shares and
Warrants pursuant to this Agreement for its own account for investment only
and not with a view towards their distribution in violation of the Securities
Act. FCG represents that it is an "accredited" investor within the meaning of
Rule 501 promulgated under the Securities Act, has such knowledge and
experience in financial and business matters that enable it to evaluate the
merits and risks of investment in the Preferred Shares and Warrants and is
able to bear the economic risk of a loss of its entire investment therein FCG
has received the opportunity to ask questions, and has obtained the related
answers, regarding the business, financial condition and results of operations
of Holdco, VANTAS and Old HQ and the terms and conditions of the Preferred
Shares and Warrants to be received in exchange for the Common Exchange Shares.
FCG has received all of the information regarding Holdco, VANTAS and Old HQ
that it has requested. Holdco has informed FCG that the Preferred Shares and
the Warrants have not been registered under the Securities Act and may not be
sold, transferred or otherwise assigned absent such registration or an
exemption therefrom. Holdco has informed FCG that certificates representing
the Preferred Shares and Warrants issued pursuant to this Agreement shall bear
the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE,
TRANSFERRED OR OTHERWISE ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT WITH RESPECT THERETO UNDER SUCH ACT OR AN EXEMPTION FROM
REGISTRATION FOR SUCH SALE, OFFER, TRANSFER OR OTHER ASSIGNMENT AS SUPPORTED
BY SUCH CERTIFICATIONS, OPINIONS AND OTHER DOCUMENTATION, IF ANY, REASONABLY
REQUESTED AND ACCEPTABLE TO THE CORPORATION."
4. Covenants. 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 set forth herein. Holdco shall cooperate
with FCG, and FCG shall cooperate with Holdco, 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, and each party requesting such cooperation
shall reimburse the other party's reasonable out-of-pocket expenses in
providing such cooperation.
5. Conditions to Closing.
(a) Each Party's Obligation. The respective obligations of each
party hereto to effect the transactions contemplated by this Agreement is
subject to the satisfaction (or waiver) as of the Closing of the following
conditions: (i) the HQ Merger and the Second Step Merger shall have been
consummated; (ii) 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 performance of this Agreement or the
consummation of the transactions contemplated by this Agreement; and (iii) 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 prohibit the performance of this Agreement or the consummation of the
transactions contemplated by this Agreement.
(b) Holdco's Obligation. The obligations of Holdco hereunder are
subject to the satisfaction (or waiver by Holdco) as of the Closing of the
following conditions:
(i) The representations and warranties of FCG 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 (1) 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) or (2) where the failure of any representations and
warranties other than the representation and warranty set forth in section
3(d) to be true and correct would not have a FCG Material Adverse Effect, and
FCG 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 FCG by the time of Closing. At
the Closing, FCG shall have delivered to Holdco a certificate, dated the
Closing Date and signed by an officer of FCG, confirming the foregoing.
(ii) At the Closing, FCG shall have delivered to Holdco a
secretary's certificate, dated the Closing Date, attesting to the
authorization of FCG to consummate the transactions contemplated by this
Agreement.
(iii) All filings, registrations, authorizations, permits,
consents and approvals required for FCG's consummation of the transactions
contemplated by this Agreement shall have been made or obtained, as
applicable.
(c) FCG's Obligation. The obligations of FCG hereunder are subject
to the satisfaction (or waiver by FCG) as of the Closing of the following
conditions:
(i) The representations and warranties of Holdco 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 (1) 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), (2) where the failure of any representations and
warranties other than the representations and warranties set forth in Sections
2(d), (e), (f) or (g) to be true and correct would not have a Holdco Material
Adverse Effect or (3) that the representation and warranty set forth in
Section 2(d) shall be true and correct other than in any de minimis respect,
and Holdco 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 Holdco by the time of
Closing. At the Closing, Holdco shall have delivered to FCG a certificate,
dated the Closing Date and signed by an officer of Holdco, confirming the
foregoing.
(ii) At the Closing, Holdco shall have delivered to FCG a
secretary's certificate, dated the Closing Date, attesting to the
authorization of Holdco to consummate the transactions contemplated by this
Agreement.
(iii) Since the date of this Agreement, Holdco and its
subsidiaries taken as a whole shall not have suffered a Holdco Material
Adverse Effect.
(iv) All filings, registrations, authorizations, permits,
consents and approvals required for Holdco's consummation of the transactions
contemplated by this Agreement shall have been made or obtained, as
applicable.
(v) At or prior to the Closing, Holdco or Old HQ shall have
received debt financing the terms of which are substantially to the effect set
forth in the commitment letter of Paribas attached as Exhibit F hereto in
respect of the bank term debt and either the commitment letter of Blackstone
attached as Exhibit G hereto in respect of the high yield or mezzanine debt or
the commitment letter of Warburg Dillon Read LLC attached as Exhibit H hereto
in respect of bridge financing, whether such financing is obtained from such
parties or any other party, and, at the Closing, except as disclosed in
Schedule 5(c), no other indebtedness of Holdco for borrowed money shall be
outstanding.
(vi) At or prior to Closing, the Certificate of Designations
relating to the Preferred Shares shall have been accepted for filing by, and
duly filed with, the Secretary of State of the State of Delaware.
(d) Frustration of Closing Conditions. Neither Holdco nor FCG may
rely on the failure of any condition set forth in Section 5(a), Section 5(b)
or Section 5(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 5.
6. 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.
7. Assignment. This Agreement and the rights and obligations hereunder
shall not be assignable or transferable by (i) Holdco without the prior
written consent of FCG or (ii) by FCG without the prior written consent of
Holdco (except as otherwise contemplated in those Purchase Agreements entered
into by FCG in connection with the resale of the Preferred Shares and the
Warrants acquired hereunder, to which assignment Holdco hereby acknowledges
and consents in the manner contemplated thereby). Any attempted assignment in
violation of this Section 7 shall be void ab initio and of no further force
and effect.
8. 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.
9. 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.
10. Representations, Warranties and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of Holdco or FCG submitted pursuant hereto shall
remain operative and in full force and effect for a period of one year (or, in
the case of the representation and warranty specified in Section 5(A)(b) of
the Merger Agreement, for the period of any applicable statute of limitations)
following the Closing. Notwithstanding anything to the contrary contained in
the foregoing, nothing in this Section 10 is intended to indicate that any
representation or warranty will be true at any time other than at the time of
execution of this Agreement and at the Closing.
11. Indemnification.
(a) Indemnity by Holdco. Holdco shall indemnify FCG and its
subsidiaries and their directors, officers and employees against all expenses,
costs, losses, claims, damages, liabilities and judgments (including, without
limitation, reasonable attorney's fees and expenses) incurred or sustained by
any such party resulting from any breach of the representations and warranties
of Holdco in Section 2; provided, however, that such indemnity shall not
extend to any expenses, costs, losses, claims, damages, liabilities or
judgments to the extent arising out of the gross negligence or willful
misconduct of any person indemnified under this Section 11(a) or any action or
inaction on the part of any such indemnified person.
(b) Indemnity by FCG. FCG shall indemnify Holdco and its directors,
officers and employees against all expenses, costs, losses, claims, damages,
liabilities and judgments (including, without limitation, reasonable
attorney's fees and expenses) incurred or sustained by any such party
resulting from any breach of the representations and warranties of FCG in
Section 3; provided, however, that such indemnity shall not extend to any
expenses, costs, losses, claims, damages, liabilities and judgments to the
extent arising out of the gross negligence or willful misconduct of any person
indemnified under this Section 11(b) or any action or inaction on the part of
any such indemnified person.
(c) Notice of Actions or Proceedings. In case any action or
proceeding shall be commenced involving any party in respect of which
indemnity may be sought pursuant to Sections 11(a) or 11(b) (the "indemnified
party"), the indemnified party shall promptly notify the party against whom
such indemnity may be sought (the "indemnifying party") in writing of such
action or proceeding; provided, however, that failure of an indemnified party
to provide such notice shall not relieve the indemnifying party of its
obligations under this Section 11 if such failure does not materially and
adversely affect the rights of the indemnifying party.
(d) Defense of Actions and Proceedings. The indemnifying party may
assume the defense of such action or proceeding provided that the expenses of
the indemnified party are reimbursed as they are incurred (including, without
limitation, the payment of all reasonable and documented fees and expenses of
counsel to the indemnified party) and the indemnifying party has not failed to
comply with any such reimbursement request. Any indemnified party shall have
the right to employ separate counsel in any such action or proceeding and
participate in the defense thereof, but the reasonable fees and expenses of
such counsel shall be at the expense of the indemnified party, unless (i) the
employment of such counsel shall have been specifically authorized in writing
by the indemnifying party, (ii) the indemnifying party shall have failed to
assume the defense of such action or proceeding or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
reasonably advised by such counsel that the representation of the indemnifying
party and the indemnified party by the same counsel would be inappropriate due
to actual or potential differing interests between the indemnifying party and
the indemnified party or there are defenses that are available to the
indemnified party that may be in conflict with or contradict those available
to the indemnifying party (in which case the indemnifying party shall not have
the right to assume the defense of such action on behalf of the indemnified
party). In any such case, the indemnifying party shall not, in connection with
any one action or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses
of more than one separate firm of attorneys for all indemnified parties and
all such reasonable fees and expenses shall be reimbursed as they are
incurred. The indemnifying party shall indemnify and hold harmless the
indemnified party from and against any and all expenses, costs, losses,
claims, damages, liabilities and judgments by reason of any settlement made by
the indemnified party of any action effected with the indemnifying party's
written consent. The indemnifying party shall not, without the prior written
consent of the indemnified party, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened
action or proceeding in respect of which the indemnified party is or could
have been a party and indemnity may be or could have been sought hereunder by
the indemnified party, unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
on claims that are the subject matter of such action or proceeding and (ii)
does not include a statement as to or an admission of fault or culpability by
or on behalf of the indemnified party.
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:
(i) if to Holdco,
00000 Xxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: General Counsel
Tel: 000-000-0000
Fax: 000-000-0000
(ii) if to FCG,
FrontLine Capital Group
1350 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx. 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
with copies to:
Xxxxx & Wood LLP
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Xx., Esq.
J. Xxxxxx Xxxxxxx, Esq.
Tel:: (000) 000-0000
Fax: (000) 000-0000
or such other address as any party may from time to time specify by written
notice to the other parties hereto.
13. 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 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 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.
14. 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 party.
15. 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.
16. Brokers. Each party hereto hereby represents and warrants that no
brokers or finders have acted for such party in connection with this
Agreement.
17. 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.
18. Consent to Jurisdiction. FCG and Holdco 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 New York or if such suit, action or other proceeding may not be brought in
such court for jurisdictional reasons, in a New York state court. Each party
to this Agreement submits and consents to personal jurisdiction in any such
litigation. FCG and Holdco 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 New York with respect to any matters to
which it has submitted to jurisdiction in this Section 18. FCG and Holdco
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 New York state court or (ii) any
federal court located in the State of New York, 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.
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
HQ GLOBAL HOLDINGS, INC.
By: /s/ Xxxx Xxxxx
-----------------------------------
Name: Xxxx Xxxxx
Title: Vice President, General
Counsel and Secretary
FRONTLINE CAPITAL GROUP
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxx
Title: Executive Vice President
SCHEDULE 2(c)
-------------
Nothing
SCHEDULE 2(d)
-------------
CAPITAL STOCK OF THE COMPANY
1. Section 5 of the Stockholders Agreement, dated as of the date hereof
(the "CarrAmerica Stockholders Agreement"), by and among FrontLine
Capital Group, HQ Global Holdings, Inc. and CarrAmerica Realty
Corporation contains Participation Rights granting CarrAmerica the
right to purchase its "pro rata share" of any issuance by the
Company of equity securities (subject to certain qualifications).
2. Section 5 of the Stockholders Agreement, dated the date hereof, by
and among FrontLine Capital Group, HQ Global Holdings, Inc. and
certain holders of Series A Preferred Stock contains Participation
Rights granting holders of Series A Preferred Stock the right to
purchase their "pro rata share" of any issuance by the Company of
equity securities (subject to certain qualifications).
3. Warrants to purchase 2,143,332 shares of Common Stock (subject to
antidilution rights), dated the date hereof, issued to holders of
Series A Preferred Stock.
4. Warrants to purchase 1,498,538 shares of Common Stock (subject to
antidilution rights), dated the date hereof, issued to UBS AG
Stamford Branch.
5. Warrant Agreement dated as of March 4, 1998 by and between
OmniOffices, Inc. and Xxxxxx X. Arcoro for the purchase of 100,000
shares at $20.00 per share. Mr. Arcoro has exercised his warrant for
99,000 shares. Only 1,000 shares remain subject to this agreement.
6. Warrant Agreement dated as of March 4, 1998 by and between
OmniOffices, Inc. and Xxxxxx Xxxxxxxx for the purchase of 85,000
shares at $20.00 per share. Xx. Xxxxxxxx has exercised his warrant
for 50,000 shares. Only 35,000 shares remain subject to this
agreement.
7. Warrant Agreement dated as of March 4, 1998 by and between
OmniOffices, Inc. and Xxxxxxxx X. Xxxxxx for the purchase of 32,500
shares at $20.00 per share.
8. Warrant Agreement dated as of March 4, 1998 by and between
OmniOffices, Inc. and Xxxxxx X. Xxxxxx, Xx. for the purchase of
32,500 shares at $20.00 per share.
o The Company is obligated to have authorized and in reserve the
shares of common stock receivable upon exercise of each of the
warrants under the Warrant Agreements.
o In the event the Company issues non-voting common stock of the
Company that is less than fair market value (other than stock
options or restricted stock pursuant to stock options plans) the
warrantholders are entitled to an adjustment of the warrant
shares purchasable under the Warrant.
o The Warrant Agreements contain antidilution provisions that are
triggered by distributions to holders of equity capital stock
(dividends) and the repurchase of common stock by the Company of
common stock at a price that is greater than the fair market
value of common stock on the date of the repurchase.
9. Purchase Right Agreement, dated as of March 4, 1998, by and among
OmniOffices, Inc., Xxxxxx X. Arcoro and Xxxxxx Xxxxxxxx pursuant to
which if immediately prior the first date on which 20% or more of
the outstanding shares of common stock of the Company have been
publicly distributed or registered and such shares are publicly
traded on a national exchange or over-the-counter market, the debt
ratio is less than 55.0% (the Company is obligated to offer the
warrantholders the right to purchase up to an aggregate of 6,818
shares of common stock of the Company per percentage point below the
55.0% (subject to the adjustments set forth in Section 5(a) of the
Warrant Agreement). This Purchase Right is subject to antidilution
protection for the benefit of the Company pursuant to Section 10 of
the CarrAmerica Stockholders Agreement.
10. [Xxxx Xxxxx holds rights to receive 120,000 shares of Class B
Non-Voting Stock and 300,000 options to acquire Non-Voting Common
Stock pursuant to his employment contract. These rights accelerate
in vesting upon a change in control.]
11. Pursuant to the Merger Agreement, at the effective time of the
Merger, each outstanding option to purchase shares of VANTAS Common
Stock granted under the VANTAS 1996 Stock Option Plan (the "VANTAS
1996 Stock Options"), is automatically amended to constitute an
option to acquire the number of shares of Voting Common Stock of the
Company as the holder of such VANTAS 1996 Stock Option would have
been entitled to receive as Merger Consideration in the 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 of the Merger 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 of the
Merger divided by (b) the Conversion Ratio.
The following is a list of options granted under the VANTAS 1996
Stock Option Plan that are subject to the foregoing:
o 36,750 Options at an exercise price of $2.00
o 250 Options at an exercise price of $4.75
o 40,458 Options at an exercise price of $4.00
12. As soon as practicable following the effective time of the Merger,
Xx. Xxxx Xxxxx and Xx. Xxxxx Xxxxxx will receive options to purchase
common stock of the Company with a value equal to 6X and 4X,
respectively, of their respective Base Compensation, or $3,600,000
or $1,600,000, respectively, which will become exercisable over a
four-year period (37.5% after 18 months, then 12.5% every 6 months
up to 100% in total, provided in each case that the executive is
still employed by the Company on the applicable vesting date). The
exercise price per share will equal the per share valuation used for
purposes of the Merger.
13. As soon as practicable following the effective time of the Merger,
Xx. Xxxxx and Xx. Xxxxxx will receive a grant of restricted common
stock in the Company with a value equal to 2.5X and 1.5X,
respectively, of their respective Base Compensation, or $1,500,000
or $600,000, respectively, which will become vested over a four-year
period (37.5% after 18 months, then 12.5% every 6 months up to 100%
in total, provided in each case that the executive is still employed
by the Company on the applicable vesting date).
14. It is anticipated that options and restricted stock with respect to
3% and 1%, respectively, of the outstanding common and preferred
stock of the Company will be issued in connection with employee
incentive compensation.
SCHEDULE 5(c)
HQ Global Holdings, Inc: Outstanding Indebtedness
Existing Letters of Credit
XX Xxxxxx Letters of Credit
---------------------------
LC# Letter of Credits Issued Beneficiary Maturity Date
868684 $ 828,630 RCPI Trust 6/1/01
868814 $ 500,000 W12/14 Wall Acquisition 6/4/01
Associates L.L.C.
868611 $ 800,000 405 Lexington, L.L.C. 6/23/01
868619 $1,327,000 Charleston Landings Associates L.P. 7/1/01
868877 $ 684,000 Xxx 000 Xxxx, X.X.X. 0/0/00
000000 $ 450,000 Petula Associates, LTD 10/21/00
868896 $ 635,850 Praedium II Broadstone 10/29/00
868931 $1,715,980 Paramount Group, Inc. 11/10/00
868934 $ 800,000 Xxxxxx Xxxxx Xxxx Xxxxxx 00/00/00
000000 $ 526,837.50 000 Xxxxxxxx Owners L.L.C. 12/31/00
868806 $ 800,000 000 Xxxxxx Xxxxxx 12/31/00
868944 $ 600,000 Commerce Plaza Partners 1/24/01
868943 $ 450,000 Cornerstone Two L.C.C. 1/27/01
Total letters of credit issued to XX Xxxxxx $10,118,297.50
Schedule 5(c)
(continued)
First Union Letters of Credit
Subsidiary Issuing Bank LC# Stated Amount Beneficiary Expiry Date
OmniOffices, Inc. First Union S147299 $ 37,192.04 Weeks Realty, L.P. May 31, 2000
OmniOffices, Inc First Union S139489 $ 148,000.00 Connecticut General Life Ins. April 30, 2000
Co.
OmniOffices, Inc First Union S145655 $ 46,000.00 Equitable Life Assurance December 21, 0000
Xxxxxxx xx XXX, Xxxxxx, XX
OmniOffices, Inc First Union S402898 $ 50,000.00 Xxxxx & Company August 31, 0000
XX Xxxxxxxx Xxxxxxx xx Xxxxx Xxxxx X000000 $ 600,000.00 Fairview Associates August 31, 2000
North Carolina, Inc.
OmniOffices, Inc First Union S116794 $ 24,221.33 American National Bank & Trust June 30, 2000
Co. of Chicago
OmniOffices, Inc First Union S108660 $ 240,000.00 Trizechahn Office Holdings August 31, 2000
OmniOffices, Inc First Union S402416 $ 16,000.00 Xxxxxxx Realty I Ltd. June 30, 2000
OmniOffices, Inc First Union SM408124C $ 31,751.76 EOP-Westchase Office Properties May 30, 2000
Trust
OmniOffices, Inc First Union S063275 $ 140,000.00 Realty Xxxxxxx Xxxxx 00, 0000
XxxxXxxxxxx, Inc First Union SM408488C $ 50,000.00 OTR January 31, 2000
Executive Office First Union S163998 $ 775,000.00 Park Avenue Properties October 15, 2000
Network, Ltd.
OmniOffices, Inc First Union S403D44 $ 180,000.00 Xxxxx Management Corp. May 1, 2000
OmniOffices, Inc First Union S101387 $ 750,000.00 Madison Avenue Associates August 30, 2000
OmniOffices, Inc First Union S114735 $ 33,124.05 Xxxxxxx Realty I Ltd. April 30, 2000
OmniOffices, Inc First Union S104374 $ 160,000.00 DRW Chesterbrook Associates November 1, 2000
OmniOffices, Inc First Union S139498 $ 40,000.00 Metro Corp Center, LLC January 31, 2000
OmniOffices, Inc First Union SM408720C $ 250,000.00 Xxxxxxx Properties, LP August 30, 2000
Kiowa, Inc. First Union S151696 $ 800,000.00 Shorenstein Management, Inc. April 15, 2000
OmniOffices, Inc First Union S111557 $ 150,000.00 Acquiport Corp. Ridge, Inc. February 20, 2000
First Union S132017 $ 70,000.00 Airlines Reporting Corp. September 30, 2000
Total Letter of Credit for First Union $4,591,289.18
