EXHIBIT 10.2
JAH REALTIES, L.P.
VERITECH VENTURES LLC
JAH I/O LLC
C/O JAH REALTIES, L.P.
0 XXXXXXXXXXXXXX XXXX, XXXXX 000
XXXXXXXX, XXX XXXX 00000
September 23, 1999
Reckson Service Industries, Inc.
RSI I/O Holdings, Inc.
RSI-OnSite Holdings LLC
RSI-OSA Holdings, Inc.
c/o Reckson Service Industries, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
This letter agreement (this "Agreement") sets forth the agreement of
the parties hereto with respect to the acquisition (the "Acquisition") by
Reckson Service Industries, Inc. ("RSI") or its Affiliates (as defined below)
("Buyer") of all of the Sellers' (as defined below) right, title and interest
in and to the Securities (as defined below) and the other matters set forth
herein.
1. CERTAIN DEFINITIONS. For purposes of this Agreement:
(a) "Securities" means, collectively:
(i) all interests (equity, debt or otherwise)
(collectively, the "JAH I/O Interests") in JAH I/O,
LLC, a New York limited liability company ("JAH I/O"),
owned directly or indirectly, beneficially or of
record ("Owned"), by JAH Realties, L.P., a New York
limited partnership ("JAH"), or any of JAH's
Affiliates (collectively, "Xxxxxxx Realties"). JAH I/O
is the Xxxxxxx Realties' member of INTEROFFICE
SUPERHOLDINGS LLC, a Delaware limited liability
company ("ISC");
(ii) all interests (equity, debt or otherwise)
(collectively, the "OCC Interests") in ONSITE COMMERCE
AND CONTENT LLC, a Delaware limited liability company
("OCC"), Owned by Xxxxxxx Realties; and
(iii) 2,597,396 shares of common stock, par value $0.01 per
share, as adjusted for any stock dividend, stock
split, other distribution or reclassification of
OnSite common stock applicable to all record holders
of OnSite common stock generally (the "OnSite Common
Stock" and together with the Series B Proceeds (as
defined below), the "OnSite Securities"), of ONSITE
ACCESS INC., a Delaware corporation ("OnSite"), Owned
by VERITECH VENTURES LLC, a New York limited liability
company ("Veritech") or any of Xxxxxxx Realties' or
Veritech's Affiliates. The sale of the OnSite Common
Stock by Veritech to Buyer together with such
registration rights in the OnSite Common Stock as are
transferable by Veritech are hereunder known as the
"OnSite Sale." In connection with the OnSite Sale,
Veritech agrees to transfer and assign to Buyer at the
closing of the OnSite Sale such registration rights in
the OnSite Common Stock as are transferable by
Veritech.
(b) "Series B Proceeds" means, collectively, fifty-eight
percent (58%) of the consideration due, paid or payable to
any Seller or its Permitted Successor (as defined below),
as the case may be, resulting from or in connection with:
(i) any sale, transfer or other disposition (other than to
a Permitted Successor) of any Series B Redeemable
Preferred Stock (the "Preferred Stock"), $0.01 par
value per share, of OnSite Owned by Veritech as of the
date hereof and any securities, rights, benefits or
entitlements distributed on or in exchange for such
shares of Preferred Stock (collectively, the "Series B
Stock"); and
(ii) any dividend payment not covered in section 1(b) (i)
above, interest payment, liquidation payment or other
payment or distribution accruing to holders of the
Series B Stock other than the 12% dividend on the
Preferred Stock accrued and unpaid from the date of
its issuance through the date of the acquisition by
Buyer of the OnSite Common Stock at closing.
The parties agree that the rights granted to Buyer by
Sellers under this Agreement to the Series B Stock consist
solely of the rights specified herein and that the terms of
this Agreement do not grant, convey or otherwise provide to
Buyer any other rights, beneficially or otherwise, in any
of the shares of the Series B Stock, including, without
limitation, the right to vote or dispose of such shares of
Series B Stock in any manner.
(c) "Affiliate" means any person or entity that, directly or
indirectly, through one or more intermediaries, controls,
is controlled by or is under common control with a
specified person or entity, and, with respect to an
individual, shall include such person's immediate family
(i.e., parents, spouse and children) or a trust for the
benefit thereof.
(d) "Deemed Interest Credit" means the amount equal to
$1,513,433.25 multiplied by 12% per annum for the period
from the date of this Agreement to and including the
earlier of (x) the date of the closing of the Vantas Sale
(as defined below) or (y) January 31, 2000.
(e) "Permitted Successor" means any transferee or assignee of
Series B Stock or RSI Stock received upon the closing of
the Vantas Sale who is a person or entity that (i) on the
date of this Agreement is a partner in JAH, a member of
Veritech or an Affiliate of such persons or entities, and
(ii) concurrently with such transfer or assignment executes
a supplement to this Agreement in form and substance
reasonably acceptable to Buyer pursuant to which such
transferee or assignee irrevocably agrees to be bound by
the terms and conditions of this Agreement in all respects
(including with respect to the Series B Stock, the
obligations relating to the payment of the Series B
Proceeds) as if such transferee or assignee is a Seller in
this Agreement.
(f) "Sellers" means, collectively, Veritech and JAH; each such
entity is referred to in this Agreement, individually, as a
"Seller".
The parties hereto, in exchange for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, covenant and
agree that the Acquisition shall be consummated as follows:
2. FORM OF ACQUISITION. The transaction will take the form of a
purchase by Buyer of all of the Securities (except the Series B
Proceeds) from the Sellers. Concurrent with the execution and
delivery of this Agreement, unless noted below, in addition to
the other documents specified in this Agreement, the parties
shall receive a duplicate original of the agreements, documents
and/or instruments listed in clauses (i), (ii), (iii), (iv) and
(vi) below and a certified copy of the agreements, documents
and/or instruments listed in clause (v) below:
(i) Waiver and Amendment from each of Xxxxxx I/O LLC,
RFIA, LLC, JAH I/O, RSI I/O LLC and ISC attached
hereto as Exhibit I providing, inter alia, that the
sale of the JAH I/O Interests is a Permitted Transfer
and not a Syndication (as each such term is defined by
the ISC LLC Agreement (as defined below));
(ii) Agreement between Xxxxxx Xxxxxxxxxx and OCC in the
form attached hereto as Exhibit II providing, inter
alia, that all of the interests of Xxxxxx Xxxxxxxxxx
("MR") and his Affiliates in OCC have been, or
effective on the date of the closing of the
Acquisition will be, terminated (the "Xxxxxxxxxx
Acquisition Agreement");
(iii)Certificates certifying the charter documents and
attaching evidence of the good standing of each party
to this Agreement;
(iv) At each closing, legal opinions from counsel to
Sellers and counsel to Buyer as to power and
authority;
(v) At the closing, documentation evidencing the
termination of (x) that certain promissory note
payable by JAH to Union State Bank ("USB") in the
principal amount of $3 million dated February 25,
1998, and (y) the security interest of USB in and to
any of the Securities which were pledged to USB in
order to secure such promissory note;
(vi) Attached to this Agreement as Schedule 20(i) are
resolutions by the parties' respective boards of
directors or managers or partner consents, as the case
may be, authorizing the execution and delivery of this
Agreement and the consummation of the transactions
contemplated herein; and
(vii)Sellers will represent and warrant as provided in
Schedule 9 paragraph (a) that Schedule 20(ii) sets
forth all of the shares in RSI and Reckson Associates
Realty Corp. ("RARC") and units in Reckson Operating
Partnership, L.P. ("ROP") Owned by any of Sellers or
their respective Affiliates as of the date of this
Agreement and at each closing.
3. PURCHASE PRICE.
(a) Subject to the terms and conditions of this Agreement, the
purchase price for the Securities (the "Purchase Price")
shall consist of:
(i) 2,423,148 shares of newly issued common stock, $0.01
par value per share, of RSI ("RSI Stock"), as adjusted
for any stock dividend, stock split, other
distribution or reclassification of RSI Stock
applicable to all record holders of RSI Stock
generally, on the date hereof through the closing
date;
(ii) a promissory note (the "Promissory Note") in the
principal amount of $5,596,572 issued to JAH; and
(iii) cash in an aggregate amount equal to $13,535,501 less
the Deemed Interest Credit, such aggregate amount to
be paid by Buyer to JAH in immediately available funds
by federal funds bank wire transfer on the closing of
the Vantas Sale.
(b) The Promissory Note shall be in the form of Exhibit III
attached hereto.
(c) The Purchase Price shall be allocated as follows:
(i) for the JAH I/O Interests: (x) cash in the amount of
$13,535,501 less the Deemed Interest Credit, and (y)
431,551 shares of RSI Stock;
(ii) for the OCC Interests: (x) issuance and delivery of
the Promissory Note in the aggregate amount of
$5,596,572, and (y) 260,000 shares of RSI Stock;
provided, however, that on the closing of the
Acquisition of the OCC Interests, the remaining amount
of previously paid capital contributions to OCC shall
be used to fund the purchase price payable to MR under
the Xxxxxxxxxx Acquisition Agreement, it being
understood that any such amounts which are payable to
MR in excess of amounts which are properly
distributable to MR and JAH under the terms of OCC
limited liability company agreement shall be
reimbursed to OCC by JAH at the closing of the
Xxxxxxxxxx Acquisition Agreement; and
(iii) for the OnSite Common Stock: 1,731,597 shares of RSI
Stock, provided, however, that as a subsequent credit
to the purchase price being paid by Buyer for the
OnSite Common Stock, Buyer shall be entitled to the
Series B Proceeds, if any, which Series B Proceeds
shall be paid to Buyer by Sellers in accordance with
Section 9(c) of this Agreement.
4. CLOSING.
(a) The closing of the Acquisition (other than the Vantas Sale)
shall occur on September 30, 1999, or such earlier date as
the parties may agree, provided that the conditions set
forth in Section 4(b) of this Agreement (the "Conditions")
have been satisfied or waived. In the event the closing of
the OnSite Sale does not occur on or prior to September 30,
1999 based solely on the precondition that the requirements
of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act") be satisfied or other
regulatory approvals be obtained, then the closing shall be
postponed until all such approvals (the HSR Act approval
and the other approvals) have been obtained, provided,
however, that if all such approvals (including HSR Act
approval) have not been obtained on or prior to December
17, 1999, then Sellers shall have the right, in their sole
discretion, to elect by written notice to Buyer delivered
on or before December 22, 1999, to (i) sell all of the JAH
I/O Interests, the OCC Interests and the OnSite Common
Stock to Buyer with a closing (except for the Vantas Sale)
to occur on or prior to December 30, 1999, but with the
OnSite Common Stock consisting of only 1,499,000 shares of
OnSite Common Stock (with an adjustment to the Purchase
Price and the Series B Proceeds credit to the Purchase
Price) if the only approval not obtained is HSR Act
approval, or (ii) terminate this Agreement and all of the
transactions contemplated hereby in their entirety.
(b) The Conditions to closing are:
(i) to the extent necessary, regulatory approval(s) with
respect to the transfer of the OnSite Securities;
(ii) to the extent described in the last sentence in
Section 4(a), HSR Act approval (and the parties agree
that, in the event that such approval is necessary,
Buyer shall pay all fees and costs, including
reasonable attorney's fees of the attorneys designated
by Buyer to represent Buyer and the Sellers in
connection with preparing, filing and processing the
application under the HSR Act);
(iii)the simultaneous closing under the Xxxxxxxxxx
Acquisition Agreement (and if for any reason Sellers
fail to close under the Xxxxxxxxxx Acquisition
Agreement, then Buyer may, at its option, close on
behalf of Sellers); and
(iv) as an additional condition to the closing of the
Vantas Sale, HSR Act approval, if necessary (and the
parties agree that, in the event that such approval is
necessary, Buyer shall pay all fees and costs,
including reasonable attorney's fees of the attorneys
designated by Buyer to represent Buyer and the Sellers
in connection with preparing, filing and processing
the application under the HSR Act).
5. VANTAS SALE. JAH shall sell (the "Vantas Sale") to Buyer all of
the JAH I/O Interests on the following terms:
(a) At the time this Agreement is executed and delivered, the
Buyer shall deposit into escrow with the Buyers' counsel,
Xxxxxxx, Xxxxxxxxx LLP ("HF"), pursuant to an escrow
agreement in the form annexed hereto as Exhibit IV, a $2.3
million principal amount irrevocable standby letter of
credit in a form reasonably acceptable to Sellers, such
deposit representing part of the Vantas Sale purchase
price.
(b) The Vantas Sale shall close concurrently with the
consummation of the purchase (the "Xxxxxx Sale") by Buyer
of the VANTAS Incorporated ("Vantas") securities (the
"Xxxxxx Shares") of Xxxxxxx Strategic Partners Fund L.P.,
Strategic Associates, L.P. and Xxxxx X. Xxxxxxx
(collectively, "Xxxxxx") whether the Xxxxxx Sale is
consummated in whole or in part; provided, however, that
JAH may elect to postpone the closing until any date up to
and including January 14, 2000, by giving a notice to Buyer
not later than five (5) business days after receipt by JAH
of written notice of the scheduled closing date of the
Xxxxxx Sale. In the event the Xxxxxx Sale is not
consummated, in whole or in part, prior to January 5, 2000,
then the Vantas Sale shall be consummated not later than
January 14, 2000.
(c) With respect to 345,241 shares of RSI Stock received upon
the closing of the Vantas Sale: upon the one-year
anniversary of the closing date and for thirty days
thereafter (time being of the essence), JAH (or, if
applicable, JAH's Permitted Successor) may request, by
written notice to Buyer, that Buyer pay to such party an
amount equal to (x) the difference between $19 per share of
RSI Stock and the closing price (if lower than $19) of RSI
Stock on the date such notice is given multiplied by (y)
the lesser of 345,241 and the number of shares of RSI Stock
Owned by such party on the date such notice is given,
provided, however, that (i) this right shall automatically
and irrevocably expire if the average of the volume
weighted average closing price (the "VWAP") of RSI Stock
for any consecutive fifteen day period (the "15 Day
Period") commencing from the date of this Agreement prior
to the giving of the aforesaid notice is $19 per share or
higher, and (ii) the right to such payment shall at all
times be adjusted for any stock dividend, stock split,
other distribution or reclassification of RSI Stock
applicable to all record holders of RSI Stock generally;
and provided further, however, that if the underwriter
lock-up agreement referred to in Section 13(c) is in effect
and precludes Sellers from selling 345,241 shares of RSI
Stock during the effectiveness of such lock-up agreement,
then the RSI Stock closing price during such lock-up period
shall be excluded in calculating the VWAP, and the day
immediately preceding the effectiveness of such lock-up
period and the day immediately following the termination of
such lock-up period shall be deemed to be consecutive days
for purposes of calculating the 15 Day Period.
(d) With respect to 86,310 shares of RSI Stock received upon
the closing of the Vantas Sale: upon the one-year
anniversary of the closing date and for thirty days
thereafter (time being of the essence), JAH (or, if
applicable, JAH's Permitted Successor) may request, by
written notice to Buyer, that Buyer pay to such party an
amount equal to (x) the difference between $15 per share of
RSI Stock and the closing price (if lower than $15) of RSI
Stock on the date such notice is given multiplied by (y)
the lesser of 86,310 and the number of shares of RSI Stock
Owned by such party on the date such notice is given,
provided, however, that (i) this right shall automatically
and irrevocably expire if the average of the VWAP of RSI
Stock for any 15 Day Period prior to the giving of the
aforesaid notice is $15 per share or higher, and (ii) the
right to such payment shall at all times be adjusted for
any stock dividend, stock split, other distribution or
reclassification of RSI Stock applicable to all record
holders of RSI Stock generally; and provided further,
however, that if the underwriter lock-up agreement referred
to in Section 13(c) is in effect and precludes Sellers from
selling 86,310 shares of RSI Stock during the effectiveness
of such lock-up agreement, then the RSI Stock closing price
during such lock-up period shall be excluded in calculating
the VWAP, and the day immediately preceding the
effectiveness of such lock-up period and the day
immediately following the termination of such lock-up
period shall be deemed to be consecutive days for purposes
of calculating the 15 Day Period.
(e) Effective upon the closing of the Vantas Sale, JAH and its
partners, Affiliates, agents and representatives shall be
indemnified and held harmless by Buyer from all
liabilities, obligations, claims or damages brought or
asserted by third parties or otherwise arising out of, in
connection with or as a result of JAH I/O being or having
been a member of ISC for acts or omissions by the
indemnified party other than acts or omissions for which
Sellers are indemnifying Buyer. Effective upon the closing
of the Vantas Sale, Buyer and its Affiliates, agents and
representatives shall be indemnified and held harmless by
Sellers, jointly and severally, from all liabilities,
obligations, claims or damages brought or asserted by third
parties or otherwise arising out of, in connection with or
as a result of wilful acts or wilful omissions or gross
negligence of JAH I/O in respect of ISC prior to the
closing date of the Vantas Sale.
(f) Effective upon the closing of the Vantas Sale, JAH, JAH
I/O, ISC, RSI I/O Holdings, Inc. and RSI hereby each
release the other and their respective Affiliates, agents
and representatives from any and all claims arising prior
to the closing date of the Vantas Sale that they have or
may have with respect to ISC except for the obligations set
forth in this Agreement.
(g) For a period of three years after the closing date of the
Vantas Sale, RSI shall cause Xxx Xxxxxxx to be elected a
director and named Vice Chairman of the Vantas board of
directors (the "Vantas Board"). As a director of Vantas,
Xxx Xxxxxxx: (i) shall be subject to the laws of fiduciary
duty applicable to a director under the corporate law of
the jurisdiction where Vantas is then incorporated and
applicable securities laws and may be removed from the
Vantas Board for any breach of any such duties; (ii) may be
removed from the Vantas Board if he refuses to execute a
registration statement for a public offering of securities
of Vantas that has been approved by the requisite number of
directors of Vantas to authorize such act and each other
director appointed by RSI has signed or has agreed to sign
the applicable registration statement; and (iii) may be
removed from the Vantas Board for any misappropriation of
any corporate opportunity of Vantas; provided, however that
Xxx Xxxxxxx may not be removed from the Vantas Board
pursuant to this clause (iii) for engaging in any activity
which is then engaged in by RSI or its Affiliates other
than through Vantas.
(h) For a period of three years after the closing date of the
Vantas Sale, RSI shall cause Xxx Xxxxxxx to be appointed to
the RSI Strategic Steering Committee. Notwithstanding the
foregoing, RSI may remove Xxx Xxxxxxx from such appointment
for cause.
(i) Notwithstanding any provision of this Agreement to the
contrary, the parties agree that Sellers shall not be
liable for (i) any obligations paid or payable to the
holder of the Class B Units in ISC (the "Xxxxxx Profits
Interest") pursuant to the Interoffice Superholdings LLC
Limited Liability Company Agreement dated August 14, 1998
(the "ISC LLC Agreement") and/or that certain letter
agreement dated January 29, 1998 by and among Interoffice
Superholdings Corporation, Xxxxxx Xxxxxx and Xxxxxx I/O
LLC;. (ii) any obligations paid or payable to any holder of
options to purchase Class A Units in ISC pursuant to the
ISC LLC Agreement and/or any employment or option agreement
with such option holder and (iii) any obligations for which
ISC has indemnified Vantas at the time of the January, 1999
merger with Vantas.
6. WAIVER REGARDING THE SERIES D STOCK, THE SERIES E STOCK AND THE
XXXXXX SALE. Notwithstanding anything herein to the contrary, on
the date hereof, each Seller hereby irrevocably waives any
rights that it may have to acquire any direct or indirect
securities of Vantas or ISC by reason of (i) the Xxxxxx Sale,
(ii) the offer and sale of the Series D Convertible Preferred
Stock of Vantas ("Series D Stock"), or (iii) the offer and sale
of the Series E Convertible Preferred Stock of Vantas ("Series E
Stock"), including, without limitation, any rights or claimed
rights of any of the Sellers under the Side Letter (as defined
below) and/or the ISC LLC Agreement; provided, however, that if
the Vantas Sale does not close, then JAH I/O shall have the
right, by giving notice to Buyer by on or before January 21,
2000 and by paying in full to Buyer by on or before January 30,
2000 all amounts required to be paid (including, without
limitation, the Deemed Interest Credit), to acquire: (a) an
additional interest in ISC representing indirect beneficial
ownership of 288,273 shares of Series D Stock at $5.25 per share
(subject to upward adjustment to $6.25 per share as provided in
the Certificate of Designation and related purchase
documentation for such Series D Stock) and (b) 27.35991% of the
Class A Units in ISC (subject to reduction in accordance with
Section 14(i) of the ISC LLC Agreement) that it would have been
entitled to acquire if RSI, Reckson Office Centers LLC, RSI I/O
Holdings, Inc. and ISC had each exercised in full all of their
preemptive rights, as regards the Series D Stock and Series E
Stock, and the right of first refusal rights of each such entity
to all of the Xxxxxx Shares (to the extent the Xxxxxx Shares are
actually purchased by any or all of RSI, Reckson Office Centers
LLC, RSI I/O Holdings, Inc. and ISC and/or their respective
Affiliates, designees or assigns, whether under the right of
first refusal or under the Xxxxxx purchase agreement) and the
appropriate capital call shall be deemed made as if made at the
time of such acquisitions.
7. OCC. JAH shall sell (the "OCC Sale") to Buyer all of the OCC
Interests on the following terms:
(a) Effective upon the closing of the OCC Sale, JAH and its
partners, Affiliates, agents and representatives shall be
indemnified and held harmless by Buyer from all
liabilities, obligations, claims or damages brought or
asserted by third parties or otherwise, arising out of, in
connection with or as a result of JAH being or having been
a member of OCC for acts or omissions of the indemnified
party except for acts or omissions which Seller is
indemnifying Buyer. Effective upon the closing of the OCC
Sale, Buyer and its Affiliates, agents and representatives
shall be indemnified and held harmless by Sellers, jointly
and severally, from all liabilities, obligations, claims or
damages brought or asserted by third parties or otherwise,
arising out of, in connection with or as a result of any
wilful acts or wilful omissions or gross negligence of JAH
arising out of, in connection with or as a result of JAH
being or having been a member of OCC prior to the closing
date; and
(b) Effective on the closing of the OCC Sale, JAH, OCC, RSI-OSA
Holdings, Inc. and RSI hereby each release the other and
their respective Affiliates, agents and representatives
from any and all claims arising prior to the closing of the
OCC Sale that they have or may have with respect to OCC
except for obligations set forth in this Agreement.
8. [INTENTIONALLY OMITTED]
9. REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of Buyer to the Sellers, and the joint and
several representations and warranties of the Sellers to the
Buyer, in each case set forth on Schedule 9, annexed hereto, are
hereby incorporated by reference herein with the same force and
effect as if fully set forth herein. All representations and
warranties of the Sellers and the Buyer shall expire upon the
15th month anniversary date of the closing for which such
representation or warranty relates (the OCC Sale, the Vantas
Sale and/or the OnSite Sale, as the case may be) except for the
representations and warranties contained in paragraphs (b), (c),
(d), (e), (g), (h), (j), (l) and (m) of Schedule 9 for the
Sellers and paragraphs (a), (b), (d) and (e) of Schedule 9 for
the Buyer, which shall survive the respective closing until
expiration of the applicable statute of limitations period. In
addition to the other covenants and agreements included in this
Agreement, the parties hereto agree as follows:
(a) Sellers agree that from and after the closing date of the
Acquisition (other than the Vantas Sale), no Seller shall,
without the prior consent of at least a majority of the
board of directors of RSI (except as provided below) and a
majority of the board of directors of RARC, directly or
indirectly acquire any additional securities of RSI or
RARC, which upon such acquisition would result in the
Sellers (determined at the time of such acquisition)
together beneficially owning (including ownership by
attribution under Section 856(d)(5) of the Internal Revenue
Code of 1986, as amended (the "Code")) more than 9.9% of
the outstanding common stock or capital stock of RSI or
more than 9.0% of the outstanding common stock or capital
stock of RARC; provided, however, that this limitation
shall not prohibit nor limit in any respect the Sellers
from owning the number of shares set forth on the Schedule
20(ii) annexed to this Agreement (as adjusted for any stock
dividend, stock split, other distribution or
reclassification of RSI Stock and/or RARC securities
applicable to all record holders of RSI Stock and/or RARC
securities generally); and provided further, however, that
in the event that Code Section 856(d)(5) is altered,
amended or modified so that the reference therein to "10
percent" is increased, RSI shall endeavor to provide an
ownership limit exception that makes a corresponding
increase to the ownership limit with respect to the common
stock of RSI and capital stock of RSI for the Sellers upon
their request, to be effective not earlier than five years
after the closing date of the Acquisition (other than the
Vantas Sale). Notwithstanding the foregoing, no approval of
the RSI board of directors shall be required if any Seller
only acquires additional securities in RARC.
(b) Buyer shall use its commercially reasonable efforts (which
efforts shall not include the payment of money or granting
of other consideration) upon the closing of the Vantas Sale
to modify the Fifth and Amended and Restated Vantas
Stockholders' Agreement to remove the non-competition
covenants applicable to Sellers and, to the extent
applicable, their Affiliates.
(c) Any and all amounts payable to Buyer in respect of Series B
Proceeds shall be paid (or, if applicable, assigned) by
Sellers within two business days after receipt.
(d) In addition to any rights that Buyer may have arising from
or in connection with any breach by Sellers of a
representation, warranty or covenant set forth in this
Agreement, Buyer shall have the right to deduct and set-off
from any amounts payable to Sellers an amount equal to the
costs, liabilities, damages and expenses, including
attorneys' fees, resulting from such breach or which Buyer
in good faith reasonably anticipates will result from such
breach; provided, however, that prior to such deduction or
set-off Buyer (i) provides JAH with a notice describing the
alleged breach and the calculation of the amount of such
deduction and/or set-off, and (ii) provides a letter of
credit or other comparable security so that if Sellers
prevail in a litigation concerning such breach, Sellers can
be paid from such security. In any litigation pursuant to
this provision, the prevailing party shall recover all
legal fees and costs including, in the case of Buyer, all
costs of the letter of credit or other security. The
parties understand that this Section 9(d) contemplates that
each sale (i.e., the OCC Sale, the OnSite Sale and the
Vantas Sale) provides a separate right to set-off for
breaches of representations, warranties and covenants
relating exclusively to that particular sale and that a
breach claimed under one sale cannot give rise to a right
of set-off pertaining to another sale.
10. INDEMNIFICATION. Buyer and Sellers agree to indemnify each other
from any and all costs, liabilities, damages and expenses,
including attorneys' fees, resulting from breach of the
representations and warranties and covenants set forth in this
Agreement.
11. REGISTRATION RIGHTS. Effective on the closing date of the
Acquisition (other than the Vantas Sale), the Sellers shall have
the right to require that RSI register under the Securities Act
of 1933, as amended, the shares of RSI Stock issued to the
Sellers pursuant to this Agreement on such closing date, in
accordance with the terms of the Registration Rights Agreement
annexed hereto as Exhibit V (the "Registration Rights
Agreement"), which agreement shall be executed and delivered in
the form annexed hereto on the closing date. Effective on the
closing date of the Vantas Sale, the Sellers shall have the
right to include the RSI Stock issued to Sellers pursuant to the
Vantas Sale in the registration statement contemplated by the
Registration Rights Agreement.
Subject to Section 13, nothing in this Section 11 shall affect the
rights, if any, of Sellers to sell shares of RSI Stock under Rule 144 under
the Securities Act of 1933, as amended, or any successor rule or regulation.
12. TERMINATION OF AGREEMENTS.
(a) Concurrently with the closing of the OCC Sale and the
OnSite Sale without any further action by Buyer or Sellers,
the following agreement is terminated and of no further
force or effect:
the letter agreement dated December 24, 1997 by and among
Reckson Associates Realty Corp., Xxx X. Xxxxxxx and Xxxxxx
Xxxxxxxxxx; provided, however, that the termination of such
letter agreement shall not modify or otherwise effect that
letter's provisions set forth in Sections 1.c., 2.a., 2.b.
and 2.f., which provisions shall not be modified by this
Agreement and shall continue in full force and affect.
(b) Concurrently at the closing of the Vantas Sale and without
any further action by Buyer or Sellers, the following
agreements are terminated and of no further force or
effect:
(i) the letter agreement dated November 9, 1998 (the "Side
Letter") among JAH I/O, Reckson Management Group,
Inc., Buyer, RSI I/O Holdings, Inc. and Reckson Office
Centers, LLC; and
(ii) Interoffice/Xxx Xxxxxxx Terms Sheet dated September
24, 1998 by and among Reckson Management Group, Inc.,
Reckson Service Industries, Inc. and JAH I/O LLC.
13. LOCK-UP AGREEMENTS
(a) Sellers agree that so long as the members of the senior
management of RSI on the date hereof and their respective
Affiliates (such persons and entities, collectively, being
the "Rechler Persons"), Own, in the aggregate, more than
fifty percent (50%) of the RSI Stock (as adjusted for any
stock dividend, stock split, other distribution or
reclassification of RSI Stock applicable to all record
holders of RSI Stock generally) Owned by them in the
aggregate on the date of this Agreement, they will not,
without the prior written consent of Buyer, directly or
indirectly, other than as provided herein, for a period of
twelve (12) months after the date of the issuance of the
RSI Stock to the Sellers, offer, sell, contract to sell or
otherwise dispose of or transfer any shares of RSI Stock
received pursuant to this Agreement other than the
aggregate of 431,551 shares of the RSI Stock (received
under the Vantas Sale). This lock-up agreement shall not
prohibit (i) the Sellers from transferring RSI Stock to any
Affiliate of the Sellers, to any charitable organization,
or to any other party in connection with any family or
estate planning by Sellers or their Affiliates or by gift,
will or the laws of descent and distribution, provided that
such transferee agrees in writing to the transfer
restrictions described herein or (ii) the Sellers from
transferring during any three month period an amount of
shares of RSI Stock that does not exceed 10% of the RSI
Stock Owned by Sellers pursuant to this Agreement;
provided, however, that in no event during the 12 month
lock-up period of this Section 13, shall the Sellers sell
an aggregate of more than 1,000,000 shares of RSI Stock
(whether such shares are registered or not registered under
the registration statement contemplated by the Registration
Rights Agreement), including the RSI Stock received by
Sellers pursuant to the Vantas Sale;
(b) Sellers agree that so long as: (i) the Rechler Persons Own,
in the aggregate, more than fifty percent (50%) of the RSI
Stock (as adjusted for any stock dividend, stock split,
other distribution or reclassification of RSI Stock
applicable to all record holders of RSI Stock generally)
Owned by them on the date of this Agreement, and (ii)
Sellers and/or their respective Affiliates Own five percent
(5%) or more of the issued and outstanding RSI Stock, in
the aggregate, then Sellers and their respective Affiliates
will vote such stock on "change of control" issues
pertaining to RSI only (i) in such manner as the majority
of the RSI board of directors recommends or (ii) by
abstaining; provided, however, that nothing contained in
this Section 13(b) shall prevent (i) Sellers or their
respective Affiliates from selling such shares to any
person or entity making a tender offer, exchange offer or
similar transaction for RSI Stock whether or not such sale
is recommended by a majority of the RSI board of directors
or (ii) Sellers from voting on any other matter for which
RSI stockholders are entitled to vote generally. For
purposes of this Section 13, "change of control" issues
consist solely of the following: (1) any proposed merger or
consolidation of RSI with or into any person, or any
proposed sale, transfer or other conveyance, whether direct
or indirect, of all or substantially all of the assets of
RSI, in one transaction or a series of related
transactions, if, immediately after giving effect to such
transaction any "person" or "group" (as such terms are used
for purposes of Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),
whether or not applicable), is or becomes the beneficial
owner, directly or indirectly, of more than thirty-five
percent (35%) of the shares of the total voting power of
RSI, (2) a proposal under which any "person" or "group" (as
such terms are used for purposes of Section 13(d) and 14(d)
of the Exchange Act, whether or not applicable) would
become the beneficial owner, directly or indirectly, of
more than thirty-five percent (35%) of the total voting
power of RSI, or (3) a proposal under which any party would
receive the right to elect a majority of the RSI board of
directors or to control, directly or indirectly, a majority
of the RSI board of directors; and
(c) Notwithstanding the provisions of Section 13(a) above, if
RSI sells common stock or securities convertible into
common stock through an underwritten public offering during
the 12 month lock-up period, the Sellers (including their
successors and assigns) shall agree to enter into standard
underwriter lock-up agreements providing that the Sellers
(and/or such successors and assigns) will not offer, sell,
contract to sell or otherwise dispose of or transfer any
shares of RSI Stock for the identical lock-up period
provided for in the underwriter lock-up agreements entered
into by members of RSI's senior management; provided, that
in no event shall such period exceed 120 days; provided
however that (i) the Sellers shall be permitted in any
event to make the transfers provided for in Section
13(a)(i) above and Section 14 below without restriction or
limitation, (ii) that the term of the Registration Rights
Agreement shall be extended by the number of days by which
the Sellers are subject to the underwriter's lock-up in
excess of sixty (60) days and (iii) that after the
expiration of the underwriter's lock-up, the Sellers shall
be permitted to increase the number of shares which they
may transfer in the next three month period under Section
13(a)(ii) by the number of shares which Sellers could not
transfer during the prior three month period because of the
underwriter's lock-up.
14. PLEDGES AND MARGIN. The lock-up agreements referred to in
Section 13 of this Agreement shall not prohibit the Sellers
and/or their Affiliates and their permitted successors and
assigns from pledging their RSI Stock to any nationally
recognized financial institution as collateral for a bona fide
third party loan or from using the RSI Stock as margin
collateral with a nationally recognized financial institution or
broker/dealer pursuant to a bona fide third party transaction,
provided, however, that such financial institution or
broker/dealer shall not be subject to the lock-up provisions of
Section 13 of this Agreement if and only if the aggregate fair
market value of the collateral securing such loan or
indebtedness is, as of the first day of such pledge or use, not
more than 2 times the amount of such loan or indebtedness.
Provided that Sellers have complied with the foregoing, Buyer
will cooperate with effectuating the purposes of this Section
14, including at Sellers' request, Buyer will promptly complete
and sign any certificate, instrument or other document or
perform any other action or thing that is reasonably requested
or desired by any lender, Seller or its Affiliates in connection
with the use of RSI stock as collateral for a loan and otherwise
promptly take all other actions to carry out the provisions
under this Section 14, all at Sellers' sole cost and expense
(including Buyer's reasonable attorneys fees).
15. RIGHTS TO CERTAIN INFORMATION. Subject to RSI's fiduciary duties
and any confidentiality obligations it may have, Xxx Xxxxxxx
will have the right to receive any and all information, reports,
analysis and other access relating to the business, operations
and prospects of RSI and its Affiliates which would be afforded
to any institutional investor of RSI without becoming an
"insider".
16. TIME OF THE ESSENCE. Time shall be of the essence with respect
to all notices required to be given, all payments required to be
made and all conditions required to be satisfied under this
Agreement.
17. BROKER. Each of the parties agrees that no finder's fee or
broker's commission shall by reason of its actions be payable by
any other party in connection with the transactions contemplated
hereby and no party knows of any such fees payable by any party.
18. FEES AND EXPENSES. Sellers and Buyer hereby agree that they will
pay their own (and their representatives') respective fees and
advances incurred in connection with the negotiation,
preparation, execution and delivery of this Agreement and any
other agreements or documents contemplated hereby or thereby.
19. PUBLICITY. No press release or other public statement shall be
issued, nor shall the terms of this Agreement be disclosed to
third parties other than the representatives of the parties,
without the mutual consent of Buyer and Sellers; provided,
however, that nothing herein shall prohibit Buyer from making
any public statement that, on the advice of counsel, is required
or advisable to make in order to comply with its obligations
under applicable securities laws or stock exchange agreements.
20. BINDING AGREEMENT. This Agreement constitutes a binding
agreement among the parties hereto and supercedes all prior
agreements or understandings, written or oral, concerning the
subject matter of this Agreement.
21. REMEDIES. The parties agree that damages may not be an adequate
remedy in the event of a breach or threatened breach of this
Agreement and, accordingly, each agrees that either party, their
agents, representatives or the Affiliates of any of them, as the
case may be, shall be entitled to equitable relief, including
injunction and specific performance, in the event of any breach
or threatened breach of the provisions of this Agreement, in
addition to all other remedies available at law or in equity.
22. SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under such
law, such provision shall be ineffective to the extent of such
prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
23. FURTHER ASSURANCES. At any time, and from time to time after the
date hereof, each party shall, without further consideration and
at its own cost and expense, execute and deliver such additional
agreements, instruments, documents or certificates and take such
further action as shall reasonably be requested by any other
party to this Agreement in order to carry out the provisions of
this Agreement, including, without limitation, taking any and
all necessary actions reasonably requested by any party hereto
to satisfy any regulatory filing requirements whether under the
HSR Act, telecommunications regulations or otherwise.
24. ASSIGNS. Neither this Agreement nor any of the rights or
obligations of any party shall be assignable or transferable by
such party without the prior written consent of the other party.
Subject to the foregoing, this Agreement shall be binding upon
and inure to the benefit of the successors and assigns of each
party.
25. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable
to contracts made and to be performed entirely in the State of
New York.
26. AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to
departures from the provisions of this Agreement may not be
given without the written consent of Buyer and Sellers.
27. NOTICES. All notices, requests, demands and other communications
which are required to be given under this Agreement shall be in
writing and shall be deemed to have been duly given: (i) upon
receipt if personally delivered; (ii) one business day after
being transmitted with confirmation of transmission, if
transmitted by telecopy or facsimile; (iii) one business day
after it is sent, if sent for next day delivery by a recognized
overnight courier service with signed receipt; and (iv) upon
receipt, if sent by certified or registered mail, return receipt
requested. In each case notice shall be sent to the address set
forth on the signature page of this Agreement or to such other
address provided by a party by delivering appropriate notice.
28. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the
same agreement. This Agreement may be executed and delivered via
facsimile machine by the parties, which shall be deemed for all
purposes as original.
[SIGNATURE PAGES FOLLOW]
If the foregoing terms and conditions are satisfactory to you, please
signify your agreement thereto by signing and returning the enclosed copy of
this Agreement.
Very truly yours,
JAH Realties, L.P.
0 Xxxxxxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
By: JLH Realty Management Service, Inc.,
its general partner
By: /s/ Xxx X. Xxxxxxx
_______________________________
Name: Xxx X. Xxxxxxx
Title: President
Veritech Ventures LLC
0 Xxxxxxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
By: JAH Realties, L.P., its managing member,
By: JLH Realty Management Service, Inc.,
its general partner
By: /s/ Xxx X. Xxxxxxx
_______________________________
Name: Xxx X. Xxxxxxx
Title: President
(SIGNATURE PAGE CONTINUES)
JAH I/O, LLC
0 Xxxxxxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
By: JAH Realties, L.P., its managing member,
By: JLH Realty Management Service, Inc.,
its general partner
By: /s/ Xxx X. Xxxxxxx
_____________________________
Name: Xxx X. Xxxxxxx
Title: President
(SIGNATURE PAGE CONTINUES)
Accepted and agreed to this
23rd day of September, 1999
Reckson Service Industries, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
By: /s/ Xxxxx Xxxxxxx
________________________________
Name: Xxxxx Xxxxxxx
Title: Chief Executive Officer
RSI I/O Holdings, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
By: /s/ Xxxxx Xxxxxxx
________________________________
Name: Xxxxx Xxxxxxx
Title: Chief Executive Officer
RSI-OnSite Holdings LLC
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
By: Reckson Service Industries, Inc.
Its' sole member
By: /s/ Xxxxx Xxxxxxx
___________________________
Name: Xxxxx Xxxxxxx
Title: Chief Executive Officer
(SIGNATURE PAGE CONTINUES)
RSI-OSA Holdings, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
By: /s/ Xxxxx Xxxxxxx
________________________________
Name: Xxxxx Xxxxxxx
Title: President
(FINAL SIGNATURE PAGE)
Exhibit I to the Letter Agreement dated September 23, 1999
Form of Waiver and Amendment
Exhibit II to the Letter Agreement dated September 23, 1999
Form of the Xxxxxxxxxx Acquisition Agreement
Exhibit III to the Letter Agreement dated September 23, 1999
Form of Promissory Note
Exhibit IV to the Letter Agreement dated September 23, 1999
Form of the Escrow Agreement
Exhibit V to the Letter Agreement dated September 23, 1999
Form of the Registration Rights Agreement
Schedule 9 to the Letter Agreement dated September 23, 1999
Representations and Warranties
Schedule 20(i) to the Letter Agreement dated September 23, 1999
Copies of Resolutions
Schedule 20(ii) to the Letter Agreement dated September 23, 1999
Number and ownership of shares in RSI, RARC and units in Reckson Operating
Partnership, L.P. Owned by any of Sellers.
