Exhibit 10.14
PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of May 31, 2000, by and between
FrontLine Capital Group, a Delaware corporation ("FCG"), and AEW Targeted
Securities Fund II, L.P., a Delaware limited partnership (the "Investor").
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 30, 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 4,130,530 (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. (the "UK Stock Purchase Agreement"),
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 HQ Global Holdings, Inc., a Delaware corporation
("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, pursuant to the Exchange Agreement, dated as of May 31, 2000
(the "Exchange Agreement"), Holdco and FCG have agreed to exchange 4,130,530
shares of common stock of Holdco ("Common 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 and certain other persons pursuant to the Stock
Purchase Agreement for 3,704,933.820 newly issued shares of Series A
Convertible Cumulative Preferred Stock (the "Preferred Stock") of Holdco and
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, upon consummation of the transactions contemplated in the
Exchange Agreement, FCG desires to sell to the Investor, and the Investor
desires to purchase from FCG, the certain securities on the terms and
conditions specified in this Agreement.
WHEREAS, capitalized words and phrases used but not otherwise defined
herein shall have the meanings ascribed to them under the Merger Agreement.
Accordingly, FCG and the Investor hereby agree as follows:
1. Purchase and Sale of Securities. (a) On the terms and subject to
the conditions of this Agreement, (i) FCG agrees to sell to the Investor, and
the Investor agrees to purchase from FCG, for $18 million (the "Purchase
Price") (A) 441,479.263 newly issued shares of Preferred Stock (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, having an initial liquidation
preference equal to $18 million and (B) warrants to purchase up to 197,846.031
shares of Voting Common Stock (the "Warrants"), the terms of which are in the
form attached as Exhibit B hereto in respect of Warrants to purchase
133,408.585 shares of Common Stock (the "Initial Warrants") and in Exhibit C
hereto in respect of Warrants to purchase 64,427.446 shares of Common Stock.
(b) The closing (the "Closing") of the purchase and sale 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, which shall
not extend beyond June 5, 2000, is hereinafter referred to as the "Closing
Date," and, if the Closing Date is not May 31, 2000, FCG shall notify the
Investor prior to the close of the business on the business day immediately
preceding the Closing Date. On the Closing Date, (i) FCG shall deliver
certificates issued in the Investor's name representing the Preferred Shares
and the Warrants, and (ii) the Investor shall deposit the Purchase Price in
immediately available funds with Citibank, N.A., as escrow agent (the "Escrow
Agent") under the Escrow Agreement, dated as of May 31, 2000 (the "Escrow
Agreement"), for payment to FCG; it being understood that the Closing shall
occur, and the Preferred Shares, Warrants and Purchase Price only released
from escrow, in accordance with the terms and conditions set forth in the
Escrow Agreement.
2. Representations and Warranties of FCG. FCG hereby represents and
warrants to the Investor as of the date hereof and as of the Closing Date as
to the following matters:
(a) Organization and Standing. FCG is a corporation 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 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 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 (an "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 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 agreement 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 equitable principles.
(c) Preferred Shares and Warrants. (A) The Preferred Shares have
been duly authorized for issuance by Holdco pursuant to the terms of the
Exchange 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 of the Exchange
Agreement will be issued in compliance with the registration and qualification
requirements of all applicable federal securities laws as presently in effect.
The Warrants have been duly authorized for issuance by Holdco pursuant to the
terms of the Exchange 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.
(B) On the Closing Date, FCG will be the sole record and
beneficial owner and holder of the Preferred Shares and the Warrants, free and
clear of all claims, conditional sale or other title retention agreements,
covenants, encumbrances, equitable interests, liens, options, pledges, rights
of first refusal, security interests, statutory liens or restrictions of any
kind, including any restrictions on voting, transfer, receipt of income, or
exercise of any other attribute of ownership ("Liens"). At the Closing, FCG
will transfer to the Investor good and marketable title to the Preferred
Shares and the Warrants, free and clear of all Liens. Except as contemplated
in Section 3(d), at the Closing, no legend or other reference to any purported
Lien will appear upon any certificate representing the Preferred Shares or the
Warrants. At the Closing, none of the Preferred Shares or the Warrants will be
transferred to FCG in violation of (i) the Securities Act of 1933, as amended
(the "Securities Act"), the securities laws of any state, or any other
federal, state, local, municipal, foreign, international, multinational, or
other constitution, law, rule, standard, requirement, administrative ruling,
order, ordinance, principle of common law, legal doctrine, code, regulation,
statute, treaty or process or (ii) any award, decision, injunction, judgment,
decree, settlement, order, process, ruling, subpoena or verdict (whether
temporary, preliminary or permanent) entered, issued, made or rendered by any
court, administrative agency, arbitrator, Governmental Entity or other
tribunal of competent jurisdiction.
(d) No Conflicts; Consents. The execution and delivery of this
Agreement by FCG does not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not conflict
with, or result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to 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 FCG or its subsidiaries
under, any provision of (i) the certificate of incorporation or by-laws of FCG
and its subsidiaries, (ii) any note, bond, mortgage, indenture, deed of trust,
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) 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 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, as amended (the "Exchange Act"), 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 or any of its subsidiaries in
connection with the execution, delivery and performance by Holdco of this
Agreement or the consummation of the transactions contemplated hereby.
3. Representations and Warranties of the Investor. The Investor
hereby represents and warrants to FCG as follows:
(a) Organization and Standing. The Investor is a limited
partnership duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Investor and its subsidiaries have all
requisite partnership 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. The Investor 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 the Investor and its
subsidiaries taken as a whole (an "Investor Material Adverse Effect").
(b) Authority. The Investor has all requisite partnership power
and authority to enter into this Agreement, that certain Registration Rights
Agreement, in the form attached as Exhibit D hereto (the "Registration Rights
Agreement"), and that certain Stockholders Agreement, in the form attached as
Exhibit E hereto (the "Stockholders Agreement"), to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated
hereby and thereby. All partnership and other acts and other proceedings
required to be taken by the Investor 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 the Investor and
each constitutes or will constitute, as applicable, a legal, valid and binding
obligation of the Investor, enforceable against the Investor 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, the Registration Rights Agreement and the Stockholders Agreement by
the Investor does not, and the consummation of the transactions contemplated
hereby and thereby and compliance by the Investor 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
loss of a material benefit under, or result in the creation of any lien,
charge or encumbrance of any kind upon any of the properties or assets of the
Investor 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 the Investor and its
subsidiaries, (ii) any note, bond, mortgage, indenture, deed of trust, loan
document, license, lease, contract, commitment, agreement or arrangement to
which the Investor 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 the Investor or any of its subsidiaries or any of their
respective properties or assets. Except for disclosure in any reports required
pursuant to the Exchange Act, no consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any
Governmental Entity is required to be obtained or made by or with respect to
the Investor in connection with the execution, delivery and performance of
this Agreement, the Registration Rights Agreement and the Stockholders
Agreement by the Investor or the consummation of the transactions contemplated
hereby and thereby.
(d) Investment Representation. The Investor is purchasing
Preferred Shares and Warrants pursuant to this Agreement for its own account
for investment only and not with a view towards their distribution or resale.
The Investor represents that it is an "accredited" investor within the meaning
of Rule 501 promulgated under the Securities Act of 1933, as amended (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, is able to bear the economic risk of a loss of
its entire investment therein and is prepared to hold the Preferred Shares and
the Warrants for an indefinite period of time. The Investor 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 the
Warrants. The Investor has received all of the information regarding Holdco,
VANTAS and Old HQ that it has requested. FCG has informed the Investor 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. FCG has also informed the
Investor that any routine sale of Preferred Shares and Warrants made in
reliance upon Rule 144 promulgated under the Securities Act can be made only
in accordance with the terms and conditions of such Rule and, further, that in
case such Rule is not applicable to any sale of Preferred Shares and Warrants,
as applicable, resale thereof may require compliance with some other exemption
under the Securities Act prior to resale. FCG has informed the Investor that
certificates representing the Preferred Shares and Warrants issued pursuant to
this Agreement 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, AS ARE
REASONABLY REQUESTED AND ACCEPTABLE TO THE CORPORATION."
4. Covenants.
(a) Transfer of Rights. At the Closing, FCG shall transfer,
assign and convey to the Investor any and all rights to which FCG is entitled
under the Exchange Agreement and in respect of the Preferred Shares and the
Warrants, all as set forth in the Assignment Agreement attached as Exhibit F
hereto.
(b) Consummation of the Transactions. Subject to the terms and
conditions of this Agreement, each party shall use its commercially reasonable
efforts to cause the Closing to occur upon the terms and conditions set forth
herein. FCG shall cooperate with the Investor, and the Investor shall
cooperate with FCG, 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.
(c) Lock-Up. In connection with an initial public offering of
Holdco's securities, the Investor agrees, and the Investor shall secure the
agreement of any transferee therefrom, upon request of the lead underwriter,
not to sell or otherwise transfer or dispose of any Common Stock of Holdco
(other than to an affiliate of the Investor or another holder of Preferred
Stock) for a period following the effective date of a registration statement
of Holdco filed under the Securities Act with respect to such offering equal
to the lesser of (i) the lock-up period applicable to (a) FCG, (b) CarrAmerica
(so long as it owns in excess of 9% of the outstanding shares of Common
Stock), (c) holders of Preferred Stock, and (d) senior executive officers of
Holdco and (ii) six (6) months.
5. Conditions to Closing.
(a) Each Party's Obligation. The respective obligations of each
party hereto to effect the transactions contemplated by this Agreement are
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) 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 the Investor 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 representations and warranties
set forth in Sections 3(b) and 3(d) to be true and correct would not have an
Investor Material Adverse Effect, and the Investor shall have duly performed,
complied with and satisfied in all material respects all covenants, agreements
and conditions required by this Agreement to be performed, complied with or
satisfied by the Investor by the time of Closing. At the Closing, the Investor
shall have delivered to FCG a certificate, dated the Closing Date and signed
by a representative of the Investor, confirming the foregoing.
(ii) At the Closing, the Investor shall have delivered to
Holdco a certificate, dated the Closing Date, attesting to the authorization
of the Investor to consummate the transactions contemplated by this Agreement.
(iii) All filings, registrations, authorizations, permits,
consents and approvals required for the Investor's consummation of the
transactions contemplated by this Agreement shall have been made or obtained,
as applicable.
(iv) At the Closing, the Investor shall have executed and
delivered to Holdco the Stockholders Agreement and the Registration Rights
Agreement and (assuming due execution and delivery by the other parties
thereto) the same shall be in full force and effect.
(v) At the Closing, the Investor shall have deposited the
Purchase Price in immediately available funds with the Escrow Agent.
(c) The Investor's Obligation. The obligations of the Investor
hereunder are subject to the satisfaction (or waiver by the Investor) 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 representations and warranties set forth in Section
2(c) to be true and correct would not have an 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 the Investor a certificate, dated the
Closing Date and signed by an officer of FCG, confirming the foregoing.
(ii) The representations and warranties of Holdco made in
the Exchange Agreement shall be true and correct as of the date of the
Exchange Agreement 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) of the Exchange
Agreement to be true and correct would not have a Holdco Material Adverse
Effect (as defined in the Exchange Agreement) or (3) that the representation
and warranty set forth in Section 2(d) of the Exchange Agreement shall be true
and correct other than in any de minimis respect, the acquisition by FCG of
the Preferred Shares and Warrants pursuant to the Exchange Agreement shall
have been consummated, and all conditions specified in the Exchange Agreement
shall have been satisfied, and there shall have been no waivers to such
conditions.
(iii) At the Closing, FCG shall have delivered to the
Investor a secretary's certificate, dated the Closing Date, attesting to the
authorization of FCG to consummate the transactions contemplated by this
Agreement.
(iv) Since the date of this Agreement, Holdco and its
subsidiaries taken as a whole shall not have suffered a Holdco Material
Adverse Effect.
(v) 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.
(vi) At the Closing, Holdco shall have executed and
delivered to the Investor the Stockholders Agreement and the Registration
Rights Agreement and (assuming due execution and delivery by the other parties
thereto) the same shall be in full force and effect.
(vii) At the Closing, FCG shall have executed and delivered
to the Investor the Assignment Agreement in the form of Exhibit F hereto and
(assuming due execution and delivery by the Investor) the same shall be in
full force and effect.
(viii) 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 G
hereto in respect of the bank term debt and either the commitment letter of
Blackstone attached as Exhibit H hereto in respect of the high yield or
mezzanine debt or the commitment letter of Warburg Dillon Read LLC attached as
Exhibit I 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.
(ix) At or prior to Closing, the Certificate of
Designations in the form of Exhibit K hereto shall have been accepted for
filing by, and duly filed with, the Secretary of State of the State of
Delaware.
(x) At the Closing, the Investor shall have received the
favorable opinion, dated the Closing Date, of Xxxxx & Xxxx LLP, counsel to
Holdco and FCG, substantially in the form attached as Exhibit J hereto.
(xi) At the Closing, the Investor shall have received an
agreed upon procedures letter, dated the Closing Date, from Ernst & Young LLP,
substantially in the form attached as Exhibit K hereto.
(xii) At the Closing, none of the Merger Agreement, the
Second Step Merger Agreement and the UK Stock Purchase Agreement shall have
been amended in any material respect other than an extension of the Closing of
the transactions contemplated thereunder until June 5, 2000, and the
conditions specified in the Merger Agreement, the Second Step Merger Agreement
and the UK Stock Purchase Agreement shall have been satisfied in all material
respects, and there shall have been no waivers to such conditions in any
material respect.
(xiii) At the Closing, EOP Operating Limited Partnership or
an affiliate thereof shall purchase Preferred Stock and Warrants from Holdco
and FCG for an aggregate amount of $75 million.
(xiv) At the Closing, the Investor shall have received an
executed Management Rights Letter substantially in the form attached as
Exhibit L hereto and an opinion of counsel from Holdco stating that Holdco is
an operating company within the meaning of the Plan Asset Regulations.
(xv) At the Closing, FCG shall have delivered the Preferred
Shares and the Warrants to the Investor.
(d) Frustration of Closing Conditions. Neither FCG nor the
Investor 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) FCG without the prior
written consent of the Investor or (ii) by the Investor without the prior
written consent of Holdco and FCG. 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 FCG or the Investor 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 FCG and Holdco. FCG and Holdco, jointly and
severally, shall indemnify the Investor and its affiliates, controlling
persons, constituent partners and subsidiaries and their directors, officers,
members, employees, attorneys and representatives 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 (i) any breach of the representations and
warranties of FCG set forth in Section 2 or of Holdco in Section 2 of the
Exchange Agreement, (ii) FCG's, Holdco's or VANTAS' acts or failure to act,
(iii) any misstatements or omissions made in any disclosure or other
information or materials delivered or made available to the Investor in
connection with the investment contemplated under this Agreement, (iv) the
action or failure to act by an indemnified party with FCG's, Holdco's or
VANTAS' consent or in reliance on FCG's, Holdco's or VANTAS' action or failure
to act or (v) any and all environmental liabilities costs and expenses arising
out of or incurred in connection with the consummation of the Merger, the
Second Step Merger or the investment contemplated in this Agreement; provided,
however, that such indemnity shall not extend to any expenses, costs, losses,
claims, damages, liabilities or judgments to the extent arising out of (A) the
gross negligence or willful misconduct of any person indemnified under this
Section 11(a) as determined by a court of competent jurisdiction in a final,
non-appealable judgment or (B) a breach by the Investor of its representations
and warranties contained herein.
FCG agrees to indemnify the Investor against any Company Level
Loss or Direct Loss (each as defined below) arising out of (i) Rule 10b-5
under the Exchange Act with respect to VANTAS' failure to file reports with
the Securities and Exchange Commission as required under the Exchange Act
prior to the date hereof or (ii) the Shareholder Litigation (as defined in the
Form of Indemnification and Escrow Agreement attached as Exhibit E to the
Merger Agreement (the "Indemnification Agreement"). FCG shall pay the
Investor, in full and complete satisfaction of FCG's obligation under clause
(ii) of this paragraph, an amount (which, in the case of a Direct Loss, shall
not exceed such Direct Loss) equal to the product of (A) a fraction, the
numerator of which equals the sum of the number of shares of Preferred Stock
(determined on an As-Converted Basis) and the number of shares of Common Stock
purchasable upon exercise of the Initial Warrants, in each case owned by the
Investor at the Closing, and the denominator of which equals the sum of the
number of shares of Preferred Stock (determined on an As-Converted Basis) and
the number of shares of Common Stock purchasable upon exercise of the Initial
Warrants, in each case owned by the Investor at the Closing, and the number of
shares of Common Stock owned by FCG at the Closing, multiplied by (B) the
dollar value of any recovery obtained by FCG from CarrAmerica under the
Indemnification Agreement. A "Company Level Loss" shall mean any loss,
liability, claim, damage or expense (including, without limitation, reasonable
attorney's fees and expenses) incurred by Holdco or Old HQ or its successor;
it being understood that a Company Level Loss shall not include (i) any
consequential, incidental or punitive damages or (ii) any Direct Loss; it
being understood that a Company Level Loss shall include any loss or damage
suffered by the Investor as a result of a diminution in value (either directly
or indirectly) of the interest held by the Investor in Holdco. A "Direct Loss"
shall mean any loss, liability, claim, damage or expense (including reasonable
attorney's fees and expenses) incurred by the Investor; it being understood
that a Direct Loss shall not include (i) any consequential, incidental or
punitive damages, (ii) any Company Level Loss or (iii) any loss or damage
suffered by the Investor as a result of a diminution in value (either directly
or indirectly) of the interest held by the Investor in Holdco.
(b) Indemnity by the Investor. The Investor shall indemnify FCG,
Holdco and their respective 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 the Investor set forth 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 (A) the gross negligence or willful misconduct of any person
indemnified under this Section 11(b) as determined by a court of competent
jurisdiction in a final, non-appealable judgment or (B) a breach by FCG or
Holdco, as the case may be, of the representations and warranties set forth in
Section 2 of this Agreement or Section 2 of the Exchange Agreement,
respectively. Under no circumstances shall the Investor be liable to FCG,
Holdco or any other indemnified party under this Section 11(b) for any
punitive, exemplary, consequential or indirect damages arising therefrom.
(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 (i) such
settlement, compromise or judgment includes an unconditional release of the
indemnified party from all liability on claims that are the subject matter of
such action or proceeding and does not include a statement as to or an
admission of fault or culpability by or on behalf of the indemnified party and
(ii) reasonable prior written notice of settlement, compromise or judgment is
given to 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 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:
Xxxxxx X. Xxxxxxxx, Xx., Esq.
J. Xxxxxx Xxxxxxx, Esq.
Xxxxx & Wood LLP
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
(ii) if to the Investor,
AEW Targeted Securities Fund II, L.P.
c/o AEW Capital Management, LP
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Tel:
Fax:
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. The Investor and FCG 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. The Investor and FCG 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. The Investor and FCG 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.
FRONTLINE CAPITAL GROUP
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President
HQ GLOBAL HOLDINGS, INC.,
solely as to its express obligations
under Section 11
By: /s/ Xxxx Xxxxx
---------------------------------------
Name: Xxxx Xxxxx
Title: Vice President, General Counsel
and Secretary
AEW TARGETED SECURITIES FUND II, L.P.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: 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)
(continued)
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 Associates 6/4/01
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
