EXHIBIT 10.1
AGREEMENT
AGREEMENT, dated as of August 19, 1999 (this "Agreement"), by and
among RECKSON SERVICE INDUSTRIES, INC., a Delaware corporation ("RSI"), RSI
I/O HOLDINGS, INC., a Delaware corporation (together with its affiliates, the
"Buyer"), and XXXXXX, XXXXXXX STRATEGIC PARTNERS FUND L.P., a Delaware limited
partnership ("CW"), STRATEGIC ASSOCIATES, L.P., a Delaware limited partnership
("SA"), and XXXXX X. XXXXXXX, an individual ("DW"; and together with CW and
SA, the "Sellers").
RECITALS
WHEREAS, each of the Sellers is the record and beneficial owner of
the number of Series A Convertible Preferred Stock, par value $0.01 per share
("Series A Stock"), Series B Convertible Preferred Stock, par value $0.01 per
share ("Series B Stock"), warrants ("Warrants") to purchase Class A Common
Stock, par value $0.01 per share ("Class A Common Stock"), and options
("Options") to purchase Class A Common Stock, of VANTAS Incorporated, a Nevada
corporation, f/k/a/ALLIANCE National Incorporated (the "Company"), set forth
opposite their respective name on Schedule A annexed hereto; and
WHEREAS, a bona fide offer (a copy of which is attached hereto as
Exhibit A; the "Offer Notice") has been made by the Buyer to the Sellers to
purchase all of the Series A Stock, the Series B Stock, the Warrants and the
Options owned by each of the Sellers (collectively, the "Transferred Shares"),
and each of the Sellers desires to sell to the Buyer, and the Buyer desires to
purchase from each of the Sellers, the Transferred Shares, upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and undertakings contained
in this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Sellers and the Buyer hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE
SECTION 1.1 Purchase and Sale of the Transferred Shares. Upon the
terms and subject to the conditions set forth in this Agreement, the Buyer has
offered to purchase from the Sellers at the Closing (as defined below), the
Transferred Shares, free and clear of any title defect, objection, security
interest, pledge, encumbrance, mortgage, lien, charge, claim, option,
preferential arrangement or restriction of any kind, including, but not
limited to, any restriction on the use, voting, transfer, receipt of income or
other exercise of any attributes of ownership (collectively, "Liens"), other
than those Liens expressly created by the Fifth Amended and Restated
Stockholders' Agreement dated as of July 29, 1999 (the "Stockholders'
Agreement") by and among the Company and the Securityholders identified
therein, and the Sellers have agreed to accept such offer as provided in this
Agreement.
SECTION 1.2 Purchase Price; Deposit; Exercise of Options and
Warrants.
(a) The purchase price (the "Purchase Price") for each Transferred
Share shall be: (i) Five Dollars and sixty cents ($5.60) in cash and (ii)
0.1263 of a share (the "RSI Shares") of common stock, par value $.01 per
share, of Reckson Service Industries, Inc., a Delaware corporation ("RSI")
(which equates to a value of Nineteen Dollars ($19.00) per RSI Share) to each
Seller who is an "accredited investor," as that term is defined in Regulation
D under the Securities Act of 1933, as amended. If the Buyer does not deliver
to the Sellers an Exercise Notice (as defined in Section 1.2(c) below), the
cash portion of the Purchase Price shall be reduced by One Million Two Hundred
Twenty Eight Thousand Ninety Eight Dollars and sixty six cents
($1,228,098.66), which represents the aggregate exercise price of the Options
and Warrants.
(b) Simultaneous with the execution and delivery of this Agreement,
the Buyer is delivering Five Million ($5,000,000.00) Dollars (the "Deposit")
to Xxxxxxx, Xxxxxxxxx LLP, counsel to the Buyer, to be held in escrow for the
benefit of the Sellers as a down payment towards the Purchase Price pursuant
to the Escrow Agreement attached hereto as Exhibit X. Xxxxxxx agree that the
Buyer, in its sole discretion, can substitute the cash Deposit with an
irrevocable letter of credit, in form acceptable to the Sellers in their
reasonable judgment, in the amount of the Deposit for the benefit of the
Sellers. Upon termination of this Agreement as a result of the failure of any
of the conditions contained in Section 6.1 of this Agreement being satisfied,
the Deposit shall be immediately returned to the Buyer. Upon execution and
delivery of this Agreement, Xxxxxxx, Xxxxxxxxx LLP shall provide written
confirmation to the Sellers that it has received the Deposit and that it is
holding the Deposit for the benefit of the Sellers in accordance with the
terms of this Section 1.2(b). If this Agreement is terminated or not performed
by the Buyer for any reason other than the failure of any of the conditions
contained in Section 6.1 of this Agreement being satisfied, the Deposit shall
be immediately delivered to the Sellers. Upon Closing, the Deposit shall be
delivered to the Sellers.
(c) The Sellers agree that anytime after forty-five (45) days from
the date of this Agreement, the Buyer, in its sole discretion, can direct the
Sellers, upon notice (the "Exercise Notice") thereto, to exercise the Options
and Warrants. The Buyer, if it so determines, will deliver the Exercise Notice
with sufficient time to enable the Sellers to duly exercise the Options and
Warrants and obtain, prior to the Closing Date (as defined below), the stock
certificates evidencing the Class A Common Stock issued upon exercise of the
Options and Warrants. If the Sellers become the record and beneficial owners
of Class A Common Stock as a result of the exercise or conversion of the
Options and Warrants, all references in this Agreement to the Transferred
Shares shall be deemed to include such Class A Common Stock in lieu of the
Options and Warrants.
(d) Upon the one-year anniversary date of the Closing and for thirty
days thereafter (time being of the essence), the Sellers who owned shares of
Series A Stock that were transferred to the Buyer and have been paid the
Purchase Price, in part, with RSI Shares, may request, by written notice to
RSI, that RSI pay such Sellers the difference between $19.00 per RSI Share
received as part of the Purchase Price and held by such Sellers on the date
such notice is given and the closing price (if lower than $19.00) of the RSI
Shares on the date such notice is given, provided, however, that (i) the right
to give such notice to RSI shall automatically and irrevocably expire if the
average of the volume weighted average closing price of RSI Shares for any
consecutive fifteen (15) days commencing from the date of this Agreement prior
to the giving of the aforesaid notice is $19.00 per share or higher and (ii)
the right to such payment at all times shall be adjusted to take into account
any additional shares of RSI stock or other securities that are acquired by or
issuable to the Sellers after the Closing by reason of stock rights or
options, warrants, stock splits, stock distributions, stock dividends or other
similar mechanisms or events by which additional shares of stock are conveyed
or will be conveyed to the Sellers by reason of their holding or having held
the RSI Shares as part of the Purchase Price.
SECTION 1.3 Closing; Closing Date.
(a) Subject to the terms and conditions of this Agreement, the sale
and purchase of the Transferred Shares contemplated hereby shall take place at
a closing (the "Closing") to be held at the offices of Xxxxxxx, Xxxxxxxxx LLP,
0 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 A.M. local time, on the
ninetieth (90th) day following the delivery of the Offer Notice to the Company
and the Securityholder Offerees (as such term is defined in the Stockholders'
Agreement), or at such other time or on such other date as the Buyer and the
Sellers may mutually agree upon in writing. The day upon which the Closing
shall occur is herein called the "Closing Date". On a date that the Buyer and
the Sellers mutually agree upon, but in no event later than the seventh (7th)
day from the date this Agreement is executed, the Sellers shall deliver, in
accordance with Section 9.7 of the Stockholders' Agreement, (i) to the Company
(x) the Offer Notice, (y) the resignation letters in the form attached hereto
as Exhibit C executed by each of DW and G. Xxx Xxxx, and (z) a written consent
and action ("Stockholders' Consent"), in the form annexed as Exhibit D
electing Xxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx as directors in place of DW
and G. Xxx Xxxx, executed by the Sellers and RSI, Buyer, Interoffice
Superholdings, LLC and Reckson Office Centers, Inc. and (ii) to each of the
Securityholder Offerees, the Offer Notice and the Stockholders Consent.
(b) At the Closing, the Sellers shall deliver or cause to be
delivered to the Buyer the stock certificates evidencing all the Transferred
Shares, duly endorsed in blank or accompanied by stock powers duly executed in
blank, in proper form for transfer and with all required stock transfer tax
stamps affixed.
(c) At the Closing, the Buyer shall deliver or cause to be delivered
to the Sellers the Purchase Price less the Deposit, as indicated on Schedule A
annexed hereto.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers hereby jointly and severally represent and warrant to
the Buyer and RSI the following, which representations and warranties shall be
true and correct on the date of this Agreement and on the Closing Date:
SECTION 2.1 Ownership of the Transferred Shares.
(a) Each of the Sellers is the record and beneficial owner of the
number and type of Transferred Shares indicated opposite its or his respective
name on Schedule A annexed hereto and has good and marketable title to the
Transferred Shares, free and clear of all Liens, other than the restrictions
imposed by the Stockholders' Agreement, and neither CW, SA nor DW nor its or
his respective affiliates have any interest, directly or indirectly, in any
shares of capital stock, or other equity in the Company, or have any other
interest in any tangible or intangible property which the Company uses or has
used in the business conducted by the Company or otherwise, or have any
outstanding indebtedness to or from the Company. Upon consummation of the
transactions contemplated by this Agreement and payment of the Purchase Price,
(i) the Buyer shall be the lawful record and beneficial owner of the
Transferred Shares, including the Class A Common Stock issuable upon
conversion or exercise of the Transferred Shares in accordance with its
respective terms, free and clear of all Liens, other than the restrictions
imposed by the Stockholders' Agreement (except for the right of first refusal
pursuant to Section 4.3 thereof (the "Right of First Refusal") as such right
pertains to this Agreement), and (ii) the Transferred Shares, including the
Class A Common Stock issuable upon conversion or exercise of the Transferred
Shares in accordance with its respective terms, have been paid for by the
Sellers and the Sellers have received an opinion of the Company's counsel that
the shares of the Series A Stock were fully paid and nonassessable. Other than
the Stockholders' Agreement and as contemplated by this Agreement, there are
no stockholders' agreements, voting trusts, proxies, or other agreements or
understandings with respect to the Transferred Shares.
(b) The Options and Warrants are transferable to the Buyer, and if
the Options and Warrants are sold to the Buyer in accordance with this
Agreement, the Buyer shall have all right, title and interest in the Options
and the Warrants, including, without limitation, the right to exercise the
Options and Warrants in accordance with their respective terms.
SECTION 2.2 Authority. Each of CW and SA is duly organized and
validly existing under the laws of the state of its organization and is duly
registered and qualified to do business in each jurisdiction where such
registration or qualification is required and has been duly authorized by all
necessary and appropriate partnership action to enter this Agreement and
consummate the transactions contemplated herein, and the individuals executing
this Agreement on behalf of each of CW and SA have been duly authorized by all
necessary and appropriate action on behalf of CW and SA, respectively. Each of
the Sellers has the absolute and unrestricted right, power and authority to
execute and deliver this Agreement and all documents and instruments specified
herein, to carry out its or his obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of the Sellers and, assuming due authorization, execution
and delivery by the Buyer, this Agreement constitutes a legal, valid and
binding obligation of the Sellers, enforceable against each of the Sellers in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability,
to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement
is sought in a proceeding at law or in equity).
SECTION 2.3 Approval of Transaction; No Conflict. The execution and
delivery of this Agreement by the Sellers does not, and the performance of
this Agreement by the Sellers will not, require any consent, approval,
authorization or other action by, or filing with or notification to, any
person, entity, governmental authority or regulatory authority, other than
those required in connection with the Stockholders' Agreement. The General
Partner of each of CW and SA, and every partner whose consent is required, has
duly authorized the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and such authorization
shall not have been amended, modified or withdrawn in any manner prior to the
Closing Date. Furthermore, the execution, delivery and performance of this
Agreement by each of the Sellers does not and will not (x) conflict with or
violate any agreement, law, rule, regulation, order, writ, judgement,
injunction, decree, determination or award to which any of the Sellers is a
party or (y) result in the creation of any Liens on the Transferred Shares.
SECTION 2.4 Investment Intent. Each of the Sellers is acquiring the
RSI Shares for its or his own account, for investment purposes only and not
with a view to or for sale in connection with any distribution thereof. Each
of the Sellers is an "accredited investor", as that term is defined in
Regulation D under the Securities Act of 1933, as amended (the "Securities
Act"). Each of the Sellers has obtained all information it considers necessary
or appropriate for deciding whether to accept the RSI Shares. Each of the
Sellers acknowledges that it or he, as the case may be, is able to evaluate
and has such knowledge and experience in financial or business matters that it
or he, as the case may be, is capable of evaluating the merits and risks of
acquiring the RSI Shares, has the ability to protect its own interests in this
transaction and is financially capable of bearing the total loss of its
investment in the RSI Shares. Each of the Sellers understands that such Seller
must bear the economic risk of investment in the RSI Shares for an indefinite
period of time. Each Seller also understands that the RSI Shares have not been
registered under the Securities Act and, therefore, cannot be resold unless
they are registered under the Securities Act or unless an exemption from
registration is available. The Sellers will not transfer or otherwise dispose
of the RSI Shares except in accordance with applicable federal and state
securities laws or the rules and regulations promulgated thereunder.
SECTION 2.5 No Material Facts Omitted. No representation or warranty
of any of the Sellers in this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements contained herein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND RSI
Buyer and RSI hereby jointly and severally represent and warrant to
the Sellers the following, which representations and warranties shall be true
and correct on the date of this Agreement and on the Closing Date:
SECTION 3.1 Authority. Each of Buyer and RSI is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware. Each of Buyer and RSI has full corporate power and authority to
execute and deliver this Agreement and all documents and instruments specified
herein, to carry out its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Buyer and RSI, and assuming due authorization, execution and
delivery by the Sellers, constitutes a legal, valid and binding obligation of
the Buyer and RSI, enforceable against the Buyer and RSI in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
SECTION 3.2 Approval of Transaction; No Default. The execution and
delivery of this Agreement by the Buyer and RSI does not, and the performance
of this Agreement by the Buyer and RSI will not, require any consent,
approval, authorization or other action by, or filing with or notification to,
any person, entity, governmental authority or regulatory authority, other than
those required in connection with the Stockholders' Agreement. The Board of
Directors of each of the Buyer and RSI has duly authorized the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby, and such authorization shall not have been amended,
modified or withdrawn in any manner prior to the Closing Date. Furthermore,
the execution, delivery and performance of this Agreement by the Buyer and RSI
does not and will not conflict with or violate any agreement, law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
applicable to the Buyer or RSI.
SECTION 3.3 Investment Intent. The Buyer is acquiring the
Transferred Shares for its own account, for investment purposes only and not
with a view to distribution of the Transferred Shares. The Buyer is an
"accredited investor", as that term is defined in Regulation D under the
Securities Act. The Buyer has requested all information it considers necessary
or appropriate for deciding whether to acquire the Transferred Shares. The
Buyer acknowledges that it is able to evaluate and has such knowledge and
experience in financial or business matters that it is capable of evaluating
the merits and risks of acquiring the Transferred Shares, has the ability to
protect its own interests in this transaction and is financially capable of
bearing the total loss of its investment in the Transferred Shares. The Buyer
will not transfer or otherwise dispose of the Transferred Shares except in
accordance with applicable federal and state securities laws or the rules and
regulations promulgated thereunder.
SECTION 3.4 RSI Shares. The RSI Shares have been duly authorized
and, upon issuance therefor in accordance with the provisions of this
Agreement, will be validly issued, fully paid and non-assessable, and have
been issued in compliance with the registration requirements (or applicable
exemptions therefrom) of all applicable state and federal laws concerning the
issuance of securities.
SECTION 3.5 SEC Documents. RSI has filed all required reports, forms
and other documents required to be filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), with the Securities and Exchange
Commission ("SEC") since December 31, 1998 (the "RSI SEC Documents"). As of
their respective dates, the RSI SEC Documents complied in all material
respects with the requirements of the Exchange Act, and the rules and
regulations of the SEC promulgated thereunder applicable to such RSI SEC
Documents.
SECTION 3.6 Independent Analysis. The Buyer and RSI recognize that
the Sellers have not made any representation or warranty upon which the Buyer
is relying in respect to the operations or prospects of the Company. The Buyer
and RSI are entering into this Agreement and Buyer and RSI are purchasing the
Transferred Shares solely based upon its independent analysis of the Company
and the representations and warranties set forth in Article II.
SECTION 3.7 No Material Facts Omitted. No representation or warranty
of either the Buyer or RSI in this Agreement contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
statements contained herein not misleading.
ARTICLE IV
REGISTRATION RIGHTS
SECTION 4.1. Demand Registration Rights. If RSI shall receive a
written request from the Sellers that RSI file a registration statement under
the Securities Act, then RSI shall, within ninety (90) days of the receipt
thereof, file a registration statement under the Securities Act for the RSI
Shares that the Sellers requested to be registered, PROVIDED, HOWEVER, that if
RSI completes an underwritten offering of its securities and in connection
therewith agrees with the underwriter(s) not to file a registration statement
with respect to the sale of its securities for a certain period subsequent to
the offering (the "Lock-Up Period"), RSI's obligation to file a registration
statement hereunder shall be deferred until the expiration of the Lock-Up
Period, which Period shall in no event exceed six (6) months. All expenses
incurred by RSI in complying with the request of the Sellers, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel for RSI, shall be borne by RSI. All underwriting
discounts and selling commissions applicable to the sale of the RSI Shares
shall be borne by the Sellers pro rata on the basis of the number of RSI
Shares registered. All fees and disbursements of counsel for the Sellers, not
to exceed $20,000 in the aggregate, shall be borne by RSI. Sellers shall have
the right to two (2) requests for registration pursuant to this Section 4.1. A
holder of RSI Shares pursuant to this Agreement shall be entitled to the
registration rights granted hereunder so long as at the time the request for
registration is made, such request is made by the holders pursuant to this
Agreement of not less than 210,000 RSI Shares in the aggregate.
SECTION 4.2 Indemnification. In the event any RSI Shares are
included in a registration statement, to the extent permitted by law, the
Sellers shall jointly and severally indemnify and hold harmless RSI, each of
its directors, officers and each person, if any, who controls RSI within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities (joint or several), including, without limitation, reasonable
attorneys' fees and expenses (collectively, "Losses") to which RSI or any such
director, officer, or controlling person may become subject under the
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act") or other federal or state law, insofar as such Losses (or actions in
respect thereto) arise out of or are based upon any of the following
statements, omissions or violations (collectively, "Violations") by any of the
Sellers: (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the
statements therein not misleading, or (iii) any Violation or alleged Violation
by any of the Sellers of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law in connection with the offering
covered by the registration statement. If the indemnification provided for
hereunder is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any Loss, the Sellers, in lieu of
indemnifying such indemnified party, shall to the extent permitted by
applicable law contribute to the amount paid or payable by such indemnified
party as a result of such Loss in such proportion as is appropriate to reflect
the relative fault of the Sellers on the one hand and the indemnified party on
the other in connection with the Violations that resulted in the Loss, as well
as any other relevant equitable considerations.
SECTION 4.3 Termination of Registration Rights. The demand
registration rights granted hereunder shall terminate and be of no further
force and effect three (3) years from the Closing Date.
ARTICLE V
SELLERS' COVENANTS; BREAK-UP FEE; NO SOLICITATION; CONFIDENTIALITY
SECTION 5.1 Waiver of Right of First Refusal. Each of the Sellers
hereby unconditionally and irrevocably waives its or his, as the case may be,
right to purchase all or any portion of the Transferred Shares pursuant to the
Right of First Refusal.
SECTION 5.2 Voting with Respect to the Transferred Shares. Each of
the Sellers agrees that in each situation where it or he, as the case may be,
is entitled to vote at any meeting of stockholders of the Company (whether
annual or special and whether or not an adjourned or postponed meeting) or
consent in lieu of any such meeting or otherwise, the Seller shall not vote or
consent without first notifying the Buyer at least three business days prior
thereto as to how the Seller intends to vote. The Buyer shall have three
business days thereafter to notify the Seller of its objection, if any, to the
manner in which the Seller intends to vote or consent, and the failure of the
Buyer to notify the Seller within such period shall be deemed its approval of
the Seller's vote on such matter.
SECTION 5.3 Replacement of Directors; Break-Up Fee.
(a) The Sellers agree to cooperate with the Buyer and RSI in the
prompt election of Xxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx to serve as members
of the board of directors of the Company (the "Successor Nominees") to replace
DW and G. Xxx Xxxx. The Sellers agree to take any and all actions necessary to
effectuate and continue the foregoing, including, without limitation, the
delivery of the resignation letters of DW and G. Xxx Xxxx to the Company
promptly after the date hereof, the nomination of the Successor Nominees and
to vote the Transferred Shares for the election of the Successor Nominees at
any special meeting or consent in lieu of a meeting called for the purpose
thereof.
(b) In the event that prior to the time the Successor Nominees are
elected to the board of directors of the Company in accordance with Section
5.2(a) above, (x) the Company exercises its Right of First Refusal to purchase
any or all of the Transferred Shares (which means that DW and G. Xxx Xxxx vote
in favor of such purchase) and the majority of the four directors of the
Company who have been designated by RSI do not vote in favor of such purchase,
and (y) the transaction contemplated by this Agreement is not consummated as a
result of the failure of the condition contained in Section 6.1(a) of this
Agreement being satisfied, then the Sellers hereby covenant and agree to pay
to the Buyer, simultaneously with the payment by the Company and/or the
Securityholder Offerees to the Sellers, the amount which is equal to (i) the
amount received by each Seller which is in excess of $5.25 per Transferred
Share multiplied by (ii) the aggregate number of Transferred Shares sold by
the Sellers.
SECTION 5.4 No Solicitation. Upon execution and delivery of this
Agreement until the Closing, none of the Sellers shall, directly or
indirectly, through any officer, director, partner, agent, employee,
representative or otherwise, except pursuant to Section 4.3 of the
Stockholders' Agreement, (i) solicit, initiate or encourage the submission of
any inquiries, proposals or offers from any person or entity relating to the
purchase of the Transferred Shares or any legal or interest therein or the
creation or imposition of any Lien thereon (collectively, a "Third Party
Purchase"); (ii) consider or accept any agreement, arrangement or
understanding with respect to a Third Party Purchase; (iii) participate in any
discussion, negotiations or other communications regarding any Third Party
Purchase; (iv) furnish to any person or entity other than the Buyer and its
representatives any information concerning the Transferred Shares; (v) grant,
issue or agree to grant or issue to any person or entity: (a) any direct or
indirect interest in CW or SA or (b) any right or option to acquire any such
interest; or (vi) cooperate in any way, assist or participate in, facilitate
or encourage any effort or attempt by any person or entity other than the
Buyer to seek to do any of the foregoing.
SECTION 5.5 Confidentiality.
(a) Each of the parties agrees, on behalf of themselves and himself,
as the case may be, and their respective affiliates and representatives, to
retain in strict confidence, and not to divulge, disseminate or disclose to
any third party (other than as may be required by the Stockholders' Agreement,
court order, law, rule or regulation) the existence of this Agreement or any
of the terms hereof, without the prior written consent of all the parties
hereto, which consent shall not be unreasonably withheld, conditioned or
delayed. The parties further agree to consult with each other prior to making
any public disclosure (other than as set forth herein) relating to the
transactions contemplated herein.
(b) In addition to any and all other remedies available at law or
equity, in the event any or all of the Sellers shall breach or threaten to
breach any of the provisions of this Article V of this Agreement, each of the
Sellers agrees and acknowledges that damages would be difficult to ascertain,
the Buyer and its affiliates will suffer immediate, irreparable harm, and the
Buyer and its affiliates shall be entitled, in addition to any and all other
remedies, to an injunction issued by a court of competent jurisdiction
restraining the aforesaid violations of any or all of the Sellers, as the case
may be, without the necessity of posting a bond. Nothing contained in this
Section 5.5(b) is intended to limit in any way any of the rights or remedies
of any party to this Agreement in respect of any breach or threatened breach
of this Article V or any other provision of this Agreement.
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.1 Conditions to the Obligation of the Buyer to Close. The
obligation of the Buyer to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, as at the Closing Date, of each
of the following conditions, any one or more of which may be waived by the
Buyer:
(a) Failure to Exercise the Right of First Refusal. The failure of
the Company and the Securityholder Offerees (i) to exercise their Right of
First Refusal to purchase the Transferred Shares or (ii) to close on such
purchase if exercised; upon occurrence of the first of such failures, there
shall be deemed an automatic acceptance by the Sellers of the offer contained
in this Agreement by operation of law.
(b) Vote of Stockholders. None of the Sellers has voted or consented
to any matter to which the Buyer has objected pursuant to Section 5.2 of this
Agreement.
(c) Vote of Directors. On every matter presented to the Company's
board of directors for a vote prior to the time that the Successor Nominees
are elected to the board in place of DW and G. Xxx Xxxx, the two directors
nominated by CW and SA have voted in the same way on the matter presented as
has been voted by the majority of the directors nominated by RSI.
(d) Performance of Covenants. Each of the Sellers shall have
performed and complied in all material respects with all covenants,
obligations and agreements to be performed or complied with by the Sellers on
or before the Closing Date pursuant to this Agreement, including, but not
limited to, the transfer of all of the Transferred Shares to Buyer in the
manner set forth in Section 1.1 of this Agreement.
(e) Accuracy of Representations and Warranties. The representations
and warranties of the Sellers contained in this Agreement are true and
accurate in all material respects on and as of the Closing Date, with the same
force and effect as if made on the Closing Date.
(f) Legal Opinion. A legal opinion, substantially in the form
annexed hereto, addressed to the Buyer and RSI from Sellers' counsel that each
of the Sellers has been duly authorized to enter into this Agreement and
consummate the transactions contemplated herein, that the Transferred Shares
are being transferred at Closing free and clear of all Liens, and that this
Agreement is valid and binding.
SECTION 6.2 Conditions to the Obligation of the Sellers to Close.
The obligations of the Sellers to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment, as at the Closing Date of
each of the following conditions, any one or more of which may be waived by
the Sellers, that (i) the representations and warranties of Buyer and RSI
contained in this Agreement are true and accurate in all material respects on
or as of the Closing Date, with the same force and effect as if made on the
Closing Date, (ii) the Buyer shall have performed and complied in all material
respects with all covenants, obligations and agreements to be performed or
complied with by the Buyer on or before the Closing Date pursuant to this
Agreement, including, but not limited to, the payment of the Purchase Price to
the Seller in the manner set forth herein, and (iii) the Sellers shall have
received a legal opinion or opinions, substantially in the form annexed
hereto, addressed to the Sellers from the Buyer's and RSI's counsel that each
of the Buyer and RSI has been duly authorized to enter into this Agreement and
consummate the transactions contemplated herein, that the RSI Shares are
issued in accordance with the registration requirements (or applicable
exemptions therefrom) of the Securities Act, and that this Agreement is valid
and binding.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 Indemnification by the Seller. The Buyer, RSI and its
respective directors, officers, employees, agents, stockholders, affiliates,
consultants, representatives and their respective successors and assigns shall
be indemnified and held harmless by the Sellers, jointly and severally, from
and against any and all damages, losses, liabilities, taxes (including any
deficiencies and penalties and interest thereon), and costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements)
(collectively, "Damages") resulting from any misrepresentation, breach of
warranty or nonfulfillment of any covenant or agreement on the part of any of
the Sellers.
SECTION 7.2 Indemnification by the Buyer and RSI. CW and SA and
their respective partners, directors, officers, employees, agents, affiliates,
consultants, representatives and their respective successors and assigns, and
DW and his legal representatives, heirs, successors and assigns shall be
indemnified and held harmless by the Buyer and RSI, jointly and severally,
from and against any and all Damages resulting from any misrepresentation,
breach of warranty or nonfulfillment of any covenant or agreement on the part
of the Buyer or RSI.
SECTION 7.3 Notices; Counsel. Each party hereto agrees to give to
the other prompt notice of any claim or action by a third party or occurrence
of any event which may give rise to a claim or action for indemnification
hereunder. The failure to provide such notice shall not release the
indemnifying party from its obligations under this Article VII except to the
extent that the indemnifying party is materially prejudiced by such failure.
The indemnifying party shall have the right to direct, through counsel of its
own choosing satisfactory to the indemnified party in the reasonable exercise
of the indemnified party's discretion, the defense or settlement of any claim
or proceeding at its own expense and agrees not to effect any settlement of
such claim which does not provide for a complete release of liability of the
indemnified party without the written consent of such party, which consent
shall not be unreasonably withheld or delayed. If the indemnifying party shall
fail to defend, or if, after commencing or undertaking any such defense, such
party fails to prosecute or withdraws from such defense, the indemnified party
shall have the right to undertake the defense or settlement thereof, at the
indemnifying party's expense. In the event of a dispute over the obligation to
provide indemnification hereunder, the prevailing party in such dispute shall
be entitled to its reasonable attorney's costs and expenses thereof.
ARTICLE VIII
TERMINATION; GENERAL PROVISIONS
SECTION 8.1 Termination. This Agreement shall automatically
terminate without any action on the part of any party hereof upon receipt by
any of the Sellers that the Company and/or the Securityholder Offerees is
exercising its or their Rights of First Refusal such that all of the
Transferred Shares will be purchased by the Company and/or the Securityholder
Offerees and such purchase is consummated. Within one business day after
receipt of a notice of the foregoing, the Sellers shall notify the Buyer
thereof. In the event that this Agreement is terminated as a result thereof,
neither the Sellers nor the Buyer shall be obligated to perform any of its
respective obligations under this Agreement, except as set forth in Section
5.3 and Article VII. Nothing contained herein shall relieve any party from
liability for any willful or material breach of such party's representations,
warranties or covenants.
SECTION 8.2 Entire Agreement. This Agreement contains, and is
intended as, a complete statement of all of the terms of the arrangements and
understandings between the parties with respect to the matters provided for,
and supersedes any previous agreements and understandings between the parties
with respect to those matters.
SECTION 8.3 Governing Law; Attorneys' Fees. This Agreement shall be
governed by, and construed and enforced in accordance with the laws of the
State of New York without regard to its principles of conflicts of law. All
actions and proceedings arising out of, or relating to, this Agreement shall
be heard and determined in any state or federal court sitting in New York, New
York. In the event of any dispute as to the terms of this Agreement, the
prevailing party in any litigation or other proceeding shall be entitled to
its reasonable attorneys' fees, costs and expenses in connection therewith.
SECTION 8.4 Notices. All notices and other communications under this
Agreement shall be in writing and shall be hand delivered, mailed by
registered or certified mail, return receipt requested (with a copy
simultaneously by ordinary mail), or recognized overnight delivery service to
the parties at the following addresses (or to such other address as a party
may have specified by notice given to the other parties pursuant to this
provision):
If to the Buyer or RSI, to:
Reckson Service Industries, Inc.
RSI I/O Holdings, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Xxxxxxx X. Xxxxxxxx, Esq.
with a copy to:
Xxxxxxx, Xxxxxxxxx LLP
Xxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
If to any of the Sellers, to:
c/x Xxxxxx Xxxxxxx & Company, LLC
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
with a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Xxxxxxxx X. Xxxxx, Esq.
Each such notice shall be deemed given at the time delivered by
hand, if personally delivered; five business days after being deposited in the
mail, postage prepaid, if mailed; and the next business day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next
business day delivery.
SECTION 8.5 Amendment; Waiver. No provision of this Agreement may be
amended or modified except by an instrument or instruments in writing signed
by the parties hereto. The failure of a party at any time or times to require
performance of any provision hereof shall in no manner be deemed to affect the
party's right at a later time to enforce the same. No waiver by any party of
the breach of any term contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be or construed as
a further or continuing waiver of any such breach or of the breach of any
other term or provision of this Agreement.
SECTION 8.6 Assignment and Binding Effect. This Agreement shall be
binding on, and shall inure to the benefit of, the parties hereto and the
rights and obligations of the parties hereunder may not be assigned or
transferred without the prior written consent of the other parties.
SECTION 8.7 Further Assurances. From and after the Closing, the
Sellers and the Buyer agree to execute and deliver such further documents and
instruments and to do such other acts and things any of them, as the case may
be, may reasonably request in order to effectuate the transactions
contemplated by this Agreement.
SECTION 8.8 No Third Party Beneficiaries. This Agreement is intended
solely for the benefit of the parties hereto. No third party shall have any
claim or rights against any party hereto by reason of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY OMITTED; SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
XXXXXX, XXXXXXX STRATEGIC PARTNERS
FUND, L.P.
By: XXXXXX, XXXXXXX STRATEGIC
PARTNERS, L.P., its General Partner
By: /s/ Xxxxx Xxxxxxx
___________________________
Name: Xxxxx Xxxxxxx
Title: Partner
STRATEGIC ASSOCIATES, L.P.
By: XXXXXX, XXXXXXX & COMPANY, L.L.C.,
its General Partner
By: /s/ Xxxxx Xxxxxxx
____________________________
Name: Xxxxx Xxxxxxx
Title: Partner
/s/ Xxxxx Xxxxxxx
--------------------------------
Xxxxx X. Xxxxxxx
RSI I/O HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
____________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President
RECKSON SERVICE INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
_____________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President
XXXXXXX, XXXXXXXXX LLP,
as escrow agent
/s/ Xxxxxx X. Xxxxxx
------------------------------
Xxxxxx X. Xxxxxx
Partner
SCHEDULE A
Securityholder Series A Shares Series B Shares Options/Warrants Cash Portion * RSI Shares**
--------------------------------------------------------------------------------------------------------------------
CW 4,448,096 593,327 667,214 warrants $31,968,367.20 721,091
SA 246,464 32,875 36,970 warrants $1,771,330.40 39,955
DW 15,000 options $84,000 1,895
* The amount indicated herein as the Cash Portion does not reflect the
deduction of (i) the Deposit ($5,000,000.00) and (ii) the exercise price
of the Options and Warrants ($1,228,098.66).
** The certificates representing the RSI Shares shall bear the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD
OR OTHERWISE DISPOSED OF UNLESS (A) SUCH DISPOSITION IS PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) THE HOLDER HEREOF SHALL HAVE DELIVERED TO THE COMPANY AN
OPINION, FROM COUNSEL AND IN FORM AND SUBSTANCE REASONABLY SATISFACTORY
TO THE COMPANY, TO THE EFFECT THAT SUCH DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF THAT ACT."
