EXHIBIT 10.1
Draft 5/6/98
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INTERCOMPANY AGREEMENT
THIS INTERCOMPANY AGREEMENT (the "Agreement") is made and entered into as
of the ___ day of _____________, 1998, by and between Reckson Operating
Partnership, L.P., a Delaware limited partnership (the "Operating Partnership"),
and Reckson Service Industries, Inc., a Delaware corporation ("RSI").
W I T N E S S E T H:
WHEREAS, Reckson Associates Realty Corp., a Maryland corporation
("Reckson"), is the managing general partner of, and owns a supermajority
interest in, the Operating Partnership;
WHEREAS, the Operating Partnership has determined that it is precluded from
pursuing, or is limited in the manner in which it pursues, various business
opportunities due to the status of Reckson as a real estate investment trust
("REIT") under sections 856 through 860 of the Internal Revenue Code of 1986, as
amended (the "Code");
WHEREAS, RSI has been formed primarily to provide various commercial
services to the Operating Partnership and its tenants and other third parties
and is expected to pursue real estate or real estate related investment
opportunities through one or more real estate opportunity funds, including
Reckson Strategic Venture Partners, LLC ("RSVP"), which may make or acquire real
estate or real estate-related investments other than REIT-Qualified Investments
(as hereinafter defined) and REIT-Qualified Investments that the Operating
Partnership has decided not to pursue;
WHEREAS, based upon management's knowledge of and relationships with the
Operating Partnership's tenants, the parties hereto believe that RSI will be
able to offer on competitive market terms a high quality level of services to
the Operating Partnership and its tenants and other third parties, which
services are currently provided by third parties in a more limited and
fragmented manner or are not currently provided at all;
WHEREAS, the Operating Partnership believes that RSI, particularly through
RSVP or other real estate opportunity funds, may source attractive opportunities
for REIT-Qualified Investments, which may be in sectors outside of the Operating
Partnership's traditional markets; and
WHEREAS, in light of the purposes for which RSI was formed, the Operating
Partnership and RSI desire to enter into this Agreement in order to (i) reduce
any potential conflict of interest by allocating to each party a right of first
opportunity with respect to certain matters referred to herein and (ii) provide
access to certain information for the benefit of the other party.
NOW, THEREFORE, in consideration of the premises and mutual undertakings
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto, the
undersigned parties hereby agree as follows:
1. Definitions. Except as may be otherwise herein expressly provided, the
following terms and phrases shall have the meanings as set forth below:
(a) "Affiliate" means any entity in which a majority of the beneficial
ownership interests are owned by another specified entity or by any entity
controlled by, controlling or under common control with another specified
entity.
(b) "Master Lease Opportunity" means the opportunity to become the
lessee under a "master" lease arrangement of a property owned or subsequently
acquired by the Operating Partnership if the Operating Partnership, in its sole
discretion, determines that, consistent with the status of Reckson as a REIT,
the Operating Partnership is required to enter into such a "master" lease
arrangement for such property and that RSI or an Affiliate of RSI is qualified
to be the lessee based on experience in the industry and financial and legal
qualifications.
(c) "REIT Opportunity" means a direct or indirect opportunity to
invest in (i) real estate, real estate mortgages, real estate derivatives, or
entities that invest primarily in or have a substantial portion of their assets
in the aforementioned types of assets, or (ii) any other investment which may be
structured in a manner so as to be a REIT-Qualified Investment, as determined by
the Operating Partnership in its sole discretion. The Operating Partnership
shall have the right from time to time to provide written notice to RSI
specifying certain more limited criteria for a REIT Opportunity. Any such
written notice from the Operating Partnership may be modified or canceled by
written notice given by the Operating Partnership at any time. The definition of
REIT Opportunity shall be modified as appropriate from time to time in
accordance with any such written notices sent by the Operating Partnership.
(d) A "REIT-Qualified Investment" means an investment, the income from
which would qualify under the 95% gross income test set forth in section
856(c)(2) of the Code, the ownership of which would not cause a REIT to violate
the asset limitations set forth in section 856(c)(5) of the Code, and which
otherwise meets the federal income tax requirements applicable to REITs.
(e) "Service Provider Opportunity" means (i) the opportunity to
provide to the Operating Partnership and its tenants and other third parties
commercial services (other than customary services) utilized by lessees of real
estate or (ii) a Master Lease Opportunity. RSI shall have the right from time to
time to provide written notice to the Operating Partnership specifying more
limited criteria for a Service Provider Opportunity. Any such written notice
from RSI may be modified or canceled by written notice given by RSI at any time.
The definition of Service Provider Opportunity shall be modified as appropriate
from time to time in accordance with any such written notices sent by RSI.
2. Operating Partnership Right of First Opportunity.
(a) During the term of this Agreement, if RSI develops a REIT
Opportunity, or if any REIT Opportunity otherwise becomes available to RSI,
then, subject to the provisions of Section 2(b), RSI shall offer such REIT
Opportunity first to the Operating Partnership. In the event that an Affiliate
of RSI (including, but not limited to, RSVP) develops a REIT Opportunity, or if
any REIT Opportunity otherwise becomes available to such Affiliate, then,
subject to the provisions of Section 2(b), RSI shall (i) cause such Affiliate to
offer such REIT Opportunity to the Operating Partnership in the form of joint
venture with such Affiliate to the extent of RSI's interest therein and (ii) to
the extent that such joint venture has invested funds in excess of 25% of such
Affiliate's total [common] equity in a particular real estate sector, cause such
Affiliate to offer all subsequent REIT Opportunities in such sector directly to
the Operating Partnership. The offer of a REIT Opportunity to the Operating
Partnership shall be made by written notice (the "RSI Notice"), which RSI Notice
shall contain a detailed description of the material terms and conditions of the
REIT Opportunity developed by or made available to RSI or the applicable
Affiliate, as the case may be, including, without limitation, any noncompetition
provisions. The Operating Partnership shall have ten days (the "Ten-Day Period")
from the date of receipt of the RSI Notice to notify RSI or the applicable
Affiliate, as the case may be, in writing that it has accepted or rejected the
REIT Opportunity. If the Operating Partnership does not respond by the end of
the Ten-Day Period, the Operating Partnership shall be deemed to have rejected
the REIT Opportunity. If the Operating Partnership accepts a REIT Opportunity,
but subsequently decides not to pursue such opportunity, or for any other reason
fails to consummate a REIT Opportunity, the Operating Partnership shall
immediately provide written notice that it is no longer pursuing such REIT
Opportunity to RSI or the applicable Affiliate, as the case may be.
(b) If the Operating Partnership rejects a REIT Opportunity, or
accepts a REIT Opportunity but thereafter provides, or is required by the
provisions hereof to provide, written notice to RSI or the applicable Affiliate,
as the case may be, that it is no longer pursuing such REIT Opportunity, RSI or
such Affiliate, as the case may be, shall, for a period of six months or, to the
extent that there are ongoing discussions relating thereto, a period of one year
after the Operating Partnership Withdrawal Date (as hereinafter defined), be
entitled to acquire the related REIT-Qualified Investment (i) on terms and
conditions that are not materially more favorable to RSI or such Affiliate, as
the case may be, than the terms and conditions set forth in the RSI Notice
relating to such REIT Opportunity or (ii) if the Operating Partnership, at any
time after the RSI Notice, negotiated different terms or conditions with respect
to such REIT Opportunity, then on terms and conditions that are not materially
more favorable than the terms and conditions negotiated by the Operating
Partnership. [If RSI or an Affiliate of RSI (including, but not limited to,
RSVP) enters into a binding agreement to acquire a REIT-Qualified Investment
within a six-month or one year period, as applicable, after the Operating
Partnership Withdrawal Date and subsequently one or more additional REIT
Opportunities in the same real estate sector become available to RSI or such
Affiliate, as the case may be, then RSI or such Affiliate, as the case may be,
shall be under no obligation to offer such REIT Opportunity to the Operating
Partnership and RSI or such Affiliate, as the case may be, may immediately enter
into a binding agreement to acquire such Qualified Investment]. If RSI or such
Affiliate, as the case may be, does not enter into a binding agreement to
acquire such REIT-Qualified Investment within such six-month or one-year period,
as applicable, or if the terms and conditions are materially more favorable to
RSI than the terms and conditions set forth in the RSI Notice (or, if
applicable, than the terms and conditions negotiated by the Operating
Partnership subsequent to the RSI Notice), then RSI or such Affiliate, as the
case may be, shall again be required to comply with the procedures set forth
above in Section 2(a) if it desires to enter into a binding agreement to acquire
such REIT-Qualified Investment. The Operating Partnership Withdrawal Date means
any one of the following dates, as applicable: (i) the date that the Operating
Partnership notifies RSI or the applicable Affiliate, as the case may be, that
it has rejected the REIT Opportunity, (ii) if the Operating Partnership does not
respond to RSI or the applicable Affiliate, as the case may be, regarding the
REIT Opportunity, the expiration date of the Ten-Day Period, or (iii) if the
Operating Partnership accepts the REIT Opportunity but subsequently ceases to
pursue the opportunity, the earlier of (A) 30 days after the date on which the
Operating Partnership ceases to pursue the REIT Opportunity or (B) the date of
receipt by RSI or the applicable Affiliate, as the case may be, of written
notice from the Operating Partnership that it is no longer pursuing the REIT
Opportunity.
(c) RSI agrees to use commercially reasonable efforts to assist the
Operating Partnership in consummating any REIT Opportunity accepted by the
Operating Partnership that was developed by, or otherwise became available to,
RSI (including, without limitation, structuring such opportunity as a
REIT-Qualified Investment) and RSI shall cause its Affiliates to do the same.
Any expenses incurred that are directly related to structuring an investment as
a REIT-Qualified Investment shall be borne solely by the Operating Partnership.
3. RSI Access to Tenants; RSI Right of First Opportunity for Service
Provider Opportunity.
(a) During the term of this Agreement, the Operating Partnership shall
provide RSI with access to its tenants so that RSI may offer services directly
to such tenants, including, but not limited to, providing an updated listing of
all of the tenants of the Operating Partnership on a semi-annual basis and the
names of contacts at such tenants. The Operating Partnership will use
commercially reasonable efforts to facilitate the solicitation of such tenants
by RSI in respect of non-customary commercial services to be provided by them
and, if the Operating Partnership develops a Service Provider Opportunity as a
result of such efforts or otherwise, or if a Service Provider Opportunity
otherwise becomes available to the Operating Partnership, the Operating
Partnership shall offer such Service Provider Opportunity first to RSI. If the
Operating Partnership accepts a REIT Opportunity presented to it by RSI or its
Affiliates, then the Service Provider Opportunity in respect of such REIT
Opportunity and any future investments by the Operating Partnership in the same
real estate sector shall also be subject to the right of first opportunity
provided for in this Section 3(a).
The offer of a Service Provider Opportunity to RSI shall be made by written
notice (the "Operating Partnership Notice"), which Operating Partnership Notice
shall contain a detailed description of the material terms and conditions of the
Service Provider Opportunity developed by or made available to the Operating
Partnership. The Operating Partnership shall thereafter provide or cause to be
provided promptly to RSI such additional information relating to the Service
Provider Opportunity as RSI reasonably may request. For a period of 30 days
after the date that the Operating Partnership delivers the Operating Partnership
Notice, the Operating Partnership and RSI shall negotiate with each other on an
exclusive basis with respect to such Service Provider Opportunity. RSI shall
offer to provide services to the Operating Partnership in respect of a Service
Provider Opportunity at market rates and on terms and conditions as attractive
as the best available for comparable services in the market or (it being
understood that RSI will provide market information on such services to the
Operating Partnership during such 30-day period) those offered by RSI to third
parties. If the Operating Partnership and RSI are unable to enter into a
mutually satisfactory arrangement with respect to such Service Provider
Opportunity within such 30-day period, or if RSI determines that it is not
interested in pursuing such Service Provider Opportunity (in which event RSI
shall provide written notice to the Operating Partnership promptly after such
determination), then the Operating Partnership shall be entitled, for a period
of six months or, to the extent that there are ongoing discussions relating
thereto, one year after the expiration of such 30-day period, to enter into a
binding agreement with respect to such Service Provider Opportunity with any
party on terms and conditions that are not materially more favorable to the
Operating Partnership than the terms and conditions last proposed in writing by
the Operating Partnership to RSI. If the Operating Partnership does not enter
into a binding agreement with respect to such Service Provider Opportunity
within such six-month or one-year period, as applicable, or if the terms and
conditions are more materially favorable to the Operating Partnership than the
terms and conditions last proposed in writing by the Operating Partnership to
RSI, the Operating Partnership shall again be required to comply with the
procedures set forth above in this Section 3(a) if it desires to pursue such
Service Provider Opportunity.
(b) Notwithstanding anything to the contrary contained in this
Agreement, (1) the Operating Partnership shall not be required to offer to RSI
any Service Provider Opportunity in connection with a proposed acquisition
involving a Master Lease Opportunity until a binding contract has been entered
into with respect to such acquisition, and the consummation of any agreement
between the Operating Partnership and RSI with respect to a Service Provider
Opportunity shall be subject to the actual closing of such acquisition by the
Operating Partnership, (2) the Operating Partnership shall have the right, in
its sole discretion, to decide not to pursue, or to discontinue at any time
pursuing, any investment opportunity, even if such opportunity, if pursued,
would create a Service Provider Opportunity, and (3) the Operating Partnership
shall have no obligation to offer any opportunity other than a Service Provider
Opportunity to RSI.
(c) The Operating Partnership agrees to use commercially reasonable
efforts to assist RSI in structuring and consummating all dealings with outside
parties in connection with any Service Provider Opportunity that was developed
by, or otherwise became available to, the Operating Partnership. The Operating
Partnership shall have the right, in its sole discretion, to structure any
investment as a REIT- Qualified Investment, even if such structuring prevents
the Operating Partnership from creating a Service Provider Opportunity for RSI.
4. General Terms and Conditions for Rights of First Opportunity/
Notification Rights.
(a) Unless waived or unless agreed to as part of an investment, each
party shall bear its own expenses with respect to any opportunity to which this
Agreement is applicable, and each party agrees that it shall not be entitled to
any compensation from the other party with respect to any such opportunity.
y. (b) A party shall not be required to comply with the right of first
opportunity and notification requirements set forth in this Agreement during any
period in which the other party or any Affiliate of such other party is in
default of this Agreement or any other agreement entered into by the parties
hereto or any of their Affiliates, if such default is material and remains
uncured for fifteen days after receipt of notice thereof.
(c) The Operating Partnership shall not enter into any arrangement or
agreement to provide any Service Provider Opportunity to any party other than
RSI, and RSI shall not, and shall cause its Affiliates not to, enter into any
arrangement or agreement to provide REIT Opportunities to any party other than
the Operating Partnership, except, in each case, as permitted in this Agreement.
(d) Any REIT Opportunity which is offered to and accepted by the
Operating Partnership under this Agreement may be entered into by or on behalf
of the Operating Partnership or by any designee which is an Affiliate of the
Operating Partnership. Any Service Provider Opportunity which is offered to and
accepted by RSI under this Agreement may be entered into by or on behalf of RSI
or by any Affiliate of RSI.
(e) All first opportunity and notification rights set forth in this
Agreement shall be subordinated to any seller consent and confidentiality
requirements. Accordingly, no party shall be required to comply with the first
opportunity and notification rights set forth in this Agreement if such
compliance would violate any seller consent or confidentiality requirements.
(f) While it is the intention of the parties to align their businesses
in accordance with the terms of this Agreement, each party shall act
independently in its own best interests, and neither party shall be considered a
partner or agent of the other party or to owe any fiduciary or other common law
duty to the other party.
(g) All provisions hereof requiring the giving of notice shall be
satisfied through the giving of notice to the Board of Directors of Reckson or
RSI, as the case may be, or a committee of such Board formed for the specific
purpose of addressing matters covered in this Agreement.
5. Services of Officers and Directors. It is acknowledged and agreed that
the directors and executive officers of either party hereto may serve in similar
capacities with the other party hereto.
6. RSI Ownership Limitation. So long as this Agreement is in effect, the
certificate of incorporation of RSI shall contain provisions to the effect that
(i) no stockholder of RSI may own, or be deemed to own by virtue of the
attribution provisions of Section 856(d)(5) of the Code, more than 9.9% of the
aggregate number or value of the outstanding shares of RSI common stock ("Common
Stock"), (ii) no stockholder of RSI may own more than 9.9% in value of all of
the outstanding shares of capital stock of RSI, taking into account all classes
of such capital stock outstanding, and (iii) any shares of RSI stock owned or
purported to be owned in violation of the foregoing restrictions shall
automatically be transferred to a trust for the benefit of a charitable
beneficiary and be subject to "Excess Stock" provisions similar to those
contained in Article VII of the Articles of Amendment and Restatement of
Reckson, provided that the ownership limitations described in clauses (i) and
(ii) above shall be subject to exceptions so as to enable a stockholder (x) to
acquire and own any Common Stock by Reckson to its shareholders, (y) to
acquire and own Common Stock in satisfaction of obligations under that certain
standby agreement between RSI and RSI Standby LLC with respect to the purchase
of Common Stock subject to certain subscription rights distributed by RSI to its
shareholders that expire unexercised, and (z) to acquire and own employee stock
options and Common Stock issued pursuant to the exercise of employee stock
options. The board of directors of RSI shall not grant any waivers or
exemptions from the foregoing limitations without the consent of the board of
directors of Reckson, which may be granted or withheld in Reckson's sole
discretion.
7. Specific Performance. Each party hereto hereby acknowledges that the
obligations undertaken by it pursuant to this Agreement are unique and that the
other party hereto would likely have no adequate remedy at law if such party
shall fail to perform its obligations hereunder, and such party therefor
confirms that the other party's right to specific performance of the terms of
this Agreement is essential to protect the rights and interests of the other
party. Accordingly, in addition to any other remedies that a party hereto may
have at law or in equity, such party shall have the right to have all
obligations, covenants, agreements and other provisions of this Agreement
specifically performed by the other party hereto and the right to obtain a
temporary restraining order or a temporary or permanent injunction to secure
specific performance and to prevent a breach or threatened breach of this
Agreement by the other party hereto. Each party submits to the jurisdiction of
the courts of the State of Delaware for this purpose.
8. Affiliates. Each party hereto shall cause all Affiliates under its
control to comply with the terms hereof. Reckson, by its signature below, hereby
agrees that it shall comply with the terms of this Agreement applicable to the
Operating Partnership.
9. Term. The term of this Agreement shall commence as of the date first
written above and shall terminate on ________, 2008. This Agreement may be
extended at the option of either of the parties hereto for two additional
five-year periods, upon notice given to the other party within six months of the
expiration hereof. Notwithstanding the foregoing, a party hereto may terminate
this Agreement if the other party or any Affiliate of such other party is in
default of this Agreement or any other agreement entered into by the parties
hereto or any of their Affiliates, if such default is material and remains
uncured for fifteen days after receipt of notice thereof.
10. Miscellaneous.
(a) Notices. Notices shall be sent to the parties at the following
addresses:
Reckson Operating Partnership, L.P.
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Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇ LLP
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▇▇, ▇▇ ▇▇▇▇▇
Facsimile: 212-839-5599
Reckson Service Industries, Inc.
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Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: [ ]
with a copy to:
________________________
________________________
Facsimile: _____________
Notices may be sent by certified mail, return receipt requested, Federal
Express or comparable overnight delivery service, or facsimile. Notice will be
deemed received on the fourth business day following deposit in U.S. mail and on
the first business day following deposit with Federal Express or other delivery
service, or transmission by facsimile. Any party to this Agreement may change
its address for notice by giving written notice to the other party at the
address and in accordance with the procedures provided above.
(b) Reasonable and Necessary Restrictions. Each of the parties hereto
hereby acknowledges and agrees that the restrictions, prohibitions and other
provisions of this Agreement are reasonable, fair and equitable in scope, term
and duration, are necessary to protect the legitimate business interests of the
parties hereto and are a material inducement to the parties hereto to enter into
the transactions described in and contemplated by the recitals hereto. Each
party hereto covenants that it will not ▇▇▇ to challenge the enforceability of
this Agreement or raise any equitable defense to its enforcement.
(c) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
assigns. Except as otherwise permitted in this Agreement, this Agreement shall
not be assigned without the express written consent of each of the parties
hereto. Notwithstanding the foregoing, this Agreement may be assigned without
the consent of any party hereto in connection with any merger, consolidation,
reorganization or other combination of a party with or into another entity where
the party is not the surviving entity.
(d) Amendments; Waivers. No termination, cancellation, modification,
amendment, deletion, addition or other change in this Agreement, or any
provision hereof, or waiver of any right or remedy herein provided, shall be
effective for any purpose unless such change or waiver is specifically set forth
in a writing signed by the party or parties to be bound thereby. The waiver of
any right or remedy with respect to any occurrence on one occasion shall not be
deemed a waiver of such right or remedy with respect to such occurrence on any
other occasion.
(e) Choice of Law. This Agreement and the rights and obligations of
the parties hereunder shall be governed by and construed in accordance with the
laws of the State of New York, without regard to the principles of choice of law
thereof.
(f) Severability. In the event that one or more of the terms or
provisions of this Agreement or the application thereof to any person(s) or in
any circumstance(s) shall, for any reason and to any extent, be found by a court
of competent jurisdiction to be invalid, illegal or unenforceable, such court
shall have the power, and hereby is directed, to substitute for or limit such
invalid term(s), provision(s) or application(s) and to enforce such substituted
or limited terms or provisions, or the application thereof. Subject to the
foregoing, the invalidity, illegality or enforceability of any one or more of
the terms or provisions of this Agreement, as the same may be amended from time
to time, shall not affect the validity, legality or enforceability of any other
term or provision hereof.
(g) Entire Agreement; No Third-Party Beneficiaries. This Agreement
constitutes the entire agreement and supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral, between
the parties hereto with respect to the subject matter hereof, so that no such
external or separate agreement relating to the subject matter of this Agreement
shall have any effect or be binding, unless the same is referred to specifically
in this Agreement or is executed by the parties after the date hereof. This
Agreement is not intended to confer upon any other person any rights or remedies
hereunder and shall not be enforceable by any party not a signatory to this
Agreement.
(h) Gender; Number. As the context requires, any word used herein in
the singular shall extend to and include the plural, any word used in the plural
shall extend to and include the singular and any word used in any gender or the
neuter shall extend to and include each other gender or be neutral.
(i) Headings. The headings of the sections hereof are inserted for
convenience of reference only and are not intended to be a part of or affect the
meaning or interpretation of this Agreement or of any term or provision hereof.
(j) Counterparts. This Agreement may be executed in two or more
counterparts, each of which together shall be deemed to be an original and all
of which together shall be deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly executed by one of its duly authorized signatories as of the date first
above written.
RECKSON OPERATING PARTNERSHIP, L.P.
By: Reckson Associates Realty Corp.,
its sole general partner
By: _________________________________________
Name:
Title:
RECKSON SERVICE INDUSTRIES, INC.
By: _________________________________________
Name:
Title: