Exhibit 10.12

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               FIFTH AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
                            DATED AS OF JULY 29, 1999
                                  BY AND AMONG
                               VANTAS INCORPORATED
                                       AND
                      THE SECURITYHOLDERS IDENTIFIED HEREIN
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                                TABLE OF CONTENTS
RECITALS.....................................................................1
ARTICLE I   DEFINITIONS......................................................3
      1.1   Defined Terms....................................................3
ARTICLE II  BOARD; COMMITTEES...............................................13
      2.1   Board of Directors..............................................13
      2.2   Removal of Directors............................................15
      2.3   Committees......................................................16
      2.4   Vacancies.......................................................17
      2.5   Proxies.........................................................17
      2.6   Compensation....................................................17
      2.7   Subsidiary Boards...............................................17
ARTICLE III CERTAIN CORPORATE ACTION........................................18
      3.1   Approval of Certain Board Action................................18
      3.2   Approval of Certain Stockholders................................21
      3.3   Appointment of Appraiser........................................22
      3.4   Appointment of Certain Executive Personnel......................22
      3.5   Resolution of Certain Tie Votes of the Board....................22
ARTICLE IV  TRANSFER OF SHARES..............................................23
      4.1   Restrictions on Transfer........................................23
      4.2   Certain Permitted Transfers.....................................23
      4.3   Rights of First Refusal.........................................24
      4.4   Restrictions in Connection with Registrations...................28
      4.5   Tag-Along Right.................................................28
      4.6   Transfers to a Competitor.......................................30
      4.7   Sales of Beale Securities.......................................31
      4.8   Sale of the Company.............................................33
      4.9   Repurchase of Equity Interests..................................34
      4.10  Restrictions Following Qualified Public Offering................34
ARTICLE V   PUT.............................................................35
      5.1   Ability to Put..................................................35
      5.2   Put Price.......................................................38
      5.3   Appraisal Procedure.............................................38
      5.4   Consent Required to Put.........................................39
ARTICLE VI  REGISTRATION RIGHTS.............................................40
      6.1   Public Offering Shares..........................................40


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ARTICLE VII  PREEMPTIVE RIGHTS..............................................48
      7.1   Preemptive Rights...............................................48
      7.2   Standstill......................................................52
ARTICLE VIII  TERMINATION...................................................52
      8.1   Termination.....................................................52
ARTICLE IX  MISCELLANEOUS...................................................54
      9.1   Information.....................................................54
      9.2   Certificate Legend..............................................56
      9.3   Negotiable Form.................................................56
      9.4   Enforcement.....................................................56
      9.5   Specific Performance............................................56
      9.6   Transferees.....................................................57
      9.7   Notices.........................................................57
      9.8   Binding Effect; Assignment......................................66
      9.9   Governing Law...................................................66
      9.10  Severability....................................................66
      9.11  Entire Agreement................................................67
      9.12  Counterparts....................................................67
      9.13  Amendment; Waiver...............................................67
      9.14  Captions........................................................67
      9.15  Waivers.........................................................67
      9.16  Subsequent Option Grants........................................68
      9.17  Non-Competition.................................................68
SCHEDULE 1  Holdings of Securityholders


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                           FIFTH AMENDED AND RESTATED
                           STOCKHOLDERS' AGREEMENT OF
                               VANTAS INCORPORATED

     STOCKHOLDERS'  AGREEMENT dated as of July 29,1999 (this "Agreement") by and
among VANTAS  INCORPORATED,  a Nevada  corporation (the "Company");  the parties
identified on the signature pages under the heading  "Cahill,  Warnock  Holders"
(the "Cahill Holders");  the parties identified on the signature pages under the
heading "Northwood Holders" (the "Northwood  Holders");  the party identified on
the signature pages under the heading "Paribas  Holder" (the "Paribas  Holder");
the party  identified on the signature pages under the heading "PNA Holder" (the
"PNA Holder");  the parties  identified on the signature pages under the heading
"Unit  Holders" (the "Unit  Holders");  the parties  identified on the signature
pages  under the  heading  the  "Series C and D  Holders"  (the  "Series C and D
Holders");  and the parties  identified on the signature pages under the heading
"Other Holders"  (collectively,  the "Other Holders").  The Cahill Holders,  the
Northwood Holders,  the Paribas Holder,  the PNA Holder,  the Unit Holders,  the
Series  C  and  D  Holders,  and  the  Other  Holders  are  referred  to  herein
collectively as the "Securityholders".

                                    RECITALS

     A. The Company entered into a Series A Convertible Preferred Stock Purchase
Agreement,  dated as of November  15, 1996 (the "First  Series A Stock  Purchase
Agreement"),  with the Cahill  Holders,  pursuant  to which the  Cahill  Holders
acquired  shares  of the  Company's  Series A  Convertible  Preferred  Stock and
warrants on the terms and conditions set forth therein.

     B. The Company entered into a Stockholders' Agreement, dated as of November
15, 1996 (the "Initial  Stockholders'  Agreement"),  with the Cahill Holders and
certain of the Other Holders identified therein.

     C. The Company entered into a Series A Convertible Preferred Stock Purchase
Agreement,  dated as of December 31, 1996 (the "Second  Series A Stock  Purchase
Agreement"), with the Northwood Holders, pursuant to which the Northwood Holders
acquired  shares  of the  Company's  Series A  Convertible  Preferred  Stock and
warrants on the terms and conditions set forth therein.

     D. The Company entered into Subscription  Agreements,  dated as of December
30, 1996 and January 14,  1997,  with certain of the Other  Holders  pursuant to
which  each of them  acquired  shares  of the  Company's  Series  A  Convertible
Preferred Stock and warrants on the terms and conditions set forth therein.

     E.  The  Company  entered  into  an  Amended  and  Restated   Stockholders'
Agreement,  dated as of December  31, 1996 (the  "First  Restated  Stockholders'
Agreement"),  with the  Cahill  Holders,  the  Northwood  Holders  and the Other
Holders who subscribed for Series A Preferred Stock, which amended, restated and
superseded in its entirety the Initial Stockholders' Agreement.


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     F. The Company  entered  into an  Amendment  No. 1, dated as of January 14,
1997 ("Amendment No. 1"), to the First Restated Stockholders' Agreement with the
Cahill Holders,  the Northwood  Holders and the Other Holders who subscribed for
Series A Preferred Stock.

     G. The Company  entered into a Second  Amended and  Restated  Stockholders'
Agreement,  dated as of February  15, 1997 (the  "Second  Restated  Stockholders
Agreement"),  with the Cahill Holders,  the Northwood Holders, the Other Holders
who  subscribed  for Series A  Preferred  Stock,  and the Paribas  Holder  which
amended, restated and superseded in its entirety the First Restated Stockholders
Agreement.

     H. The Company entered into a Series B Convertible Preferred Stock Purchase
Agreement, dated as of April 29, 1998 (the "Series B Stock Purchase Agreement"),
with the PNA Holder,  the Cahill Holders,  the Northwood  Holders and certain of
the Other Holders, pursuant to which such Securityholders acquired shares of the
Company's Series B Convertible Preferred Stock.

     I. The Company  entered  into a Third  Amended and  Restated  Stockholders'
Agreement,  dated  as of  April  29,  1998  (the  "Third  Restated  Stockholders
Agreement"),  with the Cahill Holders, the Northwood Holders, the Other Holders,
the PNA Holder and the Paribas Holder which amended,  restated and superseded in
its entirety the Second Restated Stockholders Agreement.

     J. The Company entered into Series B Convertible Stock Purchase  Agreements
dated as of December  21, 1998 with the holders of units of limited  partnership
interest (the "Unit Holders") of certain limited partnerships,  of which various
Subsidiaries  of the Company are the  general  partners,  pursuant to which such
Unit Holders exchanged their units of limited partnership interest for shares of
the Company's Series B Convertible Preferred Stock.

     K. The Company entered into an Amended and Restated Credit  Agreement dated
as of  November  6,  1998  (as  such  agreement  may be  amended,  supplemented,
refinanced, modified or replaced, the "Credit Agreement") with certain financial
institutions party thereto from time to time and Paribas, as Agent, or any other
successor Agent thereto.

     L. On January 8, 1999, ALLIANCE Holding, Inc., a wholly owned subsidiary of
the  Company,  was merged with and into  Interoffice  Superholdings  Corporation
("Interoffice"),  and, immediately thereafter, ANI Holding, Inc., a wholly owned
subsidiary of the Company,  was merged with and into Reckson Executive  Centers,
Inc.  ("REC"),  in each case pursuant to the respective  merger  agreements (the
"Merger  Agreements") and in connection with such mergers (the  "Mergers"),  the
Series C and D Holders exchanged all of their shares of capital stock of REC and
Interoffice  beneficially held on January 8, 1999 (the "Merger Date") for shares
of the Company's Series C Convertible Preferred Stock.

     M. The Company  entered into a Fourth  Amended and  Restated  Stockholders'
Agreement,   dated   January  8,  1999  (the  "Fourth   Restated   Stockholders'
Agreement"),  with the Series A Holders,  Series B Holders and Series C Holders,
which  amended,  restated and  superceded  in its entirety the Third Amended and
Restated Stockholders' Agreement.


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<PAGE>

     N. The Company entered into a Series D Convertible Preferred Stock Purchase
Agreement,  dated as of July 29, 1999 (the "Series D Stock Purchase Agreement"),
with the Series C and D Holders who subscribed for Series D Preferred Stock.

     O. The  Company  anticipates  entering  into a  Series D and E  Convertible
Preferred  Stock  Purchase  Agreement  (the  "Series  D  and  E  Stock  Purchase
Agreement")  with certain  Securityholders  who will also subscribe for Series D
Preferred  Stock or  Series E  Preferred  Stock  pursuant  thereto,  subject  to
Super-Majority Approval (as defined herein).

     P. On the date hereof, each Securityholder owns the shares of capital stock
of the Company or options or warrants exercisable for shares of capital stock of
the Company set forth  opposite his, her or its name on Schedule 1 hereto (which
Schedule 1 does not,  as of the date of this  Agreement,  include  any shares of
Series D  Preferred  Stock or  Series E  Preferred  Stock  which  may be  issued
pursuant to the Series D and E Stock Purchase Agreement).

     Q. The Securityholders desire to enter into this Agreement with the Company
which shall amend,  restate and  supersede  in its entirety the Fourth  Restated
Stockholders' Agreement.

     Accordingly, the parties hereto agree as follows:

                                   ARTICLE 1
                                   DEFINITIONS

     1.1 Defined Terms. The following terms are defined as follows:

     (1) "Adjusted Fully Diluted Capitalization" shall mean the number of issued
and  outstanding  shares of  Common  Stock,  assuming  that (i) any  Options  or
Warrants  outstanding as of the Merger Date, and any Options  outstanding  under
the Company's 1996 Stock Option Plan,  whether or not outstanding as of the date
of this Agreement,  have been exercised in full, (ii) any outstanding options or
warrants to purchase Common Stock or to purchase any security  convertible  into
or  exchangeable  for Common  Stock,  other than those  described  in clause (i)
hereof,  that are Exercisable and that have an exercise price that is lower than
the then fair market value of the Common Stock have been  exercised in full, and
(iii) any outstanding  securities that are then convertible into or exchangeable
for Common Stock have been converted or exchanged in full.

     (2) "Affiliate" shall mean, with respect to any Person, (i) any Person that
directly or indirectly  Controls,  is Controlled  by, or is under common Control
with, such Person,  (ii) any executive  officer (as such term is defined by Rule
501  promulgated  under the Securities  Act) or director (or  individual  with a
similar  capacity)  of such  Person,  or (iii)  when  used  with  respect  to an
individual, shall include the Family Group Members of such individual.

     (3)  "Annual  Budget"  shall  mean  the  budget  for  the  Company  and its
Subsidiaries  in respect of each fiscal year of the Company which shall include,
without  limitation,  a cash flow  projection,  an operating  budget,  a capital
expenditures budget and an acquisition budget.


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     (4)  "Beale  Employment  Agreement"  shall  mean  that  certain  Employment
Agreement,  dated as of  November  15,  1996,  between  the Company and David W.
Beale.

     (5)  "Beneficially  Own" shall have the meaning  given such term under Rule
13d-3 promulgated under the Exchange Act. The term "Beneficial  Ownership" shall
have the  correlative  meaning.  The foregoing terms shall exclude any record or
Beneficial  Ownership  in any  securities  issued by RSI or any  interest in JAH
Realties L.P.

     (6) "Blackout  Period" shall mean the period commencing on the consummation
of a Qualified  Public  Offering  and ending on the earliest to occur of (i) the
second  anniversary of the consummation of the Qualified  Public Offering,  (ii)
the  consummation  of a secondary  offering of the Common Stock in which (X) the
gross proceeds of such offering equal or exceed 30% of the gross proceeds of the
Qualified Public Offering,  and (Y) the offering price per share of Common Stock
is at least 10% higher than the offering  price per share of Common Stock in the
Qualified Public Offering (as adjusted to reflect stock dividends, stock splits,
stock  combinations  or  any  other  similar  transaction  occurring  after  the
Qualified Public  Offering),  and (iii) the  presentation by any  Securityholder
that is subject to restrictions on resale during the Blackout Period of evidence
reasonably satisfactory to a majority of the other Securityholders that are also
subject to such  restrictions  that the  Company is capable of  consummating  an
offering of the type described in clause (ii) hereof. The parties agree that the
opinion of a bulge bracket underwriter to the foregoing effect based on the then
current  market  price of the Common  Stock,  earnings  multiples  and any other
relevant factors shall automatically be satisfactory evidence. (7) "Board" shall
mean the Board of Directors of the Company.  (8) "Business Day" shall mean a day
(other  than a Saturday  or Sunday) on which both  federally  and New York State
chartered  banks  are  generally  open  for  business  in  New  York  City.  (9)
"Certificates of Designation"  shall  collectively mean the Series A Certificate
of  Designation,   the  Series  B  Certificate  of  Designation,  the  Series  C
Certificate of  Designation,  the Series D Certificate  of  Designation  and the
Series E Certificate of Designation. (10) "Commission" shall mean the Securities
and Exchange  Commission or any other federal  agency at the time  administering
the Securities  Act. (11) "Common Stock" shall mean the Company's  common stock,
par value $.01 per share,  whether designated as Class A Common Stock or Class B
Common Stock.  (12) "Common Stock  Equivalent"  shall mean,  with respect to any
Securityholder,   the   number  of  shares  of  Common   Stock   owned  by  such
Securityholder,  plus the number of shares of  Conversion  Stock,  the number of
Warrant Shares,  and the number of Option Shares which such  Securityholder  has
the right to acquire  (or would upon the full  vesting of all  Options  have the
right to acquire)  by  conversion  or  exercise as of the date of  determination
thereof.


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<PAGE>

     (13)  "Control"  shall mean the power to direct the management and policies
of any Person whether through voting control, by contract or otherwise,  and the
terms  "Controls" and  "Controlled"  shall have the correlative  meanings.

     (14)  "Conversion   Stock"  shall  mean  Common  Stock  issuable  upon  the
conversion of the Preferred Stock.

     (15) "Core  Business"  shall mean the business of the outsourcing of office
operations  both on an  on-site  and  off-site  basis,  and the  outsourcing  of
business  support services to customers or clients of the Company which purchase
any of the Company's products or services.

     (16) "Director" shall mean any member of the Board.

     (17) "Encumbrances" shall mean any and all liens, pledges, claims, charges,
security  interests,  options  or other  legal  or  equitable  encumbrances  and
restrictions.

     (18) "Exchange  Act" shall mean the Securities  Exchange Act of 1934 or any
similar  federal  statute,  and the  rules  and  regulations  of the  Commission
thereunder, all as the same shall be in effect at the time.

     (19)  "Exercisable"  shall mean, with respect to any options or warrants to
purchase  Common  Stock or any security  convertible  into or  exchangeable  for
Common Stock, that at the time of determination, such options or warrants may be
exercised for Common Stock or any security  convertible into or exchangeable for
Common Stock.

     (20)  "Family  Group  Members"  shall mean (i) the  parents,  grandparents,
brothers,  sisters,  descendants  (whether natural or adopted) and spouse of the
specified individual;  (ii) any spouse or descendant of any specified individual
specified in clause (i) above; (iii) any trust created solely for the benefit of
any individual described in clauses (i) through (ii) above; (iv) any executor or
administrator  for any of the individuals  described in clauses (i) through (ii)
above;  (v) any  partnership  solely of  individuals  described  in clauses  (i)
through (iv) above; and (vi) any tax exempt corporate  foundation created by any
of the Persons described in clauses (i) through (v) above exclusively engaged in
charitable purposes.

     (21)  "Fully  Diluted  Capitalization"  shall mean the number of issued and
outstanding  shares of Common Stock  assuming  full  issuance of all  Conversion
Stock,  Warrant Shares,  Option Shares and other shares of Common Stock issuable
upon  exercise of any other  options to purchase  Common  Stock or any  security
convertible  or  exchangeable  for  Common  Stock  and  conversion  of any  such
convertible or exchangeable securities.

     (22) "GAAP" shall mean generally accepted accounting principles.

     (23)  "Incapacity"  with  respect  to an  individual,  shall  mean  that  a
committee or conservator  shall have been  appointed for such  individual or his
property.


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<PAGE>

     (24) "Initial Public Offering" shall mean the consummation of either I(i) a
public offering that has received  Super-Majority  Approval, or (ii) a Qualified
Public Offering.

     (25) "Intercompany  Agreement" means that certain  Intercompany  Agreement,
dated as of January 8, 1999, by and between the Company and the RSI Holder.

     (26) "JAH Beneficial  Holders" shall mean (i) Jon L. Halpern and any Person
Controlled by him, (ii) any Family Group Member of Jon L. Halpern so long as Jon
L. Halpern has the power to control,  by contract or otherwise,  the vote of the
Shares of Series C Preferred  Stock or Series D Preferred  Stock or Common Stock
Equivalents  Beneficially  Owned by such Family Group  Member,  and (iii) in the
event of the death or  Incapacity  of Jon L.  Halpern,  any of his Family  Group
Members or any  conservator or committee  who, as a result of his death,  obtain
Beneficial  Ownership  of the  Shares  of  Series C  Preferred  Stock,  Series D
Preferred Stock or Common Stock  Equivalents,  which were Beneficially  Owned by
Jon L. Halpern  prior to his death or Incapacity so long as Control with respect
to such Beneficial Ownership thereof resides in a single individual.

     (27)  "Majority  of the Shares of Series A, B and E Preferred  Stock" shall
mean at least 66_% of the Shares of the Series A, B and E Preferred Stock (taken
as a single class) issued and outstanding at the time any such vote is taken.

     (28) "Majority of the Shares of Series C and D Preferred  Stock" shall mean
at least 50.1% of the Shares of the Series C and D Preferred  Stock  (taken as a
single class) issued and outstanding at the time any such vote is taken.

     (29) "OnSite" shall mean OnSite Ventures, L.L.C.

     (30) "OnSite  Agreement" means the agreement to be entered into between the
Company   and  OnSite  with   respect  to  the   provision   of   Internet   and
telecommunications services to the Company by OnSite.

     (31) "Option  Plan" shall mean the  Company's  1996 Stock Option Plan,  the
Company's 1999 Stock Option Plan, or any other stock option or phantom  interest
plan that has received Super-Majority Approval.

     (32) "Options"  shall mean (i) the options to purchase  Common Stock,  each
originally  dated as of June 30,  1996,  issued  to  David  W.  Beale,  Kelly G.
Besecker,  Laura J. Kozelouzek and Alan M. Langer,  (ii) the options to purchase
Common Stock,  each originally dated as of November 1, 1996,  issued to David W.
Beale, Louis Perlman,  William E. Phillips and Arnold L. Cohen, (iii) the option
to purchase Common Stock, originally dated as of August 4, 1998, issued to David
W. Beale (as all of such options  described in clauses (i),  (ii) and (iii) have
been  amended  and  restated  as of January 8,  1999),  and (iv) any  options to
purchase Common Stock granted under an Option Plan.


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<PAGE>

     (33) "Option  Shares"  shall mean the shares of Common Stock of the Company
issuable  (or which may become  issuable  upon  vesting)  upon the  exercise  of
Options.

     (34)   "Person"   means  any   individual,   proprietorship,   partnership,
corporation,  limited liability company,  trust, estate, or other form of entity
including, if applicable, any governmental authority or agency.

     (35) "Preferred  Stock" shall mean the Series A Preferred  Stock,  Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock.

     (36) "Prime Rate" shall mean the prime rate publicly announced by The Chase
Manhattan Bank, N.A. from time to time.

     (37) "Pro Rata Share"  with  respect to any  Securityholder  shall mean the
percentage equal to the fraction obtained by dividing the number of Common Stock
Equivalents such Securityholder owns by the aggregate number of all Common Stock
Equivalents owned by all Securityholders.

     (38)  "Prohibited  Business" shall mean the executive office suite business
in which the Company is engaged at the time of  determination,  taken as a whole
and  including  (i)  on-site  and  off-site  operations  and (ii) any product or
service  which  is part of the  executive  office  suite  business  and is being
actively pursued for development by management of the Company and which has been
presented  to the  Executive  Committee  of the  Company  and not been  rejected
thereby  (provided  that if such  product  or  service  has  been  rejected  and
thereafter  been  taken to the  Board and not been  rejected,  such  product  or
service  shall  be  considered  part of the  Prohibited  Business).  The time of
determination  shall be the time of the  development of a business or the making
of any investment in question  under Section 9.17 by any of the Persons  subject
to the restrictions in Section 9.17.

     (39)  "Qualified   Public  Offering"  shall  mean  the  consummation  of  a
firm-commitment   underwritten   public   offering   pursuant  to  an  effective
registration  statement  under the Securities Act covering the offer and sale of
Common  Stock for the  account of the Company in which (i) the  aggregate  gross
proceeds of such offering equal or exceed $75 million, (ii) the valuation of the
Company (as  reflected by the  quotient  obtained by dividing (A) the product of
(1) the Adjusted  Fully Diluted  Capitalization  (giving effect to the Qualified
Public  Offering) and (2) the aggregate  gross  proceeds of such offering by (B)
the number of shares of Common Stock sold in such offering)  equals or exceeds a
multiple of 20 times the Company's  projected net income for the 12 month period
following  the date of the most  recent  financial  statements  included  in the
registration  statement for such offering  (which  projected net income shall be
based on reasonable  assumptions that have been disclosed to the Board and shall
be determined in a manner consistent with the last regularly  prepared quarterly
financial  statements  of the  Company,  except  for any  change  in  accounting
practices  made  subsequent   thereto  with  which  the  Company's   independent
accountants concur and in accordance with applicable  financial  standards (e.g.
AICPA Professional  Standards Section 200 for a Financial Forecast)),  and (iii)
the lead managing underwriter is either a "bulge bracket" firm or BT Alex. Brown
Incorporated,  NationsBank Montgomery Securities LLC or William Blair & Company,
L.L.C. The assumptions used in determining projected net income may


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<PAGE>

     include:  (i)  consistency in financial  reporting  policies and procedures
(except as otherwise required or suggested by GAAP), (ii) the earnings growth of
the Company during the relevant  (e.g.,  prior 2-year)  period,  (iii) projected
events and  transactions  during the  projected  one year  period per the Annual
Budget (as adjusted per variance  analysis for the prior four  quarters) and the
expected  use of funds from the public  offering,  (iv)  financial  effect  (pro
forma) of any acquisitions  that are likely to be consummated and (v) such other
factors as any investment banking firm described above might consider in valuing
the Company.

     (40)  "Qualifying  Series C and D  Beneficial  Holders"  shall mean the RSI
Beneficial  Holders,  the JAH  Beneficial  Holders,  the  Rabinowitz  Beneficial
Holders, the Rieger Beneficial Holders and the Widder Beneficial Holders.

     (41) "Rabinowitz  Beneficial  Holders" shall mean (i) Martin Rabinowitz and
any Person  Controlled by him, (ii) any Family Group Member of Martin Rabinowitz
so long as Martin Rabinowitz has the power to control, by contract or otherwise,
the vote of the  Shares  of  Series C and D  Preferred  Stock  or  Common  Stock
Equivalents  Beneficially  Owned by such Family Group  Member,  and (iii) in the
event of the death or Incapacity of Martin  Rabinowitz,  any of his Family Group
Members  or any  conservator  or  committee  who,  as a result  of his  death or
Incapacity,  obtain  Beneficial  Ownership  of  the  shares  of  Series  C and D
Preferred Stock or the Common Stock  Equivalents,  which were Beneficially Owned
by  Martin  Rabinowitz  prior  to  his  death.   Notwithstanding  the  foregoing
provisions of this definition, no Person shall be deemed a Rabinowitz Beneficial
Holder with  respect to any shares of Series C and D  Preferred  Stock or Common
Stock  Equivalents  which were not  acquired by a Rabinowitz  Beneficial  Holder
either (i) pursuant to the Merger Agreements,  or (ii) by exercise of a right to
purchase under Article 4 or under Section 7.1 hereof.

     (42)  "Registered  Securities"  shall  mean  securities  that (i) have been
registered  under the  Securities  Act and (ii) are of a class  (A)  listed on a
national  securities  exchange or designated  for  quotation on NASDAQ,  and (B)
having an aggregate market value (which shall include  securities  issued to the
holders of the Company's securities) of at least $50,000,000.

     (43)  "Rieger  Beneficial  Holders"  shall mean (i)  Robert  Rieger and any
Person  Controlled by him, (ii) any Family Group Member of Robert Rieger so long
as Robert Rieger has the power to control, by contract or otherwise, the vote of
the Shares of Series C and D Preferred  Stock or Common Stock  Equivalents,  and
(iii) in the  event of the death or  Incapacity  of  Robert  Rieger,  any of his
Family Group  Members or any  conservator  or committee  who, as a result of his
death or Incapacity, obtain Beneficial Ownership of the shares of Series C and D
Preferred Stock or the Common Stock  Equivalents,  which were Beneficially Owned
by Robert Rieger prior to his death. Notwithstanding the foregoing provisions of
this  definition,  no Person  shall be deemed a Rieger  Beneficial  Holder  with
respect  to any  shares  of  Series  C and D  Preferred  Stock or  Common  Stock
Equivalents  which were not acquired by a Rieger  Beneficial  Holder  either (i)
pursuant  to the Merger  Agreements,  or (ii) by exercise of a right to purchase
under Article 4 or under Section 7.1 hereof.

     (44) "RSI" shall mean Reckson Service Industries, Inc.


                                        8
<PAGE>

     (45) "RSI  Beneficial  Holders"  shall mean RSI and any  Affiliates  of RSI
Controlled by RSI, in each case for so long as an  acquisition of Control of RSI
of the type described in Section 4.6 has not occurred.

     (46)  "Sale of the  Company"  shall  mean (i)  consummation  of a merger or
consolidation  (or  similar  transaction)  of the Company  with or into  another
Person  that is not a direct or  indirect  parent or  subsidiary  of the Company
pursuant to which all or  substantially  all of the then  outstanding  shares of
capital  stock of the  Company  are  converted  or  exchanged  into the right to
receive cash or securities of another Person,  (ii) the consummation of the sale
or other  disposition of all or  substantially  all of the  outstanding  Shares,
Options and Warrants that are the subject of this  Agreement to a Person that is
not a direct  or  indirect  parent or  Subsidiary  of the  Company  or (iii) the
consummation of the sale or other disposition of all or substantially all of the
Company's  assets  to a  Person  that is not a  direct  or  indirect  parent  or
Subsidiary of the Company;  provided,  however, that notwithstanding anything to
the contrary  contained  herein,  a Sale of the Company  shall only be deemed to
have  occurred  if at  least  80% of the  consideration  to be  received  by the
Securityholders in connection with such transaction is payable in (i) cash, (ii)
Registered   Securities  or  (iii)  any   combination  of  cash  and  Registered
Securities.

     (47) "Securities Act" shall mean the Securities Act of 1933, or any similar
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.

     (48) "Series A, B and E Holders" shall  collectively mean Series A Holders,
Series B Holders and Series E Holders.

     (49)  "Series A, B and E  Preferred  Directors"  shall  mean the  directors
nominated by the Series A, B and E Holders pursuant to Section 2.1(a) and (b).

     (50) "Series A, B and E Preferred Stock" shall collectively mean the Series
A Preferred Stock, Series B Preferred Stock and Series E Preferred Stock.

     (51) "Series A Certificate of Designation" shall mean the Fifth Amended and
Restated  Certificate of Designation  of Series A Preferred  Stock,  dated as of
July 20, 1999 to the Company's Articles of Incorporation.

     (52)  "Series A Holders"  shall mean the  holders of the Series A Preferred
Stock issued and outstanding at any time.

     (53)  "Series  A  Preferred  Stock"  shall  mean  the  Company's  Series  A
convertible  preferred  stock,  par value $.01 per share,  having  such  rights,
preferences and privileges as may be in effect from time to time.

     (54) "Series B Certificate  of  Designation"  shall mean the Second Amended
and Restated Certificate of Designation of Series B Preferred Stock, dated as of
July 20, 1999 to the Company's Articles of Incorporation.

                                        9
<PAGE>

     (55)  "Series B Holders"  shall mean the  holders of the Series B Preferred
Stock issued and outstanding at any time.

     (56)  "Series  B  Preferred  Stock"  shall  mean  the  Company's  Series  B
convertible  preferred  stock,  par value $.01 per share,  having  such  rights,
preferences and privileges as may be in effect from time to time.

     (57) "Series C and D Adjusted Fully Diluted  Capitalization" shall mean the
Adjusted Fully Diluted Capitalization,

     (1) decreased by the number of Common Stock Equivalents (A) issued upon the
exercise of options to purchase  Shares granted to directors or employees of, or
consultants to, the Company  pursuant to the Company's 1999 Stock Option Plan or
any other stock option plan of the Company  (other than the Company's 1996 Stock
Option  Plan),  (B) issued  pursuant to the  exercise  of any rights,  warrants,
options  (other than as described in clause (A) hereof) or other  agreements  to
purchase  Shares,  which rights,  warrants,  options or other agreements are not
outstanding on the date of this Agreement  (except if and to the extent that the
Series C and D Holders had the right to exercise preemptive rights under Article
7 with  respect to the  initial  sale or grant by the  Company  of such  rights,
warrants, options or agreements), (C) issued in an Initial Public Offering as to
which the RSI  Beneficial  Holders or the Series C and D Holders  would have had
the  right to  exercise  preemptive  rights  under  Section  7.1(b)  but for the
limitation  set forth in Section  7.1(b)  relating to the right to acquire up to
30% of the New  Securities  sold in such  Initial  Public  Offering  until other
Persons have  purchased  $75,000,000 of such New  Securities,  and (D) issued as
consideration for, or in connection with, any merger or acquisition of the stock
or assets of any acquired entity by the Company, and

     (2)  increased  in the event  there is an issuance  of New  Securities  (as
defined  in Section  7.1(a)) or  Additional  Securities  (as  defined in Section
7.1(b)) by the number of Unused  Backlog  CSE's (as  hereinafter  defined) as to
which the RSI  Beneficial  Holders or any of the Series C and D Holders have the
right to exercise  (as  determined  below)  preemptive  rights  under the second
paragraph of Section 7.1(a) or under Section 7.1(b) (the "Testing Sections").

As used herein,  "Backlog CSE's" shall mean the aggregate number of Common Stock
Equivalents  by  which  the  Adjusted  Fully  Diluted  Capitalization  has  been
decreased  pursuant to clause (i) above of this  Section  1.1(bbb),  and "Unused
Backlog  CSE's" shall mean the number of Backlog  CSE's reduced by the number of
Backlog  CSE's by which  the  Adjusted  Fully  Diluted  Capitalization  has been
increased  pursuant  to clause  (ii)  above of this  Section  1.1(bbb).  For the
purpose of determining  whether the RSI Beneficial Holders or the Series C and D
Holders have the right to exercise  preemptive rights under the Testing Sections
with respect to Unused Backlog CSEs, the RSI Beneficial  Holders or the Series C
and D Holders, as the case may be, shall be deemed to have such rights if and to
the extent that the number of New Securities or Additional  Securities which the
RSI  Beneficial  Holders or any of the Series C and D Holders  have the right to
purchase  under the  Testing  Sections  is  greater  than the number of such New
Securities  or Additional  Securities  which the RSI  Beneficial  Holders or any
Series C and D Holders would then have the right to purchase if the RSI


                                       10

<PAGE>

Beneficial  Holders  and the Series C and D Holders (x) had  actually  exercised
preemptive  rights to the maximum extent permitted to them under Sections 7.1(a)
and 7.1(b)  with  respect  to all  issuances  of New  Securities  or  Additional
Securities,  and (y) had the  right to  exercise,  and had  actually  exercised,
preemptive  rights  under the Testing  Sections  with  respect to all  issuances
described  in clause  (i)  above of this  Section  1.1(bbb).  If at any time the
Company requests,  and the RSI Beneficial  Holders or the Series C and D Holders
agree to, the waiver of  preemptive  rights that the RSI  Beneficial  Holders or
such  Series C and D Holders  may then have with  respect to New  Securities  or
Additional Securities,  then for purposes of this Agreement,  the RSI Beneficial
Holders and the Series C and D Holders shall not be deemed to have had the right
to exercise  preemptive rights with respect to such New Securities or Additional
Securities.

     (58) "Series C and D Holders"  shall mean the holders of the Series C and D
Preferred Stock.

     (59)  "Series  C  and D  Preferred  Directors"  shall  mean  the  directors
nominated by the Series C and D Holders pursuant to Section 2.1(a) and (b).

     (60)  "Series C and D  Preferred  Stock"  shall mean the Series C Preferred
Stock and Series D Preferred Stock.

     (61)  Series C  Certificate  of  Designation"  shall mean the  Amended  and
Restated Certificate of Designation of the Series C Preferred Stock, dated as of
July 20, 1999 to the Company's Articles of Incorporation.

     (62)  "Series C Holders"  shall mean the  holders of the Series C Preferred
Stock issued and outstanding at any time.

     (63)  "Series  C  Preferred  Stock"  shall  mean  the  Company's  Series  C
convertible  preferred  stock,  par value $.01 per share,  having  such  rights,
preferences and privileges as may be in effect from time to time.

     (64) "Series D Certificate of  Designation"  shall mean the  Certificate of
Designation  of Series D  Preferred  Stock,  dated as of July 20,  1999,  to the
Company's Articles of Incorporation.

     (65)  "Series D Holders"  shall mean the  holders of the Series D Preferred
Stock issued and outstanding at any time.

     (66)  "Series  D  Preferred  Stock"  shall  mean  the  Company's  Series  D
convertible  preferred  stock,  par value $.01 per share,  having  such  rights,
preferences and privileges as may be in effect from time to time.

     (67) "Series E Certificate of  Designation"  shall mean the  Certificate of
Designation  of Series E  Preferred  Stock,  dated as of July 20,  1999,  to the
Company's Articles of Incorporation.


                                       11

<PAGE>
     (68)  "Series E Holders"  shall mean the  holders of the Series E Preferred
Stock issued and outstanding at any time.

     (69)  "Series  E  Preferred  Stock"  shall  mean  the  Company's  Series  E
convertible  preferred  stock,  par value $.01 per share,  having  such  rights,
preferences and privileges as may be in effect from time to time.

     (70)  "Shares"  shall  mean any  shares of  capital  stock of the  Company,
including, without limitation, the Common Stock, Preferred Stock, Warrant Shares
and Option Shares, now or hereafter issued.

     (71)  "Subsidiary"  shall  mean any  corporation,  partnership  or  limited
liability  company of which a majority of the outstanding  voting  securities or
other voting equity interests or voting power are owned, directly or indirectly,
by the Company.

     (72)  "Super-Majority  Approval"  shall mean  approval of a majority of the
whole  Board  (which  majority  shall  include a majority  of the Series C and D
Preferred  Directors  and,  solely  with  respect to the  actions  specified  in
Sections 3.1(e), 3.1(f), and 3.1(j)(A), at least two Series A, B and E Preferred
Directors).

     (73) "Warrants" shall mean (1) the warrants originally dated as of November
15, 1996 issued to the Cahill Holders,  (2) the warrants  originally dated as of
November  15,  1996,  December  31,  1996,  February 15, 1997 and April 29, 1998
issued to Thomas S. Shattan,  Gregory E. Mendel and G. Kevin  Fechtmeyer and the
warrants  originally  dated as of December 31, 1996 and April 29, 1998 issued to
The Shattan  Group,  LLC, (3) the warrants  originally  dated as of December 31,
1996 and February  15, 1997 issued to the  Northwood  Holders,  (4) the warrants
originally dated as of December 31, 1996, January 14, 1997 and February 15, 1997
issued to certain of the Other Holders, and (5) the warrants originally dated as
of  February  15, 1997  issued to the  Paribas  Holder (as all of such  warrants
described in clauses (1),  (2),  (3), (4) and (5) have been amended and restated
as of January 8, 1999).

     (74) "Warrant  Shares" shall mean the shares of Common Stock of the Company
issuable upon the exercise of the Warrants.

     (75)  "Widder  Beneficial  Holders"  shall mean (i)  Arnold  Widder and any
Person  Controlled by him, (ii) any Family Group Member of Arnold Widder so long
as Arnold Widder has the power to control, by contract or otherwise, the vote of
the  shares  of  Series C and D  Preferred  Stock or  Common  Stock  Equivalents
Beneficially  Owned by such Family Group  Member,  and (iii) in the event of the
death or  Incapacity  of Arnold  Widder,  any of his Family Group Members or any
conservator  or committee  who, as a result of his death or  Incapacity,  obtain
Beneficial  Ownership  of the  shares of Series C and D  Preferred  Stock or the
Common Stock  Equivalents,  which were Beneficially Owned by Arnold Widder prior
to his death.  Notwithstanding the foregoing  provisions of this definition,  no
Person shall be deemed a Widder  Beneficial Holder with respect to any shares of
Series C and D  Preferred  Stock or  Common  Stock  Equivalents  which  were not
acquired by a


                                       12

<PAGE>
Widder Beneficial Holder either (i) pursuant to the Merger  Agreements,  or (ii)
by exercise of a right to purchase under Article 4 or under Section 7.1 hereof.

                                   ARTICLE 2

                                BOARD; COMMITTEES

2.1 Board of Directors.

     (1) The Board shall consist of ten Directors, (i) three Directors initially
nominated by David W. Beale (which  nominees shall  initially be David W. Beale,
Arnold  L.  Cohen,  and  Louis  Perlman)  (collectively,  and as may be  reduced
pursuant  to  Section  2.1 (b)  hereof,  the  "Company  Directors"),  (ii) three
Directors (collectively,  along with any additional Person nominated pursuant to
Section 2.1(b) hereof,  the "Series A, B and E Preferred  Directors")  initially
nominated  as follows:  two shall be  designated  by the Cahill  Holders  (which
nominees shall initially be David L. Warnock and G. Lee Bohs),  and one shall be
designated by the Northwood  Holders (which nominee shall  initially be Henry T.
Wilson), and (iii) four Directors  (collectively,  the "Series C and D Preferred
Directors") initially nominated by holders of a Majority of the Shares of Series
C and D Preferred Stock (which  nominees shall  initially be Scott Rechler,  Jon
Halpern, Daniel DiSano and Stephen M. Rathkopf). The Chairman of the Board shall
be a Series C and D Preferred Director nominated by the holders of a Majority of
the Shares of Series C and D Preferred  Stock and  reasonably  acceptable to the
Company Directors and the Series A, B and E Preferred Directors. The Chairman of
the Board  shall not serve as an employee or officer of the Company but shall be
vested with the rights and  privileges  typically  accorded  the Chairman of the
Board  of  Directors  under  applicable   corporate  law,   including,   without
limitation,  the right to call special  meetings of the Board or stockholders in
accordance  with the  Company's  By-laws.  Notwithstanding  the  foregoing,  the
Chairman  of the Board and the Chief  Executive  Officer  of the  Company  shall
jointly prepare the agenda for and chair each meeting of the Board.  The initial
Chairman of the Board shall be Scott Rechler.

     (2) On July 29, 2001,  the Directors  shall be  reelected,  such that there
shall be (A) two Company Directors who shall be nominated by David W. Beale, (B)
five Series C and D Preferred Directors who shall be nominated by the holders of
a Majority of the Shares of Series C and D Preferred Stock, and (C) three Series
A, B and E Preferred  Directors who shall be nominated by the Cahill Holders and
the Northwood Holders as set forth in Section 2.1(a). In order to implement such
reelection,  one of the Company  Directors shall resign as a Director as of that
date,  and, if such  resignation  has not occurred by such date, the Board shall
vote to remove one Company  Director  (other than David W. Beale)  pursuant to a
designation to be made by a majority of the Series C and D Preferred  Directors,
following  which the Board  shall be  re-elected  in  accordance  with the first
sentence of this Section 2.1(b). Upon any retirement, resignation, disability or
death of any Company  Director  (other than David W. Beale)  following  the date
that the  Directors are reelected  pursuant to this Section  2.1(b),  the Cahill
Holders shall have the right to appoint his  successor  (who shall be reasonably
satisfactory  to the  Northwood  Holders).  Thereafter,  there shall be (x) four
Series A, B and E Preferred Directors, three of whom shall be


                                       13

<PAGE>

nominated by the Cahill Holders (one of whom shall be reasonably satisfactory to
the  Northwood  Holder)  and one of whom  shall be  nominated  by the  Northwood
Holders, (y) one Company Director, who shall be nominated by David W. Beale, and
(z) five  Series C and D  Preferred  Directors  who  shall be  nominated  by the
holders of a Majority of the Shares of the Series C and D Preferred Stock.

     (3) Notwithstanding anything to the contrary contained herein, (i) David W.
Beale  shall have the rights set forth  herein to  nominate  all of the  Company
Directors  (as the number of Company  Directors  shall be  reduced  pursuant  to
Section  2.1(b)) only so long as he maintains  Beneficial  Ownership of at least
50% of the Common Stock Equivalents held by him as of the date of this Agreement
and the Beale  Employment  Agreement has not been  terminated by the Company for
Cause (as defined therein); provided, however, that so long as David W. Beale is
the Chief  Executive  Officer of the Company he shall serve as a Director,  (ii)
the Cahill  Holders  and the  Northwood  Holders  each shall have the rights set
forth  herein to nominate  the Series A, B and E Preferred  Directors,  and such
Series A, B and E Preferred  Directors shall have the right to nominate  members
of the  Committees  described in Section 2.3 hereof,  only so long as the Cahill
Holders  or the  Northwood  Holders,  as the  case may be,  maintain  Beneficial
Ownership  in the  aggregate  of at least 50% of the  Common  Stock  Equivalents
(excluding Warrant Shares) initially acquired by it pursuant to the First Series
A Stock Purchase Agreement and the Second Series A Stock Purchase Agreement, and
(iii) the holders of a Majority of the Shares of Series C and D Preferred  Stock
shall have the rights set forth  herein to nominate the Series C and D Preferred
Directors  and to designate  the  Chairman of the Board,  and the Series C and D
Preferred  Directors shall have the right to nominate  members of the Committees
described in Section 2.3 hereof,  only so long as the Qualifying  Series C and D
Beneficial Holders maintain Beneficial Ownership of at least 20% of the Series C
and D Adjusted  Fully  Diluted  Capitalization.  If any of David W.  Beale,  the
Cahill  Holders,  the Northwood  Holders or the Series C and D Holders loses its
rights to designate Directors,  the Directors which such Securityholder had been
entitled to designate  shall promptly  resign and the vacancies  created by such
resignations  shall be filled by the  stockholders  of the  Company  voting at a
special or general  meeting or by written consent in lieu of any such meeting at
any time after the consummation of the transaction in which any such Person lost
its rights to designate Directors. If any Directors or Committee members who are
required to resign such  positions  pursuant to the preceding  sentences fail to
promptly tender their written  resignations,  the stockholders and the remaining
Directors  shall  promptly  take such steps as may be necessary  or  appropriate
under the Company's  bylaws and applicable law in order to remove such Directors
and/or Committee  members.  The Directors  designated by the stockholders of the
Company shall appoint  successor  committee  members to fill any vacancies  then
existing as a result of the resignations of the Directors referred to in the two
preceding  sentences (other than any vacancy on the Executive  Committee created
by the failure of David W. Beale to serve  thereon which shall be handled in the
manner provided in Section 2.3(a)).

     (4) The Company shall give William E.  Phillips,  a former  Director of the
Company,  notice of (in the same  manner as notice is given to  Directors),  and
permit William E. Phillips to attend as a non-voting  observer,  all meetings of
the Board  and  shall  provide  to  William  E.  Phillips  the same  information
concerning the Company,  and access  thereto,  provided to members of the Board.
William E. Phillips shall keep all such  information  confidential and shall not
directly  or  indirectly  use  such  information  for  any  purpose  other  than
evaluating his continued  investment in the Company's  securities and to provide
such advice and counsel as may be requested by the


                                       14

<PAGE>

Company.  William E.  Phillips  shall  have the rights set forth  herein to be a
non-voting board observer until December 31, 2000.

     (5) The Company  shall give the PNA Holder notice of (in the same manner as
notice is given to  Directors),  and  permit one  Person  designated  by the PNA
Holder to attend as a non-voting  observer,  all meetings of the Board and shall
provide to such observer the same information concerning the Company, and access
thereto,  provided to members of the Board.  Such  observer  shall keep all such
information   confidential  and  shall  not  directly  or  indirectly  use  such
information  for any purpose other than  evaluating  the PNA Holder's  continued
investment  in the Series B Preferred  Stock and Series E Preferred  Stock.  The
direct  out-of-pocket  expenses  reasonably incurred by any such designee of the
PNA Holder in attending any board  meetings  shall be reimbursed by the Company.
The PNA Holder  shall have the rights  set forth  herein to a  non-voting  board
observer only so long as the PNA Holder maintains  ownership in the aggregate of
at least 50% of the Common Stock Equivalents  initially  acquired by it pursuant
to the  Series B Stock  Purchase  Agreement  and  Series D and E Stock  Purchase
Agreement.  Notwithstanding  the  foregoing,  the Company  reserves the right to
excuse the  non-voting  board observer from all or any portion of any meeting of
the Board if the Board  determines in its good faith  discretion  that there are
confidential matters to be discussed relating to the Company's debt financing.

     (6) Election of Nominees. On the date hereof, and at each annual meeting of
stockholders  of the  Company or any special  meeting  called for the purpose of
electing  Directors of the Company (or by consent of stockholders in lieu of any
such meeting) or at such other time or times as the  Securityholders  may agree,
the  Securityholders  shall vote all of their respective Shares entitled to vote
in favor of the election of all of the Persons so nominated in  accordance  with
Section 2.1(a) and Section 2.1(b) and no other Person.

     (7) Term. Each of the Series A, B and E Preferred  Directors,  the Series C
and D  Preferred  Directors  and the  Company  Directors  shall hold office as a
Director of the Company for a term of one year.

     2.2 Removal of Directors.  No Securityholder  shall vote any Shares, and no
Director  shall vote, in favor of the removal of a Director  designated by David
W.  Beale,  the  Cahill  Holders,  the  Northwood  Holders or the Series C and D
Holders  unless (i) the right of such other  Securityholder(s)  to so  designate
such Director shall no longer exist as a result of Section 2.1(c),  or (ii) such
other  Securityholder(s)  shall  have  requested  that  the  Securityholders  or
Directors   vote  for  the   removal  of  any  such   Director   (provided   the
Securityholder(s)  making such  request  shall at such time  remain  entitled to
designate a Director pursuant to Section 2.1(c)).  In the case of clause (ii) of
the immediately  preceding sentence,  the (x) Securityholders  shall vote all of
their Shares  entitled to vote and (y) Directors shall vote, as the case may be,
immediately  upon  request  in favor of the  removal  of such  Director  and the
election  of  any  replacement  Director  as  may be  designated  by  requesting
Securityholder(s).


                                       15
<PAGE>
     2.3 Committees.

     (1) The Executive  Committee of the Board shall consist of five  Directors:
(i) two Directors  nominated by the Series A, B and E Preferred Directors (which
nominees  shall  initially be David W. Beale,  who shall be entitled to serve on
the Executive Committee for so long as he remains Chief Executive Officer of the
Company,  and David L. Warnock) and (ii) three Directors nominated by the Series
C and D Preferred  Directors  (which  nominees shall initially be Scott Rechler,
Jon Halpern and Daniel DiSano). The Chairman of the Executive Committee shall be
David W.  Beale,  who  shall  hold  such  title  for so long as he serves on the
Executive Committee, and, thereafter,  the Chairman shall be any successor Chief
Executive  Officer  to David W.  Beale.  To the  extent  permitted  by law,  the
Executive  Committee shall have and may exercise all the powers and authority of
the  Board  in the  management  of the  business  and  affairs  of the  Company;
provided,  however,  that, in no event,  shall the Executive  Committee have the
authority to authorize any action which requires  Super-Majority  Approval under
this  Agreement.  If at  least  four  of the  members  of the  entire  Executive
Committee shall not agree on a decision with respect to any matter over which it
has  authority  to act,  such  matter  shall be  referred  to the  Board for its
determination. Without limiting the foregoing, it is intended that the Executive
Committee  shall be responsible  for such matters as non-annual  (project level)
budget  approvals,  commitment of capital,  incurrence  of debt and  significant
contractual  relations.  The Executive  Committee shall maintain  minutes of its
meetings and report to the Board on all of its proceedings.

     (2) The Audit Committee of the Board shall consist of four  Directors:  (i)
two Directors nominated by the Series A, B and E Preferred Directors,  who shall
not be officers or employees of the Company (which  nominees shall  initially be
Messrs.  Arnold Cohen and G. Lee Bohs) and (ii) two  Directors  nominated by the
Series C and D Preferred  Directors  (which  nominees shall initially be Messrs.
Scott Rechler and Daniel DiSano).  Subject to Section 2.1(c), the Series C and D
Preferred  Directors shall have the right to designate the Chairman of the Audit
Committee of the Board.  The Audit  Committee  shall recommend the engagement of
independent  auditors,  review and  consider  actions of  management  in matters
relating to audit  function,  review  with  independent  auditors  the scope and
results of their audit  engagement,  review the system of internal  controls and
procedures of the Company and its Subsidiaries,  and review the effectiveness of
procedures  intended to prevent  violations  of law and  regulations.  The Audit
Committee shall also approve the engagement letter of the Company's  independent
accountants, direct the internal control (or internal audit) department, if any,
be authorized  to direct agreed upon  procedures  review by  independent  public
accountants or consultants and review and approve all public securities  filings
and audited financial statements.

     (3)  The  Compensation  Committee  of  the  Board  shall  consist  of  four
Directors:  (i) two  Directors  nominated  by the  Series  A, B and E  Preferred
Directors, who shall not be officers or employees of the Company (which nominees
shall  initially be Messrs.  Louis Perlman and David L.  Warnock),  and (ii) two
Directors  nominated by the Series C and D Preferred  Directors  (which nominees
shall  initially  be  Messrs.  Scott  Rechler  and Jon  Halpern).  The  grant or
allocation of rights,  warrants,  options or other agreements to purchase Common
Stock or any security  convertible  into or exchangeable  for Common Stock under
any Option Plan or as compensation to any employee,


                                       16

<PAGE>

consultant,  Director  or officer of the  Company  shall  require  approval of a
majority of the members of the Compensation Committee.

     (4) The Board shall establish a Strategic Steering  Committee,  which shall
be a management  committee.  The Strategic  Steering  Committee shall consist of
David  W.  Beale,  three  members  appointed  by the  Series  C and D  Preferred
Directors (which members need not be Directors and which members shall initially
include Jon L.  Halpern) and three senior  managers of the Company  appointed by
the Chief Executive  Officer of the Company.  The Strategic  Steering  Committee
shall be responsible for evaluating and recommending new products,  technologies
and strategies with a view towards  ensuring the ultimate success of the Company
by  continually  meeting the changing  needs of customers of the Company.  There
shall be no chairman of the Strategic Steering Committee.

     2.4 Vacancies.  Subject to Sections 2.1(b),  2.1(c) and 2.3, if any vacancy
occurs in the  Board or any  Committee  thereof  because  of death,  disability,
resignation,  retirement  or  removal  of a Director  or a  Committee  member in
accordance with this  Agreement,  the  Securityholder  or  Securityholders  that
nominated  the Person  creating such vacancy (or the Directors who nominated the
Committee member) shall nominate a successor  (provided that such Securityholder
shall at such time remain  entitled to  designate  a Director,  or the  relevant
Directors shall at such time remain entitled to nominate a Committee  member, as
the case may be, pursuant to Sections 2.1(a),  2.1(b),  2.1(c) and 2.3), and all
Securityholders shall vote the Shares held by them which are entitled to vote in
favor of the election of such  successor  to the Board and all of the  Directors
shall  elect or appoint  the  successors  to such  Committee  of the Board.  Any
vacancy that occurs shall be filled as promptly as possible  upon the request of
the group having the right to nominate a Person to fill such vacancy.

     2.5  Proxies.  Neither the Company  nor any  Securityholder  shall give any
proxy or power of  attorney  to any  Person or entity  that  permits  the holder
thereof to vote in his  discretion  on any matter that may be  submitted  to the
Company's  Securityholders  for their  consideration  and approval,  unless such
proxy or power of attorney is made  subject to and is  exercised  in  conformity
with the provisions of this Agreement.

     2.6 Compensation.  Each Director shall be reimbursed by the Company for all
direct  out-of-pocket  expenses  incurred in the  reasonable  discretion  of the
Director in connection with their services as a Director and a committee  member
and each  Director,  other than any  Director  who is an officer of the Company,
shall receive from the Company an annual  Director's fee of $5,000. In addition,
William  E.  Phillips  shall  be  reimbursed  by  the  Company  for  all  direct
out-of-pocket  expenses  reasonably incurred by him in attending meetings of the
Board and providing advice to the Company, and shall receive from the Company an
annual fee of $5,000.

     2.7 Subsidiary  Boards.  The board of directors of each Subsidiary shall be
comprised  of a single  director  who shall be David W.  Beale or any  successor
Chief  Executive  Officer.  No  action  taken by the board of  directors  of any
Subsidiary   shall  be  contrary   to  or   inconsistent   with  the   policies,
recommendations or directions of the Board.


                                       17

<PAGE>

                                   ARTICLE 3
                            CERTAIN CORPORATE ACTION

     3.1 Approval of Certain Board Action.  None of the following  actions shall
be  taken  by  the  Company  or  any  of  its  Controlled   Affiliates   without
Super-Majority Approval (provided that if at the time of the proposed action (i)
the  Qualifying  Series  C  and D  Beneficial  Holders  do  not  have  aggregate
Beneficial  Ownership  of at  least  20% of the  Series C and D  Adjusted  Fully
Diluted  Capitalization,  then the  approval of a majority of the Series C and D
Preferred  Directors  shall  not be  required  as  part  of  the  Super-Majority
Approval,  and (ii) the Cahill  Holders  and the  Northwood  Holders do not have
aggregate Beneficial Ownership of 50% of the Common Stock Equivalents (excluding
Warrant Shares) initially  acquired by them pursuant to the First Series A Stock
Purchase  Agreement and the Second Series A Stock Purchase  Agreement,  then the
approval of at least two of the Series A, B and E Preferred  Directors shall not
be required as part of the Super-Majority Approval):

     (1) any sale,  exchange,  lease or other  disposition  (whether in a single
transaction or a series of related transactions), of any asset, group of assets,
division  or  Subsidiary  of the  Company,  which  would  have the effect of (i)
disposing of assets which produce gross revenues  constituting 4% or more of the
Company's consolidated gross revenues (determined in each case as of the date of
the last regularly  prepared quarterly  financial  statements of the Company but
giving effect to all acquisitions made by the Company and its Subsidiaries on or
after the beginning of the measurement period),  (ii) disposing of the Company's
operations in a "metropolitan  statistical  area" as such term is defined by the
Bureau of the Census (with  respect to domestic  operations)  or a country (with
respect to  international  operations),  or (iii)  terminating or  substantially
terminating any material product line (e.g.,  executive office suites,  Internet
services, telecommunications service, etc.);

     (2) (i) any material amendment to or replacement or extension of the Credit
Agreement as it exists as of the date hereof, or (ii) any request for any waiver
by the Required  Banks (as such term is defined in the Credit  Agreement) of any
term or provision  of the Credit  Agreement,  other than a waiver in  connection
with a Permitted Acquisition (as such term is defined in the Credit Agreement);

     (3) incurring any direct or indirect  Indebtedness (as such term is defined
in the Credit  Agreement as it exists as of the date hereof) for borrowed money,
loaning any money,  guaranteeing  the payment of any money or  indebtedness  for
borrowed  money of another  Person,  guaranteeing  the  performance of any other
obligation  of  another  Person  (other  than a  wholly  owned  subsidiary),  or
indemnifying another Person against any losses,  damages or costs, provided that
the  foregoing  shall not include  (i) any  borrowing  by the Company  under its
Credit Agreement for  acquisitions  which have been approved by the Board or the
Executive  Committee,  working  capital,  letters of credit in  connection  with
leases of real property by the Company or any  Subsidiary,  or any other purpose
which is within the then current Annual Budget, (ii) any Capital Lease permitted
under  Section  3.1(d),  (iii) any trade debt of the  Company or any  Subsidiary
incurred in the ordinary  course of business,  or (iv) any  indemnity  which the
Company or any Subsidiary may give to a seller or

                                       18
<PAGE>

related  entities  in  connection  with an  acquisition  that has  received  the
requisite Board approval, in respect of the liabilities or obligations which are
being  assumed  by  the  Company  or  a  Subsidiary  in  connection   with  such
acquisition;

     (4) making capital expenditures,  including Capital Leases, in an aggregate
amount as  capitalized  on a balance  sheet under GAAP, in any fiscal year which
exceeds by more than $500,000 the amount  approved in the Annual Budget for such
year;

     (5) entering into any business other than the Core Business;

     (6)  entering  into any  material  transaction  with any  Affiliate  of the
Company,   except  any  transaction  pursuant  to  the  OnSite  Agreement,   the
Intercompany Agreement or any Product Agreement entered into pursuant thereto;

     (7) any change in the name of the Company;

     (8) any voluntary  liquidation or dissolution of the Company or filing of a
voluntary  petition  of  the  Company  under  Chapter  7 or  Chapter  11 of  the
Bankruptcy  Act or a  determination  to not contest an  involuntary  petition of
bankruptcy or otherwise institute  insolvency  proceedings or otherwise seek any
relief  under laws  relating  to the relief  from  debts or the  protections  of
debtors generally; seek or consent to the appointment of a receiver, liquidator,
assignee,  trustee,  sequestrator,  custodian  or any similar  official for such
entity or all or any portion of such entity's  properties;  make any  assignment
for the benefit of such entity's creditors; take any action that would cause the
Company to become insolvent as defined by the Bankruptcy Act; or take any action
which consents to a case in a bankruptcy or other insolvency proceedings against
the Company or waives or releases any right or claims of the Company in any such
case or proceeding;

     (9) any merger, consolidation or reorganization of the Company with another
Person  which  is not a  Subsidiary  of the  Company,  except  if  such  merger,
consolidation  or  reorganization  is an acquisition  transaction that would not
require Super-Majority  Approval under Section 3.1(n);  provided,  however, that
such exception shall not apply to mergers,  consolidations,  or  reorganizations
(i)  pursuant  to which the  Company is not the  surviving  corporation  and the
shares of the Company's capital stock are converted or exchanged,  or (ii) which
would  materially and adversely affect the relative rights or preferences of the
Series C and D  Preferred  Stock  (including,  without  limitation,  through the
issuance of a security  ranking senior to the Series C and D Preferred  Stock as
to payment of dividends or liquidation preference);

     (10) (A) any issuance or sale of equity securities  (including  pursuant to
the Series D and E Stock Purchase Agreement) or phantom interests of the Company
or of any  security,  warrant,  option or right  (contingent  or  otherwise)  to
purchase or acquire any equity security of the Company or any phantom interests,
or the adoption of any option, phantom interests or similar plan (other than the
Company's 1996 Option Plan and the Company's  1999 Option Plan),  except (i) any
issuance of securities  pursuant to a Qualified Public Offering,  (ii) any grant
of options pursuant to an Option Plan, (iii) any issuance of securities upon the
exercise  of any  Warrant or Option or upon the  conversion  of any  outstanding
convertible security of the Company or (iv) any issuance of


                                       19

<PAGE>

securities as  consideration  in connection  with any merger,  consolidation  or
acquisition of stock or assets from any Person (if such merger, consolidation or
acquisition would not otherwise require Super-Majority  Approval under any other
clause of this Section  3.1); or (B)  commencement  of the process of an Initial
Public  Offering  prior to nine months  following the closing of the sale of the
Series D Preferred Stock pursuant to the Series D Stock Purchase  Agreement (for
this  purpose,  meeting with  potential  investment  bankers to discuss a public
offering,  or delivering to potential  investment  bankers material,  non-public
information  about the  Company,  would be deemed  commencing  the process of an
Initial Public Offering, provided that this is not, however, intended to prevent
management  of the  Company  from  having a  limited  number  of  meetings  with
investment bankers for the purpose of maintaining relationships and keeping them
informed  of  the  Company's  general  progress,  without  disclosing  material,
non-public information about the Company);

     (11) creating,  granting,  or consenting to any Encumbrances  which secure,
individually or in the aggregate,  an amount in excess of $100,000 and which are
not  otherwise  required or permitted  under the terms of the Credit  Agreement,
provided that if the Credit Agreement is not then in effect,  under the terms of
the Credit Agreement as such Credit Agreement exists as of the date hereof;

     (12) any change in the  accounting  principles  used by the  Company or the
adoption  of  any  change  to  the  Company's  financial  reporting   practices,
procedures or standards  which would as a normal matter  require the approval of
the  Board,  except  for any such  changes  which  are  required  by GAAP or the
Securities and Exchange Commission;

     (13) retaining any accounting firm other than  PricewaterhouseCoopers,  LLP
or another "Big Five"  accounting  firm which is  "independent"  as such term is
used in Rule 2-01 of Regulation S-X under the Securities Act and under GAAP;

     (14) any acquisition (in any transaction or series of related transactions)
of all or substantially  all of the assets of, or of a controlling  interest in,
any other Person,  where such transaction (or related  transactions)  would have
the  effect,  on a  pro  forma  basis,  assuming  such  transaction  or  related
transactions were consummated,  of increasing the consolidated gross revenues of
the Company by 10% or more (in the case of international acquisitions) or 20% or
more,  (in the case of domestic  acquisitions)  over the  existing  consolidated
gross revenues of the Company,  determined for the immediately  preceding twelve
month  period  ending  as of the date of the  most  recent  quarterly  financial
statements of the Company. For this purpose consolidated gross revenues shall be
calculated  giving effect to all other  acquisitions made by the Company and its
Subsidiaries on or after the beginning of the measurement period;

     (15) entering  into any  agreement,  other than any  agreement  that may be
entered into under the terms of the Intercompany Agreement (including the OnSite
Agreement),  (i)  with  a  real  estate  investment  trust  other  than  Reckson
Associates  Realty  Corp.,  except  for  leases  of real  property  and  related
agreements for services ancillary to a lease of real property,  or (ii) which is
a material agreement with any Person (other than RSI, OnSite or their respective
Affiliates)  which  directly  competes  with RSI as a broad  based  provider  of
multiple  outsourced business services (i.e. this clause (ii) shall not apply to
an agreement with a provider of individual business services which


                                       20
<PAGE>

RSI, OnSite or their respective Affiliates may offer;  provided,  that each such
agreement  is  not  otherwise  violative  of the  terms  and  conditions  of the
Intercompany Agreement);

     (16)  any  amendment  to  the  Articles  of  Incorporation  (including  the
Certificates  of  Designation)  or Bylaws of the  Company,  or any change in the
number of members of the Board, any Committee thereof or the Strategic  Steering
Committee;

     (17) the hiring or termination of employment of any of the Chief  Executive
Officer,  Chief Operating Officer or Chief Financial Officer of the Company,  or
of any other  officer of the Company  with a  compensation  package  equal to or
greater than the  compensation  package of the Chief  Executive  Officer,  Chief
Operating  Officer or Chief  Financial  Officer or the  approval of any renewal,
extension or termination of any employment agreement with any such individual or
the waiver by or on behalf of the Company or any of its Controlled Affiliates of
any of the Company's rights thereunder;

     (18) the adoption or amendment of the Annual Budget;

     (19) the settlement of any action or proceeding before a federal regulatory
agency,  or the  commencement  or settlement of any litigation by or against the
Company  or any  Subsidiary  in which  the  amount  at issue  involves  at least
$500,000;

     (20)  redemption  or other  purchase  of  outstanding  Shares,  Warrants or
Options except pursuant to the provisions of this Agreement, the Certificates of
Designation or the terms of the applicable Option Plan; or

     (21)  any  amendment,  modification  or  waiver  of any  provision  of this
Agreement.

     3.2  Approval of Certain  Stockholders.  The  Company  agrees it shall not,
without the  approval of a Majority of the Shares of Series A, B and E Preferred
Stock and a Majority of the Shares of the Series C and D Preferred Stock:

     (1) issue any class or series of equity  security  (including  any issuance
pursuant  to the  Series D and E Stock  Purchase  Agreement)  senior  to or on a
parity with the Preferred  Stock as to payment of dividends or senior to or on a
parity with the Preferred Stock as to payments on a dissolution,  liquidation or
winding up of the Company;

     (2) enter into any agreement or arrangement of any kind that would restrict
the Company's ability to perform its obligations under (i) this Agreement,  (ii)
the First Series A Stock Purchase Agreement,  the Second Series A Stock Purchase
Agreement,  the Series B Stock  Purchase  Agreement and the Series D and E Stock
Purchase  Agreement  (it being  agreed that no vote shall be  required  from the
holders  of the Series C and D  Preferred  Stock  with  respect  to the  actions
specified in this clause (ii)), (iii) the Merger Agreements or (iv) the Series D
and E Stock  Purchase  Agreement (it being agreed that no vote shall be required
from the  holders of the Series A, B and E Preferred  Stock with  respect to the
actions specified in this clause (iii));


                                       21

<PAGE>

     (3) amend the Articles of  Incorporation  (including  the  Certificates  of
Designation) or the By-laws of the Company in any manner;

     (4) merge or consolidate with any other entity or sell all or substantially
all of its assets or issue any voting  securities to a Person or entity not then
a holder of Shares which would result in such Person or entity acquiring control
of the Company; or

     (5) liquidate or dissolve.

     Notwithstanding  anything  to the  contrary  contained  above,  neither the
Paribas  Holder,  nor any of its affiliated  transferees or successors  shall be
entitled to  participate  in any vote  needing the approval of a Majority of the
Shares of Series A, B and E Preferred Stock.

     3.3 Appointment of Appraiser.  Notwithstanding  anything to the contrary in
this Agreement or in the Certificates of Designation,  any Initial Appraiser (as
defined in this Agreement or the  Certificates of Designation) to be selected by
the Company  shall be selected by a majority of the Directors of the Company who
are not  Affiliates of the  Securityholders  whose Shares are the subject of the
appraisal and such appraiser  shall be reasonably  acceptable to the majority of
the Series C and D Preferred Directors.

     3.4 Appointment of Certain Executive  Personnel.  In addition to the rights
contained in Section 3.1(q), the holders of a Majority of the Shares of Series C
and D  Preferred  Stock shall have the right to appoint on the Merger Date those
executive  officers  of Parent  designated  on Schedule 2 and,  thereafter,  the
employment  of such  executive  officers  shall be governed by the terms of such
agreements as the Company may enter into with such persons.

     3.5  Resolution  of Certain Tie Votes of the Board.  Except for matters for
which Super-Majority  Approval is required,  actions of the Board shall be taken
by a simple  majority  vote of  Directors  present and voting at a meeting  duly
called and at which a quorum is present and voting  throughout  (or by unanimous
written  consent of the  entire  Board).  If any vote of the  entire  Board on a
matter for which Super-Majority  Approval is not required results in a tie vote,
at the  request of any member of the Board the matter  shall be put to a vote of
the holders of all outstanding Shares (i.e.  excluding Option Shares and Warrant
Shares)  voting  as a  single  class,  and the  vote of such  holders  shall  be
determinative of the matter in question.


                                       22

<PAGE>

                                   ARTICLE 4
                               TRANSFER OF SHARES

     4.1  Restrictions on Transfer.  So long as this Agreement is in effect,  no
Securityholder shall sell, assign, transfer, give, encumber, pledge, hypothecate
or in any other way  dispose of any Shares,  Warrants  or Options  (any of which
being a  "Transfer")  except as  provided  in this  Agreement.  For  purposes of
Section  4.1,  Section  4.2,  Section 4.3 and Section 4.6 of this  Agreement,  a
Transfer shall be deemed to include any Transfer by any Person who  Beneficially
Owns any shares of Series C and D Preferred  Stock by reason of any  Transfer of
any  interest  (or portion  thereof) by or through  which such Person holds such
Beneficial  Ownership  of such  shares  (any  such  interest,  a "Series C and D
Beneficial Interest").  In addition, each Securityholder agrees that it will not
Transfer any of its Shares,  Warrants or Options  except as permitted  under the
Securities  Act or applicable  state  securities  laws or any rule or regulation
promulgated thereunder. No Transfer in violation of this Agreement shall be made
or recorded on the books of the Company and any such Transfer  shall be void and
of  no  force  or  effect.   Subject  to  the  terms  of  this  Agreement,   the
Securityholders  shall be entitled to exercise  all rights of ownership of their
Shares and any such Options or  Warrants,  and the  transferability  of any such
Options or Warrants  shall,  in addition to the terms hereof,  be subject to the
terms and  conditions  contained  therein.  Except as set forth in  Section  4.6
hereof,  nothing  herein is intended to restrict the Transfer of any  securities
issued by RSI or any interest in JAH Realties, L.P.

     4.2  Certain  Permitted  Transfers.  The  Company  and the  Securityholders
acknowledge and agree that any of the following  Transfers shall be deemed to be
in  compliance  with this  Agreement  (subject in each case to  compliance  with
applicable securities laws):

     (1) subject to Section 4.6 and 9.6 hereof,  a Transfer in  accordance  with
the provisions of Section 4.3, 4.5, 4.7 or 4.8 or Article 5 hereof,  pursuant to
the redemption  provisions  applicable to the Preferred  Stock as in effect from
time to time,  or through a sale in a  registered  offering in  accordance  with
Article 6 hereof;

     (2) subject to Section 4.6 and 9.6 hereof, a Transfer (i) upon the death of
a Securityholder  or of a Beneficial Owner of shares of Series C and D Preferred
Stock  to  his  executors,   administrators   and   testamentary   trustees  and
beneficiaries  of his  estate  or (ii) by the PNA  Holder  to not  more  than 15
employees  of the PNA Holder or any of the PNA Holder's  Affiliates  (subject in
each case to compliance with applicable securities laws);

     (3) subject to Section 4.6 and 9.6 hereof,  a Transfer to (x) an  Affiliate
or  (y)  to  members,   partners,   limited  partners,   or  stockholders  of  a
Securityholder in the event of a liquidation or other distribution of or by such
Securityholder, or (z) made for nominal consideration or as a gift to any of the
Securityholder's Family Group Members; and

     (4)  subject to Section  4.6 and 9.6  hereof,  any  Transfer  by any of the
Series C and D Holders  (or any  member  thereof)  to any  other  Series C and D
Holder or by any Beneficial Owner of shares of Series C and D Preferred Stock to
any other Beneficial Owner of shares of Series C and


                                       23

<PAGE>

D  Preferred  Stock  or  to  any  of  their  respective  members,   partners  or
stockholders or any Family Group Members (any such transferee, together with any
transferee pursuant to Section 4.2(b) and (c), being a "Permitted Transferee");

     (5) anything herein to the contrary notwithstanding,  in the event that any
Securityholder  or any of its Affiliates shall deliver to the Company an opinion
of counsel to such Securityholder or such Affiliate,  as the case may be, to the
effect that if such Securityholder or such Affiliate,  as the case may be, shall
continue to hold some or all of the  Warrants  or Shares held by it,  there is a
material risk that such  ownership  will result in the violation of any statute,
regulation or rule of any governmental authority (including, without limitation,
Regulation Y promulgated  under the Bank Holding Company Act of 1956, as amended
(the "BHCA")),  such Securityholder or such Affiliate (a "Regulated Holder"), as
the case may be, may exchange its Shares or Warrants,  as herein  provided.  The
Company shall cooperate with such  Securityholder  or such Affiliate as the case
may  be,  in  exchanging   all  or  any  portion  of  its  voting  Shares  on  a
share-for-share  basis for Shares of a  non-voting  security or warrants  (which
shall  thereafter be deemed  Warrants  hereunder)  convertible  into a nonvoting
security of the Company  (such  non-voting  security  shall be  identical in all
respects to such voting  Shares,  except that they shall be non-voting and shall
be convertible or exercisable  into voting  securities on such conditions as are
requested  by such  Securityholder  in  light of the  regulatory  considerations
prevailing).   Without   limiting   the   forgoing,   at  the  request  of  such
Securityholder  or such  Affiliate,  as the case may be, the  Company  shall use
commercially  reasonable  efforts  to amend  this  Agreement,  the  Articles  of
Incorporation  of the  Company,  the  By-laws of the  Company,  and any  related
agreements and instruments  and shall take such  additional  actions in order to
effectuate  the  authorization  of the issuance of nonvoting  securities and the
exchange  of  such  Securityholder's   voting  securities  into  such  nonvoting
securities.  The  provisions  of this  Section  4.2(e) shall inure solely to the
benefit of the  Securityholders  and their  Affiliates  which are subject to the
provisions of the BHCA or the Small Business  Investment Act of 1958, as amended
(the "SBIA"); and

     (6) any pledge of a Series C and D  Beneficial  Interest to secure any bona
fide indebtedness, but in each case subject to Section 4.6 and provided that the
lender acknowledges in writing that any sale or Transfer of the pledged Series C
and D Beneficial  Interests shall be subject to the provisions of this Agreement
and that it shall not have the right to take title,  sell or exercise any rights
of ownership of the pledged  Series C and D Beneficial  Interests  without first
having  complied  with the  provisions of Article IV hereof (it being agreed and
understood among the Company and the Securityholders  that any transfer of title
or sale of such pledged  interests to any Series C and D Holder or any holder of
a Series C and D Beneficial  Interest  shall not be subject to the provisions of
Section 4.3).

     4.3 Rights of First Refusal.


                                       24

<PAGE>

     (1)  Each  Securityholder  agrees  that,  subject  to the  restrictions  on
Transfers  contained in Sections 4.3(i),  4.4 and 4.6, if any  Securityholder (a
"Transferring  Securityholder") proposes to Transfer any or all of the Shares or
Warrants then owned by such Transferring  Securityholder pursuant to a bona fide
offer from a third party (who (x) is not an Affiliate of such Securityholder and
(y) reasonably has the ability to consummate  such offer in accordance  with its
terms),  other than as provided  in Section  4.2,  4.5,  4.7 or 4.8 or Article 5
hereof  or  pursuant  to  the  redemption  provisions  in  the  Certificates  of
Designation  or  through a sale in a  registered  offering  in  accordance  with
Article  6  hereof  (a  "Section   4.3   Transfer"),   then  such   Transferring
Securityholder  shall first give a written notice (the "Transfer Notice") to the
Company and each of the other  Securityholders (the  "Securityholder  Offerees")
specifying (i) the number of Shares or Warrants such Transferring Securityholder
proposes to Transfer  (the  "Transfer  Shares"),  (ii) the  consideration  to be
received for the Transfer Shares in the proposed  Section 4.3 Transfer  pursuant
to such bona fide offer,  (iii) any other material terms of the proposed Section
4.3 Transfer,  including,  without limitation,  the conditions precedent to such
offer,  and (iv) whether any purchase of the Transfer  Shares by the Company and
the  Securityholder  Offerees  pursuant to this Section 4.3 is conditioned  upon
purchase  by the  Company and the  Securityholder  Offerees of all the  Transfer
Shares (an "All or Nothing Condition").  The Transfer Notice shall constitute an
irrevocable offer to the Company and the Securityholder  Offerees (the "Transfer
Offer")  to sell the  Transfer  Shares  to the  Company  and the  Securityholder
Offerees,  pursuant to the provisions of this Section 4.3, for the consideration
and on the  other  terms  stated  in the  Transfer  Notice  (or  the  reasonable
equivalent thereof in the case of non-monetary  consideration of a type which is
personal to the third party  offeror).  For purposes of this Section 4.3, in the
case of a Transfer of a Series C and D Beneficial Interest,  the Transfer Shares
shall not be the Series C and D Beneficial  Interest  proposed to be transferred
but rather shall be deemed to be the number of shares of respective Series C and
D Preferred  Stock as to which the  transferee  of the Series C and D Beneficial
Interest would acquire Beneficial Ownership in such proposed transfer.

     (2) The RSI Beneficial Holder shall have the initial right, exercisable, in
RSI's sole discretion,  by the Series C and D Holders for the benefit of the RSI
Beneficial  Holders or directly by any of the RSI Beneficial  Holders (provided,
that, if such right is exercised directly by any of the RSI Beneficial  Holders,
such Person shall become a party to this Agreement for all purposes  hereunder),
to accept  the  Transfer  Offer as to all or a portion of the  Transfer  Shares;
provided,  however,  that in no event  shall the  foregoing  right to accept the
Transfer Offer and purchase  Transfer  Shares pursuant to this Section 4.3(b) by
or on behalf of the RSI Beneficial Holders entitle the Series C and D Holders or
the RSI Beneficial  Holders,  as the case may be, to purchase a number of Shares
that,  immediately  following such purchase,  would result in the RSI Beneficial
Holders   having   Beneficial   Ownership   of  Shares,   Options  and  Warrants
representing,  in the  aggregate,  more than 30% of the Adjusted  Fully  Diluted
Capitalization.  Within 5 Business Days after the receipt of a Transfer  Notice,
the Company shall notify the Transferring  Securityholder and the Securityholder
Offerees  in writing of the number of  Transfer  Shares  that the Series C and D
Holders or the RSI Beneficial  Holders, as the case may be, shall have the right
to  purchase  pursuant to this  Section  4.3(b).  Within 15 Business  Days after
receipt of such  notice from the  Company,  if the Series C and D Holders or the
RSI Beneficial Holders, as the case may be, shall be entitled to purchase any of
the Transfer Shares pursuant to this Section 4.3(b),  the Series C and D Holders
or the RSI Beneficial  Holders,  as the case may be, shall give a written notice
to the Company and the


                                       25

<PAGE>

Transferring  Securityholder,  accepting  the  Transfer  Offer  (an  "Acceptance
Notice"),  which shall specify the number of Transfer Shares that they desire to
purchase  pursuant  to this  Section  4.3(b).  The failure of the Series C and D
Holders or the RSI  Beneficial  Holders,  as the case may be, to timely  give an
Acceptance  Notice shall be deemed to be an election by them to not purchase any
Transfer  Shares  pursuant to this Section 4.3. If the Series C and D Holders or
the RSI  Beneficial  Holders,  as the case may be, have given timely  Acceptance
Notices  electing  to purchase  less than all,  or are not  entitled to purchase
pursuant  to this  Section  4.3(b) all, of the  Transfer  Shares,  the number of
Transfer  Shares as to which the  Series C and D Holders  or the RSI  Beneficial
Holders,  as the case may be,  shall have not given  timely  Acceptance  Notices
pursuant to this Section 4.3(b) (the "Initial  Remaining Transfer Shares") shall
be deemed offered by the Transferring  Securityholder to the Company pursuant to
Section 4.3(c).  The rights set forth in this Section 4.3(b) shall terminate and
shall no longer apply in the event that the Qualifying Series C and D Beneficial
Holders  do not  Beneficially  Own at least 20% of the  Series C and D  Adjusted
Fully  Diluted  Capitalization.  The Series C and D Holders  shall  provide such
information  as the Company shall  reasonably  request in order to determine the
Beneficial Ownership of the Qualifying Series C and D Beneficial Holders. In the
event that any RSI  Beneficial  Holder  transfers  Beneficial  Ownership  in any
Shares,  Options or Warrants to any Qualifying Series C and D Beneficial Holder,
then,  notwithstanding  such  transfer,  the  Shares,  Options  or  Warrants  so
transferred  shall be  deemed  to be  Beneficially  Owned by the RSI  Beneficial
Holders for purposes of this Section 4.3.

     (3) The Company shall have the right to accept the Transfer Offer as to all
or a portion of the Initial Remaining  Transfer Shares.  Within 15 Business Days
after the end of the 15  Business  Day  period  provided  to the  Series C and D
Holders in Section 4.3(b),  if the Company elects to purchase any of the Initial
Remaining  Transfer Shares,  the Company shall give an Acceptance  Notice to the
Transferring Securityholder and each of the Securityholder Offerees, which shall
specify  the  number of Initial  Remaining  Transfer  Shares  that it desires to
purchase  pursuant  to this  Section  4.3(c),  up to the  total of such  Initial
Remaining  Transfer  Shares.  The  failure  of the  Company  to  timely  give an
Acceptance  Notice  shall be  deemed to be an  election  by the  Company  to not
purchase  any  Transfer  Shares.  If the Company  has given a timely  Acceptance
Notice  electing to purchase  less than all of the  Initial  Remaining  Transfer
Shares,  the number of Initial Remaining Transfer Shares as to which the Company
has not given a timely  Acceptance  Notice  pursuant to this Section 4.3(c) (the
"Final Remaining  Transfer  Shares") shall be deemed offered by the Transferring
Securityholder to the Securityholder Offerees pursuant to Section 4.3(d).

     (4) The Securityholder Offerees shall have the right to accept the Transfer
Offer as to the Final Remaining  Transfer Shares.  Within 15 Business Days after
the end of the 15 Business Day period provided to the Company in Section 4.3(c),
each  Securityholder  Offeree who wishes to purchase any of the Final  Remaining
Transfer  Shares  shall  give  an  Acceptance  Notice  to the  Company  and  the
Transferring  Securityholder,  which shall specify the number of Final Remaining
Transfer Shares (up to such Securityholder Offeree's Pro Rata Share of the Final
Remaining  Transfer  Shares,  which  for the RSI  Beneficial  Holders  shall  be
calculated including any Transfer Shares to be acquired by them or by the Series
C and D  Beneficial  Holders for their  account  pursuant to the exercise of the
rights set forth in Section 4.3(b)) which such Securityholder Offeree desires to
purchase.  The Acceptance  Notice may, at the  Securityholder  Offeree's option,
indicate  the  maximum   number  of  Final   Remaining   Transfer   Shares  such
Securityholder Offeree would


                                       26

<PAGE>

purchase in excess of such Securityholder  Offeree's Pro Rata Share of the Final
Remaining Transfer Shares (the "Excess Amount").  If one or more  Securityholder
Offerees does not give a timely  Acceptance  Notice,  or elects in an Acceptance
Notice to purchase less than such Securityholder Offeree's Pro Rata Share of the
Final Remaining Transfer Shares,  then the Final Remaining Transfer Shares shall
automatically be deemed to be accepted by Securityholder  Offerees who specified
an Excess Amount in their  respective  Acceptance  Notice,  allocated among such
Securityholder  Offerees  (with  rounding  to the  nearest  whole share to avoid
fractional  shares) in proportion to their respective Pro Rata Shares determined
based only on those  Securityholder  Offerees who have given  timely  Acceptance
Notices which  specified an Excess  Amount.  In no event shall an amount greater
than  a   Securityholder   Offeree's   Excess   Amount  be   allocated  to  such
Securityholder  Offeree.  Any excess Final  Remaining  Transfer  Shares shall be
further  allocated  among the  Securityholder  Offerees whose  specified  Excess
Amount has not been satisfied (with rounding to the nearest whole share to avoid
fractional shares) in proportion to their respective Pro Rata Shares, determined
based only on those  Securityholder  Offerees whose specified  Excess Amount has
not yet been  satisfied,  and such procedure  shall be employed until the entire
Excess  Amount of each  Securityholder  Offeree has been  satisfied or all Final
Remaining Transfer Shares have been allocated.

     (5) The  closing of the  purchase  by the Series C and D Holders or the RSI
Beneficial  Holders,  as the case may be, the Company and/or the  Securityholder
Offerees of the Transfer Shares pursuant to this Section 4.3 shall take place at
the principal offices of the Company on the fifteenth Business Day after the end
of the 15  Business  Day period set forth in (i)  Section  4.3(d) or (ii) if the
Series C and D  Holders  are  purchasing  all of the  Transfer  Shares,  Section
4.3(c).  At such  closing,  the  Series C and D  Holders  or the RSI  Beneficial
Holders, as the case may be, the Company and/or the Securityholder  Offerees who
have  elected to purchase  Transfer  Shares shall  deliver a certified  check or
checks in the  appropriate  amount to the  Transferring  Securityholder  against
delivery  of duly  endorsed  certificates  with all stock  transfer  tax  stamps
attached  representing the Transfer Shares to be purchased.  The Transfer Shares
shall be delivered free and clear of all  Encumbrances  other than those imposed
by this Agreement.

     (6) If any Transfer Shares  allocated to a  Securityholder  Offeree are not
purchased by such Securityholder  Offeree, such Transfer Shares may be purchased
by the Company  promptly  following any such default.  Nothing  contained herein
shall prejudice any Person's right to maintain any cause of action or pursue any
other remedies available to it as a result of such default.

     (7) If, at the end of the 15  Business  Day  period  set  forth in  Section
4.3(d),  timely  Acceptance  Notices  have not been  given  covering  all of the
Transfer Shares and the Transfer Notice  contained an All or Nothing  Condition,
then the Transferring Securityholder shall have 90 days in which to complete the
sale of all,  but not less than all, of the Transfer  Shares.  If, at the end of
the 15  Business  Day  period  set forth in Section  4.3(d),  timely  Acceptance
Notices have not been given covering all of the Transfer Shares and the Transfer
Notice  did not  contain  an All or  Nothing  Condition,  then the  Transferring
Securityholder shall have 90 days in which to complete the sale of any or all of
the Transfer Shares as to which timely  Acceptance  Notices have not been given.
Any such sale of Transfer  Shares shall be to a third party for a  consideration
not  less  than  the  consideration,  and on  terms  no  more  favorable  to the
transferee, than those contained in the Transfer Notice. No such Transfer may be
made to any third party unless and until such third party delivers


                                       27

<PAGE>

to the  Company  an  executed  consent  to be  bound by the  provisions  of this
Agreement in form and substance reasonably satisfactory to the Company. Promptly
after any Transfer pursuant to this Section 4.3, the Transferring Securityholder
shall  notify the Company of the  consummation  thereof and shall  furnish  such
evidence of the  completion  and time of  completion of such Transfer and of the
terms thereof as the Company may request.  If, at the end of such 90 day period,
the  Transferring  Securityholder  has not  completed the Transfer of all of the
Transfer Shares, the Transferring Securityholder shall no longer be permitted to
Transfer such Shares  pursuant to this Section  4.3(g)  without again  complying
with  this  Section  4.3 in its  entirety.  If the  Transferring  Securityholder
determines at any time within such 90 day period that the Transfer of all or any
part of such Transfer Shares for a  consideration  not less than and on terms no
more favorable to the transferee  than those contained in the Transfer Notice is
impractical,  the  Transferring  Securityholder  may  terminate  all attempts to
Transfer such Transfer  Shares and recommence the procedures of this Section 4.3
in their  entirety  without  waiting for the expiration of such 90 day period by
delivering written notice of such decision to the Company.

     (8) If any Regulated  Holder has the right to purchase any Transfer  Shares
but is  prohibited  from  exercising  such  right  under the BHCA or SBIA or the
regulations promulgated thereunder,  such Regulated Holder may assign such right
to the Company and upon such assignment the Company shall,  subject to any legal
or contractual  restrictions and at no cost or expense to the Company,  purchase
such  Transfer  Shares  and  concurrently  sell to such  Regulated  Holder  such
Transfer Shares,  or if requested by such Regulated  Holder,  securities that do
not have  voting  rights  but  otherwise  have the same  terms as such  Transfer
Shares, for the purchase price upon which such Transfer Shares were purchased by
the Company.  The Company's  obligations under this Section 4.3(h) are solely as
an  accommodation  to such  Regulated  Holder and the Company  shall be under no
obligation  to advance  any funds or to obtain  any  financing  to acquire  such
Transfer Shares.

     (9) No Transfer of Options may be made in a Section 4.3 Transfer.

     (10) Any time  periods  contained  in this Section 4.3 shall be extended to
the  extent  reasonably  necessary  to allow any  Securityholder  to obtain  any
requisite approvals under the Hart-Scott-Rodino Act and any other approvals that
may be  required  under  applicable  state or federal  law.  The  Company  shall
cooperate (at the Securityholder's expense) in the obtaining of such approvals.

     4.4  Restrictions in Connection  with  Registrations.  Each  Securityholder
agrees not to effect any public sale or  distribution  of Shares,  including any
sale pursuant to Rule 144, during the seven (7) days prior to the effective date
of a  registration  statement  effected  pursuant to the terms hereof and during
such period of time  beginning on such  effective date as may be required by the
underwriters  of such  offering  and agreed to by the  Company,  but in no event
exceeding  nine (9) months (in each case  except as part of such  registration).
Each Securityholder  hereby acknowledges that such Securityholder  shall have no
right to include its Shares in any  registration of Shares,  except as expressly
provided in Article 6.

     4.5  Tag-Along  Right.  Prior to the  effective  date of an Initial  Public
Offering (or such longer period as set forth in the second following paragraph),
if any  Transferring  Securityholder  wishes to Transfer any Shares or Warrants,
either in one transaction or a series of related


                                       28
<PAGE>

transactions,  and any portion of the Transfer  Shares are not  purchased by the
Series C and D Holders or the RSI  Beneficial  Holders,  as the case may be, the
Company  or the  Securityholder  Offerees  under  Section  4.3  (other  than any
Transfer  pursuant to Section 4.2, 4.7 or 4.8, or through a redemption or put of
Preferred Stock or a sale in a registered offering or pursuant to Rule 144 under
the  Securities  Act, or through the right of any Remaining  Securityholder  (as
defined below) to sell Shares provided by this Section 4.5), then as a condition
to such Transfer,  the Transferring  Securityholder shall permit (or cause to be
permitted) all other  Securityholders  who did not seek to purchase the Transfer
Shares  pursuant  to Section  4.3 (other  than  Securityholders  who  elected to
purchase  Transfer  Shares and failed to close on the purchase  thereof) or were
unable to purchase the Transfer  Shares as a result of the failure of the All or
Nothing  Condition to be satisfied (the  "Remaining  Securityholders")  to sell,
either to the prospective purchaser of the Transferring  Securityholder's Shares
or Warrants or to another financially  reputable purchaser reasonably acceptable
to such  Remaining  Securityholders,  up to the same  proportion  of the Shares,
Warrants   and  Options  (if  then   vested)   then  owned  by  such   Remaining
Securityholder  as the  proportion  that the number of Shares and  Warrants  the
Transferring Securityholder proposes to Transfer pursuant to this Section 4.5 in
the  contemplated  sale on the date of the Tag-Along  Notice (as defined  below)
bears to the total  number  of  Shares  and  Warrants  held by the  Transferring
Securityholder  on such date prior to any Shares or  Warrants  sold  pursuant to
Section 4.3, on  equivalent  terms and at an  equivalent  price and for the same
type of  consideration to that offered by the third-party  offeror,  taking into
account any difference in the type of securities  (i.e.,  the Series A Preferred
Stock,  Series B Preferred Stock,  Series C Preferred Stock,  Series D Preferred
Stock,  Series E Preferred  Stock or Common Stock) held (or  acquirable)  by the
Transferring Securityholder and the Remaining Securityholders who desire to sell
Shares,  Warrants or Options.  All  numbers of Shares and  Warrants  and Options
(only to the extent then vested) under this Section 4.5 shall be determined on a
fully converted and fully exercised basis.

     The Transferring  Securityholder  shall give written notice (the "Tag-Along
Notice") to the Remaining  Securityholders of each proposed Transfer giving rise
to  the  rights  referred  to in  this  Section  4.5  (the  "Tag-Along  Rights")
immediately  following the end of the 15 Business Day period provided in Section
4.3(d) and at least 20 days prior to the proposed consummation of such Transfer,
setting  forth the name of the  prospective  purchaser,  the  maximum  number of
Shares and Warrants proposed to be Transferred,  the proposed amount and form of
consideration  and the other terms and  conditions of the proposed  transaction.
The   Tag-Along   Notice  shall  also   provide  that  each  of  the   Remaining
Securityholders  may elect to exercise such rights within 15 days  following the
giving of the Tag-Along Notice, by delivery, on or before the expiration of such
time period, of a written notice to the Transferring  Securityholder  indicating
such  Securityholder's  desire to exercise its rights under this Section 4.5 and
specifying  the number of Shares,  Warrants  or Options he, she or it desires to
sell.  No  present  or  future  Tag-Along  Rights of a  Securityholder  shall be
adversely affected by its failure to exercise such rights in the past.

     Notwithstanding  anything to the  contrary  contained  herein,  a holder of
Options shall only be entitled to exercise Tag-Along Rights with respect to such
Options if the Tag-Along  Notice  relates to the sale or other  disposition of a
majority of the outstanding shares of voting capital stock of the Company (based
on the Fully Diluted Capitalization  excluding Option Shares and Warrant Shares)
to a Person that is not a parent or Subsidiary  of the Company.  Notwithstanding
anything to the contrary  contained  herein,  the provisions of this Section 4.5
shall apply to any Transfer


                                       29

<PAGE>

following an Initial Public  Offering if, at the time of any such Transfer,  the
provisions of Rule 144  promulgated  under the  Securities Act are not generally
applicable  to sales  of the  Company's  securities  due to the  failure  of the
condition  set forth in Rule 144(c) to be  satisfied.  The Company shall use all
reasonable efforts to inform the  Securityholders if such condition has not been
satisfied at any time following an Initial Public  Offering;  provided  however,
the Company  shall have no  liability to any  Securityholder  arising out of the
failure  of any  Transferring  Securityholder  to  comply  with  the  provisions
contained in this Section 4.5.

     The  Transferring  Securityholder's  sale of Shares or Warrants in any sale
proposed in a Tag-Along Notice shall be effected on substantially  the terms and
conditions  set  forth  in  such  Tag-Along   Notice  (except  in  the  case  of
non-monetary  consideration which is unique to the third party as to which there
shall be paid the  reasonable  equivalent  thereof).  The  number  of  Shares or
Warrants to be sold by the Transferring  Securityholder  shall be reduced by the
aggregate  number  of  Shares,  Warrants  or  Options  to be sold by each of the
Remaining Securityholders who have exercised Tag-Along Rights in connection with
such Transfer.

     In no event  shall any  Securityholder  transferring  Shares,  Warrants  or
Options  pursuant  to  this  Section  4.5  receive  any  special   consideration
(including, without limitation, financial advisory, finders, consulting or other
similar  fees) in  connection  with  any sale of  Shares,  Warrants  or  Options
pursuant to this  Section  4.5,  unless such  consideration  is shared among the
Transferring  Securityholder  and the other Remaining  Securityholders  pro rata
based on their respective Shares, Warrants or Options sold (on a fully exercised
and converted  basis);  provided,  however,  this sentence  shall not apply with
respect to an arms-length  negotiated engagement of The Shattan Group LLC or any
of its Affiliates (any such Persons are hereinafter referred to as "Shattan") to
act as the  Company's  financial  advisor  with  respect to such sale of Shares,
Warrants or Options.  Furthermore, no Remaining Securityholder shall be required
to provide any  representations  or warranties  in  connection  with the sale of
Shares, Warrants or Options pursuant to this Section 4.5, except representations
as to the authority to transfer, and title to, such Shares,  Warrants or Options
and the absence of any  Encumbrances  on the title of such  Shares,  Warrants or
Options.

     4.6 Transfers to a  Competitor.  Each  Securityholder  agrees that it shall
not, except in connection with a Sale of the Company, without the approval of at
least two of the Series A, B and E Preferred Directors (in the case of Transfers
described  in clauses  (i),  (iv) and (v) of this Section 4.6) and a majority of
the Series C and D Preferred Directors, directly or indirectly,  Transfer any of
its Shares,  Warrants or Options to (any of the Persons described in clauses (i)
through (v) hereof is referred to herein as a "Prohibited Transferee"):  (i) any
entity that is engaged in owning,  operating  and/or managing  executive  office
suites and providing related business support services,  including  secretarial,
telecommunications,  word processing, printing and copying; (ii) any real estate
investment trust (other than Reckson Associates Realty Corp.);  (iii) any direct
competitor of RSI; (iv) any entity that  Beneficially  Owns 5 percent or more of
the outstanding equity securities or voting control of a Prohibited  Transferee,
excluding transfers to an institutional holder that holds such equity securities
or voting  control as a passive  investment  without  the right to Control  such
Prohibited  Transferee;  and (v)  any  Affiliate,  officer  or  director  of any
Prohibited  Transferee.  For  purposes  of this  Section  4.6, a Transfer  shall
include any indirect  Transfer  arising out of an  acquisition of Control of RSI
(provided that for this purpose no presumption of Control shall arise


                                       30

<PAGE>

solely from ownership of any specific percentage of equity securities of RSI) by
any of (w)  CarrAmerica,  (x) HQ  Omni,  or (y)  Regus,  so  long as any of such
Persons  named in clauses  (w),  (x) or (y) is engaged in the  executive  office
suite  business,  or (z) any other  Person  which owns or operates 50  executive
office suite centers as its primary  business (any of the foregoing  Persons,  a
"Disqualified Transferee"),  unless prior to or substantially  contemporaneously
with such acquisition Beneficial Ownership of the Series C and D Preferred Stock
shall have been  transferred to a Person that is (x) Controlled by the executive
officers of RSI immediately  prior to such  acquisition and (y) not an Affiliate
of RSI or the Disqualified Transferee following such acquisition.

     4.7 Sales of Beale Securities.

     (1) If the  employment  of David  W.  Beale  ("Beale")  by the  Company  is
terminated  by  reason  of the  occurrence  of any of the  events  set  forth in
Paragraph 7(d) of the Beale Employment Agreement, then at any time and from time
to time  thereafter,  Beale shall have the option (the "Beale Put"),  subject to
Section  4.7(c),  to require the  Company to purchase  all or any portion of his
Common Stock and Common Stock  Equivalents,  including the vested portion of any
Options  granted to Beale under an Option Plan,  and the  non-vested  portion of
such  Options  which  otherwise  would vest  pursuant  to the terms of such Plan
within two years of such termination  (which unvested portion shall  immediately
vest and become  exercisable) (all of the foregoing being collectively  referred
to as the "Beale  Securities"),  at the Beale Put Price (as hereinafter defined)
by delivery  of written  notice to the Company  (the "Beale Put  Notice").  Upon
receipt of such election(s),  the Company will be obligated,  subject to Section
4.7(c),  to purchase the Beale Securities  specified  (collectively the "Offered
Shares") in such Beale Put Notice  within  ninety (90) days after the receipt by
the Company of the Beale Put Notice (or such longer  period as may be reasonably
necessary to determine the Beale Put Price pursuant to the provisions of Section
4.7(b))  (such date of closing being  hereinafter  referred to as the "Beale Put
Closing Date").

     Upon  election  exercised  by Beale to require the Company to purchase  the
Offered Shares pursuant to the provisions of this Section 4.7, the Company will,
subject to  Section  4.7(c),  notify  Beale of the Beale Put  Closing  Date with
respect to such Offered  Shares and Beale shall  surrender  the  certificate  or
certificates  duly endorsed in blank or together with an  acknowledgment of such
redemption  representing  such  Offered  Shares to the Company on or before such
date. On the Beale Put Closing Date, the Beale Put Price for such Offered Shares
shall be paid to Beale by  certified  or bank  cashier's  check or,  at  Beale's
option, by wire transfer in immediately available funds to an account designated
by Beale, and each  surrendered  certificate  shall be canceled and retired.  If
less than all of the Shares  represented by such  certificates are purchased,  a
new  certificate or  certificates  shall be issued  representing  the Shares not
purchased by the Company.  If the Company does not have available  legal surplus
to purchase all of the Offered  Shares,  the Company shall  purchase the maximum
number of Offered Shares that it may purchase with such legal surplus available,
and the Company shall  purchase the remainder of such Offered  Shares as soon as
it has funds legally available to do so. If payment of the Beale Put Price shall
cause the  Company  to be in  default  under the  provisions  of any of its loan
agreements  (a "Default  Event"),  the Company may defer  payment of all or such
part of the Beale Put  Price to Beale in an amount (a "Beale  Deferred  Amount")
and for such time as is  necessary  to avoid a  Default  Event.  Interest  shall
accrue on so much of the Beale Deferred  Amount as is  outstanding  from time to
time at a rate per annum equal


                                       31

<PAGE>

to 3 1/2% plus the Prime Rate and such interest  shall be payable by the Company
to Beale at the time of payment of the Beale Deferred Amount in full.

     (2) Determination of Beale Put Price. For purposes of this Section 4.7, the
"Beale Put Price" shall be an amount per Offered Share equal to the "fair market
value"  thereof (as  determined in  accordance  with this Section  4.7(b)).  For
purposes of this Section 4.7(b), fair market value shall be determined by mutual
agreement  of the  Company  and Beale or, if the Company and Beale are unable to
agree on a fair market  value,  then the fair market  value shall be  determined
pursuant to the procedure set forth in the immediately following paragraph.

     If Beale and the  Company  are unable to  mutually  agree on a fair  market
value within 60 days after the occurrence of the  termination  event,  Beale and
the Company shall each appoint one appraiser  (each,  an "Appointed  Appraiser")
within  five (5)  business  days  thereafter  (the  "Appointment  Date"),  which
Appointed  Appraisers  shall  independently,  within 25 days of Appointment Date
(the  "Determination  Date"),  determine a fair market value  (collectively  the
"Original Estimates"). If the Original Estimates do not differ in amount by more
than 10% of the lower market  value,  then the fair market value shall be deemed
to be the average of such fair market values.  If the Original  Estimates differ
in amount by more than 10% of the lower market value,  the Appointed  Appraisers
shall within five (5) business  days of the  Determination  Date appoint a third
appraiser,  which third  appraiser  shall  independently,  within 25 days of the
Determination  Date,  determine a fair market value (the "Third Estimate").  The
Original  Estimate  that is  nearest  in amount to the Third  Estimate  shall be
deemed to be the fair market value, or if the Third Estimate is exactly the mean
of the two Original  Estimates the Third Estimate shall be deemed to be the fair
market value,  that shall be binding upon the Company and Beale. If either Beale
or the Company fails to appoint an Appointed  Appraiser by the Appointment Date,
then the Appointed  Appraiser who has been appointed shall be the sole appraiser
and the fair market value  determined by such Appointed  Appraiser  shall be the
fair market value and shall be binding on the parties.  All Appointed Appraisers
shall be qualified in valuing  companies similar to the Company and shall not be
an Affiliate of either party.  Any  determination of the fair market value under
this Section  4.7(b) shall be made without any reduction as a result of the lack
of  liquidity  of the  Offered  Shares or the fact that the  Offered  Shares may
represent  a minority  interest  in the  Company.  The  Company  and Beale shall
equally bear and be  responsible  for all costs and  expenses of the  appraisers
under this Section 4.7(b).

     (3)  Consent of Required  Banks.  Upon  receipt of a Beale Put Notice,  the
Company shall request the Required  Banks (as such term is defined in the Credit
Agreement)  to consent to the  exercise  of the Beale Put.  Unless the  Required
Banks have  consented  in writing to the  exercise of the Beale Put, the Company
shall not be required to purchase the Offered Shares pursuant to Section 4.7(a),
the Beale Put Notice shall be deemed rescinded and withdrawn and of no force and
effect and no beneficiary of the Beale Put shall have any rights  thereunder and
shall have no rights or remedies to enforce the Beale Put until such time as all
Obligations (as defined in the Credit Agreement) shall have been paid in full in
cash.

     (4) Restriction on Sale of Beale Securities. Prior to the earliest to occur
of (i) an Initial Public Offering, or (ii) any termination of Beale's employment
with the Company, or (iii) any


                                       32

<PAGE>

other time approved by Super-Majority  Approval,  Beale shall be prohibited from
making any  Transfer  of any of the Beale  Securities,  other than  pursuant  to
Section  4.2(b),  Section 4.5, or Section 4.8, to a Permitted  Transferee,  or a
pledge  of up to 50% of the  Shares  owned  by  Beale to  secure  any bona  fide
indebtedness,  but in each case  subject to Section  4.6 and  provided  that the
lender  acknowledges in writing that any sale or Transfer of such pledged Shares
shall be subject to the provisions of this Agreement. Any such lender also shall
agree in writing that upon the existence and  continuance of an event of default
of any such  indebtedness,  the Series C and D Holders  shall  upon 10  Business
Days' prior notice have the right to purchase such  indebtedness at an aggregate
price  equal  to the  lower  of (x) the  "fair  market  value"  or (y) the  then
principal amount of such  indebtedness and the accrued interest thereon (without
regard to costs,  charges or additional interest or fees accruing as a result of
such default) provided that, in connection with such purchase,  the Series C and
D Holders acknowledge in writing that they shall not have the right to foreclose
or otherwise  acquire the pledged shares without first having  complied with the
transfer provisions contained in Article IV hereof.

     4.8 Sale of the Company. If (i) the Board (by Super-Majority  Approval) and
the holders of a Majority of the Shares of Series A, B and E Preferred Stock and
a Majority of the Series C and D Preferred  Stock  approve a Sale of the Company
of the type described in clauses (i) or (iii) of the definition thereof, or (ii)
if the  holders of a Majority  of the Shares of the Series A, B and E  Preferred
Stock and a Majority of the Series C and D Preferred  Stock approve of a Sale of
the Company of the type described in clause (ii) of the definition  thereof,  in
each case to a third party which is not an  Affiliate  of any such Person or the
Company,  the Company shall deliver a notice to each  Securityholder  containing
the material  terms thereof (a "Sale  Notice").  Each  Securityholder  agrees to
vote,  if such a vote is required  under  applicable  law,  all of its Shares in
favor of such a Sale of the Company, and to sell all of its Shares, Warrants and
Options on the terms contained in the Sale Notice.  Each  Securityholder and the
Company agrees to cooperate in any such Sale of the Company (including,  without
limitation,  by not exercising any appraisal  rights that may be available under
applicable  law) and agrees to execute and deliver all documents and instruments
as is  required  in the Sale  Notice and which the  holders of a Majority of the
Shares of Series A, B and E Preferred  Stock or a Majority of the Series C and D
Preferred Stock request to effect such Sale of the Company;  provided,  however,
that the Sale  Notice (i) shall not require  any  Securityholder  to provide any
representations  or  warranties  in  connection  with  the  Sale of the  Company
pursuant to this  Section 4.8,  except  representations  as to the  authority to
transfer  such Shares,  Warrants or Options and the absence of any  Encumbrances
(other than under this  Agreement)  on the title of such  Shares,  Warrants  and
Options,  and (ii)  shall  require  that each  Securityholder  receive  the same
percentage of each type of  consideration  delivered in connection with the Sale
of the Company.

     Upon such Sale of the Company,  each  Securityholder  shall receive its Pro
Rata Share of the consideration  paid by the purchaser or received from the sale
of  securities.   In  no  event  shall  any   Securityholder   receive   special
consideration  (including,  without  limitation,  financial  advisory,  finders,
consulting  or other  similar  fees) in  connection  with a Sale of the  Company
contemplated by this Section 4.8, unless such  consideration is shared among all
Securityholders based on their Pro Rata Shares; provided, however, this sentence
shall not apply with respect to an arms-length  negotiated engagement of Shattan
to act as the  Company's  financial  advisor  with  respect  to the  Sale of the
Company.


                                       33

<PAGE>

     4.9 Repurchase of Equity  Interests.  The Company covenants and agrees that
it will not, without giving prior written notice to any  Securityholder of which
the Company has written  notice is a Regulated  Holder,  directly or indirectly,
purchase,  redeem,  retire or otherwise  acquire any Shares or Warrants if, as a
result of such  purchase,  redemption,  retirement  or other  acquisition,  such
Regulated Holder,  together with its Affiliates,  will own, or be deemed to own,
Common  Stock  Equivalents  representing  capital  equal  to 25% or  more of the
aggregate equity interests then outstanding of the Company.

     4.10 Restrictions  Following Qualified Public Offering. In the event of the
consummation  of a Qualified  Public  Offering  that has not been  approved by a
majority of the Company Directors and the Series A, B and E Preferred  Directors
(taken in the aggregate)  then serving,  and by a majority of the Series C and D
Preferred Directors then serving,  then, during the Blackout Period, (x) none of
the Cahill  Holders or Beale  shall  Transfer  any  Shares,  Options or Warrants
Beneficially Owned by any of them, (y) the RSI Beneficial Holders shall not, and
shall cause the Series C and D Holders  not to, make any  Transfer of any of the
RSI Beneficial  Holders'  Beneficial  Ownership of Shares,  Options or Warrants,
except to a Permitted  Transferee  who agrees in writing to be bound by terms of
this Agreement,  including the restrictions  contained in this Section 4.10, and
(z) the JAH  Beneficial  Holders  shall not,  and shall cause the Series C and D
Holders  not  to,  make  any  Transfer  of any of the  JAH  Beneficial  Holders'
Beneficial  Ownership of Shares,  Options or Warrants  other than to a Permitted
Transferee  who agrees in writing to be bound by this  Agreement,  including the
restrictions  contained in this Section 4.10;  provided,  however,  that (i) the
foregoing restrictions shall not apply to any Shares acquired by any such Person
in the open market  following an Initial  Public  Offering and not directly from
the Company,  (ii) the  foregoing  restrictions  shall not apply to any Transfer
which is a pledge by any of (A) the RSI Beneficial Holders,  (B) David W. Beale,
or (c) the JAH Beneficial  Holders of their respective  Beneficial  Ownership of
Shares,  Options or Warrants,  provided that such pledgor retains voting control
of such pledged  Shares,  Options or Warrants,  (iii) at any time  following the
first  anniversary of the  consummation of the Qualified  Public  Offering,  the
Cahill Holders shall be entitled to distribute any Shares,  Options, or Warrants
held by any of them to any  limited  partners  or  non-managing  members of such
Cahill Holders  (provided such limited partners or non-managing  members are not
Affiliates of the general  partner or managing  member of such Cahill  Holders),
and such limited partners or non-managing  members,  other than David L. Warnock
and Edward Cahill, shall not be subject to any further restrictions  pursuant to
this Section 4.10, and (iv) Beale shall be entitled to sell any Shares, Options,
or Warrants held by him in an amount  sufficient to provide  proceeds to pay any
tax  liabilities  arising in  connection  with the  exercise of any Options that
would  expire if not  exercised  during  the  Blackout  Period  (provided,  such
exercise is made not more than five Business Days prior to the  expiration  date
thereof  and that  all of the  proceeds  therefrom  will be used to pay such tax
liability  and  provided,  further,  that  such a sale  by  Beale  shall  not be
permitted if "cashless  exercise" of such Options is available to him to achieve
the same after tax result).


                                       34

<PAGE>

                                   ARTICLE 5
                                       PUT

     5.1 Ability to Put.  (a) If (A) the Company has not,  prior to November 15,
2001,  either made an Initial Public  Offering,  or merged into a public company
resulting  in the  holders of the then  outstanding  Series A, B and E Preferred
Stock and Conversion  Stock  receiving  Registered  Securities in such merger in
exchange for their Shares,  or (B) the Series C and D Holders  Beneficially  Own
Shares,  Options and Warrants  representing  (on a fully exercised and converted
basis), in the aggregate, 65% or more of the Fully Diluted Capitalization,  then
at any time and from time to time  thereafter  until the earlier of November 15,
2003 or two years after the  occurrence of the event  described in clause (B) of
this  paragraph,  the  holders of a Majority  of the Shares of Series A, B and E
Preferred Stock shall have the option (the "Put") to require, subject to Section
5.4, the Company to purchase all of the outstanding Series A , B and E Preferred
Stock respectively held by the Series A, B and E Holders who have voted in favor
of the  exercise  of the Put,  at the Put  Price  (as  hereinafter  defined)  by
delivery of written  notice to the Company (the "Put  Notice").  Upon receipt of
the Put Notice,  the Company  shall  notify each other Series A, B and E Holder,
who shall  have the right to join in the Put by  written  notice to the  Company
(the  "Supplemental Put Notice").  The Company shall also provide notice thereof
to the  holders of the Series C and D  Preferred  Stock.  The  Company  shall be
obligated to  purchase,  subject to Section 5.4, the Series A, B and E Preferred
Stock specified in the Put Notice and the Supplemental Put Notice within 90 days
after the receipt by the Company of the Put Notice (or such longer period as may
be reasonably necessary to determine the Put Price pursuant to the provisions of
Sections 5.2 and 5.3).  The closing of the purchase by the Company of the Series
A, B and E Preferred Stock shall occur at the Company's  principal office, or at
such other place as shall be mutually agreeable to the Series A, B and E Holders
and the Company as soon as possible  (and in any event  within 10 days after the
determination  of the Put Price in  accordance  with Sections 5.2 and 5.3) (such
date of closing being hereinafter referred to as the "Put Closing Date").

     (b) If the  holders  of a  Majority  of the  Shares  of  Series  A, B and E
Preferred  Stock are  entitled to  exercise  the Put  pursuant to the  preceding
paragraph  and shall  not have  done so,  then at any time and from time to time
thereafter  until the  earlier  of  November  15,  2003 or two  years  after the
occurrence of the event described in clause (B) of the preceding paragraph,  the
PNA Holder shall have the option, subject to all of the terms and conditions set
forth in this Article 5 (other than those pertaining to the repurchase of all of
the outstanding shares of the Series A, B and E Preferred Stock), to require the
Company to purchase all of the outstanding Series B Preferred Stock and Series E
Preferred  Stock  then held by the PNA  Holder at the Put Price by  delivery  of
written  notice to the Company  (the "PNA  Holder Put  Notice").  Following  the
receipt of the PNA Holder Put Notice,  the Company  shall  promptly  (and in any
event  within 10 days after its  receipt of the PNA Put Holder  Notice)  provide
notice thereof to the Cahill Holders,  the Northwood  Holders and the holders of
the Series C and D Preferred Stock. Each of the Cahill Holders and the Northwood
Holders  shall have the right,  subject to all of the terms and  conditions  set
forth in this Article Five (other than those pertaining to the repurchase of all
of the outstanding shares of the Series A, B and


                                       35

<PAGE>

E Preferred  Stock),  to require the Company to purchase all of the  outstanding
shares of Series A, B and E Preferred  Stock then held by it at the Put Price by
delivery  of written  notice to the Company  within 20 days after such  holder's
receipt of the PNA Holder Put  Notice.  If the Cahill  Holders or the  Northwood
Holders exercise the Put pursuant to this paragraph,  each other Series B Holder
and Series E Holder  shall be entitled  to join in the Put by written  notice to
the Company.  Any  repurchase  of Series A Preferred  Stock,  Series B Preferred
Stock or Series E Preferred  Stock pursuant to this  paragraph  shall be made on
one closing date.

     (c) If the Company  has not,  prior to November  15,  2001,  either made an
Initial  Public  Offering,  or merged  into a public  company  resulting  in the
holders of the then  outstanding  Series C and D Preferred  Stock and Conversion
Stock  receiving  Registered  Securities  in such merger in  exchange  for their
Shares,  then at any time and from time to time  thereafter  until  November 15,
2003, the holders of a Majority of the Shares of Series C and D Preferred  Stock
shall have the option (the "Series C and D Put") to require,  subject to Section
5.4,  the Company to purchase  all of the  outstanding  Series C and D Preferred
Stock held by the Series C and D Holders who have voted in favor of the exercise
of the  Series C and D Put,  at the  Series C and D Put  Price  (as  hereinafter
defined) by delivery of written  notice to the Company  (the "Series C and D Put
Notice").  Upon  receipt of the Series C and D Put  Notice,  the  Company  shall
notify each other Series C and D Holder, who shall have the right to join in the
Series C and D Put by written notice to the Company (the "Supplemental  Series C
and D Put Notice"). The Company shall also provide notice thereof to the holders
of the Series A, B and E Preferred  Stock.  The Company  shall be  obligated  to
purchase,  subject to Section 5.4, the Series C and D Preferred  Stock specified
in the Series C and D Put Notice and the Series C and D Supplemental  Put Notice
within 90 days after the receipt by the Company of the Series C and D Put Notice
(or such longer period as may be reasonably  necessary to determine the Series C
and D Put Price pursuant to the provisions of Sections 5.2 and 5.3). The closing
of the purchase by the Company of the Series C and D Preferred Stock shall occur
at the Company's  principal  office, or at such other place as shall be mutually
agreeable to the Series C and D Holders and the Company as soon as possible (and
in any event  within 10 days after the  determination  of the Series C and D Put
Price in  accordance  with  Sections  5.2 and 5.3) (such  date of closing  being
hereinafter   referred  to  as  the   "Series  C  and  D  Put  Closing   Date").
Notwithstanding  anything to the contrary  contained  herein, in the event of an
acquisition of Control of RSI of the type  described in Section 4.6 hereof,  the
Series  C and D Put may only be  exercised  in the  event  that the Put has been
exercised.

     (d) The  Company  shall not be required to  purchase  any  Preferred  Stock
pursuant  to this  Section  5.1 to the  extent  that the  Company  does not have
available legal surplus pursuant to the General  Corporation Law of the State of
Nevada  from which it can  purchase  such stock at the Put Price or the Series C
and D Put Price,  as the case may be,  provided  that the Company  shall use all
legally  permissible  methods in the reduction of capital and in the revaluation
of its assets,  including  appraisal,  in obtaining such legal surplus,  and the
Company  gives  written  notice to the electing  Securityholders  within 30 days
after the date of the notice of exercise of the Put or the Series C and D Put by
such Securityholders that it is not required to purchase the number of Shares of
Preferred  Stock set forth in such  notice by reason of this  clause and setting
forth the facts relating thereto.

     (e) It is  acknowledged  and agreed that any Put Notice,  Supplemental  Put
Notice,  PNA Holder Put  Notice,  Series C and D Put  Notice,  and  Supplemental
Series C and D Put Notice received


                                       36

<PAGE>

by the Company  within any 30 day period shall be treated in all respects  under
the terms and  provisions of this Agreement as though such notices were received
on the same  date at the same  time.  Accordingly,  the Put  Closing  Date,  the
closing  date  related  to a PNA  Holder  Put  Notice and the Series C and D Put
Closing  Date related to such notices  shall occur  simultaneous  on one closing
date and the payments to all such Securityholders  shall be made pro rata on the
basis of the Common Stock Equivalents subject to such put rights.

     (f) Upon  election to require the Company to purchase the  Preferred  Stock
pursuant  to the  provisions  of this  Article 5, the Company  will,  subject to
Section  5.4,  notify  each Series A, B and E Holder or Series C and D Holder of
the Put Closing Date or the Series C and D Put Closing Date, as the case may be,
and each such Series A, B and E Holder or Series C and D Holder, as the case may
be, shall surrender the certificate or certificates  representing such Shares to
the Company on or before such date.  On the Put Closing Date or the Series C and
D Put Closing  Date, as the case may be, the Put Price or the Series C and D Put
Price,  as the case may be, for such Shares shall be payable to each such Series
A, B and E Holder or Series C and D Holder,  as the case may be, by certified or
bank  cashier's  check or, at the  option  of the  Series A, B and E Holder  and
Series C and D Holder,  as the case may be, receiving the same, by wire transfer
in immediately available funds to an account designated by each such holder, and
each surrendered  certificate shall be canceled and retired. If less than all of
the Shares  represented by such certificate are purchased,  a new certificate or
certificates  shall be issued  representing  the  Shares  not  purchased  by the
Company. If the Company does not have available legal surplus to purchase all of
the Series A, B and E  Preferred  Stock or Series C and D  Preferred  Stock that
each such  Series A, B and E Holder or Series C and D Holder has  requested  the
Company to purchase under this Article 5, the Company shall purchase the maximum
number  of  Shares of  Series  A, B and E  Preferred  Stock  and  Series C and D
Preferred Stock that it may purchase with such legal surplus available, pro rata
to the Put Price or the Series C and D Put Price,  as the case may be,  thereof,
and the  Company  shall  repurchase  the  remainder  of such  Series  A, B and E
Preferred Stock and Series C and D Preferred  Stock, as the case may be, as soon
as it has funds legally available to do so.

     (g) The Company shall be permitted to pay the Put Price or the Series C and
D Put Price,  as the case may be, by delivery of a subordinated  note payable in
three annual  installments of principal  commencing on the first  anniversary of
the Put Closing Date or the Series C and D Put Closing Date, as the case may be,
with  interest at an annual  rate equal to 3 1/2% plus the Prime Rate,  it being
acknowledged  and agreed that with  respect to the decision to pay the Put Price
in cash or in such annual  installments,  the Series A, B and E Directors  shall
not be entitled to vote if such  decision is with respect to the  redemption  or
repurchase  of the  Series A, B and E  Preferred  Stock  and the  Series C and D
Directors  shall not be entitled to vote if such decision is with respect to the
redemption or repurchase of the Series C and D Preferred Stock.

     (h) If  payment  of the Put Price to the  Series A, B and E Holders  or the
Series C and D Put Price to the Series C and D Holders  shall  cause the Company
to be in default under the provisions of any of its loan  agreements (a "Default
Event"),  the Company may defer  payment of all or such part of the Put Price or
the  Series C and D Put  Price,  as the case may be,  to each  Series A, B and E
Holder or Series C and D Holder,  as the case may be,  pro rata to the Put Price
or the Series C and D Put Price,  as the case may be,  thereof,  in an amount (a
"Deferred Amount") and for


                                       37
<PAGE>

such time as is necessary to avoid a Default Event.  Interest shall accrue on so
much of the Deferred  Amount as is  outstanding  from time to time at a rate per
annum (based on the actual  number of days elapsed in a 365 day year) equal to 3
1/2%  percent  plus the Prime  Rate and such  interest  shall be  payable by the
Company to the Series A, B and E Holders or Series C and D Holders,  as the case
may be, at the time of payment of the Deferred Amount in full. In addition,  the
Company  shall use its best  efforts  to pay the Put Price or the Series C and D
Put  Price in full on the Put  Closing  Date or the  Series C and D Put  Closing
Date,  as the case may be, and, in this  regard,  the Company  shall (i) seek to
negotiate  with its lenders to permit the  Company,  under the terms of its loan
agreements,  to perform its obligations under this Article 5 and/or (ii) seek to
obtain new financing.

     5.2 Put Price.  (a) For  purposes of this Article 5, the Put Price shall be
the greater of (i) the Appraised  Value of the Conversion  Stock  underlying the
Series A Preferred Stock, Series B Preferred Stock and Series E Preferred Stock,
as the case may be, or (ii) the Adjusted Value of the Series A Preferred  Stock,
Series B Preferred  Stock or Series E Preferred  Stock,  as the case may be. The
"Appraised  Value"  shall mean the fair  market  value of the  Conversion  Stock
issuable  upon  conversion of the Series A Preferred  Stock,  Series B Preferred
Stock or Series E Preferred  Stock, as the case may be,  determined  pursuant to
the appraisal  procedure set forth in the immediately  succeeding  section.  The
"Adjusted  Value"  shall be an amount per share equal to the  Adjusted  Purchase
Price of the Series A Preferred Stock  (determined in accordance with the Series
A Certificate of Designation), or of the Series B Preferred Stock (determined in
accordance  with the Series B  Certificate  of  Designation)  or of the Series E
Preferred  Stock  (determined  in accordance  with the Series E  Certificate  of
Designation),  as the case may be, plus a cumulative  accretion  computed on the
Adjusted Purchase Price at the rate of 8% per annum  (compounded  annually) from
the date of issue up to the date of the Put Notice,  reduced by an amount  equal
to the aggregate of all declared and paid cash dividends, if any.

     (b) For  purposes of this  Article 5, the Series C and D Put Price shall be
the greater of (i) the Series C and D Appraised  Value of the  Conversion  Stock
underlying the Series C Preferred Stock or Series D Preferred Stock, or (ii) the
Series C and D Adjusted  Value.  The "Series C and D Preferred  Stock  Appraised
Value" shall mean the fair market value of the  Conversion  Stock  issuable upon
conversion  of the  Series  C  Preferred  Stock  or  Series  D  Preferred  Stock
determined  pursuant to the  appraisal  procedure  set forth in the  immediately
succeeding section (the "Series C and D Preferred Stock Appraised  Value").  The
"Series  C and D  Adjusted  Value"  shall be an amount  per  share  equal to the
Adjusted  Purchase  Price  of  the  Series  C  Preferred  Stock  (determined  in
accordance  with the Series C Certificate of  Designation) or Series D Preferred
Stock  (determined in accordance with the Series D Certificate of  Designation),
plus a cumulative  accretion computed on the Adjusted Purchase Price at the rate
of 8% per annum  (compounded  annually) from the date of issue up to the date of
the Series C and D Put Notice,  reduced by an amount  equal to the  aggregate of
all declared and paid cash dividends, if any.

     5.3 Appraisal  Procedure.  In order to determine the Appraised Value or the
Series C and D  Appraised  Value,  the  holders of a  Majority  of the Shares of
Series  A, B and E  Preferred  Stock  (in  the  case  of  determinations  of the
Appraised  Value) or the  holders of a Majority  of the Shares of Series C and D
Preferred Stock (in the case of  determinations  of the Series C and D Appraised
Value),  on the one hand,  and the Board  (excluding  the  Series A and Series B
Preferred Directors,


                                       38
<PAGE>
in the case of the determination of the Appraised Value of the Series A, B and E
Preferred  Stock, and excluding the Series C and D Preferred  Directors,  in the
case of the determination of the Appraisal Value of the Series C and D Preferred
Stock), on the other hand, shall each appoint one appraiser  (collectively,  the
"Initial  Appraisers"),  within 20 days after  delivery of the Put Notice or the
Series C and D Put Notice,  as the case may be, which  appraisers shall promptly
determine a fair market value based on the going concern value of the Company as
a whole and without  adjustment  for  minority  interest  or lack of  liquidity,
within 30 days.  In the event  that the fair  market  values  determined  by the
Initial  Appraisers  (collectively,  the "Original  Estimates") do not differ in
amount by more than 10  percent,  the fair  market  value for  purposes  of this
Section 5.3 shall be the amount equal to the average of the Original  Estimates.
In the  event  that the  Original  Estimates  differ  in  amount by more than 10
percent,  the holders of a Majority of the Shares of Series A, B and E Preferred
Stock (in the case of determinations of the Appraised Value) or the holders of a
Majority  of the  Shares  of  Series  C and D  Preferred  Stock  (in the case of
determinations  of the Series C and D  Appraised  Value) and the  Company  shall
mutually agree on a third appraiser within 5 days  thereafter,  provided that if
such holders and the Company fail to appoint a third appraiser within such 5-day
period,  then the Initial  Appraisers  shall appoint a third appraiser  within 5
days thereafter. The third appraiser shall independently, within 30 days of such
third  appraiser's  appointment,  determine such a fair market value (the "Third
Estimate").  The  Original  Estimate  that is  nearest  in  amount  to the Third
Estimate  shall be deemed to be the fair  market  value that shall be binding on
the Company and the holders of the Shares  subject to the Put. The Company shall
bear all costs of appraisers  under this Section 5.3. All  appraisers  appointed
pursuant to this Section 5.3 shall be qualified in valuing  companies similar to
the Company and shall be unaffiliated  with any party hereto.  Any determination
of the Appraised  Value or the Series C and D Appraised Value under this Section
5.3 shall be made without reduction  resulting from the lack of liquidity of the
Shares  subject  to Put or the  Series C and D Put or the fact that such  Shares
may, at such time, represent a minority interest in the Company.

     5.4 Consent Required to Put. Upon receipt of a Put Notice or a Series C and
D Put Notice,  the Company  shall  request the Required  Banks to consent to the
exercise  of the Put or the Series C and D Put,  as the case may be. The Company
shall not be required to purchase  Series A, B and E Preferred Stock or Series C
and D Preferred  Stock, as the case may be, pursuant to Section 5.1, and the Put
Notice or the  Series C and D Put  Notice,  as the case may be,  shall be deemed
rescinded and withdrawn and of no force and effect and no beneficiary of any Put
or Series C and D Put, as the case may be, shall have any rights thereunder, and
no  beneficiary of any Put or Series C and D Put, as the case may be, shall have
any rights or remedies to enforce any Put or Series C and D Put, as the case may
be,  until  such time as all  Obligations  shall have been paid in full in cash,
unless the Required  Banks have  consented in writing to the exercise of the Put
or Series C and D Put, as the case may be.


                                       39
<PAGE>

                                   ARTICLE 6
                               REGISTRATION RIGHTS

     6.1 Public Offering Shares.

     (1) Demand Registration  Rights. (i) Subject to Section 6.1(a)(ii),  at any
time and from time to time  following  the one year  anniversary  of an  Initial
Public Offering,  if the Company receives written notice from either (A) holders
of Class A Common Stock (as defined in Section 8.1(e)) who, immediately prior to
the Initial Public Offering, constituted the holders of a majority of the Shares
of the Series A, B and E Preferred Stock, or (B) holders of Class B Common Stock
(as defined in Section  8.1(e))  who  immediately  prior to the  Initial  Public
Offering,  constituted  the  holders of a Majority of the Shares of the Series C
and D Preferred  Stock,  which  notice  demands the  registration  of all or any
portion of the Common  Stock,  Conversion  Stock or Warrant  Shares held by such
Series A, B and E Holders or Series C and D Holders and  specifies  the intended
methods of  disposition  thereof  (which may  include a delayed  and  continuous
offering  pursuant to Rule 415 promulgated  under the Securities  Act), then the
Company  shall  promptly  (and in any event  within 10 days after its receipt of
such demand) provide notice thereof to the other  Securityholders  in accordance
with this Section 6.1 (which other Securityholders shall have the right, subject
to  Section  6.1(c)(ii)  to include  in such  registration  any shares of Common
Stock,  and any shares of Common Stock  issuable  upon  conversion  of Preferred
Stock or upon  exercise  of  Warrants  or Options  held by them) and cause to be
prepared  a  registration   statement,   file  and  obtain  a  receipt  for  the
registration  statement as soon as practicable (but not later than 90 days after
the  date of  such  demand),  and  exercise  its  best  efforts  to file a final
registration  statement,  to obtain a receipt  therefor  as soon as  practicable
thereafter and to have such registration statement declared effective as soon as
practicable thereafter,  under the Securities Act and such other securities laws
as shall  be  directed  by such  Securityholders,  to the end  that  the  Shares
(including  Shares  issuable upon conversion of Preferred Stock or upon exercise
of Warrants  or  Options)  held by all  demanding  Securityholders,  may be sold
thereunder  as soon as  practicable  after the receipt of such  notice,  and the
Company will use its best efforts to ensure that a  distribution  of such Shares
pursuant to the  registration  statement  may continue for up to six months from
the date of the effective date of the registration  statement or such later time
pursuant to the method of disposition  specified in the demand for registration;
provided, however, that the Company shall not be obligated to take any action to
effect such registration,  qualification or compliance  pursuant to this Section
6.1(a) unless the Company shall have received  requests for such registration of
such Shares having a minimum anticipated  aggregate net offering price (based on
the then market price of the Common Stock and customary  underwriter's discounts
and commissions, if applicable) of $20.0 million, subject, however, to the right
of the Company  pursuant  to Section  6.1(c)(ii),  upon  advice of the  managing
underwriters, to reduce the number of Shares that are requested to be registered
by such  holders (a "Market  Cut  Back").  Notwithstanding  the  foregoing,  the
holders of Class B Common Stock shall be entitled to exercise  the  registration
rights contained herein solely with respect to the Class A Common Stock issuable
upon conversion of such Class B Common Stock.  The Class B Common Stock shall be
automatically  converted into Class A Common Stock upon the  consummation  of an
underwritten  offering  for such  Class A Common  Stock or upon the sale of such
Class A Common Stock pursuant to any delayed and continuous offering pursuant to
Rule 415  promulgated  under the Securities  Act. Each such  registration  shall
hereinafter  be called a "Demand  Registration."  The  Series A, B and E Holders
shall be  entitled  to request  one Demand  Registration  and the Series C and D
Holders  shall be  entitled  to  request  two  Demand  Registrations;  provided,
however,  that if all of the  Series C and D  Preferred  Stock may have been (x)
included in the registration  statement prepared upon the exercise of the Series
C and D Holders' first exercised right for a Demand Registration and (y) offered
and sold in such offering in accordance with the plan of distribution  described
therein (after giving full force and


                                       40
<PAGE>

effect to the  Company's  right to a Market  Cut Back and the  Company's  rights
under  Section  6.1(a)(ii)),  then the Series C and D Holders shall not have the
right to the second  Demand  Registration  (but will continue to have the rights
provided under Section 6.1(b)).  A Demand  Registration  shall not count as such
until a registration statement becomes effective;  provided, that if, after such
registration  statement  has become  effective,  the  offering  pursuant  to the
registration statement is interfered with by any stop order, injunction or other
order or requirement of the Commission or any other governmental authority, such
registration  shall be deemed not to have been effected  unless such stop order,
injunction  or other order shall  subsequently  have been  vacated or  otherwise
removed.  The  holders  of a  Majority  of the  Shares of the  Series A, B and E
Preferred Stock or the holders of a Majority of the Shares of the Series C and D
Preferred Stock  requesting such  registration  shall select the underwriters of
any underwritten offering pursuant to a registration statement filed pursuant to
this Section 6.1(a).

     (ii) (A) If, upon  receipt of a  registration  request  pursuant to Section
6.1(a)(i),  the  Company is advised  in  writing  (with a copy to the  person(s)
requesting  registration  pursuant to Section 6.1(a)) by a nationally recognized
investment  banking firm selected by the Company that, in such firm's opinion, a
registration  at the  time  and on the  terms  requested  would  materially  and
adversely affect any immediately planned underwritten public equity financing by
the Company for the primary  purpose of raising capital for the Company that had
been   contemplated  by  the  Board  prior  to  receipt  of  notice   requesting
registration  pursuant to Section  6.1(a)(i)  (a  "Transaction  Blackout"),  the
Company  shall not be  required  to effect a  registration  pursuant  to Section
6.1(a)(i) until the earliest of (1) the  abandonment of such  financing,  (2) 90
days after the completion of such  financing,  (3) the  termination of any "hold
back" or "lock-up" period obtained by the underwriter(s) selected by the Company
from any person in connection with such financing,  or (4) 180 days after notice
to the  Securityholders  requesting  registration  of  written  notice  of  such
Transaction  Blackout  (together  with a copy  of the  investment  banking  firm
opinion  referred to above in this Section  6.1(a)(ii)(A));  provided,  however,
that the Company  shall be entitled to exercise  this right on only one occasion
during any twelve-month period; or

     (B) If, while a registration request is pending pursuant to Section 6.1(a),
counsel  to the  Company  has  determined  in good  faith  that the  filing of a
registration  statement  would require the  disclosure  of material  information
which  the  Company  has  a  bona  fide  business   purpose  for  preserving  as
confidential and which has not been disclosed to the public (which determination
shall  be made  promptly),  the  Company  shall  not be  required  to  effect  a
registration  pursuant to Section  6.1(a) until the earlier of (1) the date upon
which  such  material  information  is  disclosed  to the public or ceases to be
material  and (2) 45 days  after  counsel to the  Company  makes such good faith
determination.

     (iii) For purposes of this Article VI,  whenever  there are  references  to
Series  A, B or E  Holders  or Series C and D  Holders  at a time  following  an
Initial Public Offering, such terms shall be deemed to refer to the same Persons
but in their  capacity  as  holders  of  Class A Common  Stock or Class B Common
Stock, as the case may be.

     (2) "Piggyback"  Registration Rights.  Subject to applicable stock exchange
rules and  securities  regulations,  at least 30 days prior to the filing of any
registration statement for any


                                       41

<PAGE>

public offering of any of its Common Stock for the account of the Company or any
other Person,  (other than an Initial Public Offering or registration  statement
on Form S-4 or S-8 (or any successor  forms under the  Securities  Act) or other
registrations  relating  solely to  employee  benefit  plans or any  transaction
governed by Rule 145 of the  Securities  Act),  the Company  shall give  written
notice  of  such  proposed  filing  and of the  proposed  date  thereof  to each
Securityholder  and if, on or before the twentieth (20th) day following the date
on which such notice is given,  the Company shall receive a written request from
any such Securityholder requesting that the Company include among the securities
covered by such  registration  statement any Shares  (including  Shares issuable
upon conversion of Preferred Stock or upon exercise of Warrants or Options) held
by such  Securityholder for offering for sale in a manner and on terms set forth
in such  request,  the Company  shall  include such Shares in such  registration
statement,  if filed,  so as to permit  such Shares to be sold or disposed of in
the manner and on the terms of the offering  thereof set forth in such  request.
Each such registration  shall hereinafter be called a "Piggyback  Registration."
The holders of a majority of the Shares of  Preferred  Stock  (taken as a single
class)  participating  in the  registration  shall  have the  right to select an
underwriter of any offering pursuant to a registration  statement filed pursuant
to this Section 6.1(b).

     (3) Terms and Conditions of  Registration or  Qualification.  In connection
with any  registration  statement  filed  pursuant  to Section  6.1(a) or 6.1(b)
hereof, the following provisions shall apply:

     (1)  Each  selling  Securityholder  shall,  if  requested  by the  managing
underwriter,  agree not to sell any Shares held by such  selling  Securityholder
(other  than the Shares so  registered)  for such period of time  following  the
effective date of the registration  statement relating to such offering,  but in
no event in excess of three (3) months in the case of a secondary  offering,  or
such other longer period as the managing underwriter may require and the Company
shall agree.

     (2) If the managing  underwriter  advises in writing that the  inclusion in
such  registration  or  qualification  of some or all of the Shares sought to be
registered  exceeds the number (the  "Saleable  Number")  that can be sold in an
orderly  fashion  within  a  price  range  acceptable  to the  Company,  if such
registration is being effected at the Company's  determination,  or holders of a
Majority  of the  Shares  of the  Series  A, B and E  Preferred  Stock,  if such
registration  is being  effected  at the request of the holders of a Majority of
the Shares of Series A, B and E Preferred  Stock or the holders of a Majority of
the Shares of the Series C and D Preferred Stock, if such  registration is being
effected  at the  request of the holders of a Majority of the Shares of Series C
and D Preferred Stock, then the number of Shares offered shall be limited to the
Saleable Number and shall be allocated as follows:

     (A) If such  registration is being effected at the Company's  determination
to sell  Shares  for its own  account,  (1) first,  all the  Shares the  Company
proposes to register and (2) second,  the difference between the Saleable Number
and the number to be included  pursuant to clause (1) above,  allocated first to
the Series A, B and E Holders  and Series C and D Holders  pro rata on the basis
of the relative number of Shares offered for sale by each such


                                       42

<PAGE>

Securityholder, and then among all other selling Securityholders pro rata on the
basis of the  relative  number of  Shares  offered  for sale by each such  other
Securityholder; and

     (B) in all other cases,  including if the  registration  is being  effected
pursuant  to a Demand  Registration,  (1)  first,  the  entire  Saleable  Number
allocated first to the holders of the Series A, B and E Preferred  Stock, if the
Demand  Registration was initiated by the holders of a Majority of the Shares of
the Series A, B and E Preferred  Stock,  or to the holders of the Series C and D
Preferred  Stock, if the Demand  Registration  was initiated by the holders of a
Majority of the Shares of the Series C and D Preferred Stock, and then among all
other selling  Securityholders  pro rata on the basis of the relative  number of
Shares  offered  for  sale by each  such  Securityholder  and  (2)  second,  the
difference  (if  positive)  between  the  Saleable  Number  and the number to be
included pursuant to clause (1) above, allocated to the Company.

     (3) The selling Securityholders will promptly provide the Company with such
information concerning the selling  Securityholder,  its ownership of Shares and
its intended methods of distribution as the Company shall reasonably  request in
order to prepare such  registration  statement and, upon the Company's  request,
each selling Securityholder shall provide such information in writing and signed
by such  Securityholder  and  stated to be  specifically  for  inclusion  in the
registration  statement.  If the  distribution  of  the  Shares  covered  by the
registration statement shall be effected by means of an underwriting,  the right
of any selling  Securityholder to include its Shares in such registration  shall
be  conditioned on such  Securityholder's  execution and delivery of a customary
underwriting agreement with respect thereto; provided, however, that except with
respect to  information  concerning  such  Securityholder  and its  ownership of
Shares to be included in such  registration and such  Securityholder's  intended
manner  of  distribution  of the  Shares,  no  selling  Securityholder  shall be
required  to make any  representations  or  warranties  in such  agreement  as a
condition to the inclusion of its Shares in such registration.

     (4) The Company shall bear all expenses in connection  with the preparation
of any  registration  statement filed pursuant to Section 6.1(a),  including the
fees and  disbursements of one counsel for the selling  Securityholders,  except
for the  underwriting  discounts  or  commissions  with respect to Shares of the
selling Securityholders which shall be borne by the selling Securityholders.

     (5) The Company shall bear all expenses in connection  with the preparation
of any  registration  statement filed pursuant to Section 6.1(b),  including the
fees and disbursement of one counsel to the selling Securityholders,  except for
the underwriting  discounts or commissions with respect to Shares of the selling
Securityholders, which shall be borne by the selling Securityholders.

     (6)  Following  the  effective  date of such  registration  statement,  the
Company shall, upon the request of the selling Securityholders, forthwith supply
such number of prospectuses  (including preliminary  prospectuses and amendments
and supplements  thereto) meeting the requirements of the Securities Act or such
other  securities laws where the  registration  statement or prospectus has been
filed and such other documents as are referred to in the registration  statement
as  shall  be   requested  by  the  selling   Securityholders   to  permit  such
Securityholders to make a public


                                       43

<PAGE>

distribution of their Shares,  provided that the selling Securityholders furnish
the Company with such appropriate  information relating to such Securityholders'
intentions in connection  therewith as the Company shall  reasonably  request in
writing.

     (7) The Company shall prepare and file such  amendments and  supplements to
such  registration  statement  as may be  necessary  to keep  such  registration
statement  effective and to comply with the  provisions of the Securities Act or
such other securities laws where the registration  statement has been filed with
the respect to the offer and sale or other  disposition of the Shares covered by
such  registration  statement during the period required for distribution of the
Shares, which period shall not be in excess of six (6) months from the effective
date of such  registration  statement  or such longer  period  specified  in the
demand for registration.

     (8) The  Company  shall use its best  efforts to  register  or qualify  the
Shares of the selling Securityholders covered by any such registration statement
under  such  securities  or  Blue  Sky  laws  in  such   jurisdictions   as  the
Securityholders may request;  provided,  however,  that the Company shall not be
required to execute a general  consent to service of process or to qualify to do
business  as a  foreign  corporation  in  any  jurisdiction  where  it is not so
qualified in order to comply with such request.

     (9) The Company will as expeditiously as possible:

     (A)  cause  the  Shares  covered  by  such  registration  statement  to  be
registered with or approved by such other  governmental  agencies or authorities
as may be necessary by virtue of the business and  operations  of the Company to
enable the selling Securityholders to consummate the disposition of such Shares;

     (B)  notify  each  selling  Securityholder  at any time  when a  prospectus
relating  thereto is required to be delivered  under the Securities  Act, of the
happening  of any  event as a result of which the  prospectus  included  in such
registration  statement contains an untrue statement of a material fact or omits
to state any material  fact  required to be stated  therein or necessary to make
the statements therein not misleading, and the Company will prepare a supplement
or  amendment  to such  prospectus  so  that,  as  thereafter  delivered  to the
purchasers of such Shares,  such prospectus will not contain an untrue statement
of a material  fact or omit to state any  material  fact  required  to be stated
therein or necessary to make the statements therein not misleading;

     (C) cause all Shares covered by the registration  statement to be listed on
each securities  exchange or designated for quotation on NASDAQ on which similar
securities  issued by the Company are then so listed or designated  and,  unless
the same already exists,  provide a transfer  agent,  registrar and CUSIP number
for all such  Shares  not  later  than the  effective  date of the  registration
statement;

     (D)  enter  into  such  customary  agreements  (including  an  underwriting
agreement in customary form) and take all such other actions as the holders of a


                                       44

<PAGE>

majority  of the  voting  power of the  Shares  being  sold or the  underwriters
retained by such  holders,  if any,  reasonably  request in order to expedite or
facilitate the disposition of such Shares;

     (E) make  available  for  inspection  by any  selling  Securityholder,  any
underwriter  participating  in any  disposition  pursuant  to such  registration
statement,  and any  attorney,  accountant  or other agent  retained by any such
seller or underwriter (collectively,  the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Company as shall be
necessary to enable them to exercise  their due  diligence  responsibility,  and
cause the Company's officers,  directors and employees to supply all information
requested by any such Inspector in connection with such registration statement;

     (F) obtain "cold  comfort"  letters and updates  thereof from the Company's
independent  public  accountants and an opinion from the Company's  counsel,  in
each case  addressed  to the  selling  Securityholders,  in  customary  form and
covering such matters of the type customarily  covered by "cold comfort" letters
and opinion of counsel, respectively, as the holders of a majority of the voting
power of the Shares of the selling Securityholders shall request;

     (G)  otherwise  comply with all  applicable  rules and  regulations  of the
Commission,  and make  available to its  Securityholders,  as soon as reasonably
practicable,  an earnings  statement  covering a period of 12 months,  beginning
within three  months after the  effective  date of the  registration  statement,
which  earnings  statement  shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder; and

     (H) cause its officers to use their  reasonable best efforts to support the
marketing  of the  Shares  covered  by the  registration  statement  (including,
without  limitation,  the  participation  in "road shows," at the request of the
managing underwriter) taking into account the Company's business needs.

     (10) Each selling  Securityholder  agrees that,  upon receipt of any notice
from the Company of the happening of any event of the kind  described in Section
6.1(c)(ix)(B), such Securityholder will forthwith discontinue disposition of its
Shares pursuant to the  registration  statement  covering such Shares until such
Securityholder's receipt of the copies of the supplemented or amended prospectus
contemplated by such Section  6.1(c)(ix)(B)  and, if so directed by the Company,
such  Securityholder  will deliver to the Company (at the Company's expense) all
copies,  other  than  permanent  file  copies  then  in  such   Securityholder's
possession,  of the  prospectus  covering such its Shares current at the time of
receipt of such notice.

     (4) Transfer  Restrictions.  The transfer restrictions contained in Article
4,  including,  without  limitation,  those set forth in  Section  4.3,  of this
Agreement  shall not apply to any  offering of Shares  pursuant to this  Section
6.1.

     (5) Indemnification.

     (1) In the event of the  registration or qualification of any Shares of the
Securityholders under the Securities Act or any other applicable securities laws
pursuant to the


                                       45

<PAGE>

provisions  of this  Section  6.1,  the  Company  agrees to  indemnify  and hold
harmless each Securityholder  thereby offering such Shares for sale (a "Seller")
and  each of  their  officers,  directors,  partners,  members  or  agents,  the
underwriter, broker or dealer, if any, of such Shares, and each other Person, if
any,  who controls any such  Seller,  underwriter,  broker or dealer  within the
meaning of the Securities Act or any other  applicable  securities laws (each an
"Indemnified  Seller"),  from and against any and all losses, claims, damages or
liabilities  (or actions in respect  thereof),  joint or several,  to which such
Indemnified  Seller may become  subject  under the  Securities  Act or any other
applicable securities laws or otherwise, insofar as such losses, claims, damages
or  liabilities  (or actions in respect  thereof) arise out of or are based upon
any untrue  statement or alleged untrue statement of any material fact contained
in any  registration  statement  under  which such  Shares  were  registered  or
qualified under the Securities Act or any other applicable  securities laws, any
preliminary  prospectus  or final  prospectus  relating to such  Shares,  or any
amendment or  supplement  thereto,  offering  circular or other  document or any
amendment or  supplement  thereto or arise out of or are based upon 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 any
violation by the Company of any rule or regulation under the Securities Act, the
Exchange Act or any other  applicable  securities laws applicable to the Company
or relating to any action or inaction required by the Company in connection with
any such  registration or  qualification  and will promptly  reimburse each such
Indemnified Seller for any legal or other expenses  reasonably  incurred by such
Indemnified  Seller in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
be liable in any such case to the extent  that any such loss,  claim,  damage or
liability arises out of or is based upon an untrue statement or omission made in
such registration statement, such preliminary prospectus,  such final prospectus
or such amendment or supplement  thereto in reliance upon and in conformity with
written  information  furnished  to  the  Company  by  such  Indemnified  Seller
specifically and expressly for use in the preparation  thereof, or to the extent
that an  Indemnified  Seller sold  securities  to a Person to whom there was not
sent or given,  at or prior to the written  confirmation of such sale, a copy of
the final  prospectus as then amended or supplemented if the Company  previously
furnished copies thereof to such Indemnified Seller and the loss, claim, damage,
liability or action  results from an untrue  statement or omission  contained in
the preliminary prospectus that was corrected in the final prospectus.

     (2) In the event of the  registration or qualification of any Shares of the
Securityholders under the Securities Act or any other applicable securities laws
for  sale  pursuant  to  the  provisions  of  this  Section  6.1,  each  selling
Securityholder, each underwriter, broker and dealer, if any, of such Shares, and
each  other  Person,  if any,  who  controls  any such  selling  Securityholder,
underwriter,  broker or dealer within the meaning of the Securities  Act, agrees
severally,  and not jointly,  to indemnify and hold  harmless the Company,  each
Person who controls the Company  within the meaning of the  Securities  Act, and
each  officer and  director of the Company  from and against any and all losses,
claims,  damages  or  liabilities  (or  actions in  respect  thereof),  joint or
several,  to which the Company,  such controlling  Person or any such officer or
director may become  subject under the  Securities  Act or any other  applicable
securities  laws or  otherwise,  insofar  as such  losses,  claims,  damages  or
liabilities  (or actions in respect  thereof) arise out of or are based upon any
untrue  statement of any material fact contained in any  registration  statement
under which such Shares were registered or qualified under the Securities Act or
any other applicable securities laws,


                                       46

<PAGE>

any preliminary  prospectus or final prospectus  relating to such Shares, or any
amendment  or  supplement  thereto,  or arise out of or are based upon an untrue
statement or the omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, which untrue
statement or omission was made therein in reliance upon and in  conformity  with
written  information  furnished to the Company by such  selling  Securityholder,
underwriter,  broker,  dealer  or  controlling  Person  specifically  for use in
connection with the preparation  thereof,  and will reimburse the Company,  such
controlling  Person and each such officer or director for any legal or any other
expenses  reasonably  incurred  by  them in  connection  with  investigating  or
defending any such loss, claim, damage, liability or action; provided,  however,
that no selling  Securityholder will be liable under this Section 6.1(e)(ii) for
any amount in excess of the net proceeds paid to such selling  Securityholder in
respect of Shares sold by it.

     (3) Promptly after receipt by a Person  entitled to  indemnification  under
this Section 6.1(e) (an  "Indemnified  Party") of notice of the  commencement of
any action or claim relating to any  registration  statement filed under Section
6.1(a)  or  6.1(b)  or as to  which  indemnity  may be  sought  hereunder,  such
indemnified  party will,  if a claim for  indemnification  hereunder  in respect
thereof is to be made against any other party hereto (an "Indemnifying  Party"),
give  written  notice to such  Indemnifying  Party of the  commencement  of such
action or claim, but the omission to so notify the  Indemnifying  Party will not
relieve  the  Indemnifying  Party  from  any  liability  that it may have to any
Indemnified  Party  otherwise  than  pursuant to the  provisions of this Section
6.1(e) and shall also not  relieve  the  Indemnifying  Party of its  obligations
under this Section  6.1(e) except to the extent that the  Indemnifying  Party is
actually  prejudiced  thereby.  In case any such  action is  brought  against an
Indemnified  Party,  and it notifies an Indemnifying  Party of the  commencement
thereof,  the  Indemnifying  Party  will be  entitled  (at its own  expense)  to
participate  in and,  to the  extent  that it may wish,  jointly  with any other
Indemnifying  Party  similarly  notified,  to assume the  defense,  with counsel
reasonably  satisfactory  to such  Indemnified  Party,  of such action and/or to
settle  such  action  and,  after  notice  from the  Indemnifying  Party to such
Indemnified  Party  of its  election  so to  assume  the  defense  thereof,  the
Indemnifying Party will not be liable to such Indemnified Party for any legal or
other expenses  subsequently  incurred by such  Indemnified  Party in connection
with the  defense  thereof,  other than the  reasonable  cost of  investigation;
provided,  however,  that no Indemnifying  Party shall enter into any settlement
agreement without the prior written consent of the Indemnified Party unless such
Indemnified  Party is fully  released and  discharged  from any such  liability.
Notwithstanding  the foregoing,  the  Indemnified  Party shall have the right to
employ  its own  counsel  in any such case,  but the fees and  expenses  of such
counsel  shall  be at the  expense  of such  Indemnified  Party  unless  (A) the
employment  of such  counsel  shall  have  been  authorized  in  writing  by the
Indemnifying Party in connection with the defense of such suit, action, claim or
proceeding,   (B)  the  Indemnifying  Party  shall  not  have  employed  counsel
(reasonably satisfactory to the indemnified party) to take charge of the defense
of such action,  suit, claim or proceeding,  or (C) such Indemnified Party shall
have reasonably  concluded,  based upon the advice of counsel, that there may be
defenses  available  to it that  are  different  from  or  additional  to  those
available to the  Indemnifying  Party which, if the  Indemnifying  Party and the
Indemnified Party were to be represented by the same counsel,  could result in a
conflict of interest for such counsel or materially prejudice the prosecution of
the defenses available to such Indemnified Party. If any of the events specified
in clauses  (A), (B) or (C) of the  preceding  sentence  shall have  occurred or
shall  otherwise be  applicable,  then the  reasonable  fees and expenses of one
counsel or firm of counsel


                                       47

<PAGE>

selected by a majority in interest of the  Indemnified  Parties (and  reasonably
acceptable to the Indemnifying  Party) shall be borne by the Indemnifying Party.
If, in any such case,  the  Indemnified  Party  employs  separate  counsel,  the
Indemnifying  Party  shall  not have the  right to direct  the  defense  of such
action,  suit,  claim or proceeding on behalf of the  Indemnified  Party and the
Indemnified Party shall assume such defense and/or settle such action; provided,
however,  that an  Indemnifying  Party shall not be liable for the settlement of
any  action,  suit,  claim or  proceeding  effected  without  its prior  written
consent, which consent shall not be unreasonably withheld.

                                   ARTICLE 7
                                PREEMPTIVE RIGHTS

     7.1 Preemptive Rights.

     (1) Prior to an Initial  Public  Offering.  If,  after the date  hereof and
prior to an Initial Public Offering,  the Company shall propose to issue or sell
New   Securities  (as   hereinafter   defined)  or  enter  into  any  contracts,
commitments, agreements,  understandings or arrangements of any kind relating to
the  issuance or sale of any New  Securities,  then  subject to the  immediately
following  paragraph,  each Securityholder shall have the right to purchase that
number of New Securities, at the same price and on the same terms proposed to be
issued or sold by the Company, so that each such Securityholder would, after the
issuance  or sale of all such New  Securities  (and after  giving  effect to the
preference  given to the  Series C and D Holders  set  forth in the  immediately
following paragraph),  hold the same proportionate interest of the Fully Diluted
Capitalization  as was held by each such  Securityholder  immediately  after any
issuance or sale of New  Securities  as set forth in the  immediately  following
paragraph and  immediately  prior to the issuance or sale of the balance of such
New Securities (the "Proportionate Percentage"). "New Securities" shall mean any
Shares or other securities or other rights  convertible or exchangeable  into or
exercisable  for  Shares;  provided,  however,  that "New  Securities"  does not
include:  (i) any  Warrants,  Options  or Common  Stock  issued or  issuable  on
conversion of the Preferred  Stock,  or upon the exercise of Warrants or Options
(other  than  options  referred  to in clause (v)  below);  (ii)  Shares  issued
pursuant to the exercise of any rights,  warrants,  options  (other than options
referred to in clause (v) below) or other agreements not outstanding on the date
of this Agreement  including,  without limitation,  any security  convertible or
exchangeable, with or without consideration,  into or for any stock, options and
warrants,  provided that the rights  established  by this Section 7.1 apply with
respect  to the  initial  sale  or  grant  by the  Company  of  such  rights  or
agreements;  (iii)  securities  issued  by the  Company  as part  of any  public
offering  pursuant to an effective  registration  statement under the Securities
Act; (iv) Shares issued in connection  with any stock split,  stock  dividend or
recapitalization of the Company;  (v) Shares issued to management,  directors or
employees of, or consultants to, the Company pursuant to options  outstanding as
of the date hereof and options to purchase  Shares issued pursuant to any Option
Plan or as otherwise approved by the Compensation  Committee and Shares issuable
upon exercise thereof;  and (vi) securities  issued as consideration  for, or in
connection  with,  any  merger  or  acquisition  of the  stock or  assets of any
acquired entity by the Company.


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<PAGE>

     Notwithstanding the provisions of the foregoing paragraph,  if, at the time
of any proposed  issuance or sale by the Company of New  Securities  prior to an
Initial Public Offering, the RSI Beneficial Holders have Beneficial Ownership of
Shares,  Options and  Warrants  (which in the case of Options or Warrants  shall
include only those Options or Warrants that are Exercisable)  representing (on a
fully  exercised and converted  basis),  in the aggregate,  less than 30% of the
Adjusted Fully Diluted  Capitalization,  then the RSI  Beneficial  Holders shall
have the  initial  right,  exercisable,  in the sole  discretion  of RSI, by the
Series C and D Holders for the benefit of the RSI Beneficial Holders or directly
by any of the RSI Beneficial Holders (provided, that, if such right is exercised
directly by any of the RSI Beneficial Holders,  such Person shall become a party
to this  Agreement for all purposes  hereunder),  to purchase that number of New
Securities  (subject  to the  maximum  number of New  Securities  proposed to be
issued  or  sold)  at,  except  as set  forth in the two  immediately  following
sentences, the same price and on the same terms proposed to be issued or sold by
the Company so that after such priority  purchase  under this  paragraph the RSI
Beneficial  Holders  would have  Beneficial  Ownership  of Shares,  Options  and
Warrants  representing  (on a  fully  exercised  and  converted  basis),  in the
aggregate, 30% of the Adjusted Fully Diluted Capitalization on a pro forma basis
giving effect to the maximum number of New  Securities  proposed to be issued or
sold.  If, at the time of any  issuance  of New  Securities,  there  are  Unused
Backlog  CSE's  that  are  derived  from  a  previous   issuance  of  shares  as
consideration for, or in connection with, any merger or acquisition of the stock
or assets  of any  acquired  entity  by the  Company  ("Merger  Shares"),  then,
notwithstanding the proposed price of the New Securities to be issued, the price
per share of the New  Securities  (only for that number of New Securities as are
purchasable  under this  paragraph  with  respect to such Unused  Backlog  CSE's
derived from the Merger Shares which number of New Securities shall be deemed to
be the first New  Securities  issued unless there are at the time Unused Backlog
CSE's derived from In-the-Money  Option Shares with respect to which such Unused
Backlog CSE's came into existence prior to the Unused Backlog CSE's derived from
the  Merger  Shares)  acquirable  by the  Series  C and D  Holders  or  the  RSI
Beneficial Holders, as the case may be, shall be equal to the price per share at
which the Merger  Shares were valued at the time of issuance,  as  determined in
good faith by the Board at the time of such  acquisition  (provided  that if RSI
disagrees  with such  valuation,  then the  Company  and RSI shall  utilize  the
appraisal  procedures  set forth in Section  5.3 hereof to  determine  such fair
market  value).  If, at the time of any  issuance of New  Securities,  there are
Unused  Backlog  CSE's that are derived from the  issuance of rights,  warrants,
options or other agreements to purchase Common Stock or any security convertible
or  exchangeable  therefor  (other than options granted under the Company's 1996
Option  Plan) which such  rights,  warrants,  options or other  agreements  were
either (x) issued as  consideration  for, or in connection  with,  any merger or
acquisition  of the stock or assets of any  acquired  company  (other  than such
issuances which are made as incentive  compensation  for future services and are
approved by the  Compensation  Committee),  or (y) issued with an exercise price
below the then fair market  value of the Common  Stock,  as  determined  in good
faith by the Board (provided that if RSI disagrees with such valuation, then the
Company and RSI shall utilize the appraisal  procedures set forth in Section 5.3
hereof  to  determine  such fair  market  value and  provided  further  that the
exercise  price  of any  options  issued  pursuant  to  any  Option  Plan  or as
compensation  to any consultant to the Company shall be deemed to be at or above
fair market value and shall not be subject to the  appraisal  procedures if such
exercise price has been  established by the Compensation  Committee),  and which
rights, warrants,  options or other agreements described in clause (x) or clause
(y) are Exercisable  ("In-the-Money Option Shares"),  then,  notwithstanding the
proposed price of the New Securities to


                                       49

<PAGE>

be issued,  the price per share (only for that number of New  Securities  as are
purchasable  under this  paragraph  with  respect to such Unused  Backlog  CSE's
derived from the In-the-Money Option Shares which number of New Securities shall
be deemed to be the first New  Securities  issued  unless  there are at the time
Unused  Backlog  CSE's  derived  from Merger  Shares with  respect to which such
Unused  Backlog  CSE's came into  existence  prior to the Unused  Backlog  CSE's
derived from the In-the-Money Option Shares) of the New Securities acquirable by
the Series C and D Holders or the RSI  Beneficial  Holders,  as the case may be,
shall be equal to the exercise price for such  In-the-Money  Option Shares.  The
failure of the RSI Beneficial Holders to exercise or to cause the Series C and D
Holders to exercise  such  preemptive  rights shall  constitute  an  irrevocable
waiver of the RSI Beneficial Holders' preemptive rights with respect to such New
Securities.  The Company shall comply with the procedural  requirements  of this
Section 7.1 in connection with the offer of New Securities to the Series C and D
Holders or the RSI Beneficial  Holders, as the case may be. The rights set forth
in this  paragraph  shall  terminate and shall be of no force and effect at such
time as the  Qualifying  Series  C and D  Beneficial  Holders  shall  no  longer
maintain  Beneficial  Ownership  of at least 20% of the  Series C and D Adjusted
Fully  Diluted  Capitalization.  The Series C and D Holders  shall  provide such
information  as the Company shall  reasonably  request in order to determine the
Beneficial Ownership of the Qualifying Series C and D Beneficial Holders. In the
event that any RSI  Beneficial  Holder  transfers  Beneficial  Ownership  in any
Shares,  Options or Warrants,  then,  notwithstanding such transfer, the Shares,
Options or Warrants so transferred  shall be deemed to be Beneficially  Owned by
the RSI Beneficial Holders for purposes of this Section 7.1.

     Subject to the immediately preceding paragraph,  the Company shall give the
Securityholders   written  notice  of  its  intention  to  issue  and  sell  New
Securities,  describing  the type of New  Securities,  the price and the general
terms and conditions upon which the Company proposes to issue the same.  Subject
to the immediately  preceding paragraph,  the Securityholders shall have 15 days
from the  giving of such  notice to agree to  purchase  all (or any part) of its
Proportionate  Percentage of New Securities for the price and upon the terms and
conditions  specified in the notice by giving  written notice of the Company and
stating therein the quantity of New Securities to be purchased.

     If the  Securityholders  fail to exercise in full such right within such 15
days,  the Company shall have 120 days  thereafter to sell the New Securities in
respect of which the Securityholders'  rights were not exercised, at a price and
upon general terms and conditions no more  favorable to the  purchasers  thereof
than specified in the Company's notice to the  Securityholders  pursuant to this
Section 7.1(a).  If the Company has not sold the New Securities  within such 120
days, the Company shall not thereafter issue or sell any New Securities, without
first offering such  securities to the  Securityholders  in the manner  provided
above.

     If a Securityholder which is a SBIC has the right to acquire any voting New
Securities   under  this   Section   7.1(a),   the   Company   shall,   at  such
Securityholder's  request, offer to sell to such Securityholder,  New Securities
that do not have voting rights but otherwise  have the same terms as such voting
New Securities.

     Prior to the  consummation of an Initial Public  Offering,  if there remain
any Unused  Backlog  CSE's that are derived from Merger  Shares or  In-the-Money
Option  Shares,  upon request of the RSI Beneficial  Holders,  the Company shall
issue to the RSI Beneficial Holders or the Series C and D


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<PAGE>

Holders,  as determined by RSI in its sole discretion,  that number of shares of
Series C and D Preferred Stock as are purchasable  under the second paragraph of
this Section  7.1(a) with respect to such Unused  Backlog CSE's derived from the
Merger Shares and the In-the-Money  Option Shares.  The per share price for such
shares to be issued  shall be  calculated  in the manner set forth in the second
and third  sentences,  as applicable,  contained in the second paragraph of this
Section  7.1(a).  The  Company  shall  notify  the Series C and D Holders of the
consummation of an Initial Public  Offering at least 30 days,  prior thereto and
the Series C and D Holders or the RSI  Beneficial  Holders,  as the case may be,
shall have 15 days after receipt of such notice to exercise the rights contained
in this paragraph.  The rights set forth in this paragraph,  if not exercised by
the RSI Beneficial  Holders or the Series C and D Holders for the account of the
RSI Beneficial Holders, prior to the consummation of an Initial Public Offering,
shall terminate upon the effectiveness of an Initial Public Offering.

     (2) Initial Public Offering and Following an Initial Public  Offering.  If,
in connection with an Initial Public  Offering or thereafter,  the Company shall
propose to issue or sell  Additional  Securities  or enter  into any  contracts,
commitments, agreements,  understandings or arrangements of any kind relating to
the  issuance  or sale of any  Additional  Securities,  then the  Series C and D
Holders shall have the right to purchase  that number of Additional  Securities,
at the same  price and on the same  terms  proposed  to be issued or sold by the
Company, so that the Series C and D Holders would, after the issuance or sale of
all such Additional  Securities,  Beneficially Own the greater of (i) 46% of the
Adjusted  Fully  Diluted  Capitalization  or (ii)  the  same  percentage  of the
Adjusted Fully Diluted  Capitalization  as they held  immediately  prior to such
issuance or sale of all such Additional Securities,  provided, however, that (x)
in connection with an Initial Public  Offering,  the right of the Series C and D
Holders to purchase  Additional  Securities pursuant to this Section 7.1(b) also
shall be limited to a right to acquire 30% of the  Additional  Securities  until
the dollar  amount of such  Additional  Securities  sold in such Initial  Public
Offering  to Persons  other than the Series C and D Holders  (or any  Beneficial
Owner of the Series C and D Preferred  Stock or Shares  acquired  by  conversion
thereof) is at least  $75,000,000  and  thereafter  shall be  exercisable to the
extent provided above.  Notwithstanding the immediately preceding sentence,  if,
at the time of issuance of any Additional Securities, the Series C and D Holders
Beneficially Own less than 46% of the Adjusted Fully Diluted  Capitalization and
the  Series C and D  Holders  do not  exercise  their  right in full to  acquire
Additional Securities pursuant to the previous sentence, then, in any subsequent
issuance of  Additional  Securities,  the Series C and D Holders  shall have the
rights to purchase only that number of Additional Securities,  at the same price
and on the same terms proposed to be issued or sold by the Company,  so that the
Series C and D Holders would,  after the issuance or sale of all such Additional
Securities,  Beneficially  Own the same percentage of the Adjusted Fully Diluted
Capitalization  as such  Series C and D  Holders  Beneficially  Owned  after the
issuance of  Additional  Securities in which such Series C and D Holders did not
so exercise  their right in full (for these  purposes  any capital  stock of the
Company subsequently  acquired by the Series C and D Holders other than pursuant
to a direct issuance by the Company shall not be deemed to be Beneficially Owned
by such Series C and D Holders).  For purposes of this Section 7.1(b),  the term
"Additional  Securities" shall mean New Securities plus all securities issued by
the Company as part of any public offering pursuant to an effective registration
statement under the Securities Act ("Additional Securities").


                                       51

<PAGE>

     Subject to the immediately preceding paragraph,  the Company shall give the
Series C and D  Holders  written  notice  of its  intention  to  issue  and sell
Additional Securities,  describing the type of Additional Securities,  the price
and the general terms and  conditions  upon which the Company  proposes to issue
the same.  Subject to the immediately  preceding  paragraph,  the Series C and D
Holders  shall have 15 days from the giving of such  notice to agree to purchase
all (or any  part) of the  Additional  Securities  which  they are  entitled  to
purchase  pursuant to this  Section  7.1(b) for the price and upon the terms and
conditions  specified in the notice by giving  written notice of the Company and
stating therein the quantity of Additional Securities to be purchased.

     If the Series C and D Holders  fail to exercise  in full such right  within
such 15 days, the Company shall have 180 days  thereafter to sell the Additional
Securities  in  respect of which the  Series C and D  Holders'  rights  were not
exercised, at a price and upon general terms and conditions no more favorable to
the purchasers  thereof than  specified in the Company's  notice to the Series C
and D Holders  pursuant to this Section 7.1(b).  If the Company has not sold the
Additional  Securities  within such 180 days,  the Company shall not  thereafter
issue or sell any Additional Securities,  without first offering such securities
to the Series C and D Holders in the manner provided above. The rights set forth
in this Section  7.1(b) shall  terminate  and shall be of no force and effect at
such time as the  Qualifying  Series C and D Beneficial  Holders shall no longer
maintain  Beneficial  Ownership  of at least 20% of the  Series C and D Adjusted
Fully Diluted Capitalization.

     7.2  Standstill.  Except as expressly  provided in Section 7.1, no Series A
Holder,  Series B Holder, Series C Holder, Series D Holder or Series E Holder or
any Affiliate  thereof shall purchase or otherwise acquire any securities of the
Company that are not subject to the  provisions of this  Agreement,  without the
prior  approval of a majority of the Series A, B and E Preferred  Directors  and
the Company  Directors  (taken in the  aggregate) and a majority of the Series C
and D Preferred Directors. Notwithstanding the generality of the foregoing, this
Section  7.2 shall not apply to  restrict  the  granting  by the  Company to any
Person of Options pursuant to any Option Plan and/or to the exercise of any such
Options.

                                   ARTICLE 8
                                   TERMINATION

     8.1  Termination.  This Agreement  shall terminate  automatically  upon the
consummation of (i) an Initial Public  Offering,  or (ii) a Sale of the Company;
provided, however, that, notwithstanding the foregoing:

     (a) the provisions of Section 4.5 shall survive an Initial Public  Offering
and shall terminate upon the third anniversary thereof;

     (b) the  provisions of Section 4.10 shall  survive in  accordance  with the
terms thereof;


                                       52

<PAGE>

     (c) the  provisions of Article 6 shall survive an Initial  Public  Offering
until each  Securityholder  has  disposed  of its Shares that are the subject of
this Agreement;  provided,  however, that the provisions of Section 6.1(a) shall
terminate upon the third anniversary of the date of consummation of such Initial
Public  Offering and the provisions of Section 6.1(b) shall  terminate when each
Securityholder  is eligible to sell all of the securities held by it and covered
by this Agreement in a single transaction pursuant to Rule 144 promulgated under
the  Securities  Act  (taking  into  account  the volume  limitations  contained
therein); and

     (d) the provisions of (i) Section 7.1(b),  (ii) Section 2.1(a)  exclusively
as it relates to the right to nominate the Chairman of the Board,  (iii) Section
3.1(e),  (iv) Section 3.1(h),  (v) Section 3.1(o),  and (vi) Section 3.1(p),  in
each case, shall survive an Initial Public Offering and continue until such time
as the RSI Beneficial Holders no longer have Beneficial  Ownership of 15% of the
Series C and D Adjusted Fully Diluted  Capitalization;  provided,  however, that
following the fifth anniversary of the Initial Public Offering,  such percentage
shall be  increased to 23%.  Notwithstanding  the  foregoing,  from and after an
Initial Public Offering,  Section 3.1(e) and Section 3.1(p) shall be modified to
read as follows:

     (A)  Section  3.1(e):  "entering  into  any  business  other  than the Core
          Business if, as a result of the entering into such business,  the Core
          Business would no longer be the predominant  business of the Company;"
          and

     (B)  Section  3.1(p):  "any  amendment  to the  Articles  of  Incorporation
          (including the  Certificates of Designation) or By-laws of the Company
          or any change in the number of  members  of the Board,  any  Committee
          thereof,  or the  Strategic  Steering  Committee,  which  amendment or
          change would  materially and adversely affect the rights of the Series
          C and D Holders under this  Agreement  that survive an Initial  Public
          Offering  (it being  agreed and  understood  that any  amendment  that
          increases  the  authorized  capital  stock of the Company shall not be
          deemed to materially and adversely affect such rights)";

     (e) upon an Initial Public Offering, the Shares of Series C Preferred Stock
and Series D Preferred Stock shall automatically be converted pursuant to and in
accordance with the Series C Certificate of Designation and Series D Certificate
of Designation, respectively, into shares of the Company's Class B Common Stock,
par value $.01 per share (the "Class B Common  Stock"),  to be issued  solely to
the Series C and D Holders  (provided  that,  to the  extent  that any Shares of
Series C and D  Preferred  Stock are  Beneficially  Owned by Persons who are not
Qualifying  Series C and D  Beneficial  Holders,  such  Shares of Series C and D
Preferred Stock shall be converted pursuant to and in accordance with the Series
C Certificate of Designation and Series D Certificate of Designation into Shares
of Class A Common Stock, and such Persons who are not Qualifying  Series C and D
Beneficial  Holders,  by their  execution  of a consent  pursuant to Section 9.6
hereof,  irrevocably  elect such  conversion  to Shares of Class A Common Stock,
provided further however, that if any such Person shall not have executed such a
consent for any reason, such Person shall


                                       53

<PAGE>

nonetheless be deemed bound by the obligation set forth herein to convert Shares
of  Series C and D  Preferred  Stock to  Shares  of  Class A Common  Stock;  and
provided,  further,  that the Qualifying Series C and D Beneficial Holders shall
be  deemed  to have  irrevocably  elected  to  receive  Shares of Class B Common
Stock).  Prior to such Initial  Public  Offering,  the Board shall by resolution
grant the Shares of Class B Common Stock the rights set forth in the immediately
following  sentence and shall provide for the automatic  conversion of Shares of
Class B Common  Stock  into  Shares of Class A Common  Stock  upon any  transfer
thereof to a Person who is not a Qualifying  Series C and D Beneficial Holder or
upon the  events  set forth in clause  (y) of the  second  sentence  of  Section
9.17(d).  Shares of Class B Common Stock shall (i) carry the right to elect that
number of  Directors,  but in no event more than four, as are equal to (A) 1, if
the  outstanding  shares of the Class B Common Stock then  represent 10% or more
but less than 20% of the Series C and D Adjusted  Fully Diluted  Capitalization,
(B) 2, if the outstanding  shares of the Class B Common Stock then represent 20%
or  more  but  less  than  30% of the  Series  C and D  Adjusted  Fully  Diluted
Capitalization,  (C) 3, if the  outstanding  shares of the Class B Common  Stock
then  represent  30% or more but less  than 40% of the  Series C and D  Adjusted
Fully Diluted Capitalization, or (D) 4, if the outstanding shares of the Class B
Common  Stock then  represent  40% or more of the Series C and D Adjusted  Fully
Diluted  Capitalization,  (ii) automatically  convert into Common Stock upon any
Person  that is not a  Qualifying  Series C and D  Beneficial  Holder  acquiring
Beneficial  Ownership  thereof,  and (iii)  otherwise be identical to the Common
Stock in all respects.  From and after an Initial Public Offering, the reference
to the Series C and D Preferred  Directors in the  definition of  Super-Majority
Approval  shall mean the Directors  elected by the holders of the Class B Common
Stock. Nothing in this paragraph shall diminish any other rights of such holders
contained in this Agreement that shall survive an Initial Public  Offering which
provisions  shall survive in accordance with the terms thereof,  notwithstanding
the  conversion  of the  Preferred  Stock into  Class A Common  Stock or Class B
Common Stock, as the case may be; and

     (f) the  provisions of Section 9.17 shall survive in accordance  with their
terms.

                                   ARTICLE 9
                                  MISCELLANEOUS

     9.1  Information.  The  Company  covenants  and  agrees to  deliver to each
Securityholder   who  continues  to  own  at  least  2%  of  the  Fully  Diluted
Capitalization  (any  such   Securityholder,   a  "Large   Securityholder")  the
information  specified in this Section 9.1 unless any such Large  Securityholder
at any time specifically requests that such information not be delivered to it.

     (1) Monthly and Quarterly Financial Statements.  As soon as available,  but
in any event not later than  forty-five  (45) days after the end of each monthly
or  quarterly  fiscal  period as the case may be (other than the last  quarterly
fiscal  period in any fiscal year of the Company),  the  unaudited  consolidated
balance  sheet of the  Company and its  Subsidiaries  as at the end of each such
period and the  related  unaudited  consolidated  statements  of income and cash
flows of the  Company and its  Subsidiaries  for such period and for the elapsed
period in such fiscal year, all in reasonable detail and stating, in comparative
form (i) the figures as of the end of and for the comparable periods


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<PAGE>

of the  preceding  fiscal year and (ii) the figures  reflected in the  operating
budget  for such  period  as  specified  in the  financial  plan of the  Company
delivered pursuant to Section 9.1(e) hereof. All such financial statements shall
be prepared in accordance with GAAP applied on a consistent basis throughout the
periods reflected therein except as stated therein and shall be accompanied by a
certificate  of the  Company's  president  or chief  financial  officer  to such
effect.

     (2) Annual  Financial  Statements.  As soon as available,  but in any event
within ninety (90) days after the end of each fiscal year of the Company, a copy
of the audited consolidated (and unaudited  consolidating) balance sheets of the
Company and its  Subsidiaries  as at the end of such fiscal year and the related
audited  consolidated  (and unaudited  consolidating)  statements of operations,
stockholders' equity and cash flows of the Company and its Subsidiaries for such
fiscal  year,  all in  reasonable  detail and  stating in  comparative  form the
figures  as at  the  end of and  for  the  immediately  preceding  fiscal  year,
accompanied (in the case of the audited consolidated financial statements) by an
opinion of an accounting  firm of recognized  national  standing  selected by or
such Subsidiary, which opinion shall state that such accounting firm's audit was
conducted in accordance with generally  accepted  auditing  standards.  All such
financial  statements  shall be prepared in  accordance  with GAAP  applied on a
consistent  basis  throughout  the periods  reflected  therein  except as stated
therein.

     (3) Material  Litigation.  Within ten (10) days after the Company learns of
the  commencement  or  written  threat  of  commencement  of any  litigation  or
proceeding  against  the  Company  or any of its  Subsidiaries  or any of  their
respective  assets that could  reasonably be expected to have a material adverse
effect  on the  Company,  written  notice  of the  nature  and  extent  of  such
litigation or proceeding.

     (4)  Material  Agreement.  Within  five (5) days  after the  receipt by the
Company of written  notice of the  occurrence of a default by the Company or any
of its  Subsidiaries  under any material  contract,  agreement or document  that
could  reasonably be expected to have a material  adverse effect on the Company,
written notice of the nature and extent of such default.

     (5) Budgets.  As soon as available,  but in any event not later than thirty
(30) days prior to the beginning of each fiscal year of the Company,  the Annual
Budget as well as any updates or revisions to such plan as soon as available.

     (6) Accountants'  Management  Letters,  Etc.  Promptly after receipt by the
Company,  copies of all accountants'  management  letters and all management and
board  responses  to  such  letters,  and  copies  of  all  certificates  as  to
compliance,  defaults,  material adverse changes, material litigation or similar
matters relating to the Company and its Subsidiaries, which shall be prepared by
the Company or its officers and delivered to the third parties.

     (7)  Stockholders'  Lists.  Within  sixty  (60) days  after the end of each
fiscal year, a stockholders' list, showing the authorized and outstanding shares
by class (including the Common Stock  equivalents of any convertible  security),
the holders of all outstanding shares (both before giving effect to dilution and
on a fully diluted basis) and all outstanding options,  warrants and convertible
securities,  and detailing all options and warrants granted, exercised or lapsed
(including


                                       55

<PAGE>

in each case, without limitation,  all option and warrant exercise prices, stock
issuance  prices  and other  terms) and all shares  issued or sold  (whether  to
directors or managers, in connection with financing or otherwise).

     (8) Other  Information  and Access.  From time to time, and promptly,  such
additional  information regarding results of operations,  financial condition or
business of the Company and its  Subsidiaries,  including,  without  limitation,
cash flow analyses, projections and minutes of any meetings of the Board, as any
Large  Securityholder may reasonably  request.  The Company shall also afford to
any Large Securityholder (and its  representatives)  access, at reasonable times
and on reasonable  prior  notice,  to the books,  records and  properties of the
Company and its Subsidiaries.

     9.2  Certificate  Legend.  Upon  execution  of this  Agreement,  the  stock
certificates  representing  Shares  held by the  Securityholders  shall  contain
substantially  the following  legend,  in addition to any other  legends  deemed
reasonably appropriate or necessary by the Company:

     "This  certificate is transferable only upon compliance with and subject to
     the provisions of a  Stockholders'  Agreement among the Company and certain
     Securityholders,  a copy of which Agreement is on file in the office of the
     Secretary of the Company at its  principal  place of business.  The Company
     will  furnish  a copy  of  such  Agreement  to the  record  holder  of this
     Certificate,  without  charge,  upon written  request to the Company at its
     principal place of business or registered office."

     9.3  Negotiable  Form.  Whenever any Shares,  Warrants or Options are to be
delivered or sold pursuant to this  Agreement,  the Person  selling such Shares,
Warrants or Options shall deliver such  certificates or other  instruments  duly
endorsed or accompanied by appropriate stock powers or assignments separate from
the instrument along with attached stock transfer tax stamps.

     9.4 Enforcement. No Shares, Warrants or Options shall be transferred on the
books of the Company and no Transfer thereof shall be effective unless and until
the terms and  provisions of this  Agreement are complied  with, and in cases of
violation of this Agreement by the attempted Transfer of the Shares, Warrants or
Options without compliance with the terms and provisions thereof,  such Transfer
shall be invalid and of no effect and be deemed in all respects  void ab initio,
and the Company  and/or any of the  Securityholders  who are not  attempting  to
Transfer  the  Shares,  Warrants  or Options  shall have the right to compel the
Securityholder  who is attempting  to Transfer the Shares,  Warrants or Options,
and/or the purported transferee,  to Transfer and deliver the same in accordance
with the applicable provisions of this Agreement.

     9.5 Specific  Performance.  The parties  hereto  recognize that the Shares,
Warrants or Options  cannot be readily  purchased or sold on the open market and
that it is to the  benefit  of the  Company  and the  Securityholders  that this
Agreement be carried out; and for those and other  reasons,  the parties  hereto
would be irreparably  damaged if this Agreement is not specifically  enforced in
the  event of a breach  hereof.  If any  controversy  concerning  the  rights or
obligations to purchase or sell any Shares,  Warrants or Options  arises,  or if
this Agreement is breached, the parties hereto hereby agree that remedies at law
might be inadequate and that, therefore, such rights and


                                       56

<PAGE>

obligations,  and this Agreement,  shall be enforceable by specific performance.
The remedy of specific  performance shall not be an exclusive remedy,  but shall
be cumulative of all other rights and remedies of the parties  hereto at law, in
equity or under this Agreement.

     9.6  Transferees.  The  Company  and the  Securityholders  shall  cause any
transferee  of any Shares,  Warrants or Options  held by any  Securityholder  to
execute a consent, in form and substance  reasonably  acceptable to the Company,
to be bound by the terms and  conditions of this  Agreement  and upon  execution
thereof such future  Securityholder  shall be entitled to the rights of an owner
of the Shares,  Warrants or Options held by such transferee hereunder,  provided
that the foregoing  shall not apply to Shares that have been sold pursuant to an
effective   registration   statement  under  the  Securities  Act  or  Rule  144
thereunder.

     9.7  Notices.  Any notices or other  communications  required or  permitted
hereunder  shall be  sufficiently  given if in writing and  delivered in person,
transmitted  by  telecopier  or sent by  registered  or  certified  mail (return
receipt requested) or recognized  overnight delivery service,  postage pre-paid,
addressed as follows,  or to such other  address as any such party may notify to
the other parties in writing:

     (1) if to the Company:
         VANTAS Incorporated
         90 Park Avenue
         Suite 3100
         New York, New York 10016
         Attn:  David W. Beale
         Facsimile No.:  (212) 907-6444
         with a copy to :
         Morrison Cohen Singer & Weinstein, LLP
         750 Lexington Avenue
         New York, New York 10022
         Attn: Lawrence B. Rodman, Esq.
         Facsimile No.: (212) 735-8708
     (2) if to the Cahill Holders:
         Cahill, Warnock & Company LLC
         1 South Street, Suite 2150
         Baltimore, Maryland 21202
         Attn:  David Warnock
         Facsimile No.:  (410) 895-3805
         with a copy to:


                                       57

<PAGE>

         Wilmer, Cutler & Pickering
         100 Light St.
         Baltimore, Maryland 21202
         Attn:  John B. Watkins, Esquire
         Facsimile No.:  (410) 986-2828
     (3) if to the Northwood Holders:
         Northwood Ventures LLC
         485 Underhill Boulevard
         Syosset, New York 11791
         Attn: Henry T. Wilson
         Facsimile No.: (516) 364-0879
         with a copy to:
         Haythe & Curley
         237 Park Avenue
         New York, New York 10017
         Attn: Bradley P. Cost, Esquire
         Facsimile No.: (212) 682-0200
         and a copy to:
         Kuhn, Loeb & Co.
         485 Madison Avenue, 20th Floor
         New York, New York 10022
     (4) if to the Paribas Holder or the PNA Holder:
         Paribas, acting through its
         Cayman Island Branch
         787 Seventh Avenue
         New York, New York 10019
         Attn: Donald J. Ercole
         Facsimile No.: (212) 841-2363
         Paribas North America
         787 Seventh Avenue
         New York, New York 10019
         Attn: Donald J. Ercole
         Facsimile No.: (212) 821-2363
         with a copy to:


                                       58

<PAGE>

         White & Case
         1155 Avenue of the Americas
         New York, New York 10036
         Attn: John Reiss, Esq.
         Facsimile: (212) 354-8113
     (5) if to the Series C and D Holders:
         RSI I/O Holdings, Inc.
         225 Broadhollow Road
         Melville, New York 11747
         Attn: Scott Rechler
               Jason Barnett, Esq.
         Fax:  (516) 622-6788
         InterOffice Superholdings LLC
         225 Broadhollow Road
         Melville, New York 11747
         Attn: Scott Rechler
               Jason Barnett, Esq.
         Fax:  (516) 622-6788
         Reckson Office Centers LLC
         225 Broadhollow Road
         Melville, New York 11747
         Attn: Scott Rechler
               Jason Barnett, Esq.
         Fax:  (516) 622-6788
         with a copy to:
         Herrick, Feinstein LLP
         2 Park Avenue
         New York, New York 10016
         Attn: Irwin Kishner, Esq.
               David Lubin, Esq.
         Fax: (212) 889-7577
         and to:
         JAH I/O LLC
         2 Manhattanville Road
         Purchase, New York 10577
         Attn: Jon L. Halpern


                                       59

<PAGE>
         and to:
         Battle, Fowler LLP
         75 East 55th Street
         New York, New York 10022
         Attn: Michael Mishaan, Esq.
         Fax:  (212) 856-7811
     (6) if to any of the Other Holders,  to the respective  Other Holder as set
forth below:
         David W. Beale
         3230 Hewlett Avenue
         Merrick, New York 11564
         Thomas S. Shattan
         930 Park Avenue
         New York, New York 10028
         Kate Dundes Shattan
         930 Park Avenue
         New York, New York 10028
         Thomas S. Shattan and
         Kate Dundes Shattan Trust
         FBO Cecily Bay Shattan,
         Gregory E. Mendel, Trustee
         930 Park Ave.
         New York, New York 10028
         Thomas S. Shattan and
         Kate Dundes Shattan Trust
         FBO Ward Harrison Shattan,
         Gregory E. Mendel, Trustee
         930 Park Ave.
         New York, New York 10028
         Gregory E. Mendel
         354 Hartshorn Drive
         Short Hills, New Jersey 07078
         Nancy Warshauer Mendel
         Cust for Erica Brooke Mendel UTMA NJ
         354 Hartshorn Drive
         Short Hills, New Jersey 07078


                                       60

<PAGE>

         Nancy Warshauer Mendel
         Cust for David Ross Mendel UTMA NJ
         354 Hartshorn Drive
         Short Hills, New Jersey 07078
         G. Kevin Fechtmeyer
         5 Jackie Lane
         Westport, Connecticut 06880
         Facsimile No.: (203) 222-8231
         The Shattan Group LLC
         590 Madison  Avenue, 18th Floor
         New York, New York 10022
         Attn: Thomas S.  Shattan
         Facsimile: (212) 308-5205
         Arnold L. Cohen
         105 Captain Road
         North Woodmere, New York 11581
         Barbara Cohen
         105 Captain Road
         North Woodmere, New York 11581
         Louis Perlman
         1239 Veedor Drive
         Hewlett Bay Park, New York 11557
         Louis Perlman IRA Rollover,
         Gruntal & Co., LLC Custodian
         1239 Veedor Drive
         Hewlett Bay Park, New York 11557
         Wilma Perlman
         1239 Veedor Drive
         Hewlett Bay Park, New York 11557
         William E. Phillips
         200 North Cove Road
         Old Saybrook, Connecticut 06475
         Michael Phillips
         30 Winchester Drive
         Atherton California 94027


                                       61

<PAGE>

         Thomas Phillips and Tracy Phillips
         43 Jennifer Lane
         New Canaan, Connecticut 06840
         Willis Pember and Sarah Pember
         P.O. Box 8073
         Aspen, Colorado 81612
         Alan M. Langer
         Strawberry Lane
         Irvington, New York 10533
         Laura J. Kozelouzek
         50 West 72nd Street
         Apt. 712
         New York, New York 10023
         Edward M. Caravalho
         39 16th Street
         West Babylon, New York 11704
         Daniel Felix Robitaille
         2 Fadore Lane
         Apt. 6-G
         Yonkers, New York 10710
         Deborah Baker
         28 Cove Road
         South Salem, New York 10590
         M.L.P.F. & S. Custodian for Deborah Baker
         28 Cove Road
         South Salem, New York 10590
         Kelly J. Besecker
         21930 Hyde Park Drive
         Ashburn, Virginia 20147
         Jerry Daniels
         166 East 63rd Street
         Apt. 11C
         New York, New York 10021
         Mitchell Knecht


                                       62

<PAGE>

         37 Barnside Road
         Short Hills, New Jersey 07078
         Linda Harris
         340 East 93rd  Street, # 6L
         New York,  New York 10128
         Bonnie Deininger
         4342 Laclede Place
         St. Louis, Missouri 63108
         G. Lee Bohs
         1720 Clockwater Drive
         Westchester, Pennsylvania 19380
         David L. Warnock
         c/o Cahill, Warnock & Co.
         1 South  Street, Suite 2150
         Baltimore,  Maryland 21202
         Bennett Schmidt
         31 West 93rd Street
         Apt. 1C/2C
         New York, New York 10025
         Peter Samitt
         15 West 104th Street
         Apartment 1B
         New York, New York 10025
         Carol Whalin
         350 East 79th Street
         Apt C
         New York, New York 10021
         Donaldson Lufkin & Jenrette
         Custodian for Dottie Wight
         8 Bohler Lane
         Atlanta, Georgia 30327
         Leslie Flynn
         223 Hillside Place
         Eastchester, New York 10709
         Winnie Huynh


                                       63

<PAGE>

         108-10 66th Avenue
         Forest Hills, New York 11375
         Rommel Mapa
         47-28 Parsons Boulevard
         Flushing, New York 11355
         Rita Michaelson
         301 East 62nd Street
         New York, New York 10021
         Susan Melchner
         150 Larchmont Avenue
         Larchmont, New York 10538
         Gerald Kaminsky
         136 Harold Road
         Woodmere, New York 11598
         Bettylu Saltzman
         161 Chicago Avenue East
         Chicago, Illinois 60611
         Alan Goldberg
         10 Kenneth Court
         Kings Point, New York 11024
         Francis G. Hickey, Jr.
         6333 North Scottsdale
         Casita No. 6
         Scottsdale, Arizona 85253
         Peggyanne Kahn
         5 Lakewood Lane
         Larchmont, New York 10538
         William Spier
         One West 81st Street, Apt. 5-D
         New York, New York 10024
         Samuel Klutznick
         111 East Wacker Drive
         Suite 2400
         Chicago, Illinois 60601


                                       64

<PAGE>

         Peter A. Halstead, Trustee
         for Eliza Finkelstein
         Tippet Alley
         P.O. Box 1454
         Edwards, Colorado 81632-1454
         Peter A. Halstead, Trustee
         for Jennifer Finkelstein
         Tippet Alley
         P.O. Box 1454
         Edwards, Colorado 81632-1454
         Tippet Partners
         Tippet Alley
         P.O. Box 1454
         Edwards, Colorado 81632-1454
         Karen Scharfberg
         1058 Kingsley Road
         Rydal, Pennsylvania 19046
         Douglas Scharfberg
         1058 Kingsley Road
         Rydal, Pennsylvania 19046
         Bette Ann Spielman
         33 The Oaks
         Roslyn, New York 11576
         The Spielman Group
         c/o Bette Ann Spielman
         General Partner
         33 The Oaks
         Roslyn, New York 11576
         Gerald Spielman
         Fortrend International, LLC
         7960 L'Aquila Way, First Floor
         Delray Beach, FL 33446
         Robert Spielman
         7 Windemere Crest
         Woodbury, New York 11797
         Robin Spielman


                                       65

<PAGE>

         7 Windemere Crest
         Woodbury, New York 11797
         4364 Kasso Circle Realty, Inc. Profit Sharing Plan
         c/o Stanley Spielman and Phyllis Spielman, Trustees
         7 Acric Court
         Manhasset, New York 11030
         Stanley Spielman
         7 Acric Court
         Manhasset, New York 11030
         Stanley Spielman, IRA
         7 Acric Court
         Manhasset, New York 11030
         Kenneth Witover
         12 Sabine Road
         Oyster Bay Cove
         Syosset, New York 11791
         Erica Witover
         12 Sabine Road
         Oyster Bay Cove
         Syosset, New York 11791

A notice or  communication  will be  effective  (i) if delivered in person or by
overnight courier,  on the business day it is delivered,  (ii) if transmitted by
telecopier,  on the business day of actual  confirmed  receipt by the  addressee
thereof,  and (iii) if sent by  registered  or certified  mail, 3 business  days
after dispatch.

     9.8 Binding Effect;  Assignment.  This Agreement,  including the rights and
conditions  contained herein in connection with disposition of Shares,  Warrants
or  Options  shall be  binding  upon the  parties  hereto,  together  with their
respective  executors,  administrators,  successors,  Personal  representatives,
heirs and assigns permitted under this Agreement.

     9.9 Governing  Law. This  Agreement  shall be governed by, and construed in
accordance with, the laws of the State of New York for contracts executed and to
be fully  performed  in such state and without  regard to  principles  regarding
conflict of laws.

     9.10  Severability.  If any  provision  of  this  Agreement  is  held to be
illegal,  invalid or unenforceable under present or future laws effective during
the term hereof,  such  provisions  shall be fully  severable and this Agreement
shall be construed  and enforced as if such  illegal,  invalid or  unenforceable
provision never  comprised a part hereof;  and the remaining  provisions  hereof
shall  remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable


                                       66

<PAGE>

provision or by its severance  herefrom.  Furthermore,  in lieu of such illegal,
invalid or unenforceable  provision,  there shall be added automatically as part
of this Agreement, a provision as similar in its terms to such illegal,  invalid
or  unenforceable  provision  as  may  be  possible  and  be  legal,  valid  and
enforceable.

     9.11 Entire  Agreement.  This Agreement  together with the  Certificates of
Designation  and the Warrants  and Options  embodies  the entire  agreement  and
understanding among the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and  understandings  relating to the subject
matter hereof. To the extent that any provision contained herein conflicts or is
otherwise  inconsistent with any provision contained in the Warrants or Options,
including,  without limitation, any provision relating to preemptive rights, the
provisions contained herein shall be controlling.

     9.12 Counterparts.  This Agreement may be executed in counterparts, each of
which shall be deemed an original,  but all of which together  shall  constitute
one instrument.

     9.13  Amendment;  Waiver.  This  Agreement  may  be  amended,  modified  or
supplemented  only  by  a  written  instrument   executed  by  the  Company  and
Securityholders  holding  Common Stock  Equivalents  in excess of 66 2/3% of the
Common  Stock  Equivalents  that  are  then  subject  to this  Agreement  (which
approving Securityholders shall include each Securityholder who, either alone or
together with its Affiliates,  holds 2% or more of the Common Stock  Equivalents
that are then subject to this Agreement); provided, however, that any amendment,
modification or supplement that would (i) impose additional  restrictions on any
Securityholder's right to transfer its Options,  Warrants or Shares or eliminate
any  Securityholder's  rights  under the  Agreement  to  transfer  its  Options,
Warrants or Shares pursuant to Article 4, in each case in a manner that does not
affect all similarly situated  Securityholders  equally,  or (ii) materially and
adversely  affect any  Securityholder's  registration  rights  (other  than as a
result of any  increase  in the  number of shares  that may be  covered  by such
registration  rights),  in each  case in a  manner  that  does  not  affect  all
similarly situated  Securityholders equally, or preemptive rights shall, in each
case, require the approval of each such affected Securityholder.  Section 4.7(c)
and Section 5.4 of this Agreement  shall not be permitted to be amended  without
the consent of the Required Banks.

     9.14  Captions.  The  captions of this  Agreement  are for  convenience  of
reference  only and  shall  not limit or  otherwise  affect  any of the terms or
provisions hereof.

     9.15 Waivers. (a) By executing this Agreement, each Securityholder shall be
deemed to have waived any  preemptive  rights such  Securityholder  may have had
under this  Agreement or under any other  instrument  or agreement in connection
with the  issuance and sale of Series C Preferred  Stock  pursuant to the Merger
Agreements.

     (b) By executing this Agreement,  each  Securityholder who had the right to
receive  information  concerning  the Company  pursuant to the provisions of the
First Series A Stock  Purchase  Agreement,  the Second  Series A Stock  Purchase
Agreement  or the  Series B Stock  Purchase  Agreement  shall be  deemed to have
irrevocably waived the right to receive any such information.


                                       67

<PAGE>

The foregoing waiver shall not limit the rights of any Securityholder to receive
information pursuant to Section 9.1 hereof.

     9.16 Subsequent  Option Grants. In the event of any grant by the Company of
any Option  pursuant to the Company's 1996 Stock Option Plan, (i) if the grantee
is  a  party  to  this   Agreement,   such  Options  and  Option   Shares  shall
automatically,  and  without  any  action  on the part of such  grantee,  become
subject to the  provisions of this  Agreement,  and (ii) if the grantee is not a
party to this Agreement,  such grantee shall become a party with respect to such
Options  and Option  Shares by  executing a signature  page  hereto.  Schedule 1
hereto  shall be amended by the  Company,  without any action on the part of any
Securityholder,  from time to time to reflect such additions.  The Company shall
not be required to give notice to any  Securityholder  of any such amendments to
Schedule 1 but shall, upon the request of any Securityholder,  provide a copy of
Schedule 1, as so amended.

     9.17  Non-Competition.  (a)  Each  of the  Cahill  Holders,  the  Northwood
Holders,  the RSI Beneficial Holders and the JAH Beneficial Holders (each of the
foregoing Persons, a "Non-Competing Party" and collectively,  the "Non-Competing
Parties")  shall not, and shall cause each of its Affiliates  Controlled by such
Person not to, directly or indirectly, (i) "Compete" with the Company, or act as
a  director,  officer,  consultant  to, or as an  employee  of, any Person  that
directly or  indirectly  Competes  with the Company,  or (ii)  knowingly  own or
control  any voting  securities  or other  securities  convertible  into  voting
securities  in any Person that  Competes  with the  Company.  A Person  shall be
deemed to "Compete"  with the Company,  for purposes of this Section  9.17, if a
business conducted by such Person is materially  competitive with the Prohibited
Business.  In determining whether a business conducted by a Person is materially
competitive  with the Prohibited  Business,  the factors to be considered  shall
include,  without  limitation,  the  respective  customer base and  distribution
channels of such Person and the Prohibited Business with respect to the specific
products  and  services  which  compete  with each  other.  Notwithstanding  the
foregoing, a Person shall not be deemed to Compete with the Company if it offers
for sale one or more  products  or  services  which  are part of the  Prohibited
Business so long as the provision of any such products or services  taken in the
aggregate are not materially  competitive with the Prohibited  Business.  In the
event that the Company  believes that any proposed  investment or the conduct of
any business by any  Non-Competing  Party would  violate such  restrictions,  it
shall so notify such  Non-Competing  Party  within six months  after  receipt of
written notice from the Non-Competing Party of such investment or business.  The
failure  of the  Company  to so notify  such  Non-Competing  Party  within  such
six-month period shall  constitute an irrevocable  waiver of the Company's right
to contest such investment or business.

     (b) Notwithstanding the foregoing,  each of the Non-Competing Parties shall
be permitted to make an  investment in any Person whose  business  Competes with
the  Company,  provided  that  within 9 months  after the  consummation  of such
investment, such Person ceases to engage in the business which Competes with the
Company  provided,  that if  there is a  dispute  with  respect  to  whether  an
investment  Competes,  then any required divestiture shall not be required until
nine (9) months after the date of final determination of such Dispute adverse to
the  Non-Competing  Party. If such Person ceases to engage in the business which
Competes with the Company  through the  divestiture  of the  competing  business
lines (including any divestiture following a final


                                       68

<PAGE>
determination described above), the Non-Competing Party shall use and cause each
of its Affiliates  Controlled by it to use its reasonable  good faith efforts to
offer the Company the first  opportunity  to acquire such  business  lines which
such Person is divesting.

     (c)  Nothing in this  Section  9.17  shall  limit the right of (i) the iRSI
Beneficial  Holders  to provide  products  and  services  under the terms of the
Intercompany  Agreement,  or (ii) any  Non-Competing  Party to own not more than
4.9% of the outstanding  shares of a corporation or other entity whose shares or
other  equity or debt  interests  are listed on any United  States  national  or
regional  securities exchange or reported by NASDAQ or any successor thereto. In
the event of a final determination by a court of competent jurisdiction that any
Non-Competing  Party has breached the  covenants  in this  Section  9.17,  then,
except as set forth in Section  9.17(d) below,  the Company shall be entitled to
all available  remedies at law and in equity for such breach. It is acknowledged
and  agreed  that  no  provision   of  this  Section  9.17  shall   require  any
Non-Competing  Party to divest or refrain  from  conducting  any  investment  or
business (a "Pre-Existing Business") which it acquired or developed prior to the
time that, as a result of  developments  of or  modifications  to the Prohibited
Business,  such  Pre-Existing  Business  taken  as a  whole  Competes  with  the
Prohibited  Business.  However, the restrictions set forth in Section 9.17 shall
apply to such  Pre-Existing  Business  if,  as a result  of  developments  of or
modifications to such Pre-Existing Business, such Pre-Existing Business taken as
a whole then Competes with the Prohibited Business.

     (d)  In  the  event  of a  final  determination  by a  court  of  competent
jurisdiction  that  any of the RSI  Beneficial  Holders  or the  JAH  Beneficial
Holders  has  breached  the  covenants  in  this  Section  9.17,  then,  without
duplication  or  limitation  of any rights and remedies that may be available to
the Company under the Intercompany  Agreement,  the Company shall have the right
to recover the profits (taking into account the  consideration  set forth in the
last sentence of this Section 9.17(d)),  to the RSI Beneficial Holders and their
Affiliates  (in the  case of a  breach  of this  Section  9.17 by any of the RSI
Beneficial  Holders) or the JAH Beneficial  Holders and their Affiliates (in the
case of a breach  of this  Section  9.17 by any of the JAH  Beneficial  Holders)
derived  from  the  operations  of the  business  or  investment  that  has been
determined  to  Compete  with  the  Company  for the  period  commencing  on the
notification  of a dispute with respect to such business or investment  pursuant
to Section  9.17  hereof  and ending on the  earlier to occur of (i) the date of
divestiture  of the  business  line that  Competes  with the  Company,  (ii) the
termination of the  Intercompany  Agreement in accordance with the terms thereof
(solely  in the  case  of a  breach  of  this  Section  9.17  by any of the  RSI
Beneficial Holders), and (iii) the exercise of the Call Right (as defined below)
or the  conversion of the Class B Common Stock  described  below,  as applicable
(which right to recover profits (taking into account the consideration set forth
in the last  sentence of this  Section  9.17(d))  shall be  Alliance's  sole and
exclusive  remedy at law and in equity for such  breach  other  than  Alliance's
rights set forth in this Section  9.17(d),  (e) and (f) and in the  Intercompany
Agreement). Further, in the event that such final determination occurs (x) prior
to an Initial Public  Offering,  the Company shall have the right to acquire all
of the  Shares,  Options  and  Warrants  then  Beneficially  Owned  by  the  RSI
Beneficial  Holders (in the case of a breach of this  Section 9.17 by any of the
RSI Beneficial  Holders) or the JAH Beneficial  Holders (in the case of a breach
of this Section 9.17 by any of the JAH  Beneficial  Holders) in accordance  with
the  provisions of Section  9.17(e) and the rights granted to the Series C and D
Holders  pursuant to this Agreement  shall  terminate to the extent  provided in
Section 9.17(e), or (y) after an Initial Public Offering: (1)


                                       69

<PAGE>

all of the shares of Class B Common Stock shall  automatically,  and without any
action  on the part of any  Person,  convert  into an equal  number of shares of
Class A Common Stock; provided, however, that if only the JAH Beneficial Holders
are the  parties  that have been  determined  to breach the  provisions  of this
Section  9.17,  then only the shares of Class B Common  Stock then  Beneficially
Owned by such JAH Beneficial  Holders shall be converted as described above; (2)
all of the rights of the RSI  Beneficial  Holders and the Series C and D Holders
that survive an Initial Public Offering shall automatically  terminate and be of
no further force and effect; provided,  however, that if only the JAH Beneficial
Holders are the parties that have been  determined  to breach the  provisions of
this Section  9.17,  then such rights  shall  survive in  accordance  with their
terms;  and (3) any  Directors  then serving that are  Affiliates  or appointees
(other than Jon A. Halpern who shall  continue to serve as a Director if the JAH
Beneficial  Holders would then remain entitled to designate a Director under the
provisions of Section 9.17(e) (assuming for the purpose of applying said Section
9.17(e) to this clause (3) that an Initial Public Offering has not occurred) and
other than the Special  Series C and D Director if he is then  serving),  of the
RSI  Beneficial  Holders (in the case of a breach of this Section 9.17 by any of
the RSI  Beneficial  Holders)  or the JAH  Beneficial  Holders (in the case of a
breach  of  this  Section  9.17  by any of the  JAH  Beneficial  Holders)  shall
immediately  resign or shall be removed  from the Board.  Nothing  herein  shall
preclude  the  RSI  Beneficial  Holders  or  the  JAH  Beneficial  Holders  from
exercising  their  rights as holders of Common  Stock  following  any  automatic
conversion of the Class B Common Stock, including, without limitation, the right
to vote for, and nominate  Directors,  in accordance with the Company's Articles
of  Incorporation  and By-Laws and  applicable  law.  The Company  agrees  that,
following  any  automatic  conversion  of the  Class B  Common  Stock,  it shall
continue to hold its annual  meetings for  stockholders  in accordance  with the
Company's By-laws. Notwithstanding the foregoing, the Company shall not have the
rights described in clause (x) of the second preceding  sentence and the actions
described  in clause (y) of the second  preceding  sentence  shall not occur if,
within  thirty  days  after the  final  determination  referred  to in the first
sentence of this Section 9.17(d),  the RSI Beneficial  Holders (in the case of a
breach of this  Section  9.17 by any of the RSI  Beneficial  Holders) or the JAH
Beneficial  Holders (in the case of a breach of this  Section 9.17 by any of the
JAH Beneficial Holders),  at its option,  delivers written notice to the Company
that the business  line which  Competes  with the Company will be divested,  and
such divestiture is actually completed within nine months after the date of such
final determination.  If a breach of the covenant contained in this Section 9.17
arises out of an investment  in an entity that is not a wholly owned  subsidiary
of a  Non-Competing  Party or its  Affiliates (an "Acquired  Competing  Party"),
then, for purposes of this Section 9.17(d), the profits referred to herein shall
include only those profits that a Non-Competing  Party or its Affiliates  (other
than the Acquired Competing Party and its Affiliates Controlled by such Acquired
Competing  Party)  shall have  received  and the  portion of the  profits of the
Acquired Competing Party as to which such Non-Competing  Party or its Affiliates
(other than the Acquired  Competing Party and its Affiliates  Controlled by such
Acquired  Competing  Party)  would be entitled by virtue of their  proportionate
ownership in the Acquired Competing Party (whether or not such profits have been
distributed to a Non-Competing Party or its Affiliates).

     (e) The Company  shall have the right (the "Call  Right") to acquire,  upon
written notice  delivered to RSI Beneficial  Holders (in the case of a breach of
this Section 9.17 by any of the RSI  Beneficial  Holders) or the JAH  Beneficial
Holders (in the case of a breach of this Section 9.17


                                       70

<PAGE>

by  any  of  the  JAH  Beneficial  Holders)  within  30  days  after  the  final
determination referred to in the first sentence of Section 9.17(d) (only if such
final  determination  occurs prior to an Initial Public Offering),  all (but not
less than all) of the Shares  (including  any Class B Common Stock acquired upon
conversion  of the Series C and D Preferred  Stock),  Options and Warrants  then
Beneficially  Owned by the RSI  Beneficial  Holders  (in the case of a breach of
this Section 9.17 by any of the RSI  Beneficial  Holders) or the JAH  Beneficial
Holders  (in  the  case  of a  breach  of  this  Section  9.17 by any of the JAH
Beneficial  Holders)  at the fair  market  value  of such  Shares,  Options  and
Warrants at the time of exercise of the Call Right (without giving effect to any
actions that the Company may take to effectuate the payment of the Call Purchase
Price (as defined below) and without giving effect to the impact, if any, of any
termination  of the  Intercompany  Agreement) as  determined  pursuant to and in
accordance  with the appraisal  procedures set forth in Section 5.3 hereof.  The
aggregate  amount payable to RSI Beneficial  Holders (in the case of a breach of
this Section 9.17 by any of the RSI  Beneficial  Holders) or the JAH  Beneficial
Holders  (in  the  case  of a  breach  of  this  Section  9.17 by any of the JAH
Beneficial  Holders) upon exercise of the Call Right shall be referred to herein
as the "Call  Purchase  Price." Upon  exercise of the Call Right with respect to
the RSI  Beneficial  Holders,  the Company  shall be required to pay to such RSI
Beneficial Holders in immediately  available funds an amount equal to the lesser
of (1) 10% of the estimated  Call Purchase  Price,  and (ii)  $7,000,000,  which
amount  shall be  refunded to the Company in the event that the Call Right shall
not be consummated  due to the failure of the RSI Beneficial  Holders to deliver
the Shares,  Options and Warrants  that are the subject of the Call Right.  Upon
exercise  of the Call Right  with  respect to the JAH  Beneficial  Holders,  the
Company shall be required to pay to such JAH  Beneficial  Holders in immediately
available  funds an amount equal to the lesser of (i) 10% of the estimated  Call
Purchase  Price,  and (ii)  $2,800,000,  which  amount  shall be refunded to the
Company  in the event that the Call Right  shall not be  consummated  due to the
failure of the JAH  Beneficial  Holders  to  deliver  the  Shares,  Options  and
Warrants  that are the subject of the Call Right.  Following any exercise of the
Call  Right,  the  Series  C and D  Holders  and the  Series  C and D  Preferred
Directors shall not utilize any of the rights granted to any of them pursuant to
this  Agreement or under the Series C Certificate  of  Designation  and Series D
Certificate  of  Designation  to prohibit  the  Company  from taking any actions
reasonably  necessary to effect the  consummation of the Call Right. The closing
of the purchase by the Company of the Shares,  Options and Warrants that are the
subject of the Call Right shall occur at the Company's  principal  office, or at
such other place as shall be mutually  agreeable to the RSI  Beneficial  Holders
(in the case of a breach of this Section 9.17 by any of the RSI


                                       71

<PAGE>

Beneficial  Holders) or the JAH  Beneficial  Holders (in the case of a breach of
this Section 9.17 by any of the JAH Beneficial  Holders) and the Company as soon
as  possible  (and in any event  within 9 months  after the final  determination
referred to in Section 9.17) (such date of closing being hereinafter referred to
as the "Call Closing Date").  Notwithstanding anything to the contrary contained
herein,  if the Call Right has been exercised and an Initial Public Offering (as
evidenced  by a filing  of a  registration  statement  with the  Securities  and
Exchange  Commission) or a Rule 144A offering is pending or is being  undertaken
in connection  with the exercise of the Call Right,  then,  (x) the Call Closing
Date shall  occur  prior to or  contemporaneous  with the  consummation  of such
offering,  and (y) the  payment  of the  Call  Purchase  Price  shall be made in
immediately available funds at a price per share equal to the greater of (i) the
price per share of Common Stock in such  offering and (ii) the fair market value
of a share of Common Stock as determined in accordance  with the first  sentence
of this Section  9.17(e).  At the Call Closing Date,  each of the RSI Beneficial
Holders  (in  the  case  of a  breach  of  this  Section  9.17 by any of the RSI
Beneficial  Holders) or the JAH  Beneficial  Holders (in the case of a breach of
this Section 9.17 by any of the JAH Beneficial  Holders) shall  surrender to the
Company any Options,  Warrants and the certificate or certificates  representing
its  Shares,  in each case free and clear of all  Encumbrances  and the  Company
shall pay the Call  Purchase  Price by wire  transfer in  immediately  available
funds to an account  designated by the RSI Beneficial  Holders (in the case of a
breach of this  Section  9.17 by any of the RSI  Beneficial  Holders) or the JAH
Beneficial  Holders (in the case of a breach of this  Section 9.17 by any of the
JAH Beneficial  Holders).  Notwithstanding  the foregoing,  the Company shall be
permitted  to pay the Call  Purchase  Price by delivery of a  subordinated  note
payable  in three  annual  installments  of  principal  commencing  on the first
anniversary of the Call Closing Date, with interest at an annual rate equal to 3
1/2% plus the Prime Rate. Upon payment of the Call Purchase Price, any Directors
then serving that are Affiliates or appointees (other than Jon A. Halpern if the
JAH  Beneficial  Holders  remain  entitled  to  designate  a director  under the
provisions  of this  Section  9.17(e) and other than the Special  Series C and D
Director if he is then serving) of the RSI Beneficial  Holders (in the case of a
breach of this  Section  9.17 by any of the RSI  Beneficial  Holders) or the JAH
Beneficial  Holders (in the case of a breach of this  Section 9.17 by any of the
JAH Beneficial  Holders) shall  immediately  resign or shall be removed from the
Board.  In the  event  of a  breach  of  this  Section  9.17  by any of the  RSI
Beneficial  Holders  and  upon  payment  of the Call  Purchase  Price to the RSI
Beneficial  Holders,  all of the rights of the RSI  Beneficial  Holders  and the
Series C and D Holders contained in this Agreement shall automatically terminate
and be of no  further  force and  effect;  provided,  however,  that (x) the JAH
Beneficial Holders shall have the right to designate that number of Directors as
are equal to the number of Directors  they would have had the right to designate
pursuant to Section 8.1(e), assuming that the shares of Series C and D Preferred
Stock  Beneficially  Owned by such JAH Beneficial  Holders had been converted to
Class B  Common  Stock  as  provided  therein  and  that  there  were  no  other
outstanding   shares  of  Class  B  Common  Stock,   (y)  for  purposes  of  any
Super-Majority Approval requirements thereafter, any Directors designated by the
JAH  Beneficial  Holders  or any  other  Series  C and D  Holders  shall  not be
considered  Series C and D  Preferred  Directors  but any actions  specified  in
Sections 3.1(e),  3.1(f), and 3.1(j) shall require the approval of a majority of
the  Directors  then  designated by the JAH  Beneficial  Holders and (z) the JAH
Beneficial  Holders shall remain  entitled to exercise the rights granted to all
Securityholders  generally as set forth in Section 3.2,  Article IV,  Article V,
Article VI, and Section  7.1(a) which rights shall  survive in  accordance  with
their  terms.  Notwithstanding  the  previous  sentence,  if the JAH  Beneficial
Holders  shall  Beneficially  Own less than 10% of the  Series C and D  Adjusted
Fully Diluted Capitalization but shall not have disposed of any shares of Series
C Preferred Stock originally  issued to them pursuant to the Merger  Agreements,
or any shares of Series D Preferred  Stock issued to them pursuant to the Series
D Stock Purchase Agreement or the Series D and E Stock Purchase  Agreement,  and
shall have  exercised  in full all  rights  previously  available  to them under
Section 4.3 and Section 7.1 hereof,  then the JAH  Beneficial  Holders  shall be
entitled to  designate  one  Director.  In the event of a breach of this Section
9.17  by any of the  JAH  Beneficial  Holders,  all  of the  rights  of the  RSI
Beneficial  Holders and the Series C and D Holders  contained in this  Agreement
shall survive in accordance  with their  respective  terms.  In the event of the
Company's failure to exercise the Call Right or pay the Call Purchase Price, the
rights of the Series C and D Holders shall remain unaffected.

     (f) Upon exercise of the Call Right, the Company shall request the Required
Banks to  consent  to such  exercise.  The  Company  shall  not be  required  to
consummate the Call


                                       72

<PAGE>

Right,  and the  exercise  of such  Call  Right  shall be deemed  rescinded  and
withdrawn  and of no  force  and  effect  and no RSI  Beneficial  Holder  or JAH
Beneficial  Holder,  as the case may be,  shall have any rights or  remedies  to
enforce the Call Right,  until such time as all  Obligations  (as defined in the
Credit  Agreement)  shall have been paid in full in cash,  unless  the  Required
Banks have  consented in writing to the exercise of the Call Right.  The Company
may assign the Call Right, in whole or in part, to any Person provided that such
Person must pay the Call Purchase  Price with respect to any Shares,  Options or
Warrants acquired by it in immediately available funds.

     (g) The  prohibitions set forth in this Section 9.17 shall apply to each of
the Cahill Holders and the Northwood Holders only so long such Cahill Holders or
Northwood Holders maintain Beneficial  Ownership in the aggregate of 50% or more
of the Common Stock Equivalents (excluding Warrant Shares) initially acquired by
them  pursuant to the First  Series A Stock  Purchase  Agreement  and the Second
Series A Stock Purchase  Agreement.  The  prohibitions set forth in this Section
9.17  shall  apply  to the JAH  Beneficial  Holders  for so  long  as  such  JAH
Beneficial Holders maintain Beneficial Ownership in the aggregate of 50% or more
of the Common  Stock  Equivalents  initially  acquired  by them  pursuant to the
Merger Agreements,  the Series D Stock Purchase Agreement and the Series D and E
Stock Purchase Agreement.  The prohibitions set forth in this Section 9.17 shall
apply to the RSI Beneficial  Holders for so long as such RSI Beneficial  Holders
maintain  Beneficial  Ownership in the  aggregate of 15% or more of the Series C
and D Adjusted Fully Diluted Capitalization.

                         [NO FURTHER TEXT ON THIS PAGE]
                                 [PAGES FOLLOW]
<PAGE>
                               VANTAS INCORPORATED
               FIFTH AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
                           DATED AS OF JULY 29, 1999
                                 SIGNATURE PAGE
                               VANTAS INCORPORATED
                                 By: /s/ David W. Beale
                                     -------------------------------------------
                                     Name:  David W. Beale
                                     Title: President

                                 CAHILL, WARNOCK STRATEGIC
                                 PARTNERS FUND, L.P.
                                 By:   CAHILL, WARNOCK STRATEGIC
                                       PARTNERS, L.P., its General Partner
                                 By: /s/ David L. Warnock
                                     -------------------------------------------
                                     Name:  David L. Warnock
                                     Title: a General Partner

                                 STRATEGIC ASSOCIATES, L.P.
                                 By:   CAHILL, WARNOCK & COMPANY,
                                       L.L.C., its General Partner
                                 By: /s/ David L. Warnock
                                     -------------------------------------------
                                     Name:  David L. Warnock
                                     Title: Managing Member

                                 NORTHWOOD VENTURES LLC
                                 By: /s/ Henry T. Wilson
                                     -------------------------------------------
                                     Name:  Henry T. Wilson
                                     Title: Managing Director


                                        1

<PAGE>
                                 NORTHWOOD CAPITAL PARTNERS LLC
                                 By: /s/ Henry T. Wilson
                                     -------------------------------------------
                                     Name:  Henry T. Wilson
                                     Title: Managing Director
                               /s/ Henry T. Wilson
                                 -----------------------------------------------
                                    HENRY T. WILSON


                                        2

<PAGE>
                                 PARIBAS, acting through its
                                 Cayman Island Branch
                                By: /s/ D. Ercole
                                     -------------------------------------------
                                     Name:  D. Ercole
                                     Title: M. Director
                                 PARIBAS NORTH AMERICA, INC.
                                 By: /s/ John G. Martinez
                                     -------------------------------------------
                                     Name:  John G. Martinez
                                     Title: Financial Controller

                                 INTEROFFICE SUPERHOLDINGS LLC
                                 By: RSI I/O HOLDINGS, INC.,
                                       its managing member
                                 By: /s/ Scott Rechler
                                     -------------------------------------------
                                     Name: Scott Rechler
                                     Title: Chairman


                                        3

<PAGE>
                                 RECKSON OFFICE CENTERS LLC
                                 By: RSI I/O HOLDINGS, INC.,
                                       its managing member
                                 By: /s/ Scott Rechler
                                     -------------------------------------------
                                     Name: Scott Rechler
                                     Title: Chairman
                               /s/ David W. Beale
                                 ---------------------------------------------
                                    DAVID W. BEALE
                                 /s/ Thomas S. Shattan
                                 ---------------------------------------------
                                    THOMAS S. SHATTAN
                                 /s/ Kate Dundes Shattan
                                 ---------------------------------------------
                                    KATE DUNDES SHATTAN


                                        4

<PAGE>
                                 /s/ Gregory E. Mendel
                                 ---------------------------------------------
                                    GREGORY E. MENDEL, AS TRUSTEE OF THE THOMAS
                                    S. SHATTAN AND KATE DUNDES SHATTAN TRUST FBO
                                    CECILY BAY SHATTAN
                                 /s/ Gregory E. Mendel
                                 ---------------------------------------------
                                    GREGORY E. MENDEL, AS TRUSTEE OF THE THOMAS
                                                S. SHATTAN AND KATE DUNDES
                                                SHATTAN TRUST FBO WARD HARRISON
                                                SHATTAN
                                 /s/ Gregory E. Mendel
                                 ---------------------------------------------
                                    GREGORY E. MENDEL


                                        5

<PAGE>
                                 /s/ Nancy Warshauer Mendel
                                 ---------------------------------------------
                                    NANCY WARSHAUER MENDEL CUST FOR ERICA BROOKE
                                    MENDEL UTMA NJ
                                 /s/ Nancy Warshauer Mendel
                                 ---------------------------------------------
                                    NANCY WARSHAUER MENDEL CUST FOR DAVID ROSS
                                    MENDEL UTMA NJ
                                 /s/ G. Kevin Fechtmeyer
                                 ---------------------------------------------
                                    G. KEVIN FECHTMEYER


                                        6

<PAGE>
                              THE SHATTAN GROUP LLC
                            By: /s/ Thomas S. Shattan
                                 ---------------------------------------------
                                 Name: Thomas S. Shattan
                                 Title: Managing Director
                               /s/ Arnold L. Cohen
                                 ---------------------------------------------
                                    ARNOLD L. COHEN
                                /s/ Barbara Cohen
                                 ---------------------------------------------
                                  BARBARA COHEN


                                        7

<PAGE>
                                /s/ Louis Perlman
                                 ---------------------------------------------
                                  LOUIS PERLMAN
                                /s/ Louis Perlman
                                 ---------------------------------------------
                                    LOUIS PERLMAN IRA ROLLOVER
                                    GRUNTAL & CO., LLC CUSTODIAN
                                /s/ Wilma Perlman
                                 ---------------------------------------------
                                  WILMA PERLMAN


                                        8

<PAGE>
                                 /s/ William E. Phillips
                                 ---------------------------------------------
                                    WILLIAM E. PHILLIPS
                                 /s/ Michael Phillips
                                 ---------------------------------------------
                                    MICHAEL PHILLIPS
                                 /s/ Thomas Phillips and Tracy Phillips
                                 ---------------------------------------------
                                     THOMAS PHILLIPS AND TRACY PHILLIPS


                                        9

<PAGE>
                                 /s/ Willis Pember and Sarah Pember
                                 ---------------------------------------------
                                    WILLIS PEMBER AND SARAH PEMBER
                               /s/ Alan M. Langer
                                 ---------------------------------------------
                                    ALAN M. LANGER
                                 /s/ Laura J. Kozelouzek
                                 ---------------------------------------------
                                    LAURA J. KOZELOUZEK


                                       10

<PAGE>
                                 /s/ Edward M.Caravalho
                                 ---------------------------------------------
                                    EDWARD M. CARAVALHO
                                 /s/ Daniel Felix Robitaille
                                 ---------------------------------------------
                                    DANIEL FELIX ROBITAILLE
                                /s/ Deborah Baker
                                 ---------------------------------------------
                                  DEBORAH BAKER


                                       11

<PAGE>
                                 /s/ M.L.P.F. & S.
                                 ---------------------------------------------
                                    M.L.P.F. & S. CUSTODIAN FOR DEBORAH BAKER
                                 /s/ Kelly J. Besecker
                                 ---------------------------------------------
                                    KELLY J. BESECKER
                                /s/ Jerry Daniels
                                 ---------------------------------------------
                                  JERRY DANIELS
                               /s/ Mitchell Knecht
                                 ---------------------------------------------
                                    MITCHELL KNECHT


                                       12

<PAGE>
                                /s/ Linda Harris
                                 ---------------------------------------------
                                  LINDA HARRIS
                                 /s/ Bonnie Deininger
                                 ---------------------------------------------
                                    BONNIE DEININGER
                               /s/ Steven Ginensky
                                 ---------------------------------------------
                                    STEVEN GINENSKY
                                 /s/ G. Lee Bohs
                                 ---------------------------------------------
                                    G. LEE BOHS


                                       13

<PAGE>
                                 /s/ David L. Warnock
                                 ---------------------------------------------
                                    DAVID L. WARNOCK
                               /s/ Bennett Schmidt
                                 ---------------------------------------------
                                    BENNETT SCHMIDT
                                /s/ Peter Samitt
                                 ---------------------------------------------
                                  PETER SAMITT
                                /s/ Carol Whalin
                                 ---------------------------------------------
                                  CAROL WHALIN


                                       14

<PAGE>
                                 /s/ Dean Witter Reynolds
                                 ---------------------------------------------
                                    DEAN WITTER REYNOLDS
                                    CUSTODIAN FOR DOTTIE WIGHT
                                /s/ Leslie Flynn
                                 ---------------------------------------------
                                  LESLIE FLYNN
                                /s/ Winnie Huynh
                                 ---------------------------------------------
                                  WINNIE HUYNH
                                 /s/ Rommel Mapa
                                 ---------------------------------------------
                                   ROMMEL MAPA


                                       15

<PAGE>
                                /s/ Arnold Widder
                                 ---------------------------------------------
                                  ARNOLD WIDDER
                               /s/ Rita Michaelson
                                 ---------------------------------------------
                                    RITA MICHAELSON
                               /s/ Susan Melchner
                                 ---------------------------------------------
                                    SUSAN MELCHNER
                               /s/ Gerald Kaminsky
                                 ---------------------------------------------
                                    GERALD KAMINSKY


                                       16

<PAGE>
                                 /s/ Bettelu Saltzman
                                 ---------------------------------------------
                                    BETTELU SALTZMAN
                                /s/ Alan Goldberg
                                 ---------------------------------------------
                                  ALAN GOLDBERG
                                /s/ Frank Hickey
                                 ---------------------------------------------
                                  FRANK HICKEY
                               /s/ Peggyanne Kahn
                                 ---------------------------------------------
                                    PEGGYANNE KAHN


                                       17

<PAGE>
                                /s/ William Spier
                                 ---------------------------------------------
                                  WILLIAM SPIER
                                 /s/ Samuel Klutznick
                                 ---------------------------------------------
                                    SAMUEL KLUTZNICK
                                 /s/ Peter A. Halstead
                                 ---------------------------------------------
                                    PETER A. HALSTEAD, TRUSTEE FOR ELIZA
                                   FINKELSTEIN
                                 /s/ Peter A. Halstead
                                 ---------------------------------------------
                                    PETER A. HALSTEAD, TRUSTEE FOR
                                    JENNIFER FINKELSTEIN


                                       18

<PAGE>
                                 TIPPET PARTNERS
                                 By: /s/ Peter Halstead
                                     -------------------------------------------
                                     Name: Peter Halstead
                                     Title: General Partner
                                 /s/ Karen Scharfberg
                                 ---------------------------------------------
                                    KAREN SCHARFBERG
                                 /s/ Douglas Scharfberg
                                 ---------------------------------------------
                                    DOUGLAS SCHARFBERG
                               THE SPIELMAN GROUP
                                 By: /s/ Bette Ann Spielman
                                     -----------------------------------------
                                     Name: Bette Ann Spielman
                                     Title: General Partner


                                       19

<PAGE>
                               /s/ Gerald Spielman
                                 ---------------------------------------------
                                    GERALD SPIELMAN
                               /s/ Robert Spielman
                                 ---------------------------------------------
                                    ROBERT SPIELMAN
                               /s/ Robin Spielman
                                 ---------------------------------------------
                                    ROBIN SPIELMAN
                                 /s/ Stanley Spielman and Phyllis Spielman
                                 ---------------------------------------------
                                    STANLEY SPIELMAN AND PHYLLIS SPIELMAN,
                                    TRUSTEES FOR KASSO CIRCLE REALTY, INC.
                                    PROFIT SHARING PLAN


                                       20

<PAGE>
                                 /s/ Stanley Spielman
                                 ---------------------------------------------
                                    STANLEY SPIELMAN
                                 /s/ Stanley Spielman
                                 ---------------------------------------------
                                    STANLEY SPIELMAN, IRA
                               /s/ Kenneth Witover
                                 ---------------------------------------------
                                    KENNETH WITOVER
                                /s/ Erica Witover
                                 ---------------------------------------------
                                  ERICA WITOVER


                                       21

<PAGE>
                                /s/ Scott Rechler
                                 ---------------------------------------------
                                 SCOTT RECHLER, in his personal capacity (solely
                                 for  purposes of Section  2.1,  Section 2.2 and
                                 Section 2.4) /s/ Jon Halpern
                                 ---------------------------------------------
                                    JON HALPERN, in his personal capacity
                                    (solely for purposes of Section 2.1, Section
                                    2.2. and Section 2.4)
                                 RECKSON SERVICE INDUSTRIES, INC.,
                                 By: /s/ Scott Rechler
                                     ------------------------------------------
                                     Name:  Scott Rechler
                                     Title: President and Chief
                                             Executive Officer


                                       22