Exhibit 10.2
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Forbearance Agreement and Waiver
Reference is hereby made to that certain Note and Warrant Purchase
Agreement dated as of August 11, 2000 (as amended, supplemented or otherwise
modified from time to time, the "Purchase Agreement") by and between HQ Global
Workplaces, Inc. (the "Issuer"), HQ Global Holdings, Inc. ("Parent"), X.X.
Xxxxxx Partners (BHCA), L.P., CT Mezzanine Partners I LLC, Ares Leveraged
Investment Fund, L.P., Ares Leveraged Investment Fund II, L.P., Highbridge
International LLC, Blackstone Mezzanine Partners L.P., and Blackstone
Mezzanine Holdings L.P. (collectively, the "Purchasers"). Reference is also
made to that certain Subordination Agreement dated as of August 11, 2000 (the
"Subordination Agreement") by and among the Issuer, the Parent, the Purchasers
and the parties (the "Senior Lenders") to that certain Credit Agreement (as
defined by the Subordination Agreement). This Forbearance Agreement (this
"Agreement") by and among the Issuer, Parent and the Purchasers party hereto
is dated as of January ___, 2002. Capitalized terms used herein but not
otherwise defined herein shall have the respective meanings ascribed thereto
in the Subordination Agreement.
Recitals.
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A. The Credit Parties and the Purchasers acknowledge: (i) that there
currently exist Subordinated Note Events of Default (the "Existing Events of
Default") including, but not limited to, the failure to pay interest on the
Subordinated Notes which was due on or prior to the date of this Agreement and
comply with the financial covenants set forth in Section 9.14 of the Purchase
Agreement; and (ii) that the Credit Parties duly received notices dated
October 16, 2001 and January 10, 2002, among other things, of such
Subordinated Note Events of Default and of the accrual interest on such missed
interest payment at the rate of 15.5% per annum.
B. Section 2.8 of the Subordination Agreement provides that the
Purchasers shall not exercise certain remedies in the event of a Subordinated
Note Event of Default for a period of at least 90 days, subject to earlier
termination upon the occurrence of certain specified events as provided
therein.
C. Pursuant to that certain Forbearance Agreement dated as of October 1,
2001 (the "Forbearance Agreement") by and among the Issuer, Parent and the
Senior Lenders, the Senior Lenders have agreed to forbear from enforcing their
remedies with respect to certain defaults which have occurred and are
continuing under the Credit Agreement until December 14, 2001, subject to
earlier termination upon the occurrence of certain specified events as
provided therein.
D. Pursuant to the terms and conditions of the proposed Second Amendment
("Second Amendment") to the Forbearance Agreement dated as of December 14,
2001, the Senior Lenders have agreed to further forbear from enforcing their
remedies with respect to certain defaults which have occurred and are
continuing under the Credit Agreement until February 14, 2002, subject to
earlier termination upon the occurrence of certain specified events as
provided therein.
E. The Credit Parties have requested the Purchasers to execute and
deliver this Forbearance Agreement and Waiver and to provide the accommodations
provided for hereby.
F. The Purchasers executing this Forbearance Agreement and Waiver (this
"Agreement") are the Required Purchasers (as defined in the Purchase
Agreement), assuming that each such Purchaser holds the aggregate principal
amount of the Notes set forth below the signature of such party.
G. The Purchasers executing this Agreement have agreed to forbear from
the enforcement of their remedies against the Credit Parties with respect to
the Existing Events of Default on the terms and conditions set forth in this
Agreement.
NOW THEREFORE, in consideration of the premises, and in reliance
thereon, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
Section 1. Recitations. Each of the Credit Parties hereby jointly and
severally confirms the truth and accuracy of each of the preambles and
recitals set forth in the introduction to this Agreement other than paragraph
F and agrees that each of such preambles and recitals set forth in the
introduction to this Agreement are incorporated herein by reference and are
and shall be deemed to be a part of this Agreement as if fully set forth
herein. As of the date of this Agreement, each Purchaser holds the aggregate
principal amount of the Notes set forth below the signature of such Purchaser.
Section 2. Forbearance. Provided that each of the Credit Parties
complies with all of the requirements contained in this Agreement and the
Subordinated Note Documents (other than the Existing Events of Default and
matters expressly waived hereby), and notwithstanding any provision of the
Subordination Agreement or the Purchase Agreement to the contrary, the
Purchasers shall continue to forbear from exercising the remedies in respect
of the Existing Events of Default to the fullest extent described in Section
2.8 of the Subordination Agreement from the date hereof through and including
February 14, 2002 unless, prior to such date (1) any Senior Creditor shall
take any action of the type described in clauses (x) and (y) of Section 2.8 of
the Subordination Agreement in respect of the Senior Indebtedness or any
action to foreclose or otherwise realize upon or exercise any similar remedies
in respect of any collateral securing the Senior Indebtedness or (2) there
shall occur any event described in Section 10.1(f) or (g) of the Purchase
Agreement, provided, that if the Senior Bank Debt is accelerated, the
Purchasers shall be permitted to accelerate immediately the Subordinated
Indebtedness and to exercise any and all rights, remedies and claims then
available to them. Except as expressly provided hereby, no other period or
limitation provided for by the Subordination Agreement is hereby modified or
extended, including but not limited to that provided by Section 2.3(a) and (b)
thereto. This Agreement is an accommodation to the Credit Parties and the
Credit Parties remain bound to perform their respective
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obligations under the Subordinated Note Documents except as otherwise provided
in this Agreement.
Section 3. Waiver. The Purchasers consent to and irrevocably waive any
default under the terms and conditions of the Purchase Agreement, including
without limitation, Sections 8.3, 9.1, 9.4, 9.8 and 9.9 of the Purchase
Agreement, which may arise with respect to the following transactions or any
of them occurring on or prior to January 31, 2002:
(a) Mitigation of Landlord Claims. Any transaction between any
Credit Party and a landlord or sub-landlord of an executive office suite
center to settle a claim by such landlord or sub-landlord arising from or
related to the nonpayment of rent, additional rent or other similar amounts
related to the occupancy of a leasehold interest; provided: (i) such
transaction does not conflict with or cause a default or violation under the
Credit Agreement, as amended by the Second Amendment; and (ii) the aggregate
amount of cash payments by the Credit Parties with respect to such
transactions does not exceed $1,000,000; provided, however, that no such
consent or waiver is provided hereunder for any transaction or payment
involving an Affiliate of a Credit Party without the prior consent of the
Required Purchasers, which consent shall will not be unreasonably withheld,
delayed or conditioned.
(b) Closing or Disposition of Executive Office Suite Centers. The
consolidation, liquidation, winding up, sale, lease, license, transfer or
other disposition of any of the assets or Property relating to any executive
office suite center of a Credit Party which in the reasonable opinion of the
Issuer are no longer economical, including the executive office suite centers
listed on Schedule A; provided, however, that such actions with respect to
assets or property do not conflict with or cause a default or violation under
the Credit Agreement, as amended by the Second Amendment.
(c) Certain Transactions Regarding Shareholder Litigation. The
transactions by and among CarrAmerica Realty Corporation, Frontline Capital
Group and the Issuer consistent with the agreements, documents and instruments
listed on Schedule B, a true and complete copy of which have been provided to
counsel for the Purchasers; and
(d) Management Retention Plan. The adoption by the Credit Parties
of the Management Retention Plan summarized by the description attached hereto
as Exhibit I and the incurrence and payment of obligations thereunder by the
Credit Parties; provided, that the waiver provided in this Section 3(d) shall
be effective with respect to any specified transaction by the Credit Parties
to the extent that such transaction does not conflict with or cause a default
or violation under the Credit Agreement, as amended by the Second Amendment.
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Section 4. Indebtedness. Each of the Credit Parties hereby acknowledges
and agrees that the full original principal amount of the Subordinated Notes
is owed to the Purchasers together with interest accrued thereon through the
date hereof, including interest on overdue interest as described in the
Recitals above.
Section 5. No Offsets or Defenses. As a material inducement for the
execution of this Agreement, each of the Credit Parties hereby acknowledges
and agrees that the indebtedness evidenced by the Subordinated Notes and all
Subordinated Note Documents are valid and binding liabilities and obligations
of each of the Credit Parties party thereto. Each of the Credit Parties hereby
jointly and severally ratifies and confirms each of their respective
obligations and indebtedness under the Subordinated Notes and the other
Subordinated Note Documents and represents and warrants to the Purchasers that
none of them has or claims any defenses, offsets or counterclaim to any of
their respective obligations and indebtedness under the Subordinated Notes or
any of the other Subordinated Note Documents.
Section 6. No Waiver or Estoppel. Except as expressly set forth in this
Agreement, each of the Credit Parties hereby acknowledges and agrees that the
execution and delivery of this Agreement shall not be deemed (a) to create a
course of dealing or otherwise obligate the Purchasers to forbear or execute
similar agreements under the same or similar circumstances in the future, (b)
to modify, relinquish or impair any right of the Purchasers to receive any
indemnity or similar payment from any Person or entity as a result of any
matter arising from or relating to this Agreement, (c) to waive any right of
the Purchasers to receive interest at an increased rate as a result of any
Subordinated Note Events of Default that have occurred or may in the future
occur under the Subordinated Note Documents, or (d) an acknowledgment of the
absence of a material adverse change in the performance, business, assets,
nature of assets, liabilities, operations, properties, condition (financial or
otherwise) or prospects of the Credit Parties. Except as expressly set forth
in this Agreement, no past or future forbearance on the part of any of the
Purchasers should be viewed as a limitation upon or waiver of the right and
privilege of the Purchasers to exercise rights and remedies that currently
exist or may in the future exist.
Section 7. Representations and Warranties. Each of the Credit parties
hereby jointly and severally represents and warrants that, except as set forth
on Schedule C hereto, and other than the Existing Events of Default, no
Default or Event of Default has occurred and is continuing under the Purchase
Agreement or any Subordinated Note Document. The Credit Parties represent and
warrant to the Purchasers party to this Agreement that: (i) the Second
Amendment has been duly authorized, executed and delivered and is in full
force and effect on the date of this Agreement; and (ii) the Senior Lenders
have not taken any action to terminate the forbearance period provided in the
Second Amendment.
Section 8. Litigation. Attached as Schedule D is a description of the
litigation disclosed to the Senior Lenders pursuant to the Forbearance
Agreement, as amended.
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Section 9. Guarantee. The Guarantee executed by the Parent and each
Domestic Subsidiary of the Parent (other than the Issuer) is in full force and
effect on the date hereof and after giving effect to this Agreement and the
transactions contemplated hereby. Each of the Parent and each Domestic
Subsidiary (other than the Issuer) which executed and delivered a Guarantee
are all the Guarantors as of the date of this Agreement.
Section 10. Confirmation and Ratification. For the avoidance of doubt,
each Credit Party hereby acknowledges and confirms its due authorization,
execution and delivery of all Subordinated Note Documents and confirms its due
authorization, execution and delivery of all Subordinated Note Documents (as
amended, restated, modified and/or supplemented through and including the date
of this Agreement) to which it is a party, including all instruments,
agreements, certificates and documents executed and delivered in connection
therewith, and hereby ratifies all actions heretofore taken in connection
therewith.
Section 11. Release. As a material inducement for the execution of this
Agreement, each Credit Party, for itself and for its Subsidiaries (direct or
indirect), and its predecessors, successors, affiliates and assigns (each, a
"Releasor"), hereby remise, release and forever discharge the Purchasers and
their predecessors, affiliates, Subsidiaries (direct or indirect), successors,
assigns, participants, officers, directors, shareholders, partners, employees
or agents, of and from all manner of actions at law or equity, all causes of
action for damages, costs, debts, sums of money, accounts, bills, rights of
indemnity, breach of contract, provision of labor or materials, loss of use,
loss of services, expenses, compensation, consequential or punitive damages,
equitable subordination, avoidance of preferential or fraudulent transfers, or
any other thing whatsoever, arising by virtue of actions taken, actions
omitted to be taken or the occurrence of any other event on or prior to the
date of this Agreement, relating in any way to (a) this Agreement, the
Subordinated Note Documents and the indebtedness and obligations created
thereby, (b) any claims (including, without limitation, for contribution or
indemnification) which have or could have arisen out of any of the
transactions contemplated by this Agreement or the Subordinated Note Documents
or any other proceedings that have been brought or may be brought by any party
hereto or any third party relating to the Subordinated Note Documents or the
transactions contemplated thereby, (c) any acts, transactions or events that
are the subject matter of this Agreement or the Subordinated Note Documents,
or (d) the prosecution of any claims or any settlement negotiations which such
Releasor ever had, now or which it, its Subsidiaries (direct or indirect), its
successors or assigns hereafter can, shall or may have against the Purchasers
and their predecessors, affiliates, Subsidiaries (direct or indirect),
successors, assigns, participants, officers, directors, shareholders,
partners, employees, members or agents, by reason of (with respect to each of
clauses (a) through (d) above any matter, cause or thing whatsoever on or
prior to the date of this Agreement relating to this Agreement or the
Subordinated Note Documents, provided, however, that nothing herein shall be
construed or deemed to release (x) any covenants or agreements contained
herein or in any Subordinated Note Document so long as such Subordinated Note
Document shall remain in full force and effect or (y) the rights of any
Releasor under any other
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agreement, document or instrument (not pertaining to this Agreement, the
Subordinated Note Document or the transactions provided for thereby) or with
respect to any funds or securities held by any such released party such as
deposited funds.
Section 12. Miscellaneous.
(a) Free and Voluntary Act. All Credit Parties are freely and
voluntarily entering into this Agreement and will enter into any document
necessary to fulfill the agreements contemplated herein after full
consultation with legal, financial and other counsel of their choosing. Each
Credit Party has individually read this Agreement and has discussed this
Agreement with its respective legal, financial and other counsel. All Credit
Parties understand this Agreement and the risks inherent in, and significance
of, same.
(b) No Implied Terms. Any and all duties or obligations that the
Purchasers may have to any Credit Party are limited to those expressly stated
in this Agreement and the Subordinated Note Documents, and neither the duties
and obligations of the Purchasers, if any, nor the rights of the Credit
Parties shall be expanded beyond the express terms of this Agreement and the
Subordinated Note Documents.
(c) Fair Consideration. The agreements contained herein constitute
valuable, adequate and fair consideration for the obligations of the Credit
Parties hereunder.
(d) No Lender Control. No Purchaser will, nor has ever been, a
partner, joint venturer, alter ego, manager, or controlling person of any of
the Credit Parties.
(e) No Other Representation. The Credit Parties acknowledge and
agree that no Purchaser or any person or entity acting on their behalf has
made any representation or promise to any Credit Party which is not expressly
set forth herein or in the Subordinated Note Documents.
(f) Captions. The captions and headings used in this Agreement are
for convenience of reference only and do not in any way affect, limit, amplify
or modify the terms and provisions of this Agreement.
(g) Counterpart Execution. This Agreement may be executed in
several counterparts, each of which shall constitute an original, but together
such counterparts shall constitute one and the same instrument.
(h) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their permitted legal
representatives, heirs, successors and assigns.
(i) Time; Construction. Time is of the essence of each provision
of this Agreement. All references to the singular or plural number or
masculine, feminine or neuter gender shall, as the context requires, include
all others. All schedules and exhibits
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attached hereto are by this reference made a part of this Agreement for all
purposes. All references to sections, paragraphs, and schedules are to this
Agreement unless otherwise specifically noted.
(j) Severability. If for any reason any provision of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
(k) Authority. Each individual executing this Agreement on behalf
of any party to this Agreement represents and warrants that he or she is
authorized to enter into this Agreement on behalf of that party and that this
Agreement binds that party.
(l) Parties in Interest. Nothing in this Agreement is intended to
confer any rights or remedies under or by reason of this Agreement on any
person other than the parties hereto and their respective permitted successors
and assigns, nor is anything in this Agreement intended to relieve or
discharge any obligation of any third person or any party hereto or to give
any third person any right to subrogation or action over or against any party
to this Agreement.
(m) Further Assurances. The Credit Parties shall, at their own
expense, execute, acknowledge and deliver any further assignments,
conveyances, transfers or other assurances, documents or instruments
reasonably requested by the Required Purchasers and will take any other action
consistent with the terms of this Agreement or which may reasonably be
requested by the Required Purchasers in order to accomplish and effectuate the
intent hereof.
(n) Expenses. It is a condition to the effectiveness of this
Agreement that the Credit Parties shall (i) pay the outstanding fees and
expenses of counsel to the Purchasers, Xxxx, Weiss, Rifkind, Xxxxxxx &
Xxxxxxxx ("Xxxx Xxxxx") in the amount of $87,500, and Paul, Hastings, Xxxxxxxx
& Xxxxxx LLP in the amount of $36,000 and (ii) pay a retainer to Xxxx Xxxxx
for the payment of its reasonable and actual fees and expenses incurred after
the date hereof in the amount of $100,000.
(o) Purchasers' Financial Advisor. Upon request by the Required
Purchasers, the Credit parties shall (i) pay the reasonable and actual fees
and expenses of a financial advisor which will be selected by the Required
Purchasers to evaluate and make recommendations to the Purchasers regarding
the business and operations of the Credit Parties ("Financial Advisor") and
(ii) cooperate in all respects with, and furnish all information and access
reasonably requested by, such financial advisor, provided, that (x) a
Financial Advisor shall not be retained until after the date that is 30 days
after the date of this Agreement, and (y) the amount of fees and expenses of
the Financial Advisor shall not exceed $150,000 per month.
(p) Effectiveness. This Agreement shall become effective when (a)
each Credit Party and the Required Purchaser shall have signed a counterpart
hereof (whether the same or different counterparts) and shall have delivered
(including by way of facsimile transmission) the same to the Issuer or counsel
for the Purchasers as the case
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may be, (b) the Credit Parties shall have complied with the preceding
paragraph concerning the Purchasers' legal fees and expenses and (c) the
Second Amendment has been duly executed and delivered and is in full force and
effect.
(q) Governing Law. The provisions of Section 13.11 of the Purchase
Agreement are hereby incorporated into this Agreement by this reference.
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Agreement to be duly executed and delivered as of the date first above
written.
HQ GLOBAL HOLDINGS, INC.
By:________________________________
Name:
Title:
HQ GLOBAL WORKPLACES, INC.
By:________________________________
Name:
Title:
Executive Office Center, Inc.
Executive Office Networks, Ltd.
HQ Network Systems, Inc.
HQPA, Inc.
Office Works, Inc.
RTCCO, Inc.
Texas Suites, Inc.
Travel Disposition Company
TYCO, Inc.
Vantas Bethesda Metro, Inc.
Vantas Boca Raton, Inc.
Vantas Corporate Centers, Inc.
Vantas Long Island, L.L.C.
OfficePlus Corporation (a/k/a Vantas
Midwest, Inc.)
Vantas Newport, Inc.
Vantas New York, Inc.
Vantas San Francisco, Inc.
Vantas Southern California, Inc.
Vantas 2300 M., Inc.
Vantas International Holdings, Inc.
By:________________________________
Name:
Title:
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BLACKSTONE MEZZANINE
PARTNERS L.P.
By: Blackstone Mezzanine Associates
L.P., its General Partner
By: Blackstone Mezzanine Management
Associates L.L.C., its General
Partner
By: __________________________
Name:
Title: Member
Aggregate Principal Amount of Notes Held:
$_________________.
BLACKSTONE MEZZANINE
HOLDINGS L.P.
By: Blackstone Mezzanine Associates
L.P., its General Partner
By: Blackstone Mezzanine Management
Associates L.L.C., its General
Partner
By: __________________________
Name:
Title: Member
Aggregate Principal Amount of Notes Held:
$_________________.
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X.X. XXXXXX PARTNERS (BHCA), L.P.
By: JPMP Mater Fund Manager, L.P.
its General Partner
By: JPMP Capital Corp., its General
Partner
By: __________________________
Name:
Title:
Aggregate Principal Amount of Notes Held:
$_________________.
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CT MEZZANINE PARTNERS I LLC
By: __________________________
Name:
Title:
Aggregate Principal Amount of Notes Held:
$_________________.
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ARES LEVERAGED INVESTMENT
FUND, L.P.
By: ARES Management, L.P.
Its: General Partner
By: __________________________
Name:
Title:
Aggregate Principal Amount of Notes Held:
$_________________.
ARES LEVERAGED INVESTMENT
FUND II, L.P.
By: ARES Management II, L.P.
Its: General Partner
By: __________________________
Name:
Title:
Aggregate Principal Amount of Notes Held:
$_________________.
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XXXXXXXXXX XXXXXXXXXXXXX LLC
By: Golden Tree Asset Management,
As Agent
By: __________________________
Name:
Title:
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