EXHIBIT 10
FORBEARANCE AGREEMENT
THIS FORBEARANCE AGREEMENT (this "Agreement") is made and
entered into as of the 1st day of October, 2001, by and among HQ GLOBAL
HOLDINGS, INC., a Delaware corporation (the "Parent"), HQ GLOBAL WORKPLACES,
INC., a Delaware corporation (the "Borrower"), the SUBSIDIARY GUARANTORS party
to this Agreement (the "Subsidiary Guarantors"), certain BANKS party to the
Credit Agreement referred to below (the "Joining Banks"), ING (U.S.) CAPITAL
LLC, as managing agent (the "Managing Agent"), BANKERS TRUST COMPANY, as
syndication agent and co-arranger (the "Syndication Agent"), CITICORP REAL
ESTATE, INC., as documentation agent and co-arranger (the "Documentation
Agent"), and BNP PARIBAS (f/k/a Paribas), as administrative agent, collateral
agent and arranger (the "Administrative Agent" and, together with the Managing
Agent, the Syndication Agent and the Documentation Agent, collectively, the
"Agents" and each, an "Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Parent, the Borrower, the Banks and the Agents are
parties to that certain Amended and Restated Credit Agreement, dated as of
January 16, 1997, amended and restated as of November 6, 1998, further amended
and restated as of August 3, 1999, further amended and restated as of May 31,
2000, further amended by that certain First Amendment and Consent dated as of
August 11, 2000, further amended by that certain Second Amendment and Waiver
dated as of March 26, 2001, and further amended by that certain Third
Amendment and Agreement dated as of June 29, 2001 (collectively, the "Credit
Agreement"); and
WHEREAS, the Parent, the Borrower and the other Credit Parties
acknowledge that there currently exists, and during the Forbearance Period (as
hereinafter defined) there may also occur, the following Defaults and Events
of Default under the Credit Agreement (collectively, the "Existing Events of
Default"): (i) the failure to make the September 30, 2001 amortization
payments, (ii) the failure to meet the financial covenants set forth in
Sections 8.09, 8.10, 8.11, 8.12 and 8.13 of the Credit Agreement for any
fiscal quarter ending prior to the date of this Agreement, (iii) the failure
of the Borrower and its Subsidiaries timely to comply with the requirements of
Sections 7.18(b), 8.04 and 8.06(ii) of the Credit Agreement regarding the
establishment of Lockboxes and Concentration Accounts, and (iv) any Default or
Event of Default under the Credit Agreement (including, without limitation,
Section 9.04 thereof) resulting from any breach or default under the Mezzanine
Subordinated Note Documents (excluding any breach or default under the Mezz
Debt Subordination Agreement (as hereinafter defined)); and
WHEREAS, the Borrower sent the Administrative Agent two (2)
Notices of Borrowing dated September 26, 2001, and received by the
Administrative Agent on September 27, 2001, requesting additional fundings on
the A Revolving Loan Facility in the amount of $2,800,000.00 and on the B
Revolving Loan Facility in the amount of $5,400,000.00 (the "Funding
Requests"); and
WHEREAS, the Borrower subsequently advised the Administrative
Agent that the Borrower was withdrawing its Funding Requests; and
WHEREAS, the Borrower has acknowledged that as of September 26,
2001 and as of the date hereof, the Borrower cannot satisfy all of the
conditions precedent contained in Section 5 of the Credit Agreement; and
WHEREAS, the Banks executing this Agreement have agreed to
forbear from the enforcement of their remedies against the Borrower and the
other 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:
ARTICLE 1
RECITATIONS; DEFINITIONS
Section 1.1 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 and agrees that each
of the 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.
Section 1.2 Definitions. Capitalized terms not otherwise defined in
this Agreement shall have the meaning ascribed thereto in the Credit
Agreement.
ARTICLE 2
FORBEARANCE
Section 2.1 Forbearance. Provided that each of the Credit Parties
complies with all of the requirements contained in this Agreement, the Credit
Agreement and the other Credit Documents (other than the Existing Events of
Default or the failure to make a Required Payment (as hereinafter defined)),
the Banks executing this Agreement shall forbear from enforcing their remedies
with respect to the Existing Events of Default and with respect to failures to
make any principal amortization payments scheduled to be made (each, a
"Required Payment") during the period (the "Forbearance Period") commencing on
the date hereof and ending on the earliest to occur of the following: (a)
December 14, 2001, (b) the termination of the period during which the holders
of the Mezzanine Subordinated Note Documents are required under that certain
Subordination Agreement dated as of August 11, 2000 by and among the Parent,
the Borrower, the Administrative Agent on behalf of the Banks, and the holders
of the Mezzanine Subordinated Note
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Documents (the "Mezz Debt Subordination Agreement") to refrain from exercising
their remedies as a result of a default under the Mezzanine Subordinated Note
Documents (the "Subordinated Debt Standstill Period"), or (c) the date upon
which there occurs any Default or Event of Default under the Credit Agreement
or the other Credit Documents (other than the Existing Events of Default or
the failure to make a Required Payment) or the date upon which any of the
Credit Parties fails to comply with any of the requirements set forth herein
or any terms and provisions hereof. At the end of the Forbearance Period, if
Borrower has not paid, in full, all amounts due and owing hereunder or under
the Credit Agreement and the other Credit Documents (including, without
limitation, all of the Required Payments), and/or if the Borrower has not
cured the Existing Events of Default to the full satisfaction of the Required
Banks in their respective sole and absolute discretion, then the Banks may
immediately commence, proceed or otherwise continue with any or all rights and
remedies available under the Credit Agreement and the other Credit Documents,
under applicable law or otherwise, without any notice or demand to any Credit
Party or any other party, but as among the Agents and the Banks, subject to
the provisions of the Credit Agreement with respect to exercising remedies.
This Agreement is an accommodation to the Credit Parties and the Credit
Parties remain bound to perform their respective obligations under the Credit
Agreement and the other Credit Documents except as otherwise provided in this
Agreement.
ARTICLE 3
TERMS AND CONDITIONS OF FORBEARANCE
Section 3.1 Availability of Advances and Letters of Credit.
(a) Subject to the terms and conditions of this
Agreement, the Credit Agreement (including the satisfaction of the condition
precedent that no Default or Event of Default exists other than the Existing
Events of Default or the failure to make a Required Payment) and the other
Credit Documents, during the Forbearance Period, each Bank with an A Revolving
Loan Commitment will honor draw requests on the A Revolving Loan Facility, and
each Bank with a B Revolving Loan Commitment will honor draw requests on the B
Revolving Loan Facility; provided, however, that (i) the proceeds of such
Borrowings shall be used by Borrower solely (x) for its working capital needs
complying in all material respects with the budget attached hereto as Schedule
1 and made a part hereof by this reference, which budget has been approved and
accepted by the Required Banks (the "Budget"), and/or (y) to pay interest on
the Loans, (ii) each Notice of Borrowing shall be accompanied by an officer's
certificate from the chief financial officer (or other designated executive
with similar authority) of the Borrower delivered to the Administrative Agent
stating that such Borrowing complies in all material respects with the Budget,
and (iii) a copy of each Notice of Borrowing and accompanying officer's
certificate shall be sent by the Borrower to the Banks' Financial Advisor (as
defined in Section 7.15 of this Agreement), simultaneously with delivery to
the Administrative Agent, for review by the Banks' Financial Advisor, provided
that such review shall not unreasonably delay the funding of any such Notice
of Borrowing.
(b) Subject to the terms and conditions of this
Agreement, the Credit Agreement (including the satisfaction of the condition
precedent that no Default or Event of
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Default exists other than the Existing Events of Default or the failure to
make a Required Payment) and the other Credit Documents, during the
Forbearance Period, each A Issuing Bank will honor requests for issuance of A
Letters of Credit, and each B Issuing Bank will honor requests for issuance of
B Letters of Credit, complying in all material respects with the Budget. Each
Letter of Credit Request shall be accompanied by an officer's certificate from
the chief financial officer (or other designated executive with similar
authority) of the Borrower delivered to the Administrative Agent stating that
such Letter of Credit complies in all material respects with the Budget, and a
copy of each Letter of Credit Request and accompanying officer's certificate
shall be sent by the Borrower to the Banks' Financial Advisor, simultaneously
with delivery to the Administrative Agent, for review by the Banks' Financial
Advisor, provided that such review shall not unreasonably delay the issuance
of any such Letter of Credit.
(c) Notwithstanding the foregoing or any provision of
the Credit Agreement (including, without limitation, Sections 1A.01(c) and
1B.01(c) of the Credit Agreement) or the other Credit Documents to the
contrary, during the Forbearance Period, no Letter of Credit shall be issued
or renewed for a period exceeding ninety (90) days; provided, however, that
the Administrative Agent, in its sole and absolute discretion, may agree to
extend such ninety (90)-day period for up to a period of one (1) year.
Section 3.2 Base Rate Loans and Eurodollar Loans. Notwithstanding the
provisions of Sections 1.08 and 1.09 of the Credit Agreement or any other
provision of the Credit Agreement or the other Credit Documents to the
contrary, during the Forbearance Period, (i) the Applicable Margin with
respect to any new or converted Base Rate Loans shall be 3.00%, (ii) the
Applicable Margin with respect to any new or converted Eurodollar Loans shall
be 4.00%, and (iii) only Interest Periods of one month each shall be available
with respect to any new or converted Eurodollar Loans.
Section 3.3 Default Interest. During the Forbearance Period, default
interest will continue to accrue but the Required Banks waive the requirement
in Section 1.08(c) of the Credit Agreement that default interest be collected;
provided, however, that the foregoing shall not constitute a waiver of the
right to charge and collect such default interest retroactively upon the
expiration or earlier termination of the Forbearance Period.
Section 3.4 Borrower's Business Plan. On or before November 15, 2001,
the Borrower shall present to the Banks a business plan for the remainder of
calendar year 2001 and for calendar year 2002, including, without limitation,
Borrower's financial projections through the end of calendar year 2002 (the
"Business Plan"). Within fifteen (15) days of receipt of the Business Plan,
the Administrative Agent shall advise Borrower if the Business Plan is
acceptable to the Required Banks, such acceptance not to be unreasonably
withheld. If the Business Plan is not acceptable to the Required Banks, then
the Administrative Agent shall advise Borrower within such fifteen (15)-day
period of the portions thereof that are not acceptable and the reasonable
basis for such nonacceptance. Borrower shall have a period of ten (10) days
after receipt of such nonacceptance in which to revise the Business Plan to
address the Required Banks' objections thereto and to resubmit the Business
Plan to the Administrative Agent for its reconsideration by the Required
Banks. Subject to the terms and provisions of this Agreement (including,
without limitation, Section 3.1(a) hereof), the Credit Agreement and the other
Credit Documents, Borrower's Notices
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of Borrowing shall continue to be honored and funded during the fifteen (15)
day and ten (10) day periods referred to in this Section 3.4.
Section 3.5 Lockbox Agreement. On or before November 30, 2001,
Borrower shall execute and deliver a lockbox agreement substantially in the
form of the lockbox agreement attached as Annex L to the Security Agreement,
subject to such reasonable modifications thereto, or alternative security
arrangements, all as may be approved by the Collateral Agent.
Section 3.6 Books, Records and Inspections. Pursuant to and in
accordance with Section 7.02 of the Credit Agreement, Parent, Borrower and
each Subsidiary thereof shall cooperate and promptly comply with all requests
by the Agents, the Banks and/or the Banks' Financial Advisor to examine the
books of record and account of the Parent, the Borrower or any Subsidiary
thereof, and/or to discuss the affairs, finances and accounts of the Parent,
the Borrower or any Subsidiary thereof with, and be advised as to the same by,
its and their officers.
Section 3.7 Cash Flow Projections. On November 5, 2001 and on each
Monday thereafter during the Forbearance Period, Borrower shall deliver to the
Administrative Agent and to the Banks' Financial Advisor a "rolling" thirteen
(13)-week cash flow projection statement detailing Borrower's actual cash flow
for the elapsed week (ending on the previous Friday) and Borrower's cash flow
projections for the next succeeding thirteen (13) weeks (collectively, the
"Cash Flow Projections"). Borrower shall meet with the Banks' Financial
Advisor on a weekly basis to review the Cash Flow Projections to ensure their
compliance in all material respects with the Budget.
Section 3.8 Average Core U.S. Centers Occupancy Rate. Notwithstanding
the requirements of Section 8.21 of the Credit Agreement, the Parent and the
Borrower shall not permit the Average Core U.S. Centers Occupancy Rate to be
less than sixty-eight percent (68%) at any time during the Forbearance Period.
For the purposes of this calculation, the term "Core U.S. Centers" shall not
include office space that has been closed by the Borrower prior to the date
hereof or as to which Borrower initiates the closure process during the
Forbearance Period.
Section 3.9 Executive Compensation. During the Forbearance Period,
the Parent and the Borrower shall not increase the compensation of their
executive officers or enter into new severance agreements with executive
officers, without the prior consent of the Administrative Agent, such consent
not to be unreasonably withheld.
ARTICLE 4
AMENDMENT
Section 4.1 Conditions Precedent to All Credit Events.
Notwithstanding the provisions of Section 5.01 of the Credit Agreement or any
other provision of the Credit Agreement or the other Credit Documents to the
contrary, during the Forbearance Period, the parties waive the conditions
precedent that (a) there shall exist no Default or Event of Default at the
time of each Credit Event, but only to the extent that such Default or Event
of Default is an Existing Event of Default or the failure to make a Required
Payment, and (b) all representations and warranties contained in the Credit
Agreement or in the other Credit Documents shall be true and correct in all
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material respects with the same effect as though such representations and
warranties had been made on the date of making of such Credit Event (except to
the extent such representations specifically relate to earlier dates in which
case such representations shall be correct in all material respects on and as
of such dates), but only with respect to those representations and warranties
that are specifically excluded from Section 5.5 of this Agreement as set forth
on Schedule 3 attached hereto and incorporated herein by this reference.
ARTICLE 5
CREDIT PARTY ACKNOWLEDGMEnts
Section 5.1 Indebtedness. Each of the Credit Parties hereby
acknowledges and agrees that the principal amount outstanding under the Loans
and the Letters of Credit as of October 26, 2001 is as set forth on the
schedule attached hereto and made a part hereof by this reference as Schedule
2.
Section 5.2 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 and all Credit Documents are valid and
binding liabilities and obligations of each of the Credit Parties. Each of the
Credit Parties hereby jointly and severally ratifies and confirms each of
their respective obligations and indebtedness under the Credit Agreement and
the other Credit Documents and represents and warrants to the Banks and the
Agents that none of them has or claims any defenses, offsets or counterclaims
to any of their respective obligations and indebtedness under the Credit
Agreement or any of the other Credit Documents.
Section 5.3 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 Agents, the Collateral Agent or
the Banks 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 Agents, the Collateral Agent or the Banks 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 Banks to
receive interest at an increased rate as a result of any Events of Default
that have occurred or may in the future occur under the Credit Agreement, (d)
to obligate the Banks to make or agree to make any extension of credit if all
conditions precedent thereto under the Credit Agreement are not satisfied, (e)
to obligate the Banks in any way to forbear from individually or collectively
enforcing remedies under the Credit Agreement or any other Credit Document in
any manner, (f) to be a commitment from any of the Banks to forbear or "stand
still", (g) 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 Parent and its
Subsidiaries taken as a whole since December 31, 1999, or (h) to otherwise
limit or modify in any way the representation contained in the last sentence
of Section 6.05(a) of the Credit Agreement. Except as expressly set forth in
this Agreement, no past or future forbearance on the
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part of any of the Banks should be viewed as a limitation upon or waiver of
the absolute right and privilege of the Banks to exercise rights and remedies
that currently exist or may in the future exist.
Section 5.4 Partial Payments. The Credit Parties acknowledge that any
partial payments made, either before or after the execution of this Agreement,
may be applied to the Notes in partial satisfaction of the Obligations and
that neither the acceptance nor application by any Agents or any Banks of any
partial payment shall constitute a cure or waiver of any default under any of
the Credit Documents, constitute any extension or other modification of the
Loans or any Credit Document, or prejudice any of the Banks' rights under any
Loan or any Credit Documents.
Section 5.5 Representations and Warranties. Each of the Credit
Parties hereby jointly and severally represents and warrants that, except as
set forth on Schedule 3 hereto, each of the representations and warranties of
the Credit Parties, and each of them, set forth in the Credit Agreement and in
each of the other Credit Documents is true and correct in all material
respects as of the date of this Agreement (it being understood and agreed that
any representation or warranty which by its terms is made as of a specified
date shall be true and correct in all material respects only as of such
specified date), and other than the Existing Events of Default, no Default or
Event of Default has occurred and is continuing under the Credit Agreement or
any of the other Credit Documents. The Credit Parties make no statement
regarding the truth or correctness of the matters set forth on Schedule 3
attached hereto.
Section 5.6 No Litigation. The Credit Parties hereby represent and
warrant to the Agents and the Banks that, except as set forth on Schedule 4
hereto, no litigation, investigation or proceeding before or by an arbitrator
or a governmental authority is continuing or, to the knowledge of any Credit
Party, threatened against the Credit Parties, or any of them, or any of their
officers, directors or Affiliates (a) with respect to the Credit Agreement,
the Notes, or any of the other Credit Documents, or any of the transactions
contemplated hereby or thereby, or (b) which could have a material adverse
effect on the performance, business, assets, nature of assets, liabilities,
operations, properties, condition (financial or otherwise) or prospects of the
Credit Parties, or any of them.
Section 5.7 Subsidiary Guarantors. The Credit Parties hereby
represent and warrant to the Agents and the Banks that the Subsidiary
Guarantors that are executing this Agreement are all of the Subsidiaries of
the Parent or the Borrower that are currently obligated to the Agents or the
Banks under the Credit Documents.
Section 5.8 Confirmation and Ratification. For the avoidance of
doubt, each Credit Party hereby acknowledges and confirms its due
authorization, execution and delivery of all Credit Documents (each Credit
Document as amended, restated, modified and/or supplemented through and
including the date of this Agreement) to which it is a party, including all
instruments, financing statements, agreements, certificates and documents
executed and delivered in connection therewith, and hereby ratifies all
actions heretofore taken in connection therewith. Each Credit Party, by its
execution (or acknowledgment, as the case may be) and delivery of this
Agreement, hereby consents to the extensions of credit pursuant to the Credit
Agreement. Each Credit Party further acknowledges and agrees to the provisions
of this Agreement and hereby agrees for the benefit of the Agents and the
Banks that all extensions of credit pursuant to the Credit Agreement (as same
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may be further amended, restated, modified and/or supplemented from time to
time) shall be fully entitled to all benefits of, and shall be fully
guaranteed and secured pursuant to and in accordance with the terms of, each
of the Credit Documents, as applicable.
Section 5.9 Priority and Enforceability. Each Credit Party hereby
acknowledges and agrees that (a) the Obligations are secured by valid and
enforceable first priority liens and security interests granted by the Credit
Parties to the Collateral Agent, for the ratable benefit of the Banks, in and
to all of the Collateral, subject only to Permitted Liens, (b) the Obligations
and the liens and security interests of the Collateral Agent, for the ratable
benefit of the Banks, in the Collateral are not subject to avoidance, defense,
objection, action, counterclaim, setoff or subordination, and (c) the
Obligations constitute legal, valid and binding obligations of each Credit
Party, enforceable in accordance with the terms of the Credit Documents and
pursuant to applicable law, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to or affecting creditors' rights generally, and subject to
the limitations imposed by general equitable principles (regardless whether
such enforceability is considered in a proceeding at law or in equity).
Furthermore, no Credit Party will use any of its cash or other assets to
object to or contest in any manner, or raise any objections, counterclaims or
defenses to, the validity, perfection, priority or enforceability of the
claims or liens of the Agents, the Collateral Agent and the Banks, or to
investigate or assert any claims or causes of action arising on or prior to
the date of this Agreement against the Agents, the Collateral Agent or the
Banks.
ARTICLE 6
ADDITIONAL COVENANTS
Section 6.1 Mezz Debt Subordination Agreement. The Credit Parties
hereby acknowledge and confirm their obligations under the Mezz Debt
Subordination Agreement, including their agreement thereunder not to make
payments on the Mezzanine Subordinated Note Documents unless such payments are
permitted under the Mezz Debt Subordination Agreement. The making of any such
payment in violation of the Mezz Debt Subordination Agreement shall constitute
an Event of Default under the Credit Agreement without the benefit of any
notice or grace period and shall automatically terminate the Forbearance
Period.
Section 6.2 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 Agents, the
Collateral Agent, each Bank, 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
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Agreement, the Credit Agreement, the Obligations or any other Credit Document,
(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 Credit Documents or any
other proceedings that have been brought or may be brought by any party hereto
or any third party relating to the Credit Documents or the transactions
contemplated thereby, (c) any acts, transactions or events that are the
subject matter of this Agreement or the Credit 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), or its
successors or assigns hereafter can, shall or may have against the Agents,
each Bank, and their predecessors, affiliates, Subsidiaries (direct or
indirect), successors, assigns, participants, officers, directors,
shareholders, partners, employees 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
Credit Documents; provided, however, that nothing herein shall be construed or
deemed to release any covenants or agreements contained herein or in any
Credit Document so long as such Credit Document shall remain in full force and
effect.
ARTICLE 7
MISCELLANEOUS
Section 7.1 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.
Section 7.2 No Implied Terms. Any and all duties or obligations that
Agents and Banks may have to any Credit Party are limited to those expressly
stated in this Agreement and the Credit Documents, and neither the duties and
obligations of Banks and Agents nor the rights of the Credit Parties shall be
expanded beyond the express terms of this Agreement and the Credit Documents.
Section 7.3 Fair Consideration. The agreements contained herein
constitute valuable, adequate and fair consideration for the obligations of
the Credit Parties hereunder.
Section 7.4 No Lender Control. No Bank will, nor has ever been, a
partner, joint venturer, alter ego, manager, or controlling person of any of
the Credit Parties.
Section 7.5 No Other Representation. The Credit Parties acknowledge
and agree that no Agent, Bank 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 Credit Documents.
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Section 7.6 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.
Section 7.7 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. A complete set
of counterparts shall be lodged with the Borrower and the Administrative
Agent.
Section 7.8 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.
Section 7.9 Time; Construction; Exhibits. 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 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. The use of the words "hereof", "hereunder", "herein" and words of
similar import shall refer to this entire Agreement and not to any particular
section, paragraph or portion of this Agreement unless otherwise specifically
noted. All references to "including" shall mean "including without limited
to".
Section 7.10 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.
Section 7.11 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.
Section 7.12 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.
Section 7.13 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 any Agent and will take any other action consistent
with the terms of this Agreement or which may reasonably be requested by any
Agent in order to accomplish and effectuate the intent hereof.
Section 7.14 Expenses. The Credit Parties shall pay (a) all costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) incurred by the Administrative Agent in connection with the
execution and delivery of this Agreement, and (b) the costs and expenses of
the Banks' Financial Advisor.
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Section 7.15 Banks' Financial Advisor. Xxxxx, Xxxxxxxx & White will
be engaged as the financial advisor acting on behalf of the Banks (the "Banks'
Financial Advisor"), provided, however, that another or a different financial
advisor may be engaged by the Banks in accordance with the terms and
provisions of the Credit Agreement. All notices required hereunder to be sent
to the Banks' Financial Advisor shall be sent to Xxxxxx X. Xxxxx at Xxxxx,
Xxxxxxxx & White, 0000 Xxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000,
Facsimile No. (000) 000-0000.
Section 7.16 Effectiveness. This Agreement shall become effective
when (a) each Credit Party and the Required Banks 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
Administrative Agent at the Notice Office, and (b) the Parent and the Borrower
shall have paid in full to the Administrative Agent all costs, fees and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) payable to the Administrative Agent to the extent then due.
Section 7.17 Governing Law; Submission to Jurisdiction; Venue; Waiver
of Jury Trial. The provisions of Section 12.08 of the Credit Agreement are
hereby incorporated into this Agreement by this reference.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
11
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:
12
ING (U.S.) CAPITAL LLC, Individually and
as Managing Agent
By:
--------------------------------
Name:
Title:
13
BANKERS TRUST COMPANY, Individually
and as Syndication Agent
By:
-----------------------------------
Name:
Title:
14
CITICORP REAL ESTATE, INC., Individually
and as Documentation Agent
By:
-----------------------------------
Name:
Title:
15
BNP PARIBAS, Individually and as
Administrative Agent
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
17
BAYERISCHE HYPO UND VEREINSBANK AG
By:
------------------------------------
Name:
Title:
17
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE INC.
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
18
BHF (USA) CAPITAL CORPORATION
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
19
COAST BUSINESS CREDIT
By:
------------------------------------
Name:
Title:
20
DEUTSCHE BANC XXXX XXXXX
By:
------------------------------------
Name:
Title:
21
XXXXX XXXXX
By:
------------------------------------
Name:
Title:
22
EUROPEAN AMERICAN BANK
By:
------------------------------------
Name:
Title:
23
FIRST SOURCE LOAN OBLIGATIONS TRUST
By: First Source Financial, Inc.,
its Servicer and Administrator
By:
----------------------------
Name:
Title:
24
PILGRIM PRIME RATE TRUST
By: Pilgrim Investments, Inc., as its
investment manager
By:
-------------------------------
Name:
Title:
25
SOLOMON XXXXX XXXXXX
By:
------------------------------------
Name:
Title:
26
SRF TRADING INC.
By:
------------------------------------
Name:
Title:
27
THE PROVIDENT BANK
By:
------------------------------------
Name:
Title:
00
XXXXXXX-XXXXX XXX ADVISOR FLOATING
RATE ADVANTAGE FUND
By: Xxxxx Xxx & Xxxxxxx Incorporated,
as Advisor
By:
------------------------------
Name:
Title:
29
SRF 2000 LLC
By:
------------------------------------
Name:
Title:
30
ORIX FINANCIAL SERVICES, INC.
By:
------------------------------------
Name:
Title:
31
BNP PARIBAS LOAN TRADING
By:
-------------------------------------
Name:
Title:
32
OXFORD STRATEGIC INCOME FUND
By:
------------------------------------
Name:
Title:
33
SENIOR DEBT PORTFOLIO
By:
------------------------------------
Name:
Title:
34
XXXXXX FINANCIAL INC.
By:
------------------------------------
Name:
Title:
35
IBJ WHITEHALL BANK & TRUST COMPANY
(formerly, IBJ Xxxxxxxx Bank
& Trust Company)
By:
-------------------------------------
Name:
Title:
36
ING BARING
By:
------------------------------------
Name:
Title:
37
THE ING CAPITAL SENIOR SECURED HIGH
INCOME HOLDINGS FUND, LTD.
By: ING Capital Advisors LLC, as
Investment Manager
By:
-----------------------------
Name:
Title:
38
BALANCED HIGH-YIELD FUND II, LTD.
By: ING Capital Advisors LLC,
as Asset Manager
By:
-------------------------------
Name:
Title:
39
KZH ING-2 LLC
By:
-----------------------------------
Name:
Title:
40
PACIFICA PARTNERS I, L.P.
By: Imperial Credit Asset Management,
as Investment Manager
By:
------------------------------
Name:
Title:
41
PARIBAS CAPITAL FUNDING LLC
By:
-----------------------------------
Name:
Title:
42
EXECUTION BY SUBSIDIARY GUARANTORS
ACKNOWLEDGED AND AGREED TO BY:
Executive Office Center, Inc.
Executive Office Network, Ltd.
HQ Network Systems, Inc.
HQPA, Inc.
OfficeWorks, 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:
SCHEDULE 1
BUDGET
(SEE ATTACHED)
44
SCHEDULE 2
OUTSTANDING PRINCIPAL AMOUNT
OF LOANS AND LETTERS OF CREDIT
---------------------------------------------------
A Term Loans $10,962,401.11
---------------------------------------------------
B Term Loans $82,218,008.47
---------------------------------------------------
C Term Loans $90,937,049.04
---------------------------------------------------
Acquisition Loans $4,625,485.71
--------------------------------------------------
A Revolving Loans $0
--------------------------------------------------
A Letters of Credit $22,192,252.92
--------------------------------------------------
B Revolving Loans $19,000,000.00
---------------------------------------------------
B Letters of Credit $6,170,276.00
---------------------------------------------------
45
Schedule 3
EXCEPTIONS TO CERTAIN REPRESENTATIONS AND WARRANTIES
1. Last sentence of Section 6.05(a) of the Credit Agreement. The Banks
contend that there has occurred a material adverse change in the
performance, business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of Parent and
its Subsidiaries taken as a whole. The Credit Parties do not make the
representation and warranty provided in the last sentence of Section
6.05(a) but do not thereby adopt the Banks' contention.
2. 6.06 of the Credit Agreement. This representation and warranty is amended
by the matters disclosed in the Schedule of Litigation matters, Schedule
4 to the Forbearance Agreement (the "Litigation Schedule").
3. 6.09 of the Credit Agreement. This representation and warranty is amended
by the matters disclosed in the Litigation Schedule and the list of tax
audits attached hereto.
4. 6.13 (a) of the Credit Agreement. The Credit Parties have sold or
otherwise disposed of certain assets other than in the ordinary course in
connection with the closing of centers or the reduction of activities at
centers.
5. 6.13 (b) of the Credit Agreement. The Company has stopped payment of rent
and other amounts due to landlords with respect to leases for centers
that have been or will be closed by a Credit Party. The Company
anticipates that letters of credit and security deposits related thereto
will be drawn and other remedial actions will be taken. In addition, all
payments to landlords are being deferred by up to one week.
6. 6.15 of the Credit Agreement. The Subsidiaries of the Borrower and Parent
are set forth on the list annexed to this Schedule.
7. 6.16 of the Credit Agreement. This representation and warranty is amended
by the matters disclosed in the Litigation Schedule.
8. 6.26 of the Credit Agreement. This representation and warranty is amended
to reflect the Existing Events of Default.
* * * *
46
Subsidiaries of Parent and Borrower:
-----------------------------------
Executive Office Center, Inc.
Executive Office Network, Ltd.
HQ Network Systems, Inc.
HQPA, Inc.
OfficeWorks, 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.
International Business Services SRL
Xxxxxx Office Center SRL
OmniOffices (UK) Limited
HQ Holdings Limited HQ Developments (UK) Limited HQ (Lombard
Street) Limited HQ Executive Suites (UK) Ltd.
HQ Executive Offices (Southampton) Limited
HQ Executive Offices (UK) Ltd.
HQ Serviced Offices (UK) Ltd.
HQMerc UK Management Limited
HQMerc UK Partnership Limited
Xxxxxxx Xxxxx Xxxxxxx Serviced Offices Limited
Swallowfield Office Services Limited
OmniOffices (Lux) 1929 Holding Company SA
OmniOffices (Lux) Investment Company SA
HQ Global Workplaces Espana X.X.
Xxxxxxx Investments BV
HQ Global Workplaces Nederland B.V.
OmniOffices Buroservice GmbH
OmniOffices (DE) Buroservice GmbH
47
HQ Business Centers GmbH Bueroservice
HQ Frankfurt Business Centers GmbH Bueroservice
Vantas International Holdings, Inc.
Vantas Holdings de Mexico, S. de X.X. de C.V.
Vantas Ciudad de Mexico S. de X.X. de C.V.
Centro Corporativo de Mexico S.A. de C.V.
Centro de Negocios de la Ciudad de Mexico S.A. de C.V.
Centro de Negocios Xxxxxxx X.X. de C.V.
HQ Global Holdings France S.A.S.
HQ Global France E.U.R.L.
HQ Global Vendome SARL
HQ Global La Defense SA
HQ Global Montpellier SA
HQ Global Provence SA
HQ Global Sophia Antipolis SA
48
Tax Audits:
----------
Following is a list of ongoing audits by various tax authorities as of October
26, 2001:
1) Santa Xxxxx County, California personal property tax audit for five
centers. The audit period is for the tax return years 1997, 1998,
1999 and 2000.
2) City of Jacksonville, Florida telecommunications public service tax
audit for one center. The audit period is from 05/1998 to 04/2001.
3) New York State sales & use tax audit for one center. The audit
period is from 12/1998 to 08/2001.
4) City of Los Angeles, California business license tax audit for 11
centers. The audit period is for the tax return years 1999, 2000 and
2001.
5) Arlington County, Virginia personal property tax audit for one
center. The audit period is for the tax return years 1999, 2000 and
2001.
6) New York City commercial rent tax audit for one center. The audit
period is from 06/1997 to 05/2000.
7) New York State sales & use tax audit for one center. The audit
period is from 06/1998 to 02/2001.
8) Xxxxxx County, Georgia personal property tax audit for one center.
The audit period is for the tax return year 2001.
9) The telecommunications excise tax settlement disclosure listed on
the Litigation Schedule.
49
SCHEDULE 4
LITIGATION
1. Lease dispute with landlord in Brentwood, California for
approximately $390,000 in past due rent, penalties and additional amounts.
2. Eviction proceeding in San Francisco (Tishgart) - in response to
HQ eviction proceeding there is a claim of $5 million for wrongful eviction.
3. Class action in New York State requesting segregation of all
security deposits for clients in all New York State HQ centers and payment of
interest on monies not segregated for whatever period claim is permitted by
the statute of limitations. No motion yet made for class action certification.
4. Leaseguard litigation - litigation against HQ for breach of
contract. Company that audited leases for landlord overcharges claims that HQ
has unreasonably refused to retain counsel and prosecute the overcharge
claims, to the financial detriment of the audit company.
5. Kaidonow/Arcoro litigation - 3 actions pending. These actions are
the subject of an indemnity from CarrAmerica and other pre-merger Xxxx-related
shareholders. Kaidonow and Arcoro assert that when Xxxx exchanged in excess of
$100 million of HQ debt for securities at HQ, Xxxx undervalued the company and
issued more equity than Xxxx was entitled to for the debt which it cancelled.
Other related claims are made by Kaidonow and Arcoro. The District Court in
Washington, DC has recently ruled that the exchange of debt for stock resulted
in the stock issued being void because the exchange was not properly approved
by the pre-merger HQ Board of Directors.
6. Walnut Creek arbitration (Massachusetts) - a former franchisee
challenges the cancellation of its franchise and seeks monetary damages in an
uncertain amount which local counsel advises is speculative and not likely to
be obtained.
7. Litigation not yet commenced but is anticipated by landlords
seeking unpaid rent and additional rent in connection with HQ centers already
closed or anticipated to be closed over the next 60 to 90 days.
8. Dispute with New York City for certain telecommunications taxes
which is in the process of being negotiated with a possible $350,000
settlement.
50
9. Possible litigation with U.S. Internet Working to be filed by HQ
to terminate agreement pursuant to which HQ presently pays $50,000 per month.
51
