Exhibit 10.1
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SECOND AMENDMENT TO FORBEARANCE AGREEMENT
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THIS SECOND AMENDMENT TO FORBEARANCE AGREEMENT (this "Amendment")
is made and entered into as of the 14th day of December, 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"),
BNP PARIBAS (f/k/a Paribas), as administrative agent, collateral agent and
arranger (the "Administrative 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 ING
(U.S.) CAPITAL LLC, as managing agent (the "Managing Agent" and, together with
the Administrative 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, the Subsidiary Guarantors,
certain Banks party to the Credit Agreement, and the Agents entered into that
certain Forbearance Agreement dated as of October 1, 2001, as amended by that
certain First Amendment to Forbearance Agreement dated as of November 15, 2001
(collectively, the "Forbearance Agreement"); and
WHEREAS, the parties desire to amend the Forbearance Agreement on
the terms and conditions set forth in this Amendment.
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 Amendment and agrees that each
of the preambles and recitals set forth in the introduction to this Amendment
are incorporated herein by reference and are and shall be deemed to be a part
of this Amendment as if fully set forth herein.
Section 1.2 Definitions. Capitalized terms not otherwise defined in this
Amendment shall have the meaning ascribed thereto in the Credit Agreement.
ARTICLE 2
AMENDMENTS TO FORBEARANCE AGREEMENT
Section 2.1 Existing Events of Default. The term "Existing Events of
Default" (as defined in the Forbearance Agreement) shall also include the
following Defaults and Events of Default under the Credit Agreement: (i) the
failure to make the amortization payments due prior to the expiration of the
Forbearance Period, and (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 expiration of the Forbearance Period.
Section 2.2 Forbearance Period. The Forbearance Period shall end on the
earliest to occur of the following: (a) February 14, 2002, (b) the termination
of the Subordinated Debt Standstill Period (as such term is defined in the
Forbearance Agreement), as such period may be extended by the holders of the
Mezzanine Subordinated Note Documents, 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, terms or provisions set forth in the
Forbearance Agreement (as amended by this Amendment).
Section 2.3 Management Retention Plan. Pursuant to and in accordance
with Section 3.9 of the Forbearance Agreement, the Banks executing this
Amendment hereby ratify the Administrative Agent's approval of the management
retention plan which has been adopted by Parent's board of directors (the
"Management Retention Plan"), the terms, conditions and provisions of which
are summarized on Schedule 1 attached hereto and made a part hereof by this
reference. For purposes of administering the Management Retention Plan with
respect to the director-level employees, Parent or Borrower has determined to
either (i) establish and fund a trust, in which the director-level employees
shall be the beneficiaries, in a minimum amount of $841,380.00 and a maximum
amount of $1,028,734.00 (the "Management Retention Funds"), or (ii) deposit
the Management Retention Funds into an escrow account. Parent and Borrower
have advised the Banks that the terms of the trust documents or escrow
arrangement shall require that the
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Management Retention Funds be used solely to pay the obligations under the
Management Retention Plan and shall contain such other terms and conditions as
determined by Parent, subject to the reasonable approval of the Administrative
Agent. The Management Retention Funds consist of (a) the director-level
management retention bonuses totaling $841,380.00 (which are listed by
director-level position on Schedule 1), and (b) at Borrower's option, the
amount of up to $187,354.00 in the aggregate for retention bonuses for
supplemental positions (that is, bonuses for director-level employees who are
not specified on Schedule 1) for Borrower's United States and European based
employees. Upon the establishment of the trust or escrow for the Management
Retention Funds as described above, the Banks hereby agree that their security
interest in and lien on the Management Retention Funds shall be junior solely
to the rights of the director-level employees (and not to any senior-level
management) under the Management Retention Plan in the Management Retention
Funds. It is expressly understood that the agreement by the Banks set forth in
the immediately preceding sentence applies solely and exclusively to the
Management Retention Funds and not to any other assets or property. In the
event that the provisions of Schedule 1 (and Exhibit A to Schedule 1) conflict
with the provisions of this Section 2.3, then the provisions of this Section
2.3 shall control.
Section 2.4 Mitigation of Landlords' Claims. For purposes of mitigating
and settling claims of Borrower's landlords with respect to business centers
that have been closed (or will be closed) by Borrower, the Banks executing
this Amendment hereby agree that the amount of $1,000,000.00 in the aggregate
may be used by Borrower to mitigate and/or settle claims with such landlords;
provided, however, that as a condition to the making of any such payments by
Borrower (a) Borrower shall submit to the Administrative Agent and the Banks'
Financial Advisor a term sheet setting forth the terms and conditions of the
proposed settlement with the landlord, and (b) Borrower shall receive the
Administrative Agent's written consent to such term sheet, which consent shall
not be unreasonably withheld or delayed (it being agreed by the parties hereto
that three (3) business days after receipt by the Administrative Agent and the
Banks' Financial Advisor of such term sheet shall be a reasonable period of
time for the granting (or denying) of consent thereto). The Administrative
Agent shall furnish to the other Agents a copy of any term sheet which is
approved by the Administrative Agent and the Banks' Financial Advisor.
Section 2.5 Closings of Business Centers.
(a) Phase I Closings. Prior to the execution of this
Amendment, and consistent with the Business Plan (as such term is defined in
the Forbearance Agreement), the Credit Parties initiated the process of
closing those business centers designated as Phase I business centers on
Schedule 2 attached hereto and made a part hereof by this reference. Except as
expressly set forth to the contrary on Schedule 2, and consistent with the
Business Plan, the Credit Parties' closure of Phase I business centers shall
be completed on or before January 7, 2002.
(b) Phase II Closings. Promptly after execution of this
Amendment, and consistent with the Business Plan, the Credit Parties shall
initiate the process of closing those business centers designated as Phase II
business centers on Schedule 2, consistent with the Credit Parties' past
closure practices including relocation of clients located in such business
centers. Except as expressly set forth to the contrary on Schedule 2, and
consistent with the Business Plan,
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closure of Phase II business centers shall be initiated by the Credit Parties
on or before January 7, 2002 and completed on or before January 31, 2002.
(c) Phase III Closings. On or before January 7, 2002,
Borrower shall submit to the Administrative Agent and the Banks' Financial
Advisor a list of targeted business centers to be included in its Phase III
closings. On or before January 15, 2002, Borrower shall submit to the
Administrative Agent and the Banks' Financial Advisor a plan for Borrower's
Phase III business center closings, such plan to include, without limitation,
the following information: (i) a list of those business centers to be closed
(together with a cost/benefit analysis supporting the decision to close such
business centers), (ii) a list of those business centers for which the
applicable Credit Party intends to seek to renegotiate the leases applicable
thereto (together with a cost/benefit analysis supporting the decision to
renegotiate the leases for such business centers), and (iii) a timetable for
the initiation and the completion by the Credit Parties of such closures
and/or renegotiations.
Section 2.6 Chief Operating Officer and Chief Financial Officer. Section
3.10 of the Forbearance Agreement is hereby amended in its entirety to read as
follows:
Chief Operating Officer and Chief Financial Officer. Consistent with the
Parent's desire to hire a chief operating officer and a chief financial
officer, the Parent shall promptly engage an executive search firm to
initiate a search for individuals to fill such positions. The Parent
shall facilitate communications between such firm and the Administrative
Agent and the Banks' Financial Advisor, and Parent shall cause such firm
to periodically apprise the Administrative Agent and the Banks'
Financial Advisor with the progress of said search. On or before January
15, 2002, Parent shall submit to the Administrative Agent and the Banks'
Financial Advisor a detailed description of the desired candidate
qualifications, role, responsibility and authority to be held by the
chief operating officer and chief financial officer, and with respect to
the chief operating officer, a preliminary list of eligible internal and
external candidates (which list may be supplemented from time to time).
The list of eligible internal and external candidates for chief
financial officer shall be provided when available (and may be
supplemented from time to time). The finalist for each position shall be
reasonably acceptable to the Administrative Agent.
Section 2.7 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 December 14, 2001 is as set forth on the schedule
attached hereto and made a part hereof by this reference as Schedule 3. The
parties hereby agree that Schedule 3 attached to this Amendment shall
supersede and replace Schedule 2 attached to the Forbearance Agreement.
Section 2.8 Cash Flow Projections. The Cash Flow Projections to be
delivered by Borrower to the Administrative Agent and to the Banks' Financial
Advisor pursuant to Section 3.7 of the Forbearance Agreement is hereby
modified as follows: (a) the Cash Flow Projections due on December 24, 2001
(for the week ending December 21, 2001) shall be delivered on or before
December 26, 2001, (b) the Cash Flow Projections due on December 31, 2001 (for
the week ending
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December 28, 2001) shall be delivered on or before January 2, 2002, and (c)
the Cash Flow Projections due on January 21, 2002 (for the week ending January
18, 2002) shall be delivered on or before January 23, 2002.
ARTICLE 3
MISCELLANEOUS
Section 3.1 No Offsets or Defenses. As a material inducement for the
execution of this Amendment, each of the Credit Parties hereby acknowledges
and agrees that the Indebtedness and all Credit Documents (as modified by the
Forbearance Agreement and this Amendment) 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 (as modified by the Forbearance Agreement and this Amendment) 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 (as modified by the Forbearance Agreement and this
Amendment).
Section 3.2 Captions. The captions and headings used in this Amendment
are for convenience of reference only and do not in any way affect, limit,
amplify or modify the terms and provisions of this Amendment.
Section 3.3 Counterparts; Facsimile. This Amendment 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. This Amendment may be executed and delivered by the parties by means of
facsimile transmission.
Section 3.4 Successors and Assigns. This Amendment shall inure to the
benefit of and be binding upon the parties hereto and their permitted legal
representatives, heirs, successors and assigns.
Section 3.5 Time. Time is of the essence of each provision of this
Amendment.
Section 3.6 Severability. If for any reason any provision of this
Amendment 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 3.7 Authority. Each individual executing this Amendment on
behalf of any party to this Amendment represents and warrants that he or she
is authorized to enter into this Amendment on behalf of that party and that
this Amendment binds that party.
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Section 3.8 Effectiveness. This Amendment 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
(by means 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, and the fees and expenses
of the Banks' Financial Advisor) payable to the Administrative Agent to the
extent then due.
Section 3.9 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 Amendment by this reference.
[SIGNATURES APPEAR ON FOLLOWING PAGES]
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Amendment 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:
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: