|
EXHIBIT 99.3
FORBEARANCE AGREEMENT
THIS FORBEARANCE AGREEMENT
(this " Agreement "), dated as of January 1, 2007, is
entered into by and among the Lenders signatory hereto, HBK
INVESTMENTS L.P., a Delaware limited partnership, as the
arranger and administrative agent for the Lenders (in such
capacity, together with its successors and assigns in such
capacity, " Agent "), PAINCARE HOLDINGS, INC., a
Florida corporation (" Parent "), and each of Parent’s
Subsidiaries identified on the signature pages hereof (such
Subsidiaries, together with Parent, are referred to hereinafter
each individually as a " Loan Party ", and individually and
collectively, jointly and severally, as the " Loan Parties
"). Terms used herein without definition shall have the meanings
ascribed to them in the Loan Agreement defined below.
RECITALS
A. The Lenders, Agent and Loan
Parties have previously entered into that certain Loan and Security
Agreement dated May 10, 2005 (as amended, modified and supplemented
from time to time, the " Loan Agreement "), pursuant to
which the Lenders have made certain loans and financial
accommodations available to the Loan Parties.
B. Certain Events of Default have
occurred and are continuing or (in the case of amortization
payments that will be due during the Forbearance Period) are
expected to occur under the Loan Agreement as set forth in
Schedule A hereto (collectively, the " Known Defaults
").
C. The Loan Parties have requested
that the Agent and Lenders forbear from exercising their rights and
remedies under the Loan Agreement and the other Loan Documents in
order to provide the Loan Parties with time to liquidate a portion
of the Collateral and to prepay a portion of the Obligations.
D. Agent and the Lenders are
willing, for a limited period of time and on the terms and
conditions set forth herein, to forbear from exercising their
rights and remedies under the Loan Agreement and the other Loan
Documents with respect to the Known Defaults.
E. The Loan Parties are entering
into this Agreement with the understanding and agreement that,
except as expressly provided herein, none of the Agent’s or
Lenders’ rights or remedies as set forth in the Loan
Agreement or any other Loan Document are being waived or modified
by the terms of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration
of the foregoing and the mutual covenants herein contained, and for
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as
follows:
1. Incorporation of
Recitals . Each of the above recitals is expressly incorporated
herein and is represented by each Loan Party to be true and
correct.
2. Acknowledgment of Events of
Default . The Loan Parties acknowledge and agree that the Known
Defaults have occurred and are continuing (except with respect to
Known Defaults consisting of the failure of Borrowers to make
amortization payments, which are anticipated to occur hereafter
during the Forbearance Period).
3. Reaffirmation of
Obligations . Each Loan Party hereby acknowledges that the Loan
Documents and the Obligations constitute the valid and binding
obligations of such Loan Party enforceable against such Loan Party
in accordance with their respective terms, and each Loan Party
hereby reaffirms its
1
obligations under the Loan
Documents. Agent’s and the Lenders’ entry into this
Agreement or any of the documents referenced herein, their
negotiations with any party with respect to any Loan Document,
their conduct of any analysis or investigation of any Collateral
for the Obligations or any Loan Document, their acceptance of any
payment from any Loan Party or any other party of any payments made
prior to the date hereof, or any other action or failure to act on
the part of Agent or any Lender shall not constitute (a) a
modification of any Loan Document or (b) a waiver of any Default or
Event of Default under the Loan Agreement, including, without
limitation, the Known Defaults, or a waiver of any term or
provision of any Loan Document.
4. Agreement to
Forbear . For the Forbearance Period (as defined below), the
Agent and Lenders shall not take any action or commence any
proceedings with respect to the enforcement of any of their rights
or remedies under the Loan Documents based solely on the
continuance of the Known Defaults. The parties agree that neither
the foregoing agreement by Agent and Lenders nor the acceptance by
Agent or Lenders of any of the payments provided for in the Loan
Documents, nor any payment prior to the date hereof shall, however,
(a) excuse any party from any of its obligations under the Loan
Documents (other than as set forth in Sections 9 and 10 below),
or (b) toll the running of any time periods applicable to any such
rights and remedies, including, without limitation, any grace
periods with respect to Defaults under the Loan Documents or
otherwise. Each Loan Party agrees that it will not assert laches,
waiver or any other defense to the enforcement of any of the Loan
Documents based upon the foregoing agreement Agent and Lenders to
forbear or the acceptance by Agent or Lenders of any of the
payments provided for in the Loan Documents or any payment prior to
the date hereof. As used herein, " Forbearance Period "
shall mean the period commencing upon the effectiveness of this
Agreement and continuing until the earlier to occur of: (w) any
Default or Event of Default under this Agreement or any other Loan
Document (other than any Known Default), (x) a determination by
Agent in its discretion that the nature or extent of any Known
Event of Default is materially different from the nature or extent
as disclosed to the Agent prior to the date hereof, (y) any Loan
Party makes any payment in respect of the CPM Obligations (other
than payments made with the Junior Capital Proceeds (as defined
below) which are permitted to be made by Section 6(a)
hereof) on or before the date when Agent has received a prepayment
of the Term Loans in an amount to be determined by Agent in its
discretion but which in any event shall be at least $25,000,000, or
(z) March 31, 2007.
5. Termination
of Agreement to Forbear . Each Loan Party acknowledges and
agrees that upon the termination of the Agent’s and
Lenders’ agreement to forbear upon the expiration of the
Forbearance Period as provided in Section 4 hereof, Agent, on
behalf of the Lenders, shall be entitled to exercise any or all of
its remedies under the Loan Documents, including, without
limitation, the appointment of a receiver, the acceleration of the
Obligations and the enforcement under the Code of any liens in
favor of Agent, as a result of the Known Defaults, and at any time
Agent and Lenders shall be entitled to exercise any or all of their
remedies under the Loan Documents as a result of any Default or
Event of Default under the Loan Documents (other than a Known
Default).
6. Covenants . Each Loan Party covenants and agrees that it
shall do the following (the failure to comply with any of the
following shall constitute an immediate Event of Default):
(a) Junior
Capital . On or before February 21, 2007, Parent shall
deliver to Agent (i) evidence satisfactory to Agent that Borrowers
shall have received cash proceeds of not less than $2,500,000 (the
" Junior Capital Proceeds ") from either (A) cash equity
contributions by Parent in the form of common stock with no
mandatory dividends or redemptions (including dividends or
redemptions at the request or option of the stockholder) and
otherwise on terms and conditions acceptable to Agent, or (B)
subordinated debt issued by Parent, which subordinated debt shall
not provide for (I) payments of interest in cash until after the
date when the Borrowers have received the proceeds of the sale of
the Surgical Centers, or (II) payments of principal until at least
six (6) months after the Maturity Date, shall be subject to
subordination provisions in favor of Agent which are satisfactory
to Agent, and shall otherwise be issued on terms and conditions
acceptable to Agent, and (ii) copies of each of the agreements and
other documents that are executed or delivered in connection with
the transactions described in clause (i) of this Section
6(a) which shall be in form
2
and substance satisfactory
to Agent. The Loan Parties shall not permit the Junior Capital
Proceeds to be used for any purpose other than to satisfy the CPM
Obligations that are described in Section 11(d)(i) hereof
(until such time as such CPM Obligations have repaid in full in
immediately available funds).
(b) Weekly Cash
Flow Forecast . On or before January 5, 2007, Borrowers
shall deliver to Agent a rolling 13-week cash flow forecast (in
form and substance satisfactory to Agent) covering each Loan
Party’s and each of their respective Subsidiaries’
operations during the period commencing on the Monday of the week
during which such forecast is required to be delivered and ending
on the Friday of the week that is thirteen weeks after the
commencement of such period (a " Cash Flow Forecast "),
together with a certificate from the chief financial officer of
Parent representing and warranting that such 13-week cash flow
forecast represents management’s good faith estimates of
future financial performance during such period, based on
historical performance (the " Officer Certificate "). On or
before the close of business on each Monday thereafter, Agent shall
have received an updated Cash Flow Forecast together with an
Officer Certificate with respect to such period; provided ,
that each such updated Cash Flow Forecast shall also set forth the
variances of such updated Cash Flow Forecast from the previous Cash
Flow Forecast and the variances between the Borrowers’ actual
financial performance for all periods after January 1, 2007, as
compared against the projected financial performance set forth in
the initial Cash Flow Forecast delivered to Agent on or before
January 5, 2007.
(c) Sale of
Surgery Centers . On or before March 31, 2007, the Loan
Parties shall have completed the sale or disposition of (i) the
ambulatory surgical center located at 7597 Lake Worth Road, Lake
Worth, Florida, (ii) the surgical center located at 11921 Rockville
Pike, Ste. 505, Rockville, Maryland 20852 (the " CPM Surgery
Center "), and (iii) the ambulatory surgical center located at 401
South LeJeune Road, Miami, Florida (collectively, the " Surgery
Centers ") on terms that are satisfactory to Agent. Each
Borrower hereby acknowledges that it is not otherwise permitted to
sell or otherwise dispose of any Stock or other assets without the
prior written consent of the Required Lenders.
(d) Disposition
Proceeds . Any proceeds from the Designated Divestiture or
the sale of the Surgery Centers shall not be used to satisfy any
Existing Seller Notes and Earn-Out Obligations or any obligations
in respect of any Earn-Out Arrangements or Seller Notes which, in
each case, are owed to The Center for Pain Management, LLC or any
of its Affiliates (collectively, the " CPM Obliations ") until
the later to occur of (i) April 3, 2007, and (ii) the date when
Agent has received a prepayment of the Term Loans in an amount to
be determined by Agent in its discretion but which in any event
shall be at least $25,000,000.
7. Forbearance
Fee . The Borrowers shall pay to Agent a forbearance fee
(the " Forbearance Fee "), which shall be fully earned on the
date hereof, non-refundable when paid, and due and payable as
follows: (a) $277,500 of the Forbearance Fee shall be due and
payable on the date hereof, and (b) upon the repayment in full of
the Obligations, an amount equal to the greater of (i) $500,000,
and (ii) $277,500 for each month (or portion thereof) that has
elapsed after the date hereof before the Obligations have been
repaid in full in immediately available funds, shall be due and
payable on the date of such repayment. All payments in respect of
the Forbearance Fee shall be due and payable in immediately
available funds as set forth above.
(a) Each Loan Party
hereby absolutely and unconditionally waives, releases, remises and
forever discharges Agent and Lenders, and any and all of their
respective participants, parent corporations, subsidiary
corporations, affiliated corporations, insurers, indemnitors,
successors and assigns thereof, together with all of the present
and former directors, officers, agents and employees of any of the
foregoing (each a " Released Party "), from any and all
claims, suits, investigations, proceedings, demands, obligations,
liabilities, damages, losses, costs, expenses, or causes of action
of any kind, nature or description, whether based in law, equity,
contract, tort, implied or express warranty, strict liability,
criminal or civil statute, common law, or under any state or
federal law or otherwise, of any kind or character, known or
unknown, past, present or future, liquidated or unliquidated,
suspected or unsuspected, which such Loan Party has had, now
has,
3
hereafter may have, or has
made claim to have against any such person for or by reason of any
act, omission, matter, cause or thing whatsoever arising from the
beginning of the world to and including the date of this Agreement
or thereafter, whether such claims, demands and causes of action
are matured or unmatured or known or unknown. It is the intention
of each Loan Party in providing this release that the same shall be
effective as a bar to each and every claim, demand and cause of
action specified, and in furtherance of this intention it waives
and relinquishes all rights and benefits under Section 1542 of the
Civil Code of the State of California (or any comparable provision
of any other applicable law), which provides:
"A general release does not extend to claims which the creditor
does not know or suspect to exist in his or her favor at the time
of executing the release, which if known by him or her might have
materially affected his or her settlement with the debtor."
Each Loan Party acknowledges that it may hereafter discover
facts different from or in addition to those now known or believed
to be true with respect to such claims, demands, or causes of
action and agrees that this instrument shall be and remain
effective in all respects notwithstanding any such differences or
additional facts. Each Loan Party understands, acknowledges and
agrees that the release set forth above may be pleaded as a full
and complete defense and may be used as a basis for an injunction
against any action, suit or other proceeding which may be
instituted, prosecuted or attempted in breach of the provisions of
such release.
(b) Each Loan
Party, on behalf of itself and its successors, assigns, and other
legal representatives, hereby absolutely, unconditionally and
irrevocably, covenants and agrees with and in favor of each
Released Party above that it will not sue (at law, in equity, in
any regulatory proceeding or otherwise) any Released
Party
|
