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Exhibit
10.2
EXECUTION
VERSION
FORBEARANCE
AGREEMENT
THIS FORBEARANCE AGREEMENT
(as the same may from time to time be amended, restated or
otherwise modified, this “ Agreement ”) is made
as of December 18, 2007, and entered into by and among
AMERICAN DENTAL PARTNERS, INC., a Delaware corporation (the “
Borrower ”), the Subsidiary Guarantors (as defined in
the Credit Agreement referred to below), the lending institutions
party to the Credit Agreement, as hereinafter defined (“
Lenders ”), and KBCM BRIDGE LLC, a national banking
association, as a Lender and as administrative agent for the
Lenders (the “ Administrative Agent
”).
RECITALS
WHEREAS, the Borrower, the
Administrative Agent and the Lenders are parties to that certain
Term Loan Agreement, dated as of September 25, 2007 (as the
same may be amended, restated or otherwise modified from time to
time, the “ Credit Agreement ”);
WHEREAS, certain Defaults and
Events of Default exist or will occur under the Credit Agreement
and, as a result of such Defaults and Events of Default, Lenders
have the right, among other things, to exercise any remedies
available to Lenders under the Credit Agreement;
WHEREAS, notwithstanding the
existence of such Defaults and Events of Default, the Borrower has
requested that Lenders forbear from exercising their rights under
the Credit Agreement and other Credit Documents; and
WHEREAS, Lenders are willing
to forbear from exercising such rights on the terms and conditions
set forth in this Agreement;
NOW, THEREFORE, in
consideration of the foregoing, the parties agree as
follows:
ARTICLE I.
FORBEARANCE
Section 1.1.
Outstanding Indebtedness . The Borrower acknowledges and
confirms (a) that Exhibit A hereto sets forth, as of
the date hereof, the aggregate principal amount of all outstanding
Loans, and (b) that such amounts are not subject to any
defense, counterclaim, recoupment or offset of any kind.
Section 1.2.
Defaults . The Borrower acknowledges that as of the date
hereof, the Administrative Agent and the Lenders have notified the
Borrower that, and the Borrower acknowledges that, the Borrower has
failed to comply with the provisions of the Credit Agreement as set
forth in Exhibit B hereto (collectively, the “
Credit Agreement Defaults ”).
Section 1.3.
Continuing Defaults . With respect to each of the Credit
Agreement Defaults, the Borrower acknowledges that (a) such
Credit Agreement Defaults are continuing and have not been waived
by virtue of any previous actions (or failure to act) by
Administrative Agent or Lenders through any course of conduct or
course of dealing or otherwise and (b) as a result of the
existence of such Credit Agreement Defaults, Lenders, pursuant to
the terms and conditions of the Credit Agreement and the other
Credit Documents, have the right to, among other things,
(i) accelerate the maturity of all of the Borrower’s
Obligations, and (ii) exercise any or all rights and remedies
available to them pursuant to the Credit Documents, applicable law
or otherwise.
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Section 1.4.
Forbearance and Forbearance Period . Administrative Agent
and Lenders, by executing this Agreement and upon the satisfaction
of the conditions set forth in Section 2.1 hereof, hereby
agree to forbear from exercising their rights and remedies that
exist by virtue of the Credit Agreement Defaults, for the period
from December 14, 2007 through January 11, 2008 (the
“ Forbearance Period ”), on the conditions
that:
(a) after giving effect to
the terms of this Agreement, other than the Credit Agreement
Defaults, no other Default or Event of Default shall exist under
the Credit Agreement or any Credit Document;
(b) during the Forbearance
Period, other than the Credit Agreement Defaults, no other Default
or Event of Default shall occur under the Credit Agreement and no
default or event of default shall occur under this
Agreement;
(c) the Borrower shall only
be permitted to request Borrowings of Base Rate Loans and
Eurodollar Loans with an Interest Period of one month;
(d) with respect to the
Verdict (as defined in Exhibit B ) or the Judgment Entry (as
defined in Exhibit B ), (i) the Court (as defined in
Exhibit B ) (x) shall not enter a Judgment Entry for an
amount in excess of $130,540,647.00 (exclusive of post-judgment
interest), (y) shall not enter a Judgment Entry against any
entity other than the Borrower or PDHC, Ltd. and (z) shall not
award any relief or other damages, other than the monetary damages
set forth in the Verdict, after the date hereof that materially and
adversely affects any Credit Party, (ii) there shall not
occur, in the sole opinion of the Lenders, any material and adverse
development concerning the Civil Action (as defined in Exhibit
B ), (iii) no Person shall take any action against the
Borrower or any of its Subsidiaries, or any of their properties or
assets, to enforce the Judgment Entry or (iv) no judgment lien
relating to the Judgment Order shall be recorded against the
Borrower or any of its Subsidiaries, or any of their properties or
assets;
(e) the Borrower and each
Subsidiary Guarantor shall comply with all of the terms and
provisions of this Agreement (the failure to so comply shall
constitute an Event of Default under the Credit
Agreement);
(f) the Forbearance
Agreement, dated the date hereof, among the Borrower, the
subsidiary guarantors signatory thereto, the lenders signatory
thereto and KeyBank National Association, as a lender and as
administrative agent, and entered into in connection with the
Revolving Credit Agreement, shall not have been terminated;
and
(g) no assets of any Credit
Party that constitute Collateral shall be used to pay the Verdict
or any part thereof or, if applicable, to secure a bond for
purposes of appealing the Judgment Entry.
Section 1.5. End of
Forbearance Period . The Borrower acknowledges and agrees that
upon the failure of the Borrower to satisfy any of the foregoing
conditions at any time, the Forbearance Period shall automatically
terminate without notice to the Borrower of any kind. The Borrower
hereby waives any such notice. Upon termination of the Forbearance
Period, Administrative Agent and Lenders shall be permitted to
exercise any and all rights and remedies that exist with respect to
the Credit Agreement Defaults and any other Default or Event of
Default that may then exist.
Section 1.6. Default
Interest . The Lenders agree that, notwithstanding the
existence of the Credit Agreement Defaults and anything in
Section 2.5(c) of the Credit Agreement to the contrary, the
default rate of interest set forth in Section 2.5(c) shall not
accrue on the outstanding principal amount of the Loans during the
Forbearance Period.
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ARTICLE II.
MISCELLANEOUS
Section 2.1.
Conditions Precedent . This Agreement shall not be effective
until:
(a) it has been executed by
the Borrower, the Administrative Agent and the Required Lenders and
acknowledged by each Subsidiary Guarantor;
(b) the Borrower has paid a
fee to the Administrative Agent, for the pro rata benefit of each
of Lender executing this Agreement based on the outstanding
principal amount of Loans owing to each such Lender, in an amount
equal to $43,478; and
(c) the Borrower shall have
satisfied such other conditions or delivered such other items as
the Administrative Agent or any Lender shall reasonably
request.
Section 2.2.
Representations and Warranties . The Borrower and each
Subsidiary Guarantor hereby represents and warrants to
Administrative Agent that (a) the Borrower and each Subsidiary
Guarantor has the legal power and authority to execute and deliver
this Agreement; (b) the officers of the Borrower and each
Subsidiary Guarantor executing this Agreement have been duly
authorized to execute and deliver the same and bind the Borrower
and each Subsidiary Guarantor with respect to the provisions
hereof; (c) the execution and delivery hereof by the Borrower
and each Subsidiary Guarantor and the performance and observance by
the Borrower and each Subsidiary Guarantor of the provisions hereof
do not violate or conflict with the organizational documents,
operating agreement or bylaws, as applicable, of the Borrower and
each Subsidiary Guarantor or any law applicable to the Borrower or
any Subsidiary Guarantor or result in a breach of any provision of
or constitute a default under any other agreement, instrument or
document binding upon or enforceable against the Borrower or any
Subsidiary Guarantor; (d) except with respect to the Credit
Agreement Defaults, no Default or Event of Default exists under the
Credit Agreement, nor will any occur immediately after the
execution and delivery of this Agreement or by the performance or
observance of any provision hereof; (e) the Borrower and each
Subsidiary Guarantor are not aware of any claim or offset against,
or defense or counterclaim to, the Borrower’s and each
Subsidiary Guarantor’s obligations or liabilities under the
Credit Agreement or any Credit Document; (f) this Agreement
and each document executed by the Borrower and each Subsidiary
Guarantor in connection herewith constitute valid and binding
obligations of the Borrower and each Subsidiary Guarantor in every
respect, enforceable in accordance with their terms; and
(g) the Borrower and each Subsidiary Guarantor have not
received a notice of default of any kind from any material account
debtor and no material account debtor has asserted any right of
set-off, deduction or counterclaim with respect to any
account.
Section 2.3.
Release . The Borrower and each Subsidiary Guarantor hereby
waive and release Administrative Agent and Lenders and their
respective directors, officers, employees, agents, attorneys,
affiliates and subsidiaries from any and all claims, offsets,
defenses and counterclaims that the Borrower or any Subsidiary
Guarantor may have as of the date of this Agreement, such waiver
and release being with full knowledge and understanding of the
circumstances and effect thereof and after having consulted legal
counsel with respect thereto.
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Section 2.4. Credit
Documents Unaffected . Except as herein otherwise specifically
provided, all provisions of the Credit Agreement and the Credit
Documents shall remain in
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