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Exhibit
10.1
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 KEYBANK NATIONAL ASSOCIATION, 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
Amended and Restated Credit Agreement, dated as of
February 22, 2005, which provides, among other things, for
revolving loans, letters of credit and other financial
accommodations, all upon certain terms and conditions stated
therein (as amended and as the same may be further 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 temporarily continue to make Loans available
under the Credit Agreement and forbear from exercising their rights
under the Credit Agreement and other Credit Documents;
and
WHEREAS, Lenders are willing
to temporarily continue to make Loans available and 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 the issued and outstanding Letters of Credit, 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) terminate the Commitments and any
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obligations of Lenders to make any
further Loans or issue any Letters of Credit, (ii) accelerate
the maturity of all of the Borrower’s Obligations, and
(iii) exercise any or all rights and remedies available to
them pursuant to the Credit Documents, applicable law or
otherwise.
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, and hereby agree
that notwithstanding the existence of the Credit Agreement
Defaults, the Lenders shall continue to make Loans under the Credit
Agreement, 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 not
request, and the Letter of Credit Issuer shall not be obligated to
issue or renew, any Letters of Credit;
(d) (i) the Borrower shall
only be permitted to request Borrowings of Base Rate Loans and
Eurodollar Loans with an Interest Period of one month (any Loan
made on or after the date hereof shall be referred to as an “
Interim Loan ”), (ii) the sum of (x) Letter
of Credit Outstandings and (y) the aggregate principal amount
of all Loans outstanding (including, without limitation, Interim
Loans) shall not exceed $51,424,000 and (iii) the use of
proceeds of Interim Loans by the Borrower or any Subsidiary shall
be solely for the use and operation of their business in the
ordinary course consistent with past practice and shall not be used
to pay the Verdict or any part thereof or, if applicable, to secure
a bond for purposes of appealing the Judgment Entry;
(e) at the time of each
Interim Loan and after giving effect thereto, (i) there shall
exist no Default or Event of Default (other than the Credit
Agreement Defaults) and (ii) all representations and
warranties of the Credit Parties contained herein or in the other
Credit Documents (other than the representation and warranty set
forth in Section 7.9 solely as a result of the Credit
Agreement Defaults) shall be true and correct in all material
respects with the same effect as though such representations and
warranties had been made on and as of the date of such Interim
Loan, except to the extent that such representations and warranties
expressly relate to an earlier specified date, in which case such
representations and warranties shall have been true and correct in
all material respects as of the date when made;
(f) 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;
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(g) the Borrower and each
Subsidiary Guarantor shall comply with all of the terms and
provisions of this Agreement (and the failure to so comply shall
constitute an Event of Default under the Credit
Agreement);
(h) the Forbearance
Agreement, dated the date hereof, among the Borrower, the
subsidiary guarantors signatory thereto, the lenders signatory
thereto and KBCM Bridge LLC, as a lender and as administrative
agent, and entered into in connection with the Term Loan Agreement,
shall not have been terminated; and
(i) 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.
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 $56,522; 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
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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 ter
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