Exhibit 10.1
FORBEARANCE AGREEMENT
This
FORBEARANCE AGREEMENT (this “ Agreement ”) is
entered into as of March 22, 2005 (the “ Closing Date
”), between and among Bradley Pharmaceuticals, Inc., as
Borrower (the “ Borrower ”), certain
subsidiaries of the Borrower, as Guarantors (the “
Guarantors ”) and Wachovia Bank, National Association,
as Administrative Agent (in such capacity, the “ Agent
”) for and on behalf of the various financial institutions
from time to time party to the Credit Agreement referenced below
(the “ Lenders ”). Capitalized terms used herein
but not otherwise defined shall have the meanings given to such
terms in the Credit Agreement (as defined below).
RECITALS
A.
The Borrower, the Guarantors, the Agent and the Lenders are parties
to that certain Credit Agreement dated as of September 28, 2004 (as
amended and otherwise modified from time to time, the “
Credit Agreement ”), pursuant to which the Lenders
have made and may hereafter make loans and advances and other
extensions of credit to the Borrower.
B.
Events of Default exist under the Credit Agreement arising from (i)
the Borrower’s failure to furnish the financial statements
required under Section 5.1(a) of the Credit Agreement as and when
required, (ii) the Borrower’s failure to file the Form 10-K
with the SEC within the time period prescribed by the SEC in
violation of Section 5.11 of the Credit Agreement and (iii) the
cross-default to the Convertible Bonds under Sections 7.1(d) and
(e) of the Credit Agreement triggered by the default under the
Convertible Bonds resulting from the Borrower’s failure to
file the Form 10-K with the SEC within the time period prescribed
by the SEC and to delivery a copy of such Form 10-K to the trustee
with respect to the Convertible Bonds (the “ Acknowledged
Events of Default ”).
C.
The Borrower has requested that the Lenders forbear from exercising
certain rights and remedies arising from the Acknowledged Events of
Default through and until April 22, 2005.
D.
The Required Lenders have agreed to do so pursuant to the terms and
conditions set forth herein and have directed the Agent to execute
this Agreement on their behalf.
NOW,
THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1.
Estoppel, Acknowledgement and Reaffirmation . As of March
18, 2005, the total outstanding principal amount of the Term Loan
was $71,250,000, which amount constitutes a valid and subsisting
obligation of the Borrower to the Lenders that is not subject to
any credits, offsets, defenses, claims, counterclaims or
adjustments of any kind. The Borrower and the Guarantors hereby
acknowledge their respective obligations under the Credit
Documents, reaffirm that each of the liens and security interests
created and granted in or pursuant to the Credit Documents are
valid and subsisting and agree that this Agreement shall in no
manner impair or otherwise adversely affect such obligations or
such liens and security interests.
2.
Forbearance . Subject to the terms and conditions set forth
herein, the Agent and the Lenders shall, until the occurrence of a
Forbearance Termination Event (as defined below), forbear from
exercising any rights or remedies (including without limitation the
right to institute the default rate of interest pursuant to Section
2.10 of the Credit Agreement) to the extent such rights arise
exclusively as a result of the Acknowledged Events of Default;
provided , however, that the Agent and the Lenders shall
be
free to exercise any or all of
their rights and remedies arising on account of the Acknowledged
Events of Default at any time upon or after the occurrence of a
Forbearance Termination Event (defined below).
3.
Forbearance Termination Events . Nothing set forth herein or
contemplated hereby is intended to constitute an agreement by the
Agent or the Lenders to forbear from exercising any of the rights
available to them under the Credit Agreement, the other Credit
Documents, or applicable law (all of which rights and remedies are
hereby expressly reserved by the Agent and the Lenders) upon or
after the occurrence of a Forbearance Termination Event (as defined
below). As used herein, a “ Forbearance Termination
Event ” shall mean the earliest to occur of: (a) any
Default or Event of Default under any of the Credit Documents other
than the Acknowledged Events of Default; (b) any breach of this
Agreement by the Borrower or any of the Guarantors; (c) the
Company’s receipt of a notice of a default under the
Convertible Bonds and the expiration of any applicable grace
periods before such default is cured; and (d) April 22, 2005. The
period from the Closing Date to (but excluding) the date that a
Forbearance Termination Event occurs shall be referred to as the
“ Forbearance Period .”
4.
Limitation on Advances . During the Forbearance Period, the
Borrower shall not request, and the Lenders shall have no
obligation to make, any additional Extensions of Credit under the
Credit Agreement, whether in the form of Revolving Loans, Swingline
Loans, Letters of Credit or otherwise. In addition, the Borrower
shall continue to be permitted to convert Alternate Base Rate Loans
into LIBOR Rate Loans, or extend or continue existing LIBOR Rate
Loans, so long as any such LIBOR Rate Loans have Interest Periods
of no longer than two months.
5.
Cooperation with Consultants . The Agent reserves the right
to engage, through counsel or otherwise, a consultant
(the
