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Amended And Restated Forbearance Agreement & Amendment No.4 To Credit Agreement

This is an actual contract by American Dental Partners.

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Sectors: Health Products and Services
Governing Law: Ohio, View Ohio State Laws
Effective Date: January 11, 2008
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Exhibit 10.1

EXECUTION VERSION

AMENDED AND RESTATED FORBEARANCE AGREEMENT AND AMENDMENT NO. 4 TO

CREDIT AGREEMENT

THIS AMENDED AND RESTATED FORBEARANCE AGREEMENT AND AMENDMENT NO. 4 TO CREDIT AGREEMENT (as the same may from time to time be amended, restated or otherwise modified, this " Agreement" ) is made as of January 11, 2008, 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 (the " 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, the Borrower, the Administrative Agent and the Lenders are parties to that certain Forbearance Agreement, dated as of December 18, 2007 (the " Original Forbearance Agreement" );

WHEREAS, the Borrower and PDHC, Ltd. (" PDHC" ), a Subsidiary of the Borrower, have entered into the Settlement Agreement, dated as of December 26, 2007, an executed copy of which is attached hereto as Exhibit A (the " Settlement Agreement" ), among the Borrower, PDHC, PDG, P.A. (" PDG" ) and Dental Specialists of Minnesota, P.A. (with PDG, collectively, the " Plaintiff" ), and Northland Dental Partners, PLLC, fka James Ludke, D.D.S., PLLC, in connection with the civil actions captioned PDG, P.A. and Dental Specialists of Minnesota P.A. vs. PDHC, Ltd. and PDHC, Ltd. vs. PDG, P.A. and Dental Specialists of Minnesota, P.A. vs. PDHC, Ltd. and American Dental Partners, Inc. (collectively, the " Civil Action" ) filed with the District Court of Minnesota, Fourth Judicial District (the " Court" ), in which the jury in the Civil Action returned a verdict for the Plaintiff against PDHC and the Borrower awarding the Plaintiff $88,290,647 in compensatory damages on December 12, 2007 and awarding the Plaintiff $42,250,000 in punitive damages on December 13, 2007;

WHEREAS, certain Events of Default exist under the Credit Agreement and, as a result of such Events of Default, the Lenders have the right, among other things, to exercise any remedies available to the Lenders under the Credit Agreement;

WHEREAS, notwithstanding the existence of such Events of Default, the Borrower has requested that the Lenders, among other things, temporarily continue to make Loans available under the Credit Agreement and continue to forbear from exercising their rights under the Credit Agreement and the other Credit Documents, in each case until February 29, 2008, consent to the Settlement Agreement and permanently amend the Credit Agreement in certain respects; and

WHEREAS, the 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:


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ARTICLE I. AMENDMENTS TO CREDIT AGREEMENT Section 1.1 Amendment to Schedule I . Schedule I to the Credit Agreement is hereby amended and restated in its entirety as set forth at Exhibit B hereto.

Section 1.2 Amendment to Section 1.1 . Section 1.1 of the Credit Agreement is hereby amended to add the following new definitions in the appropriate alphabetical order:

"" Amendment No. 4 Effective Date" shall mean the date upon which the conditions specified in Section 4.1 of Forbearance Agreement and Amendment No. 4 are satisfied."" "" Forbearance Agreement and Amendment No. 4" shall mean Amended and Restated Forbearance Agreement and Amendment No. 4 to Credit Agreement, dated January 11, 2008, by and among the Borrower, the Subsidiary Guarantors, the Lenders and the Administrative Agent."" Section 1.3 Amendment to Section 1.1 . Section 1.1 of the Credit Agreement is hereby amended to amend and restate the definition of " Total Commitment" in its entirety as follows:

"" Total Commitment" shall mean the aggregate amount of the Commitments of the Lenders, as such commitment may be decreased or increased pursuant to the terms of this Agreement. The amount of the Total Commitment on the Amendment No. 4 Effective Date is $75,000,000. The Commitment of each Lender on the Amendment No. 4 Effective Date shall be as set forth on Schedule I.""

ARTICLE II. CONSENT

Section 2.1. Settlement Agreement . The Administrative Agent and each Lender hereby consent to the execution by the Borrower and PDHC of the Settlement Agreement and consent to the terms and provisions thereof; provided , however , that the agreements, documents and instruments to be entered into to effectuate the transfer of the Settlement Assets (as defined below) (the " Transfer Documents" ) shall be in form and substance reasonably satisfactory to the Administrative Agent.

Section 2.2 Release of Collateral . Pursuant to the Settlement Agreement, the Borrower and PDHC have agreed to transfer the operating assets owned by PDHC and currently located at the PDG Offices (as defined in the Settlement Agreement) (collectively, the " Settlement Assets" ) to PDG, all of which Settlement Assets constitute Collateral. Upon the transfer of the Settlement Assets by the Borrower and PDHC to PDG in accordance with the terms of the Settlement Agreement, and so long as (i) the condition set forth in Section 3.5(h) of this Agreement has been satisfied, (ii) the Transfer Documents are in form and substance reasonably satisfactory to the Administrative Agent, and (iii) the Civil Action has been dismissed with prejudice by the Court, the Administrative Agent' s and the Lenders' security interest in and Liens on the Settlement Assets shall be automatically released and terminated. The Administrative Agent agrees to promptly file UCC financing statement amendments (collectively, the " UCC Amendments" ) to evidence the release of the security interest in and Lien on the Settlement Assets and will provide to the Borrower a copy of the acknowledgments of the filing of such UCC Amendments promptly upon receipt by the Administrative Agent. The Administrative Agent agrees to execute such other agreements, documents and instruments as the Borrower may reasonably request to effectuate the release described in this Section 2.2.


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ARTICLE III. FORBEARANCE Section 3.1. Outstanding Indebtedness . The Borrower acknowledges and confirms (a) that Exhibit C 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 3.2. 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 D hereto (collectively, the " Credit Agreement Defaults" ).

Section 3.3. 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 the Administrative Agent or the 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, the 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 obligations of the Lenders to make any further Loans or issue any Letters of Credit, (ii) accelerate the maturity of all of the Obligations, and (iii) exercise any or all rights and remedies available to them pursuant to the Credit Documents, applicable law or otherwise.

Section 3.4. Original Forbearance Agreement . The Borrower, the Administrative Agent and the Lenders each acknowledge that this Agreement replaces in its entirety the Original Forbearance Agreement, and that the Original Forbearance Agreement shall be of no further force and effect. Section 3.5 Forbearance and Forbearance Period . The Administrative Agent and the Lenders, by executing this Agreement and upon the satisfaction of the conditions set forth in Section 4.1 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 February 29, 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 in excess of $4,000,000 in the aggregate for all 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" ), provided that any Eurodollar Loan outstanding on the date hereof may be continued with an Interest Period of one, two or three months, (ii) the sum of (x) Letter of Credit Outstandings and (y) the aggregate principal amount


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of all Loans outstanding (including, without limitation, Interim Loans) shall not exceed $61,424,000 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 Consideration or any part thereof for any Acquisition; (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 of the Credit Agreement 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) the Borrower and each Sub
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