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Form of Forbearance Agreement

This is an actual contract by American Commercial Lines.

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Sectors: Transportation
Governing Law: New York, View New York State Laws
Effective Date: February 22, 2002
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EXECUTION COPY


FORBEARANCE AGREEMENT


FORBEARANCE AGREEMENT (this "AGREEMENT") dated as of February 22, 2002, among AMERICAN COMMERCIAL LINES HOLDINGS LLC, a Delaware limited liability company ("HOLDINGS"), AMERICAN COMMERCIAL LINES LLC, a Delaware limited liability company and a wholly-owned subsidiary of Holdings (the "BORROWER"), those subsidiaries of the Borrower identified as a Subsidiary Guarantor on the Subsidiary Guarantor Signature Pages attached hereto (collectively with Holdings, the "GUARANTORS" and, together with the Borrower, the "CREDIT PARTIES"), the several banks and other financial institutions identified as Lenders on the Lender Signature Pages attached hereto (the "LENDERS" and, each individually, a "LENDER"), and JPMORGAN CHASE BANK (formerly known as The Chase Manhattan Bank), a New York banking corporation, as administrative agent for the Lenders (the "ADMINISTRATIVE AGENT"). Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement referred to below.


RECITALS


WHEREAS, the Borrower, the Guarantors, the Administrative Agent and the Lenders are parties to that certain Credit Agreement dated as of June 30, 1998 (as amended, modified, supplemented or restated from time to time, the "CREDIT AGREEMENT");


WHEREAS, an Event of Default has occurred and is continuing as of the date hereof based on non-compliance by Holdings and the Borrower with Sections 6.11 and 6.12 of the Credit Agreement and as a result of an event specified in clause (f) of Article VII of the Credit Agreement (collectively, the "ACKNOWLEDGED EVENTS OF DEFAULT");


WHEREAS, by letter to the Borrower dated January 10, 2002, the Administrative Agent, on behalf of the Lenders, notified the Borrower of certain of the Acknowledged Events of Default and expressly reserved all rights and remedies of the Lenders under the Loan Documents;


WHEREAS, Holdings, the Borrower and the Required Lenders desire to implement a financial restructuring (the "FINANCIAL RESTRUCTURING") in accordance with the Term Sheet attached hereto as EXHIBIT A (the "TERM SHEET");


WHEREAS, in order to implement the Financial Restructuring, the Borrower intends to (a) prepare and deliver an Offering Memorandum, Solicitation of Consents and Acceptances and Disclosure Statement, to consummate the exchange of the Borrower's outstanding Senior Unsecured Notes in accordance with the Term Sheet (the "EXCHANGE OFFER"), and (b) prepare and, if necessary, file and seek approval of a disclosure statement (the "DISCLOSURE STATEMENT") and plan of reorganization (the "PLAN") consistent in all material respects with the terms set forth in this Agreement and the Term Sheet implementing the terms of the Financial Restructuring in a case (the "CHAPTER 11 CASE") filed under the United States Bankruptcy Code, 11 U.S.C.ss.101 et seq. (the "BANKRUPTCY CODE");


WHEREAS, if the Exchange Offer is unsuccessful, the Borrower intends to use its best efforts to have the Disclosure Statement approved and such Plan confirmed by the United States Bankruptcy Court for the District of Delaware (the "BANKRUPTCY Court") in the Chapter 11 Case as expeditiously as possible under the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure (the "BANKRUPTCY RULES");


WHEREAS, Holdings and the Borrower have asked the Administrative Agent and the Lenders to forbear from exercising their rights and remedies arising from the Acknowledged Events of Default during the period (the "FORBEARANCE PERIOD") from the date hereof until and including the earlier of (i) April 30, 2002 or, if the Receivables Program is extended beyond April 30, 2002 on the same terms as those upon which such program was extended as a condition precedent to the effectiveness of this Agreement, such later termination date of the Receivables Program, but in no event later than August 1, 2002 (the "NEW FORBEARANCE TERMINATION DATE") or (ii) the occurrence of a Forbearance Default (as defined below); and


WHEREAS, the Administrative Agent and the Lenders are, upon and subject to the terms and conditions specified in this Agreement, willing to forbear from exercising their rights and remedies arising from the Acknowledged Events of Default until the New Forbearance Termination Date in accordance with the terms hereof.


NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


Section 1. ACKNOWLEDGEMENT OF LOANS AND SECURITY. The Credit Parties acknowledge and confirm that (a) the Borrower's obligation to repay the outstanding principal amount of the Loans and all accrued and unpaid interest in respect thereof and to reimburse the Issuing Bank for any drawing on a Letter of Credit, and each Guarantor's Guarantee of each such obligation, is unconditional and not subject to any offsets, defenses or counterclaims, (b) each Security Document is effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in such Security Document), in each case fully perfected and prior and superior in right to any other person (assuming, in the case of the Pledge Agreement, that the Collateral Agent continues to hold the certificated Collateral pledged thereunder), subject to the Liens permitted by Section 6.02 of the Credit Agreement, (c) the Administrative Agent and the Lenders have performed fully all of their respective obligations under the Credit Agreement and the other Loan Documents and (d) by entering into this Agreement, the Administrative Agent and the Lenders do not waive or release any term or condition of the Credit Agreement or any of the other Loan Documents or any of their rights or remedies under such Loan Documents or applicable law or any of the obligations of any Credit Party thereunder except as specifically set forth herein.


Section 2. FORBEARANCE. Subject to the other terms and conditions of this Agreement, the Required Lenders hereby agree (such agreement, the "FORBEARANCE") until the New Forbearance Termination Date to forbear the exercise of rights and remedies otherwise available under the Credit Agreement and the other Loan Documents solely on account of an Acknowledged Event of Default; PROVIDED, that the Administrative Agent and the Lenders shall be free to exercise any or all of their rights and remedies arising on account of any Acknowledged Event of Default at any time after the occurrence of a Forbearance Default (as defined below).


Section 3. FORBEARANCE DEFAULT. Nothing set forth herein or contemplated hereby (a) is intended to or shall be construed as a waiver of or acquiescence to any Acknowledged Event of Default, which shall continue in existence subject only to the terms of the Forbearance, or (b) shall constitute an agreement by the Administrative Agent or the Lenders to forbear the exercise of any of the rights and remedies available to the Administrative Agent and/or the Lenders under the Credit Agreement and the other Loan Documents (all of which rights and remedies are hereby expressly reserved by the Administrative Agent and the Lenders) upon and after the occurrence of a Forbearance Default. For purposes hereof, the term "FORBEARANCE DEFAULT" shall mean the existence of any or all of the following: (a) any Event of Default under the Credit Agreement or any other Loan Document other than the


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Acknowledged Events of Default; (b) a breach by the Credit Parties of any term of this Agreement; (c) the Exchange Offer or the Plan provides or is modified to provide for treatment of the Administrative Agent or any Lender in a manner that is adverse to the treatment described in the Te
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