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Forbearance And Amendment Agreement

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Sectors: Chemicals
Effective Date: March 25, 2003
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Exhibit 10.25


Forbearance and Amendment Agreement


Forbearance and Amendment Agreement (this "Agreement"), dated as of March 25, 2003, relating to the Credit Agreement dated as of April 30, 1999, among General Chemical Industrial Products Inc. (the "Company"), General Chemical Canada Ltd. (the "Canadian Borrower"), JPMorgan Chase Bank, as Administrative Agent, J.P. Morgan Bank Canada, as Canadian Administrative Agent, the other agents named therein and the Lenders party thereto ("Lenders") ("Credit Agreement"). Capitalized terms used herein without definition shall have the same meanings herein as set forth in the Credit Agreement.


RECITALS


WHEREAS, the Lenders have extended certain credit facilities to the Company and the Canadian Borrower pursuant to the Credit Agreement;


WHEREAS, as of the date of this Agreement and as described herein, Forbearance Defaults (as defined below) have occurred and/or may occur under the Credit Agreement and the Borrowers have requested that the Administrative Agent, the Canadian Administrative Agent and the Lenders forbear from exercising certain remedies against the Loan Parties as a result of the Forbearance Defaults;


WHEREAS, the Lenders have agreed to forbear from exercising formal remedies, including acceleration of amounts owed under the Credit Agreement, as a result of the Forbearance Defaults, for the period and on the terms set forth herein;


WHEREAS, in order to induce the Lenders to execute this Agreement, the Loan Parties have notified the Lenders that they will not make any payments of any kind in respect of the Senior Subordinated Notes on or after the date hereof (other than reasonable fees and expenses of Jefferies & Company, Inc. and reasonable fees and expenses of Stroock & Stroock & Lavan, LLP for services rendered to the Ad Hoc Committee of holders of the Senior Subordinated Notes);


NOW, THEREFORE, in consideration of the premises and the agreements and provisions herein contained, the parties hereto agree as follows:


1. The Lenders hereby agree to forbear from exercising formal remedies against
the Loan Parties under the Loan Documents (i.e., termination of the
Revolving Credit Commitments and the Canadian Revolving Credit Commitments,
acceleration pursuant to Section 8 of the Credit Agreement of amounts owed
under the Credit Agreement, foreclosure on Collateral and setting off
deposits of the Loan Parties against obligations of the Loan Parties under
the Loan Documents), arising solely as a result of the Forbearance
Defaults. The Lenders agree to waive the Forbearance Defaults to the extent
necessary to permit the Borrowers to borrow and request Loans and Letters
of Credit in accordance with Section 6 below unless and until the
forbearance set forth in this Agreement is terminated in accordance with
Section 3 below. As used herein "Forbearance Defaults" means any Default or
Event of Default arising (i) solely as the


General Chemical
Forbearance Agreement


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result of the failure of the Company to comply with (a) Section 7.1 of the
Credit Agreement as of, and for the periods of four consecutive fiscal
quarters ending on, March 31, 2003 and June 30, 2003, (b) Section 6.1(a) of
the Credit Agreement solely as a result of the failure of the Company to
deliver an unqualified accountants report for its 2002 fiscal year, (c)
Section 6.2(b) of the Credit Agreement solely as a result of the Company's
failure to demonstrate compliance with Section 7.1 of the Credit Agreement
as of, and for the periods of four consecutive fiscal quarters ending on,
March 31, 2003 and June 30, 2003, and (d) Section 6.3 of the Credit
Agreement and paragraph (e) of Section 8.1 of the Credit Agreement solely
as a result of the failure of the Company to make scheduled interest
payments on the Senior Subordinated Notes and (ii) under paragraphs (b) and
(e) of Section 8.1 of the Credit Agreement solely as a result of the
failure of the Company to make scheduled interest payments on the Senior
Subordinated Notes. Notwithstanding the foregoing, the Administrative Agent
and the Lenders reserve the right to deliver a payment blockage notice
under the Senior Subordinated Note Indenture as a result of the Forbearance
Defaults.


2. Each Borrower agree that during the Forbearance Period it will not request
a Eurodollar Loan with an Interest Period longer than two months or issue
an Acceptance with a maturity of longer than 60 days.


3. The forbearance set forth in Section 1 hereof herein shall cease to be
effective without any further act or action by the Lenders or the
Administrative Agent on the earliest of (i) 4:00 p.m. (New York time) on
July 30, 2003, (ii) any time after the date hereof at which Holdings or any
of its Subsidiaries makes any direct or indirect payment on or in respect
of the Senior Subordinated Notes, (iii) the date on which the
Administrative Agent notifies the Company that the Required Lenders, acting
in their sole discretion, have determined to terminate their forbearance
pursuant to this Agreement because (a) one or more creditors of any Loan
Party or its Subsidiaries (other than under the Credit Agreement) are
exercising or attempting to exercise any remedies (including accelerating
payment of the Senior Subordinated Notes) against any Loan Party or a
Subsidiary or any property of any of them, (b) any Loan Party or any of its
Subsidiaries grants or suffers any Liens arising or created after the date
hereof (other than Liens created to secure obligations under the Loan
Documents and Liens created under Section 7.3(a), (b) and (e) of the Credit
Agreement), (c) without limitation of clause (ii) above, any Loan Party or
any of its Subsidiaries makes any payments on account of Indebtedness
(other than Indebtedness under the Credit Agreement) after the date hereof
(other than scheduled payments of principal, interest and commitment fees
as in effect on the date hereof and payments in the ordinary course of
business), (d) the Company has failed to reach substantial agreement with
the Administrative Agent on the material terms of an amended credit
facility among the Company and the Lenders by May 1, 2003, (e) the Company
has failed (i) to finalize (without the objection of the Administrative
Agent) the Joint Plan of Reorganization, the Joint Disclosure Statement and
plan solicitation materials in connection with the conversion ("Senior
Subordinated Notes Conversion") of the Senior Subordinated Notes to common
equity of the Company or of a direct holding company of the Company (as
determined by the Company and the Lenders) and (ii) to commence
solicitation of holders of the Senior Subordinated Notes for the Senior
Subordinated


General Chemical
Forbearance Agreement


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Notes Conversion, in each case under this clause (e) by June 30, 2003, or
(f) a material adverse change in the financial condition, operations or
prospects of either Borrower has occurred from the date hereof other than
as a result of this Agreement and the failure to make scheduled interest
payments on the Senior Subordinated Notes (provided that a failure by the
Lenders to act with respect to any of the events described in the preceding
clauses (a)-(f) shall not preclude the Lenders from acting with respect to
any such events at a later time or any subsequent or similar events) and
(iv) the occurrence of any Event of Default under the Credit Agreement
(other than the Forbearance Defaults described in Section 1 above) or this
Agreement. As used herein "Forbearance Period" means the period from the
date hereof to the termination of the forbearance pursuant to this Section
3.


4. On the Forbearance Effective Date (as defined below) the Total Commitments
will be automatically reduced from $85,000,000 to $70,000,000. The
aggregate Revolving Credit Commitments shall be $10,000,000 and the
aggregate Canadian Revolving Credit Commitments shall be $60,000,000. The
Borrowers shall not entitled to reallocate Commitments pursuant to Section
2.4 of the Credit Agreement without the consent of the Required Lenders.


5. The Company agrees to pay to the Administrative Agent, (i) for the account
of each Lender which has returned an executed counterpart of this Agreement
to the Administrative Agent prior to 5:00 p.m. (New York time) on March 25,
2003, a forbearance fee equal to .50% of the Commitment of such Lender
(calculated after giving effect to the reduction in the Total Commitments
pursuant to Section 4 above), such fee to be earned and payable on the
Forbearance Effective Date and (ii) for the account of each Lender which
has returned an executed counterpart of this Agreement to the
Administrative Agent after 5:00 p.m. (New York time) on March 25, 2003 but
prior to 5.00 p.m. (New York time) on March 28, 2003, a forbearance fee
equal to .25% of the Commitment of such Lender (calculated after giving
effect to the reduction in the Total Commitments pursuant to Section 4
above), such fee to be earned and payable on the date the Administrative
Agent receives such Lender's executed counterpart.


6. The Borrowers agree that during the Forbearance Period the aggregate
principal amount of the Loans and the L/C Obligations will not exceed the
lesser of (i) $60,000,000 and (ii) for any day 115% of the projected usage
of the Facilities for such day as set forth in the Credit Agreement
Utilization Schedule (i.e. total projected existing and future usage under
the Credit Agreement) attached as Schedule A hereto. During the Forbearance
Period, the inability of the Borrowers to make the representations and
warranties set forth in (a) Sections 4.2 and 4.7 of the Credit Agreement
solely as a result of the Forbearance Defaults and (b) Section 4.18, shall
not prevent Borrowers from borrowing or requesting Loans and Letters of
Credit in accordance with this Agreement. The Borrowers agree that from and
after the date hereof the aggregate principal amount of the Loans and the
L/C Obligations will not exceed $60,000,000 without the written consent of
each Lender.


7. (a) (i) The Company agrees that it will not permit Consolidated Cash Flow
for any period set forth below to be l
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