Execution Version
RESTRUCTURING AGREEMENT
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This Restructuring Agreement ("Agreement") dated as of July 22, 2004 is
made and entered into by and among Continental Global Group, Inc., a Delaware
corporation (the "Company"), N.E.S. Investment Co. ("N.E.S.") and Wayzata
Investment Partners LLC ("Wayzata").
BACKGROUND
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A. Wayzata is a holder of, or investment manager or advisor for certain
discretionary accounts that are holders or beneficial owners of, certain of the
Old Notes (as defined below).
B. The Company, Wayzata and N.E.S. have entered into that certain
Forbearance Agreement, dated as of April 26, 2004 (as amended) (the "Forbearance
Agreement"), pursuant to which, among other things, Wayzata agreed to forbear
from exercising certain rights and remedies under or with respect to Old Notes
owned or controlled by Wayzata while the parties are negotiating the
Restructuring (as defined below).
C. The Company, Wayzata and N.E.S. desire to effectuate the Restructuring.
D. The Company and N.E.S. desire that Wayzata (i) continue to forbear from
exercising certain rights and remedies under or with respect to the Old Notes
owned or controlled by Wayzata while the parties are effectuating the
Restructuring, (ii) agree to vote as requested by the Company in connection with
the Consent Solicitation and (iii) agree to tender the Wayzata Notes (as defined
below) in connection with the Exchange, and Wayzata is willing to agree to such
obligations in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the promises and mutual agreements
herein contained, the parties hereto, intending to be legally bound hereby,
hereby agree as follows:
1. Definitions. Capitalized terms used in this Agreement and not
defined elsewhere herein shall be defined as set forth below:
"Closing Date" has the meaning set forth in Section 11 hereof.
"Confidentiality Agreement" has the meaning set forth in Section 4(b)
hereof.
"Consent Solicitation" means the solicitation of the Holders by the
Company for amendment of the Existing Indenture on the terms set forth in
Schedule 3 hereto.
"Exchange" means the exchange of the Old Notes for the New Notes.
"Exchange Offer" means the offer to be made by the Company to exchange
the Old Notes for (i) cash (as provided in Section 5(d) hereof) and (ii) the New
Notes on an exchange ratio of $65 in aggregate principal amount of New Series A
Notes and $10 in aggregate
principal amount of New Series B Notes for each $120 in aggregate principal
amount of Old Notes duly tendered and not withdrawn pursuant to the Exchange
Offer.
"Existing Indenture" means the Indenture, dated as of April 1, 1997,
among the Company, each Subsidiary Guarantor (as defined therein) and Wells
Fargo Bank Minnesota, N.A. (as successor to Norwest Bank Minnesota, National
Association), as trustee, relating to the Old Notes.
"Forbearance Agreement" has the meaning set forth in Recital B to this
Agreement.
"Guarantee" has the meaning set forth in the Existing Indenture.
"Holder" has the meaning set forth in the Existing Indenture.
"Indebtedness" has the meaning set forth in the Existing Indenture.
"Intercreditor Agreement" means an intercreditor agreement to be
agreed to between Bank One, N.A. and the Trustee.
"Initiation Date" means July 30, 2004.
"New Notes" means the New A Notes and New B Notes.
"New A Notes" means the Company's 9% Series A Senior Secured Notes, to
be issued pursuant to the New Indenture, in the aggregate principal amount of up
to Sixty Five Million Dollars ($65,000,000).
"New B Notes" means the Company's 13% Series B Senior Secured Notes,
to be issued pursuant to the New Indenture, in the aggregate principal amount of
up to Ten Million Dollars ($10,000,000).
"New Indenture" means the Indenture to be entered into among the
Company, each Subsidiary Guarantor (as defined in the New Indenture) and Wells
Fargo Bank Minnesota, N.A., as trustee, relating to the New Notes and containing
the terms provided for in Schedule 2 hereto.
"Old Notes" means the Company's 11% Series A Senior Notes due 2007 and
the Company's 11% Series B Senior Notes due 2007 issued pursuant to the
Indenture, in the aggregate principal amount of One Hundred Twenty Million
Dollars ($120,000,000).
"Person" means any individual or any partnership, corporation, joint
venture, limited liability company or other unincorporated organization or
entity or any association, trust, or governmental unit.
"Restructuring" means the effectuation of the Exchange, including the
execution and delivery of all documentation related to the Exchange Offer,
Consent Solicitation and amendments to the Existing Indenture.
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"Security Agreement" means a security agreement pursuant to
which the Company grants to the Trustee, for the benefit of holders of the New
Notes, a security interest in substantially all of its personal property.
"Subsidiary" has the meaning set forth in the Existing
Indenture.
"Transfer" means to directly or indirectly sell (through a
direct sale or otherwise), pledge, assign, encumber, grant a proxy, grant an
option with respect to, transfer or dispose of any participation or interest
(voting or otherwise) in or enter into an agreement, voting trust, commitment or
other arrangement to sell (through a direct sale or otherwise), pledge, assign,
encumber, grant a proxy, grant an option with respect to, transfer or dispose of
any participation or interest (voting or otherwise) in or the act thereof.
"Trustee" means the trustee under the Existing Indenture and
the New Indenture.
"Wayzata Notes" means Notes in the aggregate principal amount
set forth on Schedule 1 hereto.
2. The Restructuring.The Restructuring will be effectuated pursuant to
the following terms and conditions:
(a) The Company shall use its reasonable commercial efforts to
initiate the Consent Solicitation and Exchange Offer on or before the
Initiation Date.
(b) To the extent permitted by applicable law, the Exchange Offer
shall be effectuated pursuant to one or more exemptions from registration
under the Securities Act of 1933, as amended (the "Securities Act"), and
applicable state securities laws.
(c) The Company agrees to use its reasonable commercial efforts to
do all things reasonably necessary and appropriate in connection with the
Consent Solicitation and Exchange Offer, including filing any related
documents with any governmental authority or regulatory body.
(d) The Company agrees to consummate the Exchange Offer subject to
the following conditions: (i) 100% of the issued and outstanding Old Notes
are duly tendered, and not withdrawn (the "Minimum Condition"), (ii) the
Company obtains the consent of Bank One, N.A. to the Restructuring in a
form reasonably satisfactory to the Company, (iii) Wayzata submits consents
with respect to all Wayzata Notes in connection with the Consent
Solicitation amending the Old Indenture as provided in Schedule 3 hereto ,
(iv) N.E.S. makes the cash payment provided in Section 5(a) hereof and
irrevocably commits to make the payment provided in Section 5(b) hereof,
and (v) the general conditions set forth in Schedule 4 and such other
general conditions to the Exchange Offer as are customary in transactions
of this type are satisfied. Notwithstanding anything herein to the
contrary, the Company may waive, in its sole discretion, the Minimum
Condition; provided, that, the Company may not waive the Minimum Condition
without the written consent of Wayzata and N.E.S. in the event that
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less than 95% in aggregate principal amount of the issued and
outstanding Old Notes are duly tendered, and not withdrawn.
3. The Terms of the New Indenture and New Notes. The New Indenture and
New Notes will have the following terms and conditions:
(a) Except as provided herein, the terms and conditions governing
the New Indenture and the New Notes shall be substantially similar in all
material respects to the terms and conditions governing the Old Indenture
and the Old Notes.
(b) Interest shall be paid on the New Notes as follows:
(i) with respect to the New A Notes, interest shall be paid
semi-annually in arrears, in cash, at an interest rate equal to nine
percent (9%) per annum, payable on each April 1 and October 1 until
maturity, with interest accruing from April 1, 2004;
(ii) with respect to the New B Notes, interest shall be paid
semi-annually in arrears, in-kind, at an interest rate equal to
thirteen percent (13%) per annum, payable on each April 1 and October
1 until maturity with interest accruing from April 1, 2004; provided,
however, the Company shall have the right to make interest payments on
the New B Notes semi-annually, in cash, at the same rate and on the
same terms as the interest payments on the New A Notes.
(c) The New A Notes and New B Notes shall rank pari passu.
(d) The New Notes shall be secured by a second priority security
interest on the terms set forth in the Security Agreement and Intercreditor
Agreement executed simultaneously with the Indenture and shall have a
stated maturity of October 1, 2008.
(e) Continental Conveyor & Equipment Company and Goodman Conveyor
Company (the "Guarantor Subsidiaries") shall be guarantors of the New Notes
on the same terms and conditions as the Guarantor Subsidiaries guaranteed
the Old Notes.
(f) Schedule 2 hereto sets forth the additional terms and
conditions governing the New Indenture and the New Notes.
4. Wayzata Covenants. Until the Restructuring is consummated or this
Agreement is terminated in accordance with its terms:
(a) Wayzata agrees (i) to forbear from enforcing any and all of its
rights and remedies with respect to defaults under the Old Notes arisen or
arising in respect of the covenants set forth in Sections 4.01, 4.03, and
4.04 of the Existing Indenture or as a direct result of the transactions
contemplated by this Agreement and (ii) to give a copy of this Agreement to
the Trustee and to inform the Trustee that it is not authorized to take any
action on behalf of Wayzata that is inconsistent with Wayzata's
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agreements and obligations under this Agreement. Wayzata expressly consents
to the Company's right to confirm such actions with the Trustee.
(b) Wayzata agrees not to Transfer any Wayzata Notes, in whole or
in part, unless (i) the Transfer is made in accordance with the terms of
the Confidentiality Agreement dated January 8, 2004 (as amended by the
Forbearance Agreement between the Company and Wayland Advisers, Inc. (as
predecessor in interest to Wayzata) (the "Confidentiality Agreement") and
by Section 24 hereof), and (ii) the transferee of such Transfer agrees to
be bound by the terms of this Agreement with respect to any Wayzata Notes
so transferred and executes a counterpart of this Agreement; provided,
that, no Transfer will be permitted hereunder if such Transfer will have an
adverse effect on the transactions contemplated hereby because of the
character of the transferee or otherwise. Without limiting the generality
of the foregoing, Wayzata agrees not to Transfer any Wayzata Notes if, as a
result of such Transfer, any additional regulatory or other restrictions
would be imposed on the Company in connection with the effectuation of the
Restructuring, including the Consent Solicitation or the Exchange. Any
Transfer of the Wayzata Notes in violation of the foregoing restriction
shall be deemed null and void ab initio.
(c) Wayzata agrees to submit consents with respect to all of the
Wayzata Notes as requested by the Company in connection with the Consent
Solicitation, provided that N.E.S. makes, or irrevocably commits to make,
the cash payments provided for in Sections 5(a) and 5(b) hereof, and
provided, further, that the effectiveness of such consent shall be subject
to N.E.S. posting the letter of credit called for in Section 5(c), the
Company obtaining the consent of Bank One, N.A. to the Restructuring on
terms materially consistent with the term sheet provided to Wayzata prior
to the date hereof, consummation of the Exchange and the making of the
payment called for in Section 5(d)(i).
(d) Wayzata agrees to tender all of the Wayzata Notes in the
Exchange Offer, provided that N.E.S. makes, or irrevocably commits to make
the cash payments provided for in Sections 5(a) and 5(b) hereof, and
provided, further that the effectiveness of the tender shall be subject to
N.E.S. posting the letter of credit called for in Section 5(c), the Company
obtaining the consent of Bank One, N.A. to the Restructuring on terms
materially consistent with the term sheet provided to Wayzata prior to the
date hereof, consummation of the Exchange and the making of the payment
called for in Section 5(d)(i).
(e) Wayzata agrees not to take or suffer to be taken any act that
could restrict or otherwise affect its or any other Holder's legal power,
authority or right to vote all of the Wayzata Notes as requested by the
Company in connection with the Consent Solicitation and tender all of the
Wayzata Notes in the Exchange Offer.
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5. N.E.S. Funding; Cash Payments to Holders of Old Notes.
(a) On the Closing Date, N.E.S. shall remit Ten Million Dollars
($10,000,000) to the Company, which amount shall be in the form of a
subordinated loan from N.E.S. to the Company or a contribution to capital, as
determined by N.E.S. in its sole discretion.
(b) Assuming that the Exchange Offer is consummated as herein provided,
on the date that is one year from the Closing Date, N.E.S. shall remit Two
Million Dollars ($2,000,000) to the Company, or at the direction of the Company,
to the Trustee for the benefit of the holders of the New Notes, which amount
shall be in the form of a subordinated loan from N.E.S. to the Company or a
contribution to capital, as determined by N.E.S. in its sole discretion. If
N.E.S. contributes amounts under Sections 5(a) and (b) as subordinated loans,
such loans shall (x) bear interest at a rate of 9% per year which shall be
payable, in-kind, semi-annually on April 1 and October 1, (y) mature one day
following payment in full, in cash, of the New Notes, and be convertible, at the
sole option of N.E.S., into equity, and (z) otherwise be consistent with the
terms set forth on Exhibit A hereto.
(c) On the Closing Date, N.E.S. shall provide to the Trustee a letter of
credit, in a form and from an issuer reasonably satisfactory to the Trustee, in
the face amount of Two Million Dollars ($2,000,000) in respect of N.E.S.'
obligation to make the payment described in the first sentence of Section 5(b)
hereto.
(d) The Company shall pay as additional consideration to Holders who
validly tender and do not withdraw their Old Notes (i) upon consummation of the
Exchange Offer, an amount equal to $15.50 for each $120 in principal amount of
Old Notes tendered and (ii) on the date that is one year from the Closing Date,
an amount equal to $2 for each $120 in principal amount of Old Notes tendered.
6. Representations and Warranties.
(a) Each of the signatories to this Agreement represents and warrants to
the other signatories to this Agreement that:
(i) it is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has all
requisite corporate, partnership or other power and authority to enter into
this Agreement and to carry out the transactions contemplated by, and
perform its respective obligations under, this Agreement;
(ii) the execution, delivery and performance by it of this
Agreement do not and shall not (A) violate any provision of law, order,
rule or regulation applicable to it or its certificate of incorporation or
bylaws or other organizational documents or (B) conflict with, result in
the breach of or constitute (with due notice or lapse of time or both) a
default under any material contractual obligations to which it is a party
or under its certificate of incorporation, bylaws or other governing
instruments;
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(iii) the execution, delivery and performance by it of this
Agreement do not and shall not require any registration or filing with, the
consent or approval of, notice to, or any other action with respect to, any
Federal, state or other governmental authority or regulatory body, except
for any filings or registrations or other actions required to be made with
or to any Federal or state governmental authorities or regulatory bodies in
connection with the effectuation of the Restructuring and the Exchange;
(iv) assuming the due execution and delivery of this Agreement by
each of the other parties hereto, this Agreement is its legally valid and
binding obligation, enforceable against it in accordance with its terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws; and
(v) it has been represented by counsel in connection with this
Agreement and the transactions contemplated by this Agreement and confirms
that its decision to execute this Agreement has been based upon its
independent investigation and evaluation of the matters contemplated
hereby.
(b) Wayzata further represents, warrants and covenants to the other
signatories to this Agreement that:
(i) as of the date of this Agreement, Wayzata is the beneficial
owner of, or the investment adviser or manager for the beneficial owners
of, the aggregate principal amount of the Wayzata Notes, with the sole
power and authority to vote and dispose of the Wayzata Notes, Wayzata has
no interest in, or rights with respect to, any other Old Notes, and, except
as set forth on Schedule 5 hereto, the Wayzata Notes are owned free and
clear of any liens, encumbrances, equities and claims;
(ii) as of the date of this Agreement and for so long as this
Agreement remains in effect, Wayzata has not entered, and will not enter,
into any voting agreement (other than this Agreement) with any Person with
respect to any of the Wayzata Notes, has not granted, and will not grant,
to any Person any of the Wayzata Notes, has not deposited, and will not
deposit, any Wayzata Notes in a voting trust or entered into any
arrangement or agreement with any Person limiting or affecting its legal
power, authority or right to vote Wayzata Notes on any matter; and
(iii) as of the date of this Agreement and for so long as this
Agreement remains in effect, Wayzata is and will be an "Accredited
Investor" as such term is defined in Rule 501(a) of Regulation D
promulgated under the Securities Act of 1933, as amended.
7. Condition to N.E.S.'s Funding Obligations. Notwithstanding anything
to the contrary in this Agreement, N.E.S. shall have no obligation to
make the cash payments to the Company provided in Section 5(a) or 5(b) hereof,
or to post the letter of credit provided for in
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Section 5(c) hereof, unless ninety-five percent (95%) of the Holders of the Old
Notes shall have tendered in the Exchange Offer (and not withdrawn such tender).
8. Tax Payment Agreement. N.E.S. and the Company and its subsidiaries will
enter into a tax payment agreement substantially in the form of Exhibit B
hereto.
9. Treatment of Creditors. All debts and other obligations of the Company
to other creditors of the Company will continue unimpaired.
10. No Public Announcement. Wayzata agrees that it shall not make any
announcement or disclosure regarding this Agreement or the transactions
contemplated hereby without the prior written consent of the Company; provided,
that, following commencement of the Exchange Offer, Wayzata may discuss with
other parties any publicly available information regarding the Company or the
Exchange Offer without consent of the Company.
11. Closing. The Restructuring and Exchange Offer shall close (the
"Closing") twenty full business days following commencement of the Exchange
Offer at the offices of Squire, Sanders & Dempsey L.L.P., 4900 Key Tower, 127
Public Square, Cleveland, Ohio 44114, or at such other place and on such other
date as shall be mutually agreed upon by the parties hereto; provided, however,
if the Minimum Condition has not been satisfied, the Company may extend the
Exchange Offer, in its sole discretion, for one ten business day period and,
upon expiration of such extension, for an additional ten business day period
with the consent of Wayzata (the "Closing Date").
12. Good Faith. Each of the signatories to this Agreement agrees to
cooperate fully and in good faith with each other to facilitate the performance
by the parties of their respective obligations hereunder and the effectuation of
the Restructuring and the Exchange, and to vote for, execute and deliver all
documents and agreements necessary to effectuate, and otherwise support and
implement, the Restructuring and the Exchange on or before the Closing Date.
13. Termination of Agreement. This Agreement shall terminate and expire
upon the earlier to occur of:
(i) mutual written consent of the Company, Wayzata and N.E.S.; and
(ii) the later of 5:00 P.M. New York City time on July 30, 2004 or, if
the Exchange Offer has been commenced and not terminated, the
Closing Date;
provided, that, the obligations set forth in Sections 5(b), 5(d)(ii) and 23(a)
hereof shall survive the Closing.
14. Amendments and Modifications. This Agreement shall not be amended
except by instrument in writing signed by each of the parties hereto.
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15. Further Assurances. Each of the signatories to this Agreement hereby
further covenants and agrees to execute and deliver all further documents and
agreements and take all further action that may be reasonably necessary or
desirable in order to enforce and effectively implement the terms and conditions
of this Agreement.
16. Complete Agreement. Except for the Confidentiality Agreement and the
Forbearance Agreement, this Agreement constitutes the complete agreement among
the signatories hereto with respect to the subject matter hereof and supersedes
all prior and contemporaneous negotiations, agreements and understandings with
respect to the subject matter hereof. The provisions of this Agreement shall be
interpreted in a reasonable manner to affect the intent of the signatories to
this Agreement.
17. Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing and shall be (a) transmitted by
hand delivery, (b) mailed by first class, registered or certified mail, postage
prepaid, (c) transmitted by overnight courier, or (d) transmitted by telecopy,
and in each case at the address set forth below:
If to the Company:
Continental Global Group, Inc.
438 Industrial Drive
Winfield, Alabama 35594
Attention: President
Telephone: (205) 487-6492
Facsimile: (205) 487-4233
With copies to:
Squire, Sanders & Dempsey L.L.P.
4900 Key Tower
127 Public Square
Cleveland, Ohio 44114-1304
Attention: David A. Zagore
Telephone: (216) 479-8610
Facsimile: (216) 479-8780
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, New York 10005-1413
Attention: Dennis F. Dunne
Telephone: (212) 530-5000
Facsimile: (212) 530-5219
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If to N.E.S.:
N.E.S. Investment Co.
6140 Parkland Boulevard
Mayfield Heights, Ohio 44124
Attention: Robert Tomsich
Telephone: (440) 461-6000
Facsimile: (440) 449-3112
With a copy to:
Morris, Nichols, Arsht & Tunnell
P.O. Box 1347
Wilmington, Delaware 19899
Attention: A. Gilchrist Sparks, III
Telephone: (302) 658-9200
Facsimile: (302) 658-3989
If to Wayzata:
Wayzata Investment Partners LLC
701 East Lake Street
Wayzata, Minnesota 55391
Attention: Blake Carlson
Telephone: (952) 345-0708
Facsimile: (952) 345-8901
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Scott K. Charles
Telephone: (212) 403-1202
Facsimile: (212) 403-2202
Notices mailed or transmitted in accordance with the foregoing shall be deemed
to have been given upon receipt.
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18. Governing Law. This Agreement shall be governed in all respects by the
laws of the State of New York applicable to contracts made and to be performed
in the State of New York without regard to any conflicts of law provision that
would require the application of the law of any other jurisdiction.
19. Waiver of Jury Trial. EACH OF THE SIGNATORIES TO THIS AGREEMENT WAIVES
ITS RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.
20. Headings. The headings of the sections, paragraphs and subsections of
this Agreement are inserted for convenience only and shall not affect the
interpretation hereof.
21. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the signatories to this Agreement and their respective
successors, permitted assigns, heirs, executors, administrators and
representatives.
22. Fees and Expenses. The Company agrees to pay all reasonable
out-of-pocket fees and expenses incurred by N.E.S. and Wayzata in connection
with the negotiation, execution and performance of this Agreement (including the
effectuation of the Restructuring).
23. Release.
(a) In consideration of the agreements set forth herein and subject to
paragraph (b) below, effective as of the Closing Date, each of the signatories
hereto unconditionally releases, and forever discharges and acquits, each of the
other signatories hereto, their parents, subsidiaries and affiliates and their
respective directors, officers, executives, employees, attorneys, advisors,
representatives and shareholders (the "Released Persons"), from all, and all
manner of, actions, suits, debts, claims, duties, payment and performance of all
obligations, liabilities and indebtedness of every kind, direct or indirect,
determined or undetermined, at law or in equity, whether or not asserted or
raised and existing or alleged to exist or to have existed, at any time, which
such signatory ever had or has or may have at this time against any Released
Person, arising out of, relating to, or incurred in connection with this
Agreement, the Restructuring, the Consent Solicitation, the Exchange Offer, the
Exchange, or any transaction entered into hereunder or thereunder or any action
taken or omitted to be taken by the Released Persons hereunder or thereunder
(except that this Section 23 shall not be effective with respect to any
obligations relating to the New Notes) (collectively, the "Released Claims").
Subject to paragraph (b) below and notwithstanding any provision hereof
to the contrary, the releases provided for in this Section 23 shall survive the
Closing.
(b) The release by a signatory hereto will not apply if and to the
extent that any payment or delivery, in whole or in part, by or on behalf of
another signatory hereto under or in connection with this Agreement, the
Restructuring, the Consent Solicitation, the Exchange Offer or the Exchange is
rescinded or must be otherwise restored, whether as a result of any proceedings
in bankruptcy, insolvency or reorganization or otherwise, all as though such
payment or delivery had not been made. Each signatory hereto hereby covenants
not to sue or pursue any legal or equitable action against any other signatory
hereto with respect to any Released Claim, and if any such signatory shall
breach such covenant, then (i) such non-
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breaching signatory shall be entitled to collect from such breaching signatory
all reasonable out-of-pocket costs and expenses, including attorneys' fees,
losses, claims and damages, incurred by such non-breaching signatory that are
directly related to the defense of such action and (ii) the release granted to
such breaching signatory by such non-breaching signatory shall be void ab initio
and shall be deemed never to have been given.
24. Venue. For so long as this Agreement remains in effect and in the event
that an involuntary case is commenced against the Company, Wayzata agrees that
it shall not challenge any actions by the Company to change or otherwise
transfer venue of such action.
25. Confidentiality Agreement. Wayzata acknowledges that it is subject to
all terms and conditions agreed to in that certain Confidentiality Agreement,
provided, however, that such Confidentiality Agreement is hereby modified by
changing the expiration date thereof wherever it appears therein to the sooner
of the Closing Date or the date this Agreement is terminated in accordance with
its terms.
26. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page by facsimile shall be as effective as delivery of a manually
executed counterpart.
27. No Third-Party Beneficiaries. This Agreement shall be solely for the
benefit of the signatories to this Agreement, and no other Person shall be a
third-party beneficiary hereof. Nothing in this Agreement, express or implied,
shall give to any Person other than the parties hereto any benefit or any legal
or equitable right, remedy or claim under this Agreement.
28. Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.
29. Consideration. It is hereby acknowledged by each of the signatories to
this Agreement that no consideration (other than the obligations of the other
parties under this Agreement) has been paid or shall be due or paid to the
parties for their agreement to support the Restructuring in accordance with the
terms and conditions of this Agreement.
[Signature Page To Follow]
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed and delivered by its duly authorized officers as of the
date first written above.
CONTINENTAL GLOBAL GROUP, INC.
By: /s/ J.L. Dickinson
---------------------------------
Name: J.L. Dickinson
--------------------------
Title: Vice President
-------------------------
WAYZATA INVESTMENT PARTNERS LLC
By: /s/ Blake M. Carlson
---------------------------------
Name: Blake M. Carlson
--------------------------
Title: Authorized Signatory
-------------------------
N.E.S. INVESTMENT CO.
By: /s/ Patrick J. Brainard
---------------------------------
Name: Patrick J. Brainard
--------------------------
Title: Vice President
-------------------------
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SCHEDULE 1
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WAYZATA NOTES
Wayzata Investment Partners LLC, $82,115,000
as Manager and/or
Agent, on behalf of
various funds
SCHEDULE 2
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ADDITIONAL TERMS AND CONDITIONS GOVERNING THE
NEW INDENTURE AND NEW NOTES
The New Indenture shall have substantially similar terms to the Existing
Indenture, with the exceptions noted below. All definitions under the New
Indenture shall be substantially the same as under the Existing Indenture,
unless otherwise noted.
1. 3.07 - Optional Redemption. New Notes may be redeemed at any time, without
premium.
2. 4.07 - Restricted Payments.
- - The New Indenture shall forbid all payments to equity or subordinated debt
prior to stated maturity and shall forbid all Investments that are not
defined as "Permitted Investments."
- - "Restricted Payments" shall not include payments permitted under the Tax
Payment Agreement.
- - Restricted Payments under the Management Agreement must be accrued and may
not be paid in cash prior to, and must be subordinated to, the New Notes;
provided, however, reasonable out-of-pocket expenses incurred on behalf of
the Company shall be reimbursed as billed, subject to an annual cap of
$50,000.
- - Principal payments on all subordinated Indebtedness and Capital Lease
Obligations prior to stated maturity shall be prohibited. Principal
payments on term debt under the Company's Credit Facilities or Foreign
Credit Facilities shall not be prohibited.
3. Permitted Investments.
- - Limit consolidated capital expenditures by the Company and its domestic
Subsidiaries to $2.0 million per year, plus any unused amounts attributable
to prior years, subject to a maximum of $3.0 million in any one year.
Notwithstanding the forgoing:
- Investments up to $600,000 in value per year in new equipment
purchases and financed with Capital Lease Obligations shall be
excluded from limitation.
- Up to $3.0 million in restructuring capital expenditures incurred
within two years from Closing Date shall be excluded from limitation.
- - All existing Investments shall be Permitted Investments.
- - New Permitted Investments in Persons that become both wholly-owned
Subsidiaries and Guarantors and that are engaged in "Related Businesses"
shall be subject to an aggregate $3.0 million. Any new Permitted
Investments above $3.0 million may be made only on the
condition that 75% of such investments shall be funded from the proceeds of
new equity or subordinated indebtedness.
- - New Investments of up to $1.5 million in Foreign Subsidiaries shall be
Permitted Investments.
- - Clauses (c), (g) and (h) in the definition of Permitted Investments shall
be eliminated, except as consistent with and to the same extent as
specified above.
4. 4.09 - Incurrence of Indebtedness.
- - All existing Indebtedness (and any Permitted Refinancing Indebtedness
thereof) shall be grandfathered. Permitted Indebtedness shall not include
new Indebtedness incurred under general baskets clause (ix) of Section
4.09, nor Indebtedness incurred pursuant to the Fixed Charge Coverage Ratio
test.
- - The Company shall be permitted to incur additional Indebtedness only as
follows:
1) Indebtedness under the Credit Facilities, subject to an aggregate
principal amount of the greater of (x) $60 million; and (y) the
Borrowing Base;
2) Indebtedness under the Foreign Credit Facilities, subject to an
aggregate principal amount limit of the greater of (x) $15 million and
(y) the Foreign Borrowing Base, provided that such Indebtedness shall
not be guaranteed by or secured by any of the assets of the Company or
the Subsidiary Guarantors.
3) Capital Lease Obligations and related Indebtedness incurred under
clause (v) of Section 4.09 shall be limited to amounts permitted under
Section 4.07.
5. 4.10 - Asset Sales.
- - All net Asset Sale proceeds must be used to pay-off obligations under
Credit Facilities (if proceeds of Company or domestic subsidiary sale of
assets) or Foreign Credit Facilities (if proceeds of foreign subsidiary
sale of assets) or the New Notes; provided, however, the Company shall not
be obligated to permanently reduce availability under the Credit Facilities
or Foreign Credit Facilities in the event net Asset Sale proceeds are used
to pay-off obligations thereunder; The Company shall not be permitted to
reinvest net Asset Sale proceeds, even within one-year period provided for
in Section 4.10.
6. 4.11 - Transactions with Affiliates.
- - Affiliate Transactions with NESCO, Inc.; N.E.S. Investment Co.; Robert
Tomsich; Edward Crawford; Donald Hastings; C. Wesley McDonald; and James
Wert shall be prohibited; provided, however, prohibition on Affiliate
Transactions shall not include the payment of director fees to independent
directors or the reimbursement of ordinary and necessary out-of-pocket
expenses incurred on behalf of the Company by such Affiliates or under the
Management Agreement.
7. 4.12 - Liens.
- - Clause (x) of definition of Permitted Liens shall be reduced from $5.0
million to $500,000.
8. 5.01 - Merger, Consolidation of Sale of Assets.
- - Section shall be revised to permit merger of the Company and one or more
guarantor subsidiaries, as well as a change in form of the Company and one
or more subsidiaries form of organization from corporation to general or
limited partnership or limited liability company; provided, however,
neither the Company nor any domestic subsidiary may merge with or into any
direct or indirect foreign subsidiary of the Company.
SCHEDULE 3
----------
AMENDMENTS TO EXISTING INDENTURE
The following is a summary of the Proposed Amendments to the Existing Indenture.
Proposed additions appear in square brackets "[" "]". Proposed deletions appear
in square brackets with asterisk "*[" "]*". This summary is qualified in its
entirety by reference to: (i) the relevant terms of the Existing Indenture, as
currently in effect, and (ii) the proposed form of Supplemental Indenture
containing the Proposed Amendments. Copies of the Existing Indenture and the
form of Supplemental Indenture may be obtained from the Information Agent
without charge upon written request directed to its address set forth in this
Statement. The proposed form of Supplemental Indenture may be modified or
supplemented prior to execution thereof in a manner that would not require
additional consents.
PROPOSED AMENDMENT TO ARTICLE 3 (REDEMPTION AND PREPAYMENT) OF THE
EXISTING INDENTURE
Section 3.09. (Repurchase Offers) will be deleted in its entirety.
PROPOSED AMENDMENTS TO ARTICLE 4 (COVENANTS) OF THE EXISTING INDENTURE
1. Section 4.05. (Taxes) will be deleted in its entirety.
2. Section 4.06. (Stay, Extension and Usury Laws) will be deleted in its
entirety.
3. Section 4.07. (Restricted Payments) will be deleted in its entirety.
4. Section 4.08. (Dividends and Other Payment Restrictions Affecting
Subsidiaries) will be deleted in its entirety.
5. Section 4.09. (Incurrence of Indebtedness and Issuance of Preferred Stock)
will be deleted in its entirety.
6. Section 4.10. (Asset Sales) will be deleted in its entirety.
7. Section 4.11. (Transaction with Affiliates) will be deleted in its
entirety.
8. Section 4.12. (Liens) will be deleted in its entirety.
9. Section 4.13. (Sale and Leaseback Transactions) will be deleted in its
entirety.
10. Section 4.14. (Offer to Purchase Upon Change of Control) will be deleted in
its entirety.
11. Section 4.15. (Corporate Existence) will be deleted in its entirety.
12. Section 4.16. (Limitation on Issuances of Capital Stock of Wholly Owned
Subsidiaries) will be deleted in its entirety.
13. Section 4.17. (Business Activities) will be deleted in its entirety.
14. Section 4.18. (Additional Subsidiary Guarantees) will be deleted in its
entirety.
15. Section 4.19. (Payment for Consents) will be deleted in its entirety.
PROPOSED AMENDMENT TO ARTICLE 5 (SUCCESSORS) OF THE EXISTING INDENTURE
Section 5.01. (Merger, Consolidation, or Sale of Assets) will be deleted in its
entirety.
PROPOSED AMENDMENT TO ARTICLE 6 (DEFAULTS AND REMEDIES)
OF THE EXISTING INDENTURE
Section 6.01. (Events of Default) will be amended as follows:
SECTION 6.01. EVENTS OF DEFAULT.
Each of the following constitutes an "Event of Default:"
(i) default for 30 days in the payment when due of interest
on, or Liquidated Damages, if any, with respect to the Senior Notes;
(ii) default in payment when due of principal of or premium,
if any, on the Senior Notes;
*[(iii) failure by the Company or any Subsidiary to comply
with the provisions described under Sections 3.09, 4.07, 4.09, 4.10,
4.14 or 4.19 or Article 5 hereof;]*
[(iii)] *[(iv)]* failure by the Company or any Subsidiary for
60 days after notice to comply with its other agreements in this
Indenture or the Senior Notes;
*[(v) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of
its Subsidiaries (or the payment of which is guaranteed by the Company
or any of its Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date hereof, which default (A)(i) is
caused by a failure to pay when due at final stated maturity (giving
effect to any grace period related thereto) any principal of or
premium, if any, or interest on such Indebtedness (a "Payment
Default") or (ii) results in the acceleration of such Indebtedness
prior to its express maturity and (B) in each case, the principal
amount of any such Indebtedness as to which a Payment Default shall
have occurred, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $5.0 million or
more;]*
*[(vi) failure by the Company or any of its Subsidiaries to
pay final judgments aggregating in excess of $5.0 million, which
judgments are not paid, discharged or stayed within 60 days after
their entry;]*
[(iv)] *[(vii)]* the Company, any of its Significant
Subsidiaries or any group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary, pursuant to or within the meaning
of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against
it in an involuntary case in which it is the debtor,
(iii) consents to the appointment of a Custodian of it or
for all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) admits in writing its inability generally to pay its
debts as the same become due;
[(v)] *[(vii)]* a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:
(i) is for relief against the Company, any of its
Significant Subsidiaries or any group of Subsidiaries
that, taken together, would constitute a Significant
Subsidiary, in an involuntary case in which it is the
debtor,
(ii) appoints a Custodian of the Company, any of its
Significant Subsidiaries or any group of Subsidiaries
that, taken together, would constitute a Significant
Subsidiary, or for all or substantially all of the
property of the Company, any of its Significant
Subsidiaries or any group of Subsidiaries that taken,
taken together, would constitute a Significant
Subsidiary, or
(iii) orders the liquidation of the Company or any of its
Subsidiaries,
and the order or decree contemplated in clauses (i), (ii) or (iii),
remains unstayed and in effect for 60 consecutive days; or
[(vi)] *[(ix)]* the termination of the Subsidiary Guarantee
of any Subsidiary Guarantor for any reason not permitted by this
Indenture, or the denial of any Person acting on behalf of any such
Subsidiary Guarantor of its Obligations under any such Subsidiary
Guarantee.
To the extent that the last day of the period referred to in
clauses (i) [or] (iii), *[(iv) or (vi)]* of the immediately preceding
paragraph is not a Business Day, then the first Business Day following such day
shall be deemed to be the last day of the period referred to in such clauses.
Any "day" will be deemed to end as of 11:59 p.m., New York City time.
SCHEDULE 4
----------
GENERAL CONDITIONS
(a) There shall have been any action taken or threatened, or any statute, rule,
regulation, judgment, order, stay, decree or injunction promulgated, enacted,
entered, enforced or deemed applicable to the Exchange Offer, the Proposed
Amendments or the exchange of Old Notes pursuant to the Exchange Offer (the
"Exchange") by or before any court or governmental regulatory or administrative
agency or authority or tribunal, domestic or foreign, which challenges the
making of the Exchange Offer, the Proposed Amendments or the Exchange or in the
reasonable judgment of the Company might directly or indirectly prohibit,
prevent, restrict or delay consummation of the Exchange Offer, the Proposed
Amendments or the Exchange or otherwise adversely affects in any material manner
the Exchange Offer, the Proposed Amendments or the Exchange;
(b) There shall have occurred or be likely to occur any event affecting the
business or financial affairs of the Company that, in the reasonable judgment of
the Company, would or might prohibit, prevent, restrict or unduly delay
consummation of the Exchange Offer, the Proposed Amendments or the Exchange;
(c) There shall have occurred (i) any general suspension of or limitation on
trading in securities on the New York Stock Exchange, the American Stock
Exchange, or in the over-the-counter market (whether or not mandatory), (ii) a
material impairment in the trading market for debt securities, (iii) a
declaration of a banking moratorium or any suspension of payments in respect of
banks by federal or state authorities in the United States (whether or not
mandatory), (iv) a commencement of a war, armed hostilities or other national or
international crisis directly or indirectly relating to the United States, (v)
any limitation (whether or not mandatory) by any governmental authority on, or
other event having a reasonable likelihood of affecting, the extension of credit
by banks or other lending institutions in the United States or (vi) any
significant adverse change in United States securities or financial markets
generally or in the case of any of the foregoing existing at the time of the
commencement of the Exchange Offer, a material acceleration or worsening
thereof; or
(d) The Trustee shall have objected in any respect to, or taken any action that
could, in the reasonable judgment of the Company, adversely affect the
consummation of the Exchange Offer, the Exchange or the Company's ability to
effect the Proposed Amendments, or shall have taken any action that challenges
the validity or effectiveness of the procedures used by the Company in
soliciting the Consents to the Proposed Amendments (including the form thereof)
or in making the Exchange Offer or in accepting the Old Notes tendered for
exchange.
SCHEDULE 5
----------
LIENS, ENCUMBRANCES, EQUITIES AND CLAIMS
WITH RESPECT TO THE WAYZATA NOTES
1) Certain of the Wayzata Notes are held in leveraged funds and
are subject to the security interest of the lenders to those
funds; provided, however, such security interests do not limit
Wayzata's power or authority to enter into this Agreement or
perform its obligations hereunder.
EXHIBIT A
---------
TERMS OF SUBORDINATED N.E.S. INVESTMENT CO. NOTE
Any notes evidencing the loans from N.E.S. to the Company with respect to the
funds advanced to the Company pursuant to the provisions of Sections 5(a) and
5(b) of this Agreement shall be on the following terms and such other customary
terms as the parties may agree:
1) Indebtedness shall be subordinated in full to the New Notes and the Bank One
Facility, and any Permitted Refinancing thereof ("Senior Debt"). The
subordinated notes shall prohibit payment of any principal or interest payment
and receipt of any distribution in liquidation/bankruptcy until Senior Debt is
paid in full.
2) Interest on subordinated notes shall be payable in-kind at a rate of 9% per
annum through maturity, and shall be paid semi-annually on April 1 and October 1
through maturity.
3) Subordinated notes shall mature one day following payment in full of the New
Notes.
4) Subordinated notes shall be convertible into common equity at its then fair
market value as reasonably determined by the Board of Directors of the Company.
5) Holders of the subordinated notes shall be subrogated to rights of the
holders of the New Notes.
EXHIBIT B
---------
FORM OF TAX PAYMENT AGREEMENT
TAX PAYMENT AGREEMENT
WHEREAS, N.E.S. Investment Co. (Shareholder) is the sole Shareholder of
Continental Global Group, Inc. (Global) and Global is the sole Shareholder of
Continental Conveyor & Equipment Company (CC&E) and Goodman Conveyor Company
(Goodman); Global, CC&E and Goodman (collectively the Subsidiaries, each
individually - Subsidiary); each of the foregoing parties hereto; and
WHEREAS, by virtue of the relationship described in Section 2, the
taxable income of the Subsidiaries will be included in the income of Shareholder
for federal income tax purpose, and the tax thereon is payable by Shareholder
(or the affiliated group which includes Shareholder), and similar consequences
may result for state or local tax purposes as well;
NOW, THEREFORE, the consideration of the mutual promises herein
exchanged and for other good and valuable consideration, the receipt and
sufficiency of which is mutually acknowledged, the parties agree that the
Subsidiaries shall each make estimated tax payments to Shareholder as set forth
herein based on their respective earnings.
1. To the extent Global and the Subsidiaries fulfill their
obligations hereunder, Shareholder will pay to the relevant
taxing authorities any tax liability relating to any Stand-Alone
Tax.
2. Within fifteen (15) days after the end of each calendar quarter
Global shall make distributions to Shareholder relating to the
federal, state, local and foreign income taxes relating to the
Subsidiaries operations in an amount which is equal to the
Stand-Alone Taxes for such quarter and the accrued and
un-reimbursed Reimbursements, as described in Paragraph 3 below,
provided that:
a) The Subsidiaries and Shareholder are, during the taxable
period or any portion thereof to which the distribution
relates, members of an affiliated group of corporations that
file consolidated tax returns for federal income tax purposes;
or the Subsidiaries have elected to be treated as Subchapter S
corporations or qualified subchapter S subsidiaries for
federal income tax purposes during the entire taxable period
to which the distribution relates;
b) If the distributions made with respect to a calendar year
exceed the actual Stand-Alone Tax for such calendar year (or
as subsequently adjusted by taxpayer and the taxing authority,
including by virtue of any carryback of losses, credits, etc.
attributable to the Subsidiaries), the excess will be returned
to Global not later than 45 days after the taxpayer has
received the refund;
c) Distributions shall be made by Global with respect to state
or local income taxes in a manner similar to federal income
tax, but only to the extent that such
state or local taxes are imposed on the Subsidiaries' income,
but paid or payable by the Shareholder to the jurisdiction
imposing such taxes on behalf of the Subsidiaries.
3. Distributions that comply with the requirements of 1. above shall be
made in one or more installments, including without limitation catch-up
installments at or after the end of a month or tax year, installments after
adjustments made by the Internal Revenue Service and installments made for
Reimbursements.
4. Definitions:
a) "Reimbursements" means an amount equal to the sum of
interest and penalties imposed on the Shareholder as a result
of an incorrect calculation by the Subsidiaries of the amount
distributed to the Shareholder by the Subsidiaries,
adjustments made by the IRS relating to the Subsidiaries, late
tax distributions made by the Subsidiaries to such
Shareholder. Notwithstanding the foregoing, Reimbursements
shall not include any amount described in the preceding
sentence to the extent such amount is as a result of, or
directly attributable to, an action or inaction taken by the
Shareholder.
b) "Stand-Alone Tax" means an amount (which shall never be
less than zero) computed as of the end of any quarter for the
total U.S. federal, state, local and foreign (but only to the
extent that such state, local or foreign taxes are imposed on
the Subsidiaries' income, but paid or payable by the
Shareholder to the jurisdiction imposing such taxes on behalf
of the Subsidiaries) income taxes for which the Shareholder
would be liable if its income was only from the items of
income, gain, loss, deduction or credit arising out of the
Subsidiaries' business and operations for the period beginning
on the first day of such quarter and ending on the last day of
such quarter, determined on an annualized basis, provided that
the amount for the final quarter of any year shall be adjusted
for any difference between amounts provisionally and finally
determined for prior quarters. The tax rates applied to such
income are to be based on the maximum corporate, U.S. federal,
state, local and foreign income tax rates imposed by Section
11 of the Internal Revenue Code of 1986, as amended and as it
may be amended, and by the equivalent provisions of the state,
local and foreign (but only to the extent that state, local,
foreign taxes are imposed on the Subsidiaries' income, but
paid or payable by the Shareholder to the jurisdiction
imposing such taxes on behalf of the Subsidiaries) income tax
laws. All of the preceding shall be computed without regard to
phase-in and phase-out rules for minimum tax and alternative
minimum tax, interest and penalties, but shall include any
surtax, and shall reflect the benefits of the deductibility of
state and local income taxes and allowable tax credits in
effect for each of the respective taxable periods. The
computation of Stand-Alone Tax shall give effect to any
carrybacks or carryovers of losses, credits, etc. that would
be available to the Subsidiaries on a separate return basis.
c) For the purposes of this Agreement, the term "Subsidiary"
shall mean all present and future direct and indirect
subsidiaries of Continental Global Group, Inc.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed effective as of the _______ day of ________________, 2004.
N.E.S. INVESTMENT CO. CONTINENTAL GLOBAL GROUP, INC.
By: ________________________________ By: ______________________________
Its: _______________________________ Its: ______________________________
CONTINENTAL CONVEYOR & GOODMAN CONVEYOR
EQUIPMENT COMPANY COMPANY
By: ___________________________________ By: ______________________________
Its: ___________________________________ Its: ______________________________