FORBEARANCE AGREEMENT

 

                                  Exhibit 10.9

 

                              FORBEARANCE AGREEMENT

                  This Forbearance Agreement ("Agreement") is entered into

effective as of June 1, 2004, by and among BANK ONE, N.A., ("Lender"),

CONTINENTAL CONVEYOR & EQUIPMENT COMPANY, a Delaware Corporation ("Continental")

and GOODMAN CONVEYOR COMPANY, a Delaware corporation ("Goodman") (Continental

and Goodman are collectively referred to the "Borrowers" and each individually

as a "Borrower").

 

                                R E C I T A L S:

         A.       Pursuant to the terms of that certain Assumption and

                  Modification Agreement by and between Borrower and Bank dated

                  as of March 7, 1997 ("Assumption"), the Borrowers assumed all

                  of the Obligations of CONTINENTAL CONVEYOR & EQUIPMENT CO.

                  L.P., formerly a limited partnership organized and existing

                  under the laws of the State of Delaware, and GOODMAN CONVEYOR

                  CO. L.P., formerly a limited partnership organized and

                  existing under the laws of the State of Delaware

                  (collectively, the "Borrowers") under that certain Credit

                  Facility and Security Agreement by and among the Borrowers

                  and Bank (and/or its predecessor Bank One Cleveland, N.A.)

                  dated as of September 14, 1992; as amended by a certain First

                  Amendment to Credit Facility and Security Agreement by and

                  among the Borrowers and Bank executed on August 27, 1993; as

                  further amended by a certain Second Amendatory Agreement by

                  and among the Borrowers and Bank dated as of October 5, 1994;

                  as further amended by a certain Consolidated Amendment No. 1

                  to Credit Facility and Security Agreement by and among the

                  Borrowers and Bank dated as of July 28, 1995; as further

                  amended by a certain Consolidated Amendment No. 2 to Credit

                  Facility and Security Agreement by and among the Borrowers

                  and Bank dated as of December 13, 1996; as further amended

                  by a certain Third  Amendatory  Agreement to Credit Facility

                  and Security Agreement by and among the Borrower and Bank

                  dated as of March 28, 1997; as further amended by a certain

                  Fourth Amendatory Agreement by and among the Borrower and Bank

                  dated as of December, 1998; as further amended by a certain 

                  Fifth Amendatory Agreement by and among the Borrower and Bank

                  dated as of April 29, 1999; as further amended by a certain  

                  Sixth Amendatory Agreement by and among the Borrower and Bank

                  dated as of March 28, 2000, as modified by a letter amendment

                  dated as of March 25, 2002 (collectively, the "Original Credit

                  Agreement"); and as further amended by a certain Amended and

                  Restated Credit Facility and Security Agreement by and among

                  the Borrower and Bank dated as of July 25, 2002 (the "Restated

                  Credit Agreement") as further amended by a certain First

                  Amendment to Amended and Restated Credit Facility and Security

                  Agreement dated as of June 30, 2003; and as further  amended

                  by a certain Second Amendment to Amended and Restated Credit

                  Facility and Security Agreement dated as of August 12, 2003

                  (which, together with the Original Credit Agreement and the

                  Restated Credit Agreement are sometimes collectively referred

                  to herein as the "Credit Agreement"). Capitalized terms not

                  otherwise defined herein shall have the meanings given to such

                  terms in the Credit Agreement.

 

                  B. The Borrowers' obligation to repay advances on the

Revolving Loan (as defined in the Credit Agreement) is evidenced by a certain

Amended and Restated Revolving Note (Revolving Loan), as amended by a certain

Second Amended and Restated Replacement Promissory Note, and as further amended

by the Third Amended and Restated Replacement Promissory Note (the "Restated

Revolving Note"). The Borrower's obligations to repay the Term Loan A (as

defined in the Credit Agreement) is evidenced by a certain Amended and Restated

Promissory Note (Term Loan A) (the "Restated Term Note"). To secure the

Obligations, including advances under the Restated Revolving Note and the

Restated Term Note, the Borrowers granted to Lender a security interest in

substantially all of their assets.

 

                  C. The Borrowers acknowledge that they are currently in

default of certain of the terms of the Credit Agreement, and by reason thereof,

Lender has no obligation to make additional advances under any of the Credit

Documents.

 

                  D. Under the terms of the Credit Documents, Lender is

currently entitled to exercise any right, power or remedy permitted to Lender by

law or any provision of the Credit Documents to effectuate repayment of all

amounts owing to Lender under the Credit Documents, including, without

limitation, the repossession and/or foreclosure and sale of the Collateral. The

parties agree that, as of May 27, 2004, there is due and owing from Borrowers to

Lender $11,417,318 as the outstanding principal amount of the Revolving Loan,

and $1,258,854 as the outstanding principal balance of the Term Loan A, together

with accrued but unpaid interest thereon and certain costs and expenses.

 

                  E. The Borrowers have requested that Lender forbear from

exercising its rights and remedies under the Credit Documents.

 

                  F. Lender is willing to forbear in the exercise of its

remedies under the Credit Documents upon the terms and conditions set forth

herein.

 

                  NOW, THEREFORE, in consideration of the mutual promises and

covenants contained herein, the foregoing recitals (which are incorporated

herein by reference), and for other good and valuable consideration, the receipt

and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

                  1. Forbearance. During the Forbearance Period (as defined

         below), Lender will not make demand for payment under the Restated

         Revolving Note and/or Restated Term Note, or exercise any of its rights

         or remedies under the Credit Documents with respect to the Designated

         Defaults (as defined below). For purposes of this Agreement,

         "Forbearance Period" means the period commencing on the date hereof and

         ending on the earlier of: (a) June 15, 2004; (b) the occurrence of a

         Default hereunder; (c) the termination of the forbearance period

         pursuant to that certain Forbearance Agreement by and among Continental

         Global Group, Inc. ("Continental Global"), N.E.S. Investment Co., and

         CFSC Wayland Advisors, Inc., dated as of April 26, 2004 (the "Global

         Forbearance Agreement"); and/or (d) either the Trustee under, or

         holders of 25% or more of the Series A and Series B Notes issued by

         Continental Global and administered by Norwest Bank Minnesota, Trustee

         under, that certain Indenture, dated as of April 1, 1997 (the

         "Indenture"), have declared the Series A and Series B Notes and/or any

         Liquidated Damages (as defined in the Indenture) to be due and payable;

         provided, however, that Lender's present willingness to so forbear and

         to forgo the exercise of any of Lender's rights, remedies, powers

         and/or privileges under the Credit Documents shall only be construed as

         a limited, one-time forbearance. The Borrowers acknowledge and agree

         that, notwithstanding the foregoing: (i) except as set forth herein,

         Lender reserves the right to enforce each and every term of the Credit

         Documents; (ii) Lender is under no duty or obligation of any kind or

         any nature to grant the Borrowers any additional period of forbearance

         beyond the Forbearance Period; (iii) Lender's actions in entering into

         this Agreement shall not be construed as a waiver or relinquishment of,

         or estoppel to assert, any of Lender's rights or remedies under any of

         the Credit Documents, applicable law or in equity; and (iv) Lender's

         actions in entering into this Agreement are without prejudice to

         Lender's right to pursue any and all remedies under the Credit

         Documents, pursuant to applicable law, or in equity available to it in

         the sole discretion upon the termination (whether upon expiration

         thereof, upon acceleration, or otherwise) of the Forbearance Period.

 

                  2. Short Term Extension. Lender hereby agrees to extend the

         maturity date on the Restated Term Loan until July 31, 2004. Such

         extension is a one time extension, and Lender shall have no obligation

         whatsoever to further extend, modify or amend such Restated Term Loan.

 

                  3. Letter of Credit Limit. During the Forbearance Period,

         Continental's Letter of Credit sub-limit shall be increased from

         $4,000,000 to $4,250,000 and Goodman's Letter of Credit sub-limit shall

         be decreased from $500,000 to $250,000.

 

                  4. Effect and Construction of Agreement. Except as expressly

         provided in this Agreement, the Credit Documents shall remain in full

         force and effect in accordance with their respective terms and be

         unaffected hereby. To the extent of any inconsistency, amendment or

         superseding provisions, this Agreement shall govern and control. Except

         as expressly provided in this Agreement, the Borrowers expressly

         acknowledge that nothing in this Agreement shall be deemed to

         constitute in any way a waiver, extinguishment, satisfaction, or

         novation of the Obligations and/or Borrowers' existing indebtedness to

         Lender. The Borrowers acknowledge that they have consulted with counsel

         and with such other advisors as they have deemed necessary in

         connection with the negotiation, execution and delivery of this

         Agreement. This Agreement shall be construed without regard to any

         presumption or rule requiring that it be construed against the party

         causing this Agreement or any part hereof to be drafted.

 

                  5. The Loans. Lender hereby agrees that during the Forbearance

         Period, Lender will continue to make advances under the Revolving Loan

         to or for the benefit of the Borrowers, which Revolving Loan shall not

         exceed the amount provided in Section 2.4 of the Credit Agreement, as

         amended. During the Forbearance Period interest shall not accrue on the

         Revolving Loan or the Term Loan A at the Default Rate.

 

                  6. Grant and Confirmation of Security Interests and Liens by

         the Borrowers. The Borrowers hereby confirm their prior grant of a

         security interest to Lender, and to the extent necessary, hereby grant

         a new security interest to Lender, in all of their respective

         Collateral. The Borrowers acknowledge and agree that the security

         interests and liens previously and hereby granted to Lender in the

         Collateral: (a) secure all amounts now or hereafter owing to Lender by

         the Borrowers, including, without limitation, all loans and other

         advances under the Credit Documents; (b) remain valid, first and best

         liens therein, subject only to the permitted encumbrances specified in

         the Credit Agreement; and (c) are not impaired by the execution and

         performance of this Agreement. The Borrowers further represent and

         warrant that as of the date hereof, there are no claims, set offs or

         defenses to the Obligations or to Lender's exercise of any rights or

         remedies available to it as a creditor in realizing upon the

         Collateral. The Credit Documents and the liens and security interests

         granted thereby and hereby, shall remain in full force and effect after

         the consummation of the transactions contemplated herein.

 

                  7. Representations and Warranties. To induce Lender to enter

         into this Agreement, each Borrower, jointly and severally, represents

         and warrants to Lender as follows:

 

                  (a) As of the date of this Agreement, the Borrowers are in

         default under certain provisions of the Credit Documents, including,

         without limitation, the following provisions of the Credit Agreement,

         and as a result of such defaults, Lender is entitled to exercise its

         rights and remedies as provided by law and in the Credit Documents: (i)

         Sections 8.1(O),(Q) of the Credit Agreement; (ii) Section 8.2(U) of the

         Credit Agreement, and (iii) Section 11.1(D) as it pertains to the

         Borrowers' Guaranty of payments due by Continental Global to its note