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EXHIBIT 10.93
ASSUMPTION AND CONSENT AGREEMENT
THIS ASSUMPTION AND CONSENT AGREEMENT (hereinafter the "Agreement") is
entered into as of this 12th day of January, 1999, by and among TOLEDO PICKLING
& STEEL SALES, INC., an Ohio corporation ("Current Debtor"), TPSS ACQUISITION
CORPORATION, an Ohio corporation ("Assumptor"), NATIONAL BANK OF CANADA ("NBC"),
FINOVA CAPITAL CORPORATION ("FINOVA"; and together with NBC the "Lenders"), and
NATIONAL BANK OF CANADA, in its capacity as agent for the Lenders (in such
capacity, the "Agent").
RECITALS
A. Current Debtor, Lenders and Agent are parties to a certain Restated Loan
and Security Agreement dated as of December 1, 1997 (which, as heretofore
amended, modified or supplemented from time to time, is referred to herein as
the "Credit Agreement" and, together with the other "Credit Documents" as
therein defined, as heretofore amended, modified or supplemented from time to
time, as the "Credit Documents"), under the terms of which Lenders agreed to
make loans to Current Debtor on a revolving loan basis (copies of the Credit
Documents are attached hereto as collective Exhibit A and incorporated herein by
reference);
B. The Obligations (as defined in the Credit Agreement) of Current Debtor
to Lenders are evidenced by certain demand notes executed by Current Debtor and
payable to each Lender (as heretofore amended, modified or supplemented from
time to time, the "Credit Notes");
C. Current Debtor and FINOVA are also parties to a certain Loan and
Security Agreement dated as of December 1, 1997 (which, as heretofore amended,
modified or supplemented from time to time, is referred to herein as the "Term
Loan Agreement" and, together with the other "Loan Documents" as therein
defined, as heretofore amended, modified or supplemented from time to time, as
the "Term Loan Documents"), under the terms of which FINOVA agreed to make two
term loans to Current Debtor;
D. The Obligations (as defined in the Term Loan Agreement) of Current
Debtor to FINOVA (the "Term Loan Obligations") are evidenced by certain demand
notes executed by Current Debtor and payable to FINOVA;
E. Pursuant to an Asset Purchase Agreement dated as of December 31, 1998,
Assumptor is purchasing (subject to the liens and security interests securing
the Obligations and the Term Loan Obligations) substantially all of the Current
Debtor's assets for valuable consideration, part of said consideration being the
assumption and agreement by Assumptor to pay the unpaid balance owing on the
Credit Notes and to assume all of Current Debtor's Obligations, covenants and
agreements under the Credit Documents by and subject to the terms of this
Agreement;
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F. Under the terms of the above-described Credit Documents and Term Loan
Documents, the Obligations of Current Debtor may be accelerated if Current
Debtor sells or otherwise conveys its Property without the prior written consent
of Lenders; and
G. Subject to the terms and conditions of this Agreement, Lenders are
willing to consent to the transfer (subject to the liens and security interests
securing the Obligations and the Term Loan Obligations) of Current Debtor's
Property to Assumptor and the assumption of the Obligations by Assumptor.
PROVISIONS
NOW, THEREFORE, in consideration of the foregoing and the provisions
set forth in this Agreement, and the further consideration of the advantages to
accrue to all parties hereto, Current Debtor, Assumptor, NBC, FINOVA and Agent
hereby agree as follows:
1. Definitions. Capitalized terms not otherwise defined in this Agreement
shall have the same meanings as used in the Credit Documents.
2. Amount of Revolving Loans. Current Debtor, Lenders and Assumptor agree
that as of the date hereof, (i) the Revolving Loan Commitment is $9,000,000,
(ii) the unpaid amount owing to Lenders under the Credit Documents is
$5,417,725.88 of principal, plus accrued but unpaid interest thereon, fees,
costs, expenses and other amounts chargeable under the Credit Documents and
(iii) the Obligations are duly and validly existing and enforceable obligations
of Current Debtor which are due and payable in accordance with the terms of the
Credit Documents, and upon assumption by Assumptor pursuant hereto, are also
duly and validly existing and enforceable obligations of Assumptor payable in
accordance with the terms of the Credit Documents (as modified hereby) and are
not subject to any defense, setoff, offset, recoupment, reduction or
counterclaim of any kind or nature by or on behalf of Current Debtor or
Assumptor.
3. Assumption. Assumptor hereby (i) assumes and agrees to pay, as a primary
obligor, on or before April 12, 1999 the principal balance due and becoming due
under the Credit Notes, all interest and other Obligations due and becoming due
thereunder; (ii) assumes and covenants to perform, as a primary obligor, all the
terms and conditions of the Credit Notes and all other Credit Documents required
to be performed by Current Debtor, as modified by this Agreement; and (iii)
agrees to be legally bound for such performance, as a primary obligor, to the
same extent as if Assumptor were the "Borrower" originally named in the Credit
Notes and other Credit Documents and notwithstanding any failure of Current
Debtor to perform any warranties, covenants or other obligations running from
Current Debtor to Assumptor; provided, however, that Current Debtor shall remain
fully liable for the Obligations and for the performance of the terms and
conditions of the Credit Notes and the other Credit Documents, as modified by
this Agreement, as a primary obligor, jointly and severally with Assumptor
(provided, that solely Assumptor shall be entitled to borrow under the Credit
Documents from and after the date hereof).
4. Modifications of Terms of Credit Documents. Assumptor specifically
acknowledges receipt of the Credit Documents and hereby assumes and covenants to
comply with and perform all of the terms, provisions, covenants and requirements
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set forth in such Credit Documents (except those waived in writing by Lenders,
if any), to the same extent as if Assumptor were originally named as "Borrower"
in those Credit Documents, subject to the following:
(a) Notwithstanding anything to the contrary in the Credit Documents,
Assumptor and Current Debtor jointly and severally agree that the
Obligations owed to Lenders under the Credit Notes shall be paid in
full on or before April 12, 1999 (the "Termination Date") and that
neither Lender shall have any obligation to extend any credit or make
any advances to Assumptor under the Revolving Loan after the
Termination Date.
(b) Notwithstanding anything to the contrary in the Credit Documents or
this Agreement, Assumptor and Current Debtor jointly and severally
agree that in the event all of the Obligations owed to Lenders under
the Credit Notes are not paid in full on or before the Termination
Date, Assumptor and Current Debtor will be jointly and severally
obligated to pay to Agent, for the benefit of the Lenders, a fee of
$2,000 for each day after the Termination Date that any Obligations
remain unpaid (the "Loan Continuation Fee") and, until paid, the
entire amount of the Loan Continuation Fee shall be an additional
Obligation under the Credit Agreement secured by the Collateral.
(c) Notwithstanding anything to the contrary in the Credit Documents or
this Agreement, Section 2.1(A) of the Credit Agreement is hereby
deleted and replaced with the following:
(A) Establishment of Revolving Loan. Subject to the provisions of
this Agreement, and subject at all times to the right of the
Required Lenders to demand repayment thereof and to the creation
of reserves for accrued interest and otherwise as Agent deems
necessary or appropriate from time to time after five (5) days
notice to Borrower, each Lender severally agrees to make such
loans to Borrower as the Required Lenders, from time to time, in
their discretion, elect to make (collectively, the "Revolving
Loans") consisting of advances made by such Lender against the
value of Eligible Inventory and Eligible Accounts, provided,
however, that (i) the aggregate unpaid principal of the Revolving
Loans outstanding at any one time shall not at any time exceed
the Revolving Loan Borrowing Base and (ii) the aggregate amount
of a Lender's Revolving Loans outstanding at any one time shall
not exceed such Lender's Revolving Loan Commitment.
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(d) Notwithstanding anything to the contrary in the Credit Documents or
this Agreement, Section 2.1(B) of the Credit Agreement is hereby
deleted and replaced with the following:
(B) Changes in Revolving Loan Borrowing Base. As long as no Event of
Default has occurred or is continuing and as long as there is no
substantial decrease in the value of the Collateral (as
reasonably determined by Agent), Agent may not decrease the
Revolving Loan Borrowing Base. Notwithstanding the foregoing
provision, Agent may decrease the Revolving Loan Borrowing Base
immediately upon providing five days prior notice thereof to
Borrower for the purpose of calculating the amounts which the
Lenders may be willing to advance or to allow to remain
outstanding as revolving credit advances if an Event of Default
has occurred or is continuing or a substantial decrease in the
value of the Collateral has occurred (as reasonably determined by
the Agent).
(e) Assumptor and Current Debtor jointly and severally acknowledge and
agree that Current Debtor is currently in default under the Credit
Documents, that the Default Rate (as defined in the Credit Agreement)
is currently being charged on the outstanding balance under the Credit
Notes and that such Default Rate will continue to be charged by
Lenders on all Obligations owed under the Credit Documents from the
date hereof until all Obligations under such Credit Notes are paid in
full on April 12, 1999.
(f) Notwithstanding anything to the contrary in the Credit Documents or
this Agreement, it shall constitute an "Event of Default" under the
Credit Agreement if Assumptor fails, within 30 days after the date of
this Agreement, to have restructured Current Debtor's accounts payable
in accordance with Exhibit C attached hereto and incorporated herein
by reference.
(g) Notwithstanding anything to the contrary in the Credit Documents or
this Agreement, if Guarantor fails to contribute a second One Million
Dollar equity contribution to Assumptor within 30 days after the date
of this Agreement, Assumptor shall immediately pay to Agent for the
benefit of Lenders an additional fee of $20,000.
5. Agreements of Lenders. Subject to the terms and conditions of this
Agreement, NBC and FINOVA each agree as follows:
(a) Each Lender consents to the transfer (subject to the liens and
security interests securing the Obligations and the Term Loan
Obligations) of Current Debtor's Property to Assumptor and the
assumption of the Obligations by Assumptor.
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(b) Each of the Lenders and Agent agree not to accelerate the Obligations
or exercise available default-related remedies under the Credit
Documents arising out of Current Debtor's Existing Defaults (as
defined below) from the date hereof until the earlier of (i) the
occurrence of an Event of Default other than the Existing Defaults or
(ii) the Termination Date (the "Forbearance Period"); provided,
however, that (i) such forbearance shall in no way be considered a
waiver of any current or future Event of Default by Current Debtor or
Assumptor under the Credit Agreement and (ii) such forbearance shall
not affect, impair or diminish any rights Lenders or Agent may have
under the Credit Documents as a result of any failure or breach by
Current Debtor or Assumptor under the Credit Documents after the date
hereof;
(c) Each Lender expressly waives any Event of Default under Section
10.1(c) of the Credit Agreement as a result of noncompliance by
Assumptor during the Forbearance Period with the financial covenants
set forth in Sections 7.1(C), 7.1(I), 7.1(N) and 7.1(P) of the Credit
Agreement; provided, however, that such waiver shall in no way be
considered to extend beyond the Forbearance Period or in any way be
deemed a waiver of any other provision, covenant or obligation under
the Credit Documents as assumed by Assumptor under this Agreement.
6. Security Interests. Assumptor acknowledges and reaffirms the Existing
Security Interests (as defined in the Credit Agreement) and the liens and
security interests granted pursuant to the Credit Agreement and agrees that (i)
it is purchasing the Property of Current Debtor subject to the liens and
security interests securing the Obligations and the Term Loan Obligations and
(ii) neither the execution of this Agreement nor any documents or instruments
required to be delivered under this Agreement nor the transfer of the Property
from Current Debtor to Assumptor shall be deemed to terminate or otherwise
affect the Existing Security Interests, the liens and security interests granted
pursuant to the Credit Agreement, the existing priority thereof or the rights of
Lenders or Agent with respect thereto. In addition, to secure the prompt payment
and performance of the Obligations, and in addition to any other Collateral
securing the Obligations, Assumptor hereby grants to the Agent, in its capacity
as agent for the benefit and account of each Lender, a security interest in and
to all of the following Property of Assumptor, whether now owned or existing or
hereafter acquired or arising and wheresoever located:
(a) Revolving Collateral. All Revolving Collateral.
(b) Deposits; Accounts. Any and all deposits or other sums at any time
credited by or due from the Agent or any Lender to Assumptor, whether
in a Depository Account or other account, together with any and all
instruments, documents, policies and certificates of insurance,
securities, goods, Accounts, choses in action, general intangibles,
chattel paper, cash or other Property, and the proceeds of each of the
foregoing, to the extent owned by Assumptor or in which Assumptor has
an interest and which now or hereafter are at any time in the
possession or control of the Agent or any Lender or in transit by mail
or carrier to or from the Agent or any Lender or in the possession of
any Person acting on behalf of the Agent or any Lender, without regard
to whether such party received the same in pledge, for safekeeping, as
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agent for collection or transmission or otherwise or whether such
party had conditionally released the same, and any and all balances,
sums, proceeds and credits of Assumptor with, and any claims of
Assumptor against, such party.
(c) Fixed Collateral. All Fixed Collateral except for the "Equipment" (as
defined in that certain Equipment Purchase Agreement between Assumptor
and Xxxxxxx Xxxxxxxx and Xxxxx Xxxxxxxx dated as of the date of this
Agreement, a copy of which is attached hereto as Exhibit B and
incorporated herein by reference).
(d) Accessions, Products and Proceeds. All accessions to, substitutions
for, and all replacements, products, and proceeds of the Property
described in Subsections (a), (b) and (c) above including, without
limitation, proceeds of insurance policies insuring such Property.
(e) Books and Records. All books, records, and other property (including,
without limitation, credit files, programs, printouts, and other
materials and records) of Assumptor pertaining to any of the Property
described in Subsections (a), (b), (c) or (d) above.
In furtherance thereof, Assumptor shall execute such financing statements and
otherwise take such other action and execute such other documents or instruments
as Agent may from time to time request to evidence Agent's continued security
interest in the Collateral. Assumptor hereby authorizes Agent to execute and
file any such instrument on Assumptor's behalf.
7. Representations and Warranties. Assumptor and Current Debtor each
represent, warrant and covenant that: (i) it (and its undersigned
representative, if any) has full power, authority and legal right to execute
this Agreement and to keep and observe all of the terms of this Agreement on its
part to be observed or performed; and (ii) the Credit Notes, the other Credit
Documents and this Agreement constitute valid and binding obligations of
Assumptor and Current Debtor. Current Debtor represents and warrants that, other
than the Events of Default described on Schedule I hereto (the "Existing
Defaults"), no Event of Default or event which, with the passage of time, could
become an Event of Default, has occurred and is continuing. Assumptor, NBC and
FINOVA represent and warrant that, to their knowledge, no Events of Default
other than the Existing Defaults have occurred and are continuing; provided,
however, that nothing set forth herein shall be deemed a waiver or forbearance
by Agent from exercising its rights and remedies with respect to any Event of
Default other than the Existing Defaults. All of the covenants, representations
and warranties set forth in the Credit Documents are hereby restated, ratified
and confirmed in all respects by Assumptor and Current Debtor as of the date
hereof and are and shall remain in full force and effect without modification or
amendment, except as otherwise provided in this Agreement.
8. Conditions to Consent of Lenders and Agent. The consent of Lenders to
the transfer (subject to the liens and security interests securing the
Obligations and the Term Loan Obligations) of Current Debtor's Property to
Assumptor and the assumption of the Obligations by Assumptor, and the other
agreements of Lenders and Agent under this Agreement are conditioned upon
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satisfaction by Assumptor on the date this Agreement is executed, of each of the
following conditions, all in form and substance satisfactory to Lenders and
their counsel:
(a) No legal action, proceeding, investigation, regulation or legislation
shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain, or
prohibit, or to obtain damages in respect of, or which is related to
or arises out of this Agreement or any of the other Credit Documents
or the consummation of the transactions contemplated hereby or
thereby, or which, in the reasonable opinion of the Lenders would make
it inadvisable to consummate the transactions contemplated by this
Agreement.
(b) Agent shall have received the following documents, each in form and
substance satisfactory to Lenders and their counsel:
(i) Credit Notes duly executed by Assumptor;
(ii) The Unlimited Guaranty "CCC Guaranty" of Consolidated Capital of
North America, Inc. ("Guarantor") duly executed by an authorized
officer of Guarantor;
(iii) An Amended and Restated Limited Guaranty executed by Xx. Xxxxxxx
Xxxxxxxx;
(iv) The written opinion of counsel to Assumptor and Guarantor as to
the transactions contemplated by the Asset Purchase Agreement,
this Agreement and the CCC Guaranty;
(v) Certified copies of Assumptor's casualty insurance policies
evidencing the existence of the insurance coverage required
pursuant to the Credit Agreement, together with loss payable
endorsements thereto naming the Agent, in such capacity, as the
loss payee or additional insured;
(vi) A Certificate of the Secretary of Assumptor, dated as of a date
satisfactory to the Agent, certifying (a) that attached thereto
is a true and complete copy of the Articles of Incorporation and
Code of Regulations of Assumptor, as in effect on the date of
such certification, (b) that attached thereto is a true and
complete copy of resolutions, in form satisfactory to the
Lenders, adopted by the Board of Directors of Assumptor,
authorizing the execution, delivery and performance of the Asset
Purchase Agreement and this Agreement and the consummation of the
transactions contemplated hereby, and (c) as to the incumbency
and genuineness of the signature of each officer of Assumptor
executing the Asset Purchase Agreement and this Agreement;
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(vii) Good standing certificates of Assumptor and Guarantor issued by
the Secretary of State of Assumptor's and Guarantor's respective
state of incorporation;
(viii) A Certificate of the Secretary of Guarantor, dated as of a date
satisfactory to the Agent, certifying (a) that attached thereto
is a true and complete copy of the Certificate of Incorporation
and Bylaws of Guarantor, as in effect on the date of such
certification, (b) that attached thereto is a true and complete
copy of resolutions, in form satisfactory to the Lenders, adopted
by the Board of Directors of Guarantor, authorizing the
execution, delivery and performance of the CCC Guaranty and the
consummation of the transactions contemplated hereby, and (c) as
to the incumbency and genuineness of the signature of each
officer of Guarantor executing the CCC Guaranty;
(ix) UCC financing statements evidencing transfer of the Collateral
from Current Debtor to Assumptor and the lien and security
interest granted hereby, duly executed by Assumptor;
(x) An Assumption and Consent Agreement duly executed by Current
Debtor, Assumptor and FINOVA, pursuant to which Assumptor shall
have assumed the Term Loan Obligations and the terms and
conditions of the Term Loan Documents; and
(xi) Such other agreements, instruments and documents which the Agent
or Lenders may require to be executed in connection therewith.
(c) Guarantor shall have made a One Million Dollar ($1,000,000) equity
contribution to Assumptor, which will be paid directly to Agent to be
applied to the outstanding balance of the Revolving Loan.
(d) Assumptor shall have paid to Agent for the benefit of Lenders a fee in
the amount of $10,000.
9. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
(b) Counterparts. This Agreement may be executed and acknowledged in
multiple counterparts for the convenience of the parties, which
together shall constitute one agreement, and the counterpart signature
pages may be detached from the various counterparts and attached to
one copy of this Agreement to simplify the recordation of this
Agreement.
(c) Notices. Any notices which may be required under the Credit Documents
to be sent to Current Debtor shall be sent to Assumptor at the
following address:
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Mr. Xxxxxxx Xxxxxx
TPSS Acquisition Corporation
00000 X. Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
with a copy to:
Xxxxxxx X. Xxxxxxx
Xxxxxxx & Xxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
(d) References. Any reference to the Credit Agreement contained in any
notice, request, certificate, or other document executed concurrently
with or after the execution and delivery of this Agreement shall be
deemed to refer to the Credit Agreement as modified by this Agreement
unless the context shall otherwise require.
(e) Continued Effectiveness. Notwithstanding anything contained herein,
the terms of this Agreement are not intended to and do not serve to
effect a novation as to the Credit Agreement; instead, it is the
express intention of the parties hereto to reaffirm the Obligations
created under the Credit Agreement which are evidenced by the Credit
Notes and secured by the Collateral. The Credit Agreement, as amended
hereby, and each of the other Credit Documents shall remain in full
force and effect.
(f) Costs, Expenses and Indemnity. Assumptor and Current Debtor affirm and
acknowledge that Sections 13.2 and 13.12 of the Credit Agreement apply
to this Agreement and the transactions and agreements and documents
contemplated hereunder.
(g) Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto, being duly authorized and
empowered, have executed and delivered this Agreement, intending to be legally
bound as of the date above set forth.
NATIONAL BANK OF CANADA, CURRENT DEBTOR:
in its capacities as both the Agent
and as a Lender TOLEDO PICKLING & STEEL SALES, INC.
By: /s/ Xxxx Xxxxxxxx By: /s/ Xxxxxxx Xxxxxxxx
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Its: Vice President Its: President
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FINOVA CAPITAL CORPORATION ASSUMPTOR:
TPSS ACQUISITION CORPORATION
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
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Its: Authorized Signer Its: President
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