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EXHIBIT 10.89
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"), and FINOVA CAPITAL CORPORATION
("FINOVA").
RECITALS
A. Current Debtor and FINOVA are 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 (copies of the Term Loan Documents are attached hereto as
collective Exhibit A and incorporated herein by reference);
B. The Obligations (as defined in the Term Loan Agreement) of Current
Debtor to FINOVA (the "Obligations") are evidenced by certain demand notes
executed by Current Debtor and payable to FINOVA (as heretofore amended,
modified or supplemented from time to time, the "Notes");
C. Current Debtor, FINOVA and National Bank of Canada ("NBC") are parties
to a certain Restated Loan and Security Agreement dated 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 NBC
together with FINOVA (collectively the "Credit Lenders") agreed to make loans to
Current Debtor on a revolving loan basis;
D. The Obligations (as defined in the Credit Agreement) of Current Debtor
to the Credit Lenders (the "Credit Obligations") are evidenced by certain demand
notes executed by Current Debtor and payable to the Credit Lenders (as
heretofore amended, modified or supplemented from time to time, the "Credit
Notes");
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 Credit 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
Notes and to assume all of Current Debtor's Obligations, covenants and
agreements under the Term Loan Documents by and subject to the terms of this
Agreement;
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F. Under the terms of the above-described 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 FINOVA; and
G. Subject to the terms and conditions of this Agreement, FINOVA is
willing to consent to the transfer (subject to the liens and security interests
securing the Obligations and the Credit 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, and FINOVA hereby agree
as follows:
1. Definitions. Capitalized terms not otherwise defined in this Agreement
shall have the same meanings as used in the Term Loan Agreement.
2. Amount of Term Loans. Current Debtor, FINOVA and Assumptor agree that as
of the date hereof, (i) the unpaid amount owing to FINOVA under the Term Loan
Documents is $2,641,024.32 of principal, plus accrued but unpaid interest
thereon, fees, costs, expenses and other amounts chargeable under the Term Loan
Documents and (ii) 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 Term Loan 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 Term Loan 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 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 Notes and all other Term Loan 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 Notes and
other Term Loan 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 Notes and the other Term Loan Documents, as modified by this Agreement,
as a primary obligor, jointly and severally with Assumptor.
4. Modifications of Terms of Term Loan Documents. Assumptor specifically
acknowledges receipt of the Term Loan Documents and hereby assumes and covenants
to comply with and perform all of the terms, provisions, covenants and
requirements set forth in such Term Loan Documents (except those waived in
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writing by FINOVA, if any), to the same extent as if Assumptor were originally
named as "Borrower" in those Term Loan Documents, subject to the following:
(a) Notwithstanding anything to the contrary in the Term Loan Documents,
Assumptor and Current Debtor jointly and severally agree that the
Obligations owed to FINOVA under the Notes shall be paid in full on or
before April 12, 1999 (the "Termination Date") and that FINOVA shall
not have any obligation to extend any credit or make any advances to
Assumptor after the Termination Date;
(b) Assumptorand Current Debtor jointly and severally acknowledge and
agree that Current Debtor is currently in default under the Term Loan
Documents, that the Default Interest Rate set forth in Section 2.4 of
the Term Loan Agreement is currently being charged on the outstanding
balance under the Notes and that such Default Interest Rate will
continue to be charged by FINOVA on all Obligations owed under the
Term Loan Documents from the date hereof until all Obligations under
such Notes are paid in full on or before April 12, 1999.
5. Agreements of FINOVA. Subject to the terms and conditions of this
Agreement, FINOVA agrees as follows:
(a) FINOVA consents to the transfer (subject to the liens and security
interests securing the Obligations and the Credit Obligations) of
Current Debtor's Property to Assumptor and the assumption of the
Obligations by Assumptor.
(b) FINOVA agrees not to accelerate the Obligations or exercise available
default-related remedies under the Term Loan Documents including,
without limitation, the Notes delivered pursuant to Section 8(b)(i) of
this Agreement, 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 Term Loan Agreement and (ii) such forbearance
shall not affect, impair or diminish any rights FINOVA may have under
the Term Loan Documents as a result of any failure or breach by
Current Debtor or Assumptor under the Term Loan Documents after the
date hereof.
(c) FINOVA expressly waives the Termination Fee and the other requirements
of Section 9.2(b) of the Term Loan 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 Term Loan Documents as
assumed by Assumptor under this Agreement.
(d) FINOVA expressly waives any Event of Default (i) under Section 7.1(b)
of the Term Loan Agreement as a result of noncompliance by the
Assumptor during the Forbearance Period with the requirement in
Section 9.1(b) of the Term Loan Agreement that Borrower provide FINOVA
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with the financial and collateral reports required under Section
7.1(I) of the Credit Agreement; (ii) under Section 7.1(b) of the Term
Loan Agreement as a result of noncompliance by the Assumptor during
the Forbearance Period with Section 9.1(c) of the Term Loan Agreement;
and (iii) under Section 7.1(d) of the Term Loan Agreement with respect
to Xxxxxxx Xxxxxxxx; 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 Term Loan Documents as assumed by Assumptor under this
Agreement.
6. Security Interests. Assumptor acknowledges and reaffirms the liens and
security interests granted pursuant to the Term Loan Agreement and agrees that
(i) it is purchasing the assets of Current Debtor subject to the liens and
security interests securing the Obligations and the Credit 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 assets
from Current Debtor to Assumptor shall be deemed to terminate or otherwise
affect the liens and security interests granted pursuant to the Term Loan
Agreement, the existing priority thereof or the rights of FINOVA 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 FINOVA a security interest in and to all of
Assumptor's now owned or hereafter acquired or arising Inventory, Equipment,
Receivables, life insurance policies and the proceeds thereof, Trademarks,
Copyrights, Licenses and Patents, Investment Property (as defined in Section
9-115 of the Uniform Commercial Code) and General Intangibles, including without
limitation, all of Borrower's Deposit Accounts, money, any and all property now
or at any time hereafter in FINOVA's possession (including claims and credit
balances), and all proceeds (including proceeds of any insurance policies,
proceeds of proceeds and claims against third parties), all products and all
books and records and computer data related to any of the foregoing.
In furtherance thereof, Assumptor shall execute such financing statements and
otherwise take such other action and execute such other documents or instruments
as FINOVA may from time to time request to evidence FINOVA's continued security
interest in the Collateral. Assumptor hereby authorizes FINOVA 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 Notes, the other Term Loan
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 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 FINOVA 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 Term Loan Documents are hereby restated, ratified and confirmed
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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 FINOVA. The consent of FINOVA to the transfer
(subject to the liens and security interests securing the Obligations and the
Credit Obligations) of Current Debtor's assets to Assumptor and the assumption
of the Obligations by Assumptor, and the other agreements of FINOVA under this
Agreement are conditioned upon satisfaction by Assumptor on the date this
Agreement is executed, of each of the following conditions, all in form and
substance satisfactory to FINOVA and its 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 Term Loan
Documents or the consummation of the transactions contemplated hereby
or thereby, or which, in the reasonable opinion of FINOVA would make
it inadvisable to consummate the transactions contemplated by this
Agreement.
(b) FINOVA shall have received the following documents, each in form and
substance satisfactory to FINOVA and its counsel:
(i) 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) Certifiedcopies of Assumptor's casualty insurance policies
evidencing the existence of the insurance coverage required
pursuant to Section 3.4 of the Term Loan Agreement, together with
loss payable endorsements thereto naming FINOVA as the loss payee
or additional insured;
(vi) A Certificate of the Secretary of Assumptor, dated as of a date
satisfactory to FINOVA 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 FINOVA, adopted by
the Board of Directors of Assumptor, authorizing the execution,
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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;
(vii) Good standing certificates of Assumptor and Guarantor issued by
the Secretary of State of Assumptor's and Guarantor's respective
states of incorporation;
(viii) A Certificate of the Secretary of Guarantor, dated as of a date
satisfactory to FINOVA 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 FINOVA, 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, FINOVA, and NBC pursuant to which Assumptor
shall have assumed the Credit Obligations and the terms and
conditions of the Credit Documents; and
(xi) Such other agreements, instruments and documents which FINOVA may
require to be executed in connection therewith.
(c) Guarantorshall have made a One Million Dollar ($1,000,000) equity
contribution to Assumptor, which will be paid directly to NBC to be
applied to the outstanding balance of the Credit Obligations.
9. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Arizona.
(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
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one copy of this Agreement to simplify the recordation of this
Agreement.
(c) Notices. Any notices which may be required under the Term Loan
Documents to be sent to Current Debtor shall be sent to Assumptor at
the following address:
Mr. Xxxxxxx Xxxxxx
TPSS Acquisition Corporation
00000 Xx. Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
with a copy to:
Xxxxxxx X. Xxxxxxx
Xxxxxxx & Xxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
(d) References. Any reference to the Term Loan 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 Term Loan Agreement as modified by this
Agreement unless the context shall otherwise require.
(e) ContinuedEffectiveness. Notwithstanding anything contained herein, the
terms of this Agreement are not intended to and do not serve to effect
a novation as to the Term Loan Agreement; instead, it is the express
intention of the parties hereto to reaffirm the Obligations created
under the Term Loan Agreement which are evidenced by the Notes and
secured by the Collateral. The Term Loan Agreement, as amended hereby,
and each of the other Term Loan Documents shall remain in full force
and effect.
(f) Costs and Expenses. Assumptor and Current Debtor affirm and
acknowledge that Section 8.1 of the Term Loan Agreement applies 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.
[Signature page follows]
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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.
FINOVA CAPITAL CORPORATION CURRENT DEBTOR:
TOLEDO PICKLING & STEEL SALES, INC.
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxxxx Xxxxxxxx
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Its: Xxxxx Xxxxxx Its: Xxxxxxx Xxxxxxxx
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ASSUMPTOR:
TPSS ACQUISITION CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
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Its: Xxxxxxx X. Xxxxxx
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