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EXHIBIT 10.1
as of May 20, 2005
UNIVERSAL AUTOMOTIVE, INC.
UNIVERSAL AUTOMOTIVE OF VIRGINIA, INC.
UNIVERSAL BRAKE PARTS, INC..
THE AUTOMOTIVE COMMODITY CONNECTION,
INC.
c/o Universal Automotive Industries,
Inc.
11859 South Central Avenue
Alsip, Illinois 60803
Re: Second
Amendment to Forbearance and Amendment Agreement
Ladies and Gentlemen:
We refer to that
certain (a) Loan and Security Agreement, dated as of
January 9, 2004 (as the same now exists or
may hereafter be further amended,
modified, supplemented, extended, renewed,
restated or replaced, the "Loan
Agreement") by and among Wachovia Capital
Finance Corporation (Central),
formerly known as Congress Financial
Corporation (Central), as Agent ("Agent"),
the other Lenders from time to time party
thereto ("Lenders"), and Universal
Automotive, Inc. ("Universal"), Universal
Automotive of Virginia, Inc.
("Virginia"). Universal Brake Parts, Inc.
("Brake Parts") and The Automotive
Commodity Connection, Inc. ("Connection",
and together with Universal, Virginia
and Brake Parts, each individually a
"Borrower" and collectively, "Borrowers"):
and (b) the letter re. Forbearance and
Amendment Agreement dated as of April 11,
2005 among Borrowers, Lender and Agent, as
amended by the Letter re: Amendment
to Forbearance and Amendment Agreement
dated as of May 12, 2005 (the
"Forbearance Agreement"). All capitalized
terms used herein shall have the
meaning assigned thereto in the Forbearance
Agreement, unless otherwise defined
herein.
Borrowers have
advised Agent and Lenders that Borrowers may be unable to
consummate an Approved Sale by the end of
the Forbearance Period and have
requested that Agent and Lenders (a)
continue to forbear for a limited period of
time from exercising their rights and
remedies with respect to the Existing
Defaults, and (b) continue to make
additional Loans to the Borrowers during such
limited forbearance period, and Agent and
Lenders are willing to agree to the
foregoing, on and subject to the terms and
conditions set forth in this letter
agreement (this "Amendment").
In consideration
of the premises and the respective agreements, covenants
and warranties contained herein, the
parties hereto hereby agree, covenant and
warrant as follows:
1. Amendment to
Forbearance Period.
(a) Notwithstanding anything to the contrary contained in the
Forbearance Agreement, at Borrowers'
request and in reliance upon Borrowers'
representations, warranties and covenants
contained in this Amendment, and
subject to the terms and conditions of
this
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Amendment, Agent and Lenders hereby agree
to forbear during the Revised
Forbearance Period (as defined below) from
exercising any of Agent's and
Lenders' rights and remedies with respect
to the Existing Defaults, whether
arising under the Loan Agreement, the other
Financing Agreements or applicable
law. For the purposes of this Amendment,
the "Revised Forbearance Period" means
the period commencing on the effective date
of this Amendment and terminating on
the earlier to occur of (i) May 27, 2005,
and (ii) the date on which any one or
more of the following events has occurred
and is continuing (hereinafter
referred to as an "Additional Event of
Default"): (A) Borrowers' failure to
perform or observe any of the terms and
conditions of this Amendment, (B)
Borrowers' failure to deliver to Agent, by
5:00 P.M. on May 23, 2005, a
resolution by the Board of Directors of the
Borrowers (in form and substance
satisfactory to the Borrowers and the Agent
and Lenders): (1) authorizing the
Borrowers to obtain from a person or
persons (the "Third Party Investor") loans
(subordinated to the obligations of Agent
and Lenders), a cash equity capital
contribution, or the sale of the Borrowers'
capital stock or equity, or the
assets of the Borrowers to such Third Party
Investor, and (2) in the event that
the Borrowers are unable to obtain a
commitment letter by May 26, 2005 from a
Third Party Investor, authorizing the
immediate commencement of the orderly
winding down of the Borrowers' business
operations and the liquidation of the
Borrowers' assets and further authorizing
the Borrowers to fully cooperate with
Agent and Lenders in connection therewith,
or (C) the commencement of any
enforcement actions against the Borrowers
by Laurus Master Fund, Ltd. seeking
equitable relief, or (D) the occurrence of
any Event of Default under the Loan
Agreement that is not an Existing
Default.
(b) During the Revised Forbearance Period, notwithstanding the
existence of the Existing Defaults, at
Borrowers' request and as an
accommodation to Borrowers, Agent and
Lenders agree to continue making Loans to
Borrowers, except that, notwithstanding
anything to the contrary contained in
the Loan Agreement, the aggregate amount of
Revolving Loans and Letter of Credit
Accommodations outstanding shall not
exceed, at any given time, $14,000,000 in
the aggregate and the aggregate principal
amount of Loans and Letter of Credit
Accommodations outstanding to a Borrower
shall not exceed the Borrowing Base of
such Borrower or the Revolving Loan Limit
of such Borrower.
(c) From and after termination or expiration of the Revised
Forbearance Period (the "Forbearance
Termination Date"), the agreement of Agent
and Lenders to forbear shall automatically
and without further notice or action
terminate and be of no further force and
effect, and Agent and Lenders shall
have the immediate and unconditional right,
in their discretion, to exercise any
or all of their rights and remedies under
the Loan Agreement, the other
Financing Agreements and applicab
