Exhibit 10(jj)
January 6, 2005
Xx. Xxxxxxx X. Xxxxx
President
Riviera Tool Company
0000 Xxxxxxxxx Xxxxxxx X.X.
Xxxxx Xxxxxx, XX 00000-0000
RE: FORBEARANCE AGREEMENT AMONG COMERICA BANK ("BANK") AND RIVIERA TOOL
COMPANY ("BORROWER") DATED NOVEMBER 16, 2004, AS AMENDED BY A FIRST
AMENDMENT DATED DECEMBER 15, 2004 AND A SECOND AMENDMENT DATED DECEMBER
22, 2004 (AS AMENDED, "FORBEARANCE AGREEMENT")
Dear Xx. Xxxxx:
Borrower has requested that Bank extend its forbearance under the Forbearance
Agreement to March 15, 2005.
Subject to timely, written acceptance by Borrower of the following conditions in
this third amendment to the Forbearance Agreement ("Third Amendment"), and the
additional acknowledgment required below, Bank is willing to continue to forbear
until March 15, 2005, subject to earlier termination as provided below, from
further action to collect the Liabilities:
1) Future administration of the Liabilities and the financing arrangements
between Bank and Borrower shall continue to be governed by the covenants,
terms and conditions of the Forbearance Agreement and the other Loan
Documents, which are ratified and confirmed and incorporated by this
reference, except to the extent that the Forbearance Agreement and the
other Loan Documents have been superseded, amended, modified or
supplemented by this Third Amendment or are inconsistent with this Third
Amendment, then this Third Amendment shall govern.
2) Borrower acknowledges Bank is under no obligation to advance funds or
extend credit to Borrower under the Loan Documents, or otherwise.
3) 100% of Borrower's cash inflows will continue to be applied to the Line
of Credit Note. Subject to maintaining an advisory "Formula Amount"
(defined below) equal to or greater than the balance owing on the Line of
Credit Note (plus the amount of outstanding letters of credit), and
provided there are no defaults under the terms of the Forbearance
Agreement as amended by this Third Amendment, and no further defaults
under the other Loan Documents, Bank may, in its sole discretion, continue
to advance to Borrower under the Line of Credit Note, in accordance with
the Loan Documents, through March 15, 2005. Effective immediately, the
maximum amount available under the Line of Credit Note is $5,000,000.
Effective as of January 28, 2005, the maximum amount available under the
Line of Credit Note will be reduced to $4,000,000. The "Formula Amount" is
as defined as follows: as of the date of any determination, the sum of:
(a) eighty percent (80%) of Eligible Accounts Receivable, less than 120
days past invoice, plus; (b) eighty percent (80%) of Retention Xxxxxxxx
less than 180 days past invoice for Drive Automotive, that are related to
the Mercedes BR-164 and BR-251 Programs; plus (c) an overformula equal to
the lesser of (i) the amount owing to Borrower by Mercedes-Benz U. S.
International, Inc. as assignee of Oxford Automotive, Inc. ("Oxford") from
time to time based on invoices dated prior to December 17, 2004 and (ii)
$3,094,947, provided, however, that the maximum amount included in the
Formula Amount under this subparagraph (c) will reduce permanently to
$300,000 on January 28, 2005 and to zero ($0) on February 25, 2005, in
both cases, to the extent not already reduced by the payment of amounts
owing by Mercedes-Benz; plus (d) an additional overformula equal to
$400,000 until February 18, 2005, at which time such additional
overformula shall reduce permanently to $200,000 until February 25, 2005,
at which time it shall reduce permanently to zero ($0). Accounts owing by
Benteler de Mexico that are otherwise Eligible Accounts, shall be included
in determining the Formula Amount. Accounts
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owed by Oxford shall not be included in Eligible Accounts. All previous
definitions of Advance Formula or Formula Amount are superceded by the
foregoing. In the event the balance on the Line of Credit Note (plus the
amount of outstanding letters of credit) exceeds the Advance Formula at
any time, no advances will be allowed. Effective immediately, there shall
be no availability to Borrower for letters of credit except for the
currently outstanding letters of credit. Each borrowing request must be
accompanied by an accounts receivable report, in form satisfactory to
Bank, with a minimum of one report per week. Each report shall also
include a detailed list of current ineligible accounts and a statement of
those ineligible accounts collected.
4) Upon execution of this Third Amendment, Borrower will pay to Bank a
fully earned, non-refundable fee of $25,000.
5) Notwithstanding Borrower's default under the Loan Documents, subject to
HillStreet's execution of this Third Amendment as provided below, Bank
consents to Borrower's payment to The HillStreet Fund II, L.P.
("HillStreet"), and any other holders of Subordinated Debt (only as
defined in that certain Senior Subordination Agreement ("Subordination
Agreement") among Bank, Borrower and HillStreet dated July 9, 2004) of
$105,000 due on December 31, 2004 under the Subordinated Loan Documents
(as defined in the Subordination Agreement). HillStreet, by its signature
below, (a) represents and warrants to Bank that it is the only holder of
Subordinated Debt, (b) consents to and acknowledges the terms of the
Forbearance Agreement, as amended by this Third Amendment and (c) agrees
to forbear from exercising any rights or remedies against Borrower or its
assets until the termination of Bank's forbearance under this Third
Amendment (and the failure of HillStreet to do so shall be a default under
this Third Amendment).
6) Concurrently with execution of this Third Amendment, Borrower will
deliver to Bank updated borrowing resolutions in a form satisfactory to
Bank.
7) On or before January 31, 2005, Borrower will provide to Bank all
documents requested by Bank with respect to life insurance policies
pledged to Bank under the Loan Documents.
8) In addition to all reporting currently required by the Forbearance
Agreement and other Loan Documents, Borrower shall provide Bank and
HillStreet:
(a.) on or before Monday of each week, a 13-week cash forecast and
budget (including a weekly analysis of availability and the
outstanding balance under the Line of Credit Note);
(b.) on or before January 15, 2005, (i) Borrower's monthly
financial statements for September, October and November 2004
and (ii) an updated monthly forecast of Borrower's income
statement, balance sheet, cash flow and borrowing base
analysis for fiscal year 2004, incorporating actual results
for September through November 2004 and any changes to
assumptions in the previous forecast;
(c.) on or before January 15, 2005, Borrower's backlog report as of
November 30, 2004, including margins (percentage of completion
format);
(d.) on or before January 15, 2005, all information requested by
Bank with respect to (i) potential tooling lien claims by or
against Borrower and (ii) Borrower's relationship with Oxford
Automotive, Inc. (and its subsidiaries and affiliates),
Gestamp Automocion, S.L. and Mercedes-Benz U.S. International,
Inc.; and
(e.) within 30 days after each month end, monthly financial
statements, including without limitation, income statements,
balance sheet and cash flow.
9) This Third Amendment shall be governed and controlled in all respects
by the laws of the State of Michigan, without reference to its conflict of
law provisions, including interpretation, enforceability, validity and
construction.
10) Bank expressly reserves the right to exercise any or all rights and
remedies provided under the Forbearance Agreement and the other Loan
Documents and applicable law except as modified herein. Bank's failure to
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exercise immediately such rights and remedies shall not be construed as a
waiver or modification of those rights or an offer of forbearance.
11) This Third Amendment will inure to the benefit of Bank and all its
past, present and future parents, subsidiaries, affiliates, predecessors
and successor corporations and all of their subsidiaries and affiliates.
12) Bank anticipates that discussions addressing the Liabilities may take
place in the future. During the course of such discussions, Borrower and
Bank, may touch upon and possibly reach a preliminary understanding on one
or more issues prior to concluding negotiations. Notwithstanding this fact
and absent an express written waiver by Bank, Bank will not be bound by an
agreement on any individual issues unless and until an agreement is
reached on all issues and such agreement is reduced to writing and signed
by Borrower and Bank.
13) As of the date of this Third Amendment, there are no other offers
outstanding from Bank to Borrower. Any prior offer by Bank, whether oral
or written is hereby rescinded in full. There are no oral agreements
between Bank and Borrower; any agreements concerning the Liabilities are
expressed only in the Forbearance Agreement (as amended by this Third
Amendment) and the other Loan Documents. The duties and obligations of
Borrower and Bank shall be only as set forth in the Forbearance Agreement,
the other Loan Documents and this Third Amendment, when executed by all
parties.
14) Borrower acknowledges that it has reviewed (or has had the opportunity
to review) this Third Amendment with counsel of its choice and has
executed this Third Amendment of its own free will and accord and without
duress or coercion of any kind by Bank or any other person or entity.
15) BORROWER AND BANK ACKNOWLEDGE AND AGREE THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF
THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT
WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE
PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS THIRD
AMENDMENT, THE FORBEARANCE AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE
LIABILITIES.
16) DEFAULTS HAVE OCCURRED UNDER THE LOAN DOCUMENTS. BORROWER, TO THE
FULLEST EXTENT ALLOWED UNDER APPLICABLE LAW, WAIVES ALL NOTICES THAT BANK
MIGHT BE REQUIRED TO GIVE BUT FOR THIS WAIVER, INCLUDING ANY NOTICES
OTHERWISE REQUIRED UNDER SECTION 6 OF ARTICLE 9 OF THE UNIFORM COMMERCIAL
CODE AS ENACTED IN THE STATE OF MICHIGAN OR THE RELEVANT STATE CONCERNING
THE APPLICABLE COLLATERAL (AND UNDER ANY SIMILAR RIGHTS TO NOTICE GRANTED
IN ANY ENACTMENT OF REVISED ARTICLE 9 OF THE UNIFORM COMMERCIAL CODE).
FURTHERMORE, BORROWER WAIVES (A) THE RIGHT TO NOTIFICATION OF DISPOSITION
OF THE COLLATERAL UNDER SECTION 9-611 OF THE UNIFORM COMMERCIAL CODE, (B)
THE RIGHT TO REQUIRE DISPOSITION OF THE COLLATERAL UNDER SECTION 9-620(E)
OF THE UNIFORM COMMERCIAL CODE, AND (C) ALL RIGHTS TO REDEEM ANY OF THE
COLLATERAL UNDER SECTION 9-623 OF THE UNIFORM COMMERCIAL CODE.
17) BORROWER HEREBY WAIVES, DISCHARGES AND FOREVER RELEASES BANK, BANK'S
EMPLOYEES, OFFICERS, DIRECTORS, ATTORNEYS, STOCKHOLDERS, AFFILIATES AND
SUCCESSORS AND ASSIGNS, FROM AND OF ANY AND ALL CLAIMS, CAUSES OF ACTION,
DEFENSES, COUNTERCLAIMS OR OFFSETS AND/OR ALLEGATIONS BORROWER MAY HAVE OR
MAY HAVE MADE OR WHICH ARE BASED ON FACTS OR CIRCUMSTANCES ARISING AT ANY
TIME UP THROUGH AND INCLUDING THE DATE OF THIS THIRD AMENDMENT, WHETHER
KNOWN OR UNKNOWN, AGAINST ANY OR ALL OF BANK, BANK'S EMPLOYEES, OFFICERS,
DIRECTORS, ATTORNEYS, STOCKHOLDERS, AFFILIATES AND SUCCESSORS AND ASSIGNS.
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18) This Third Amendment may be executed in counterparts and delivered by
facsimile and the counterparts and/or facsimiles, when properly executed
and delivered by the signing deadline, will constitute a fully executed
complete agreement.
19) Borrower shall properly execute this Third Amendment, obtain
HillStreet's signature below, and deliver same to the undersigned by no
later than 5:00 p.m. on January 6, 2005.
Bank reserves the right to terminate its forbearance prior to March 15, 2005, in
the event of any new defaults under the Loan Documents, defaults under the
Forbearance Agreement or this Third Amendment, in the event of further
deterioration in the financial condition of Borrower or further deterioration in
Bank's collateral position, and/or in the event Bank, for any reason, believes
that the prospect of payment or performance is impaired.
Very truly yours,
Xxxxxx X. Xxxxxxxxxxx
Vice President - AGM
Middle Market Banking
00 Xxxxxx Xxxxxx, XX
Xxxxx Xxxxxx, XX 00000
(000) 000-0000
Fax: (000) 000-0000
ACKNOWLEDGED AND AGREED:
"BORROWER"
RIVIERA TOOL COMPANY
By: ____________________________________
Its: ___________________________________
Date: January 6, 2005
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In consideration of the foregoing, The HillStreet Fund II, L.P.
("HillStreet") hereby consents to the foregoing Third Amendment and to the
Forbearance Agreement, and joins in agreement to paragraph 5 of the Third
Amendment:
(1.) Borrower agrees to furnish HillStreet with the same reporting
information as detailed in paragraph 8 to be furnished to Bank.
(2.) HillStreet expressly reserves the right to exercise any or all
rights and remedies provided under its loan documents with Borrower
and applicable law except as modified in paragraph 5 of the
Forbearance Agreement.
(3.) HillStreet's consent and forbearance shall be effective through the
termination of Bank's forbearance under the Third Amendment (but not
later than March 15, 2005) and HillStreet's failure to exercise
immediately its rights and remedies shall not be construed as a
waiver or modification of those rights or an offer of forbearance
beyond such termination.
The HillStreet Fund II, L.P.
By: HillStreet Capital II, Inc.
Its: Investment Manager
By: ______________________________
Xxxxxxxxx X. Xxxxxxxxx
Its: President
Date: January 6, 2005
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