<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE YEAR ENDED DECEMBER 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-3252
LEXINGTON PRECISION CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 22-1830121
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
767 THIRD AVENUE, NEW YORK, NY 10017
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 319-4657
___________________________
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $.25 PAR VALUE
(TITLE OF CLASS)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant at February 29, 1996 was approximately $3,719,000.
The number of shares outstanding of the registrant's common stock as of
February 29, 1996 was 4,228,036.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's proxy statement to be issued in connection with
its 1996 Annual Meeting of Stockholders (the "Proxy Statement") are
incorporated by reference into Part III. Only those portions of the Proxy
Statement which are specifically incorporated by reference are deemed filed as
part of this report on Form 10-K.
===============================================================================
<PAGE> 2
LEXINGTON PRECISION CORPORATION
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PART I
<S> <C> <C>
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . 7
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . 22
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . 45
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . 45
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . 45
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . . . . . . . . . . . 46
</TABLE>
<PAGE> 3
PART I
ITEM 1. BUSINESS
Lexington Precision Corporation ("LPC") is a Delaware corporation which
was incorporated in 1966. Unless the context otherwise requires, all references
herein to the "Company" are to LPC and its wholly-owned subsidiary, Lexington
Components, Inc. ("LCI"). Through its two business segments, the Rubber Group
and the Metals Group, the Company manufactures, to customer specifications,
rubber and metal component parts used primarily by manufacturers of
automobiles, automotive replacement parts, industrial equipment, computers,
office equipment, medical devices and home appliances. The Company's business
is conducted primarily in the continental United States.
RUBBER GROUP
The Company's Rubber Group manufactures silicone and organic rubber
components. The Rubber Group currently conducts its business through three
divisions of LCI, the Precision Seals Division, the Electrical Insulator
Division and Lexington Medical, and through a division of LPC, Lexington
Manufacturing.
PRECISION SEALS DIVISION. The Precision Seals Division manufactures
molded rubber seals used in primary wire-harnesses for automobiles and trucks.
Primary wire-harnesses distribute electrical power to interior and exterior
lighting fixtures, electrically powered accessories and other electrical
equipment. The seals are designed to assure the integrity of the many
connections which are required throughout the harnesses. The seals are generic
in nature. A particular seal may be used in a number of connectors within a
harness and in a variety of car models produced by several different car
manufacturers. The Precision Seals Division's largest customer is Delphi
Packard Electric Systems, a division of General Motors Corporation ("Delphi
Packard Electric").
ELECTRICAL INSULATOR DIVISION. The Electrical Insulator Division
manufactures molded rubber insulators used in ignition-wire-harnesses for
automobiles and trucks. Insulators are used to shield the electrical
connections made by the ignition-wire at the distributor and at the spark plug.
Approximately 33% of the insulators manufactured by the Electrical Insulator
Division are used in harnesses for new vehicles, primarily those manufactured
by Ford Motor Company and Chrysler Corporation, and approximately 67% are used
in replacement harnesses.
LEXINGTON MEDICAL. Lexington Medical manufactures molded rubber
components which are used in a variety of medical devices, such as intravenous
feeding systems, syringes, laparoscopic instruments and catheters.
LEXINGTON MANUFACTURING. Lexington Manufacturing manufactures rubber
molds which are sold to customers of the other divisions of the Rubber Group
and are used by the other divisions to produce components. Lexington
Manufacturing also provides engineering support to the other divisions of the
Rubber Group.
During 1995, the Company sold the Rubber Group's Extruded and Lathe-Cut
Products Division. The former Division manufactured extruded rubber components
used primarily by manufacturers of industrial equipment, lighting products and
home appliances.
-1-
<PAGE> 4
METALS GROUP
The Company's Metals Group manufactures metal components. The Metals
Group conducts its business through Falconer Die Casting Company ("Falconer")
and Ness Precision Products ("Ness"), both of which are divisions of LPC.
FALCONER DIE CASTING COMPANY. Falconer manufactures aluminum,
magnesium and zinc die castings used primarily by manufacturers of computers,
office equipment, recreational equipment, communications equipment, industrial
equipment and automobiles. Many of the die castings produced by Falconer are
also machined by Falconer using computer-controlled machining centers and other
secondary machining equipment.
NESS PRECISION PRODUCTS. Ness produces machined aluminum, brass and
steel components used primarily by manufacturers of automobiles, home
appliances, office equipment, communications equipment and industrial
equipment. In 1995, approximately 38% of the revenues of Ness were generated
by sales of components for automotive air bag inflators.
PRINCIPAL END USES FOR THE COMPANY'S PRODUCTS
The following table summarizes net sales of the Company during 1995,
1994 and 1993 by the type of product in which the Company's components were
utilized (dollar amounts in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
------------------ ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Automobiles and light trucks $ 68,083 65.3% $53,005 59.9% $45,223 60.3%
Industrial equipment 10,916 10.5 9,639 10.9 6,724 9.0
Computers and office equipment 8,670 8.3 6,835 7.7 5,406 7.2
Medical devices 6,973 6.7 5,959 6.7 4,576 6.1
Recreational equipment and
home appliances 6,154 5.9 8,710 9.8 7,626 10.2
Other 3,502 3.3 4,384 5.0 5,421 7.2
-------- ----- ------- ----- ------- -----
$104,298 100.0% $88,532 100.0% $74,976 100.0%
======== ===== ======= ===== ======= =====
</TABLE>
-2-
<PAGE> 5
The following table summarizes net sales of the Rubber Group and the
Metals Group during 1995, 1994 and 1993 by the type of product in which the
Company's components were utilized (dollar amounts in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Rubber Group:
Automobiles and light trucks $53,734 86.2% $37,584 80.2% $32,761 81.1%
Medical devices 6,577 10.6 5,536 11.8 3,946 9.8
Other 1,991 3.2 3,748 8.0 3,681 9.1
------- ----- ------- ----- ------- -----
$62,302 100.0% $46,868 100.0% $40,388 100.0%
======= ===== ======= ===== ======= =====
Metals Group:
Automobiles and light trucks $14,349 34.2% $15,421 37.0% $12,452 36.0%
Industrial equipment 10,581 25.2 9,083 21.8 6,207 17.9
Computers and office equipment 8,655 20.6 6,800 16.3 5,351 15.5
Recreational equipment and
home appliances 5,733 13.6 7,871 18.9 6,712 19.4
Other 2,678 6.4 2,489 6.0 3,866 11.2
------- ----- ------- ----- ------- -----
$41,996 100.0% $41,664 100.0% $34,588 100.0%
======= ===== ======= ===== ======= =====
</TABLE>
(For additional information concerning the Rubber Group and the Metals
Group, see "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in Part II, Item 7, and Note 11 to the consolidated
financial statements in Part II, Item 8.)
MARKETING AND SALES
The marketing and sales effort within the Rubber Group is carried out by
management personnel and internal sales personnel. The marketing and sales
effort within the Metals Group is carried out by management personnel, internal
sales personnel and independent sales representatives.
RAW MATERIALS
Each of the principal raw materials used by the Company is available at
competitive prices from several major manufacturers. All raw materials have
been readily available and the Company does not foresee any significant
shortages.
SEASONAL VARIATIONS
The Company's business generally is not subject to significant seasonal
variations.
MAJOR CUSTOMERS
During 1995, 1994 and 1993, net sales to the largest customer of the
Rubber Group, Delphi Packard Electric, accounted for 22.5%, 20.6% and 22.3%,
respectively, of the Company's total net sales. Net sales to the second largest
customer of the Rubber Group accounted for 6.8%, 6.1% and 5.1%, respectively, of
the
-3-
<PAGE> 6
Company's total net sales. Net sales to the largest customer of the Metals
Group, TRW Vehicle Safety Systems, Inc. ("TRW VSSI"), accounted for 8.1%, 13.0%
and 11.8%, respectively, of the Company's total net sales. Loss of a
significant amount of business from the Company's three largest customers, as a
group, would have a material adverse effect on the business of the Company if
such business were not replaced by additional business from existing or new
customers. (See also "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources -
Dependence on Large Customers" in Part II, Item 7.)
BACKLOG
The Company's backlog of customer orders includes orders which have
scheduled shipping dates and orders which do not have scheduled shipping dates
but which, based upon historical experience, the Company anticipates will be
produced and shipped within one year. Orders included in such backlog may be
subject to cancellation or postponement by customers; however, based upon past
experience, the Company expects to ship during 1996 substantially all of the
orders which were included in the backlog at December 31, 1995. The Company
believes that its order backlog is not necessarily indicative of future net
sales levels. The following table sets forth the backlog of orders for the
Rubber Group and the Metals Group at December 31, 1995 and 1994 (dollar amounts
in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1994
---- ----
<S> <C> <C>
Rubber Group $13,566 $ 7,976
Metals Group 15,370 19,057
------- -------
$28,936 $27,033
======= =======
</TABLE>
COMPETITION
The Company competes for business primarily on the basis of quality,
service, technical and engineering capabilities and price. The Rubber Group
and the Metals Group encounter substantial competition from a large number of
manufacturing companies. Competitors range from small and medium-sized
specialized firms to large diversified companies, many of which have resources
substantially greater than those of the Company. Additionally, some of the
Company's customers have captive manufacturing operations which compete with
the Company.
PRODUCT LIABILITY RISKS
The Company is subject to potential product liability risks which are
inherent in the manufacture and sale of component parts. Although there have
been no claims made to date against the Company which the Company believes will
have a material adverse effect upon its financial position, there can be no
assurance that any existing claims or any claims made in the future will not
have a material adverse effect upon the financial position of the Company.
Although the Company maintains insurance coverage for product liability, there
can be no assurance that, in the event of a claim, such insurance coverage
would automatically apply or that, in the event of an award arising out of a
claim, the amount of such insurance coverage would be sufficient to satisfy the
award.
ENVIRONMENTAL COMPLIANCE
The Company's operations are subject to numerous federal, state and
local laws and regulations controlling the discharge of materials into the
environment or otherwise relating to the protection of the
-4-
<PAGE> 7
environment. Although the Company continues to make expenditures for the
protection of the environment, compliance with federal, state and local
environmental regulations has not had a significant impact on the capital
spending requirements, earnings or competitive position of the Company. There
can be no assurance that changes in environmental laws and regulations, or the
interpretation or enforcement thereof, will not require material expenditures by
the Company in the future. (See also "Legal Proceedings" in Part I, Item 3.)
EMPLOYEES
The following table shows the number of employees at the Rubber Group,
the Metals Group and the Corporate Office at December 31, 1995:
<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------
<S> <C>
Rubber Group 568
Metals Group 558
Corporate Office 5
-----
1,131
=====
</TABLE>
At December 31, 1995, thirty-four hourly workers at one plant location
within the Rubber Group were subject to a collective bargaining agreement. The
Company believes that its employee relations are generally good.
-5-
<PAGE> 8
ITEM 2. PROPERTIES
At December 31, 1995, the Company conducted its operations at eight
manufacturing plants. In 1995, the Company acquired real estate in North
Canton, Ohio, and commenced construction of an additional manufacturing
facility. Production is expected to commence at the new facility during the
second quarter of 1996. In addition, in 1995, the Company sold a manufacturing
facility in Blue Ridge, Georgia. The following table shows the location and
square footage of each of the properties of the Rubber Group, the Metals Group
and the Corporate Office at December 31, 1995:
<TABLE>
<CAPTION>
SQUARE
LOCATION FEET
------------------- --------
<S> <C> <C>
Rubber Group:
Precision Seals Division Vienna, OH 60,000(1)
Precision Seals Division LaGrange, GA 77,000(1)
Electrical Insulator Division Jasper, GA 91,000(2)
Lexington Medical Rock Hill, SC 60,000(1)
Lexington Manufacturing North Canton, OH 41,000(1)(3)
--------
329,000
--------
Metals Group:
Falconer Lakewood, NY 91,000(1)(4)
Falconer Manchester, NY 21,000
Ness Rochester, NY 60,000(1)(5)
Ness Casa Grande, AZ 26,000(1)
--------
198,000
--------
Corporate Office:
Executive Offices New York, NY 3,000(6)
Administrative Offices Cleveland, OH 3,000(7)
--------
6,000
--------
533,000
========
</TABLE>
[FN]
(1) Encumbered by mortgage.
(2) Includes a 26,000 square foot addition, which was under
construction at December 31, 1995. The addition was completed in
the first quarter of 1996.
(3) Under construction at December 31, 1995. The Company expects
this facility to be completed during the second quarter of 1996.
(4) Includes a 30,000 square foot addition, which was under
construction at December 31, 1995. The Company expects the
addition to be completed during the second quarter of 1996. This
facility is leased from an industrial development authority
pursuant to a lease which expires in 2006 and provides the
Company with an option to purchase the facility for nominal
consideration.
(5) Leased from an industrial development authority pursuant to a
lease which expires in 2000 and provides the Company with an
option to purchase the facility for nominal consideration.
(6) Provided to the Company by an affiliate pursuant to arrangements
under which the Company reimburses the affiliate for a portion of
the cost relating to the space.
(7) Leased.
-6-
<PAGE> 9
All of the plants are well maintained, general manufacturing facilities
which are suitable for the Company's operations. The Company believes that,
except for Ness, which generally is operating near capacity, all of the
operating companies have facilities which are adequate to meet significant
increases in the demand for their products.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to certain legal actions arising in the ordinary
course of its business, including actions naming the Company as a potentially
responsible party or as a third-party defendant in cost recovery actions
initiated pursuant to environmental laws. Based upon the information presently
available to the Company, the Company believes that the ultimate outcome of
these actions will not have a material adverse effect upon its financial
position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of 1995.
-7-
<PAGE> 10
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock, held by approximately 1,100 holders of
record as of February 29, 1996, is traded in the over-the-counter market.
Trading of shares of the Company's common stock is limited. No reliable
trading data for the Company's common stock was publicly available for the
period January 1, 1993 through April 7, 1994. Since April 8, 1994, trading
information has been available from the OTC Bulletin Board provided by the
National Association of Securities Dealers (NASD). The following table sets
forth selling prices of the Company's common stock as reported by the OTC
Bulletin Board:
<TABLE>
<CAPTION>
SELLING PRICES
--------------------------
PERIOD HIGH LOW
-------------------- ----------- ----------
<S> <C> <C>
4/8/94 - 6/30/94 $3.00 $1.50
7/1/94 - 9/30/94 $2.50 $1.50
10/1/94 - 12/31/94 $2.50 $1.50
1/1/95 - 3/31/95 $2.375 $1.25
4/1/95 - 6/30/95 $3.25 $1.50
7/1/95 - 9/30/95 $3.125 $2.00
10/1/95 - 12/31/95 $3.75 $2.50
</TABLE>
The Company is not able to determine whether or not retail mark-ups,
mark-downs or commissions were included in the above prices. The Company
believes that five brokerage firms currently make a market in the Company's
common stock, although both bid and asked quotations may at times be limited.
No dividends have been paid on the Company's common stock since 1979.
The future payment of dividends is dependent upon, among other things, the
earnings and capital requirements of the Company. The agreements pursuant to
which certain of the Company's indebtedness is outstanding, and the terms of
the Company's preferred stock, contain provisions limiting the Company's
ability to make dividend payments on its common stock. The most restrictive of
such provisions would have permitted the Company to pay $3,495,000 of dividends
on its common stock at December 31, 1995. (See also Notes 6 and 7 to the
consolidated financial statements in Part II, Item 8.)
The Board of Directors intends, for the foreseeable future, to follow a
policy of retaining the Company's earnings in order to reduce the indebtedness
of the Company and finance the development and expansion of its business.
-8-
<PAGE> 11
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected consolidated financial data of
the Company as of and for each of the years in the five-year period ended
December 31, 1995 (dollar amounts in thousands, except per share amounts). The
financial data set forth below has been taken from the consolidated financial
statements of the Company, which have been audited by Ernst & Young LLP,
independent certified public accountants. The information set forth below is
not necessarily indicative of the results of future operations and should be
read in conjunction with, and are qualified by, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in Part II, Item 7
and the consolidated financial statements in Part II, Item 8.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED STATEMENTS OF OPERATIONS DATA:
Net sales $104,298 $88,532 $74,976 $65,201 $65,180
======== ======= ======= ======= =======
Income from continuing operations (1) $ 9,657 $ 8,102 $ 6,347 $ 548 $ 3,965
Interest expense 7,585 6,272 5,496 5,041 5,867
Other income/(expense), net 641 536 - - (56)
Provision/(credits) for income taxes 425 34 - - (396)
-------- ------- ------- ------- -------
Income/(loss) before discontinued operations
and extraordinary item 2,288 2,332 851 (4,493) (1,562)
Loss from discontinued operations - - - - (209)
Extraordinary item (2) - - - - 978
-------- ------- ------- ------- -------
Net income/(loss) $ 2,288 $ 2,332 $ 851 $(4,493) $ (793)
======== ======= ======= ======= =======
Per fully diluted share of common stock (3):
Income/(loss) before discontinued operations
and extraordinary item $ .49 $ .51 $ .13 $ (1.11) $ (.39)
Discontinued operations - - - - (.05)
Extraordinary item - - - - .24
-------- ------- ------- ------- -------
Net income/(loss) $ .49 $ .51 $ .13 $ (1.11) $ (.20)
======== ======= ======= ======= =======
</TABLE>
(Footnotes on following page) (Continued)
- 9 -
<PAGE> 12
ITEM 6. SELECTED FINANCIAL DATA (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
OTHER DATA:
Average number of employees 1,147 968 860 883 905
Depreciation and amortization expenses $ 6,449 $ 5,060 $ 4,297 $ 5,050 $ 5,216
Capital expenditures $ 17,902 $ 15,319 $ 6,288 $ 2,235 $ 613
DECEMBER 31,
--------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
SELECTED BALANCE SHEET DATA:
Current assets $ 24,478 $ 22,752 $ 15,715 $ 14,257 $ 15,211
Current liabilities (4) 29,253 24,330 12,733 51,224 50,940
--------- ---------- --------- ---------- ---------
Net working capital/(deficit) $ (4,775) $ (1,578) $ 2,982 $ (36,967) $ (35,729)
========= ========== ========= ========== =========
Total assets $ 81,876 $ 67,396 $ 49,983 $ 45,584 $ 50,978
Long-term debt, excluding current portion (4) $ 56,033 $ 49,627 $ 46,273 $ 3,795 $ 5,013
Redeemable preferred stock at par value $ 510 $ 555 $ 600 $ 735 $ 735
Total stockholders' deficit $ (4,976) $ (7,215) $ (9,623) $ (10,170) $ (5,710)
</TABLE>
[FN]
(1) In 1992, income from continuing operations included charges of $1,113,000
for the amortization of and $2,132,000 for the write-off of covenants not to
compete. In 1991, income from continuing operations included a charge of
$1,113,000 for the amortization of covenants not to compete.
(2) In 1991, the extraordinary item represented the gain on the repurchase of
$1,500,000 principal amount of the Company's 12-3/4% Subordinated Notes, due
February 1, 1997.
(3) In 1995, 1994 and 1993, fully diluted income per common share was reduced by
$.02, $.02 and $.07, respectively, to reflect the effect of dividends paid
or accrued on the Company's preferred stock and the amount by which payments
made to effect the redemption of the preferred stock exceeded the par value
of such shares.
(4) At December 31, 1992 and 1991, $29,046,000 and $30,429,000, respectively, of
debt obligations with scheduled maturities of one year or more were
classified as current liabilities because of certain defaults. In January
1993, the Company completed a restructuring of substantially all of its
indebtedness which eliminated all defaults on its outstanding debt.
-10-
<PAGE> 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Various statements in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this report are based
upon projections and estimates, as distinct from past or historical facts and
events. These forward-looking statements are subject to a number of risks and
uncertainties that could cause actual results to be materially different. Such
risks and uncertainties include changes in future economic conditions, changes
in the competitive environment, changes in the capital markets, unanticipated
operating results and a number of other factors.
The results of operations for any particular fiscal period of the
Company are not necessarily indicative of the results to be expected for any
one or more succeeding fiscal periods. In addition, because the Company's
business is materially affected by the level of activity in the automotive
industry, any material reduction in the level of activity in that industry may
have a material adverse effect on the Company's results of operations.
RESULTS OF OPERATIONS
1995 VERSUS 1994
NET SALES
A summary of the net sales of the Rubber Group and the Metals Group for
1995 and 1994 follows (dollar amounts in thousands):
<TABLE>
<CAPTION>
PERCENTAGE
1995 1994 INCREASE
---- ---- --------
<S> <C> <C> <C>
Rubber Group $ 62,302 $46,868 32.9%
Metals Group 41,996 41,664 0.8
-------- ------- ----
$104,298 $88,532 17.8%
======== ======= ====
</TABLE>
Approximately 89% of the $15,434,000 increase in net sales of the Rubber
Group came from increased sales of seals for primary wire-harnesses and
insulators for ignition-wire-harnesses. Increased sales of tooling and
medical components were responsible for the balance of the increase. If net
sales of the Extruded and Lathe-Cut Products Division, which was sold on June
30, 1995, were excluded from the above table, net sales of the Rubber Group
would have increased from $44,306,000 to $60,981,000, an increase of 37.6%.
In 1995, net sales of the Metals Group were adversely affected by a
decline of $3,978,000 in sales of a single component to TRW VSSI. The decline
in sales of the component resulted from the planned phase-out of the inflator
system of which the component is a part. (See also "Liquidity and Capital
Resources - Dependence on Large Customers" in this Item 7.)
-11-
<PAGE> 14
COST OF SALES
A summary of cost of sales and cost of sales as a percentage of net
sales for the Rubber Group and the Metals Group for 1995 and 1994 follows
(dollar amounts in thousands):
<TABLE>
<CAPTION>
PERCENTAGE
1995 1994 INCREASE
---------------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Rubber Group $50,623 81.3% $39,314 83.9% 28.8%
Metals Group 34,138 81.3 32,320 77.6 5.6
------- ---- ------- ---- ----
$84,761 81.3% $71,634 80.9% 18.3%
======= ==== ======= ==== ====
</TABLE>
The decrease in cost of sales of the Rubber Group as a percentage of net
sales from 83.9% in 1994 to 81.3% in 1995, resulted from reduced direct labor
expense as a percentage of net sales, primarily because of the purchase of new
equipment and the introduction of improved manufacturing processes, and reduced
factory overhead expense as a percentage of net sales, primarily because
factory overhead expense grew at a slower rate than sales at the Precision
Seals Division and the Electrical Insulator Division. Reductions in factory
overhead expense as a percentage of net sales at the Precision Seals Division
and the Electrical Insulator Division were offset in part by costs associated
with the development and startup of new products at Lexington Medical. The
reduction in factory overhead expense as a percentage of net sales at the
Precision Seals Division would have been greater but for the impact of startup
expenses and production inefficiencies at the Division's new facility in
LaGrange, Georgia.
Cost of sales of the Metals Group as a percentage of net sales increased
from 77.6% in 1994 to 81.3% in 1995, primarily because of increased factory
overhead expense as a percentage of net sales and, to a lesser extent,
increased direct labor expense as a percentage of net sales at Ness. Increased
factory overhead expense and direct labor expense as a percentage of net sales
at Ness were offset in part by lower material costs as a percentage of net
sales and decreased factory overhead expense and direct labor expense as a
percentage of net sales at Falconer. Factory overhead and direct labor expense
as a percentage of net sales increased at Ness because of the installation of
new equipment and the start-up of new products. In addition, factory overhead
expense as a percentage of net sales increased because of reduced absorption
of fixed factory overhead expense due to a decrease in net sales at Ness.
SELLING AND ADMINISTRATIVE EXPENSES
A summary of selling and administrative expenses and selling and
administrative expenses as a percentage of net sales for the Rubber Group, the
Metals Group and the Corporate Office follows (dollar amounts in thousands):
<TABLE>
<CAPTION>
PERCENTAGE
1995 1994 INCREASE
--------------- -------------- ----------
<S> <C> <C> <C> <C> <C>
Rubber Group $4,175 6.7% $3,694 7.9% 13.0%
Metals Group 3,712 8.8 3,284 7.9 13.0
Corporate Office 1,993 N/A 1,818 N/A 9.6
------ ---- ------ ---- ----
$9,880 9.5% $8,796 9.9% 12.3%
====== ==== ====== ==== ====
</TABLE>
-12-
<PAGE> 15
At the Rubber Group, selling and administrative expenses as a percentage
of net sales decreased to 6.7% during 1995, primarily because most selling and
administrative expenses grew at a slower rate than net sales and because of
reduced legal expenses.
At the Metals Group, selling and administrative expenses as a percentage
of net sales increased to 8.8% during 1995, primarily because of increased
legal expenses.
In 1995, administrative expenses at the Corporate Office increased,
primarily because of increased wage expenses and increased accruals for
incentive compensation, offset in part by reduced legal expenses.
INTEREST EXPENSE
Interest expense totaled $7,585,000 during 1995, an increase of
$1,313,000, compared to 1994. This increase was caused primarily by an
increase in average borrowings outstanding.
OTHER INCOME
On June 30, 1995, the Company sold the Extruded and Lathe-Cut Products
Division of LCI for cash and the assumption by the purchaser of certain
liabilities, which resulted in a pre-tax gain of $578,000. In addition, during
1995, the Company realized a pre-tax gain in the amount of $63,000 on the sale
of several other pieces of equipment. During 1994, other income consisted of a
gain of $336,000 on the sale of marketable securities and a gain of $200,000
from the sale of real estate in connection with the settlement of litigation.
PROVISION FOR INCOME TAXES
The income tax provisions otherwise recognizable during 1995 and 1994
were reduced by the utilization of portions of the Company's tax loss
carryforwards and tax credit carryforwards. In 1995, the income tax provision
was also reduced by $265,000 because the Company's valuation allowance was
reduced by the recognition of federal operating loss carryforwards which the
Company expects to utilize during 1996. The Company's valuation allowance
decreased $703,000 in 1995.
At December 31, 1994, the Company's valuation allowance equaled 100% of
its net deferred tax assets. (For additional information concerning income tax
expense and the utilization of tax loss carryforwards and tax credit
carryforwards, see Note 10 to the consolidated financial statements in Part II,
Item 8.)
1994 VERSUS 1993
NET SALES
A summary of the net sales of the Rubber Group and the Metals Group for
1994 and 1993 follows (dollar amounts in thousands):
<TABLE>
<CAPTION>
PERCENTAGE
1994 1993 INCREASE
---- ---- --------
<S> <C> <C> <C>
Rubber Group $46,868 $40,388 16.0%
Metals Group 41,664 34,588 20.5
------- ------- ----
$88,532 $74,976 18.1%
======= ======= ====
</TABLE>
-13-
<PAGE> 16
Approximately 77% of the $6,480,000 increase in net sales of the Rubber
Group came from increased sales of seals for primary wire-harnesses and
insulators for ignition-wire-harnesses. Increased net sales of medical
components were primarily responsible for the balance of the increase.
Net sales of the Metals Group increased by $7,076,000 in 1994, primarily
due to a $2,762,000 increase in net sales to TRW VSSI and a $2,690,000 increase
in net sales of die cast components.
COST OF SALES
A summary of cost of sales and cost of sales as a percentage of net
sales for the Rubber Group and the Metals Group for 1994 and 1993 follows
(dollar amounts in thousands):
<TABLE>
<CAPTION>
PERCENTAGE
1994 1993 INCREASE
------------------ ----------------- ----------
<S> <C> <C> <C> <C> <C>
Rubber Group $ 39,314 83.9% $ 33,280 82.4% 18.1%
Metals Group 32,320 77.6 27,413 79.3 17.9
-------- ---- -------- ---- ----
$ 71,634 80.9% $ 60,693 80.9% 18.0%
======== ==== ======== ==== ====
</TABLE>
Cost of sales of the Rubber Group as a percentage of net sales increased
from 82.4% in 1993 to 83.9% in 1994, primarily as a result of increased factory
overhead expense as a percentage of net sales. During 1994, increased factory
overhead expense included increased indirect labor expense, increased workers'
compensation expense and increased depreciation and amortization expense.
Increased factory overhead expense as a percentage of net sales was offset in
part by lower direct labor expense as a percentage of net sales resulting from
the installation of new and refurbished equipment and the introduction of
improved manufacturing processes.
Cost of sales of the Metals Group as a percentage of net sales decreased
from 79.3% in 1993 to 77.6% in 1994. During 1994, material costs and direct
labor expense as percentages of net sales were essentially unchanged, while
factory overhead expense as a percentage of net sales decreased, primarily
because sales increased while certain components of factory overhead expense
remained relatively unchanged.
SELLING AND ADMINISTRATIVE EXPENSES
A summary of selling and administrative expenses and selling and
administrative expenses as a percentage of net sales for the Rubber Group, the
Metals Group and the Corporate Office follows (dollar amounts in thousands):
<TABLE>
<CAPTION>
PERCENTAGE
1994 1993 INCREASE
------------------ ----------------- ----------
<S> <C> <C> <C> <C> <C>
Rubber Group $ 3,694 7.9% $ 3,166 7.8% 16.7%
Metals Group 3,284 7.9 2,894 8.4 13.5
Corporate Office 1,818 N/A 1,876 N/A N/A
-------- ---- -------- ---- ----
$ 8,796 9.9% $ 7,936 10.6% 10.8%
======== ==== ======== ==== ====
</TABLE>
-14-
<PAGE> 17
At the Rubber Group, selling and administrative expenses as a percentage
of net sales increased to 7.9% in 1994 compared to 7.8% in 1993, primarily as a
result of the addition of sales and administrative personnel.
At the Metals Group, selling and administrative expenses as a percentage
of net sales decreased to 7.9% in 1994, compared to 8.4% in 1993. Increased
sales of products subject to sales commissions and increased advertising costs
were more than offset by efficiencies related to increased volume.
In 1994, administrative expenses at the Corporate Office decreased by
$58,000, or 3.1%, primarily as a result of reduced legal fees. In 1993,
administrative expenses at the Corporate Office included $730,000 of expenses
recorded in connection with the Company's restructuring of its 12-3/4%
Subordinated Notes, due February 1, 1997 (the "12-3/4% Notes"), and 14% Junior
Subordinated Convertible Notes, due May 1, 2000, which were partially offset by
a credit of $215,000 resulting from the settlement of litigation.
INTEREST EXPENSE
Interest expense totaled $6,272,000 during 1994, an increase of
$776,000, compared to 1993. This increase was caused primarily by an increase
in average borrowings outstanding and increases in the Prime Rate.
OTHER INCOME
During 1994, other income consisted of a gain of $336,000 on the sale of
marketable securities and a gain of $200,000 from the sale of real estate in
connection with the settlement of litigation.
PROVISION FOR INCOME TAXES
The income tax provisions otherwise recognizable during 1994 and 1993
were reduced by the utilization of portions of the Company's tax loss
carryforwards and tax credit carryforwards. (For additional information
concerning income tax expense and the utilization of tax loss carryforwards and
tax credit carryforwards, see Note 10 to the consolidated financial statements
in Part II, Item 8.)
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARD ADOPTED DURING 1994
FINANCIAL ACCOUNTING STANDARD NO. 112
Effective January 1, 1994, the Company changed its method of accounting
for postemployment benefits, such as Company funded disability benefits, from
the cash basis (recognizing expense as benefits are paid) to the accrual method
(recognizing the estimated cost of providing such benefits as an expense while
the employee renders service) as required by "Financial Accounting Standard No.
112, Employers' Accounting for Postemployment Benefits" ("FAS 112"). The
adoption of FAS 112 did not materially affect the financial position or results
of operations of the Company because benefits of this type currently provided
by the Company are de minimis in amount.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS TO BE ADOPTED DURING 1996
FINANCIAL ACCOUNTING STANDARD NO. 121 - IMPAIRMENT OF LONG-LIVED ASSETS
In March 1995, the Financial Accounting Standards Board issued
"Financial Accounting Standard No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("FAS 121"),
which requires losses to be recorded on long-lived assets used in operations
where indicators of
-15-
<PAGE> 18
impairment are present and the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amount of such assets.
FAS 121 also addresses the accounting for long-lived assets to be disposed of.
The Company plans to adopt FAS 121 during the first quarter of 1996 and
believes that, at the time of adoption, FAS 121 will not affect the financial
position or results of operations of the Company.
FINANCIAL ACCOUNTING STANDARD NO. 123 - STOCK-BASED COMPENSATION
The Company has a Restricted Stock Award Plan and an Incentive Stock
Option Plan pursuant to which it may award to officers and key employees
restricted shares of the Company's common stock and options to purchase shares
of the Company's common stock. Awards under both plans are accounted for in
accordance with the provisions of "Accounting Principles Board Opinion Number
25, Accounting for Stock Issued to Employees" ("APB 25"). With respect to
restricted shares, the Company recognizes compensation expense on the date of
grant equal to the then market value of the Company's common stock. With
respect to options to purchase shares of common stock or shares of common stock
issued at the time options are exercised, the Company does not recognize
compensation expense.
During 1995, the Financial Accounting Standards Board issued "Financial
Accounting Standard No. 123, Accounting for Stock-Based Compensation"
("FAS 123"), which establishes new standards for the measurement and recognition
of stock-based compensation, but allows entities to continue using APB 25 to
account for the issuance of stock-based compensation if they disclose the pro
forma effect of stock-based compensation on net income and earnings per share as
if FAS 123 had been adopted. FAS 123 is effective for 1996. The Company
intends to continue using the provisions of APB 25 to account for stock-based
compensation.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS RELATING TO OPERATING ACTIVITIES
During 1995, net cash provided by the operating activities of the
Company totaled $7,860,000.
During 1995, $481,000 of cash was used to fund increased levels of
accounts receivable, resulting primarily from increased levels of sales and
orders during the fourth quarter of 1995, compared to the fourth quarter of
1994.
At December 31, 1995, the Company's trade accounts payable included
approximately $2,876,000 relating to the purchase of new property, equipment
and customer-owned tooling, compared to $4,325,000 at December 31, 1994.
Excluding accounts payable balances related to purchases of new property,
equipment and customer-owned tooling, trade accounts payable increased by
$1,588,000, from $6,164,000 at December 31, 1994 to $7,752,000 at December 31,
1995. The increase resulted from higher levels of production during the fourth
quarter of 1995, compared to the fourth quarter of 1994, and, to a lesser
extent, a temporary slowing of payments to suppliers.
Compared to December 31, 1994, accrued expenses at December 31, 1995
included increased accruals for employee compensation and related taxes and
benefits and increased accruals for alternative minimum taxes.
Net working capital declined during 1995 by $3,197,000, primarily
because capital expenditures were financed with increased short-term borrowings
under the Company's revolving line of credit (the "Revolving Line of Credit")
provided to the Company by Congress Financial Corporation ("Congress"). (For
additional information concerning the Revolving Line of Credit, see "Cash Flows
Relating to Financing Activities" in this Item 7 and Notes 5 and 6 to the
consolidated financial statements in Part II, Item 8.)
-16-
<PAGE> 19
CASH FLOWS RELATING TO INVESTING ACTIVITIES
During 1995, the investing activities of the Company used $17,997,000 of
cash, primarily for capital expenditures.
The following table sets forth capital expenditures for the Rubber
Group, the Metals Group and the Corporate Office during 1995 and 1994 (dollar
amounts in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1995 1994 Total
---- ---- -----
<S> <C> <C> <C>
Rubber Group:
Equipment $ 8,487 $ 6,537 $ 15,024
Land and buildings 4,097 2,114 6,211
----------- ---------- ----------
12,584 8,651 21,235
----------- ---------- ----------
Metals Group:
Equipment 3,384 6,622 10,006
Land and buildings 1,918 34 1,952
----------- ---------- ----------
5,302 6,656 11,958
----------- ---------- ----------
Corporate Office:
Equipment 16 12 28
Land and buildings - - -
----------- ---------- ----------
16 12 28
----------- ---------- ----------
Total Company:
Equipment 11,887 13,171 25,058
Land and buildings 6,015 2,148 8,163
----------- ---------- ----------
$ 17,902 $ 15,319 $ 33,221
=========== ========== ==========
</TABLE>
As a result of growing market share in certain market niches and
increased volume because of a healthy economy and, in particular, a strong
automotive industry, the Company commenced a major expansion plan in 1994. Net
sales increased from $74,976,000 in 1993, to $88,532,000 in 1994 and then to
$104,298,000 in 1995. Net sales for 1996 are currently projected to range
between $110,000,000 and $120,000,000. The Company estimates that
approximately $4,000,000 of capital expenditures are required annually to
maintain or replace existing equipment or to effect cost reductions and that
the balance of capital expenditures are for the expansion of facilities and the
purchase of production equipment to meet increased demand for product.
During 1995, $958,000 of funds were used to finance deferred tooling
expense. Also, during 1995, $998,000 of funds were provided by the sale of the
Extruded and Lathe-Cut Products Division of LCI.
The Company presently estimates that capital expenditures will total
approximately $13,000,000 during 1996. At December 31, 1995, the Company had
commitments outstanding for capital expenditures totaling approximately
$6,700,000. The Company anticipates that the funds needed for capital
expenditures in 1996 will be provided by cash flows from operations and from
borrowings. (See also "Liquidity" in this Item 7.)
-17-
<PAGE> 20
CASH FLOWS RELATING TO FINANCING ACTIVITIES
During 1995, the financing activities of the Company provided
$10,176,000 of cash, primarily from increased borrowings.
The Company finances its day-to-day operations through the Revolving
Line of Credit. The Company also uses the Revolving Line of Credit to fund
capital expenditures with the intention of later refinancing such borrowings
with term loans. The Company borrows and repays loans outstanding under the
Revolving Line of Credit daily, depending on cash receipts and disbursements.
The ability of the Company to borrow under the Revolving Line of Credit is
based on certain availability formulas, agreed upon by the Company and
Congress, which are based on the levels of accounts receivable and inventories
of the Company.
In addition to borrowings under the Revolving Line of Credit, in 1995,
the Company borrowed an aggregate of $15,067,000 in term loans from Congress.
Proceeds from the term loans were used to refinance loans outstanding under the
Revolving Line of Credit. Congress provides the Company with a line of credit
which can be used to finance a portion of qualifying new equipment purchases
through term loans (the "Equipment Line of Credit"). Generally, the amount of
financing available to fund new equipment purchases is equal to 85% of the
appraised orderly liquidation value of the equipment being purchased. At
December 31, 1995, the Equipment Line of Credit totaled $5,466,000.
In the first quarter of 1996, the Company obtained from Congress, The
CIT Group/Equipment Financing, Inc. and Bank One, Akron, NA ("Bank One") term
loans in the aggregate amount of $10,302,000. Proceeds from the term loans
were used to refinance $4,035,000 of term loans outstanding with Congress and
$6,267,000 of loans outstanding under the Revolving Line of Credit.
As a result of the borrowings under long-term agreements during the
first quarter of 1996, $3,730,000 of loans outstanding under the Revolving Line
of Credit were classified as long-term debt at December 31, 1995.
Also, in the first quarter of 1996, the Company borrowed $1,000,000 from
Bank One on a demand basis. The $1,000,000 loan is scheduled to be refinanced
as part of a $2,500,000 term loan to be advanced during the second quarter of
1996 (the "Bank One Commitment").
The Company's financing arrangements, which are secured by substantially
all of the Company's assets and the stock of LCI, require the Company to
maintain certain financial ratios and limit the payment of dividends.
LIQUIDITY
The Company operates with high financial leverage and limited liquidity.
During 1995, aggregate indebtedness of the Company, excluding accounts payable,
increased by $10,808,000 to $68,086,000 at December 31, 1995. As a result of
increased borrowings during the first quarter of 1996, the aggregate
indebtedness of the Company, excluding accounts payable, totaled $75,390,000 as
of March 26, 1996.
Cash interest and principal payments totaled $7,299,000 and $3,228,000,
respectively, in 1995. During 1996, cash interest and principal payments are
projected to total approximately $7,986,000 and $5,163,000, respectively.
Availability under the Revolving Line of Credit totaled $2,340,000 at
March 26, 1996. Availability under the Revolving Line of Credit is calculated
without deducting outstanding checks issued by the Company. Typically,
outstanding checks average approximately $1,500,000.
-18-
<PAGE> 21
During 1996, the Company anticipates that, in addition to its projected
cash flows from operations, borrowings in the amount of approximately
$10,400,000 will be required to meet the Company's working capital, capital
expenditure and debt service requirements. Peak borrowing requirements during
1996 of approximately $78,000,000 are projected to occur on August 1, 1996, the
scheduled payment date for $2,022,000 of interest then due on the 12-3/4%
Notes. Although no assurances can be given, based on its present business
plan, the Company currently believes that cash flows from operations and
availability under the Revolving Line of Credit, the Equipment Line of Credit,
and the Bank One Commitment should be adequate to meet its anticipated working
capital, capital expenditure and debt service requirements for 1996. If cash
flows from operations or availability under the Revolving Line of Credit, the
Equipment Line of Credit, and the Bank One Commitment fall below expectations,
the Company intends to reduce or delay its capital expenditure program and/or
to extend accounts payable balances with suppliers beyond terms which the
Company believes are customary in the industries in which it operates.
DEPENDENCE ON LARGE CUSTOMERS
During 1995, 1994 and 1993, net sales to TRW VSSI, the Company's second
largest customer, accounted for 8.1%, 13.0% and 11.8%, respectively, of the
Company's total net sales and consisted primarily of sales of a single
component. During 1995, net sales of the single component declined by
$3,978,000. The decline in sales, which occurred because of the planned
phase-out of the inflator system of which the component is a part, had an
adverse affect on the operating profit of Ness and the Company. Currently,
management of the Company believes that the component will only be in
production through June 30, 1996. The Company believes that, during 1996,
orders for new parts from TRW VSSI and other companies which supply TRW VSSI
will not offset the decrease in sales of the single component and that the
decrease will result in a significant reduction of operating profit at Ness in
1996. The Company currently believes that the reduction in operating profit at
Ness will not have a material adverse effect on the financial position or
operating profit of the Company.
ACQUISITIONS
The Company is seeking to acquire assets and businesses related to its
current operations with the intention of expanding its existing operations.
Depending on, among other things, the size and terms of such acquisitions, the
Company may be required to obtain additional financing and, in some cases, the
approval of Congress and the holders of other debt of the Company. The
Company's ability to effect acquisitions may be dependent upon its ability to
obtain such financing and, to the extent applicable, consents.
INFLATION
Many customers of the Company will not accept price increases from the
Company to compensate for increases in labor and overhead expenses that result
from inflation. To the extent practical, fluctuations in material costs are
passed through to customers. Although the Company may, in certain cases,
commit to a fixed material cost for a specified time period, generally, a
similar offsetting commitment is made to the Company by its material supplier.
To offset inflationary costs which the Company cannot pass through to its
customers and to maintain or improve its operating margins, the Company has
continually worked to improve its production efficiencies and manufacturing
processes. Although the Company believes that during the three-year period
ended December 31, 1995 inflationary increases in labor and overhead expenses
have been substantially offset as a result of its efforts, there can be no
assurance that the Company will continue to be able offset inflationary cost
increases through such measures.
-19-
<PAGE> 22
ENVIRONMENTAL MATTERS
The Company has been named from time to time as one of numerous
potentially responsible parties under applicable environmental laws for
restoration costs at waste disposal sites, as a third-party defendant
in cost recovery actions pursuant to applicable environmental laws and as a
defendant or potential defendant in various other environmental law matters.
It is the Company's policy to record accruals for such matters when a loss is
deemed probable and the amount of such loss can be reasonably estimated. The
various actions to which the Company is or may be a party in the future are at
various stages of completion and, although there can be no assurance as to the
outcome of existing or potential environmental litigation, in the event such
litigation were commenced, based upon the information currently available to
the Company, the Company believes that the outcome of such actions would not
have a material adverse effect upon its financial position.
-20-
<PAGE> 23
THIS PAGE INTENTIONALLY LEFT BLANK
-21-
<PAGE> 24
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . 23
Consolidated Balance Sheets at December 31, 1995 and 1994 . . . . . . . . . . . 24
Consolidated Statements of Income for the Years Ended
December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . 26
Consolidated Statements of Stockholders' Deficit for
the Years Ended December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . . 27
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . 28
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . 30
</TABLE>
-22-
<PAGE> 25
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Lexington Precision Corporation and Subsidiary
We have audited the accompanying consolidated balance sheets of
Lexington Precision Corporation and subsidiary at December 31, 1995 and 1994,
and the related consolidated statements of income, stockholders' deficit, and
cash flows for each of the three years in the period ended December 31, 1995.
Our audits also included the financial statement schedule listed in the table
of contents in Part IV, Item 14(a). These financial statements and schedule
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements and schedule
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Lexington Precision Corporation and subsidiary at December 31, 1995 and
1994, and the consolidated results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 1995, in
conformity with generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
ERNST & YOUNG LLP
Cleveland, Ohio
March 22, 1996
-23-
<PAGE> 26
LEXINGTON PRECISION CORPORATION
CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1995 1994
---- ----
<S> <C> <C>
ASSETS:
Current assets:
Cash $ 118 $ 79
Accounts receivable 12,959 12,478
Inventories 8,105 8,186
Prepaid expenses and other assets 2,101 2,009
Deferred income taxes 1,195 -
---------- ---------
Total current assets 24,478 22,752
---------- ---------
Property, plant and equipment:
Land 1,525 823
Buildings 17,190 12,274
Equipment 57,110 46,516
---------- ---------
75,825 59,613
Less accumulated depreciation 30,887 27,019
---------- ---------
Property, plant and equipment, net 44,938 32,594
---------- ---------
Excess of cost over net assets of businesses acquired, net 9,726 10,041
---------- ---------
Other assets, net 2,734 2,009
---------- ---------
$ 81,876 $ 67,396
========== =========
<FN>
See notes to consolidated financial statements. (Continued)
</TABLE>
-24-
<PAGE> 27
LEXINGTON PRECISION CORPORATION
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
---- ----
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIT:
Current liabilities:
Accounts payable $ 10,628 $ 10,489
Accrued expenses 6,572 6,190
Short-term debt 7,522 5,052
Current portion of long-term debt 4,531 2,599
---------- ---------
Total current liabilities 29,253 24,330
---------- ---------
Long-term debt, excluding current portion 56,033 49,627
---------- ---------
Deferred income taxes and other long-term liabilities 1,056 99
---------- ---------
Redeemable preferred stock, $100 par value,
at redemption value 1,020 1,110
Less excess of redemption value over par value 510 555
---------- ---------
Redeemable preferred stock at par value 510 555
---------- ---------
Stockholders' deficit:
Common stock, $.25 par value, 10,000,000
shares authorized, 4,348,951 shares issued 1,087 1,087
Additional paid-in-capital 12,547 12,659
Accumulated deficit (18,305) (20,593)
Cost of common stock in treasury, 120,915 and
145,915 shares, respectively (305) (368)
---------- ---------
Total stockholders' deficit (4,976) (7,215)
---------- ---------
$ 81,876 $ 67,396
========== =========
</TABLE>
See notes to consolidated financial statements.
-25-
<PAGE> 28
LEXINGTON PRECISION CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net sales $ 104,298 $ 88,532 $ 74,976
--------- --------- ---------
Costs and expenses:
Cost of sales 84,761 71,634 60,693
Selling and administrative expenses 9,880 8,796 7,936
--------- --------- ---------
Total costs and expenses 94,641 80,430 68,629
--------- --------- ---------
Income from operations 9,657 8,102 6,347
Interest expense 7,585 6,272 5,496
Other income 641 536 -
--------- --------- ---------
Income before income taxes 2,713 2,366 851
Provision for income taxes 425 34 -
--------- --------- ---------
Net income $ 2,288 $ 2,332 $ 851
========= ========= =========
Net income per primary and fully diluted
common share:
Primary $ .52 $ .53 $ .13
========= ========= =========
Fully diluted $ .49 $ .51 $ .13
========= ========= =========
</TABLE>
See notes to consolidated financial statements.
-26-
<PAGE> 29
LEXINGTON PRECISION CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN ACCUMULATED TREASURY STOCKHOLDERS'
STOCK CAPITAL DEFICIT STOCK DEFICIT
----- ------- ------- ----- -------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1993 $ 1,087 $ 13,286 $ (23,783) $ (760) $ (10,170)
Net income - - 851 - 851
Preferred stock dividends
and redemptions - (311) - - (311)
Deferred compensation expense
on restricted stock - - 7 - 7
-------- -------- --------- -------- ----------
Balance at December 31, 1993 1,087 12,975 (22,925) (760) (9,623)
Net income - - 2,332 - 2,332
Preferred stock dividends
and redemptions - (92) - - (92)
Issuance of common shares - (224) - 392 168
-------- -------- --------- -------- ----------
Balance at December 31, 1994 1,087 12,659 (20,593) (368) (7,215)
Net income - - 2,288 - 2,288
Preferred stock dividends
and redemptions - (89) - - (89)
Issuance of common shares - (23) - 63 40
-------- -------- --------- -------- ----------
Balance at December 31, 1995 $ 1,087 $ 12,547 $ (18,305) $ (305) $ (4,976)
======== ======== ========= ======== ==========
</TABLE>
See notes to consolidated financial statements.
-27-
<PAGE> 30
LEXINGTON PRECISION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 2,288 $ 2,332 $ 851
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,449 5,060 4,297
Deferred income taxes (265) - -
Gain on sale of property, plant and equipment (668) - -
Gain on sale of marketable equity securities - (336) -
Gain on sale of real estate - (200) -
Changes in operating assets and liabilities which
provided/(used) cash:
Receivables (481) (3,399) (1,672)
Inventories 81 (2,488) (348)
Prepaid expenses and other assets (92) (1,149) 529
Accounts payable 139 6,037 32
Accrued expenses 382 (110) 5,844
Other 27 210 68
--------- ----------- --------
Net cash provided by operating activities 7,860 5,957 9,601
--------- ----------- --------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (17,902) (15,319) (6,288)
Decrease/(increase) in equipment deposits, net 20 229 (575)
Proceeds from sales of property, plant and equipment 998 614 5
Proceeds from sale of marketable securities - 338 -
Additions to deferred tooling expense (958) (824) (373)
Other (155) (4) -
--------- ----------- --------
Net cash used by investing activities (17,997) (14,966) (7,231)
--------- ----------- --------
<FN>
See notes to consolidated financial statements. (Continued)
</TABLE>
-28-
<PAGE> 31
LEXINGTON PRECISION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
FINANCING ACTIVITIES:
Net increase in short-term debt $ 2,470 $ 5,052 $ 498
Proceeds from issuance of long-term debt 15,566 9,847 -
Repayment of long-term debt (7,263) (5,735) (2,421)
Redemption of preferred stock (90) (90) (270)
Preferred stock dividends (44) (47) (176)
Issuance of common stock 40 90 -
Other (503) (62) -
--------- --------- --------
Net cash provided/(used) by financing activities 10,176 9,055 (2,369)
--------- --------- --------
Net increase in cash 39 46 1
Cash at beginning of year 79 33 32
--------- -------- --------
Cash at end of year $ 118 $ 79 $ 33
========= ======== =========
Supplemental disclosure of cash flow information:
Interest paid $ 7,299 $ 9,779 $ 1,134
Income taxes paid $ 99 $ 26 $ -
Supplemental disclosure of noncash financing activities:
Accrued interest converted to long-term debt $ - $ - $ 10,525
Issuance of 100,000 shares of common stock in exchange
for investment banking services $ - $ 78 $ -
</TABLE>
See notes to consolidated financial statements.
-29-
<PAGE> 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Lexington
Precision Corporation ("LPC") and its wholly-owned subsidiary, Lexington
Components, Inc. ("LCI"). Unless the context otherwise requires all references
herein to the "Company" are to LPC and LCI. All significant intercompany
accounts and transactions have been eliminated.
USE OF ESTIMATES
The preparation of the consolidated financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
consolidated financial statements and the reported amount of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
CONCENTRATION OF CREDIT RISK
At December 31, 1995 and 1994, trade accounts receivable outstanding
from automotive customers totaled $8,357,000 and $7,904,000, respectively. The
Company provides for credit losses based upon historical experience and ongoing
credit evaluations of its customers' financial condition but does not generally
require collateral from its customers to support the extension of trade credit.
At December 31, 1995 and 1994, the Company had reserves for credit losses of
$175,000 and $174,000, respectively.
INVENTORIES
Inventories are valued at the lower of cost (first-in, first-out method)
or market. Inventory levels by principal classification are set forth below
(dollar amounts in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1994
---- ----
<S> <C> <C>
Finished goods $ 3,040 $ 2,696
Work in process 2,213 2,285
Raw materials and purchased parts 2,852 3,205
-------- --------
$ 8,105 $ 8,186
======== ========
</TABLE>
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are carried at cost less accumulated
depreciation. Depreciation is calculated principally on the straight-line
method over the estimated useful life of the various assets (15 to 32 years for
buildings and 3 to 10 years for equipment). Maintenance and repair expenses
were $3,162,000, $2,484,000 and $2,189,000 for 1995, 1994 and 1993,
respectively. Maintenance and repair expenses are charged against income as
incurred, while major improvements are capitalized. When property is retired
or otherwise disposed of, the related cost and accumulated depreciation are
eliminated.
-30-
<PAGE> 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
EXCESS OF COST OVER NET ASSETS OF BUSINESSES ACQUIRED
Excess of cost over the net assets of businesses acquired (goodwill)
is amortized on the straight-line method, principally over 40 years. At
December 31, 1995 and 1994, accumulated amortization of goodwill was $2,264,000
and $1,948,000, respectively. Amortization of goodwill is classified as part
of selling and administrative expenses. During each of 1995, 1994 and 1993,
amortization of goodwill totaled $316,000. The carrying value of goodwill is
assessed for impairment quarterly. Based upon such assessment, the Company
believes that no impairment of goodwill existed at December 31, 1995.
INCOME PER SHARE
Primary net income per common share and fully diluted net income per
common share are computed using the weighted average number of common shares
and dilutive common equivalent shares outstanding. For purposes of the income
per share calculations, income for each period is reduced by preferred stock
dividends and by the amount by which payments made to redeem shares of the
Company's $8 Cumulative Convertible Redeemable Preferred Stock, Series B (the
"Redeemable Preferred Stock"), exceed the par value of such shares. Common
equivalent shares are those shares issuable upon the assumed exercise of
outstanding dilutive stock options and conversion of Redeemable Preferred
Stock, calculated using the treasury stock method. Fully diluted income per
share assumes conversion of the 14% Junior Subordinated Convertible Notes, due
May 1, 2000 (the "14% Convertible Notes").
REPORTING OF CASH FLOWS
The Company considers all highly liquid investments with maturities at
the time of purchase of less than three months to be cash equivalents.
FINANCIAL ACCOUNTING STANDARD NO. 121 - IMPAIRMENT OF LONG-LIVED ASSETS
In March 1995, the Financial Accounting Standards Board issued
"Financial Accounting Standard No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("FAS 121"),
which requires losses to be recorded on long-lived assets used in operations
where indicators of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the carrying amount of
such assets. FAS 121 also addresses the accounting for long-lived assets to be
disposed of. The Company plans to adopt FAS 121 during the first quarter of
1996 and believes that, at the time of adoption, FAS 121 will not affect the
financial position or results of operations of the Company.
FINANCIAL ACCOUNTING STANDARD NO. 123 - STOCK-BASED COMPENSATION
The Company has a Restricted Stock Award Plan and an Incentive Stock
Option Plan pursuant to which it may award to officers and key employees
restricted shares of the Company's common stock and options to purchase shares
of the Company's common stock. Awards under both plans are accounted for in
accordance with the provisions of "Accounting Principles Board Opinion Number
25, Accounting for Stock Issued to Employees" ("APB 25"). With respect to
restricted shares, the Company recognizes compensation expense on the date of
grant equal to the then market value of the Company's common stock. With
respect to options to purchase shares of common stock or shares of common stock
issued at the time options are exercised, the Company does not recognize
compensation expense.
-31-
<PAGE> 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During 1995, the Financial Accounting Standards Board issued
"Financial Accounting Standard No. 123, Accounting for Stock-Based
Compensation" ("FAS 123"), which establishes new standards for the measurement
and recognition of stock-based compensation, but allows entities to continue
using APB 25 to account for the issuance of stock-based compensation if they
disclose the pro forma effect of stock-based compensation on net income and
earnings per share as if FAS 123 had been adopted. FAS 123 is effective for
1996. The Company intends to continue using the provisions of APB 25 to
account for stock-based compensation.
RECLASSIFICATIONS
Certain amounts in the consolidated financial statements have been
reclassified to conform to the 1995 presentation.
NOTE 2 -- PREPAID EXPENSES AND OTHER ASSETS
At December 31, 1995 and 1994, other current assets included
$1,790,000 and $1,242,000, respectively, of tooling acquired by the Company for
certain customers. Upon customer approval of the components produced from such
tooling, which normally takes less than 90 days, the customer is required to
purchase the tooling from the Company.
NOTE 3 -- OTHER NONCURRENT ASSETS
At December 31, 1995 and 1994, other noncurrent assets included
$1,481,000 and $990,000, respectively, which represented amounts paid by the
Company for tooling owned by the Company's customers in excess of the amounts
paid by the customers for such tooling. Such excess amounts are amortized over
periods not exceeding three years. During 1995 and 1994, amortization expense
related to tooling owned by customers but funded by the Company was $626,000
and $272,000, respectively.
NOTE 4 -- ACCRUED EXPENSES
Accrued expenses at December 31, 1995 and 1994 are summarized below
(dollar amounts in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1994
---- ----
<S> <C> <C>
Interest $ 1,717 $ 1,716
Employee fringe benefits 1,196 1,645
Salaries and wages 1,562 976
Taxes 1,264 755
Other 833 1,098
------- -------
$ 6,572 $ 6,190
======= =======
</TABLE>
NOTE 5 -- SHORT-TERM DEBT
At December 31, 1995 and 1994, short-term debt consisted of loans
outstanding under the revolving line of credit (the "Revolving Line of Credit")
provided to the Company by Congress Financial Corporation ("Congress"). The
Revolving Line of Credit has an expiration date of January 2, 1998. Except for
certain loans
-32-
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
which were refinanced under long-term agreements before the consolidated
financial statements were issued, the loans outstanding under the Revolving
Line of Credit have been classified as short-term debt at December 31, 1995 and
1994 because the Company's cash receipts are automatically used to reduce the
loans outstanding under the Revolving Line of Credit on a daily basis, by means
of a lock-box sweep arrangement, and Congress has the ability to modify certain
terms of the Revolving Line of Credit without the prior approval of the
Company. (See also Note 6, "Long-Term Debt.")
At December 31, 1995, 1994 and 1993, the interest rates on borrowings
under the Revolving Line of Credit were 9.1%, 10.0% and 7.5%, respectively.
NOTE 6 -- LONG-TERM DEBT
Long-term debt at December 31, 1995 and 1994 is summarized below
(dollar amounts in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1995 1994
---- -----
<S> <C> <C>
Loans outstanding under the Revolving Line of Credit $ 3,730 $ 7,267
Congress term loans, payable in monthly installments, final
maturities in 2002 or 2003 20,488 8,029
12% Note, payable in monthly installments through 2000 2,635 3,078
Industrial Revenue Bond, 75% of prime, payable in monthly
installments, final maturity in 2000 498 598
12-3/4% Senior Subordinated Notes, due 2000 31,682 31,647
14% Junior Subordinated Convertible Notes, due 2000 1,000 1,000
14% Junior Subordinated Nonconvertible Notes, due 2000 347 347
Other 184 260
--------- ---------
Total long-term debt 60,564 52,226
Less current portion 4,531 2,599
--------- ---------
Total long-term debt, excluding current portion $ 56,033 $ 49,627
========= =========
</TABLE>
LOANS OUTSTANDING UNDER THE REVOLVING LINE OF CREDIT CLASSIFIED AS
LONG-TERM DEBT
At December 31, 1995 and 1994, there were loans of $3,730,000 and
$7,267,000, respectively, outstanding under the Revolving Line of Credit which
were classified as long-term debt because the loans were refinanced under
long-term agreements before the consolidated financial statements for the
respective years were issued.
During the first quarter of 1996, the Company obtained term loans in
the aggregate amount of $10,302,000, payable in installments ranging from 48 to
84 months. Of that amount, $4,035,000 was used to refinance term loans and
$6,267,000 was used to refinance loans outstanding under the Revolving Line of
Credit. Of the latter amount, $3,730,000 was used to refinance loans that were
outstanding under the Revolving Line of Credit at December 31, 1995.
-33-
<PAGE> 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The term loans obtained during the first quarter of 1996 are payable
in monthly installments with final maturities in 2000, 2001, 2002 or 2003.
Interest on the loans is due monthly at the London Interbank Offered Rate
("LIBOR") plus 3% or 3-1/4%, Prime Rate plus 3/4% or 1%, or a fixed rate of
8.37%. The loans are secured, in the aggregate, by all receivables,
inventories and equipment, and by certain real property and other personal
property.
CONGRESS TERM LOANS
At December 31, 1995 and 1994, term loans in the aggregate amounts of
$20,488,000 and $8,029,000, respectively, were outstanding with Congress. The
loans are payable in monthly installments with final maturities in 2002 or
2003, subject to earlier maturity in the event the Revolving Line of Credit
terminates or expires. Interest on the loans is due monthly at LIBOR plus
3-1/4% or Prime Rate plus 1%. The loans are secured by all receivables and
inventories and by certain equipment, real property and other personal
property.
12% NOTE
The 12% Note, due April 30, 2000 (the "12% Note"), is payable by LCI,
is secured by a mortgage on LCI's Rock Hill, South Carolina, facility and is
guaranteed by LPC. Level payments of principal and interest in the amount of
$66,000 are due monthly until the 12% Note is paid in full.
12-3/4% NOTES
The 12-3/4% Senior Subordinated Notes, due February 1, 2000 (the
"12-3/4% Notes"), are unsecured obligations of the Company, redeemable at the
option of the Company, in whole or in part, at a declining premium over the
principal amount thereof. Interest on the 12-3/4% Notes is due semi-annually
on February 1 and August 1.
14% NOTES
The 14% Junior Subordinated Convertible Notes, due May 1, 2000, and
14% Junior Subordinated Nonconvertible Notes, due May 1, 2000 (collectively,
the "14% Notes"), are unsecured obligations of the Company and are redeemable
at the option of the Company, in whole or in part, at a declining premium over
the principal amount thereof. Interest on the 14% Notes is due quarterly on
February 1, May 1, August 1 and November 1. The 14% Convertible Notes are
convertible into 440,000 shares of the Company's common stock.
RESTRICTIVE COVENANTS
Certain of the Company's loan agreements contain covenants restricting
the Company's business and operations, including restrictions on the issuance
or assumption of additional debt, the sale of all or substantially all of the
Company's assets, the purchase of common stock, the redemption of preferred
stock and the payment of cash dividends.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company believes that, at December 31, 1995, the fair value of the
Congress term loans and the loans outstanding under the Revolving Line of
Credit approximately equaled the outstanding principal balances of such loans
because the interest rates on these loans floated at a spread over LIBOR or
Prime Rate and because the Company obtained commitments for similar loans from
lending institutions other than Congress during 1995.
-34-
<PAGE> 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The 12% Note is secured by a mortgage on the Company's manufacturing
facility located in Rock Hill, South Carolina. The Company believes that the
fair value of the 12% Note is probably between 85% and 115% of its principal
amount because, although the interest rate on the loans is probably in excess
of market rates for industrial mortgage loans, the market value of the facility
may be less than the outstanding balance of the 12% Note so that a portion of
the 12% Note may be unsecured. Depending on how unsecured the loan is
perceived to be, the rate on the note may actually be lower than market rates
and, as a result, the fair value for the loan may be less than the outstanding
principal balance.
There is a limited market for the 12-3/4% Notes. The Company believes
that, based on informal discussions with securities brokers that have traded
the 12-3/4% Notes and with buyers and sellers of the 12-3/4% Notes, that the
12-3/4% Notes traded at discounts of between 15% and 30% during 1995.
The Company believes that the 14% Nonconvertible Notes would
hypothetically trade at a discount equal to or in excess of the discount
assumed for the 12-3/4% Notes and that the 14% Convertible Notes would
hypothetically trade at around par or in excess of par because, at December 31,
1995, they were convertible at a price per common share of $2.2727, which was
9% below the last reported trade of the Company's common stock in 1995.
Fair value estimates of the Company's securities are subjective in
nature and involve uncertainties and matters of judgement and therefore cannot
be determined definitively. Any change in the market for similar securities,
the financial performance of the Company or interest rates could materially
affect the fair value of all of the Company's securities.
SCHEDULED MATURITIES OF LONG-TERM DEBT
Maturities of long-term debt for the five-year period ending December
31, 2000 and for the years thereafter are listed below (dollar amounts in
thousands):
<TABLE>
<S> <C>
1996 $ 4,531
1997 4,927
1998 4,999
1999 5,082
2000 35,385
Thereafter 5,640
-----------
$ 60,564
===========
</TABLE>
NOTE 7 -- PREFERRED STOCK
REDEEMABLE PREFERRED STOCK
Each share of $8 Cumulative Convertible Redeemable Preferred Stock,
Series B, is (1) entitled to one vote, (2) redeemable for $200 plus accumulated
and unpaid dividends, (3) convertible into 14.8148 shares of common stock
(subject to adjustment) and (4) entitled, upon voluntary or involuntary
liquidation and after payment of the debts and other liabilities of the
Company, to a liquidation preference of $200 plus accumulated and unpaid
dividends. On November 30, 1995, 450 shares of Redeemable Preferred Stock were
redeemed for $90,000. Further redemptions of $90,000 are scheduled on November
30 of each year in order to retire annually
-35-
<PAGE> 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
450 shares of Redeemable Preferred Stock. Scheduled redemptions for the years
1996 through 2000 total $450,000. For accounting purposes, when such stock is
redeemed, the redeemable preferred stock account is reduced by the $100 par
value of each share redeemed and paid-in-capital is charged for the $100 excess
of redemption value over par value of each share redeemed. Under the terms of
the Redeemable Preferred Stock, the Company may not declare any cash dividends
on its common stock if there exists a dividend arrearage on the Redeemable
Preferred Stock. During 1995, the Company paid the holders of the Redeemable
Preferred Stock regular dividends aggregating $8.00 per share.
OTHER AUTHORIZED PREFERRED STOCK
The Company's Restated Certificate of Incorporation provides that the
Company is authorized to issue 2,500 shares of 6% Cumulative Convertible
Preferred Stock, Series A, $100 par value ("Series A Preferred Stock"). At
December 31, 1995 and 1994, no shares of the Series A Preferred Stock were
issued or outstanding.
The Company's Restated Certificate of Incorporation also provides that
the Company is authorized to issue 2,500,000 shares of preferred stock having a
par value of $1 per share. At December 31, 1995 and 1994, no shares of the
preferred stock, $1 par value, were issued or outstanding.
NOTE 8 -- COMMON STOCK
COMMON STOCK, $.25 PAR VALUE
At December 31, 1995 and 1994, there were 4,228,036 and 4,203,036
shares, respectively, of the Company's common stock outstanding and 385,000 and
410,000 shares, respectively, reserved for issuance under the Company's
Restricted Stock Award Plan and Incentive Stock Option Plan.
RESTRICTED STOCK AWARD PLAN
The Company has a Restricted Stock Award Plan pursuant to which the
Company may award restricted shares of common stock to officers and key
employees. Plan participants are entitled to receive cash dividends (if any)
and to vote their respective shares. The restricted shares vest at a rate set
by the Compensation Committee of the Company's Board of Directors, which has
generally set the rate at 25% per year on each of the four anniversary dates
subsequent to the award date. Unless otherwise amended, the Restricted Stock
Award Plan expires on December 31, 2001.
During 1995, 1994 and 1993, no shares of restricted common stock were
awarded. At December 31, 1995 and 1994, 350,000 shares of common stock were
available for grant under the terms of the Restricted Stock Award Plan.
INCENTIVE STOCK OPTION PLAN
The Company has an Incentive Stock Option Plan that provides for
grants to officers and key employees of options to purchase shares of the
Company's common stock. The exercise price of an option is established by the
Compensation Committee of the Company's Board of Directors at the date of grant
at a price not less than the then market price of the Company's common stock.
During 1995, 1994 and 1993, no options were granted. At December 31, 1995,
options for 35,000 shares were outstanding and no options were available for
future grant.
-36-
<PAGE> 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Activity in the Company's Incentive Stock Option Plan for 1995 and
1994 is summarized below:
<TABLE>
<CAPTION>
OPTION PRICE
OR SHARES
PRICE RANGE UNDER OPTION
------------------- ----------------
<S> <C> <C>
Outstanding at January 1, 1994 $.625 to $1.625 125,000
Granted None
Exercised $1.625 55,000
Terminated $1.625 10,000
---------
Outstanding at December 31, 1994 $.625 to $1.625 60,000
=========
Granted None
Exercised $1.625 25,000
Terminated None
---------
Outstanding at December 31, 1995 $.625 35,000
=========
</TABLE>
At December 31, 1995 and 1994, outstanding options for 35,000 and
51,250 shares, respectively, were exercisable.
NOTE 9 -- EMPLOYEE BENEFIT PLANS
RETIREMENT AND SAVINGS PLAN
The Company maintains a Retirement and Savings Plan (the "Plan")
pursuant to Section 401 of the Internal Revenue Code (i.e., a 401(k) plan).
All employees of the Company are entitled to participate in the Plan after
meeting the eligibility requirements. Generally, employees may contribute up
to 15% of their annual compensation but not more than prescribed amounts as
established by the United States Secretary of the Treasury. Employee
contributions, up to a maximum of 6% of an employee's compensation, are matched
50% by the Company. During 1995, 1994 and 1993, provisions for Company
matching contributions totaled approximately $372,000, $339,000 and $296,000,
respectively. In addition, the Company has the option to make a profit sharing
contribution to the Plan. The size of the profit sharing contribution is set
annually at the end of each Plan year by the Company's Board of Directors.
Provisions recorded for profit sharing contributions authorized by the
Company's Board of Directors totaled $401,000, $370,000 and $334,000 during
1995, 1994 and 1993, respectively. Company contributions to the Plan vest for
a participant at a rate of 20% per year commencing in the participant's third
year of service until the participant becomes fully vested after seven years of
service.
INCENTIVE COMPENSATION PLAN
The Company has incentive compensation plans which provide for the
payment of cash bonus awards to certain officers and key employees of the
Company. The Compensation Committee of the Company's Board of Directors, which
consists of two directors who are not employees of the Company, oversees the
administration of the plans. Cash bonus awards, which are subject to the
approval of the Compensation Committee, are based upon prescribed formulae
relating to the attainment of predetermined divisional and consolidated
operating profit
-37-
<PAGE> 40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
targets and the achievement of other objectives. Accruals for bonuses totaled
$560,000, $214,000 and $386,000 during 1995, 1994 and 1993, respectively.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company maintains programs to fund certain costs related to a
prescription drug card program for retirees of one of its former divisions and
to fund insurance premiums for certain retirees of one of its divisions. At
December 31, 1995, the Company's accumulated postretirement benefit obligation
totaled $564,000. The Company is amortizing its accumulated postretirement
benefit obligation over the remaining life expectancy of the participants
(i.e., an annual rate of $57,000).
The following table presents the funded status of the postretirement
benefits at December 31, 1995, 1994 and 1993 (dollar amounts in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 500 $ 469 $ 525
Fully eligible active plan participants 16 13 16
Other active plan participants 48 39 48
-------- --------- ---------
564 521 589
Unrecognized net gain 83 156 107
Unrecognized transition obligation (521) (578) (635)
-------- --------- ---------
Accrued postretirement benefit cost $ 126 $ 99 $ 61
======== ========= =========
Net postretirement benefit cost:
Service cost $ 1 $ 1 $ 1
Interest cost 41 41 54
Net amortization and deferral 42 46 57
-------- --------- ---------
Net periodic postretirement benefit cost $ 84 $ 88 $ 112
======== ========= =========
</TABLE>
The weighted average annual assumed rate of increase in the per capita
cost of covered benefits for the prescription drug card program is 10.2% for
1996 and is assumed to decrease gradually to 6.45% in 2005. Changing the
assumed rate of increase in the prescription drug cost by one percentage point
in each year would not have a significant effect on the accumulated
postretirement benefit obligation. The Company's program to fund certain
insurance premiums for retirees of one of its divisions has a defined dollar
benefit and is therefore unaffected by increases in health care costs. The
weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.25% and 8.25% at December 31, 1995 and
1994, respectively. The change in the discount rate at December 31, 1995
reflects lower prevailing interest rates.
-38-
<PAGE> 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 -- INCOME TAXES
The following table reflects the deferred tax assets and the deferred
tax liabilities of the Company at December 31, 1995 and 1994 (dollar amounts in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1994
---- ----
<S> <C> <C>
Deferred tax assets:
Tax carryforwards:
Federal operating loss carryforwards $ 2,510 $ 2,829
State operating loss carryforwards 643 456
Capital loss carryforwards 2,177 2,313
Federal alternative minimum taxes 623 46
Investment tax credit carryforwards 232 341
Other tax credit carryforwards 81 81
--------- ---------
Total tax carryforwards 6,266 6,066
Asset loss reserves 223 254
Tax inventory over book 332 375
Deferred compensation liabilities 63 111
Vacation accruals 53 168
Non-economic performance accruals 224 179
Deferred financing costs 112 58
Other 11 10
--------- ---------
Total deferred tax assets 7,284 7,221
Valuation allowance (5,059) (5,762)
--------- ---------
Net deferred tax assets 2,225 1,459
Deferred tax liabilities -- tax over book depreciation 1,960 1,459
--------- ---------
Net deferred taxes $ 265 $ -
========= =========
</TABLE>
At December 31, 1995, the Company's valuation allowance was adjusted to
recognize the change in the Company's deferred tax assets and deferred tax
liabilities and the federal operating loss carryforwards which the Company
expects to utilize in 1996. The Company's valuation allowance decreased by
$703,000 in 1995. At December 31, 1994, the Company's valuation allowance
equaled 100% of its net deferred tax assets.
At December 31, 1995, the Company had net operating loss carryforwards
for federal income tax purposes of $7,381,000 that expire in the years 2004
through 2007. Capital loss carryforwards for federal income tax purposes
totaled $6,402,000 at December 31, 1995 and expire in 1996. For purposes of
the federal alternative minimum tax, the Company essentially utilized all of
its alternative minimum tax operating loss carryforwards during 1994.
-39-
<PAGE> 42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The income tax provision consisted of the following for 1995, 1994 and
1993 (dollar amounts in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Current:
Federal $ 537 $ 34 $ -
State and local 153 - -
----- ----- -----
690 34 -
Deferred:
Federal (265) - -
----- ----- -----
$ 425 $ 34 $ -
===== ===== =====
</TABLE>
Reconciliations of the federal statutory income tax rate to the
Company's effective income tax rate for 1995, 1994 and 1993 are summarized
below:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Statutory federal income tax rate 34.0% 34.0% 34.0%
Change in valuation allowance (25.9) (38.9) (51.0)
Goodwill 3.9 4.5 12.6
State taxes, net of federal benefit 3.6 - -
Other .1 1.8 4.4
----- ----- -----
Effective income tax rate 15.7% 1.4% - %
===== ===== =====
</TABLE>
NOTE 11 -- INDUSTRY SEGMENTS
Through its two business segments, the Rubber Group and the Metals
Group, the Company manufactures, to customer specifications, rubber and metal
components. The Rubber Group manufactures silicone and organic rubber
components used primarily by manufacturers of automobiles, automotive
replacement parts and medical devices. The Metals Group manufactures metal
components used primarily by manufacturers of automobiles, industrial
equipment, computers, office equipment and home appliances.
During 1995, 1994 and 1993, net sales to automotive industry customers
totaled $68,083,000, $53,005,000 and $45,223,000, respectively, which
represented 65.3%, 59.9% and 60.3%, respectively, of the Company's total net
sales. The Company's three largest customers accounted for 37.4%, 39.7% and
39.2% of net sales during the same respective periods. One customer of the
Company's Rubber Group accounted for 22.5%, 20.6% and 22.3% of the Company's
total net sales during the same respective periods. In addition, one customer
of the Metals Group accounted for 8.1%, 13.0% and 11.8% of the Company's total
net sales during such respective periods. Loss of a significant amount of
business from the Company's three largest customers, as a group, would have a
material adverse effect on the Company's business.
-40-
<PAGE> 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Information relating to the Company's industry segments for 1995, 1994
and 1993 is summarized below (dollar amounts in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
NET SALES:
Rubber Group $ 62,302 $ 46,868 $ 40,388
Metals Group 41,996 41,664 34,588
--------- --------- ---------
Total net sales $ 104,298 $ 88,532 $ 74,976
========= ========= =========
INCOME FROM OPERATIONS:
Rubber Group $ 7,504 $ 3,860 $ 3,942
Metals Group 4,146 6,060 4,281
--------- --------- ---------
Subtotal 11,650 9,920 8,223
Corporate expense (1,993) (1,818) (1,876)
--------- --------- ---------
Total income from operations $ 9,657 $ 8,102 $ 6,347
========= ========= =========
IDENTIFIABLE ASSETS:
Rubber Group $ 52,288 $ 42,013 $ 31,986
Metals Group 28,479 25,025 17,531
--------- --------- ---------
Subtotal 80,767 67,038 49,517
Corporate 1,109 358 466
--------- --------- ---------
Total identifiable assets $ 81,876 $ 67,396 $ 49,983
========= ========= =========
DEPRECIATION AND AMORTIZATION EXPENSE:
Rubber Group $ 4,106 $ 3,316 $ 2,440
Metals Group 2,045 1,510 1,602
--------- --------- ---------
Subtotal 6,151 4,826 4,042
Corporate 298 234 255
--------- --------- ---------
Total depreciation and amortization expense $ 6,449 $ 5,060 $ 4,297
========= ========= =========
CAPITAL EXPENDITURES:
Rubber Group $ 12,584 $ 8,651 $ 5,046
Metals Group 5,302 6,656 1,225
--------- --------- ---------
Subtotal 17,886 15,307 6,271
Corporate 16 12 17
--------- --------- ---------
Total capital expenditures $ 17,902 $ 15,319 $ 6,288
========= ========= =========
</TABLE>
-41-
<PAGE> 44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 -- INCOME PER SHARE
The calculation of primary net income per share and fully diluted net
income per share for 1995, 1994 and 1993 are set forth below (dollar amounts in
thousands, except per share amounts):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
PRIMARY NET INCOME PER COMMON SHARE:
Weighted average common shares outstanding during period 4,219 4,186 4,048
Common equivalent shares - incentive stock options 26 23 -
--------- -------- --------
Weighted average common and common equivalent shares 4,245 4,209 4,048
========= ======== ========
Net income $ 2,288 $ 2,332 $ 851
Preferred stock dividends (44) (47) (176)
Pro rata portion of the excess of the redemption cost over
the value of preferred stock redeemed (45) (45) (135)
--------- -------- --------
Income for primary net income per common share $ 2,199 $ 2,240 $ 540
========= ======== ========
Primary net income per common share $ .52 $ .53 $ .13
========= ======== ========
FULLY DILUTED NET INCOME PER COMMON SHARE:
Weighted average common shares outstanding during period 4,228 4,203 4,048
Pro forma conversion of 14% Convertible Notes 440 440 440
Common equivalent shares - incentive stock options 26 23 -
--------- -------- --------
Weighted average common and common equivalent shares 4,694 4,666 4,488
========= ======== ========
Net income $ 2,288 $ 2,332 $ 851
Preferred stock dividends (44) (47) (176)
Pro rata portion of the excess of the redemption cost over
the value of preferred stock redeemed (45) (45) (135)
Pro forma elimination of interest expense on the
14% Convertible Notes, net of applicable income taxes 104 140 140
--------- -------- --------
Income for fully diluted net income per common share $ 2,303 $ 2,380 $ 680
========= ======== ========
Fully diluted net income per common share $ .49 $ .51 $ .13
========= ======== ========
</TABLE>
The calculation of fully diluted net income per common share for 1993 is
antidilutive, therefore, fully diluted net income per common share for 1993 is
equal to the primary net income per share.
-42-
<PAGE> 45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 -- COMMITMENTS AND CONTINGENCIES
LEASES
The Company is lessee under various leases relating to buildings and
equipment. Total rent expense under operating leases aggregated $269,000,
$177,000 and $89,000 for 1995, 1994 and 1993, respectively. At December 31,
1995, future minimum lease commitments under non-cancelable operating leases
were not significant for any year or in the aggregate.
LEGAL ACTIONS
The Company is subject to various claims and legal proceedings covering
a wide range of matters that arise in the ordinary course of its business
activities, including actions naming the Company as a potentially responsible
party or a third-party defendant, along with other companies, for certain waste
disposal sites. Each of these matters is subject to various uncertainties, and
it is possible that some of these matters may be decided unfavorably to the
Company. Management believes that any liability that may ultimately result
from the resolution of these matters will not have a material adverse effect on
the financial position of the Company.
NOTE 14 -- RELATED PARTIES
The Chairman of the Board and the President of the Company are the two
largest holders of the Company's common stock, are the holders of the 14% Notes
and beneficially own $200,000 principal amount of the 12-3/4% Notes. In
addition, the Chairman of the Board and certain of his affiliates hold an
aggregate of $1,300,000 principal amount of the 12-3/4% Notes.
The Chairman of the Board and the President of the Company are partners
of an investment banking firm which was retained by the Company to provide
management and investment banking services through December 31, 1995, for an
annual fee of $400,000. Additionally, the firm may receive incentive
compensation tied to the Company's operating performance and other compensation
for specific transactions completed by the Company with the assistance of the
firm. The Company also has agreed to reimburse the firm for certain expenses.
During 1995, the Company paid the firm aggregate fees of $600,000 and
reimbursed it for direct and indirect expenses of $97,000. During 1994, the
Company paid the firm aggregate fees of $678,000 and reimbursed it for direct
and indirect expenses of $135,000. During 1993, the Company paid the firm
aggregate fees of $300,000 and reimbursed it for indirect expenses of $50,000.
The Secretary of the Company, who is also a member of the Company's
Board of Directors, is a stockholder of a professional corporation which is a
partner in a law firm which serves as general counsel to the Company. During
1995, 1994 and 1993, the Company made payments to the law firm for legal
services in the amounts of $371,000, $364,000 and $383,000, respectively.
A member of the Board of Directors of the Company is a member of the
board of directors of an insurance brokerage firm which specializes in
brokering commercial, life and accident insurance coverage and providing third
party administration of health claims. After competitive bidding, the Company
has from time to time secured large portions of its insurance coverage through
this firm and purchased third party administrative services from this firm.
During 1995, 1994 and 1993, the Company made cash payments to the brokerage
firm for insurance premiums, including commissions thereon, of $798,000,
$1,319,000 and $1,518,000, respectively,
-43-
<PAGE> 46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
and for administrative fees for services performed in connection with the
administration of the Company's hospital and medical plans of $88,000, $70,000
and $76,000, respectively.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
-44-
<PAGE> 47
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by Item 10 is incorporated by reference to the
Company's proxy statement to be issued in connection with its 1996 Annual
Meeting of Stockholders and to be filed with the Commission not later than 120
days after December 31, 1995.
ITEM 11. EXECUTIVE COMPENSATION
Information required by Item 11 is incorporated by reference to the
Company's proxy statement to be issued in connection with its 1996 Annual
Meeting of Stockholders and to be filed with the Commission not later than 120
days after December 31, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information required by Item 12 is incorporated by reference to the
Company's proxy statement to be issued in connection with its 1996 Annual
Meeting of Stockholders and to be filed with the Commission not later than 120
days after December 31, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by Item 13 is incorporated by reference to the
Company's proxy statement to be issued in connection with its 1996 Annual
Meeting of Stockholders and to be filed with the Commission not later than 120
days after December 31, 1995.
-45-
<PAGE> 48
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) 1. FINANCIAL STATEMENTS
The consolidated financial statements of Lexington Precision
Corporation ("LPC") and its wholly owned subsidiary, Lexington
Components, Inc. ("LCI"), are included in Part II, Item 8.
2. FINANCIAL STATEMENT SCHEDULES
Schedule II, Valuation and Qualifying Accounts and Reserves,
is included in this Part IV, Item 14, on page 53. All other
schedules are omitted because the required information is not
applicable, not material or included in the consolidated
financial statements or notes thereto.
3. EXHIBITS
<TABLE>
<S> <C>
3-1 Articles of Incorporation and Restatement thereof
3-2 By-Laws, as amended
3-3 Certificate of Correction dated September 21, 1976
3-4 Certificate of Ownership and Merger dated May 24, 1977
3-5 Certificate of Ownership and Merger dated May 31, 1977
3-6 Certificate of Reduction of Capital dated December 30, 1977
3-7 Certificate of Retirement of Preferred Shares dated December 30, 1977
3-8 Certificate of Reduction of Capital dated December 28, 1978
3-9 Certificate of Retirement of Preferred Shares dated December 28, 1978
3-10 Certificate of Reduction of Capital dated January 9, 1979
3-11 Certificate of Reduction of Capital dated December 20, 1979
3-12 Certificate of Retirement of Preferred Shares dated December 20, 1979
3-13 Certificate of Reduction of Capital dated December 16, 1982
3-14 Certificate of Reduction of Capital dated December 17, 1982
</TABLE>
-46-
<PAGE> 49
<TABLE>
<S> <C>
3-15 Certificate of Amendment of Restated Certificate of Incorporation dated September 26,
1984
3-16 Certificate of Retirement of Stock dated September 24, 1986
3-17 Certificate of Amendment of Restated Certificate of Incorporation dated November 21,
1986
3-18 Certificate of Retirement of Stock dated January 15, 1987
3-19 Certificate of Retirement of Stock dated February 22, 1988
3-20 Certificate of Amendment of Restated Certificate of Incorporation dated
January 6, 1989
3-21 Certificate of Retirement of Stock dated August 17, 1989
3-22 Certificate of Retirement of Stock dated January 9, 1990
3-23 Certificate of the Designations, Preferences and Relative Participating, Optional
and Other Special Rights of 12% Cumulative Convertible Exchangeable Preferred
Stock, Series C and the Qualifications, Limitations and Restrictions thereof dated
January 10, 1990
3-24 Certificate of Ownership and Merger dated April 25, 1990
3-25 Certificate of Elimination of 12% Cumulative Convertible Exchangeable Preferred
Stock, Series C, dated June 4, 1990
3-26 Certificate of Retirement of Stock dated March 6, 1991
3-27 Certificate of Retirement of Stock dated April 29, 1994
3-28 Certificate of Retirement of Stock dated January 6, 1995
3-29 Certificate of Retirement of Stock dated January 5, 1996
4-1 Certificate of Designations, Preferences, Rights and Number of Shares of Preferred
Stock, Series B
4-2 Purchase Agreement dated as of February 7, 1985 between LPC and L&D Precision
Limited Partnership ("L&D Precision") and exhibits thereto
4-3 Amendment Agreement dated as of April 27, 1990 between LPC and L&D Precision
with respect to Purchase Agreement dated as of February 7, 1985
4-4 Recapitalization Agreement dated as of April 27, 1990 between LPC and L&D Woolens
Limited Partnership ("L&D Woolens") and exhibits thereto
</TABLE>
-47-
<PAGE> 50
<TABLE>
<S> <C>
4-5 Specimen of Junior Subordinated Convertible Increasing Rate Note, due May 1, 2000
4-6 Specimen of 14% Junior Subordinated Note, due May 1, 2000
4-7 Indenture dated as of August 1, 1993 between LPC and IBJ Schroder Bank & Trust
Company, as Trustee
4-8 Specimen of 12-3/4% Senior Subordinated Note, due February 1, 2000
10-1 Purchase Agreement dated as of February 7, 1985 between LPC and L&D Precision
and exhibits thereto
10-2 Amendment Agreement dated as of April 27, 1990 between LPC and L&D Precision
with respect to Purchase Agreement dated as of February 7, 1985
10-3 *Lexington Precision Corporation Flexible Compensation Plan, as amended
10-4 *1983 Incentive Stock Option Plan, as amended
10-5 *1986 Restricted Stock Award Plan, as amended
10-6 *Lexington Precision Corporation Retirement & Savings Plan, as amended
10-7 *Description of 1995 Compensation Arrangements with Lubin, Delano, & Company
10-8 *Corporate Office 1995 Management Cash Bonus Plan
10-9 Lease Agreement dated as of December 1, 1985 between the County of Monroe
Industrial Development Agency and LPC
10-10 Consent and Amendment Letter Agreement between Chemical Bank of New Jersey
and LPC dated as of December 29, 1993
10-11 Promissory Note dated November 30, 1988 of LCI payable to the order of Paul H. Pennell
in the original principal amount of $3,530,000
10-12 Guaranty dated as of November 30, 1988 from LPC to Paul H. Pennell
10-13 Amendment Agreement dated as of November 30, 1991 between LCI and Paul H.
Pennell
10-14 Release and Notice Agreement dated as of March 31, 1993 between LCI and Paul
H. Pennell
10-15 Standstill Agreement dated as of November 2, 1988 between Atlas Corporation and
LPC
10-16 Recapitalization Agreement dated as of April 27, 1990 between LPC and L&D Woolens
and exhibits thereto
</TABLE>
-48-
<PAGE> 51
<TABLE>
<S> <C>
10-17 Accounts Financing Agreement [Security Agreement] dated as of January 11, 1990
between Congress Financial Corporation ("Congress") and LPC
10-18 Accounts Financing Agreement [Security Agreement] dated as of January 11, 1990
between Congress and LCI
10-19 Covenants Supplement to Accounts Financing Agreement [Security Agreement] dated
as of January 11, 1990 between Congress and LPC
10-20 Covenants Supplement to Accounts Financing Agreement [Security Agreement] dated
as of January 11, 1990 between Congress and LCI
10-21 Letter dated April 11, 1990 from LPC and Wise Die Casting, Inc. to Congress
10-22 Letter Agreement dated February 28, 1991 between LPC and Congress amending
certain financing agreements and consent thereto of LCI
10-23 Letter Agreement dated February 28, 1991 between LCI and Congress amending
certain financing agreements and consent thereto of LPC
10-24 Letter Agreement dated January 14, 1994 between LPC and Congress amending
certain financing agreements and consent thereto of LCI
10-25 Letter Agreement dated January 14, 1994 between LCI and Congress amending
certain financing agreements and consent thereto of LPC
10-26 Letter Agreement dated March 25, 1994 between Congress and LPC and consent thereto
of LCI
10-27 Letter Agreement dated March 25, 1994 between Congress and LCI and consent
thereto of LPC
10-28 Letter Agreement dated as of August 1, 1994 between LPC and Congress amending
certain financing agreements and consent thereto of LCI
10-29 Letter Agreement dated as of August 1, 1994 between LCI and Congress amending
certain financing agreements and consent thereto of LPC
10-30 Trade Financing Agreement Supplement to Accounts Financing Agreement [Security
Agreement] dated as of July 19, 1994 between LPC and Congress
10-31 Letter Agreement dated January 13, 1995 between LCI and Congress amending
certain financing agreements and consent thereto of LPC
10-32 Term Promissory Note dated January 13, 1995 from LCI in favor of Congress
10-33 Letter Agreement dated January 31, 1995 between LPC and Congress amending certain
financing agreements and consent thereto of LCI
</TABLE>
-49-
<PAGE> 52
<TABLE>
<S> <C>
10-34 Second Amended and Restated Promissory Note dated January 31, 1995 from LPC in
favor of Congress
10-35 Letter Agreement dated January 31, 1995 between LCI and Congress amending
certain financing agreements and consent thereto of LPC
10-36 Second Amended and Restated Promissory Note dated January 31, 1995 from LCI
in favor of Congress
10-37 Term Promissory Note dated April 26, 1995 from LCI in favor of Congress
10-38 Equipment Term Note dated June 26, 1995 from LCI in favor of Congress
10-39 Amendment to Financing Agreements dated August 1, 1995 from LPC in favor of
Congress
10-40 Amendment to Financing Agreements dated August 1,1995 from LCI in favor of
Congress
10-41 Term Note dated September 13, 1995 from LPC in favor of Congress
10-42 Term Note dated September 13, 1995 from LCI in favor of Congress
10-43 Term Note dated October 11, 1995 from LPC in favor of Congress
10-44 Term Note dated October 11, 1995 from LCI in favor of Congress
10-45 Term Promissory Note dated August 1, 1995 from LPC in favor of Congress
10-46 Term Promissory Note dated August 1, 1995 from LCI in favor of Congress
10-47 New Equipment Term Note dated December 15, 1995 from LPC in favor of Congress
10-48 New Equipment Term Note dated December 15, 1995 from LCI in favor of Congress
10-49 Amendment to Financing Agreements dated January 16, 1996 from LPC in favor of
Congress
10-50 Term Promissory Note dated January 16, 1996 in the amount of $375,000 from
LPC in favor of Congress
10-51 Term Promissory Note dated January 16, 1996 in the amount of $450,000 from
LPC in favor of Congress
10-52 Promissory Note dated January 17, 1996 from LPC in favor of The CIT
Group/Equipment Financing, Inc. ("CIT")
</TABLE>
-50-
<PAGE> 53
<TABLE>
<S> <C>
10-53 Loan and Security Agreement and Rider A to Loan and Security Agreement dated
January 17, 1996 from LPC in favor of CIT
10-54 Amendment No. 1 to Loan and Security Agreement dated February 29, 1996 from
LPC in favor of CIT
10-55 Promissory Note dated March 1, 1996 from LPC in favor of CIT
10-56 New Equipment Term Note dated March 15, 1996 from LCI in favor of Congress
10-57 Promissory Note (Demand Loan) dated March 14, 1996 from LPC in favor of Bank
One, Akron, NA ("Bank One")
10-58 Credit Facility and Security Agreement and Rider A to Credit Facility and Security
Agreement dated March 14, 1996 from LPC and LCI in favor of Bank One
10-59 Promissory Note (Vienna Term Loan) dated March 14, 1996 from LCI in favor of Bank
One
10-60 Cognovit Guarantee of LPC dated March 14, 1996 in favor of Bank One
10-61 Cognovit Guarantee of LCI dated March 14, 1996 in favor of Bank One
10-62 Letter Agreement re: Amendment to Financing Agreements and Consent dated
February 28, 1996 from LPC in favor of Congress
10-63 Amendment to Financing Agreements and Consent dated March 14, 1996 from
LPC in favor of Congress
10-64 Amendment to Financing Agreements and Consent dated March 14, 1996 from
LCI in favor of Congress
10-65 Promissory Note (Equipment Term Loan) dated March 27, 1996 from LPC in favor of
Bank One
21-1 Subsidiary of Registrant
23-1 Consent of Ernst & Young LLP
27-1 **Financial Data Schedule
</TABLE>
[FN]
* Indicates a management contract or compensatory plan or
arrangement required to be filed as an exhibit pursuant to Item
14(a)(3).
** Not deemed filed for purposes of Section 11 of the Securities
Act of 1933, Section 18 of the Securities Exchange Act of 1934
and Section 323 of the Trust Indenture Act of 1939, or
otherwise subject to the liabilities of such sections and not
deemed part of any regulation statement to which such exhibit
relates.
-51-
<PAGE> 54
Note: Pursuant to section (b)(4)(iii) of item 601 of
Regulation S-K, the Company agrees to furnish to the Securities
and Exchange Commission upon request documents defining the
rights of other holders of long-term debt.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended
December 31, 1996.
-52-
<PAGE> 55
LEXINGTON PRECISION CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO DEDUCTIONS BALANCE
BEGINNING COSTS AND FROM AT END
OF PERIOD EXPENSES RESERVES OF PERIOD
---------- -------- -------- ---------
<S> <C> <C> <C> <C>
ALLOWANCE FOR
DOUBTFUL ACCOUNTS
-----------------
Year ended December 31, 1995 $ 174 $ 1 $ - $ 175
Year ended December 31, 1994 159 20 5 174
Year ended December 31, 1993 181 25 47 159
INVENTORY RESERVES
------------------
Year ended December 31, 1995 $ 367 $ 49 $ 42 $ 374
Year ended December 31, 1994 337 92 62 367
Year ended December 31, 1993 281 57 1 337
</TABLE>
-53-
<PAGE> 56
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
LEXINGTON PRECISION CORPORATION
(Registrant)
By: /s/ Warren Delano
----------------------------------
Warren Delano, President
March 28, 1996
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 28, 1996:
PRINCIPAL EXECUTIVE OFFICERS:
/s/ Michael A. Lubin
- -----------------------------------------
Michael A. Lubin, Chairman of the Board
/s/ Warren Delano
- -----------------------------------------
Warren Delano, President and Director
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:
/s/ Dennis J. Welhouse
- -----------------------------------------
Dennis J. Welhouse, Senior Vice President
and Chief Financial Officer
DIRECTORS:
/s/ William B. Conner
- -----------------------------------------
William B. Conner, Director
/s/ Kenneth I. Greenstein
- -----------------------------------------
Kenneth I. Greenstein, Secretary and
Director
/s/ Arnold W. MacAlonan
- -----------------------------------------
Arnold W. MacAlonan, Director
/s/ Phillips E. Patton
- -----------------------------------------
Phillips E. Patton, Director
-54-
<PAGE> 57
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Location
- ------ ------- --------
<S> <C> <C>
3-1 Articles of Incorporation and Restatement Incorporated by reference from Exhibit 3-1 to the
thereof Company's Form 10-K for the year ended May 31, 1981
located under Securities and Exchange Commission File
No. 0-3252 ("1981 10-K")
3-2 By-laws, as amended Incorporated by reference from Exhibit 3-2 to the
Company's Form 10-K for the year ended December 31,
1991 located under Securities and Exchange Commission
File No. 0-3252 ("1991 10-K")
3-3 Certificate of Correction dated Incorporated by reference from Exhibit 3-3 to the
September 21, 1976 Company's Form 10-K for the year ended May 31, 1983
located under Securities and Exchange Commission File
No. 0-3252 ("1983 10-K")
3-4 Certificate of Ownership and Merger dated Incorporated by reference from Exhibit 3-4 to
May 24, 1977 1983 10-K
3-5 Certificate of Ownership and Merger dated Incorporated by reference from Exhibit 3-5 to
May 31, 1977 1983 10-K
3-6 Certificate of Reduction of Capital dated Incorporated by reference from Exhibit 3-6 to
December 30, 1977 1983 10-K
3-7 Certificate of Retirement of Preferred Incorporated by reference from Exhibit 3-7 to
Shares dated December 30, 1977 1983 10-K
3-8 Certificate of Reduction of Capital dated Incorporated by reference from Exhibit 3-8 to
December 28, 1978 1983 10-K
3-9 Certificate of Retirement of Preferred Incorporated by reference from Exhibit 3-9 to
Shares dated December 28, 1978 1983 10-K
3-10 Certificate of Reduction of Capital dated Incorporated by reference from Exhibit 3-10 to 1983
January 9, 1979 10-K
3-11 Certificate of Reduction of Capital dated Incorporated by reference from Exhibit 3-11 to 1983
December 20, 1979 10-K
3-12 Certificate of Retirement of Preferred Incorporated by reference from Exhibit 3-12 to 1983
Shares dated December 20, 1979 10-K
3-13 Certificate of Reduction of Capital dated Incorporated by reference from Exhibit 3-13 to 1983
December 16, 1982 10-K
3-14 Certificate of Reduction of Capital dated Incorporated by reference from Exhibit 3-14 to 1983
December 17, 1982 10-K
</TABLE>
<PAGE> 58
- 2 -
<TABLE>
<S> <C> <C>
3-15 Certificate of Amendment of Restated Incorporated by reference from Exhibit 3-15 to the
Certificate of Incorporation dated September Company's Form 10-K for the year ended May 31, 1985
26, 1984 located under Securities and Exchange Commission File
No. 0-3252
3-16 Certificate of Retirement of Stock dated Incorporated by reference from Exhibit 4-3 to the
September 24, 1986 Company's Registration Statement on Form S-2 located
under Securities and Exchange Commission File No.
33-9380 ("1933 Act Registration Statement")
3-17 Certificate of Amendment of Restated Incorporated by reference from Exhibit 3-17 to the
Certificate of Incorporation dated Company's Form 10-K for the year ended May 31, 1987
November 21, 1986 located under Securities and Exchange Commission File
No. 0-3252
3-18 Certificate of Retirement of Stock dated Incorporated by reference from Exhibit 4-5 to Amendment
January 15, 1987 No. 1 to 1933 Act Registration Statement
3-19 Certificate of Retirement of Stock dated Incorporated by reference from Exhibit 3-19 to the
February 22, 1988 Company's Form 10-K for the year ended May 31, 1989
located under Securities and Exchange Commission File
No. 0-3252 ("May 31, 1989 10-K")
3-20 Certificate of Amendment of Restated Incorporated by reference from Exhibit 3-20 to May 31,
Certificate of Incorporation dated 1989 10-K
January 6, 1989
3-21 Certificate of Retirement of Stock dated Incorporated by reference from Exhibit 3-21 to May 31,
August 17, 1989 1989 10-K
3-22 Certificate of Retirement of Stock dated Incorporated by reference from Exhibit 3-22 to the
January 9, 1990 Company's Form 10-K for the seven months ended December
31, 1989 located under Securities and Exchange
Commission File No. 0-3252 ("December 31, 1989 10-K")
3-23 Certificate of the Designations, Preferences Incorporated by reference from Exhibit 3-1 to the
and Relative Participating, Optional and Company's Form 10-Q for the quarter ended November 30,
Other Special Rights of 12% Cumulative 1989 located under Securities and Exchange Commission
Convertible Exchangeable Preferred Stock, File No. 0-3252 ("November 30, 1989 10-Q")
Series C and the Qualifications, Limitations
and Restrictions thereof dated January 10,
1990
3-24 Certificate of Ownership and Merger dated Incorporated by reference from Exhibit 3-24 to December
April 25, 1990 31, 1989 10-K
</TABLE>
<PAGE> 59
- 3 -
<TABLE>
<S> <C> <C>
3-25 Certificate of Elimination of 12% Cumulative Incorporated by reference from Exhibit 3-25 to the
Convertible Exchangeable Preferred Stock, Company's Form 10-K for the year ended December 31,
Series C, dated June 4, 1990 1990 located under Securities and Exchange Commission
File No. 0-3252 ("1990 10-K")
3-26 Certificate of Retirement of Stock dated Incorporated by reference from Exhibit 3-26 to 1990
March 6, 1991 10-K
3-27 Certificate of Retirement of Stock dated Incorporated by reference from Exhibit 3-27 to 1994
April 29, 1994 10-K
3-28 Certificate of Retirement of Stock dated Incorporated by reference from Exhibit 3-28 to 1994
January 6, 1995 10-K
3-29 Certificate of Retirement of Stock dated Filed with this Form 10-K
January 5, 1996
4-1 Certificate of Designations, Preferences, Incorporated by reference from Exhibit 3-3 to 1981 10-K
Rights and Number of Shares of Preferred
Stock, Series B
4-2 Purchase Agreement dated as of February 7, Incorporated by reference from Exhibit 4-1 to the
1985 between the Company and L&D Precision Company's Form 8-K dated February 7, 1985 (date of
Limited Partnership ("L&D Precision") and earliest event reported) located under Securities and
exhibits thereto Exchange Commission File No. 0-3252
4-3 Amendment Agreement dated as of April 27, Incorporated by reference from Exhibit 10-2 to 1990 10-K
1990 between the Company and L&D Precision
with respect to Purchase Agreement dated as
of February 7, 1985
4-4 Recapitalization Agreement dated as of Incorporated by reference from Exhibit 4-10 to December
April 27, 1990 between the Company and 31, 1989 10-K
Woolens and exhibits thereto
4-5 Specimen of Junior Subordinated Convertible Incorporated by reference from Exhibit 4-11 to December
Increasing Rate Note Due May 1, 2000 31, 1989 10-K
4-6 Specimen of 14% Junior Subordinated Note due Included in Exhibit 4-6 hereto
May 1, 2000
4-7 Indenture dated as of August 1, 1993 between Incorporated by reference from Exhibit 4-2 to the
the Company and IBJ Schroder Bank & Trust Company's Form 8-K dated January 18, 1994 (date of
Company, as Trustee earliest event reported) located under Securities and
Exchange Commission File No. 0-3252
4-8 Specimen of 12-3/4% Senior Subordinated Note Included in Exhibit 4-8 hereto
due February 1, 2000
</TABLE>
<PAGE> 60
- 4 -
<TABLE>
<S> <C> <C>
10-1 Purchase Agreement dated as of February 7, See Exhibit 4-2 hereto
1985 between the Company and L&D Precision
and exhibits thereto
10-2 Amendment Agreement dated as of April 27, See Exhibit 4-3 hereto
1990 between the Company and L&D Precision
with respect to Purchase Agreement dated as
of February 7, 1985
10-3 Lexington Precision Corporation Flexible Incorporated by reference from Exhibit 10-3 to 1991 10-K
Compensation Plan, as amended
10-4 1983 Incentive Stock Option Plan, as amended Incorporated by reference from Exhibit 10-37 to
December 31, 1989 10-K
10-5 1986 Restricted Stock Award Plan, as amended Incorporated by reference from Exhibit 10-38 to
December 31, 1989 10-K
10-6 Lexington Precision Corporation Retirement Incorporated by reference from Exhibit 10-9 to 1991 10-K
and Savings Plan, as amended
10-7 Description of 1995 Compensation Filed with this Form 10-K
Arrangements with Lubin, Delano & Company
10-8 Lexington Precision Corporate Office 1995 Incorporated by reference from Exhibit 10-9 to 1994 10-K
Management Cash Bonus Plan
10-9 Lease Agreement dated as of December 1, 1985 Incorporated by reference from Exhibit 10-22 to the
between the County of Monroe Industrial Company's Form 10-K for the year ended May 31, 1986
Development Agency and the Company located under Securities and Exchange Commission File
No. 03252
10-10 Consent and Amendment Letter Agreement Incorporated by reference from Exhibit 10-1 to the
between Chemical Bank of New Jersey and the Company's Form 8-K dated December 30, 1993 (date of
Company dated as of December 29, 1993 earliest event reported) located under Securities and
Exchange Commission File No. 0-3252
10-11 Promissory Note dated November 30, 1988 of Incorporated by reference from Exhibit 10-32 to May 31,
LCI payable to the order of Paul H. Pennell 1989 10-K
in the original principal amount of
$3,530,000
10-12 Guaranty dated as of November 30, 1988 from Incorporated by reference from Exhibit 10-33 to May 31,
the Company to Paul H. Pennell 1989 10-K
10-13 Amendment Agreement dated as of November 30, Incorporated by reference from Exhibit 10-28 to 1991
1991 between LCI and Paul H. Pennell 10-K
</TABLE>
<PAGE> 61
- 5 -
<TABLE>
<S> <C> <C>
10-14 Release and Notice Agreement dated as of Incorporated by reference from Exhibit 10-40 to the
March 31, 1993 between LCI and Paul H. Company's Form 10-K for the year ended December 31,
Pennell 1992 located under Securities and Exchange Commission
File No. 0-3252
10-15 Standstill Agreement dated as of November 2, Incorporated by reference from Exhibit 10-49 to May 31,
1988 between Atlas Corporation and the 1989 10-K
Company
10-16 Recapitalization Agreement dated as of April See Exhibit 4-4 hereto
27, 1990 between the Company and Woolens and
exhibits thereto
10-17 Accounts Financing Agreement [Security Incorporated by reference from Exhibit 4-2 to November
Agreement] dated as of January 11, 1990 30, 1989 10-Q
between Congress Financial Corporation
("Congress") and the Company
10-18 Accounts Financing Agreement [Security Incorporated by reference from Exhibit 4-3 to November
Agreement] dated as of January 11, 1990 30, 1989 10-Q
between Congress and LCI
10-19 Covenants Supplement to Accounts Financing Incorporated by reference from Exhibit 10-49 to 1990
Agreement [Security Agreement] dated as of 10-K
January 11, 1990 between Congress and the
Company
10-20 Covenants Supplement to Accounts Financing Incorporated by reference from Exhibit 10-50 to 1990
Agreement [Security Agreement] dated as of 10-K
January 11, 1990 between Congress and LCI
10-21 Letter dated April 11, 1990 from the Company Incorporated by reference from Exhibit 10-51 to 1990
and Wise to Congress 10-K
10-22 Letter Agreement dated February 28, 1991 Incorporated by reference from Exhibit 10-54 to 1990
between the Company and Congress amending 10-K
certain financing agreements and consent
thereto of LCI
10-23 Letter Agreement dated February 28, 1991 Incorporated by reference from Exhibit 10-56 to 1990
between LCI and Congress amending certain 10-K
financing agreements and consent thereto of
the Company
10-24 Letter Agreement dated January 14, 1994 Incorporated by reference from Exhibit 10-26 to the
between the Company and Congress amending Company's Form 10-K for the year ended December 31,
certain financing agreements and consent 1993 located under Securities and Exchange Commission
thereto of LCI File No. 0-3252 ("1993 10-K")
</TABLE>
<PAGE> 62
- 6 -
<TABLE>
<S> <C> <C>
10-25 Letter Agreement dated January 14, 1994 Incorporated by reference from Exhibit 10-27 to 1993
between LCI and Congress amending certain 10-K
financing agreements and consent thereto of
the Company
10-26 Letter Agreement dated March 25, 1994 Incorporated by reference from Exhibit 10-30 to 1993
between Congress and the Company, and 10-K
consent thereto of LCI
10-27 Letter Agreement dated March 25, 1994 Incorporated by reference from Exhibit 10-31 to 1993
between Congress and LCI, and consent 10-K
thereto of the Company
10-28 Letter Agreement dated as of August 1, 1994 Incorporated by reference from Exhibit 10-1 to the
between the Company and Congress amending Company's Form 10-Q for the quarter ended September 30,
certain financing agreements and consent 1994 located under Securities and Exchange Commission
thereto of LCI File No. 0-3252 ("September 30, 1994 10-Q")
10-29 Letter Agreement dated as of August 1, 1994 Incorporated by reference from Exhibit 10-2 to
between LCI and Congress amending certain September 30, 1994 10-Q
financing agreements and consent thereto of
the Company
10-30 Trade Financing Agreement Supplement to Incorporated by reference from Exhibit 10-3 to
Accounts Financing Agreement [Security September 30, 1994 10-Q
Agreement] dated as of July 19, 1994 between
the Company and Congress
10-31 Letter Agreement dated January 13, 1995 Incorporated by reference from Exhibit 10-32 to 1994
between LCI and Congress amending certain Form 10-K
financing agreements and consent thereto of
the Company
10-32 Term Promissory Note dated January 13, 1995 Incorporated by reference from Exhibit 10-33 to 1994
from LCI in favor of Congress Form 10-K
10-33 Letter Agreement dated January 31, 1995 Incorporated by reference from Exhibit 10-34 to 1994
between the Company and Congress amending Form 10-K
certain financing agreements and consent
thereto of LCI
10-34 Second Amended and Restated Promissory Note Incorporated by reference from Exhibit 10-35 to 1994
dated January 31, 1995 Form 10-K
from the Company in favor of Congress
10-35 Letter Agreement dated January 31, 1995 Incorporated by reference from Exhibit 10-36 to 1994
between LCI and Congress amending certain Form 10-K
financing agreements and consent thereto of
the Company
</TABLE>
<PAGE> 63
- 7 -
<TABLE>
<S> <C> <C>
10-36 Second Amended and Restated Promissory Note Incorporated by reference from Exhibit 10-37 to 1994
dated January 31, 1995 from LCI in favor of Form 10-K
Congress
10-37 Term Promissory Note dated April 26, 1995 Incorporated by reference from Exhibit 10-1 to
from Lexington Components, Inc. in favor of March 31, 1995 Form 10-Q
Congress Financial Corporation
10-38 Equipment Term Note dated June 26, 1995 from Incorporated by reference from Exhibit 10-1 to June 30,
Lexington Components, Inc. in favor of 1995 Form 10-Q
Congress Financial Corporation
10-39 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-1 to
August 1, 1995 from Lexington Precision September 30, 1995 Form 10-Q
Corporation in favor of Congress Financial
Corporation
10-40 Amendment to Financing Agreements dated Incorporated by reference from Exhibit 10-2 to
August 1,1995 from Lexington Components, September 30, 1995 Form 10-Q
Inc. in favor of Congress Financial
Corporation
10-41 Term Note dated September 13, 1995 from Incorporated by reference from Exhibit 10-3 to
Lexington Precision Corporation in favor of September 30, 1995 Form 10-Q
Congress Financial Corporation
10-42 Term Note dated September 13, 1995 from Incorporated by reference from Exhibit 10-4 to
Lexington Components, Inc. in favor of September 30, 1995 Form 10-Q
Congress Financial Corporation
10-43 Term Note dated October 11, 1995 from Incorporated by reference from Exhibit 10-5 to
Lexington Precision Corporation in favor of September 30, 1995 Form 10-Q
Congress Financial Corporation
10-44 Term Note dated October 11, 1995 from Incorporated by reference from Exhibit 10-6 to
Lexington Components, Inc. in favor of September 30, 1995 Form 10-Q
Congress Financial Corporation
10-45 Term Promissory Note dated August 1, 1995 Filed with this Form 10-K
from Lexington Precision Corporation in
favor of Congress Financial Corporation
10-46 Term Promissory Note dated August 1, 1995 Filed with this Form 10-K
from Lexington Components, Inc. in favor of
Congress Financial Corporation
</TABLE>
<PAGE> 64
- 8 -
<TABLE>
<S> <C> <C>
10-47 New Equipment Term Note dated December 15, Filed with this Form 10-K
1995 from Lexington Precision Corporation in
favor of Congress Financial Corporation
10-48 New Equipment Term Note dated December 15, Filed with this Form 10-K
1995 from Lexington Components, Inc. in
favor of Congress Financial Corporation
10-49 Amendment to Financing Agreements dated Filed with this Form 10-K
January 16, 1996 from Lexington Precision
Corporation in favor of Congress Financial
Corporation
10-50 Term Promissory Note dated January 16, 1996 Filed with this Form 10-K
in the amount of $375,000 from Lexington
Precision Corporation in favor of Congress
Financial Corporation
10-51 Term Promissory Note dated January 16, 1996 Filed with this Form 10-K
in the amount of $450,000 from Lexington
Precision Corporation in favor of Congress
Financial Corporation
10-52 Promissory Noted dated January 17, 1996 from Filed with this Form 10-K
Lexington Precision Corporation in favor of
CIT Group/Equipment Financing, Inc.
10-53 Loan and Security Agreement and Rider A to Filed with this Form 10-K
Loan and Security Agreement dated January
17, 1996 from Lexington Precision
Corporation in favor of CIT Group/Equipment
Financing, Inc.
10-54 Amendment No. 1 to Loan and Security Filed with this Form 10-K
Agreement dated February 29, 1996 from
Lexington Precision Corporation in favor of
CIT Group/Equipment Financing, Inc.
10-55 Promissory Note dated March 1, 1996 from Filed with this Form 10-K
Lexington Precision Corporation in favor of
CIT Group/Equipment Financing, Inc.
10-56 New Equipment Term Note dated March 15, 1996 Filed with this Form 10-K
from Lexington Components, Inc. in favor of
Congress Financial Corporation
</TABLE>
<PAGE> 65
- 9 -
<TABLE>
<S> <C> <C>
10-57 Promissory Note (Demand Loan) dated March Filed with this Form 10-K
14, 1996 from Lexington Precision
Corporation in favor of Bank One, Akron, NA
10-58 Credit Facility and Security Agreement and Filed with this Form 10-K
Rider A to Credit Facility and Security
Agreement dated March 14, 1996 from
Lexington Precision Corporation and
Lexington Components, Inc. in favor of Bank
One, Akron, NA
10-59 Promissory Note (Vienna Term Loan) dated Filed with this Form 10-K
March 14, 1996 from Lexington Components,
Inc. in favor of Bank One, Akron, NA
10-60 Cognovit Guarantee of Lexington Precision Filed with this Form 10-K
Corporation dated March 14, 1996 from
Lexington Precision Corporation in favor of
Bank One, Akron, NA
10-61 Cognovit Guarantee of Lexington Components, Filed with this Form 10-K
Inc. dated March 14, 1996 from Lexington
Components, Inc. in favor of Bank One,
Akron, NA
10-62 Letter Agreement re Amendment to Financing Filed with this Form 10-K
Agreements and Consent dated February 28,
1996 from Lexington Precision Corporation in
favor of Congress Financial Corporation
10-63 Amendment to Financing Agreements and Filed with this Form 10-K
Consent dated March 14, 1996 from Lexington
Precision Corporation in favor of Congress
Financial Corporation
10-64 Amendment to Financing Agreements and Filed with this Form 10-K
Consent dated March 14, 1996 from Lexington
Components, Inc. in favor of Congress
Financial Corporation
10-65 Promissory Note (Equipment Term Loan) Filed with this Form 10-K
dated March 27, 1996 from Lexington Precision
Corporation in favor of Bank One, Akron, NA
21-1 Subsidiary of Registrant Incorporated by reference from Exhibit 22-1 to 1991 10-K
23-1 Consent of Ernst & Young LLP Filed with this Form 10-K
27-1 Financial Data Schedule Filed with this Form 10-K
</TABLE>
<PAGE> 1
Exhibit 329
CERTIFICATE OF RETIREMENT OF STOCK
LEXINGTON PRECISION CORPORATION, a corporation organized and
existing under the General Corporation Law of the State of Delaware ("the
Corporation") ,
DOES HEREBY CERTIFY:
FIRST: That the Corporation acquired an aggregate of Four
Hundred Fifty (450) shares of the Corporation's $4 - $8 Cumulative Convertible
Preferred Stock, Series B, par value $100 per share, which shares had capital
applied in connection with their acquisition and which shares upon their
acquisition became retired shares.
SECOND: That the Restated Certificate of Incorporation of the
Corporation prohibits the reissue of the shares of $4 - $8 Cumulative
Convertible Preferred Stock, Series B, when so retired; and pursuant to the
provisions of Section 243 of the General Corporation Law of the State of
Delaware, upon the effective date of the filing of this certificate as therein
provided, the Restated Certificate of Incorporation of the Corporation shall be
amended so as to effect a reduction in the authorized number of shares of the
$4 - $8 Cumulative Convertible Preferred Stock, Series B, to the extent of Four
Hundred Fifty (450) shares, being the total number of shares retired with a par
value of $100 per share, and an aggregate par value of $45,000.
IN WITNESS WHEREOF, the Corporation has caused this
certificate to be signed by Dennis J. Welhouse, its Senior Vice President and
Assistant Secretary, and attested to by Kelly L. MacMillan, its Treasurer, this
5th day of January, 1996.
LEXINGTON PRECISION CORPORATION
By: Dennis J. Welhouse
------------------
Dennis J. Welhouse
Senior Vice President and Assistant
Secretary
ATTEST:
By: Kelly L. MacMillan
------------------
Kelly L. MacMillan
Treasurer
<PAGE> 1
Exhibit 107
DESCRIPTION OF 1995 COMPENSATION ARRANGEMENTS
WITH LUBIN, DELANO & COMPANY
During 1995, Lexington Precision Corporation (the "Company")
compensated Michael A. Lubin, its Chairman of the Board, and Warren Delano, its
President, indirectly through payments to Lubin, Delano & Company, an
investment banking firm of which they are the only partners. These
compensation arrangements provided for payment to Lubin, Delano & Company of
(I) a basic fee of $400,000, (ii) an incentive fee based upon the 1995 budgeted
operating profit of the Company, and (iii) transaction fees as agreed upon by
the Company and Lubin, Delano & Company in connection with acquisitions,
divestitures, financings and other similar transactions.
<PAGE> 1
Exhibit 1045
TERM PROMISSORY NOTE
--------------------
$1,000,000 August 1, 1995
FOR VALUE RECEIVED, LEXINGTON PRECISION CORPORATION, a Delaware
corporation (the "Debtor"), hereby unconditionally promises to pay to the order
of CONGRESS FINANCIAL CORPORATION, a California corporation (the "Payee"), at
the offices of Payee at 1133 Avenue of the Americas, New York, New York 10036,
or at such other place as the Payee or any holder hereof may from time to time
designate, the principal sum of ONE MILLION DOLLARS ($1,000,000) in lawful
money of the United States of America and in immediately available funds, in
seventy-seven (77) consecutive monthly installments (or earlier as hereinafter
referred to) on the first day of each month, commencing October 1, 1995, of
which the first seventy-six (76) installments shall each be in the amount of
THIRTEEN THOUSAND DOLLARS ($13,000), and the last (i.e. SEVENTY-SEVENTH
(77th)) installment shall be in the amount of the entire unpaid balance of this
Note.
Debtor hereby further promises to pay interest to the order of Payee
on the unpaid principal balance hereof at the Interest Rate. Such interest
shall be paid in like money at said office or place from the date hereof,
commencing on the first day of the month next following the date hereof, and on
the first day of each month thereafter until the indebtedness evidenced by this
Note is paid in full. Interest payable upon and during the continuance of an
Event of Default or following the effective date of termination or non-renewal
of the Financing Agreements shall be payable upon demand.
For purposes hereof, (a) the term "Interest Rate" shall mean, as to
Prime Rate Loans, a rate of one (1%) percent per annum in excess of the Prime
Rate, and as to Eurodollar Rate Loans, a rate of three and one-quarter (3 1/4%)
percent per annum in excess of the Adjusted Eurodollar Rate; PROVIDED, THAT, at
Payee's option, the Interest Rate shall mean a rate of three (3%) percent per
annum in excess of the Prime Rate as to Prime Rate Loans and a rate of five and
one-quarter (5 1/4%) percent per annum in excess of the Adjusted Eurodollar
Rate as to Eurodollar Rate Loans, upon and during the continuance of an Event
of Default or following the effective date of termination or non-renewal of the
Financing Agreements, and (b) the term "Prime Rate" shall mean the rate from
time to time publicly announced by CoreStates Bank, N.A., or its successors, at
its office in Philadelphia, Pennsylvania, as its prime rate, whether or not
such announced rate is the best rate available at such bank. Unless otherwise
defined herein, all capitalized terms used herein shall have the meanings
assigned thereto in the Accounts Agreement (as hereinafter defined) and the
other Financing Agreements.
<PAGE> 2
The Interest Rate payable hereunder as to Prime Rate Loans shall
increase or decrease by an amount equal to each increase or decrease,
respectively, in such Prime Rate, effective on the first day of the month after
any change in such Prime Rate, based on the Prime Rate in effect on the last
day of the month in which any such change occurs. Interest shall be calculated
on the basis of a three hundred sixty (360) day year and actual days elapsed.
In no event shall the interest charged hereunder exceed the maximum permitted
under the laws of the State of New York or other applicable law.
This Note is issued pursuant to the terms and provisions of the letter
agreement re: Amendment to Financing Agreements, dated of even date herewith
between Debtor and Payee (the "Amendment") to evidence the "Additional Term
Loan" (as defined in the Amendment) made by Payee to Debtor. This Note is
secured by the "Collateral" described in the Accounts Financing Agreement
[Security Agreement], dated January 11, 1990, by and between Payee and Debtor,
as amended (the "Accounts Agreement") and any agreement, document or instrument
now or at any time hereafter executed and/or delivered in connection therewith
or related thereto (the foregoing, as the same now exist or may hereafter be
amended, modified, supplemented, renewed, extended, restated or replaced, are
hereinafter collectively referred to as the "Financing Agreements") and is
entitled to all of the benefits and rights thereof and of the Financing
Agreements. At the time any payment is due hereunder, at its option, Payee may
charge the amount thereof to any account of Debtor maintained by Payee.
If any principal or interest payment is not made when due hereunder,
and such failure shall continue for three (3) days, or if any other Event of
Default (as defined in the Accounts Agreement) shall occur for any reason, or
if the Financing Agreements shall be terminated or not renewed for any reason
whatsoever, then and in any such event, in addition to all rights and remedies
of Payee under the Financing Agreements, applicable law or otherwise, all such
rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively and concurrently, Payee may, at its option, declare
any or all of Debtor's obligations, liabilities and indebtedness owing to Payee
under the Financing Agreements (the "Obligations"), including, without
limitation, all amounts owing under this Note, to be due and payable, whereupon
the then unpaid balance hereof together with all interest accrued thereon,
shall forthwith become due and payable, together with interest accruing
thereafter at the then applicable rate stated above until the indebtedness
evidenced by this Note is paid in full, plus the costs and expenses of
collection hereof, including, but not limited to, reasonable attorneys' fees.
Debtor (i) waives diligence, demand, presentment, protest and notice
of any kind, (ii) agrees that it will not be necessary
-2-
<PAGE> 3
for any holder hereof to first institute suit in order to enforce payment of
this Note and (iii) consents to any one or more extensions or postponements of
time of payment, release, surrender or substitution of collateral security, or
forbearance or other indulgence, without notice or consent. Upon the
occurrence of any Event of Default and during the continuance thereof, Payee
shall have the right, but not the obligation to setoff against this Note all
money owed by Payee to Debtor.
Payee shall not be required to resort to any Collateral for payment,
but may proceed against Debtor and any guarantors or endorsers hereof in such
order and manner as Payee may choose. None of the rights of Payee shall be
waived or diminished by any failure or delay in the exercise thereof.
Debtor hereby waives the right to a trial by jury and all rights of
setoff and rights to interpose counterclaims and cross-claims in any litigation
or proceeding arising in connection with this Note, the Accounts Agreement, the
other Financing Agreements, the Obligations or the Collateral, other than
compulsory counterclaims, the non-assertion of which would result in a
permanent waiver. Debtor hereby irrevocably consents to the non-exclusive
jurisdiction of the Supreme Court of the State of New York and of the United
States District Court for the Southern District of New York for all purposes in
connection with any action or proceeding arising out of or relating to this
Note, the Accounts Agreement, the other Financing Agreements, the Obligations
or the Collateral and further consents that any process or notice of motion or
other application to said Courts or any judge thereof, or any notice in
connection with any proceeding hereunder may be served (i) inside or outside
the State of New York by registered or certified mail, return receipt
requested, and service or notice so served shall be deemed complete five (5)
days after the same shall have been posted or (ii) in such other manner as may
be permissible under the rules of said Courts. Within thirty (30) days after
such mailing, Debtor shall appear in answer to such process or notice of motion
or other application to said Courts, failing which Debtor shall be deemed in
default and judgment may be entered by Payee against Debtor for the amount of
the claim and other relief requested therein.
The execution and delivery of this Note has been authorized by the
Board of Directors of Debtor.
This Note, the other Obligations and the Collateral shall be governed
by and construed in accordance with the laws of the State of New York and shall
be binding upon the successors and assigns of Debtor and inure to the benefit
of Payee and its successors, endorsees and assigns. If any term or provision
of this Note shall be held invalid, illegal or unenforceable, the
-3-
<PAGE> 4
validity of all other terms and provisions hereof shall in no way be affected
thereby.
This Note may not be changed, modified or terminated orally, but only
by an agreement in writing signed by the Payee or the holder hereof.
Whenever used herein, the terms "Debtor" and "Payee" shall be deemed
to include their respective successors and assigns.
LEXINGTON PRECISION CORPORATION
ATTEST:
By: Warren Delano
Michael A. Lubin -----------------------
- ---------------------
Chairman of the Board Title: President
-----------------------
[Corporate Seal]
-4-
<PAGE> 1
Exhibit 1046
TERM PROMISSORY NOTE
--------------------
$1,000,000 August 1, 1995
FOR VALUE RECEIVED, LEXINGTON COMPONENTS, INC., a Delaware corporation
(the "Debtor"), hereby unconditionally promises to pay to the order of CONGRESS
FINANCIAL CORPORATION, a California corporation (the "Payee"), at the offices
of Payee at 1133 Avenue of the Americas, New York, New York 10036, or at such
other place as the Payee or any holder hereof may from time to time designate,
the principal sum of ONE MILLION DOLLARS ($1,000,000) in lawful money of the
United States of America and in immediately available funds, in seventy-seven
(77) consecutive monthly installments (or earlier as hereinafter referred to)
on the first day of each month, commencing October 1, 1995, of which the first
seventy-six (76) installments shall each be in the amount of THIRTEEN THOUSAND
DOLLARS ($13,000), and the last (i.e. SEVENTY-SEVENTH (77th)) installment shall
be in the amount of the entire unpaid balance of this Note.
Debtor hereby further promises to pay interest to the order of Payee
on the unpaid principal balance hereof at the Interest Rate. Such interest
shall be paid in like money at said office or place from the date hereof,
commencing on the first day of the month next following the date hereof, and on
the first day of each month thereafter until the indebtedness evidenced by this
Note is paid in full. Interest payable upon and during the continuance of an
Event of Default or following the effective date of termination or non-renewal
of the Financing Agreements shall be payable upon demand.
For purposes hereof, (a) the term "Interest Rate" shall mean, as to
Prime Rate Loans, a rate of one (1%) percent per annum in excess of the Prime
Rate, and as to Eurodollar Rate Loans, a rate of three and one-quarter (3 1/4%)
percent per annum in excess of the Adjusted Eurodollar Rate; PROVIDED, THAT, at
Payee's option, the Interest Rate shall mean a rate of three (3%) percent per
annum in excess of the Prime Rate as to Prime Rate Loans and a rate of five and
one-quarter (5 1/4%) percent per annum in excess of the Adjusted Eurodollar
Rate as to Eurodollar Rate Loans, upon and during the continuance of an Event
of Default or following the effective date of termination or non-renewal of the
Financing Agreements, and (b) the term "Prime Rate" shall mean the rate from
time to time publicly announced by CoreStates Bank, N.A., or its successors, at
its office in Philadelphia, Pennsylvania, as its prime rate, whether or not
such announced rate is the best rate available at such bank. Unless otherwise
defined herein, all capitalized terms used herein shall have the meanings
assigned thereto in the Accounts Agreement (as hereinafter defined) and the
other Financing Agreements.
<PAGE> 2
The Interest Rate payable hereunder as to Prime Rate Loans shall
increase or decrease by an amount equal to each increase or decrease,
respectively, in such Prime Rate, effective on the first day of the month after
any change in such Prime Rate, based on the Prime Rate in effect on the last
day of the month in which any such change occurs. Interest shall be calculated
on the basis of a three hundred sixty (360) day year and actual days elapsed.
In no event shall the interest charged hereunder exceed the maximum permitted
under the laws of the State of New York or other applicable law.
This Note is issued pursuant to the terms and provisions of the letter
agreement re: Amendment to Financing Agreements, dated of even date herewith
between Debtor and Payee (the "Amendment") to evidence the "Additional Term
Loan" (as defined in the Amendment) made by Payee to Debtor. This Note is
secured by the "Collateral" described in the Accounts Financing Agreement
[Security Agreement], dated January 11, 1990, by and between Payee and Debtor,
as amended (the "Accounts Agreement") and any agreement, document or instrument
now or at any time hereafter executed and/or delivered in connection therewith
or related thereto (the foregoing, as the same now exist or may hereafter be
amended, modified, supplemented, renewed, extended, restated or replaced, are
hereinafter collectively referred to as the "Financing Agreements") and is
entitled to all of the benefits and rights thereof and of the Financing
Agreements. At the time any payment is due hereunder, at its option, Payee may
charge the amount thereof to any account of Debtor maintained by Payee.
If any principal or interest payment is not made when due hereunder,
and such failure shall continue for three (3) days, or if any other Event of
Default (as defined in the Accounts Agreement) shall occur for any reason, or
if the Financing Agreements shall be terminated or not renewed for any reason
whatsoever, then and in any such event, in addition to all rights and remedies
of Payee under the Financing Agreements, applicable law or otherwise, all such
rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively and concurrently, Payee may, at its option, declare
any or all of Debtor's obligations, liabilities and indebtedness owing to Payee
under the Financing Agreements (the "Obligations"), including, without
limitation, all amounts owing under this Note, to be due and payable, whereupon
the then unpaid balance hereof together with all interest accrued thereon,
shall forthwith become due and payable, together with interest accruing
thereafter at the then applicable rate stated above until the indebtedness
evidenced by this Note is paid in full, plus the costs and expenses of
collection hereof, including, but not limited to, reasonable attorneys' fees.
Debtor (i) waives diligence, demand, presentment, protest and notice
of any kind, (ii) agrees that it will not be necessary
-2-
<PAGE> 3
for any holder hereof to first institute suit in order to enforce payment of
this Note and (iii) consents to any one or more extensions or postponements of
time of payment, release, surrender or substitution of collateral security, or
forbearance or other indulgence, without notice or consent. Upon the
occurrence of any Event of Default and during the continuance thereof, Payee
shall have the right, but not the obligation to setoff against this Note all
money owed by Payee to Debtor.
Payee shall not be required to resort to any Collateral for payment,
but may proceed against Debtor and any guarantors or endorsers hereof in such
order and manner as Payee may choose. None of the rights of Payee shall be
waived or diminished by any failure or delay in the exercise thereof.
Debtor hereby waives the right to a trial by jury and all rights of
setoff and rights to interpose counterclaims and cross-claims in any litigation
or proceeding arising in connection with this Note, the Accounts Agreement, the
other Financing Agreements, the Obligations or the Collateral, other than
compulsory counterclaims, the non-assertion of which would result in a
permanent waiver. Debtor hereby irrevocably consents to the non-exclusive
jurisdiction of the Supreme Court of the State of New York and of the United
States District Court for the Southern District of New York for all purposes in
connection with any action or proceeding arising out of or relating to this
Note, the Accounts Agreement, the other Financing Agreements, the Obligations
or the Collateral and further consents that any process or notice of motion or
other application to said Courts or any judge thereof, or any notice in
connection with any proceeding hereunder may be served (i) inside or outside
the State of New York by registered or certified mail, return receipt
requested, and service or notice so served shall be deemed complete five (5)
days after the same shall have been posted or (ii) in such other manner as may
be permissible under the rules of said Courts. Within thirty (30) days after
such mailing, Debtor shall appear in answer to such process or notice of motion
or other application to said Courts, failing which Debtor shall be deemed in
default and judgment may be entered by Payee against Debtor for the amount of
the claim and other relief requested therein.
The execution and delivery of this Note has been authorized by the
Board of Directors of Debtor.
This Note, the other Obligations and the Collateral shall be governed
by and construed in accordance with the laws of the State of New York and shall
be binding upon the successors and assigns of Debtor and inure to the benefit
of Payee and its successors, endorsees and assigns. If any term or provision
of this Note shall be held invalid, illegal or unenforceable, the
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<PAGE> 4
validity of all other terms and provisions hereof shall in no way be affected
thereby.
This Note may not be changed, modified or terminated orally, but only
by an agreement in writing signed by the Payee or the holder hereof.
Whenever used herein, the terms "Debtor" and "Payee" shall be deemed
to include their respective successors and assigns.
LEXINGTON COMPONENTS, INC.
ATTEST:
By: Warren Delano
-----------------
Michael A. Lubin
- --------------------- Title: Vice Chairman
Chairman of the Board -----------------
[Corporate Seal]
-4-
<PAGE> 1
Exhibit 1047
NEW EQUIPMENT TERM NOTE
-----------------------
$500,000 December 15, 1995
FOR VALUE RECEIVED, LEXINGTON PRECISION CORPORATION, a Delaware
corporation (the "Debtor"), hereby unconditionally promises to pay to the order
of CONGRESS FINANCIAL CORPORATION, a California corporation (the "Payee"), at
the offices of Payee at 1133 Avenue of the Americas, New York, New York 10036,
or at such other place as the Payee or any holder hereof may from time to time
designate, the principal sum of FIVE HUNDRED THOUSAND DOLLARS ($500,000) in
lawful money of the United States of America and in immediately available
funds, in seventy-three (73) consecutive monthly installments (or earlier as
hereinafter referred to) on the first day of each month commencing February 1,
1996, of which the first seventy-two (72) installments shall each be in the
amount of SIX THOUSAND EIGHT HUNDRED DOLLARS ($6,800), and the last (i.e.
seventy- third (73rd)) installment shall be in the amount of the entire unpaid
balance of this Note.
Debtor hereby further promises to pay interest to the order of Payee
on the unpaid principal balance hereof at the Interest Rate. Such interest
shall be paid in like money at said office or place from the date hereof,
commencing on the first day of the month next following the date hereof, and on
the first day of each month thereafter until the indebtedness evidenced by this
Note is paid in full. Interest payable upon and during the continuance of an
Event of Default or following the effective date of termination or non-renewal
of the Financing Agreements shall be payable upon demand.
For purposes hereof, (a) the term "Interest Rate" shall mean, as to
Prime Rate Loans, a rate of one (1%) percent per annum in excess of the Prime
Rate, and as to Eurodollar Rate Loans, a rate of three and one-quarter (3 1/4%)
percent per annum in excess of the Adjusted Eurodollar Rate; PROVIDED, THAT, at
Payee's option, the Interest Rate shall mean a rate of three (3%) percent per
annum in excess of the Prime Rate as to Prime Rate Loans and a rate of five and
one-quarter (5 1/4%) percent per annum in excess of the Adjusted Eurodollar
Rate as to Eurodollar Rate Loans, upon and during the continuance of an Event
of Default or following the effective date of termination or non-renewal of the
Financing Agreements, and (b) the term "Prime Rate" shall mean the rate from
time to time publicly announced by CoreStates Bank, N.A., or its successors, at
its office in Philadelphia, Pennsylvania, as its prime rate, whether or not
such announced rate is the best rate available at such bank. Unless otherwise
defined herein, all capitalized terms used herein shall have the meanings
assigned thereto in the Accounts Agreement (as hereinafter defined) and the
other Financing Agreements.
<PAGE> 2
The Interest Rate payable hereunder as to Prime Rate Loans shall
increase or decrease by an amount equal to each increase or decrease,
respectively, in such Prime Rate, effective on the first day of the month after
any change in such Prime Rate, based on the Prime Rate in effect on the last
day of the month in which any such change occurs. Interest shall be calculated
on the basis of a three hundred sixty (360) day year and actual days elapsed.
In no event shall the interest charged hereunder exceed the maximum permitted
under the laws of the State of New York or other applicable law.
This Note is issued pursuant to the terms and provisions of the letter
agreement re: Amendment to Financing Agreements, dated as of January 31, 1995
between Debtor and Payee and by letter agreement re: Amendment to Financing
Agreements, dated as of August 1, 1995 (collectively, the "Amendment") to
evidence a "New Equipment Term Loan" (as defined in the New Equipment Term Loan
Agreement as referred to in and as modified by the Amendment) made by Payee to
Debtor. This Note is secured by the "Collateral" described in the Accounts
Financing Agreement [Security Agreement], dated January 11, 1990, by and
between Payee and Debtor, as amended (the "Accounts Agreement") and any
agreement, document or instrument now or at any time hereafter executed and/or
delivered in connection therewith or related thereto (the foregoing, as the
same now exist or may hereafter be amended, modified, supplemented, renewed,
extended, restated or replaced, are hereinafter collectively referred to as the
"Financing Agreements") and is entitled to all of the benefits and rights
thereof and of the Financing Agreements. At the time any payment is due
hereunder, at its option, Payee may charge the amount thereof to any account of
Debtor maintained by Payee.
If any principal or interest payment is not made when due hereunder,
and such failure shall continue for three (3) days, or if any other Event of
Default (as defined in the Accounts Agreement) shall occur for any reason, or
if the Financing Agreements shall be terminated or not renewed for any reason
whatsoever, then and in any such event, in addition to all rights and remedies
of Payee under the Financing Agreements, applicable law or otherwise, all such
rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively and concurrently, Payee may, at its option, declare
any or all of Debtor's obligations, liabilities and indebtedness owing to Payee
under the Financing Agreements (the "Obligations"), including, without
limitation, all amounts owing under this Note, to be due and payable, whereupon
the then unpaid balance hereof together with all interest accrued thereon,
shall forthwith become due and payable, together with interest accruing
thereafter at the then applicable rate stated above until the indebtedness
evidenced by this Note is paid in full, plus the costs and expenses of
collection hereof, including, but not limited to, reasonable attorneys' fees.
-2-
<PAGE> 3
Debtor (i) waives diligence, demand, presentment, protest and notice
of any kind, (ii) agrees that it will not be necessary for any holder hereof to
first institute suit in order to enforce payment of this Note and (iii)
consents to any one or more extensions or postponements of time of payment,
release, surrender or substitution of collateral security, or forbearance or
other indulgence, without notice or consent. Upon the occurrence of any Event
of Default and during the continuance thereof, Payee shall have the right, but
not the obligation to setoff against this Note all money owed by Payee to
Debtor.
Payee shall not be required to resort to any Collateral for payment,
but may proceed against Debtor and any guarantors or endorsers hereof in such
order and manner as Payee may choose. None of the rights of Payee shall be
waived or diminished by any failure or delay in the exercise thereof.
Debtor hereby waives the right to a trial by jury and all rights of
setoff and rights to interpose counterclaims and cross-claims in any litigation
or proceeding arising in connection with this Note, the Accounts Agreement, the
other Financing Agreements, the Obligations or the Collateral, other than
compulsory counterclaims, the non-assertion of which would result in a
permanent waiver. Debtor hereby irrevocably consents to the non-exclusive
jurisdiction of the Supreme Court of the State of New York and of the United
States District Court for the Southern District of New York for all purposes in
connection with any action or proceeding arising out of or relating to this
Note, the Accounts Agreement, the other Financing Agreements, the Obligations
or the Collateral and further consents that any process or notice of motion or
other application to said Courts or any judge thereof, or any notice in
connection with any proceeding hereunder may be served (i) inside or outside
the State of New York by registered or certified mail, return receipt
requested, and service or notice so served shall be deemed complete five (5)
days after the same shall have been posted or (ii) in such other manner as may
be permissible under the rules of said Courts. Within thirty (30) days after
such mailing, Debtor shall appear in answer to such process or notice of motion
or other application to said Courts, failing which Debtor shall be deemed in
default and judgment may be entered by Payee against Debtor for the amount of
the claim and other relief requested therein.
The execution and delivery of this Note has been authorized by the
Board of Directors of Debtor.
This Note, the other Obligations and the Collateral shall be governed
by and construed in accordance with the laws of the State of New York and shall
be binding upon the successors and assigns of Debtor and inure to the benefit
of Payee and its successors, endorsees and assigns. If any term or provision
of
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<PAGE> 4
this Note shall be held invalid, illegal or unenforceable, the validity of all
other terms and provisions hereof shall in no way be affected thereby.
This Note may not be changed, modified or terminated orally, but only
by an agreement in writing signed by the Payee or the holder hereof.
Whenever used herein, the terms "Debtor" and "Payee" shall be deemed
to include their respective successors and assigns.
LEXINGTON PRECISION CORPORATION
ATTEST:
By: Warren Delano
Michael A. Lubin ------------------------
- ---------------------
Chairman of the Board Title: President
------------------------
[Corporate Seal]
-4-
<PAGE> 1
Exhibit 1048
NEW EQUIPMENT TERM NOTE
-----------------------
$600,000 December 15, 1995
FOR VALUE RECEIVED, LEXINGTON COMPONENTS, INC., a Delaware corporation
(the "Debtor"), hereby unconditionally promises to pay to the order of CONGRESS
FINANCIAL CORPORATION, a California corporation (the "Payee"), at the offices
of Payee at 1133 Avenue of the Americas, New York, New York 10036, or at such
other place as the Payee or any holder hereof may from time to time designate,
the principal sum of SIX HUNDRED THOUSAND DOLLARS ($600,000) in lawful money of
the United States of America and in immediately available funds, in
seventy-three (73) consecutive monthly installments (or earlier as hereinafter
referred to) on the first day of each month commencing February 1, 1996, of
which the first seventy-two (72) installments shall each be in the amount of
EIGHT THOUSAND TWO HUNDRED DOLLARS ($8,200), and the last (i.e. seventy- third
(73rd)) installment shall be in the amount of the entire unpaid balance of this
Note.
Debtor hereby further promises to pay interest to the order of Payee
on the unpaid principal balance hereof at the Interest Rate. Such interest
shall be paid in like money at said office or place from the date hereof,
commencing on the first day of the month next following the date hereof, and on
the first day of each month thereafter until the indebtedness evidenced by this
Note is paid in full. Interest payable upon and during the continuance of an
Event of Default or following the effective date of termination or non-renewal
of the Financing Agreements shall be payable upon demand.
For purposes hereof, (a) the term "Interest Rate" shall mean, as to
Prime Rate Loans, a rate of one (1%) percent per annum in excess of the Prime
Rate, and as to Eurodollar Rate Loans, a rate of three and one-quarter (3 1/4%)
percent per annum in excess of the Adjusted Eurodollar Rate; PROVIDED, THAT, at
Payee's option, the Interest Rate shall mean a rate of three (3%) percent per
annum in excess of the Prime Rate as to Prime Rate Loans and a rate of five and
one-quarter (5 1/4%) percent per annum in excess of the Adjusted Eurodollar
Rate as to Eurodollar Rate Loans, upon and during the continuance of an Event
of Default or following the effective date of termination or non-renewal of the
Financing Agreements, and (b) the term "Prime Rate" shall mean the rate from
time to time publicly announced by CoreStates Bank, N.A., or its successors, at
its office in Philadelphia, Pennsylvania, as its prime rate, whether or not
such announced rate is the best rate available at such bank. Unless otherwise
defined herein, all capitalized terms used herein shall have the meanings
assigned thereto in the Accounts Agreement (as hereinafter defined) and the
other Financing Agreements.
<PAGE> 2
The Interest Rate payable hereunder as to Prime Rate Loans shall
increase or decrease by an amount equal to each increase or decrease,
respectively, in such Prime Rate, effective on the first day of the month after
any change in such Prime Rate, based on the Prime Rate in effect on the last
day of the month in which any such change occurs. Interest shall be calculated
on the basis of a three hundred sixty (360) day year and actual days elapsed.
In no event shall the interest charged hereunder exceed the maximum permitted
under the laws of the State of New York or other applicable law.
This Note is issued pursuant to the terms and provisions of the letter
agreement re: Amendment to Financing Agreements, dated as of January 31, 1995
between Debtor and Payee as amended by letter agreement re: Amendment to
Financing Agreements, dated as of August 1, 1995 (collectively, the
"Amendment") to evidence a "New Equipment Term Loan" (as defined in the New
Equipment Term Loan Agreement as referred to in and as modified by the
Amendment) made by Payee to Debtor. This Note is secured by the "Collateral"
described in the Accounts Financing Agreement [Security Agreement], dated
January 11, 1990, by and between Payee and Debtor, as amended (the "Accounts
Agreement") and any agreement, document or instrument now or at any time
hereafter executed and/or delivered in connection therewith or related thereto
(the foregoing, as the same now exist or may hereafter be amended, modified,
supplemented, renewed, extended, restated or replaced, are hereinafter
collectively referred to as the "Financing Agreements") and is entitled to all
of the benefits and rights thereof and of the Financing Agreements. At the
time any payment is due hereunder, at its option, Payee may charge the amount
thereof to any account of Debtor maintained by Payee.
If any principal or interest payment is not made when due hereunder,
and such failure shall continue for three (3) days, or if any other Event of
Default (as defined in the Accounts Agreement) shall occur for any reason, or
if the Financing Agreements shall be terminated or not renewed for any reason
whatsoever, then and in any such event, in addition to all rights and remedies
of Payee under the Financing Agreements, applicable law or otherwise, all such
rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively and concurrently, Payee may, at its option, declare
any or all of Debtor's obligations, liabilities and indebtedness owing to Payee
under the Financing Agreements (the "Obligations"), including, without
limitation, all amounts owing under this Note, to be due and payable, whereupon
the then unpaid balance hereof together with all interest accrued thereon,
shall forthwith become due and payable, together with interest accruing
thereafter at the then applicable rate stated above until the indebtedness
evidenced by this Note is paid in full, plus the costs and expenses of
collection hereof, including, but not limited to, reasonable attorneys' fees.
-2-
<PAGE> 3
Debtor (i) waives diligence, demand, presentment, protest and notice
of any kind, (ii) agrees that it will not be necessary for any holder hereof to
first institute suit in order to enforce payment of this Note and (iii)
consents to any one or more extensions or postponements of time of payment,
release, surrender or substitution of collateral security, or forbearance or
other indulgence, without notice or consent. Upon the occurrence of any Event
of Default and during the continuance thereof, Payee shall have the right, but
not the obligation to setoff against this Note all money owed by Payee to
Debtor.
Payee shall not be required to resort to any Collateral for payment,
but may proceed against Debtor and any guarantors or endorsers hereof in such
order and manner as Payee may choose. None of the rights of Payee shall be
waived or diminished by any failure or delay in the exercise thereof.
Debtor hereby waives the right to a trial by jury and all rights of
setoff and rights to interpose counterclaims and cross-claims in any litigation
or proceeding arising in connection with this Note, the Accounts Agreement, the
other Financing Agreements, the Obligations or the Collateral, other than
compulsory counterclaims, the non-assertion of which would result in a
permanent waiver. Debtor hereby irrevocably consents to the non-exclusive
jurisdiction of the Supreme Court of the State of New York and of the United
States District Court for the Southern District of New York for all purposes in
connection with any action or proceeding arising out of or relating to this
Note, the Accounts Agreement, the other Financing Agreements, the Obligations
or the Collateral and further consents that any process or notice of motion or
other application to said Courts or any judge thereof, or any notice in
connection with any proceeding hereunder may be served (i) inside or outside
the State of New York by registered or certified mail, return receipt
requested, and service or notice so served shall be deemed complete five (5)
days after the same shall have been posted or (ii) in such other manner as may
be permissible under the rules of said Courts. Within thirty (30) days after
such mailing, Debtor shall appear in answer to such process or notice of motion
or other application to said Courts, failing which Debtor shall be deemed in
default and judgment may be entered by Payee against Debtor for the amount of
the claim and other relief requested therein.
The execution and delivery of this Note has been authorized by the
Board of Directors of Debtor.
This Note, the other Obligations and the Collateral shall be governed
by and construed in accordance with the laws of the State of New York and shall
be binding upon the successors and assigns of Debtor and inure to the benefit
of Payee and its successors, endorsees and assigns. If any term or provision
of
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<PAGE> 4
this Note shall be held invalid, illegal or unenforceable, the validity of all
other terms and provisions hereof shall in no way be affected thereby.
This Note may not be changed, modified or terminated orally, but only
by an agreement in writing signed by the Payee or the holder hereof.
Whenever used herein, the terms "Debtor" and "Payee" shall be deemed
to include their respective successors and assigns.
LEXINGTON COMPONENTS, INC.
ATTEST:
By: Warren Delano
Michael A. Lubin ------------------
- ---------------------
Chairman of the Board Title: Vice Chairman
-----------------
[Corporate Seal]
-4-
<PAGE> 1
Exhibit 1049
January 16, 1996
Lexington Precision Corporation
767 Third Avenue
New York, New York 10017
Re: Amendment to Financing Agreements
---------------------------------
Gentlemen:
Reference is made to certain financing agreements dated January 11,
1990 between Lexington Precision Corporation ("LPC") and Congress Financial
Corporation ("Congress"), including, but not limited to, an Accounts Financing
Agreement [Security Agreement], as amended (the "Accounts Agreement"), and all
supplements thereto and all other related financing and security agreements
(collectively, all of the foregoing, as the same have heretofore or
contemporaneously been or may be hereafter, amended, replaced, extended,
modified or supplemented, the "Financing Agreements").
In connection with the financing arrangements pursuant to the Accounts
Agreement and the other Financing Agreements, the parties hereto hereby agree
to amend the Financing Agreements, as set forth below (capitalized terms used
herein, unless otherwise defined herein, shall have the meanings ascribed
thereto in the Accounts Agreement and the other Financing Agreements):
1. Definitions.
-----------
(a) The definition of "LPC Financing Agreements"
contained in the Covenant Supplement to the Accounts Agreement is hereby
amended to include, without limitation, the LPC Arizona Real Estate Note and
the LPC New York Real Estate Notes (as each such term is defined below).
(b) The definition of "Term Loans" contained in the
letter agreement re: Amendment to Financing Agreements, dated January 31, 1995,
between LPC and Congress is hereby amended to include, without limitation, the
term loans made by Congress to LPC evidenced by the LPC Arizona Real Estate
Note and the LPC New York Real Estate Notes (as each such term is defined
below).
<PAGE> 2
2. Additional Term Loans.
---------------------
(a) Contemporaneously herewith, in order to evidence an
additional one-time advance to LPC in the principal amount of $375,000 (the
"LPC Arizona Real Estate Loan"), LPC is executing and delivering to Congress
the Term Promissory Note, dated of even date herewith, in the original
principal amount of $375,000 (as the same now exists or may hereafter be
amended, supplemented, renewed, extended, restated or replaced, the "LPC
Arizona Real Estate Note"). The Obligations evidenced by the LPC Arizona Real
Estate Note shall be payable, including interest and other amounts, as provided
therein and, to the extent not inconsistent with the terms of the LPC Arizona
Real Estate Note, as provided in the other Financing Agreements, and shall be
secured by all Collateral.
(b) Contemporaneously herewith, in order to evidence an
additional one-time advance to LPC in the principal amount of $450,000 (the
"LPC New York Real Estate Loan A"), LPC is executing and delivering to Congress
the Term Promissory Note, dated of even date herewith, in the original
principal amount of $450,000 (as the same now exists or may hereafter be
amended, supplemented, renewed, extended, restated or replaced, the "LPC New
York Real Estate Note A"). The Obligations evidenced by the LPC New York Real
Estate Note A shall be payable, including interest and other amounts, as
provided therein and, to the extent not inconsistent with the terms of the LPC
New York Real Estate Note A, as provided in the other Financing Agreements, and
shall be secured by all Collateral.
(c) At LPC's request made on or before May 31, 1996, and
upon not less than five (5) business days' prior written notice by LPC to
Congress and provided all of the conditions precedent set forth in Section 5
are then satisfied, Congress agrees to make an additional one-time advance to
LPC in the principal amount of $375,000 (the "LPC New York Real Estate Loan B";
and together with the LPC New York Real Estate Loan A, collectively, the "LPC
New York Real Estate Loans"). The LPC New York Real Estate Loan B shall be
evidenced by a Term Promissory Note in the principal amount of $375,000 in the
form annexed hereto as Exhibit A (as the same now exists or may hereafter be
amended, supplemented, renewed, extended, restated or replaced, the "LPC New
York Real Estate Note B; and together with the LPC New York Real Estate Note A,
collectively, the "LPC New York Real Estate Notes"). The Obligations evidenced
by the LPC New York Real Estate Note B shall be payable, including interest and
other amounts, as provided therein, and, to the extent not inconsistent with
the terms of the LPC New York Real Estate Note B, as provided in the other
Financing Agreements, and shall be secured by all Collateral.
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<PAGE> 3
3. REPRESENTATIONS, WARRANTIES AND COVENANTS. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by LPC to Congress pursuant to the Financing Agreements, LPC hereby
represents, warrants and covenants with and to Congress as follows (which
representations, warranties and covenants are continuing and shall survive the
execution and delivery hereof and shall be incorporated into and made a part of
the Financing Agreements):
(a) No Event of Default exists or has occurred and is
continuing on the date of this Amendment and on the date of each advance in
respect of the LPC Arizona Real Estate Loan and the LPC New York Real Estate
Loans;
(b) This Amendment has been duly executed and delivered
by LPC and is in full force and effect as of the date hereof, and the
agreements and obligations of LPC contained herein constitute the legal, valid
and binding obligations of LPC enforceable against LPC in accordance with their
terms; and
(c) LPC agrees that, in connection with each of the
proposed equipment and real estate financing arrangements between LPC and Bank
One, Akron, NA ("Bank One") as set forth in the proposal letter dated October
26, 1995 between LPC and Bank One and the proposed equipment financing
arrangements between LPC and The CIT Group/Capital Equipment Financing, Inc.
("CIT") as set forth in the proposal letter dated October 30, 1995 between LPC
and CIT, LPC shall not enter into any such arrangements, or any other similar
financing arrangements with Bank One or CIT or other lender(s), unless Congress
has consented in writing to such arrangements and has approved in writing the
collateral to be granted thereunder, and unless the lender providing such
financing has entered into an intercreditor agreement with Congress, in form
and substance satisfactory to Congress, setting forth the relative priorities
of Congress and such lender in the collateral securing such financing
arrangements, and providing Congress rights of access and use of the equipment
and real estate subject to the senior security interests (if any) of such
lender, as well as notice and opportunity to cure defaults before the exercise
by such lender of enforcement rights against LPC or its property.
4. CONDITIONS TO THE EFFECTIVENESS OF AMENDMENT. Anything
contained in this Amendment to the contrary notwithstanding, LPC shall only be
entitled to receive the LPC Arizona Real Estate Loan and the LPC New York Real
Estate Loans pursuant to the terms and other conditions of this Amendment upon
the satisfaction of the following additional conditions precedent:
(a) Congress shall have received an executed original or
executed original counterparts (as the case may be) of this
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<PAGE> 4
Amendment together with the following, each of which shall be in form and
substance satisfactory to Congress:
(i) the LPC Arizona Real Estate Note;
(ii) an Amendment to the Second Amended and
Restated Deed of Trust and Assignment of
Rents with Security Agreement and
Financing Statement (Fixture Filing)
between LPC and Congress which amends the
terms of the existing deed of trust in
favor of Congress previously granted with
respect to LPC's real property in Pinal
County, Arizona to expressly secure, INTER
ALIA, the LPC Arizona Real Estate Loan,
together with an updating endorsement, at
LPC's expenses, to the existing title
policy with respect thereto;
(iii) an updated Phase I Environmental
Assessment addressed to Congress or upon
which Congress is expressly permitted to
rely, a certification that there has been
no change in the facts set forth on the
existing ALTA standard survey previously
certified to Congress, and an appraisal
report addressed to Congress or upon which
Congress is expressly permitted to rely,
showing a fair market value of not less
than $500,000 (such fair market value to
be determined by using methodology
acceptable to Congress), each with respect
to LPC's owned real property in Pinal
County, Arizona and each dated as of a
date acceptable to Congress and prepared,
at LPC's expense, by an environmental
engineering firm, a surveyor and an
appraiser, respectively, reasonably
satisfactory to Congress;
(iv) a Landlord Waiver, by Tri-Valley Electric
Supply Co., as lessor of LPC's premises at
3011 N. Piper Dr., Casa Grande, Pinal
County, Arizona, in favor of Congress,
duly authorized, executed and delivered by
Tri- Valley Electric Supply Co.;
(v) the LPC New York Real Estate Note A;
(vi) a Mortgage and Security Agreement between
LPC and Congress, together with a title
policy, with respect to LPC's owned real
property in Lakewood, New York;
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<PAGE> 5
(vii) a Phase I Environmental Assessment
addressed to Congress or upon which
Congress is expressly permitted to rely,
together with a NYSAPLS standard survey
certified to Congress, each with respect
to LPC's real property in Lakewood, New
York and each dated as of a date
acceptable to Congress and prepared, at
LPC's expenses, by an environmental
engineering firm and a surveyor
respectively, reasonably satisfactory to
Congress;
(viii) an appraisal report addressed to Congress,
or upon which Congress is expressly
permitted to rely, showing a fair market
value of LPC's owned real property in
Lakewood, New York of not less than
$925,000 as such real property existed
prior to the construction of the Lakewood
Improvements (as defined below), and of
not less than $1,650,000 assuming the
construction of the Lakewood Improvements
(such fair market values to be determined
by using methodology acceptable to
Congress), each dated as of a date
acceptable to Congress and prepared, at
LPC's expense, by an appraiser reasonably
satisfactory to Congress;
(ix) the resolutions of the Boards of Directors
of LPC and LCI duly authorizing the
execution and delivery of this Amendment
and the instruments and transactions
contemplated by this Amendment;
(x) evidence of casualty, hazard and business
interruption insurance and loss payable
endorsements naming Congress as a loss
payee thereunder and certificates of
insurance policies naming Congress as
additional insured as to liability
insurance, at LPC's cost and expense, in
each case with respect to the Pinal
County, Arizona and Lakewood, New York
real property of LPC (including the
Lakewood Improvements) and issued by an
insurance company and in amounts
satisfactory to Congress; and
(xi) evidence that none of LPC's owned real
property in Pinal County, Arizona and
Lakewood, New York is within an area
having
-5-
<PAGE> 6
special flood hazard or flood prone
characteristics, unless LPC has obtained
insurance coverage with respect to such
flood hazard issued by an insurance
company and in amounts satisfactory to
Congress, and as to which Congress has
been named as a loss payee thereunder.
(b) All representation and warranties contained herein,
in the Accounts Agreements and in the other Financing Agreements shall be true
and correct in all material respects; and
(c) No Event of Default shall have occurred and no event
shall have occurred or condition shall be existing which, with notice or
passage of time or both, would constitute an Event of Default.
5. DELIVERIES RELATING TO LPC NEW YORK REAL ESTATE LOAN B.
Anything contained in this Amendment to the contrary notwithstanding, LPC shall
only be entitled to receive the LPC New York Real Estate Loan B pursuant to the
terms and other conditions of this Amendment upon the satisfaction of the
following additional conditions precedent:
(a) Congress shall have received an executed original or
executed original counterparts (as the case may be) of each of the following,
each of which shall be in form and substance satisfactory to Congress:
(i) the LPC New York Real Estate Note B;
(ii) a Mortgage and Agreement of Consolidation
and Modification between LPC and Congress
which amends, modifies and consolidates
the terms of the existing Mortgage and
Security Agreement in favor of Congress
with respect to LPC's Lakewood, New York
owned real property to secure, with a
consolidated first mortgage lien upon such
real property of LPC, all of LPC's
Obligations in respect of the LPC New York
Real Estate Loan A and the LPC New York
Real Estate Loan B, and which shall
contain terms and conditions substantially
similar to those contained in the existing
Mortgage and Security Agreement;
(iii) a title policy issued to Congress insuring
the Mortgage and Agreement of
Consolidation and Modification referred to
above;
-6-
<PAGE> 7
(iv) a Certificate of Occupancy or other
municipal certification of completion, by
no later than May 31, 1996, of the
improvements to LPC's Lakewood, New York
real property described in the Building
Proposal of Kessel Construction dated June
15, 1995 which has been submitted to
Congress; and
(v) an updated NYSAPLS standard survey
certified to Congress reflecting the
completion of the improvements described
in subparagraph (iv) above (the "Lakewood
Improvements") by no later than May 31,
1996.
(b) All of the conditions precedent set forth in Section
4 above are satisfied;
(c) All representations and warranties contained herein,
in the Accounts Agreements and in the other Financing Agreements shall be true
and correct in all material respects; and
(d) No Event of Default shall have occurred an no event
shall have occurred or condition shall be existing which, with notice or
passage of time or both, would constitute an Event of Default.
6. EFFECT OF THIS AMENDMENT. Except as modified pursuant hereto,
the Accounts Agreement and all supplements to the Accounts Agreement and all
other Financing Agreements, are hereby specifically ratified, restated and
confirmed by the parties hereto as of the date hereof and no existing defaults
or Events of Default have been waived in connection herewith. To the extent of
conflict between the terms of this Amendment and the Accounts Agreement or any
of the other Financing Agreements, the terms of this Amendment control.
7. FURTHER ASSURANCES. LPC shall execute and deliver such
additional documents and take such additional actions as may reasonably be
requested by Congress to effectuate the provisions and purposes of this
Amendment.
8. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York without
reference to its principles of conflicts of law.
-7-
<PAGE> 8
By the signatures hereto of the duly authorized officers, the parties
hereto mutually covenant, warrant and agree as set forth herein.
Very truly yours,
CONGRESS FINANCIAL CORPORATION
By: Lawrence S. Forte
----------------------
Title: Vice President
----------------------
AGREED AND ACCEPTED:
LEXINGTON PRECISION CORPORATION
By: Warren Delano
-----------------------
Title: President
-----------------------
-8-
<PAGE> 9
CONSENT
-------
The undersigned guarantor hereby consents to the foregoing Amendment,
agrees to be bound by its terms applicable to it, and ratifies and confirms the
terms of its Guarantee and Waiver dated January 11, 1990 as applicable to all
present and future indebtedness, liabilities and obligations of LEXINGTON
PRECISION CORPORATION ("LPC") to CONGRESS FINANCIAL CORPORATION ("Congress"),
including, without limitation, all indebtedness, liabilities and obligations
under the Financing Agreements as amended hereby.
LEXINGTON COMPONENTS, INC.
By: Warren Delano
------------------
Title: Vice Chairman
------------------
-9-
<PAGE> 10
EXHIBIT A
LPC NEW YORK TERM PROMISSORY NOTE B*
------------------------------------
$375,000 New York, New York
____________ __, 1996
FOR VALUE RECEIVED, LEXINGTON PRECISION CORPORATION, a Delaware
corporation (the "Debtor"), hereby unconditionally promises to pay to the order
of CONGRESS FINANCIAL CORPORATION, a California corporation (the "Payee"), at
the offices of Payee at 1133 Avenue of the Americas, New York, New York 10036,
or at such other place as the Payee or any holder hereof may from time to time
designate, the principal sum of THREE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS
($375,000) in lawful money of the United States of America and in immediately
available funds, in _____ (___) consecutive monthly installments (or earlier as
hereinafter referred to) on the first day of each month commencing
_______________ 1, 1996, of which the first __________ (__) installments shall
each be in the amount of _____________________________________ DOLLARS
($____________), and the last (i.e. ____________ (__)) installment shall be in
the amount of the entire unpaid balance of this Note.
Debtor hereby further promises to pay interest to the order of Payee
on the unpaid principal balance hereof at the Interest Rate. Such interest
shall be paid in like money at said office or place from the date hereof,
commencing _____________ 1, 1996 and on the first day of each month thereafter
until the indebtedness evidenced by this Note is paid in full. Interest
payable upon and during the continuance of an Event of Default or following the
effective date of termination or non-renewal of the Financing Agreements shall
be payable upon demand.
For purposes hereof (a) the term "Interest Rate" shall mean, as to
Prime Rate Loans, a rate of one (1%) percent per annum in excess of the Prime
Rate and as to Eurodollar Rate Loans, a rate of three and one-quarter (3-1/4%)
percent per annum in excess of the Adjusted Eurodollar Rate; PROVIDED, THAT, at
Payee's option, the Interest Rate shall mean a rate of three (3%) percent per
annum in excess of the Prime Rate as to Prime Rate Loans and a
__________________________________
* For preparation of Note:
The blanks are to be completed such that the principal amount
of the LPC New York Term Promissory Note B is amortized in
equal, consecutive monthly installments of principal
commencing on the first day of the month following the date of
advance and ending December 1, 2002.
<PAGE> 11
rate of five and one-quarter (5-1/4%) percent per annum in excess of the
Adjusted Eurodollar Rate as to Eurodollar Rate Loans, upon and during the
continuance of an Event of Default or following the effective date of
termination or non-renewal of the Financing Agreements, and (b) the term "Prime
Rate" shall mean the rate from time to time publicly announced by CoreStates
Bank, N.A., or its successors, at its office in Philadelphia, Pennsylvania, as
its prime rate, whether or not such announced rate is the best rate available
at such bank. Unless otherwise defined herein, all capitalized terms used
herein shall have the meanings assigned thereto in the Accounts Agreement (as
hereinafter defined) and the other Financing Agreements.
The Interest Rate applicable to Prime Rate Loans payable hereunder
shall increase or decrease by an amount equal to each increase or decrease,
respectively, in the Prime Rate, effective on the first day of the month after
any change in the Prime Rate, based on the Prime Rate in effect on the last day
of the month in which any such change occurs. Interest shall be calculated on
the basis of a three hundred sixty (360) day year and actual days elapsed. In
no event shall the interest charged hereunder exceed the maximum permitted
under the laws of the State of New York or other applicable law.
This Note is issued pursuant to the terms and provisions of the letter
agreement re: Amendment to Financing Agreements, dated as of December __, 1995,
between Debtor and Payee (the "Amendment") to evidence the "LPC New York Real
Estate Loan B" (as defined in the Amendment) made by Payee to Debtor. This
Note is secured by the "Collateral" described in the Accounts Financing
Agreement [Security Agreement], dated January 11, 1990, by and between Payee
and Debtor, as amended (the "Accounts Agreement") and any agreement, document
or instrument now or at any time hereafter executed and/or delivered in
connection therewith or related thereto (the foregoing, as the same now exist
or may hereafter be amended, modified, supplemented, renewed, extended,
restated or replaced, are hereinafter collectively referred to as the
"Financing Agreements") and is entitled to all of the benefits and rights
thereof and of the Financing Agreements. At the time any payment is due
hereunder, at its option, Payee may charge the amount thereof to any account of
Debtor maintained by Payee.
If any principal or interest payment is not made when due hereunder,
and such failure shall continue for three (3) days, or if any other Event of
Default (as defined in the Accounts Agreement) shall occur for any reason, or
if the Financing Agreements shall be terminated or not renewed for any reason
whatsoever, then and in any such event, in addition to all rights and remedies
of Payee under the Financing Agreements, applicable law or otherwise, all such
rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively and
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<PAGE> 12
concurrently, Payee may, at its option, declare any or all of Debtor's
obligations, liabilities and indebtedness owing to Payee under the Financing
Agreements (the "Obligations"), including, without limitation, all amounts
owing under this Note, to be due and payable, whereupon the then unpaid balance
hereof together with all interest accrued thereon, shall forthwith become due
and payable, together with interest accruing thereafter at the then applicable
rate stated above until the indebtedness evidenced by this Note is paid in
full, plus the costs and expenses of collection hereof, including, but not
limited to, reasonable attorneys' fees.
Debtor (i) waives diligence, demand, presentment, protest and notice
of any kind, (ii) agrees that it will not be necessary for any holder hereof to
first institute suit in order to enforce payment of this Note and (iii)
consents to any one or more extensions or postponements of time of payment,
release, surrender or substitution of collateral security, or forbearance or
other indulgence, without notice or consent. Upon the occurrence and during
the continuance of any Event of Default, Payee shall have the right, but not
the obligation to setoff against this Note all money owed by Payee to Debtor.
Payee shall not be required to resort to any Collateral for payment,
but may proceed against Debtor and any guarantors or endorsers hereof in such
order and manner as Payee may choose. None of the rights of Payee shall be
waived or diminished by any failure or delay in the exercise thereof.
Debtor hereby waives the right to a trial by jury and all rights of
setoff and rights to interpose counterclaims and cross-claims in any litigation
or proceeding arising in connection with this Note, the Accounts Agreement, the
other Financing Agreements, the Obligations or the Collateral, other than
compulsory counterclaims, the non-assertion of which would result in a
permanent waiver. Debtor hereby irrevocably consents to the non-exclusive
jurisdiction of the Supreme Court of the State of New York and of the United
States District Court for the Southern District of New York for all purposes in
connection with any action or proceeding arising out of or relating to this
Note, the Accounts Agreement, the other Financing Agreements, the Obligations
or the Collateral and further consents that any process or notice of motion or
other application to said Courts or any judge thereof, or any notice in
connection with any proceeding hereunder may be served (i) inside or outside
the State of New York by registered or certified mail, return receipt
requested, and service or notice so served shall be deemed complete five (5)
days after the same shall have been posted or (ii) in such other manner as may
be permissible under the rules of said Courts. Within thirty (30) days after
such mailing, Debtor shall appear in answer to such process or notice of motion
or other application to said Courts, failing which Debtor shall
-3-
<PAGE> 13
be deemed in default and judgment may be entered by Payee against Debtor for
the amount of the claim and other relief requested therein.
The execution and delivery of this Note has been authorized by the
Board of Directors of Debtor.
This Note, the other Obligations and the Collateral shall be governed
by and construed in accordance with the laws of the State of New York and shall
be binding upon the successors and assigns of Debtor and inure to the benefit
of Payee and its successors, endorsees and assigns. If any term or provision
of this Note shall be held invalid, illegal or unenforceable, the validity of
all other terms and provisions hereof shall in no way be affected thereby.
This Note may not be changed, modified or terminated orally, but only
by an agreement in writing signed by the Payee or the holder hereof.
Whenever used herein, the terms "Debtor" and "Payee" shall be deemed
to include their respective successors and assigns.
LEXINGTON PRECISION CORPORATION
ATTEST:
By:________________________
_____________________
Title:_____________________
[Corporate Seal]
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<PAGE> 1
Exhibit 1050
TERM PROMISSORY NOTE
--------------------
$375,000 New York, New York
January 16, 1996
FOR VALUE RECEIVED, LEXINGTON PRECISION CORPORATION, a Delaware
corporation (the "Debtor"), hereby unconditionally promises to pay to the order
of CONGRESS FINANCIAL CORPORATION, a California corporation (the "Payee"), at
the offices of Payee at 1133 Avenue of the Americas, New York, New York 10036,
or at such other place as the Payee or any holder hereof may from time to time
designate, the principal sum of THREE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS
($375,000) in lawful money of the United States of America and in immediately
available funds, in eighty-four (84) consecutive monthly installments (or
earlier as hereinafter referred to) on the first day of each month commencing
February 1, 1996, of which the first eighty-three (83) installments shall each
be in the amount of FOUR THOUSAND FOUR HUNDRED SIXTY-FOUR AND 29/100 DOLLARS
($4,464.29), and the last (i.e. eighty-fourth (84th)) installment shall be in
the amount of the entire unpaid balance of this Note.
Debtor hereby further promises to pay interest to the order of Payee
on the unpaid principal balance hereof at the Interest Rate. Such interest
shall be paid in like money at said office or place from the date hereof,
commencing February 1, 1996 and on the first day of each month thereafter until
the indebtedness evidenced by this Note is paid in full. Interest payable upon
and during the continuance of an Event of Default or following the effective
date of termination or non-renewal of the Financing Agreements shall be payable
upon demand.
For purposes hereof (a) the term "Interest Rate" shall mean, as to
Prime Rate Loans, a rate of one (1%) percent per annum in excess of the Prime
Rate and as to Eurodollar Rate Loans, a rate of three and one-quarter (3-1/4%)
percent per annum in excess of the Adjusted Eurodollar Rate; PROVIDED, THAT, at
Payee's option, the Interest Rate shall mean a rate of three (3%) percent per
annum in excess of the Prime Rate as to Prime Rate Loans and a rate of five and
one-quarter (5-1/4%) percent per annum in excess of the Adjusted Eurodollar
Rate as to Eurodollar Rate Loans, upon and during the continuance of an Event
of Default or following the effective date of termination or non-renewal of the
Financing Agreements, and (b) the term "Prime Rate" shall mean the rate from
time to time publicly announced by CoreStates Bank, N.A., or its successors, at
its office in Philadelphia, Pennsylvania, as its prime rate, whether or not
such announced rate is the best rate available at such bank. Unless otherwise
defined herein, all capitalized terms used herein shall have the meanings
assigned thereto in the Accounts Agreement (as hereinafter defined) and the
other Financing Agreements.
<PAGE> 2
The Interest Rate applicable to Prime Rate Loans payable hereunder
shall increase or decrease by an amount equal to each increase or decrease,
respectively, in the Prime Rate, effective on the first day of the month after
any change in the Prime Rate, based on the Prime Rate in effect on the last day
of the month in which any such change occurs. Interest shall be calculated on
the basis of a three hundred sixty (360) day year and actual days elapsed. In
no event shall the interest charged hereunder exceed the maximum permitted
under the laws of the State of New York or other applicable law.
This Note is issued pursuant to the terms and provisions of the letter
agreement re: Amendment to Financing Agreements, dated as of the date hereof,
between Debtor and Payee (the "Amendment") to evidence the "LPC Arizona Real
Estate Loan" (as defined in the Amendment) made by Payee to Debtor. This Note
is secured by the "Collateral" described in the Accounts Financing Agreement
[Security Agreement], dated January 11, 1990, by and between Payee and Debtor,
as amended (the "Accounts Agreement") and any agreement, document or instrument
now or at any time hereafter executed and/or delivered in connection therewith
or related thereto (the foregoing, as the same now exist or may hereafter be
amended, modified, supplemented, renewed, extended, restated or replaced, are
hereinafter collectively referred to as the "Financing Agreements") and is
entitled to all of the benefits and rights thereof and of the Financing
Agreements. At the time any payment is due hereunder, at its option, Payee may
charge the amount thereof to any account of Debtor maintained by Payee.
If any principal or interest payment is not made when due hereunder,
and such failure shall continue for three (3) days, or if any other Event of
Default (as defined in the Accounts Agreement) shall occur for any reason, or
if the Financing Agreements shall be terminated or not renewed for any reason
whatsoever, then and in any such event, in addition to all rights and remedies
of Payee under the Financing Agreements, applicable law or otherwise, all such
rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively and concurrently, Payee may, at its option, declare
any or all of Debtor's obligations, liabilities and indebtedness owing to Payee
under the Financing Agreements (the "Obligations"), including, without
limitation, all amounts owing under this Note, to be due and payable, whereupon
the then unpaid balance hereof together with all interest accrued thereon,
shall forthwith become due and payable, together with interest accruing
thereafter at the then applicable rate stated above until the indebtedness
evidenced by this Note is paid in full, plus the costs and expenses of
collection hereof, including, but not limited to, reasonable attorneys' fees.
-2-
<PAGE> 3
Debtor (i) waives diligence, demand, presentment, protest and notice
of any kind, (ii) agrees that it will not be necessary for any holder hereof to
first institute suit in order to enforce payment of this Note and (iii)
consents to any one or more extensions or postponements of time of payment,
release, surrender or substitution of collateral security, or forbearance or
other indulgence, without notice or consent. Upon the occurrence and during
the continuance of any Event of Default, Payee shall have the right, but not
the obligation to setoff against this Note all money owed by Payee to Debtor.
Payee shall not be required to resort to any Collateral for payment,
but may proceed against Debtor and any guarantors or endorsers hereof in such
order and manner as Payee may choose. None of the rights of Payee shall be
waived or diminished by any failure or delay in the exercise thereof.
Debtor hereby waives the right to a trial by jury and all rights of
setoff and rights to interpose counterclaims and cross-claims in any litigation
or proceeding arising in connection with this Note, the Accounts Agreement, the
other Financing Agreements, the Obligations or the Collateral, other than
compulsory counterclaims, the non-assertion of which would result in a
permanent waiver. Debtor hereby irrevocably consents to the non-exclusive
jurisdiction of the Supreme Court of the State of New York and of the United
States District Court for the Southern District of New York for all purposes in
connection with any action or proceeding arising out of or relating to this
Note, the Accounts Agreement, the other Financing Agreements, the Obligations
or the Collateral and further consents that any process or notice of motion or
other application to said Courts or any judge thereof, or any notice in
connection with any proceeding hereunder may be served (i) inside or outside
the State of New York by registered or certified mail, return receipt
requested, and service or notice so served shall be deemed complete five (5)
days after the same shall have been posted or (ii) in such other manner as may
be permissible under the rules of said Courts. Within thirty (30) days after
such mailing, Debtor shall appear in answer to such process or notice of motion
or other application to said Courts, failing which Debtor shall be deemed in
default and judgment may be entered by Payee against Debtor for the amount of
the claim and other relief requested therein.
The execution and delivery of this Note has been authorized by the
Board of Directors of Debtor.
This Note, the other Obligations and the Collateral shall be governed
by and construed in accordance with the laws of the State of New York and shall
be binding upon the successors and assigns of Debtor and inure to the benefit
of Payee and its successors, endorsees and assigns. If any term or provision
of
-3-
<PAGE> 4
this Note shall be held invalid, illegal or unenforceable, the validity of all
other terms and provisions hereof shall in no way be affected thereby.
This Note may not be changed, modified or terminated orally, but only
by an agreement in writing signed by the Payee or the holder hereof.
Whenever used herein, the terms "Debtor" and "Payee" shall be deemed
to include their respective successors and assigns.
LEXINGTON PRECISION CORPORATION
ATTEST:
By: Warren Delano
-----------------------
Kenneth I. Greenstein
- ------------------------ Title: President
-----------------------
[Corporate Seal]
-4-
<PAGE> 1
Exhibit 1051
TERM PROMISSORY NOTE
--------------------
$450,000 New York, New York
January 16, 1996
FOR VALUE RECEIVED, LEXINGTON PRECISION CORPORATION, a Delaware
corporation (the "Debtor"), hereby unconditionally promises to pay to the order
of CONGRESS FINANCIAL CORPORATION, a California corporation (the "Payee"), at
the offices of Payee at 1133 Avenue of the Americas, New York, New York 10036,
or at such other place as the Payee or any holder hereof may from time to time
designate, the principal sum of FOUR HUNDRED FIFTY THOUSAND DOLLARS ($450,000)
in lawful money of the United States of America and in immediately available
funds, in eighty-four (84) consecutive monthly installments (or earlier as
hereinafter referred to) on the first day of each month commencing February 1,
1996, of which the first eighty-three (83) installments shall each be in the
amount of FIVE THOUSAND THREE HUNDRED FIFTY-SEVEN AND 14/100 DOLLARS
($5,357.14), and the last (i.e. eighty-fourth (84th)) installment shall be in
the amount of the entire unpaid balance of this Note.
Debtor hereby further promises to pay interest to the order of Payee
on the unpaid principal balance hereof at the Interest Rate. Such interest
shall be paid in like money at said office or place from the date hereof,
commencing February 1, 1996 and on the first day of each month thereafter until
the indebtedness evidenced by this Note is paid in full. Interest payable upon
and during the continuance of an Event of Default or following the effective
date of termination or non-renewal of the Financing Agreements shall be payable
upon demand.
For purposes hereof (a) the term "Interest Rate" shall mean, as to
Prime Rate Loans, a rate of one (1%) percent per annum in excess of the Prime
Rate and as to Eurodollar Rate Loans, a rate of three and one-quarter (3-1/4%)
percent per annum in excess of the Adjusted Eurodollar Rate; PROVIDED, THAT, at
Payee's option, the Interest Rate shall mean a rate of three (3%) percent per
annum in excess of the Prime Rate as to Prime Rate Loans and a rate of five and
one-quarter (5-1/4%) percent per annum in excess of the Adjusted Eurodollar
Rate as to Eurodollar Rate Loans, upon and during the continuance of an Event
of Default or following the effective date of termination or non-renewal of the
Financing Agreements, and (b) the term "Prime Rate" shall mean the rate from
time to time publicly announced by CoreStates Bank, N.A., or its successors, at
its office in Philadelphia, Pennsylvania, as its prime rate, whether or not
such announced rate is the best rate available at such bank. Unless otherwise
defined herein, all capitalized terms used herein shall have the meanings
assigned thereto in the Accounts Agreement (as hereinafter defined) and the
other Financing Agreements.
<PAGE> 2
The Interest Rate applicable to Prime Rate Loans payable hereunder
shall increase or decrease by an amount equal to each increase or decrease,
respectively, in the Prime Rate, effective on the first day of the month after
any change in the Prime Rate, based on the Prime Rate in effect on the last day
of the month in which any such change occurs. Interest shall be calculated on
the basis of a three hundred sixty (360) day year and actual days elapsed. In
no event shall the interest charged hereunder exceed the maximum permitted
under the laws of the State of New York or other applicable law.
This Note is issued pursuant to the terms and provisions of the letter
agreement re: Amendment to Financing Agreements, dated as of the date hereof,
between Debtor and Payee (the "Amendment") to evidence the "LPC New York Real
Estate Loan A" (as defined in the Amendment) made by Payee to Debtor. This
Note is secured by the "Collateral" described in the Accounts Financing
Agreement [Security Agreement], dated January 11, 1990, by and between Payee
and Debtor, as amended (the "Accounts Agreement") and any agreement, document
or instrument now or at any time hereafter executed and/or delivered in
connection therewith or related thereto (the foregoing, as the same now exist
or may hereafter be amended, modified, supplemented, renewed, extended,
restated or replaced, are hereinafter collectively referred to as the
"Financing Agreements") and is entitled to all of the benefits and rights
thereof and of the Financing Agreements. At the time any payment is due
hereunder, at its option, Payee may charge the amount thereof to any account of
Debtor maintained by Payee.
If any principal or interest payment is not made when due hereunder,
and such failure shall continue for three (3) days, or if any other Event of
Default (as defined in the Accounts Agreement) shall occur for any reason, or
if the Financing Agreements shall be terminated or not renewed for any reason
whatsoever, then and in any such event, in addition to all rights and remedies
of Payee under the Financing Agreements, applicable law or otherwise, all such
rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively and concurrently, Payee may, at its option, declare
any or all of Debtor's obligations, liabilities and indebtedness owing to Payee
under the Financing Agreements (the "Obligations"), including, without
limitation, all amounts owing under this Note, to be due and payable, whereupon
the then unpaid balance hereof together with all interest accrued thereon,
shall forthwith become due and payable, together with interest accruing
thereafter at the then applicable rate stated above until the indebtedness
evidenced by this Note is paid in full, plus the costs and expenses of
collection hereof, including, but not limited to, reasonable attorneys' fees.
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<PAGE> 3
Debtor (i) waives diligence, demand, presentment, protest and notice
of any kind, (ii) agrees that it will not be necessary for any holder hereof to
first institute suit in order to enforce payment of this Note and (iii)
consents to any one or more extensions or postponements of time of payment,
release, surrender or substitution of collateral security, or forbearance or
other indulgence, without notice or consent. Upon the occurrence and during
the continuance of any Event of Default, Payee shall have the right, but not
the obligation to setoff against this Note all money owed by Payee to Debtor.
Payee shall not be required to resort to any Collateral for payment,
but may proceed against Debtor and any guarantors or endorsers hereof in such
order and manner as Payee may choose. None of the rights of Payee shall be
waived or diminished by any failure or delay in the exercise thereof.
Debtor hereby waives the right to a trial by jury and all rights of
setoff and rights to interpose counterclaims and cross-claims in any litigation
or proceeding arising in connection with this Note, the Accounts Agreement, the
other Financing Agreements, the Obligations or the Collateral, other than
compulsory counterclaims, the non-assertion of which would result in a
permanent waiver. Debtor hereby irrevocably consents to the non-exclusive
jurisdiction of the Supreme Court of the State of New York and of the United
States District Court for the Southern District of New York for all purposes in
connection with any action or proceeding arising out of or relating to this
Note, the Accounts Agreement, the other Financing Agreements, the Obligations
or the Collateral and further consents that any process or notice of motion or
other application to said Courts or any judge thereof, or any notice in
connection with any proceeding hereunder may be served (i) inside or outside
the State of New York by registered or certified mail, return receipt
requested, and service or notice so served shall be deemed complete five (5)
days after the same shall have been posted or (ii) in such other manner as may
be permissible under the rules of said Courts. Within thirty (30) days after
such mailing, Debtor shall appear in answer to such process or notice of motion
or other application to said Courts, failing which Debtor shall be deemed in
default and judgment may be entered by Payee against Debtor for the amount of
the claim and other relief requested therein.
The execution and delivery of this Note has been authorized by the
Board of Directors of Debtor.
This Note, the other Obligations and the Collateral shall be governed
by and construed in accordance with the laws of the State of New York and shall
be binding upon the successors and assigns of Debtor and inure to the benefit
of Payee and its successors, endorsees and assigns. If any term or provision
of
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<PAGE> 4
this Note shall be held invalid, illegal or unenforceable, the validity of all
other terms and provisions hereof shall in no way be affected thereby.
This Note may not be changed, modified or terminated orally, but only
by an agreement in writing signed by the Payee or the holder hereof.
Whenever used herein, the terms "Debtor" and "Payee" shall be deemed
to include their respective successors and assigns.
LEXINGTON PRECISION CORPORATION
ATTEST:
By: Warren Delano
-----------------------
Kenneth I. Greenstein
- ---------------------- Title: President
-----------------------
[Corporate Seal]
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<PAGE> 1
Exhibit 1052
PROMISSORY NOTE
$4,554,900.00 New York, New York
January 17, 1996
FOR VALUE RECEIVED, LEXINGTON PRECISION CORPORATION ("Debtor")
promises to pay to the order of THE CIT GROUP/EQUIPMENT FINANCING, INC.
("CIT"), at such address as CIT may designate, in lawful money of the United
States, the principal sum of FOUR MILLION FIVE HUNDRED FIFTY-FOUR THOUSAND NINE
HUNDRED and no/100 DOLLARS ($4,554,900.00) in forty-eight (48) equal
consecutive monthly installments, commencing on April 30, 1996 with the
following installments on the last day of each month thereafter until payment
in full of this Note. Each such installment shall be a payment of principal in
the amount of $94,893.75. Debtor shall pay interest together with each such
installment of principal, in like money, from the date hereof until payment in
full, on the unpaid principal balance hereof at an interest rate per annum
equal to three percent (3%) above the LIBOR Rate. Each payment shall be
applied first to the payment of any unpaid interest on the principal sum and
then to payment of principal. Interest shall be calculated on the basis of a
360-day year and actual number of days elapsed. Any amount not paid when due
under this Note shall bear late charges thereon, calculated at the Late Charge
Rate, from the due date thereof until such amount shall be paid in full. Any
payment received after the maturity of any installment of principal shall be
applied first to the payment of unpaid late charges, second to the payment of
any unpaid interest on said principal, and third to the payment of principal.
This Note is one of the Notes referred to in the Loan and Security
Agreement dated as of January , 1996, between Debtor and CIT (herein, as the
same may from time to time be amended, supplemented or otherwise modified,
called the "Agreement"), is secured as provided in the Agreement, and is
subject to prepayment only as provided therein, and the holder hereof is
entitled to the benefits thereof.
Terms defined in the Agreement shall have the same meaning when used
in this Note, unless the context shall otherwise require.
Except as provided in Section 6 of the Agreement, Debtor hereby waives
presentment, demand of payment, notice of dishonor, and any and all other
notices or demands in connection with the delivery, acceptance, performance,
default or enforcement of this Note and hereby consents to any extensions of
time, renewals, releases of any party to this Note, waivers or modifications
that may be granted or consented to by the holder of this Note.
Upon the occurrence and during the continuance of any one or more of
the Events of Default specified in the Agreement, the amounts then remaining
unpaid on this Note, together with any interest accrued, may be declared to be
(or, with respect to certain Events of Default, automatically shall become)
immediately due and payable as provided therein.
In the event that any holder shall institute any action for the
enforcement or the collection of this Note, there shall be immediately due and
payable, in addition to the unpaid balance hereof, all late charges and all
reasonable costs and expenses of such action, including reasonable attorneys'
fees. In accordance with the provisions of the Agreement, Debtor and CIT waive
trial by jury in any litigation relating to or in connection with this Note in
which they shall be adverse parties and Debtor hereby waives the right to
interpose any setoff counterclaim or defense of any nature or description
whatsoever, but Debtor shall have the right to assert in an independent action
against CIT any such defense, offset or counterclaim (including any compulsory
counterclaim) which it may have which has not otherwise been waived pursuant to
the Agreement.
Page 1 of 2
<PAGE> 2
Debtor agrees that its liabilities hereunder are absolute and
unconditional without regard to the liability of any other party, and that no
delay on the part of the holder hereof in exercising any power or right
hereunder shall operate a waiver thereof; nor shall any single or partial
exercise of any power or right hereunder preclude other or further exercise
thereof or the exercise of any other power or right.
If at any time this transaction would be usurious under applicable
law, then regardless of any provision contained in the Agreement, in this Note
or in any other agreement made in connection with this transaction, it is
agreed that (a) the total of all consideration which constitutes interest under
applicable law that is contracted for, charged or received upon the Agreement,
this Note or any such other agreement shall under no circumstances exceed the
maximum rate of interest authorized by applicable law and any excess shall be
credited to Debtor and (b) if CIT elects to accelerate the maturity of, or if
CIT permits Debtor to prepay the indebtedness described in, this Note, any
amounts which because of such action would constitute interest may never
include more than the maximum rate of interest authorized by applicable law and
any excess interest, if any, shall be credited to Debtor automatically as of
the date of acceleration or prepayment.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
LEXINGTON PRECISION CORPORATION
By: Warren Delano
-------------
Title: President
-------------
Page 2 of 2
<PAGE> 1
Exhibit 1053
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT dated as of January 17, 1996, is made by
and between LEXINGTON PRECISION CORPORATION ("DEBTOR") and THE CIT
GROUP/EQUIPMENT FINANCING, INC. ("CIT").
SECTION 1. DEFINITIONS.
All capitalized terms which are not defined herein are defined in Rider A
attached hereto and made a part hereof ("RIDER A"). Accounting terms not
specifically defined shall be construed in accordance with generally accepted
accounting principles.
SECTION 2. AMOUNT AND TERMS OF LOANS; GRANT OF SECURITY INTEREST.
Subject to the terms and conditions hereof, CIT agrees to make Loans to
Debtor from time to time, in the amounts described in paragraph 2 of Rider A.
Each Loan shall be evidenced by Debtor's Note, which Note shall set forth the
repayment terms and Interest Rate for such Loan.
As security for the prompt and complete payment and performance when due
of all the Obligations and in order to induce CIT to enter into this Agreement
and make the Loans and to extend other credit from time to time to Debtor,
whether under this Agreement or otherwise, Debtor hereby grants to CIT a first
priority security interest in all Debtor's right, title and interest in, to and
under the Collateral.
SECTION 3. CONDITIONS OF BORROWING.
CIT shall not be required to make any Loan hereunder unless on the
Closing Date thereof all legal matters with respect to, and all legal documents
executed in connection with, the contemplated transactions are satisfactory to
CIT and all of the following conditions are met to the satisfaction of CIT
(except that (a) and (b) are required in connection with the initial Loan
only): (a) CIT has received a satisfactory Secretary's Certificate certified by
Debtor's Secretary or Assistant Secretary; (b) Debtor has executed and
delivered to CIT the Note evidencing, and a Supplement describing the Equipment
to be financed by, such Loan; (c) the Equipment being financed by such Loan has
been delivered to, and accepted by, Debtor and CIT has received satisfactory
evidence that the Equipment is insured in accordance with the provisions hereof
and that the Cost thereof has been, or concurrently with the making of the Loan
shall be, fully paid; (d) CIT has received copies of the invoices and bills of
sale, if any, with respect to the Equipment being financed by such Loan; (e)
all filings, recordings and other actions (including the obtaining of landlord
and/or mortgagee waivers and a satisfactory intercreditor Agreement with
Congress) deemed necessary or desirable by CIT in order to perfect a first
priority security interest in the Equipment being financed by such Loan have
been duly effected, and all fees, taxes and other charges relating to such
filings and recordings have been paid by Debtor; (f) the representations and
warranties contained in this Agreement are true and correct in all material
respects with the same effect as if made on and as of such date, and no Default
or Event of Default is in existence on such date or shall occur as a result of
such Loan; (g) in the sole judgment of CIT, there has been no material adverse
change in the financial condition, business or operations of Debtor from the
date referred to in Section 4(j) hereof; (h) CIT has received from Debtor such
other documents and information as CIT has reasonably requested; (i) CIT has
inspected and appraised each item of used Equipment and found it satisfactory
in value and condition, and all items of Equipment shall be satisfactory to CIT
in value, condition and type, except that CIT has already so inspected and
approved the items of Equipment listed on EXHIBIT 1 hereto.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
In order to induce CIT to enter into this Agreement and to make each
Loan, Debtor represents and warrants to CIT that: (a) Debtor is a corporation
duly organized, validly existing and in good standing under the laws of its
State of incorporation, has the necessary authority and power to own the
Equipment and its other assets and to transact the business in which it is
engaged, is duly qualified to do business in each jurisdiction where the
Equipment is located and in each other jurisdiction in which the conduct of its
business or the ownership of its assets requires such qualification, and its
chief executive office is located at the address set forth in paragraph 6 of
Rider A; (b) Debtor has full power, authority and legal right to execute and
deliver this Agreement and the Notes, to perform its obligations hereunder and
thereunder, to borrow hereunder and to grant the security interest created
hereby; (c) this Agreement has been (and each Note when executed and delivered
shall have been) duly authorized, executed and delivered by Debtor and
constitutes (and each Note when executed and delivered shall constitute) a
legal, valid and binding obligation of Debtor enforceable in accordance with
its terms except as such rights may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights generally;
(d) the execution, delivery and performance by Debtor of this Agreement and the
Notes do not and will not violate any provision of any applicable law or
regulation or of any judgment or order of any court or governmental
instrumentality, and will not violate any provision of, or cause a default
under, any loan, other agreement, contract or judgment to which Debtor is a
party; (e) Debtor is not in default under any material agreement, contract or
judgment to which Debtor is a party; (f) Debtor has filed all tax returns that
are required to be filed and has paid all taxes as shown on said returns and
all assessments received by it to the extent such taxes and assessments have
become due other than those which are the subject of valid extensions and those
which are being contested in good faith by appropriate proceedings and as to
which appropriate reserves are being maintained by Debtor in accordance with
generally accepted accounting principles and so long as such proceedings
Page 1 of 8
<PAGE> 2
operate during the pendency thereof to prevent the sale, forfeiture, or loss
of the Collateral by or to such taxing authority, and Debtor does not have any
knowledge of any actual or proposed deficiency or additional assessment in
connection therewith; (g) to the best of its knowledge, there is no action,
audit, investigation or proceeding pending or threatened against or affecting
Debtor or any of its assets which involves any of the Equipment or any of the
contemplated transactions hereunder or which, if adversely determined, could
reasonably be expected to have a material adverse effect on Debtor's business,
operations or financial condition; (h) on each Closing Date, Debtor shall have
good and marketable title to the Equipment being financed on such date and CIT
shall have a perfected first Lien on such Equipment; and (i) (i) the operations
of Debtor comply in all material respects with all applicable Environmental
Laws; and (ii) except as disclosed to CIT, (A) none of the operations of Debtor
are subject to any judicial or administrative proceeding alleging the violation
of any Environmental Laws; (B) none of the operations of Debtor is the subject
of an investigation to determine whether any remedial action is needed to
respond to a release of any Hazardous Material into the environment; and (C)
Debtor has no known material contingent liability in connection with any
release of any Hazardous Material into the environment: (j) all annual and
quarterly financial statements of Debtor which have been delivered to CIT have
been prepared in accordance with generally accepted accounting principles
consistently applied, and present fairly in all material respects Debtor's
financial position as at, and the results of its operations for, the periods
ended on the dates set forth on such financial statements, and there has been
no material adverse change in Debtor's financial condition, business or
operations since September 30, 1995, as reflected in such financial statements;
(k) Debtor has not changed its name in the last five years or done business
under any other name except as previously disclosed in writing to CIT; and (l)
no consent of any Person, and no consent, license, approval or authorization
of, or registration or filing with, any governmental authority, bureau or
agency is required in connection with the execution, delivery and performance
of, and payment under, this Agreement or the Notes other than the consent of
Congress and the filing of financing statements.
SECTION 5. COVENANTS.
Debtor covenants and agrees that from and after the date hereof and so
long as the Commitment or any of the Notes is outstanding:
A. It will: (1) promptly give written notice to CIT of the occurrence of
any Event of Loss; (2) observe all material requirements of any governmental
authorities relating to the conduct of its business, to the performance of its
obligations hereunder, to the use, operation or ownership of the Equipment, or
to its other properties or assets, maintain its existence as a legal entity and
obtain and keep in full force and effect all material rights, franchises,
licenses and permits which are necessary to the proper conduct of its business,
and pay all fees, taxes, assessments and governmental charges or levies imposed
upon any of the Equipment; (3) at any reasonable time or times, permit CIT or
its authorized representative (A) upon prior written request to inspect the
Equipment and, (B) following the occurrence and during the continuation of an
Event of Default, to inspect the books and records of Debtor; (4) in accordance
with generally accepted accounting principles, keep proper books of record and
account in which entries will be made of all dealings or transactions in
relation to its business and activities; (5) furnish to CIT the following
financial statements, all in reasonable detail, prepared in accordance with
generally accepted accounting principles applied on a basis consistently
maintained throughout the period involved, (a) as soon as available, but not
later than 120 days after the end of each fiscal year, its consolidated balance
sheet as at the end of such fiscal year, and its consolidated statements of
income and consolidated statements of cash flow, including all footnotes, or
such fiscal year, together with comparative information for the prior fiscal
year, audited by Ernst & Young, LLP or other certified public accountants
reasonably acceptable to CIT; and (b) as soon as available, but not later than
90 days after the end of each of the first three quarterly periods of each
fiscal year, its consolidated balance sheet as at the end of such quarterly
period and its consolidated statements of income and consolidated statements of
cash flow for such quarterly period and for the portion of the fiscal year then
ended together with comparative information for the prior comparable period,
certified as to their accuracy by its chief financial officer; (6) furnish to
CIT, (i) together with the financial statements described in clauses 5(a) and
5(b) above, a statement signed by Debtor's chief financial officer certifying
that Debtor is in compliance with all financial covenants contained herein, or
if Debtor is not in compliance, the nature of such noncompliance or default,
and the status thereof (such statement shall set forth the actual calculations
of any financial covenants), and (ii) promptly, such additional financial and
other information as CIT may from time to time reasonably request; (7)
promptly, at Debtor's expense, execute and deliver to CIT such instruments and
documents, and take such action, as CIT may from time to time reasonably
request in order to carry out the intent and purpose of this Agreement and to
establish and protect the rights, interests and remedies created, or intended
to be created, in favor of CIT hereby, including, without limitation, the
execution, delivery, recordation and filing of financing statements (hereby
authorizing CIT, in such jurisdictions where such action is authorized by law,
to effect any such recordation or filing of financing statements without
Debtor's signature, and to file as valid financing statements in the applicable
financing statement records, photocopies hereof and of any other financing
statement executed in connection herewith); PROVIDED, HOWEVER, notwithstanding
anything in this Agreement to the contrary, in no event shall CIT file any
financing statement or other public document which specifically lists the
particular items of Equipment included in the Collateral; (8) warrant and
defend its good and marketable title to the Equipment, and CIT's perfected
first priority security interest in the Collateral, against all claims and
demands whatsoever (hereby agreeing that the Equipment shall be and at all
times remain separately identifiable personal property, and shall not become
part of any real estate), and will, at its expense, take such action as may be
necessary to prevent any other Person (other than Congress) from acquiring any
right or interest in the Equipment; (9) at Debtor's expense, if requested by
CIT in writing, attach to the Equipment a notice satisfactory to CIT disclosing
CIT's security interest in the Equipment; (10) at Debtor's expense, maintain
the Equipment in good condition and working order and furnish all parts,
replacements and servicing required therefor so that the value, condition and
operating efficiency thereof will at all times be maintained, normal wear and
tear excepted, and any repairs, replacements and parts added to the Equipment
in connection with any repair or maintenance or with any improvement, change,
addition or alteration shall immediately, without further act, become part of
the Equipment
Page 2 of 8
<PAGE> 3
and subject to the security interest created by this Agreement; and (11) obtain
and maintain at all times on the Collateral, at Debtor's expense, "All-Risk"
physical damage and, if required by CIT, liability insurance (including bodily
injury and property damage) in such amounts, against such risks, in such form
and with such insurers as shall be reasonably satisfactory to CIT; PROVIDED,
HOWEVER, that the amount of physical damage insurance shall not be less than
the then aggregate outstanding principal amount of the Notes. All physical
damage insurance policies shall be made payable to CIT as its interest may
appear; if liability insurance is required by CIT, the liability insurance
policies shall name CIT as an additional insured. Debtor shall maintain and
deliver to CIT the original certificates of insurance or other documents
satisfactory to CIT prior to policy expiration or upon CIT's request, but CIT
shall bear no duty or liability to ascertain the existence or adequacy of such
insurance. Each insurance policy shall, among other things, require that the
insurer give CIT at least 30 days' prior written notice of any material
alteration in the terms of such policy or the cancellation thereof and that the
interests of CIT be continued insured regardless of any breach of or violation
by Debtor of any warranties, declarations or conditions contained in such
insurance policy. The insurance maintained by the Debtor shall be primary with
no other insurance maintained by CIT (if any) contributory.
B. It will not: (1) sell, convey, transfer, exchange, lease or otherwise
relinquish possession or dispose of any of the Collateral or attempt or offer
to do any of the foregoing; (2) create, assume or suffer to exist any Lien
upon the Collateral except for the security interest created hereby and the
subordinate security interest in favor of Congress; (3) liquidate or dissolve;
(4) change the form of organization of its business; or (5) without thirty (30)
days prior written notice to CIT, change its name or its chief executive
office; (6) move (or in the case of titled vehicles, change the principal base
of) any of the Equipment from the location specified on the Supplement relating
thereto without the prior written consent of CIT except within the continental
United States upon 30 days prior written notice to CIT (provided that Debtor
delivers to CIT such financing statements as CIT requests to maintain its
perfected first priority security interest in such Equipment); or (7) make or
authorize any improvement, change, addition or alteration to the Equipment
which would impair its originally intended function or use or its value.
Notwithstanding anything herein to the contrary, Debtor shall have the right to
substitute up to $1,000,000.00 of items of Equipment included in the Collateral
with other items of Equipment of a like type and of a value and utility equal
to or greater than the Equipment replaced, or other items of Equipment
acceptable to CIT. Any Equipment which is so substituted for shall no longer
be Collateral for purposes of this Agreement.
SECTION 6. EVENTS OF DEFAULT; REMEDIES.
The following events shall each constitute an "EVENT OF DEFAULT"
hereunder: (a) Debtor shall fail to pay any principal or interest on any Note
within 10 days after the same becomes due (whether at the stated maturity, by
acceleration or otherwise) or shall fail to pay any other Obligation when due
(whether at the stated maturity, by acceleration or otherwise) which failure is
not cured within 10 days after Debtor's receipt of notice from CIT; (b) any
representation or warranty made by Debtor in this Agreement or in any document,
certificate or financial or other statement now or hereafter furnished by
Debtor in connection with this Agreement or any Loan shall at any time prove to
be untrue or misleading in any material respect as of the time when made; (c)
Debtor shall fail to observe any covenant, condition or agreement contained in
Sections 5.A(11) or 5.B hereof or in paragraphs 4 or 5(b) of Rider A, which
failure shall continue for a period of ten (10) days after receipt of notice
from CIT; (d) Debtor shall fail to observe or perform any other covenant or
condition contained in this Agreement, and such failure shall continue
unremedied for a period of 30 days after the date on which notice thereof shall
be given by CIT to Debtor; (e) Debtor or any affiliate of Debtor shall default
(i) in the payment of, or other performance under, any obligation for payment
or lease (whether or not capitalized) or any guarantee to CIT or any affiliate
of CIT beyond the period of grace, if any, provided with respect thereto, or
(ii) in the payment or performance of any obligation for borrowed money to any
other Person beyond the period of grace, if any, provided with respect thereto,
where such obligation or amount guaranteed is in excess of $100,000 if such
obligation for borrowed money is accelerated as a result thereof; (f) a
complaint in bankruptcy or for arrangement or reorganization or for relief
under any insolvency law is filed by or against Debtor (and when filed against
Debtor is in effect for 60 days) or Debtor admits its inability to pay its
debts as they mature; or (g) upon the expiration of Debtor's current revolving
loan facility with Congress, Debtor shall fail to renew such facility with
Congress or shall fail to replace such facility with another lender reasonably
acceptable to CIT with terms and conditions reasonably acceptable to CIT.
If an Event of Default shall occur and be continuing, CIT may, by notice
of default given to Debtor, do any one or more of the following: (a) terminate
the Commitment and/or (b) declare the Notes to be due and payable, whereupon
the principal amount of the Notes, together with accrued interest thereon and
all other amounts owing under this Agreement and the Notes, shall become
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived (and in the case
of any Event of Default specified in clause (f) of the above paragraph, such
acceleration of the Notes shall be automatic, without any notice by CIT). In
addition, if an Event of Default shall occur and be continuing, CIT may
exercise all other rights and remedies available to it, whether under this
Agreement, under any other instrument or agreement securing, evidencing or
relating to the Obligations, under the Code, or otherwise available at law or
in equity. Without limiting the generality of the foregoing, Debtor agrees
that in any such event, CIT, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon Debtor or any other Person (all
and each of which demands, advertisements and notices are hereby expressly
waived), may forthwith do any one or more of the following: collect, receive,
appropriate and realize upon the Collateral or any part thereof, and sell,
lease, assign, give an option or options to purchase or otherwise dispose of
and deliver, the Collateral (or contract to do so), or any part thereof, in one
or more parcels at public or private sale or sales at such places and at such
prices as it may deem best, for cash or on credit or for future delivery
without the assumption of any credit risk. CIT shall have the right upon any
such public sale or sales, and, to the extent permitted
Page 3 of 8
<PAGE> 4
by law, upon any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption of Debtor,
which right or equity is hereby expressly released. Debtor further agrees, at
CIT's request, to assemble (at Debtor's expense) the Collateral and make it
available to CIT at such places which CIT shall select, whether at Debtor's
premises or elsewhere but not more than 1000 miles from Debtor's premises. CIT
shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale (after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care, safekeeping
or otherwise of any or all of the Collateral or in any way relating to the
rights of CIT hereunder, including reasonable attorney's fees and legal
expenses) to the payment in whole or in part of the Obligations, in such order
as CIT may elect. Debtor agrees that CIT need not give more than 10 days'
notice of the time and place of any public sale or of the time after which a
private sale may take place and that such notice is reasonable notification of
such matters. Debtor shall be liable for any deficiency if the proceeds of any
sale or disposition of the Collateral are insufficient to pay all amounts to
which CIT is entitled. Debtor agrees to pay all costs of CIT, including
reasonable attorneys' fees, incurred with respect to collection of any of the
Obligations and enforcement of any of CIT's rights hereunder. To the extent
permitted by law, Debtor hereby waives presentment, demand, protest or any
notice (except as expressly provided in this Section 6) of any kind in
connection with this Agreement or any Collateral.
SECTION 7. MISCELLANEOUS.
No failure or delay by CIT in exercising any right, remedy or privilege
hereunder or under any Note shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy or privilege hereunder or
thereunder preclude any other or further exercise thereof or the exercise of
any other right, remedy or privilege. No right or remedy in this Agreement is
intended to be exclusive but each shall be cumulative and in addition to any
other remedy referred to herein or otherwise available to CIT at law or in
equity; and the exercise by CIT of any one or more of such remedies shall not
preclude the simultaneous or later exercise by CIT of any or all such other
remedies. No express or implied waiver by CIT of an Event of Default shall in
any way be, or be construed to be, a waiver of any other or subsequent Event of
Default. The acceptance by CIT of any regular installment payment or any other
sum owing hereunder shall not (a) constitute a waiver of any Event of Default
in existence at the time, regardless of CIT's knowledge or lack of knowledge
thereof at the time of such acceptance, or (b) constitute a waiver of any Event
of Default unless CIT shall have agreed in writing to waive the Event of
Default.
All notices, requests and demands to or upon any party hereto shall be
deemed duly given or made when sent, if given by telecopier, when delivered, if
given by personal delivery or overnight commercial carrier, or the fifth
calendar day after deposit in the United States mail, certified mail, return
receipt requested, addressed to such party at its address (or telecopier
number) set forth in paragraph 6 of Rider A or such other address or telecopier
number as may be hereafter designated in writing by such party to the other
party hereto.
Debtor agrees (A) to pay or reimburse CIT for (i) all expenses of CIT in
connection with the documentation hereof; (ii) all fees, taxes and expenses of
whatever nature incurred in connection with the creation, preservation and
protection of CIT's security interest in the Collateral, including, without
limitation, all filing and lien search fees, payment or discharge of any taxes
or Liens upon, or in respect to, the Collateral, and all other fees and
expenses reasonably incurred in connection with protecting or maintaining the
Collateral or in connection with defending or prosecuting any actions, suits or
proceedings arising out of, or related to, the Collateral; and (iii) all costs
and expenses (including reasonable legal fees and disbursements) of CIT in
connection with the enforcement of this Agreement and the Notes, and (B) to
pay, and to indemnify and hold CIT harmless from and against any and all
liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, suits, out-of-pocket costs, expenses (including reasonable legal
expenses) or disbursements of any kind or nature whatsoever arising out of or
with respect to (a) this Agreement, the Collateral or CIT's interest therein,
including, without limitation, the execution, delivery, enforcement,
performance or administration of this Agreement and the Notes and the
manufacture, purchase, ownership, possession, use, selection, operation or
condition of the Collateral or any part thereof, or (b) Debtor's violation or
alleged violation of any Environmental Laws or any law or regulation relating
to Hazardous Materials (the foregoing being referred to as the "indemnified
liabilities"), PROVIDED, that Debtor shall have no obligation hereunder with
respect to indemnified liabilities arising from the gross negligence or willful
misconduct of CIT. If Debtor fails to perform or comply with any of its
agreements contained in this Agreement and CIT shall itself perform, comply or
cause performance or compliance, the expenses of CIT so incurred, together with
interest thereon at the Late Charge Rate, shall be payable by Debtor to CIT on
demand and until such payment is made shall constitute Obligations hereunder.
The agreements and indemnities contained in this paragraph shall survive
termination of this Agreement and payment of the Notes.
This Agreement contains the complete, final and exclusive statement of
the terms of the agreement between CIT and Debtor related to the contemplated
transactions, and neither this Agreement, nor any terms hereof, may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of a change, waiver, discharge or
termination is sought.
This Agreement shall be binding upon, and inure to the benefit of, Debtor
and CIT and their respective successors and assigns, except that Debtor may not
assign or transfer its rights hereunder or any interest herein without the
prior written consent of CIT.
Headings of sections and paragraphs are for convenience only, are not
part of this Agreement and shall not be deemed to affect the meaning or
construction of any of the provisions hereof. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining
Page 4 of 8
<PAGE> 5
provisions hereof, and any such prohibition or unenforceability shall not
invalidate or render unenforceable such provision in any other jurisdiction.
Debtor hereby authorizes CIT to correct patent errors and to fill in such
blanks as dates herein and in the Notes, Supplements and in any document
executed in connection herewith.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
DEBTOR HEREBY IRREVOCABLY CONSENTS AND AGREES THAT ANY LEGAL ACTION IN
CONNECTION WITH THIS AGREEMENT MAY BE INSTITUTED IN THE COURTS OF THE STATE OF
NEW YORK, IN THE COUNTY OF NEW YORK OR THE UNITED STATES COURTS FOR THE
SOUTHERN DISTRICT OF NEW YORK, AS CIT MAY ELECT, AND BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, DEBTOR HEREBY IRREVOCABLY ACCEPTS AND SUBMITS TO, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, THE NON-EXCLUSIVE JURISDICTION OF ANY SUCH
COURT, AND TO ALL PROCEEDINGS IN SUCH COURTS. DEBTOR AND CIT ACKNOWLEDGE THAT
JURY TRIALS OFTEN ENTAIL ADDITIONAL EXPENSES AND DELAYS NOT OCCASIONED BY
NONJURY TRIALS. DEBTOR AND CIT AGREE AND STIPULATE THAT A FAIR TRIAL MAY BE
HAD BEFORE A STATE OR FEDERAL JUDGE BY MEANS OF A BENCH TRIAL WITHOUT A JURY.
IN VIEW OF THE FOREGOING, AND AS A SPECIFICALLY NEGOTIATED PROVISION OF THIS
AGREEMENT, DEBTOR AND CIT HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF
AN CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT, OR
THE TRANSACTIONS RELATED HERETO, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT O TORT OR OTHERWISE; AND DEBTOR AND CIT HEREBY
AGREE AND CONSENT THAT DEBTOR OR CIT MAY FILE AN ORIGINAL COUNTERPART OR A COPY
OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their duly authorized officers as of January 17,
1996.
CIT: DEBTOR:
THE CIT GROUP/EQUIPMENT LEXINGTON PRECISION CORPORATION,
FINANCING, INC., A DELAWARE CORPORATION
A NEW YORK CORPORATION
By: Richard J. Doherty By: Warren Delano
------------------ -----------------------
Title: Senior Vice President Title: President
--------------------- ----------------------
Page 5 of 8
<PAGE> 6
RIDER A TO
LOAN AND SECURITY AGREEMENT
DATED AS OF JANUARY 17, 1996
BETWEEN THE CIT GROUP/EQUIPMENT FINANCING, INC. ("CIT") AND
LEXINGTON PRECISION CORPORATION ("DEBTOR").
1. DEFINITIONS. As used in the Loan and Security Agreement, the following
terms shall have the following defined meanings (applicable to both singular
and plural forms), unless the context otherwise requires:
"Agreement": "hereof", "hereto", "hereunder" and words of similar meaning:
the Loan and Security Agreement of even date herewith between Debtor and CIT
including this Rider A and any other rider, schedule and exhibit executed by
Debtor and CIT in connection herewith, as from time to time amended, modified
or supplemented.
"Appraisal": an appraisal satisfactory to CIT commissioned by CIT with
respect to the items of used Equipment. {this definition can be made more
specific once the appraiser is engaged and the appraisal conducted].
"Business Day": a day other than a Saturday, Sunday or legal holiday under
the laws of the State of New York. "
"Cash Flow Coverage Ratio": with respect to Debtor shall mean at any
time, the sum of Debtor's net income, depreciation and amortization
less its dividends divided by the current portion of its long term debt
excluding its 12 3/4% Senior Subordinated Notes due February 1, 2002 in the
original principal amount of $31,720,000; PROVIDED; that for the purposes of
this calculation the Debtor's results of operations for any twelve-month period
shall exclude any write-down or write-off of assets (whether tangible or
intangible) of any manufacturing facility or business unit of the Debtor which
is recorded by Debtor as a result of the restructuring, relocation, shut-down
or sale of such manufacturing facility or business unit or as a result of
compliance with Financial Accounting Standard No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of.
"Closing Date": each date on which a Loan is made.
"Code": the Uniform Commercial Code as from time to time in effect in any
applicable jurisdiction.
"Collateral": the Equipment and the Proceeds thereof.
"Commitment": CIT's obligation to make Loans in the aggregate principal
amount stated in paragraph 2 of this Rider A.
"Congress": Congress Financial Corporation and its successors and assigns.
"Cost": with respect to any item of new Equipment, the seller's invoiced
purchase price therefor (after giving effect to any discount or
other reduction) payable by Debtor excluding all other amounts and expenses
payable by Debtor unless approved by CIT such as installation, freight,
tooling, delivery charges, sales taxes, site preparation, and other similar
costs with respect Equipment or, with respect to any item of used Equipment,
such amount as CIT may approve. The Cost shall be set forth in the applicable
Supplement.
"Default": any event which with notice, lapse of time, or both would
constitute an Event of Default.
"Equipment": any and all items of property which are listed on
Supplements, together with all now owned or hereafter acquired accessories,
parts, repairs, replacements, substitutions, attachments, modifications,
additions, improvements, upgrades and accessions of, to or upon such items of
property.
"Environmental Laws": the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, any
so-called "Superfund" or "Superlien" law, the Toxic Substances Control Act, or
any other federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing liability or
standards of conduct concerning, any hazardous, toxic or dangerous waste,
substance or material, as now or at any time hereafter in effect.
"Event Of Default": as set forth in Section 6 of the Agreement.
"Event Of Loss": with respect to any item of Equipment, (i) the actual or
constructive loss or loss of use thereof, due to theft, destruction, damage
beyond repair or to an extent which makes repair uneconomical, or (ii) the
condemnation, confiscation or seizure thereof, or requisition of title thereto,
or use thereof, by any Person.
"Hazardous Materials": any pollutant or contaminant defined as such in (or
for the purposes of) any Environmental Laws including, but not limited to,
petroleum, any radioactive material, and asbestos in any form or condition.
"Indebtedness" shall mean all items which, in accordance with generally
accepted accounting principles, consistently applied, would be included in
determining total liabilities of Debtor shown on the liability side of its
balance sheet as at the date such Indebtedness is to be calculated.
"Installment Payment Date": with respect to any Note, each date on which a
regular installment of interest is due.
"Interest Rate": as set forth in paragraph 3 of this Rider A.
"Interest Rate Period" shall mean each successive one-month period
beginning on the day each Loan is made and ending on the day before such date
in the subsequent month.
"Late Charge Rate": a rate per annum equal to the higher of 3% over the
applicable Interest Rate, but not to exceed the highest rate permitted by
applicable law.
"Libor Rate": shall mean the rate of interest equal to the thirty (30)-day
London Interbank Offered Rate on United States Dollars as reported and
published in THE WALL STREET JOURNAL. The LIBOR Rate in effect during any
Interest Rate Period shall be the LIBOR Rate in effect at the close of business
on the latest Rate Determination Date preceding the Installment Payment Date
upon which such Interest Rate Period commences.
Page 6 of 8
<PAGE> 7
"Liens": liens, mortgages, security interests, financing statements or
other encumbrances of any kind whatsoever.
"Loan": each loan made pursuant to the Agreement.
"Note": each promissory note executed and delivered by Debtor pursuant
hereto, satisfactory in form and substance to CIT.
"Obligations": all indebtedness, obligations, liabilities and performance
of Debtor to CIT, now existing or hereafter incurred under, arising out of, or
in connection with, the Agreement or any Note.
"Parent Company": any Person having beneficial ownership (directly or
indirectly) of 25% or more of Debtor's shares of voting stock.
"Person": an individual, partnership, corporation, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"Prepayment Percentage": on the date of any prepayment of any Note
pursuant to the Agreement (i) during or prior to the first twelve months
thereof, 3%, (ii) during the second twelve months thereof, 1.5%, and
thereafter 0%. The first twelve month period shall commence on the Installment
Payment Date first occurring after March 31, 1996.
"Proceeds": the meaning assigned to it in the Code, and in any event,
including, without limitation, (i) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to Debtor from time to time with
respect to any of the Equipment; (ii) any and all payments made, or due and
payable from time to time, in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Equipment by any
Person; (iii) any and all accounts arising out of, or chattel paper evidencing
a lease of, any of the Equipment; and (iv) any and all other rents or profits
or other amounts from time to time paid or payable in connection with any of
the Equipment.
"Prohibited Transaction": a transaction in which: (i) Debtor enters into
any transaction of merger or consolidation where (x) it shall not be the
surviving corporation or (y) if it is the surviving corporation, after giving
effect to such merger or consolidation its tangible net worth does not equal or
exceed that which existed prior to such merger or consolidation; or (ii) Debtor
sells, transfers or otherwise disposes of all or substantially all its assets;
or (iii) any Person, or group of Persons acting together, becomes or agrees to
become the beneficial owner (directly or indirectly) of 25% or more of Debtor's
shares of voting stock (excluding current shareholders and their affiliates as
of the date of this Agreement owning in the aggregate 25% or more of Debtor's
shares of voting stock).
"Rate Determination Date" shall mean with respect to any Interest Rate
Period for any Loan made hereunder, shall mean the third preceding Business Day
prior to the commencement of any Interest Rate Period, or if such day is not a
day on which THE WALL STREET JOURNAL is published (or if published, does not
publish the LIBOR Rate), then on the next preceding day prior to the day on
which THE WALL STREET JOURNAL is published and reports the LIBOR Rate.
"Supplement": each supplement executed and delivered by Debtor pursuant
hereto, satisfactory in form and substance to CIT.
"Working Capital": shall mean and include, at any time, the amount, if
any, by which (i) the aggregate net book value of all assets of Debtor which
would, in accordance with generally accepted accounting principles,
consistently applied, be classified as current assets at any such time, exceeds
(ii) all Indebtedness of Debtor which would, in accordance with generally
accepted accounting principles, consistently applied, be classified as current
liabilities at such time; PROVIDED, THAT in computing Working Capital
hereunder, none of the Obligations of Debtor to CIT and none of the obligations
of Debtor to Congress shall be considered current liabilities.
2. LOAN AND COMMITMENT. The aggregate principal amount of all Loans shall not
exceed the lesser of (x) $5,000,000.00 or (y) the sum of (i) $2,600,000 with
respect to the items of Equipment listed on EXHIBIT 1 hereto; (ii) 100% of the
fair market value (as determined by CIT) of the used Equipment not listed on
Exhibit 1 but set forth on the Appraisal and (iii) 100% of the Cost (as
approved by CIT) of items of new and used Equipment not listed on the
Appraisal, which items are satisfactory to CIT. Each Loan shall be in a
principal amount of not less than $300,000, and CIT shall not make more than
four (4) Loans. Each Loan shall be amortized in level payments of principal.
Interest on the unpaid principal balance shall be payable at the rate specified
in the Notes. With respect to any Loan made prior to March 31, 1996, interest
only shall be payable through March 31, 1996 and thereafter the Loan shall be
payable in forty-eight (48) payments equal payments of principal commencing on
April 30, 1996. Interest shall be payable monthly on the last day of each
calendar month. CIT's Commitment shall terminate on July 31, 1996. The
proceeds of each Loan shall be to finance the purchase of, or reimburse Debtor
for the cost of, the Equipment.
3. INTEREST RATE. The interest rate per annum on the unpaid principal amount of
each Loan shall be equal to the LIBOR Rate plus 3.00%.
4. FINANCIAL COVENANTS. Debtor agrees that so long as any Note remains
outstanding and unpaid, Debtor shall, directly or indirectly, at all times: (a)
maintain on a basis consolidated with Debtor's direct and indirect
subsidiaries, Working Capital of not less than $1,000,000; (b) maintain on a
basis consolidated with Debtor's direct and indirect subsidiaries, a minimum
Net Worth of not less than negative $9,500,000; (c) maintain a Cash Flow
Coverage Ratio of not less than 1.25 to 1.0; or (d) not incur, make or commit
to make any expenditure in respect of the purchase or other acquisition of
fixed or capital assets including leases which in accordance with generally
accepted accounting principles should be capitalized on the books of Debtor
(including normal replacements and maintenance) which after giving effect
thereto, would cause the aggregate amount of such capital expenditures by
Debtor to exceed $15,000,000 (on a non-cumulative basis) in any fiscal year.
Page 7 of 8
<PAGE> 8
5. PREPAYMENT. (a) Should any item of Equipment suffer an Event of Loss, Debtor
shall either replace such item of Equipment within 60 days with equipment
(which shall become Equipment) of a value and utility equal to or greater than
that of the Equipment suffering the Event of Loss (such determination of value
and utility being deemed made immediately prior to the Event of Loss) or make a
prepayment on the corresponding Note within 60 days after the occurrence of the
Event of Loss. The amount to be prepaid shall be (i) the unpaid principal
amount of such Note multiplied by a fraction the numerator of which is the Cost
of the item of Equipment which suffered the Event of Loss and the denominator
of which is the Cost of all items of Equipment less the Cost of each item of
Equipment which previously suffered an Event of Loss or for which a prepayment
has otherwise previously been made (the "PREPAID PRINCIPAL AMOUNT"), (ii) all
other amounts then due and owing hereunder and under the Notes and (iii) an
amount equal to the product of the Prepayment Percentage and the Prepaid
Principal Amount.
(b) A Prohibited Transaction may be consummated only with CIT's prior
written consent. Not less than twenty (20) Business Days prior to the date the
proposed Prohibited Transaction is expected to be consummated, Debtor shall
give CIT written notice of the proposed Prohibited Transaction. In the event
CIT does not consent to the Prohibited Transaction and the Prohibited
Transaction is nonetheless to be consummated, Debtor shall, on or prior to the
date the Prohibited Transaction is to be consummated, prepay the outstanding
principal under all Notes together with (1) all interest accrued thereon, (2)
all other amounts then due and owing hereunder and under the Notes, and (3) an
amount equal to the product of the Prepayment Percentage and the outstanding
principal amount of the Notes.
(c) On any Installment Payment Date Debtor may, at its option, on at least
30 days' prior written notice to CIT, prepay all, but not less than all, of the
outstanding principal under all Notes executed hereunder together with (i) all
interest accrued thereon to the date of prepayment, (ii) all other amounts then
due and owing hereunder or under the Notes, and (iii) an amount equal to the
product of the outstanding principal under all Notes and the Prepayment
Percentage.
(d) Except as provided in (a), (b) or (c) of this paragraph 5, the Notes
may not be prepaid in whole or in part.
6. ADDRESSES FOR NOTICE PURPOSES AND DEBTOR'S CHIEF EXECUTIVE OFFICE.
<TABLE>
<CAPTION>
CIT: DEBTOR:
<S> <C>
THE CIT GROUP/EQUIPMENT FINANCING, INC. LEXINGTON PRECISION CORPORATION
1211 Avenue of the Americas c/o Lubin Delano & Co.
21st Floor 767 Third Avenue
New York, New York 10036 New York, New York 10017
Telecopier No. (212) 536-1385 Telecopier No. (212) 319-4659
Attention: Senior Vice President/Credit Attention: Warren Delano
</TABLE>
7. COMMITMENT FEE. CIT acknowledges receipt from Debtor of a commitment fee in
the amount of $25,000. CIT agrees to refund to Debtor after the expiration of
the commitment period hereunder and completion by CIT of all follow-up matters
related to the transactions contemplated hereby, as the refundable portion of
the Commitment Fee, the amount determined in accordance with the following
formula:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Refund = $25,000 Fee Aggregate principal amount of all Loans made
X hereunder - not to exceed $5,000,000
--------------------------------------------
$5,000,0000
</TABLE>
Such refund shall be net, however, of any unreimbursed out-of-pocket fees,
costs, disbursements and expenses incurred by CIT in connection with the
transactions contemplated hereby. Debtor agrees that the difference, if any,
between the amount of the Commitment Fee and the amount determined in
accordance with the foregoing formula shall be retained by CIT.
THE PROVISIONS SET FORTH IN THIS RIDER A ARE INCORPORATED IN AND MADE A PART OF
THE LOAN AND SECURITY AGREEMENT BETWEEN CIT AND DEBTOR DATED AS OF JANUARY 17,
1996.
<TABLE>
<CAPTION>
<S> <C>
CIT: DEBTOR:
THE CIT GROUP/EQUIPMENT LEXINGTON PRECISION
FINANCING, INC., A NEW YORK CORPORATION A DELAWARE CORPORATION,
By: Richard J. Doherty By: Warren Delano
--------------------------------------------- ---------------------------------------------
Title: Senior Vice President Title: President
------------------------------------------ ------------------------------------------
</TABLE>
Page 8 of 8
<PAGE> 1
EXHIBIT 1054
AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 1 dated as of February 29, 1996, to LOAN AND SECURITY
AGREEMENT, dated as of January 17, 1996 (the "Agreement"), between LEXINGTON
PRECISION CORPORATION., and THE CIT GROUP/EQUIPMENT FINANCING, INC. ("Amendment
No. 1").
RECITAL
-------
CIT and Debtor desire to amend the Agreement to provide for, among
other things, an adjustment in the method by which the Interest Rate is
determined from time to time as hereinafter set forth.
IN CONSIDERATION OF THE FOREGOING and the mutual covenants and
agreements herein contained, CIT and Debtor hereby agree as follows:
1. DEFINITIONS. Terms defined in the Agreement shall have the
same meanings herein unless otherwise defined herein or unless the context
clearly requires otherwise.
2. AMENDMENTS TO THE AGREEMENT.
---------------------------
(a) The reference in the definition of "Cash Flow Coverage Ratio" in
Section 1 of Rider A to "February 1, 2002" is hereby changed to "February 1,
2000."
(b) The definition of "Interest Rate Period" in Section 1 of Rider A
is hereby amended in its entirety to read as follows:
"INTEREST RATE PERIOD" shall mean each successive one-month
period beginning on the day each Loan is made and ending on
the day before such date in the subsequent month; PROVIDED,
HOWEVER, that if a Loan is made on a day other than the last
day of the month, then the first Interest Rate Period shall
commence on the day such Loan is made and end on the day
before the last day of the month, so that all succeeding
Interest Rate Periods shall commence on the last day of the
month.
(c) Section 2 of Rider A is hereby amended in its entirety to read as
follows:
2. LOAN AND COMMITMENT. The aggregate principal amount
of all Loans shall not exceed the lesser of (x) $5,500,000.00
or (y) the sum of (i) $2,600,000 with respect to the items of
Equipment presented to CIT which are located in Casa Grande,
Arizona; (ii) 100% of the fair market value (as determined by
CIT) of the used Equipment set forth on the Appraisal other
than those items presented to CIT and located in Casa Grande,
Arizona; and (iii) 100% of the Cost (as approved by CIT) of
items of new and used Equipment not listed on the Appraisal,
which items are satisfactory to CIT. Each Loan shall be in a
principal amount of not less than $300,000, and CIT shall not
make more than four (4) Loans. Each Loan shall be amortized
in level payments of principal. Interest on the unpaid
principal balance shall be payable at the rate specified in
the Notes. Each Loan shall be payable in forty-eight (48)
payments equal payments of principal commencing on April 30,
1996, and interest shall be payable monthly on the last day of
each calendar month commencing on April 30, 1996 (in the case
of both principal and interest, assuming no Loan is made after
April 30, 1996). CIT's Commitment shall terminate on July 31,
1996. The proceeds of each Loan shall be to finance the
purchase of, or reimburse Debtor for the cost of, the
Equipment.
<PAGE> 2
(d) The reference in Subsection 3(i) to the Agreement to "the items of
Equipment listed on EXHIBIT 1 hereto" is hereby deleted and replaced with the
following: "the 19 items of Equipment presented to CIT for approval prior to
the date hereof."
3. RATIFICATION. CIT and Debtor ratify and reaffirm the terms of
the Agreement as amended by this Amendment No. 1.
IN WITNESS WHEREOF, the parties hereto have caused their duly
elected and authorized officers to execute this Amendment No. 1 as of the day
and year first written above.
THE CIT GROUP/EQUIPMENT LEXINGTON PRECISION CORPORATION
FINANCING, INC.
By: Richard J. Doherty By: Warren Delano
---------------------------- --------------
Title: Senior Vice President Title: President
------------------------- --------------
2
<PAGE> 1
EXHIBIT 1055
PROMISSORY NOTE
$822,364.71 New York, New York
March 1, 1996
FOR VALUE RECEIVED, LEXINGTON PRECISION CORPORATION ("Debtor")
promises to pay to the order of THE CIT GROUP/EQUIPMENT FINANCING, INC.
("CIT"), at such address as CIT may designate, in lawful money of the United
States, the principal sum of EIGHT HUNDRED TWENTY-TWO THOUSAND THREE HUNDRED
SIXTY-FOUR AND 71/100 DOLLARS ($822,364.71) in forty-eight (48) equal
consecutive monthly installments, commencing on April 30, 1996 with the
following installments due on the last day of each month thereafter until
payment in full of this Note. The initial forty-seven (47) installments shall
be level payments of principal in the amount of $17,132.60 each, and the
forty-eighth (48th) and final installment shall be a payment of principal in
the amount of $17,132.51. Debtor shall pay interest together with each such
installment of principal, in like money, from the date hereof until payment in
full, on the unpaid principal balance hereof at an interest rate per annum
equal to three percent (3%) above the LIBOR Rate. Each payment shall be
applied first to the payment of any unpaid interest on the principal sum and
then to payment of principal. Interest shall be calculated on the basis of a
360-day year and actual number of days elapsed. Any amount not paid when due
under this Note shall bear late charges thereon, calculated at the Late Charge
Rate, from the due date thereof until such amount shall be paid in full. Any
payment received after the maturity of any installment of principal shall be
applied first to the payment of unpaid late charges, second to the payment of
any unpaid interest on said principal, and third to the payment of principal.
This Note is one of the Notes referred to in the Loan and Security
Agreement dated as of January 17, 1996, between Debtor and CIT (herein, as the
same may from time to time be amended, supplemented or otherwise modified,
called the "Agreement"), is secured as provided in the Agreement, and is
subject to prepayment only as provided therein, and the holder hereof is
entitled to the benefits thereof.
Terms defined in the Agreement shall have the same meaning when used
in this Note, unless the context shall otherwise require.
Except as provided in Section 6 of the Agreement, Debtor hereby waives
presentment, demand of payment, notice of dishonor, and any and all other
notices or demands in connection with the delivery, acceptance, performance,
default or enforcement of this Note and hereby consents to any extensions of
time, renewals, releases of any party to this Note, waivers or modifications
that may be granted or consented to by the holder of this Note.
Upon the occurrence and during the continuance of any one or more of
the Events of Default specified in the Agreement, the amounts then remaining
unpaid on this Note, together with any interest accrued, may be declared to be
(or, with respect to certain Events of Default, automatically shall become)
immediately due and payable as provided therein.
In the event that any holder shall institute any action for the
enforcement or the collection of this Note, there shall be immediately due and
payable, in addition to the unpaid balance hereof, all late charges and all
reasonable costs and expenses of such action, including reasonable attorneys'
fees. In accordance with the provisions of the Agreement, Debtor and CIT waive
trial by jury in any litigation relating to or in connection with this Note in
which they shall be adverse parties and Debtor hereby waives the right to
interpose any setoff counterclaim or defense of any nature or description
whatsoever, but Debtor shall have the right to assert in an independent action
against CIT any such defense, offset or counterclaim (including any compulsory
counterclaim) which it may have which has not otherwise been waived pursuant to
the Agreement.
Page 1 of 2
<PAGE> 2
Debtor agrees that its liabilities hereunder are absolute and
unconditional without regard to the liability of any other party, and that no
delay on the part of the holder hereof in exercising any power or right
hereunder shall operate a waiver thereof; nor shall any single or partial
exercise of any power or right hereunder preclude other or further exercise
thereof or the exercise of any other power or right.
If at any time this transaction would be usurious under applicable
law, then regardless of any provision contained in the Agreement, in this Note
or in any other agreement made in connection with this transaction, it is
agreed that (a) the total of all consideration which constitutes interest under
applicable law that is contracted for, charged or received upon the Agreement,
this Note or any such other agreement shall under no circumstances exceed the
maximum rate of interest authorized by applicable law and any excess shall be
credited to Debtor and (b) if CIT elects to accelerate the maturity of, or if
CIT permits Debtor to prepay the indebtedness described in, this Note, any
amounts which because of such action would constitute interest may never
include more than the maximum rate of interest authorized by applicable law and
any excess interest, if any, shall be credited to Debtor automatically as of
the date of acceleration or prepayment.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
LEXINGTON PRECISION CORPORATION
By: Warren Delano
---------------
Title: President
------------
Page 2 of 2
<PAGE> 1
EXHIBIT 1056
NEW EQUIPMENT TERM NOTE
-----------------------
$800,000 March 15, 1996
FOR VALUE RECEIVED, LEXINGTON COMPONENTS, INC., a Delaware corporation
(the "Debtor"), hereby unconditionally promises to pay to the order of CONGRESS
FINANCIAL CORPORATION, a California corporation (the "Payee"), at the offices
of Payee at 1133 Avenue of the Americas, New York, New York 10036, or at such
other place as the Payee or any holder hereof may from time to time designate,
the principal sum of EIGHT HUNDRED THOUSAND DOLLARS ($800,000) in lawful money
of the United States of America and in immediately available funds, in seventy
(70) consecutive monthly installments (or earlier as hereinafter referred to)
on the first day of each month commencing May 1, 1996, of which the first
sixty-nine (69) installments shall each be in the amount of ELEVEN THOUSAND
FOUR HUNDRED DOLLARS ($11,400), and the last (i.e. seventieth (70th))
installment shall be in the amount of the entire unpaid balance of this Note.
Debtor hereby further promises to pay interest to the order of Payee
on the unpaid principal balance hereof at the Interest Rate. Such interest
shall be paid in like money at said office or place from the date hereof,
commencing on April 1, 1996 and on the first day of each month thereafter until
the indebtedness evidenced by this Note is paid in full. Interest payable upon
and during the continuance of an Event of Default or following the effective
date of termination or non-renewal of the Financing Agreements shall be payable
upon demand.
For purposes hereof, (a) the term "Interest Rate" shall mean, as to
Prime Rate Loans, a rate of one (1%) percent per annum in excess of the Prime
Rate, and as to Eurodollar Rate Loans, a rate of three and one-quarter (3 1/4%)
percent per annum in excess of the Adjusted Eurodollar Rate; PROVIDED, THAT, at
Payee's option, the Interest Rate shall mean a rate of three (3%) percent per
annum in excess of the Prime Rate as to Prime Rate Loans and a rate of five and
one-quarter (5 1/4%) percent per annum in excess of the Adjusted Eurodollar
Rate as to Eurodollar Rate Loans, upon and during the continuance of an Event
of Default or following the effective date of termination or non-renewal of the
Financing Agreements, and (b) the term "Prime Rate" shall mean the rate from
time to time publicly announced by CoreStates Bank, N.A., or its successors, at
its office in Philadelphia, Pennsylvania, as its prime rate, whether or not
such announced rate is the best rate available at such bank. Unless otherwise
defined herein, all capitalized terms used herein shall have the meanings
assigned thereto in the Accounts Agreement (as hereinafter defined) and the
other Financing Agreements.
<PAGE> 2
The Interest Rate payable hereunder as to Prime Rate Loans shall
increase or decrease by an amount equal to each increase or decrease,
respectively, in such Prime Rate, effective on the first day of the month after
any change in such Prime Rate, based on the Prime Rate in effect on the last
day of the month in which any such change occurs. Interest shall be calculated
on the basis of a three hundred sixty (360) day year and actual days elapsed.
In no event shall the interest charged hereunder exceed the maximum permitted
under the laws of the State of New York or other applicable law.
This Note is issued pursuant to the terms and provisions of the letter
agreement re: Amendment to Financing Agreements, dated as of January 31, 1995
between Debtor and Payee as amended by letter agreement re: Amendment to
Financing Agreements, dated as of August 1, 1995 (collectively, the
"Amendment") to evidence a "New Equipment Term Loan" (as defined in the New
Equipment Term Loan Agreement as referred to in and as modified by the
Amendment) made by Payee to Debtor. This Note is secured by the "Collateral"
described in the Accounts Financing Agreement [Security Agreement], dated
January 11, 1990, by and between Payee and Debtor, as amended (the "Accounts
Agreement") and any agreement, document or instrument now or at any time
hereafter executed and/or delivered in connection therewith or related thereto
(the foregoing, as the same now exist or may hereafter be amended, modified,
supplemented, renewed, extended, restated or replaced, are hereinafter
collectively referred to as the "Financing Agreements") and is entitled to all
of the benefits and rights thereof and of the Financing Agreements. At the
time any payment is due hereunder, at its option, Payee may charge the amount
thereof to any account of Debtor maintained by Payee.
If any principal or interest payment is not made when due hereunder,
and such failure shall continue for three (3) days, or if any other Event of
Default (as defined in the Accounts Agreement) shall occur for any reason, or
if the Financing Agreements shall be terminated or not renewed for any reason
whatsoever, then and in any such event, in addition to all rights and remedies
of Payee under the Financing Agreements, applicable law or otherwise, all such
rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively and concurrently, Payee may, at its option, declare
any or all of Debtor's obligations, liabilities and indebtedness owing to Payee
under the Financing Agreements (the "Obligations"), including, without
limitation, all amounts owing under this Note, to be due and payable, whereupon
the then unpaid balance hereof together with all interest accrued thereon,
shall forthwith become due and payable, together with interest accruing
thereafter at the then applicable rate stated above until the indebtedness
evidenced by this Note is paid in full, plus the costs and expenses of
collection hereof, including, but not limited to, reasonable attorneys' fees.
-2-
<PAGE> 3
Debtor (i) waives diligence, demand, presentment, protest and notice
of any kind, (ii) agrees that it will not be necessary for any holder hereof to
first institute suit in order to enforce payment of this Note and (iii)
consents to any one or more extensions or postponements of time of payment,
release, surrender or substitution of collateral security, or forbearance or
other indulgence, without notice or consent. Upon the occurrence of any Event
of Default and during the continuance thereof, Payee shall have the right, but
not the obligation to setoff against this Note all money owed by Payee to
Debtor.
Payee shall not be required to resort to any Collateral for payment,
but may proceed against Debtor and any guarantors or endorsers hereof in such
order and manner as Payee may choose. None of the rights of Payee shall be
waived or diminished by any failure or delay in the exercise thereof.
Debtor hereby waives the right to a trial by jury and all rights of
setoff and rights to interpose counterclaims and cross-claims in any litigation
or proceeding arising in connection with this Note, the Accounts Agreement, the
other Financing Agreements, the Obligations or the Collateral, other than
compulsory counterclaims, the non-assertion of which would result in a
permanent waiver. Debtor hereby irrevocably consents to the non-exclusive
jurisdiction of the Supreme Court of the State of New York and of the United
States District Court for the Southern District of New York for all purposes in
connection with any action or proceeding arising out of or relating to this
Note, the Accounts Agreement, the other Financing Agreements, the Obligations
or the Collateral and further consents that any process or notice of motion or
other application to said Courts or any judge thereof, or any notice in
connection with any proceeding hereunder may be served (i) inside or outside
the State of New York by registered or certified mail, return receipt
requested, and service or notice so served shall be deemed complete five (5)
days after the same shall have been posted or (ii) in such other manner as may
be permissible under the rules of said Courts. Within thirty (30) days after
such mailing, Debtor shall appear in answer to such process or notice of motion
or other application to said Courts, failing which Debtor shall be deemed in
default and judgment may be entered by Payee against Debtor for the amount of
the claim and other relief requested therein.
The execution and delivery of this Note has been authorized by the
Board of Directors of Debtor.
This Note, the other Obligations and the Collateral shall be governed
by and construed in accordance with the laws of the State of New York and shall
be binding upon the successors and assigns of Debtor and inure to the benefit
of Payee and its successors, endorsees and assigns. If any term or provision of
successors, endorsees and assigns. If any term or provision of
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<PAGE> 4
this Note shall be held invalid, illegal or unenforceable, the validity of all
other terms and provisions hereof shall in no way be affected thereby.
This Note may not be changed, modified or terminated orally, but only
by an agreement in writing signed by the Payee or the holder hereof.
Whenever used herein, the terms "Debtor" and "Payee" shall be deemed
to include their respective successors and assigns.
LEXINGTON COMPONENTS, INC.
ATTEST:
By: Warren Delano
Kenneth I. Greenstein -------------
---------------------
Secretary Title: Vice Chairman
-------------
[Corporate Seal]
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<PAGE> 1
EXHIBIT 1057
PROMISSORY NOTE
---------------
(Demand Loan)
$1,000,000.00 Canton, Ohio
March 14,1996
FOR VALUE RECEIVED, LEXINGTON PRECISION CORPORATION, a
corporation organized under the laws of the State of Delaware (hereinafter
referred to as the "Company"), promises to pay to the order of BANK ONE, AKRON,
NA (hereinafter referred to as the "Bank"), the principal amount of ONE MILLION
AND NO/100 DOLLARS ($1,000,000.00), on demand on or after May 15, 1996, with
interest on the unpaid balance of said principal amount from the date hereof at
eight and thirty-seven one-hundredths percent (8.37%) per annum. If any
installment of principal, interest or other amounts due and payable hereunder
are not paid when due, or within any applicable grace periods, the Company
shall pay interest thereon at the rate per annum of three percent (3.0%) in
excess of the Base Rate, as the same may from time to time be established but
not to exceed the maximum rate allowed by law. Bank shall have the right to
assess a late payment processing fee in the amount of the greater of FIFTY AND
NO/100 DOLLARS ($50.00) or five percent (5.0%) of the scheduled payment in the
event of a default in payment that remains uncured for a period of at least ten
(10) days.
The Company agrees to pay interest on the unpaid principal
amount outstanding of this Note in monthly installments, commencing on April 1,
1996, and continuing on first day of each month thereafter. The unpaid balance
of the principal amount outstanding and all accrued interest thereon shall be
due and payable on demand on or after May 15, 1996.
Payments of both principal of and interest on this Note shall
be made in lawful money of the United States of America, at 50 South Main
Street, Akron, Ohio 44308-1888, or at such other place as the Bank or any
subsequent holder hereof shall have designated to the Company in writing.
Interest payable on this Note shall be computed on a three hundred sixty (360)
day per year basis counting the actual number of days elapsed.
This Note is issued pursuant to and is entitled to the
benefits of a Credit Facility and Security Agreement dated March 14, 1996, by
and between the Company and the Bank (the "Agreement"), to which Agreement
reference is hereby made for a statement of the rights and obligations of the
Bank and the duties and obligations of the Company in relation thereto; but
neither this reference to said Agreement nor any provisions thereof shall
affect or impair the absolute and unconditional obligation of the Company to
pay the principal of or interest on this Note when due.
The Company may prepay all or any portion of this Note at any
time or times and in any amount without penalty or premium.
Upon demand of the Bank on or after May 15, 1996, or if an
Event of Default, as defined in said Agreement, shall occur, the principal of
this Note may be declared immediately due and payable at the option of the
Bank.
In the event that the Company fails to pay any regularly
scheduled principal or interest payment on the Vienna Term Note when due (other
than as a result of acceleration thereof based on a default or event of default
other than the failure to make any such regularly scheduled payments of
principal or interest on the Vienna Term Note when due) which failure is not
cured within the ten (10)-day cure period provided in Section 6A of the
Agreement (a "Payment Default"), or if an Event of Default occurs and is
continuing,
<PAGE> 2
which arises from fraudulent act(s) or practice(s) of the Company which Event
of Default is not cured within three (3) Business Days after the Company's
receipt of written notice thereof from the Bank (a "Fraud Default"), the
Company hereby authorizes any attorney-at-law to appear in an court of record
in the State of Ohio, or in any other state or territory of the United States,
at any time or times after the above sum becomes due, and waive the issuance
and service of process and confess judgment against it, in favor of any holder
of this Note, for the amount then appearing due, together with the costs of
suit, and thereupon to release all errors and waive all rights of appeal and
stay of execution. The foregoing warrant of attorney shall survive any
judgment, it being understood that should any judgment be vacated for any
reason, the foregoing warrant of attorney nevertheless may thereafter be used
for obtaining an additional judgment or judgments. To the extent that the
provisions of the cognovit warning set forth above the Company's signature
specifically contradict the provisions of this paragraph regarding the
requirement of a Payment Default or a Fraud Default to take a cognovit
judgment, the provisions of this paragraph control.
No delay on the part of any holder hereof in exercising any
power or rights hereunder shall operate as a waiver of any power or rights.
Any demand or notice hereunder to the Company shall be deemed duly given or
made when sent, if given by telecopier, when delivered, if given by personal
delivery or overnight commercial carrier, or the fifth calendar day after
deposit in the United States mail, certified mail, return receipt requested,
addressed to the Company at its address (or telecopier number) set forth in
Rider A of the Agreement or such other address or telecopier number as may be
hereafter designated in writing by the Company to the Bank.
This Note is executed at Canton, Stark County, Ohio.
- ------------------------------------------------------------------------------
WARNING--BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR, WHETHER
FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT, OR ANY OTHER CAUSE.
- ------------------------------------------------------------------------------
LEXINGTON PRECISION CORPORATION
By Dennis J. Welhouse
------------------
Dennis J. Welhouse
Senior Vice President and Assistant Secretary
2
<PAGE> 1
Exhibit 1058
CREDIT FACILITY AND SECURITY AGREEMENT
--------------------------------------
THIS CREDIT FACILITY AND SECURITY AGREEMENT is made as of the
14 day of MARCH, 1996, by and between BANK ONE, AKRON, NA, a national banking
association organized and existing under the laws of the United States of
America ("Lender"), with its principal place of business located at 50 South
Main Street, Akron, Ohio 44308, and LEXINGTON PRECISION CORPORATION, a
corporation organized and existing under the laws of the State of Delaware
("LPC"), with its principal place of business and executive offices located at
767 Third Avenue, New York, New York 10017-2023, and LEXINGTON COMPONENTS,
INC., a corporation organized and existing under the laws of the State of
Delaware ("LCI"), with its principal place of business and executive offices
located at 767 Third Avenue, New York, New York 10017-2023 (hereinafter LPC and
LCI are referred to each as Borrower singularly and referred to jointly and
severally as the "Borrowers," which term shall mean each of the companies
individually and both of the companies collectively).
WITNESSETH:
WHEREAS, LPC is the parent of LCI; and
WHEREAS, LCI is a wholly subsidiary of LPC; and
WHEREAS, Borrowers desire, from time to time hereafter, to
borrow from Lender, and Lender is willing and may, from time to time hereafter,
be willing to make loans to each of the Borrowers, subject to the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the terms and conditions
contained herein, and of any extension of credit heretofore, now or hereafter
made by Lender to Borrowers, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
All capitalized terms which are not defined herein are defined
in Rider A attached hereto and made a part hereof ("Rider A"). Accounting
terms not specifically defined shall be construed in accordance with generally
accepted accounting principles. All other terms contained in this Agreement
shall have, unless the context indicates to the contrary, the meanings provided
for by the Code to the extent the same are used or defined therein. All
definitions shall be equally applicable to both the singular and plural forms
of the defined terms.
SECTION 2. AMOUNT AND TERMS OF LOANS; GRANT OF SECURITY INTEREST
Subject to the terms and conditions of this Agreement and each
of the other Credit Documents and otherwise provided that no loan advances need
be made by Lender if, at the date of any request for a loan advance hereunder
by Borrower, an Event of Default, or event or condition which, with notice,
lapse of time or both, would constitute an Event of Default, then exists,
Lender will provide the credit facility described in this Section 2 for the
account of Borrower.
<PAGE> 2
A. EQUIPMENT TERM LOAN. Lender will make a term
loan (the "Equipment Term Loan") to LPC in a principal amount not to exceed ONE
MILLION EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS ($1,800,000.00) for the
purchase of the North Canton Equipment to be located at the North Canton
Location. The amount advanced pursuant to the Equipment Term Loan shall,
subject to the terms and conditions of this Agreement, be the lesser of ninety
percent (90%) of the purchase price of the North Canton Equipment Collateral or
ONE MILLION EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS ($1,800,000.00). Upon
ordering of specific equipment by LPC, the purchase orders for such orders
shall be submitted to Lender for Lender's review of the same as equipment to be
purchased under the Equipment Term Loan. To the extent the Seller of the
equipment has not already been paid, funds disbursed under the Equipment Term
Loan shall be paid directly to the seller of the equipment to such extent. All
purchases of equipment under the Equipment Term Loan shall be completed no
later than April 30, 1996. The Equipment Term Loan shall be subject to
repayment in accordance with, and bear interest as provided in Section 2.B of
this Agreement and shall otherwise be evidenced by, and repayable in accordance
with, the Equipment Term Note.
B. PAYMENT TERMS OF EQUIPMENT TERM LOAN.
(1) INTEREST. The Equipment Term Loan shall bear
interest on the unpaid principal balance until the date paid in full at a
rate per annum equal to the LIBOR Interest Rate on the Core Borrowing Amount, if
any, pursuant to Section 2.B.(2) below and at a rate per annum equal to
three-quarters percent (.75%) in excess of the Base Rate on the unpaid principal
amount excluding the Core Borrowing Amount, such interest being payable monthly
on the first day of each calendar month, commencing on the first day of the
second calendar month following the disbursement of the loan and continuing on
the first day of each calendar month thereafter. Interest shall be computed on
a three hundred sixty (360)-day year basis based upon the actual number of days
elapsed.
(2) CORE BORROWING AMOUNT. LPC may request that a
portion of the outstanding balance of the Equipment Term Loan accrue interest
at the LIBOR Interest Rate (the "Core Borrowing Amount") by delivering to Lender
a written, telephonic, or telegraphic request (effective upon receipt) by
facsimile, telephone, or telegraph by 12:00 p.m. three (3) Business Days prior
to the Business Day the LIBOR Interest Rate is to be effective. The request
shall specify (i) the Core Borrowing Amount, which shall be in incremental
amounts of ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00), not to exceed
the Core Cap and (ii) the duration of the LIBOR Interest Period which shall be
either one (1) month or two (2) months, provided that at no time may the Core
Borrowing Amount exceed the Core Cap. During the term of the Equipment Term
Loan, the Core Borrowing Amount shall not exceed the Core Cap. It shall be the
responsibility of the Borrowers to ensure that at no time shall the Core
Borrowing Amount exceed the Core Cap. If such an event occurs, the Core
Borrowing Amount shall be immediately reduced to a figure equal to or less than
the Core Cap, and LPC shall pay to Lender on demand a TWENTY-FIVE DOLLAR ($25)
fee, together with interest on the incremental amount(s) which was in excess of
the Core Cap at a rate per annum equal to three-quarters percent (.75%) in
excess of the Base Rate less any interest previously paid at the LIBOR Interest
Rate during such period that there was an amount in excess of the Core Cap.
2
<PAGE> 3
(3) FIXED PRINCIPAL INSTALLMENTS. Subject otherwise
to the terms and provisions of the Equipment Term Note, the principal
balance of the Equipment Term Loan shall be payable in fifty-nine (59)
consecutive equal monthly installments of THIRTY THOUSAND AND NO/100 DOLLARS
($30,000.00) each, commencing on the first day of the second month following
disbursement of the loan amount, and continuing on the first day of each
calendar month thereafter and a final installment of THIRTY THOUSAND AND
NO/100 DOLLARS ($30,000.00).
C. NORTH CANTON INTERIM LOAN. Lender will make
a demand loan (the "North Canton Interim Loan") to LPC in the principal amount
of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00).
D. PAYMENT TERMS OF NORTH CANTON INTERIM LOAN
(1) DEMAND OBLIGATION. Subject otherwise to the
terms and provisions of the Demand Note, the North Canton Interim Loan
shall be payable on demand on or after May 15, 1996, and bear interest as
provided in Section 2.D(2) of this Agreement and shall otherwise be evidenced
by, and repayable in accordance with, the Demand Note. Upon completion of the
construction at the North Canton Property, on or before May 15, 1996, and, if
the conditions for the North Canton Term Loan are met, the principal amount of
the Demand Note shall be paid in full out of the proceeds of the North Canton
Term Loan and the Demand Note shall be canceled.
(2) INTEREST. The North Canton Interim Loan shall bear
interest on the unpaid principal balance at a rate per annum equal to eight
and thirty-seven one-hundredths percent (8.37%) per annum, such interest being
payable monthly on the first day of each calendar month, commencing April 1,
1996, and continuing on the first day of each calendar month thereafter.
E. NORTH CANTON TERM LOAN. Lender will make a term loan
(the "North Canton Term Loan") to LPC in the principal amount not to exceed
TWO MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($2,500,000.00). The
amount advanced under the North Canton Term Loan shall be limited to the lesser
of (i) eighty percent (80%) of the appraised value of the North Canton
Property, (ii) ninety percent (90%) of the total cost of the project at the
North Canton Property, or (iii) TWO MILLION FIVE HUNDRED THOUSAND AND NO/100
DOLLARS ($2,500,000.00). The review of the appraised value and the project's
total cost shall be within the sole discretion of Lender. Upon the completion
of such project, LPC shall submit to Lender, in form and substance satisfactory
to Lender, an itemization of the project's total cost, together with an updated
appraisal of the property completed by an MAI appraiser, acceptable to Lender.
The completion of the project, the submission of the appraisal, cost reports,
and any other items requested or required by Lender, and the disbursement of
the loan amount shall be completed no later than May 15, 1996. The North
Canton Term Loan shall be subject to repayment in accordance with, and bear
interest as provided in Section 2.F of this Agreement and shall otherwise be
evidenced by, and repayable in accordance with, the North Canton Term Note.
3
<PAGE> 4
F. PAYMENT TERMS OF NORTH CANTON TERM LOAN
(1) INTEREST. The North Canton Term Loan shall bear
interest at a fixed rate on the unpaid principal balance until the date paid
in full at a rate per annum equal to eight and thirty-seven one-hundredths
percent (8.37%), such interest being payable monthly on the first day of each
calendar month, commencing on the first day of the second calendar month
following the disbursement of the loan and continuing on the first day of each
calendar month thereafter. Interest shall be computed on a three hundred sixty
(360)-day year basis based upon the actual number of days elapsed.
(2) FIXED PRINCIPAL INSTALLMENTS. Subject otherwise
to the terms and provisions of the North Canton Term Note, the principal
balance of the North Canton Term Loan shall be payable in fifty-nine (59)
consecutive, equal monthly installments of principal, commencing on the first
day of the second calendar month following the disbursement of the loan and
continuing on the first day of each calendar month thereafter, based on a
fifteen (15) year amortization of the original loan amount, with a sixtieth
(60th) payment of the remaining balance.
G. VIENNA TERM LOAN. Lender will make a term loan (the
"Vienna Term Loan") to LCI in the principal amount of ONE MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($1,500,000.00). The Vienna Term Loan
shall be subject to repayment in accordance with, and bear interest as provided
in Section 2.H of this Agreement and shall otherwise be evidenced by, and
repayable in accordance with, the Vienna Term Note.
H. PAYMENT TERMS OF VIENNA TERM LOAN.
(1) INTEREST. The Vienna Term Loan shall bear interest
at a fixed rate on the unpaid principal balance until the date paid in
full at a rate per annum equal to eight and thirty-seven one-hundredths percent
(8.37%), such interest being payable monthly commencing on April 1, 1996, and
continuing on the first day of each calendar month thereafter. Interest shall
be computed on a three hundred sixty (360)-day year basis based upon the actual
number of days elapsed.
(2) FIXED PRINCIPAL INSTALLMENTS. Subject otherwise to
the terms and provisions of the Vienna Term Note, the principal balance of
the Vienna Term Loan shall be payable in fifty-nine (59) consecutive, equal
monthly installments of EIGHT THOUSAND THREE HUNDRED THIRTY-THREE DOLLARS AND
THIRTY-THREE CENTS ($8,333.33) each, commencing on April 1, 1996, and
continuing on the first day of each calendar month thereafter and a final
installment of ONE MILLION EIGHT THOUSAND THREE HUNDRED THIRTY-THREE DOLLARS
AND FIFTY-THREE CENTS ($1,008,333.53) on March 1, 2001.
I. DEFAULT RATE. Upon and after the occurrence of an Event
of Default, and during the continuation thereof, unless Lender otherwise
agrees, the Notes and the obligations under this Agreement shall bear interest,
calculated daily on the basis of a three hundred and sixty (360)-day year, for
the actual days elapsed, at the Default Rate.
4
<PAGE> 5
J. LIBOR-RELATED PROVISIONS
(1) ILLEGALITY; LENDER'S POLICY. Notwithstanding any
other provision in this Agreement, if the Lender determines that any
applicable law, rule, regulation, or directive (whether or not having the force
of law) shall make it (1) unlawful or impossible for the Lender to extend the
LIBOR Interest Rate, or (2) imposes or modifies any reserve, special deposit,
compulsory loan, or similar requirements relating to any extensions of credit
or their assets, or any deposits with or other liabilities, of such Lender; or
(3) imposes any other condition adversely affecting Lender's rights hereunder,
or (4) if Lender no longer offers the LIBOR Interest Rate, then the interest
rate shall automatically convert to a rate per annum equal to three-quarters
percent (.75%) in excess of the Base Rate. Borrower shall not be required to
pay any costs, penalties, or other amounts as a result of or in connection with
any such conversion.
(2) DISASTER; COSTS. Notwithstanding anything to the
contrary herein, if the Lender determines (which determination shall be
conclusive) that (i) quotations of interest rates for the relevant deposits
referred to in the definition of LIBOR Interest Rate are not being provided in
the relevant amounts or for the relative maturities for purposes of determining
the LIBOR Interest Rate as provided in this Agreement; or (ii) if the Lender
determines (which determination shall be conclusive) that the relevant rates of
interest referred to in the definition of LIBOR Interest Rate, do not
accurately cover the cost to the Lender of extending the LIBOR Interest Rate,
or (iii) the Lender matches funds in the London Interbank market or in any
other money market, then the interest rate shall, upon notice to Borrower,
automatically convert to a rate per annum equal to three-quarters percent
(.75%) in excess of the Base Rate. Borrower shall not be required to pay any
costs, penalties, or other amounts as a result of or in connection with any
such conversion.
K. ALL ADVANCES TO CONSTITUTE ONE LOAN. The Equipment Term
Loan, North Canton Term Loan, and Vienna Term Loan, and all other sums owed
by Borrowers to Lender under this Agreement, whether or not evidenced by the
Notes, shall be secured by Lender's lien on and security interest in all of the
Collateral. Borrowers shall be liable, as provided under this Agreement and
their respective guarantees, to Lender for all Obligations.
L. ORIGINATION FEE. In order to compensate Lender for its
services in preparing and reviewing the Credit Documents and the
documentation relating thereto in connection with this Credit Facility,
Borrowers shall pay to Lender on the date of each advance hereunder an
origination fee of one-half of one percent (.5%) of the total principal amount
of the Notes, provided in the case of the North Canton Term Note, the
origination fee shall be paid on the principal amount in excess of the
principal amount of the Demand Note (the "Origination Fee").
M. SECURITY. As security for the prompt and complete payment
and performance when due of all the Obligations and in order to induce
Lender to enter into this Agreement and make the Loans and to extend other
credit from time to time to Borrower, whether under this Agreement or
otherwise, LPC hereby grants to Lender a first priority security interest in
all LPC's right, title, and interest in, to, and under the Equipment and the
5
<PAGE> 6
proceeds thereof. As security for the prompt and complete payment and
performance when due of all the Obligations and in order to induce Lender to
enter into this Agreement and make the Loans and to extend other credit from
time to time to Borrower, whether under this Agreement or otherwise, LPC or
LCI, as applicable, shall execute and deliver an open-end mortgage, granting
the Lender the first and best lien on the North Canton Property and the Vienna
Property subject only to Permitted Encumbrances.
SECTION 3. CONDITIONS OF BORROWING
Notwithstanding any other provision of this Agreement or any
of the other Credit Documents, and without affecting in any manner the rights
of Lender under the other sections of this Agreement, it is understood and
agreed that Lender shall have no obligation at any time under Section 2 of this
Agreement unless and until the following conditions have been and continue to
be satisfied, all in form and substance satisfactory to Lender and its counsel:
A. CONDITIONS. The following conditions shall have been
and shall continue to be satisfied, in the sole discretion of Lender:
(1) 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
Lender's opinion would make it inadvisable to consummate the transactions
contemplated by this Agreement.
(2) The representations and warranties of the Borrowers
herein are true and correct in all respects and no Event of Default or
condition which, with notice, lapse of time or both would constitute an Event
of Default then exists.
(3) No event, occurrence or condition shall then exist
which might have a Material Adverse Effect.
B. DOCUMENTATION. Lender shall have received the following
documents, each to be in form and substance satisfactory to Lender and its
counsel:
(1) Certificates of insurance or certified copies of
Borrower's casualty insurance policies evidencing the existence of the
insurance coverage required pursuant to this Agreement, together with loss
payable endorsements thereto naming Lender as a loss payee or additional
insured in form and substance satisfactory to Lender.
(2) Such UCC financing statements as are required by
Lender to perfect the Liens of Lender in the Collateral (subject to the
provisions in Section 5.A.(8) hereof) and evidence, in a form acceptable to
Lender, that such Liens will constitute valid and first priority perfected
Liens.
(3) A Certificate of the secretary or an assistant
secretary of Borrower, dated as of the date Lender makes its initial advance
of loan proceeds pursuant hereto, certifying
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(i) that attached thereto is a true and complete copy of the Bylaws of
Borrower, as in effect on the date of such certification, (ii) that attached
thereto is a true and complete copy of resolutions, in form satisfactory to
Lender, adopted by the Board of Directors of Borrower, authorizing the
execution, delivery and performance of this Agreement and each of the other
Credit Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby, and (iii) as to the incumbency
and genuineness of the signature of each officer of Borrower executing this
Agreement or any of the other Credit Documents to which Borrower is a party.
(4) A copy of the Articles of Incorporation of Borrower,
and all amendments thereto, certified by the Secretary of State of the
Borrower's state of incorporation.
(5) A good standing certificate for Borrower issued by
the Secretary of State of Borrower's state of incorporation and the Secretary
of State of Ohio.
(6) A certificate of Borrower signed by the chairman,
vice chairman, president or chief financial officer of Borrower and dated as of
the date Lender makes its initial advance of loan proceeds pursuant hereto,
stating that (i) the representations and warranties set forth in Section 4
hereof are true and correct on and as of such date, (ii) Borrower is on such
date in compliance with all the terms and provisions set forth in this
Agreement, and (iii) on such date no event or condition has occurred or is
continuing which, with the giving of notice, the lapse of time, or both, would
constitute an Event of Default.
(7) Written instructions from Borrowers directing the
disbursement of the loan proceeds made pursuant to this Agreement.
(8) The written opinion of counsel to Borrowers as to
the transactions contemplated by this Agreement, in form and substance
satisfactory to Lender.
(9) The Equipment Term Note, North Canton Term Note,
and Vienna Term Note, duly executed by Borrower, and such other
agreements, instruments and documents, including, without limitation,
assignments, security agreements, mortgages, deeds of trust, pledges,
guaranties and consents, which Lender may require to be executed in connection
herewith, including, but not limited to, the following:
(a) Duly executed guarantees of all Obligations
of Borrowers by both LPC and LCI, in form and substance
satisfactory to Lender and its counsel.
(b) Environmental Assessments, Appraisals of Real
Property and North Canton Equipment Collateral, ALTA Lender
Title Policies and Surveys of the North Canton Property and
the Vienna Property, together with any other items or
information requested by Lender in regard to the North Canton
Property and the Vienna Property.
(c) Duly executed Environmental Indemnity Agreement
from Borrower, in form and substance acceptable to Lender
and its counsel.
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(d) Duly executed UCC-1 Financing
Statements from Borrowers, in recordable form, in form and
substance acceptable to Lender and its counsel (subject to the
provisions of Section 5.A.(8) hereof).
(e) Duly executed and delivered open-end
mortgage of the North Canton Property from LPC in recordable
form, in form and substance acceptable to Lender and its
counsel, granting Lender the first lien on the North Canton
Property, subject only to the Permitted Encumbrances.
(f) Duly executed and delivered open-end
mortgage of the Vienna Property from LCI in recordable form,
in form and substance acceptable to Lender and its counsel,
granting Lender the first lien on the Vienna Property, subject
only to the Permitted Encumbrances.
(10) An Intercreditor Agreement executed by
Congress Financial Corporation in form and substance acceptable to Lender and
its counsel subordinating the rights of Congress Financial Corporation to
Lender's rights in the Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and to
make each Loan, Borrower represents and warrants to Lender that:
A. Borrower is a corporation duly organized, validly
existing, and in good standing under the laws of its state of incorporation,
has the necessary authority and power to own its respective Collateral and its
other assets and to transact the business in which it is engaged, is duly
qualified to do business in each jurisdiction where the Collateral is located
and in each other jurisdiction in which the conduct of its business or the
ownership of its assets requires such qualification, and its chief executive
office is located at the address set forth in paragraph 4.B of Rider A;
B. Borrower has full power, authority, and legal right to
execute and deliver this Agreement and each of the other Credit Documents, to
perform its obligations hereunder and thereunder, to borrow hereunder and to
grant the security interest created hereby and to grant the mortgages on the
North Canton Property and the Vienna Property;
C. This Agreement and each of the other Credit Documents
has been (and each of the Notes when executed and delivered shall have been)
duly authorized, executed, and delivered by Borrower and constitutes (and each
of the Notes when executed and delivered shall constitute) a legal, valid, and
binding obligation of Borrower enforceable in accordance with their respective
terms;
D. The execution, delivery, and performance by Borrower
of this Agreement and each of the Credit Documents do not and will
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not violate any provision of any applicable law or regulation or of any
judgment or order of any court or governmental instrumentality, and will not
violate any provision of, or cause a default under, any loan, other agreement,
contract, or judgment to which Borrower is a party;
E. Borrowers' uses of the proceeds of the Equipment Term
Loan, North Canton Term Loan, and Vienna Term Loan made by Lender to Borrowers
pursuant to this Agreement are, and will continue to be, legal and proper
corporate uses, and such uses are and will continue to be consistent with all
applicable laws and statutes.
F. As of the date hereof, and after giving effect to the
transactions contemplated by this Agreement, (i) Borrower is able to pay its
debts as they mature and is not otherwise insolvent in any respect, and (ii)
Borrower's capital is sufficient and not unreasonably small for the business
and transactions in which Borrower is engaged or about to engage.
G. Borrower is not in default under any material agreement,
contract, or judgment to which Borrower is a party;
H. Borrower has filed all tax returns that are required to
be filed and has paid all taxes as shown on said returns and all assessments
received by it to the extent such taxes and assessments have become due other
than those which are the subject of valid extensions and those which are being
contested in good faith by appropriate proceedings and as to which appropriate
reserves are being maintained by Borrower in accordance with generally accepted
accounting principles and so long as such proceedings operate during the
pendency thereof to prevent the sale, forfeiture, or loss of the Collateral by
or to such taxing authority, and Borrower does not have any knowledge of any
actual or proposed deficiency or additional assessment in connection therewith;
I. To the best of its knowledge, there is no action, audit,
investigation, or proceeding pending or threatened against or affecting
Borrower or any of its assets which involves any of the Collateral or any of
the contemplated transactions hereunder or which, if adversely determined,
could reasonably be expected to have a Material Adverse Effect on Borrower's
business, operations, or financial condition;
J. On each Closing Date, Borrower shall have good and
marketable title to the Collateral being secured on such date and, upon the
filing of proper financing statements and recording of the Mortgages, Lender
shall have a perfected first Lien on such Collateral (subject to Permitted
Encumbrances); and
(1) Except as disclosed in writing to Lender
(including in any environmental audit or assessment report) the operations of
Borrower at the North Canton Property and the Vienna Property comply in all
material respects with all applicable Environmental Laws; and
(2) Except as disclosed in writing to Lender
(including in any environmental audit or assessment report):
(a) None of the operations of Borrower at
the North Canton Property and the Vienna Property are subject
to any judicial or
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administrative proceeding alleging the violation of any
Environmental Laws;
(b) None of the operations of Borrower at the
North Canton Property and the Vienna Property is the subject
of an investigation to determine whether any remedial action
is needed to respond to a release of any Hazardous Material
into the environment; and
(c) Borrower has no known contingent liability
with respect to the North Canton Property or the Vienna
Property in connection with any release of any Hazardous
Material into the environment;
K. All annual and quarterly financial statements of
Borrower, included in any annual reports on form 10-K or included in any
quarterly reports on form 10-Q, which have been delivered to Lender have been
prepared in accordance with generally accepted accounting principles
consistently applied, and present fairly in all material respects Borrower's
financial position as at, and the results of its operations for, the periods
ended on the dates set forth on such financial statements, and there has been
no material adverse change in Borrower's financial condition, business, or
operations since September 30, 1995, as reflected in such financial statements;
L. Borrower has not changed its name in the last five
(5) years or done business or been known under any other name except as
disclosed in writing to Lender; and
M. No consent of any person, and no consent, license,
approval, or authorization of, or registration or filing with, any governmental
authority, bureau, or agency is required in connection with the execution,
delivery, and performance of, and payment under, this Agreement or the Notes,
other than the consent of Congress, and the filing of financing statements and
the recording of the Mortgages.
N. Neither this Agreement, nor any written statement
made by Borrower in connection herewith, contains any untrue statement of a
material fact or omits a material fact necessary to make the statements
contained therein or herein not misleading. There is no fact which Borrower has
not disclosed to Lender which has, or will have, a Material Adverse Effect.
O. All Equipment is in good operating condition and
repair and all necessary replacements of and repairs to the same have been made
so that the value and operating efficiency thereof has been maintained and
preserved, reasonable wear and tear excepted. None of the Equipment is so
affixed to the real property where located (other than the North Canton
Property) so that an interest therein arises under the real property laws of
such jurisdiction nor is any such Equipment an accession to any other personal
property not otherwise a part of the Collateral.
Each request for an advance made by Borrowers pursuant to this
Agreement shall, unless Lender is otherwise notified in writing prior to the
time of such advance, constitute (I) an automatic representation and warranty
by Borrowers to Lender that there does not then exist an Event of Default or
any event or condition which, with notice, lapse of time and/or the
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making of such advance, would constitute an Event of Default, and (ii) a
reaffirmation as of the date of said request of all of the representations and
warranties of Borrowers contained in this Agreement or any of the other Credit
Documents.
Borrower covenants, warrants and represents to Lender that all representations
and warranties of Borrower contained in this Agreement and each of the other
Credit Documents shall be true at the time of Borrower's execution of this
Agreement and such other Credit Documents, and shall survive the execution,
delivery and acceptance thereof by Lender and the parties thereto and the
closing of the transactions described therein or related thereto.
SECTION 5. COVENANTS
Borrower covenants and agrees that from and after the date
hereof and so long as any Obligations remain unsatisfied, unless otherwise
consented to by Lender in writing:
A. It will:
(1) Promptly give written notice to Lender of the
occurrence of any Event of Loss;
(2) Observe all material requirements of any
governmental authorities relating to the conduct of its business, to the
performance of its obligations hereunder, to the use, operation or ownership of
the Equipment, or to its other properties or assets, maintain its existence as
a legal entity and obtain and keep in full force and effect all material
rights, franchises, licenses and permits which are necessary to the proper
conduct of its business, and pay all fees, taxes, assessments and governmental
charges or levies imposed upon any of the Equipment;
(3) At any reasonable time or times, permit Lender or
its authorized representative
(a) upon prior written notice, to inspect the
Collateral and Borrower's books and records pertaining to the
Collateral and,
(b) following the occurrence and during the
continuation of an Event of Default, to inspect all of the
books and records of Borrower,
(4) In accordance with generally accepted accounting
principles, keep proper books of record and account in which entries will be
made of all dealings or transactions in relation to its business and
activities;
(5) Furnish to Lender the following financial
statements, prepared in accordance with generally accepted accounting
principles applied on a basis consistently maintained throughout the period
involved,
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(a) as soon as available, but not later
than 120 days after the end of each fiscal year, its
consolidated balance sheet as at the end of such
fiscal year, and its consolidated statements of income and
consolidated statements of cash flow, including all footnotes,
or such fiscal year, together with comparative information for
the prior fiscal year, audited by Ernst & Young, LLP or other
certified public accountants reasonably acceptable to Lender;
and
(b) as soon as available, but not later
than 45 days after the end of each of the first three
quarterly periods of each fiscal year, its consolidated
balance sheet as at the end of such quarterly period and its
consolidated statements of income and consolidated statements
of cash flow for such quarterly period and for the portion of
the fiscal year then ended together with comparative
information for the prior comparable period, certified as to
their accuracy by its chief financial officer,
(6) Furnish to Lender, (i) together with the
financial statements described in clauses 5.A.(5)(a) and 5.A.(5)(b) above, a
statement of Borrower signed by Borrower's chief financial officer certifying
that Borrower is in compliance with all financial covenants contained herein,
or if Borrower is not in compliance, the nature of such noncompliance or
default, and the status thereof (such statement shall set forth the actual
calculations of any financial covenants), and (ii) promptly, such additional
financial and other information as Lender may from time to time reasonably
request;
(7) Promptly, at Borrower's expense, execute and
deliver to Lender such instruments and documents, and take such action, as
Lender may from time to time reasonably request in order to carry out the
intent and purpose of this Agreement and to establish and protect the rights,
interests and remedies created, or intended to be created, in favor of Lender
hereby, including, without limitation, the execution, delivery, recordation and
filing of financing statements (hereby authorizing Lender, in such
jurisdictions where such action is authorized by law, to effect any such
recordation or filing of financing statements without Borrower's signature, and
to file as valid financing statements in the applicable financing statement
records, photocopies hereof and of any other financing statement executed in
connection herewith); PROVIDED, HOWEVER, notwithstanding anything in this
Agreement or any other Credit Document to the contrary, in no event shall
Lender file or record any financing statement or other public document which
specifically lists the particular items of Equipment included in the
Collateral;
(8) Warrant and defend its good and marketable
title to the Equipment, and Lender's perfected first priority security interest
in the Collateral, against all claims and demands whatsoever (hereby agreeing
that the Equipment shall be and at all times remain separately identifiable
personal property, and shall not become part of any real estate other than the
North Canton Property), and will, at its expense, take such action as may be
necessary to prevent any other Person (other than Congress) from acquiring any
right or interest in the Equipment;
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(9) At Borrower's expense, if requested by Lender
in writing, attach to the Equipment a notice satisfactory to Lender disclosing
Lender's security interest in the Equipment;
(10) At Borrower's expense, maintain the Equipment
in good condition and working order and furnish all parts, replacements and
servicing required therefor so that the value, condition and operating
efficiency thereof will at all times be maintained, normal wear and tear
excepted, and any repairs, replacements and parts added to the Equipment in
connection with any repair or maintenance or with any improvement, change,
addition or alteration shall immediately, without further act, become part of
the Equipment and subject to the security interest created by this Agreement;
and
(11) Deliver to Lender, upon demand, any and all
evidence of ownership of the Equipment, inclusive of any certificates of title
or applications therefor, and maintain accurate, itemized records describing the
kind, type, quantity and value of all the Equipment, a summary of which shall be
provided to Lender on at least an annual basis and more frequently if requested
by Lender.
(12) Obtain and maintain at all times on the
Equipment, at Borrower's expense, "All-Risk" physical damage and, if required by
Lender, liability insurance (including bodily injury and property damage) in
such amounts, against such risks, in such form and with such insurers as shall
be reasonably satisfactory to Lender; PROVIDED, HOWEVER, that the amount of
physical damage insurance shall not be less than the then aggregate outstanding
principal amount of the Equipment Term Note. All physical damage insurance
policies shall be made payable to Lender as its interest may appear, if
liability insurance is required by Lender, the liability insurance policies
shall name Lender as an additional insured. Borrower shall maintain and deliver
to Lender the original certificates of insurance or other documents reasonably
satisfactory to Lender prior to policy expiration or upon Lender's request, but
Lender shall bear no duty or liability to ascertain the existence or adequacy of
such insurance. Each insurance policy shall, among other things, require that
the insurer give Lender at least 30 days' prior written notice of any material
alteration in the terms of such policy or the cancellation thereof and that the
interests of Lender continue to be insured regardless of any breach of or
violation by Borrower of any warranties, declarations or conditions contained in
such insurance policy. The insurance maintained by the Borrower shall be
primary with no other insurance maintained by Lender (if any) contributory.
Unless Lender otherwise agrees in writing, following the occurrence of an Event
of Default and during the continuance thereof Lender shall have the sole right,
in its name or in Borrower's name, to file claims under any insurance policies,
to receive, receipt, and give acquittance for any payments that may be payable
thereunder, and to execute any and all endorsements, receipts, releases,
assignments, reassignments, or other documents that may be necessary to effect
the collection, compromise, or settlement of any claims under any such insurance
policies.
B. It will not:
(1) Sell, convey, transfer, exchange, lease or
otherwise relinquish possession or dispose of any of the Collateral or attempt
or offer to do any of the foregoing;
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provided, however, that Borrower may offer to sell Collateral after giving
Lender notice of its wish to offer Collateral for sale;
(2) Create, assume or suffer to exist any Lien upon the
Collateral except for the security interest created hereby and the subordinate
security interest in favor of Congress subordinated to the extent provided in an
Intercreditor Agreement of even date herewith and except for Permitted
Encumbrances;
(3) Liquidate or dissolve;
(4) Change the form of organization of its business; or
(5) Without thirty (30) days prior written notice to
Lender, change its name or its chief executive office;
(6) At any time after Lender advances the North Canton Term
Loan, move (or in the case of titled vehicles, change the principal base of) any
of the Equipment from the North Canton Property without the prior written
consent of Lender except within the continental United States upon thirty (30)
days prior written notice to Lender (provided that Borrower delivers to Lender
such financing statements as Lender requests to maintain its perfected first
priority security interest in such Equipment); or
(7) Make or authorize any improvement, change, addition or
alteration to the Equipment which would impair its originally intended function
or use or its value.
C. After obtaining the written consent of Lender as to each item
of Equipment, Borrower shall have the right to substitute up to THREE HUNDRED
SIXTY THOUSAND AND NO/100 DOLLARS ($360,000.00) of items of Equipment with other
items of Equipment of a similar type and of a value to Lender equal to or
greater than the Equipment replaced or with other items of Equipment acceptable
to Lender.
SECTION 6. EVENTS OF DEFAULT; REMEDIES
The following events shall each constitute an "EVENT OF DEFAULT"
hereunder:
A. Borrower shall fail to pay any principal or interest on any
Notes within 10 days after the same becomes due (whether at the stated maturity,
by acceleration or otherwise) which failure is not cured within 10 days after
Borrower's receipt of written notice from Lender or shall fail to pay any other
Obligation when due (whether at the stated maturity, by acceleration or
otherwise), which failure is not cured within 10 days after Borrower's receipt
of written notice from Lender;
B. Any representation or warranty made by Borrower in this
Agreement or in any document, certificate or financial or other statement now or
hereafter furnished by Borrower in connection with this Agreement or any Loan
shall at any time prove to be untrue or misleading in any material respect as of
the time when made;
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C. Borrower shall fail to observe any covenant, condition or
agreement contained in Sections 5.A.(11) or 5.B hereof or in paragraphs 2 or 3.A
of Rider A, which failure shall continue for a period of 10 days after receipt
of written notice from Lender;
D. Borrower shall fail to observe or perform any other covenant
or condition contained in this Agreement, and such failure shall continue
unremedied for a period of 30 days after the date on which written notice
thereof shall be given by Lender to Borrower;
E. Borrowers or any guarantor of the Obligations fails to
perform, keep or observe any other term, provision, condition, covenant,
warranty or representation contained in any of the Credit Documents other than
this Agreement or the Notes, which is required to be performed, kept or observed
by Borrowers or any such guarantor, which failure shall continue unremedied for
a period of thirty (30) days after the date on which written notice thereof
shall be given by Lender to Borrower.
F. Borrower or any subsidiary of Borrower shall default (i) in
the payment of, or other performance under, any obligation for payment or lease
(whether or not capitalized) or any guarantee to Lender or any affiliate of
Lender (excluding all Participation Obligations) beyond the period of grace, if
any, provided with respect thereto, (ii) in the payment of any obligation for
borrowed money in excess of ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($100,000.00) to any other Person beyond the period of grace, if any, provided
with respect thereto, if such obligation for borrowed money is accelerated as a
result thereof, or (iii) in the performance of any obligation for borrowed money
in excess of ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00) to any other
Person beyond the period of grace, if any, provided with respect thereto if such
obligation for borrowed money is accelerated as a result thereof;
G. A complaint in bankruptcy or for arrangement or
reorganization or for relief under any insolvency law is filed by or against
Borrower (and when filed against Borrower is in effect for 60 days) or Borrower
admits its inability to pay its debts as they mature; or
H. Any material adverse change in the value of the Collateral or
the financial condition or operating results of Borrower or any guarantor of the
Obligations.
I. The revocation of any Guaranty of the Obligations.
If an Event of Default shall occur and be continuing, Lender may
in addition to any of the remedies otherwise available to Lender, by notice of
default given to Borrower, do any one or more of the following:
J. Terminate the Commitment and/or
K. Declare the Notes to be due and payable, whereupon the
principal amount of the Notes, together with accrued interest thereon and all
other amounts owing under this Agreement and the Notes or the other Credit
Documents, shall become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived
(and in the case of any Event of Default specified in clause 6.G of the above
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paragraph, such acceleration of the Notes shall be automatic, without any
notice by Lender). In addition, if an Event of Default shall occur and be
continuing, Lender may exercise all other rights and remedies available to it,
whether under this Agreement, under any other instrument or agreement securing,
evidencing or relating to the Obligations, under the Code, or otherwise
available at law or in equity. Without limiting the generality of the
foregoing, Borrower agrees that in any such event, Lender, without demand of
performance or other demand, advertisement or notice of any kind (except the
notice specified below of time and place of public or private sale and any
notice specified in any applicable mortgage) to or upon Borrower or any other
Person (all and each of which demands, advertisements and notices are hereby
expressly waived), may forthwith do any one or more of the following: collect,
receive, appropriate and realize upon the Collateral or any part thereof, and
sell, lease, assign, give an option or options to purchase or otherwise dispose
of and deliver, the Collateral (or contract to do so), or any part thereof, in
one or more parcels at public or private sale or sales at such places and at
such prices as it may deem best, for cash or on credit or for future delivery
without the assumption of any credit risk. Lender shall have the right upon
any such public sale or sales, and, to the extent permitted by law, upon any
such private sale or sales, to purchase the whole or any part of the Collateral
so sold, free of any right or equity of redemption of Borrower, which right or
equity is hereby expressly released. Borrower further agrees, at Lender's
request, to assemble (at Borrower's expense) the Collateral and make it
available to Lender at such places which Lender shall select, whether at
Borrower's premises or elsewhere but not more than 1000 miles from Borrower's
premises. Lender shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale (after deducting all
reasonable costs and expenses of every kind incurred therein or incidental to
the care, safekeeping or otherwise of any or all of the Collateral or in any
way relating to the rights of Lender hereunder, including reasonable attorney's
fees and legal expenses) to the payment in whole or in part of the Obligations,
in such order as Lender may elect. Borrower agrees that Lender need not give
more than 10 days' notice of the time and place of any public sale or of the
time after which a private sale may take place and that such notice is
reasonable notification of such matters. Borrower shall be liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which Lender is entitled. Borrower agrees
to pay all costs of Lender, including reasonable attorneys' fees, incurred with
respect to collection of any of the Obligations and enforcement of any of
Lender's rights hereunder. To the extent permitted by law, Borrower hereby
waives presentment, demand, protest or any notice (except as expressly provided
in this Section 6) of any kind in connection with this Agreement or any of the
other Credit Documents or any Collateral except as otherwise specifically
provided in any Credit Document.
SECTION 7. MISCELLANEOUS
No failure or delay by Lender in exercising any right, remedy
or privilege hereunder or under any Notes or any of the other Credit Documents
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy or privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right, remedy or
privilege. No right or remedy in this Agreement or any of the other Credit
Documents is intended to be exclusive but each shall be cumulative and in
addition to any other remedy referred to herein or otherwise available to
Lender at law or in equity; and the exercise by Lender of any one or more of
such remedies shall not preclude the simultaneous or later exercise by
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Lender of any or all such other remedies. No express or implied waiver by
Lender of an Event of Default shall in any way be, or be construed to be, a
waiver of any other or subsequent Events of Default. The acceptance by Lender
of any regular installment payment or any other sum owing hereunder shall not
(a) constitute a waiver of any Event of Default in existence at the time,
regardless of Lender's knowledge or lack of knowledge thereof at the time of
such acceptance, or (b) constitute a waiver of any Event of Default unless
Lender shall have agreed in writing to waive the Event of Default.
All notices, requests and demands to or upon any party hereto
shall be deemed duly given or made when sent, if given by telecopier, when
delivered, if given by personal delivery or overnight commercial carrier, or the
fifth calendar day after deposit in the United States mail, certified mail,
return receipt requested, addressed to such party at its address (or telecopier
number) set forth in paragraph 4 of Rider A or such other address or telecopier
number as may be hereafter designated in writing by such party to the other
party hereto.
Borrower agrees:
A. To pay or reimburse Lender for (i) all expenses
of Lender in connection with the documentation hereof, (ii) all fees, taxes and
expenses of whatever nature reasonably incurred in connection with the creation,
preservation and protection of Lender's security interest in the Collateral,
including, without limitation, all filing and lien search fees, payment or
discharge of any taxes or Liens upon, or in respect to, the Collateral, and all
other fees and expenses reasonably incurred in connection with protecting or
maintaining the Collateral or in connection with defending or prosecuting any
actions, suits or proceedings arising out of, or related to, the Collateral;
(iii) all costs and expenses (including reasonable legal fees and disbursements)
of Lender in connection with the enforcement of this Agreement or any of the
other Credit Documents, including, but not limited to (a) any court or
administrative proceeding involving the Collateral or the Credit Documents to
which Lender is made a party or is subject to subpoena by reason of its being
the holder of any Credit Documents, including, without limitation, bankruptcy,
insolvency, or a reorganization, and (b) any court or administrative proceeding
or other action undertaken by Lender to enforce any remedy or to collect any
indebtedness due under the Credit Documents and (c) any remedy exercised by
Lender; (iv) any activity in connection with any request by Borrowers or anyone
acting on behalf of Borrowers that the Lender consent to a proposed action
which, pursuant to the Credit Documents may be undertaken or consummated only
with the prior consent of Lender, whether or not such consent is granted, and
(v) any negotiation undertaken between Borrowers and Lender, or anyone acting on
behalf of Borrowers, pertaining to the existence or cure of any default under or
the modification or extension of any of the Credit Documents, and
B. to pay, and to indemnify and hold Lender harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
claims, actions, judgments, suits, out-of-pocket costs, expenses (including
reasonable legal expenses) or disbursements of any kind or nature whatsoever
arising out of or with respect to (a) this Agreement or any of the other Credit
Documents, the Collateral or Lender's interest therein, including, without
limitation, the execution, delivery, enforcement, performance or administration
of this Agreement or any of the other Credit Documents and the manufacture,
purchase, ownership, possession, use, selection,
17
<PAGE> 18
operation or condition of the Collateral or any part thereof, or (b) Borrower's
violation or alleged violation of any Environmental Laws or any law or
regulation relating to Hazardous Materials (the foregoing being referred to as
the "indemnified liabilities"), PROVIDED, that Borrower shall have no
obligation hereunder with respect to indemnified liabilities arising from the
gross negligence or willful misconduct of Lender. If Borrower fails to perform
or comply with any of its agreements contained in this Agreement or any of the
other Credit Documents and Lender shall itself perform, comply or cause
performance or compliance, the expenses of Lender so incurred, together with
interest thereon at the Default Rate, shall be payable by Borrower to Lender on
demand and until such payment is made shall constitute Obligations hereunder.
The agreements and indemnities contained in this paragraph shall survive
termination of this Agreement or any of the other Credit Documents and payment
of the Notes.
This Agreement together with the other Credit Documents contains
the complete, final and exclusive statement of the terms of the agreement
between Lender and Borrower related to the contemplated transactions, and
neither this Agreement, the Notes, or the other Credit Documents, nor any terms
hereof, may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of a change,
waiver, discharge or termination is sought.
This Agreement and the other Credit Documents shall be binding
upon, and inure to the benefit of, Borrower and Lender and their respective
successors and assigns, except that Borrower may not assign or transfer its
rights hereunder or any interest herein without the prior written consent of
Lender. Borrowers hereby consent to Lender's participation, sale, assignment,
transfer, or other disposition to a bank or other financial institution which
does not and whose affiliates are not competitors of either Borrower, at any
time or times hereafter, of this Agreement, or any of the other Credit
Documents, or any portion hereof or thereof, including, without limitation,
Lender's rights, title, interest, remedies, powers, and/or duties hereunder or
thereunder.
Headings of sections and paragraphs are for convenience only, are
not part of this Agreement and shall not be deemed to affect the meaning or
construction of any of the provisions hereof. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Borrower hereby authorizes Lender to correct patent errors and to
fill in such blanks as dates herein and in the Notes and in any of the other
Credit Documents.
Except with the respect to obligations of the Borrowers to make
payments pursuant to the Notes, all agreements, obligations, and covenants
contained herein to be kept and performed by the Borrowers shall be joint and
several.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF OHIO.
EXCEPT AS OTHERWISE PROVIDED FOR IN THIS AGREEMENT OR AS REQUIRED BY APPLICABLE
LAW, BORROWER WAIVES (i) PRESENTMENT,
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<PAGE> 19
DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NONPAYMENT,
MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL
PAPER AND GUARANTIES AT ANY TIME HELD BY LENDER ON WHICH BORROWER MAY IN ANY
WAY BE LIABLE, (ii) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE
COLLATERAL WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO
EXERCISE ANY OF LENDER'S REMEDIES AND (iii) ITS RIGHT TO A JURY TRIAL IN THE
EVENT OF ANY LITIGATION INSTITUTED IN RESPECT OF THIS AGREEMENT, THE NOTES OR
ANY OF THE OTHER CREDIT DOCUMENTS. BORROWER ACKNOWLEDGES THAT IT HAS BEEN
ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS AGREEMENT AND THE
TRANSACTIONS EVIDENCED BY THIS AGREEMENT. BORROWER HEREBY IRREVOCABLY CONSENTS
AND AGREES THAT ANY LEGAL ACTION IN CONNECTION WITH THIS AGREEMENT MAY BE
INSTITUTED IN THE COURTS OF THE STATE OF OHIO, IN THE COUNTY OF STARK OR THE
UNITED STATES COURTS FOR THE NORTHERN DISTRICT OF OHIO, AS LENDER MAY ELECT,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWER HEREBY IRREVOCABLY
ACCEPTS AND SUBMITS TO, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, THE
NON-EXCLUSIVE JURISDICTION OF ANY SUCH COURT, AND TO ALL PROCEEDINGS IN SUCH
COURTS. BORROWER AND LENDER ACKNOWLEDGE THAT JURY TRIALS OFTEN ENTAIL
ADDITIONAL EXPENSES AND DELAYS NOT OCCASIONED BY NON-JURY TRIALS. BORROWER AND
LENDER AGREE AND STIPULATE THAT A FAIR TRIAL MAY BE HAD BEFORE A STATE OR
FEDERAL JUDGE BY MEANS OF A BENCH TRIAL WITHOUT A JURY. IN VIEW OF THE
FOREGOING, AND AS A SPECIFICALLY NEGOTIATED PROVISION OF THIS AGREEMENT,
BORROWER AND LENDER HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT, OR THE
TRANSACTIONS RELATED HERETO, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND BORROWER AND LENDER
HEREBY AGREE AND CONSENT THAT BORROWER OR LENDER MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
19
<PAGE> 20
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered by their duly authorized officers as of MARCH 14,
1996.
<TABLE>
<S> <C>
LEXINGTON PRECISION CORPORATION
("Borrower")
By Dennis J. Welhouse
----------------------------------------------
Name: Dennis J. Welhouse
Title: Senior Vice President and Assistant
Secretary
LEXINGTON COMPONENTS, INC.
("Borrower")
By Dennis J. Welhouse
----------------------------------------------
Name: Dennis J. Welhouse
Title: Vice Chairman and Assistant
Secretary
Accepted at Canton, Ohio, as of the date
first above written.
BANK ONE, AKRON, NA
By Rudolf G Bentlage
------------------------------------------
Name: Rudolf G. Bentlage
Title: Vice President
</TABLE>
20
<PAGE> 21
RIDER A TO CREDIT FACILITY AND SECURITY AGREEMENT DATED AS OF
MARCH 14, 1996, BETWEEN BANK ONE, AKRON, NA ("LENDER"), AND LEXINGTON
PRECISION CORPORATION ("LPC") AND LEXINGTON COMPONENTS, INC. ("LCI")
(HEREINAFTER LPC AND LCI ARE REFERRED TO EACH AS BORROWER SINGULARLY AND
REFERRED TO JOINTLY AND SEVERALLY AS THE "BORROWERS," WHICH TERM SHALL
MEAN EACH OF THE COMPANIES INDIVIDUALLY AND BOTH OF THE COMPANIES COLLECTIVELY)
1. DEFINITIONS
As used in the Credit Facility and Security Agreement, the
following terms shall have the following defined meanings (applicable to both
singular and plural forms), unless the context otherwise requires:
AGREEMENT: "Hereof," "hereto," "hereunder" and words of
similar meaning: the Credit Facility and Security Agreement of even date
herewith between Borrower and Lender including this Rider A and any other
rider, schedule and exhibit executed by Borrower and Lender in connection
herewith, as from time to time amended, modified or supplemented.
BASE RATE: The Lender's Prime Rate for commercial loans, as
in effect from time to time, or such other designation announced in replacement
of such Prime Rate for commercial loans, which in either instance may not
necessarily be the most favorable or lowest or best rate offered by Lender.
BUSINESS DAY: A day other than a Saturday, Sunday or legal
holiday under the laws of the State of Ohio or day on which commercial banks
are authorized or required to close in Ohio.
CASH FLOW RATIO: The ratio of cash flow to debt service
calculated as fiscal net income plus depreciation and amortization minus
dividends divided by current maturities of all long-term debt excluding the
twelve and three-quarter percent (12.75%) Senior Subordinated Notes of LPC due
February 1, 2000, in the original principal amount of THIRTY-ONE MILLION SEVEN
HUNDRED TWENTY THOUSAND ONE HUNDRED TWENTY-FIVE AND NO/100 DOLLARS
($31,720,125.00) the fourteen percent (14%) junior subordinated notes of LPC
due May 1, 2000, in the original principal amount of THREE HUNDRED FORTY-SIX
THOUSAND SIX HUNDRED SIXTY-SIX DOLLARS AND SIXTY-SEVEN CENTS ($346,666.67) and
the junior subordinated convertible increasing rate notes of LPC due May 1,
2000, in the original principal amount of ONE MILLION AND NO/100 DOLLARS
($1,000,000.00), provided that for the purposes of this calculation, the
Borrower's results of operations for any twelve (12) month period shall exclude
any write down or write-off of asset (whether tangible or intangible) of any
manufacturing facility or business unit of the Borrower which is recorded by
Borrower as a result of the restructuring, relocation, shutdown, or sale of
such manufacturing facility or business unit or as a result of compliance with
Financial Accounting Standard No. 121, accounting for the Impairment of
Long-Lived Assets and for the Long-Lived Assets to Be Disposed of.
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<PAGE> 22
CLOSING DATE: Each date on which a Loan is made.
CODE: The Uniform Commercial Code as from time to time in
effect in any applicable jurisdiction.
COLLATERAL: The Equipment, the North Canton Property, the
Vienna Property, and all other Property of the Borrower now or at any time or
times hereafter subject to a Lien in favor of Lender pursuant to the Credit
Documents and the Proceeds thereof.
COMMITMENT: Lender's obligation to make Loans in the
aggregate principal amount stated in paragraph 2 of this Rider A.
CONGRESS: Congress Financial Corporation and its successors
and assigns.
CORE BORROWING AMOUNT: That portion of the outstanding
balance of the Equipment Term Loan designated by Borrowers to accrue interest
at the LIBOR Interest Rate during the LIBOR Interest Period and which shall be
in incremental amounts of ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00)
and which shall not exceed the Core Cap.
CORE CAP: An amount that the Core Borrowing Amount shall
not exceed at any time during the term of the Equipment Term Loan. The Core
Cap shall be ONE MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($1,500,000.00) until August 1, 1996, on which date it shall be reduced to ONE
MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS ($1,400,000.00) and shall be
reduced by another ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00) on the
first day of each month every four (4) months thereafter until December 1,
2000, on which date it shall be reduced to ONE HUNDRED THOUSAND AND NO/100
DOLLARS ($100,000.00).
COST: With respect to any item of new Equipment, the
seller's invoiced purchase price therefor (after giving effect to any discount
or other reduction) payable by Borrower excluding all other amounts and
expenses payable by Borrower unless approved by Lender such as installation,
freight, tooling, delivery charges, sales taxes, site preparation, and other
similar costs with respect to Equipment or, with respect to any item of used
Equipment, such amount as Lender may approve.
CREDIT DOCUMENTS: This Agreement, the Notes, and all other
agreements, instruments and documents (including, without limitation, all
assignments, security agreements, mortgages, deeds of trust, lien waivers,
subordinations, guarantees, pledges, powers of attorney and consents)
heretofore, now or hereafter executed by Borrower in respect of the
transactions contemplated by this Agreement or any amendments or additions
thereto, in each instance as amended from time to time, provided, in no event
shall the Credit Documents include any agreement with respect to any
Participation Obligation.
DEFAULT: Any event which with notice, lapse of time, or
both would constitute an Event of Default.
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<PAGE> 23
DEFAULT RATE: A fluctuating rate of interest equal to three
percentage points (3.0%) above the Base Rate but not to exceed the maximum rate
allowed by law.
DEMAND NOTE: The Demand Note to be executed by LPC in the
form attached as Exhibit F to this Agreement (with such changes or
modifications, if any, to which Lender may agree) evidencing the North Canton
Interim Loan made by Lender pursuant to Section 2.C of this Agreement, together
with all amendments thereto and all promissory notes issued in substitution
therefor or replacement thereof.
ENVIRONMENTAL LAWS: The Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation and Liability Act,
the Federal Occupational Safety and Health Act, the Environmental Protection
Act, any so-called "Superfund" or "Superlien law, the Toxic Substances Control
Act, or any other federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing liability or
standards of conduct concerning, any solid or hazardous or, toxic or dangerous
waste, substance or material, as now or at any time hereafter in effect, as
well as any other substance the ownership, possession, use, storage, or
disposal of which is regulated under any federal, state, or local laws,
ordinances, regulations, codes, rules, orders, or decrees pertaining to
environmental, health, or safety matters.
EQUIPMENT: Specific machinery and equipment of Lexington
Precision Corporation ("LPC") consisting of: lathes, machining centers,
grinders, bandsaw, drilling machine, transfer molding presses, vacuum pump,
ultrasonic cleaning tank, compressor/dryer, lift truck, sweeper, scrubber and
cabinets, now owned or hereafter acquired by LPC, as more particularly
described on a certain Schedule of Equipment dated March 14, 1996, executed by
LPC and Bank One, Akron, NA (the "Specific Equipment"), together with all
currently owned or hereafter acquired accessories and parts for, and repairs,
modifications, improvements, upgrades, accessions and attachments to, the
Specific Equipment, PROVIDED, in each case that such machinery and equipment is
either (i) located at the North Canton Property as of March 14, 1996, or (ii)
moved to the North Canton Property at any time after March 14, 1996, or (iii)
removed from the North Canton Property at any time after March 14, 1996; and
replacements and substitutions for the Specific Equipment acquired after the
date hereof that are (i) located at the North Canton Property at any time after
March 14, 1996, or (ii) removed from the North Canton Property at any time
after March 14, 1996.
EQUIPMENT TERM LOAN: As defined in Section 2.A of this
Agreement.
EQUIPMENT TERM NOTE: The term promissory note to be
executed by LPC in the form attached as Exhibit B to this Agreement (with such
changes or modifications, if any, to which Lender may agree) evidencing the
Equipment Term Loan made by Lender pursuant to Section 2.A of this Agreement,
together with all amendments thereto and all promissory notes issued in
substitution therefor or replacement thereof.
EVENT OF DEFAULT: As set forth in Section 6 of the
Agreement.
3
<PAGE> 24
EVENT OF LOSS: With respect to any item of Equipment (i)
the actual or constructive loss or loss of use thereof, due to theft,
destruction, damage beyond repair or to an extent which makes repair
uneconomical, or (ii) the condemnation, confiscation or seizure thereof, or
requisition of title thereto, or use thereof, by any Person.
HAZARDOUS MATERIALS: Any substance, pollutant or
contaminant regulated by (or for the purposes of) any Environmental Laws
including, but not limited to, petroleum, any radioactive material, and
asbestos in any form or condition.
INDEBTEDNESS: Shall mean all items which, in accordance
with generally accepted accounting principles, consistently applied, would be
included in determining total liabilities of Borrower shown on the liability
side of its balance sheet as at the date such Indebtedness is to be calculated.
INSTALLMENT PAYMENT DATE: with respect to any Note, each
date on which a regular installment of interest is due.
LIBOR INTEREST PERIOD: The period commencing on the date
the LIBOR Interest Rate on the Core Borrowing Amount is to be made, and ending,
as the Borrowers may elect, pursuant to Section 2.B.(2) of the Agreement, one
(1) month or two (2) months thereafter; provided that all of the foregoing
provisions relating to interest periods are subject to the following:
(i) No interest period may extend beyond any demand of
payment made by Lender;
(ii) If an interest period would end on a day that is not
a Business Day, such interest period shall be extended to the next Business
Day.
LIBOR INTEREST RATE: Means the London Interbank Offered
Rate on United States dollars plus three hundred (300) basis points per annum.
LIENS: Liens, mortgages, security interests, financing
statements or other encumbrances of any kind whatsoever.
MATERIAL ADVERSE EFFECT: As to any events, occurrences or
conditions, if the result thereof would, either singly or in the aggregate,
have a material and adverse effect on (i) the Borrower's Property, business,
operations, prospects, profitability or condition (financial or otherwise),
(ii) Borrower's ability to repay the Obligations or (iii) Lender's Lien on the
Collateral or the priority thereof.
MORTGAGES: The open-end mortgage by LPC in favor of Lender
with respect to the North Canton Property and the open-end mortgage by LCI in
favor of Lender with respect to the Vienna Property.
4
<PAGE> 25
NORTH CANTON INTERIM LOAN: As defined in Section 2.C of
this Agreement.
NORTH CANTON LOCATION: LPC's building and offices located
at 3565 Highland Park NW, North Canton, Ohio.
NORTH CANTON PROPERTY: Certain property owned by LPC
located in Stark County, Ohio, described on Exhibit C hereto.
NORTH CANTON TERM LOAN: As defined in Section 2.C of this
Agreement.
NORTH CANTON TERM NOTE: The term promissory note to be
executed by LPC in the form attached as Exhibit D to this Agreement (with such
changes or modifications, if any, to which Lender may agree) evidencing the
North Canton Term Loan made by Lender pursuant to Section 2.C of this
Agreement, together with all amendments thereto and all promissory notes issued
in substitution therefor or replacement thereof.
NOTES: The Equipment Term Note, the North Canton Term Note,
the Vienna Term Note, and any other promissory note or other instrument
evidencing a Borrower's obligation to repay any Obligations.
OBLIGATIONS: All debts, liabilities and obligations of the
Borrower to Lender under this Agreement and also any and all other debts,
liabilities and obligations of Borrower to Lender of every kind and
description, direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, including without limiting the generality of
the foregoing, any debt, liability or obligation of Borrower to Lender under
any guaranty, and all interest, fees, charges and expenses which at any time
may be payable by Borrower to Lender thereunder, provided that in no event
shall the Obligations include any Participation Obligations or any obligation,
guarantee, or liability of Borrower to any other Person which Lender may have
obtained by assignment, grant, or transfer.
ORIGINATION FEE: As defined in Section 2.I of this
Agreement.
PARENT COMPANY: Any Person having beneficial ownership
(directly or indirectly) of 25% or more of Borrower's shares of voting stock.
PARTICIPATION OBLIGATIONS: Any obligation, guarantee, or
other liability of any kind whatsoever to Lender or any affiliate of Lender as
a result of or arising out of Lender's or any affiliate of Lender's
participation in any loan, credit facility, or other extension of credit to or
with any Borrower by Congress or any other Person.
PERMITTED ENCUMBRANCES: The (i) Lien of Congress Financial
Corporation, (ii) any Liens which are not in excess of TWENTY- FIVE THOUSAND
DOLLARS ($25,000) in the aggregate, and (iii) any "Permitted Encumbrances" as
defined in each of the Mortgages.
5
<PAGE> 26
PERSON: An individual, partnership, corporation, trust,
unincorporated association, joint venture, governmental authority or other
entity of whatever nature.
PRIME RATE: The interest rate established from time to time
by Lender as the Lender's Prime Rate, whether or not publicly announced, which
may not necessarily be the most favorable or lowest or best rate offered by
Lender.
PROCEEDS: All proceeds of the Equipment, which proceeds
shall include the meaning assigned to it in the Code, and in any event,
including, without limitation, (i) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to Borrower from time to time with
respect to any of the Equipment; (ii) any and all payments made, or due and
payable from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Equipment by any
Person; (iii) any and all accounts arising out of a sale or lease of any of the
Equipment, or chattel paper evidencing a lease of any of the Equipment; (iv)
any and all other rents or profits or other amounts from time to time paid or
payable upon the sale, lease, or other disposition of any of the Equipment; and
(v) all books and records (including, without limitation, programs, printouts,
and other accounting records) of LPC pertaining to the Equipment.
SUBORDINATED DEBT: The 14% Junior Subordinated Notes of LPC
due May 1, 2000 in the original principal amount of $346,666.67, the Junior
Subordinated Convertible Increasing Rate Notes of LPC due May 1, 2000 in the
original principal amount of $1,000,000 and such other Indebtedness which is
subordinated and junior in right of payment to the Obligations to the extent,
in such manner, and pursuant to an instrument evidencing such subordination,
acceptable to Lender.
TANGIBLE NET WORTH: At any time, Stockholder's Equity plus
Preferred Stock plus Subordinated Debt, less the sum of:
(i) any surplus resulting from any write-up of assets of
Borrower subsequent to September 30, 1995; and
(ii) good will, including any amounts, however designated
on a balance sheet of the Borrower, representing the excess of the
purchase price paid for assets or stock acquired over the value
assigned thereto on the books of the Borrower; and
(iii) proprietary rights of Borrower, including all
patents, trademarks, trade names and copyrights; and
(iv) loans and advances to stockholders of Borrower who
own five percent (5%) or more of LPC's common stock.
6
<PAGE> 27
TREASURY RATE: The weekly average yield on United States
Treasury securities adjusted to a constant maturity of five (5) years as in
effect from time to time. Should the United States Treasury Department cease to
issue Treasury securities having a maturity as noted above in the same manner
existing on the date of this Agreement, then the Lender shall select an index
that in the opinion of the Lender, accurately reflects monetary trends intended
to be reflected by the Treasury Rate.
VIENNA PROPERTY: Certain property owned by LCI located in
Trumbull County, Ohio, described on Exhibit E hereto.
VIENNA TERM LOAN: As defined in Section 2.E of this
Agreement.
VIENNA TERM NOTE: The term promissory note to be executed
by LCI in the form attached as Exhibit F to this Agreement (with such changes
or modifications, if any, to which Lender may agree) evidencing the Vienna Term
Loan made by Lender pursuant to Section 2.E of this Agreement, together with
all amendments thereto and all promissory notes issued in substitution therefor
or replacement thereof.
2. FINANCIAL COVENANTS
So long as any Obligations remain unsatisfied, Borrowers
covenant that, unless otherwise consented to by Lender in writing, LPC shall:
A. Maintain on a basis consolidated with LPC's direct
and indirect subsidiaries at all times a Tangible Net Worth equal to or greater
than FIFTEEN MILLION THREE HUNDRED THOUSAND AND NO/100 DOLLARS
($15,300,000.00).
B. Maintain on a basis consolidated with LPC's direct
and indirect subsidiaries a positive Cash Flow Ratio of not less than one and
twenty-five hundredths (1.25) to one (1.0).
C. Maintain on a basis consolidated with LPC's direct
and indirect subsidiaries operating working capital (excess of current assets
over current liabilities) as determined in accordance with generally accepted
accounting principles (excluding notes payable and the current portion of
long-term indebtedness) of not less than THREE MILLION EIGHT HUNDRED THOUSAND
AND NO/100 DOLLARS ($3,800,000.00).
D. Not incur, make, or commit to make any expenditure in
respect of the purchase or other acquisition of fixed or capital assets,
including leases which in accordance with generally accepted accounting
principles should be capitalized on the books of LPC (including normal
replacements and maintenance), which after giving effect thereto would cause
the aggregate amount of such capital expenditures by LPC to exceed FIFTEEN
MILLION AND NO/100 DOLLARS ($15,000,000.00) (on a non-cumulative basis) in any
fiscal year.
7
<PAGE> 28
3. PREPAYMENT
E. Should any item of Equipment suffer an Event of Loss,
Borrower shall either replace such item of Equipment within 60 days with
equipment (which shall become Equipment) of a value and utility equal to or
greater than that of the Equipment suffering the Event of Loss (such
determination of value and utility being deemed made immediately prior to the
Event of Loss) or make a prepayment on the corresponding Note within 60 days
after the occurrence of the Event of Loss. The amount to be prepaid shall be
(i) the unpaid principal amount of such Note multiplied by a fraction the
numerator of which is the Cost of the item of Equipment which suffered the Event
of Loss and the denominator of which is the Cost of all items of Equipment less
the Cost of each item of Equipment which previously suffered an Event of Loss or
for which a prepayment has otherwise previously been made (the PREPAID
PRINCIPAL AMOUNT) and (ii) all other amounts then due and owing hereunder and
under the Notes.
F. On any Installment Payment Date Borrower may, at its
option, on at least 30 days' prior written notice to Lender, prepay all, but
not less than all, of the outstanding principal under all Notes executed
hereunder together with (i) all interest accrued thereon to the date of
prepayment and (ii) all other amounts then due and owing hereunder or under the
Notes.
4. ADDRESSES FOR NOTICE PURPOSES AND DEBTOR'S CHIEF EXECUTIVE OFFICE
A. If to Lender, at:
Bank One, Akron, NA
Attention: Rudolf G. Bentlage
50 South Main Street
Akron, Ohio 44308
Telecopier No. (216) 438-8212
With a copy to:
Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A.
Attention: Sam O. Simmerman
4775 Munson Street NW
P.O. Box 36963
Canton, Ohio 44735-6963
Telecopier No. (216) 497-4020
8
<PAGE> 29
B. If to Borrowers, at:
Lexington Precision Corporation
Attention: Warren Delano
767 Third Avenue
New York, New York 10017
Telecopier No. (212) 319-4659
With a copy to:
Nixon, Hargrave, Devans & Doyle
Attention: Lauren E. Wiesenberg
437 Madison Avenue, 24th Floor
New York, New York 10022
Telecopier No. (212) 940-3111
9
<PAGE> 30
or to such other address as each party may designate for itself by like notice
given in accordance with this section.
THE PROVISIONS SET FORTH IN THIS RIDER A ARE INCORPORATED IN
AND MADE A PART OF THE CREDIT FACILITY AND SECURITY AGREEMENT BETWEEN LENDER
AND DEBTOR DATED AS OF MARCH 14, 1996.
<TABLE>
<S> <C>
LEXINGTON PRECISION CORPORATION
("Borrower")
By Dennis J. Welhouse
-----------------------------------------------
Name: Dennis J. Welhouse
Title: Senior Vice President and
Assistant Secretary
LEXINGTON COMPONENTS, INC.
("Borrower")
By Dennis J. Welhouse
-----------------------------------------------
Name: Dennis J. Welhouse
Title: Vice Chairman and
Assistant Secretary
Accepted at Canton, Ohio, as of the date
first above written.
BANK ONE, AKRON, NA
By Rudolf G. Bentlage
----------------------------------------
Name: Rudolf G. Bentlage
Title: Vice President
</TABLE>
10
<PAGE> 31
Exhibits to the Credit Facility and Security Agreement dated March 14,
1996 have been omitted.
The following is a list of the omitted Exhibits which the Registrant
agrees to furnish supplementally to the Commission upon request:
Exhibits:
A Equipment Term Note
B North Canton Property
C North Canton Term Note
D Vienna Property
E Vienna Term Note
F Demand Note
<PAGE> 1
Exhibit 1059
PROMISSORY NOTE
------------------
(Vienna Term Loan)
$1,500,000.00 Canton, Ohio
March 14, 1996
FOR VALUE RECEIVED, LEXINGTON COMPONENTS, INC., a corporation organized
under the laws of the State of Delaware (hereinafter referred to as the
"Company"), promises to pay to the order of BANK ONE, AKRON, NA (hereinafter
referred to as the "Bank"), the principal amount of ONE MILLION FIVE HUNDRED
THOUSAND AND NO/100 DOLLARS ($1,500,000.00), on April 1, 2001, or sooner as
hereinafter provided, with interest on the unpaid balance of said principal
amount from the date hereof at a rate per annum equal to eight and thirty-seven
one-hundredths percent (8.37%). If any installment of principal, interest or
other amounts due and payable hereunder are not paid when due, or within any
applicable grace periods set forth in the Agreement, the Company shall pay
interest thereon at the rate of three percent (3.0%) per annum in excess of the
Base Rate (as defined in the Agreement) as the same may from time to time be
established but not to exceed the maximum rate allowed by law. Bank shall have
the right to assess a late payment processing fee in the amount of the greater
of FIFTY AND NO/100 DOLLARS ($50.00) or five percent (5%) of the scheduled
payment in the event of a default in payment that remains uncured for a period
of at least ten (10) days.
The Company agrees to pay the principal amount of this Note in fifty-nine
(59) consecutive equal installments of EIGHT THOUSAND THREE HUNDRED
THIRTY-THREE DOLLARS THIRTY-THREE CENTS ($8,333.33) each, together with all
accrued interest due at the time of payment of each such installment of
principal, commencing on May 1, 1996, and continuing on the first day of each
month thereafter and a final installment of ONE MILLION EIGHT THOUSAND THREE
HUNDRED THIRTY-THREE DOLLARS FIFTY-THREE CENTS ($1,008,333.53), together with
all accrued interest due at the time of payment of such installment, on April
1, 2001. Monthly payments hereunder shall be applied first to interest due and
the balance to reduction of the principalamount outstanding.
Payments of both principal of and interest on this Note shall be made in
lawful money of the United States of America, at 50 South Main Street, Akron,
Ohio 44308-1888, or at such other place as the Bank or any subsequent holder
hereof shall have designated to the Company in writing. Interest payable on
this Note shall be computed on a three hundred sixty (360) day per year basis
counting the actual number of days elapsed. If any payment under this Note
becomes due and payable on a day which is not a Business Day (as defined in
this Agreement), payment thereof shall be made on the immediately succeeding
Business Day.
This Note is issued pursuant to and is entitled to the benefits of a Credit
Facility and Security Agreement dated March 14, 1996, by and among the Company,
Lexington Precision Corporation ("LPC"), and the Bank (the "Agreement"), to
which Agreement reference is hereby made for a statement of the rights and
obligations of the Bank and the duties and obligations of the Company and LPC
in relation thereto; but neither this reference to said Agreement nor any
provisions thereof shall affect or impair the absolute and unconditional
obligation of the Company to pay the principal of or interest on this Note when
due.
The Company may prepay all or any portion of this Note at any time and in
any amount without penalty or premium, provided that all prepayments shall be
applied to installments of principal in the inverse order of their maturities.
<PAGE> 2
If an Event of Default (as defined in the Agreement), shall occur and shall
be continuing, the principal of this Note may be declared immediately due and
payable at the option of the Bank.
In the event that the Company fails to pay any regularly scheduled principal
or interest payment on the Demand Note, the Equipment Term Note, or the North
Canton Term Note (the "Notes") when due (other than as a result of acceleration
thereof based on a default or event of default other than the failure to make
any such regularly scheduled payments of principal or interest on the Notes
when due) which failure is not cured within the ten (10)-day cure period
provided in Section 6A of the Agreement (a "Payment Default"), or if an Event
of Default occurs and is continuing, which arises from fraudulent act(s) or
practice(s) of the Company which Event of Default is not cured within three (3)
Business Days after the Company's receipt of written notice thereof from the
Bank (a "Fraud Default"), the Company hereby authorizes any attorney-at-law to
appear in any court of record in the State of Ohio, or in any other state or
territory of the United States, at any time or times after the above sum
becomes due, and waives the issuance and service of process and confesses
judgment against it, in favor of any holder of this Note, for the amount then
appearing due, together with the costs of suit, and thereupon to release all
errors and waive all rights of appeal and stay of execution. The foregoing
warrant of attorney shall survive any judgment, it being understood that should
any judgment be vacated for any reason, the foregoing warrant of attorney
nevertheless may thereafter be used for obtaining an additional judgment or
judgments. To the extent that the provisions of the cognovit warning set forth
above the Company's signature specifically contradict the provisions of this
paragraph regarding the requirement of a Payment Default or a Fraud Default to
take a cognovit judgment, the provisions of this paragraph control.
No delay on the part of any holder hereof in exercising any power or rights
hereunder shall operate as a waiver of any power or rights. Any demand or
notice hereunder to the Company shall be deemed duly given or made when sent,
if given by telecopier, when delivered, if given by personal delivery or
overnight commercial carrier, or the fifth calendar day after deposit in the
United States mail, certified mail, return receipt requested, addressed to the
Company at its address (or telecopier number) set forth in Rider A of the
Agreement or such other address or telecopier number as may be hereafter
designated in writing by the Company to the Bank.
This note is executed at Canton, Stark County, Ohio.
- -------------------------------------------------------------------------------
WARNING--BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST
YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO
COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR,
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH
THE AGREEMENT, OR ANY OTHER CAUSE.
- -------------------------------------------------------------------------------
LEXINGTON COMPONENTS, INC.
By Dennis J. Welhouse
------------------------------------
Dennis J. Welhouse
Vice Chairman and Assistant Secretary
<PAGE> 1
Exhibit 1060
COGNOVIT GUARANTEE OF
LEXINGTON PRECISION CORPORATION
In consideration of the extension of credit by BANK ONE, AKRON, NA (the
"Bank"), to LEXINGTON COMPONENTS, INC. (the "Debtor"), and for the purpose of
inducing the Bank, its successors and assigns, to continue, in whole or in
part, existing indebtedness, or to advance credit, to loan money to the Debtor,
and as a condition to the continuance of credit to the Debtor and other good
and valuable considerations, the receipt of which is acknowledged, the
undersigned, Lexington Precision Corporation (hereinafter referred to as the
"undersigned" or "Guarantor"), hereby guarantees to the Bank the prompt
payment, when due, of all debts, liabilities and obligations of the Debtor to
Bank pursuant to a Credit Facility and Security Agreement of even date herewith
(the "Credit Facility") and also any and all other debts, liabilities and
obligations of Debtor to Bank of every kind and description, direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, including without limiting the generality of the foregoing,
any debt, liability or obligation of Debtor to Bank under any guarantee, and
all interest, fees, charges and expenses which at any time may be payable by
Debtor to Bank thereunder, provided that in no event shall the Obligations
include any obligation, guarantee, or other liability of any kind whatsoever to
Bank or any affiliate of Bank as a result of or arising out of Bank's or any
affiliate of Bank's participation in any loan, credit facility, or other
extension of credit to or with Debtor by Congress Financial Corporation or any
other person or any obligation, guarantee, or liability of Debtor to any other
person which Bank may have obtained by assignment, grant, or transfer
(hereinafter collectively referred to as the "Obligations"). This is a
guarantee of payment and not of collection.
All sums at any time to the credit of the undersigned and any property of
the undersigned on which the Bank at any time has a security interest or lien
or of which the Bank at any time has possession, shall secure payment and
performance of all this Guarantee and all other obligations of the undersigned
to the Bank, however arising (except any property to which the Truth-in-Lending
Act and Regulation Z promulgated thereunder apply), including, but not limited
to, the following collateral, together with all re-issues, renewals,
replacements, and extensions or substitutions thereof and the income and
proceeds thereof:
The collateral granted to Bank pursuant to an Ohio Open-End Mortgage of even
date herewith in regard to certain real estate located in North Canton,
Ohio.
The liability of the undersigned hereunder is direct, absolute, and
unconditional, and may be enforced against the undersigned irrespective of the
validity or enforceability of the Obligations. This is an absolute,
unconditional, and continuing guarantee and will remain in full force and
effect until revoked by written notice received by the Bank. Such revocation
shall not affect then existing liabilities of the undersigned hereunder,
including but not limited to, any outstanding obligation or liability
hereunder, or any unpaid portion thereof which may be renewed or extended. In
no event shall such notice relieve the undersigned from liability for any
Obligations incurred before termination or for post-termination collection
expenses and interest pertaining to any Obligations arising before termination.
After the effective date of such termination, the Bank may apply, in the
exercise of its absolute discretion, any proceeds received upon realization of
any collateral securing the Obligations to Obligations incurred by Debtor or
otherwise arising after the effective date of such termination. This Guarantee
will extend to and cover renewals of the Obligations and any number of
extensions of time
<PAGE> 2
for payment thereof and will not be affected by any surrender, exchange,
acceptance, or release by the Bank of the Debtor, any other guarantee or any
security held by it for any of the Obligations. Except for notices of Event(s)
of Default given to the Debtor pursuant to the Credit Facility and Security
Agreement of even date herewith, notice of acceptance of this Guarantee, notice
of extensions of credit to the Debtor from time to time, notice of default,
diligence, presentment, protest, demand for payment, notice of nonpayment,
notice of demand or protest, and to the extent allowed by applicable law any
defense based upon a failure of the Bank to comply with the notice requirements
of the applicable version of Uniform Commercial Code Section 9-504 are hereby
waived. The Bank at any time and from time to time, without the consent of the
undersigned, may change the manner, place, or terms of payment of or interest
rates on, or change or extend the time of payment of, or renew or alter, any of
the Obligations, without impairing or releasing the liabilities of the
undersigned hereunder. Undersigned consents to any impairment of collateral,
including, but not limited to release of the collateral to a third party or
failure to perfect any security interest. The Bank in its sole discretion may
determine the reasonableness of the period which may elapse prior to the making
of demand for any payment upon the Debtor and it need not pursue any of its
remedies against said Debtor before having recourse against the undersigned
under this Guarantee. The Bank may enforce this Guarantee against the
undersigned without being first required to resort to any other Guarantors of
the Obligations. In addition to the waiver set forth above, undersigned waives
any other defense at law or in equity that may be available to the undersigned.
Notwithstanding anything to the contrary in this Guarantee, the Guarantor
hereby irrevocably waives all rights it may have at law or in equity
(including, without limitation, any law subrogating the Guarantor to the rights
of the Bank) to seek contribution, indemnification, or any other form of
reimbursement from the Debtor, any other Guarantor of any Obligations, or any
other person now or hereafter primarily or secondarily liable for any
Obligations of the Debtor to the Bank, for any disbursement made by the
Guarantor under or in connection with this Guarantee until the Obligations are
paid in full.
Upon the dissolution, or insolvency of the undersigned, or if proceedings
are instituted by or against the undersigned in bankruptcy or insolvency, or
for reorganization, arrangement, receivership, or the like, or if the
undersigned calls a meeting of creditors or commits any act of bankruptcy, the
liability of the undersigned for the Obligations shall mature, even if the
liability of Debtor therefor has or does not.
The undersigned agrees that, to the extent that Debtor makes a payment or
payments to the Bank, or the Bank receives any proceeds of collateral securing
the Obligations, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to the Debtor, its estate, trustee, receiver, or any
other party, including, without limitation, the undersigned, under any
bankruptcy law, state or federal law, common law, or equity, then to the extent
of such payment or repayment, the Obligations or part thereof which has been
paid, reduced, or satisfied by such amount shall be reinstated and continued in
full force and effect as of the date such initial payment, reduction, or
satisfaction occurred. If any demand is made at any time upon the Bank for the
repayment or recovery of any amount or amounts received by it in payment or on
account of any of the Obligations and if the Bank repays all or any part of
such amount or amounts by reason of any judgment, decree, or order of any court
or administrative body or by reason of any settlement or compromise of any such
demand, the undersigned will be and remain liable hereunder for the amount or
amounts so repaid or recovered to the same extent as if such amount or amounts
had never been received originally by the Bank.
<PAGE> 3
The Bank's books and records showing the account between the Bank and Debtor
shall be admissible in evidence in any action or proceeding as prima facie
proof of the items therein set forth; and the Bank's monthly or other periodic
statements rendered to Debtor to the extent to which no written objection is
made within thirty (30) days after the date thereof, shall constitute an
account stated between the Bank and Debtor and shall be binding on the
undersigned.
At any time or times after the occurrence of and during the continuance of
an event of default under the documents evidencing the Obligations or after
maturity of any of the Obligations, by acceleration or otherwise, Bank at its
option and with only such notice as required by law, may appropriate and apply
any balances, credits, deposits, accounts, or monies of the undersigned, now or
hereafter in the possession or control of Bank, toward payment of any or all of
the Obligations, with the undersigned agreeing to remain liable for the full
balance of Obligations remaining unpaid after any such setoff.
Guarantor shall pay all the reasonable costs, expenses, and fees, including
all reasonable attorneys' fees and litigation costs, which may be incurred by
the Bank in enforcing or attempting to enforce this Guarantee following any
default on the part of Guarantor hereunder, whether the same shall be enforced
by suit or otherwise. If any such fees and expenses are not so reimbursed, the
amount thereof shall, to the extent permitted by law, constitute indebtedness
guaranteed hereby, and in any action brought to collect such indebtedness the
Bank shall be entitled to seek the recovery of such fees and expenses in such
action except as limited by law or by judicial order or decision entered in
such proceedings.
No waiver of Bank's rights or options hereunder shall be effective unless in
writing and signed by Bank; and any rights and remedies hereunder are
cumulative and not alternative.
If any term, restriction or covenant of this Guarantee is deemed illegal or
unenforceable, all other terms, restrictions and covenants, and the application
thereof to all persons and circumstances subject hereto, shall remain
unaffected to the extent permitted by law; and if any application of any term,
restriction or covenant to any person or circumstance is deemed illegal, the
application of such term, restriction or covenant to other persons and
circumstances shall remain unaffected to the extent permitted by law.
The obligations and liabilities hereunder shall be binding upon the
successors and assigns of the Guarantor.
In the event that Debtor fails to pay any regularly scheduled principal or
interest payment on the Vienna Term Note (the "Note") when due (other than as a
result of acceleration thereof based on a default or event of default other
than the failure to make any such regularly scheduled payments of principal or
interest on the Note when due) which failure is not cured within the ten
(10)-day cure period provided in Section 6A of the Credit Facility (a "Payment
Default"), or if an Event of Default occurs and is continuing, which arises
from fraudulent act(s) or practice(s) of the Debtor which Event of Default is
not cured within three (3) Business Days after the Debtor's receipt of written
notice thereof from the Bank (a "Fraud Default"), the undersigned hereby
authorizes any attorney-at-law to appear in any court of record and lawful
jurisdiction in the State of Ohio or in any state or territory of the United
States, or in any court of the United States, from time to time, after any or
all of Obligations become due by acceleration or otherwise, to admit the
maturity thereof, to waive the issuance and service of process and
<PAGE> 4
confess a judgment against the undersigned in favor of payee or any other
holder of such Obligations for the amount then appearing due, together with
costs of suit, and thereupon to waive all errors and rights of appeal and stay
of execution, but no such judgment or judgments against less than all of those
obligated hereunder, or based on nonpayment of less than all of the
Obligations, shall bar subsequent judgment or judgments against any other
Guarantor, or based on nonpayment of other guaranteed Obligations. It is
agreed that the identification of any obligation as a guaranteed Obligation and
the amount due thereon under this Guarantee shall be conclusively evidenced by
any statement relative thereto in any petition filed in any court by any holder
hereof against any Guarantor for judgment thereon. To the extent that the
provisions of the cognovit warning set forth above the undersigned's signature
specifically contradict the provisions of this paragraph regarding the
requirement of a Payment Default or a Fraud Default to take a cognovit
judgment, the provisions of this paragraph control.
This Guarantee will be governed by and construed in accordance with the laws
of the State of Ohio and will be binding upon the undersigned and the
successors and assigns thereof and inure to the benefit of the Bank and its
successors and assigns. The undersigned agrees that legal action or
proceedings between the Bank and the undersigned may be brought in any court of
competent jurisdiction in the State of Ohio and waives objections to summons,
service of process, jurisdiction of the person or venue of any such court. THE
UNDERSIGNED WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED ON THIS
GUARANTEE.
Signed at Canton, Stark County, Ohio, this 14 day of March, 1996.
- -------------------------------------------------------------------------------
WARNING--BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR, WHETHER
FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT, OR ANY OTHER CAUSE.
- -------------------------------------------------------------------------------
LEXINGTON PRECISION CORPORATION
By Dennis J. Welhouse
--------------------------------------------
Dennis J. Welhouse
Senior Vice President and Assistant Secretary
<PAGE> 1
Exhibit 1061
COGNOVIT GUARANTEE OF
LEXINGTON COMPONENTS, INC.
In consideration of the extension of credit by BANK ONE, AKRON, NA (the
"Bank"), to LEXINGTON PRECISION CORPORATION (the "Debtor"), and for the purpose
of inducing the Bank, its successors and assigns, to continue, in whole or in
part, existing indebtedness, to advance credit, or to loan money to the Debtor,
and as a condition to the continuance of credit to the Debtor and other good
and valuable considerations, the receipt of which is acknowledged, the
undersigned, Lexington Components, Inc. (hereinafter referred to as the
"undersigned" or "Guarantor"), hereby guarantees to the Bank the prompt
payment, when due, of all debts, liabilities and obligations of the Debtor to
Bank pursuant to a Credit Facility and Security Agreement of even date herewith
(the "Credit Facility") and also any and all other debts, liabilities and
obligations of Debtor to Bank of every kind and description, direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, including without limiting the generality of the foregoing,
any debt, liability or obligation of Debtor to Bank under any guarantee, and
all interest, fees, charges and expenses which at any time may be payable by
Debtor to Bank thereunder, provided that in no event shall the Obligations
include any obligation, guarantee, or other liability of any kind whatsoever to
Bank or any affiliate of Bank as a result of or arising out of Bank's or any
affiliate of Bank's participation in any loan, credit facility, or other
extension of credit to or with Debtor by Congress Financial Corporation or any
other person or any obligation, guarantee, or liability of Debtor to any other
person which Bank may have obtained by assignment, grant, or transfer
(hereinafter collectively referred to as the "Obligations"). This is a
guarantee of payment and not of collection.
All sums at any time to the credit of the undersigned and any property of
the undersigned on which the Bank at any time has a security interest or lien
or of which the Bank at any time has possession, shall secure payment and
performance of all this Guarantee and all other obligations of the undersigned
to the Bank, however arising (except any property to which the Truth-in-Lending
Act and Regulation Z promulgated thereunder apply), including, but not limited
to, the following collateral, together with all re-issues, renewals,
replacements, and extensions or substitutions thereof and the income and
proceeds thereof:
The collateral granted to Bank pursuant to an Ohio Open-End Mortgage of even
date herewith in regard to certain real estate located in North Canton,
Ohio, and the collateral granted to Bank pursuant to the Credit Facility and
Security Agreement of even date herewith.
The liability of the undersigned hereunder is direct, absolute, and
unconditional, and may be enforced against the undersigned irrespective of the
validity or enforceability of the Obligations. This is an absolute,
unconditional, and continuing guarantee and will remain in full force and
effect until revoked by written notice received by the Bank. Such revocation
shall not affect then existing liabilities of the undersigned hereunder,
including but not limited to, any outstanding obligation or liability
hereunder, or any unpaid portion thereof which may be renewed or extended. In
no event shall such notice relieve the undersigned from liability for any
Obligations incurred before termination or for post-termination collection
expenses and interest pertaining to any Obligations arising before termination.
After the effective date of such termination, the Bank may apply, in the
exercise of its absolute discretion, any proceeds received upon realization of
any collateral securing the Obligations to Obligations incurred by Debtor or
otherwise arising after the effective date of such termination. This
<PAGE> 2
Guarantee will extend to and cover renewals of the Obligations and any number
of extensions of time for payment thereof and will not be affected by any
surrender, exchange, acceptance, or release by the Bank of the Debtor, any
other guarantee or any security held by it for any of the Obligations. Except
for notices of Event(s) of Default given to the Debtor pursuant to the Credit
Facility and Security Agreement of even date herewith, notice of acceptance of
this Guarantee, notice of extensions of credit to the Debtor from time to time,
notice of default, diligence, presentment, protest, demand for payment, notice
of nonpayment, notice of demand or protest, and to the extent allowed by
applicable law any defense based upon a failure of the Bank to comply with the
notice requirements of the applicable version of Uniform Commercial Code
Section 9-504 are hereby waived. The Bank at any time and from time to time,
without the consent of the undersigned, may change the manner, place, or terms
of payment of or interest rates on, or change or extend the time of payment of,
or renew or alter, any of the Obligations, without impairing or releasing the
liabilities of the undersigned hereunder. Undersigned consents to any
impairment of collateral, including, but not limited to release of the
collateral to a third party or failure to perfect any security interest. The
Bank in its sole discretion may determine the reasonableness of the period
which may elapse prior to the making of demand for any payment upon the Debtor
and it need not pursue any of its remedies against said Debtor before having
recourse against the undersigned under this Guarantee. The Bank may enforce
this Guarantee against the undersigned without being first required to resort
to any other Guarantors of the Obligations. In addition to the waiver set
forth above, undersigned waives any other defense at law or in equity that may
be available to the undersigned. Notwithstanding anything to the contrary in
this Guarantee, the Guarantor hereby irrevocably waives all rights it may have
at law or in equity (including, without limitation, any law subrogating the
Guarantor to the rights of the Bank) to seek contribution, indemnification, or
any other form of reimbursement from the Debtor, any other Guarantor of any
Obligations, or any other person now or hereafter primarily or secondarily
liable for any Obligations of the Debtor to the Bank, for any disbursement made
by the Guarantor under or in connection with this Guarantee until the
Obligations are paid in full.
Upon the dissolution, or insolvency of the undersigned, or if proceedings
are instituted by or against the undersigned in bankruptcy or insolvency, or
for reorganization, arrangement, receivership, or the like, or if the
undersigned calls a meeting of creditors or commits any act of bankruptcy, the
liability of the undersigned for the Obligations shall mature, even if the
liability of Debtor therefor has or does not.
The undersigned agrees that, to the extent that Debtor makes a payment or
payments to the Bank, or the Bank receives any proceeds of collateral securing
the Obligations, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to the Debtor, its estate, trustee, receiver, or any
other party, including, without limitation, the undersigned, under any
bankruptcy law, state or federal law, common law, or equity, then to the extent
of such payment or repayment, the Obligations or part thereof which has been
paid, reduced, or satisfied by such amount shall be reinstated and continued in
full force and effect as of the date such initial payment, reduction, or
satisfaction occurred. If any demand is made at any time upon the Bank for the
repayment or recovery of any amount or amounts received by it in payment or on
account of any of the Obligations and if the Bank repays all or any part of
such amount or amounts by reason of any judgment, decree, or order of any court
or administrative body or by reason of any settlement or compromise of any such
demand, the undersigned will be and remain liable hereunder for the amount or
amounts so repaid or recovered to the same extent as if such amount or amounts
had never been received originally by the Bank.
<PAGE> 3
The Bank's books and records showing the account between the Bank and Debtor
shall be admissible in evidence in any action or proceeding as prima facie
proof of the items therein set forth; and the Bank's monthly or other periodic
statements rendered to Debtor to the extent to which no written objection is
made within thirty (30) days after the date thereof, shall constitute an
account stated between the Bank and Debtor and shall be binding on the
undersigned.
At any time or times after the occurrence of and during the continuance of
an event of default under the documents evidencing the Obligations or after
maturity of any of the Obligations, by acceleration or otherwise, Bank at its
option and with only such notice as required by law, may appropriate and apply
any balances, credits, deposits, accounts, or monies of the undersigned, now or
hereafter in the possession or control of Bank, toward payment of any or all of
the Obligations, with the undersigned agreeing to remain liable for the full
balance of Obligations remaining unpaid after any such setoff.
Guarantor shall pay all the reasonable costs, expenses, and fees, including
all reasonable attorneys' fees and litigation costs, which may be incurred by
the Bank in enforcing or attempting to enforce this Guarantee following any
default on the part of Guarantor hereunder, whether the same shall be enforced
by suit or otherwise. If any such fees and expenses are not so reimbursed, the
amount thereof shall, to the extent permitted by law, constitute indebtedness
guaranteed hereby, and in any action brought to collect such indebtedness the
Bank shall be entitled to seek the recovery of such fees and expenses in such
action except as limited by law or by judicial order or decision entered in
such proceedings.
No waiver of Bank's rights or options hereunder shall be effective unless in
writing and signed by Bank; and any rights and remedies hereunder are
cumulative and not alternative.
If any term, restriction or covenant of this Guarantee is deemed illegal or
unenforceable, all other terms, restrictions and covenants, and the application
thereof to all persons and circumstances subject hereto, shall remain
unaffected to the extent permitted by law; and if any application of any term,
restriction or covenant to any person or circumstance is deemed illegal, the
application of such term, restriction or covenant to other persons and
circumstances shall remain unaffected to the extent permitted by law.
The obligations and liabilities hereunder shall be binding upon the
successors and assigns of the Guarantor.
In the event that Debtor fails to pay any regularly scheduled principal or
interest payment on the Demand Note, the Equipment Term Note, or the North
Canton Term Note (the "Notes") when due (other than as a result of acceleration
thereof based on a default or event of default other than the failure to make
any such regularly scheduled payments of principal or interest on the Notes
when due) which failure is not cured within the ten (10)-day cure period
provided in Section 6A of the Credit Facility (a "Payment Default"), or if an
Event of Default occurs and is continuing, which arises from fraudulent act(s)
or practice(s) of the Debtor which Event of Default is not cured within three
(3) Business Days after the Debtor's receipt of written notice thereof from the
Bank (a "Fraud Default"), the undersigned hereby authorizes any attorney-at-
law to appear in any court of record and lawful jurisdiction in the State of
Ohio or in any state or territory of the United States, or in any court of the
United States, from time to time, after any or all of Obligations become due by
acceleration or otherwise, to admit the maturity thereof, to waive the issuance
and service of process and confess a judgment against the undersigned in favor
of payee or any other holder of such Obligations for the amount then appearing
due, together with
<PAGE> 4
costs of suit, and thereupon to waive all errors and rights of appeal and
stay of execution, but no such judgment or judgments against less than all of
those obligated hereunder, or based on nonpayment of less than all of the
Obligations, shall bar subsequent judgment or judgments against any other
Guarantor, or based on nonpayment of other guaranteed Obligations. It is
agreed that the identification of any obligation as a guaranteed Obligation and
the amount due thereon under this Guarantee shall be conclusively evidenced by
any statement relative thereto in any petition filed in any court by any holder
hereof against any Guarantor for judgment thereon. To the extent that the
provisions of the cognovit warning set forth above the undersigned's signature
specifically contradict the provisions of this paragraph regarding the
requirement of a Payment Default or a Fraud Default to take a cognovit
judgment, the provisions of this paragraph control.
This Guarantee will be governed by and construed in accordance with the laws
of the State of Ohio and will be binding upon the undersigned and the
successors and assigns thereof and inure to the benefit of the Bank and its
successors and assigns. The undersigned agrees that legal action or
proceedings between the Bank and the undersigned may be brought in any court of
competent jurisdiction in the State of Ohio and waives objections to summons,
service of process, jurisdiction of the person or venue of any such court. THE
UNDERSIGNED WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED ON THIS
GUARANTEE.
Signed at Canton, Stark County, Ohio, this 14 day of March, 1996.
- -------------------------------------------------------------------------------
WARNING--BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR, WHETHER
FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT, OR ANY OTHER CAUSE.
- -------------------------------------------------------------------------------
LEXINGTON COMPONENTS, INC.
By Dennis J. Welhouse
------------------------------------------
Dennis J. Welhouse
Vice Chairman and Assistant Secretary
<PAGE> 1
Exhibit 1062
February 28, 1996
Lexington Precision Corporation
767 Third Avenue
New York, New York 10017
Re: Amendment to Financing Agreements and Consent
---------------------------------------------
Gentlemen:
Reference is made to certain financing agreements dated January 11, 1990
between Lexington Precision Corporation ("LPC") and Congress Financial
Corporation ("Congress"), including, but not limited to, an Accounts Financing
Agreement [Security Agreement], as amended (the "Accounts Agreement"), and all
supplements thereto and all other related financing and security agreements
(collectively, all of the foregoing, as the same have heretofore or
contemporaneously been or may be hereafter, amended, replaced, extended,
modified or supplemented, the "Financing Agreements"). Reference is further
made to the letter agreement re: Amendment to Financing Agreements dated
January 16, 1996 between Congress and LPC (the "1996 LPC Real Estate Loan
Amendment") pursuant to which, INTER ALIA, Congress has made the LPC Arizona
Real Estate Loan and the LPC New York Real Estate Loan A to LPC and has agreed,
upon certain terms and conditions, to make the LPC New York Real Estate Loan B
to LPC.
LPC has requested Congress' consent to a transfer of the real property
securing the LPC New York Real Estate Loan A and required to secure the LPC New
York Real Estate Loan B in connection with a proposed sale/leaseback
transaction between LPC and the Chautauqua County Industrial Development
Agency. Congress is willing to provide such consent upon the terms and
conditions set forth in this Amendment to Financing Agreements and Consent
(this "Amendment") and, in connection with such consent and other matters
pertaining to the financing arrangements pursuant to the Accounts Agreement and
the other Financing Agreements, the parties hereto hereby agree to amend the
Financing Agreements, as set forth below (capitalized terms used herein, unless
otherwise defined herein, shall have the meanings ascribed thereto in the
Accounts Agreement, the 1996 LPC Real Estate Loan Amendment and the other
Financing Agreements):
1. Definitions.
-----------
(a) "Chautauqua IDA" shall mean the County of Chautauqua Industrial
Development Agency, a public benefit corporation of the State of New York and a
body corporate and politic organized under the New York State Industrial
Development Agency Act, and its successors and assigns.
(b) "Lakewood Deed" shall mean the Warranty Deed dated as of February 28,
1996 executed and delivered by LPC conveying title to the Lakewood Facility to
the Chautauqua IDA.
<PAGE> 2
(c) "Lakewood Facility" shall mean the real property subject to the
Mortgage and Security Agreement, dated January 16, 1996 ("Existing Lakewood
Mortgage"), made by LPC in favor of Congress to secure LPC's Obligations in
respect of the LPC New York Real Estate Loan A (plus other sums as provided in
the Existing Lakewood Mortgage), and which will secure, as well, other
Obligations of LPC, including LPC's Obligations in respect of the LPC New York
Real Estate Loan B upon and after the making of such loan as to be provided in
the Consolidated Mortgage (as defined in Section 5(a)(ii) of the 1996 LPC Real
Estate Loan Amendment, as amended by this Amendment), plus additional sums as
to be provided in the Consolidated Mortgage.
(d) "Lakewood IDA Agreements" shall mean the Lakewood Deed, the Lakewood
IDA Lease, the Lakewood PILOT Agreement, together with all documents
instruments and agreements executed and delivered in connection therewith or
pursuant thereto, as the same now exist or may hereafter be amended, modified,
supplemented, renewed, restated or replaced.
(e) "Lakewood IDA Lease" shall mean the Lease dated as of February 1, 1996
between the Chautauqua IDA, as lessor, and LPC (d/b/a Falconer Die Casting
Company), as lessee.
(f) "Lakewood IDA Transaction" shall mean the sale/leaseback transaction
between LPC and the Chautauqua IDA pursuant to which LPC shall, pursuant to the
Lakewood Deed, convey title to the Lakewood Facility to the Chautauqua IDA
which shall, simultaneously therewith, together with LPC, enter into the
Lakewood IDA Lease, the Lakewood PILOT Agreement and the other Lakewood IDA
Agreements, in each case as such agreements are in effect on the date hereof.
(g) "Lakewood PILOT Agreement" shall mean the Payment in Lieu of Taxes
Agreement dated as of February 1, 1996 between LPC and the Chautauqua IDA
providing for certain payments by LPC in lieu of certain real estate tax levies
upon the Lakewood Facility.
2. CONSENT REGARDING LAKEWOOD IDA TRANSACTION. To the extent such consent is
required under the Financing Agreements, Congress hereby consents to the
conveyance of title to the Lakewood Facility from LPC to the Chautauqua IDA
pursuant to the Lakewood Deed and the simultaneous leaseback of the Lakewood
Facility by the Chautauqua IDA to LPC pursuant to the Lakewood IDA Lease, in
each case pursuant to such agreements as in effect on the date hereof;
PROVIDED, HOWEVER, that the Chautauqua IDA shall acquire title to the Lakewood
Facility expressly subject to the lien of the Existing Lakewood Mortgage in
favor of Congress, and that in no event shall LPC be released or discharged
from any of the LPC Obligations secured by the Existing Lakewood Mortgage, nor
shall such conveyance or Congress' consent thereto or the
-2-
<PAGE> 3
Lakewood IDA Agreements or any provision thereof in any manner release or
impair the lien of the Existing Lakewood Mortgage.
3. AMENDMENT TO REQUIREMENTS FOR LPC NEW YORK REAL ESTATE LOAN B. Section
5(a) of the 1996 LPC Real Estate Loan Amendment is hereby deleted and the
following substituted therefor:
"(a) Congress shall have received an executed original or executed original
counterparts (as the case may be) of each of the following, each of which shall
be in form and substance satisfactory to Congress:
(i) the LPC New York Real Estate Note B;
(ii) a Mortgage, Spreader Agreement and
Agreement of Consolidation and
Modification among Congress, LPC and the
Chautauqua IDA ("Consolidated Mortgage"),
which amends, modifies, spreads and
consolidates the terms of the existing
Mortgage and Security Agreement in favor
of Congress with respect to LPC's
Lakewood, New York real property
("Lakewood Facility") to secure, with a
consolidated first mortgage lien upon the
fee simple estate in such real property
owned by the Chautauqua IDA and the
leasehold estate in such real property
owned by LPC (including, without
limitation, its early lease termination
and purchase options with respect to the
Lakewood Facility) (A) $825,000 in
principal amount of LPC's Obligations in
respect of (1) the LPC New York Real
Estate Loan A, (2) the LPC New York Real
Estate Loan B, (3) other outstanding term
loans previously made by Congress to LPC,
and (4) the guarantee by LPC of
outstanding and future term loans made by
Congress to LCI, plus (B) interest and
other obligations and sums of the kinds
secured under the existing Mortgage and
Security Agreement, and which shall
otherwise contain terms and conditions
substantially similar to those contained
in the existing Mortgage and Security
Agreement, except that such Consolidated
Mortgage may be without representation,
warranty or covenant on the part of, and
without recourse to, the Chautauqua IDA,
except for those representations,
warranties and covenants by, and recourse
against, the Chautauqua IDA, as to which
enforcement against the Chautauqua IDA is
limited to the interest
-3-
<PAGE> 4
of the Chautauqua IDA in the Lakewood
Facility;
(iii) a title insurance policy issued to
Congress insuring the lien of the
Consolidated Mortgage in the amount of
$825,000, issued by the title insurance
company that issued the existing title
insurance policy insuring the lien of the
Existing Lakewood Mortgage and containing
only such exceptions, terms and
conditions, and including such
endorsements, as are included in such
existing policy;
(iv) a resolution duly adopted by the
Chautauqua IDA authorizing it to join with
LPC in the execution of the Consolidated
Mortgage to encumber their respective
interests in the Lakewood Facility (but
without recourse to the Chautauqua IDA
beyond its interest in the Lakewood
Facility);
(v) a Certificate of Occupancy or other
municipal certification of completion, by
no later than May 31, 1996, of the
improvements to the Lakewood Facility
described in the Building Proposal of
Kessel Construction dated June 15, 1995
which has been submitted to Congress; and
(vi) an updated NYSAPLS standard survey
certified to Congress reflecting the
completion of the improvements described
in subparagraph (v) above (the "Lakewood
Improvements") by no later than May 31,
1996."
4. REPRESENTATIONS, WARRANTIES AND COVENANTS. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by LPC to Congress pursuant to the Financing Agreements, LPC hereby
represents, warrants and covenants with and to Congress as follows (which
representations, warranties and covenants are continuing and shall survive the
execution and delivery hereof and shall be incorporated into and made a part of
the Financing Agreements):
(a) No Event of Default exists or has occurred and is
continuing on the date of this Amendment and on the date of each advance in
respect of the LPC New York Real Estate Loan B; and
(b) This Amendment has been duly executed and delivered
by LPC and is in full force and effect as of the date hereof, and the
agreements and obligations of LPC contained
-4-
<PAGE> 5
herein constitute the legal, valid and binding obligations of LPC enforceable
against LPC in accordance with their terms.
5. CONDITIONS TO THE EFFECTIVENESS OF THIS AMENDMENT. Anything
contained in this Amendment to the contrary notwithstanding, LPC shall only be
permitted to enter into the Lakewood IDA Agreements and consummate the
transactions provided thereunder pursuant to the consent set forth herein and
the other terms and conditions of this Amendment and only upon the satisfaction
of the following conditions precedent to the effectiveness of this Amendment:
(a) Congress shall have received an executed original or
executed original counterparts (as the case may be) of this Amendment together
with the following, each of which shall be in form and substance satisfactory
to Congress;
(b) The Lakewood IDA Transaction shall have closed
pursuant to the Lakewood IDA Agreements, including authorizing resolutions, in
each case in form and substance satisfactory to Congress and Congress shall
have received true and complete copies of the Lakewood IDA Agreements in effect
on the date hereof;
(c) Congress shall have received a letter from the issuer
of its existing title insurance policy with respect to the lien of the Existing
Lakewood Mortgage, or an authorized agent thereof, confirming that neither the
conveyance of title to the Lakewood Facility to the Chautauqua IDA nor
Congress' consent thereto will affect or impair Congress' title insurance
coverage as to the lien of the Existing Lakewood Mortgage under such policy
(which condition shall be deemed satisfied by the letter dated February 7, 1996
received by Congress' counsel from such issuer);
(d) Congress shall have received a letter from Protection
Mutual Insurance Company ("Protection Mutual"), stating that neither the
conveyance of title to the Lakewood Facility to the Chautauqua IDA nor
Congress' consent thereto will affect or impair the rights or interests of
Congress in the casualty and hazard insurance coverage for the Lakewood
Facility under Policy No. 727901-93 notwithstanding anything to the contrary
contained in such policy or any mortgagee loss payable clause issued in favor
of Congress by Protection Mutual (which condition shall be deemed satisfied by
the letter dated February 27, 1996, by Protection Mutual to Congress);
(e) All representations and warranties contained herein,
in the Accounts Agreements and in the other Financing Agreements shall be true
and correct in all material respects; and
-5-
<PAGE> 6
(f) No Event of Default shall have occurred and no event
shall have occurred or condition shall be existing which, with notice or
passage of time or both, would constitute an Event of Default.
6. EFFECT OF THIS AMENDMENT. Except as modified pursuant hereto,
the Accounts Agreement and all supplements to the Accounts Agreement, the 1996
LPC Real Estate Loan Amendment, all existing mortgages by LPC in favor of
Congress and all other Financing Agreements, are hereby specifically ratified,
restated and confirmed by the parties hereto as of the date hereof and no
existing defaults or Events of Default have been waived in connection herewith.
To the extent of conflict between the terms of this Amendment and the Accounts
Agreement or any of the other Financing Agreements, including the 1996 LPC Real
Estate Loan Amendment, the terms of this Amendment control.
7. FURTHER ASSURANCES. LPC shall execute and deliver such
additional documents and take such additional actions as may reasonably be
requested by Congress to effectuate the provisions and purposes of this
Amendment.
8. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York without
reference to its principles of conflicts of law.
By the signatures hereto of the duly authorized officers, the parties
hereto mutually covenant, warrant and agree as set forth herein.
Very truly yours,
CONGRESS FINANCIAL CORPORATION
By: Frank L. Chiovari
----------------------------
Title: Vice President
-------------------------
AGREED AND ACCEPTED:
LEXINGTON PRECISION CORPORATION
By: Warren Delano
----------------------------
Title: President
-------------------------
-6-
<PAGE> 7
CONSENT
-------
The undersigned guarantor hereby consents to the foregoing Amendment,
agrees to be bound by its terms applicable to it, and ratifies and confirms the
terms of its Guarantee and Waiver dated January 11, 1990 as applicable to all
present and future indebtedness, liabilities and obligations of LEXINGTON
PRECISION CORPORATION ("LPC") to CONGRESS FINANCIAL CORPORATION ("Congress"),
including, without limitation, all indebtedness, liabilities and obligations
under the Financing Agreements as amended hereby.
LEXINGTON COMPONENTS, INC.
By: Warren Delano
-----------------------
Title: Vice Chairman
--------------------
-7-
<PAGE> 1
Exhibit 1063
March 14, 1996
Lexington Precision Corporation
767 Third Avenue
New York, New York 10017
Re: Amendment to Financing Agreements and Consent
---------------------------------------------
Gentlemen:
Reference is made to certain financing agreements dated January 11, 1990
between Lexington Precision Corporation ("LPC") and Congress Financial
Corporation ("Congress"), including, but not limited to, an Accounts Financing
Agreement [Security Agreement], as amended (the "Accounts Agreement"), and all
supplements thereto and all other related financing and security agreements
(collectively, all of the foregoing, as the same have heretofore or
contemporaneously been or may be hereafter, amended, replaced, extended,
modified or supplemented, the "Financing Agreements").
LPC has requested Congress' consent to: (i) the security interest in certain
equipment of LPC granted to CIT (as defined below) to secure certain loans by
CIT to LPC in the aggregate principal amount of up to $5,500,000, (ii) the
security interest in certain equipment and mortgage liens upon certain real
property and related personal property of LPC, to be granted by LPC to Bank One
(as defined below) in order to secure certain loans by Bank One to LPC in the
aggregate principal amount of up to $4,300,000 and LPC's guarantee of a loan by
Bank One to LCI in the principal amount of $1,500,000, and (iii) the mortgage
lien to be granted by LCI to Bank One covering certain real property and
related personal property in Vienna, Ohio to secure such $1,500,000 loan to
LCI. Congress is willing to provide such consent upon the terms and conditions
set forth in this Amendment to Financing Agreements and Consent (this
"Amendment") and, in connection with such consent and other matters pertaining
to the financing arrangements pursuant to the Accounts Agreement and the other
Financing Agreements, the parties hereto hereby agree to amend the Financing
Agreements, as set forth below (capitalized terms used herein, unless otherwise
defined herein, shall have the meanings ascribed thereto in the Accounts
Agreement and the other Financing Agreements):
1. Definitions.
-----------
(a) "Bank One" shall mean Bank One, Akron, NA, a national banking
association, and its successors and assigns.
(b) "Bank One Collateral" shall mean the collateral set forth on Exhibits
A, B and C annexed hereto.
<PAGE> 2
(c) "Bank One Financing" shall mean the loans made and to be made by Bank
One to LPC and LCI in the aggregate principal amount of up to $5,800,000 and
the respective guarantees thereof by LPC and LCI in favor of Bank One, all
pursuant to the Bank One Financing Agreements.
(d) "Bank One Financing Agreements" shall mean the Credit Facility and
Security Agreement, dated as of the date hereof, among LPC, LCI and Bank One,
together with the promissory notes, guarantees and mortgages delivered
thereunder and all other documents, instruments and agreements executed in
connection therewith or pursuant thereto, as the same now exist or may
hereafter be amended, modified, supplemented, renewed, restated or replaced.
(e) "CIT" shall mean The CIT Group/Equipment Financing, Inc., and its
successors and assigns.
(f) "CIT Collateral" shall mean the equipment of LPC described on Exhibit
A to the Subordination Agreement, dated as of January 17, 1996, as amended by
Amendment No. 1 to Subordination Agreement, dated as of February 29, 1996, each
between CIT and Congress, agreed to and confirmed by LPC, together with the
proceeds thereof.
(g) "CIT Financing" shall mean the loans to LPC in the aggregate principal
amount not to exceed $5,500,000, secured by the CIT Collateral, pursuant to the
CIT Financing Agreements.
(h) "CIT Financing Agreements" shall the Loan and Security Agreement,
dated as of January 17, 1996, as amended by Amendment No. 1 thereto, dated as
of February 29, 1996, and Rider A to Loan and Security Agreement, dated as of
January 17, 1996, each between LPC and CIT, together with all notes, guarantees
and other documents, instruments and agreements executed pursuant thereto or in
connection therewith, as the same now exist or may hereafter be amended,
modified, supplemented, renewed, restated or replaced.
2. CONSENT REGARDING CIT COLLATERAL AND BANK ONE COLLATERAL. To the extent
such consent is required under the Financing Agreements, Congress hereby
consents to (i) the security interest in the CIT Collateral granted by LPC to
CIT to secure the CIT Financing pursuant to the CIT Financing Agreements, such
consent to be effective as of January 17, 1996, and (ii) the mortgage liens and
security interests in the Bank One Collateral granted by LPC and LCI to Bank
One to secure the Bank One Financing pursuant to the Bank One Financing
Agreements, including any documents contemplated thereby which are to be
executed and delivered after the date hereof in connection with the loans to be
advanced pursuant to the Bank One Financing
-2-
<PAGE> 3
Agreements after the date hereof, such consent to be effective as of the date
hereof.
3. ADDITIONAL COVENANTS RELATING TO THE CIT COLLATERAL AND BANK ONE
COLLATERAL. In addition to all other covenants, representations and warranties
contained in the Financing Agreements applicable to the types or items of
property included in the CIT Collateral and Bank One Collateral, respectively
(whether or not included in the Collateral), LPC agrees as follows:
(a) LPC shall not remove any of the CIT Collateral from the premises of
LPC located at 3181 North Lear Avenue, Casa Grande, Arizona, 3011 in North
Piper Avenue, Casa Grade, Arizona or 677 Buffalo Road, Rochester, New York
(such three premises, collectively, the "CIT Collateral Locations"), except
removal upon prior written notice to Congress to locations otherwise permitted
under the Financing Agreements. In addition, LPC shall not remove from the
premises of LPC described in Exhibit A annexed hereto (the "North Canton
Property"), any of the tangible personal property comprising part of the Bank
One Collateral, nor shall any equipment or other tangible personal property of
LPC, of any subsidiary of LPC, be moved from another location of LPC or a
subsidiary of LPC, to the North Canton Property, in each case, except upon
prior written notice to Congress. Notices given under this Section 3(a) shall
include serial numbers or other information sufficient to identify the
particular items removed.
(b) LPC shall furnish to Congress all material written notices or demands
concerning the CIT Financing and Bank One Financing, required to be delivered
pursuant to the CIT Financing Agreements and Bank One Financing Agreements,
respectively, other than notices under the Bank One Financing Agreements as to
future advances or loans or interest rates or interest periods on borrowings,
either received by LPC, promptly after receipt thereof, or sent by LPC or on
its behalf, promptly upon the sending thereof, as the case may be.
4. CERTAIN COLLATERAL NOT ELIGIBLE FOR LENDING PURPOSES. Anything contained
in the Financing Agreements to the contrary notwithstanding, i) no Inventory
located or to be located at the North Canton Property shall be considered
Eligible Inventory for lending purposes, and ii) no Equipment located or to be
located at the North Canton Property shall be considered Eligible New Equipment
for purposes of New Equipment Term Loans from time to time requested by LPC.
5. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by LPC to Congress pursuant to the Financing Agreements, LPC hereby
represents,
-3-
<PAGE> 4
warrants and covenants with and to Congress as follows (which
representations, warranties and covenants are continuing and shall survive the
execution and delivery hereof and shall be incorporated into and made a part of
the Financing Agreements):
(a) No Event of Default exists or has occurred and is continuing on the
date of this Amendment and on the date of each advance in respect of the CIT
Financing and Bank One Financing.
(b) This Amendment has been duly executed and delivered by LPC and is in
full force and effect as of the date hereof, and the agreements and obligations
of LPC contained herein constitute the legal, valid and binding obligations of
LPC enforceable against LPC in accordance with their terms.
6. CONDITIONS TO THE EFFECTIVENESS OF THIS AMENDMENT. Anything contained in
this Amendment to the contrary notwithstanding, this Amendment shall be
effective only upon the satisfaction of the following conditions precedent:
(a) Congress shall have received an executed original or executed original
counterparts (as the case may be) of this Amendment together with the
following, each of which shall be in form and substance satisfactory to
Congress;
(b) Congress shall have received true and complete copies of the CIT
Financing Agreements and the Bank One Financing Agreements as in effect on the
date hereof;
(c) Congress shall have received a duly executed Intercreditor Agreement
between Congress and Bank One, duly executed and delivered on behalf of Bank
One;
(d) Congress shall have received from LPC an executed original or
executed original counterparts of a letter agreement pursuant to which LPC and
LCI acknowledge and consent to the Intercreditor Agreement between Congress and
Bank One and agree that, although neither LPC nor LCI is a party thereto, each
of LPC and LCI will, together with its successors and assigns, be bound by the
provisions thereof;
(e) Congress shall have received from LCI an executed original or executed
original counterparts of a letter agreement re: Amendment to Financing
Agreements and Consent, pertaining to the Bank One Collateral to be granted by
LCI to Bank One pursuant to the Bank One Financing and related matters,
together with the documents, instruments and agreements to be delivered
pursuant thereto;
(f) Congress shall have received from Bank One, the sum of $1,500,000, in
immediately available funds, representing full disbursement for the account of
LCI of the "Vienna Term
-4-
<PAGE> 5
Loan" (as defined in the Bank One Financing Agreements), which sum shall be
applied to fully prepay the outstanding principal amount of the LCI Ohio Real
Estate Loan (as defined in the LCI Financing Agreements) and the balance
applied to the Revolving Loan (as defined in the LCI Financing Agreements)
account of LCI maintained by Congress;
(g) Congress shall have received from Bank One, the sum
of $1,000,000, in immediately available funds, representing full disbursement
for the account of LPC of the "North Canton Interim Loan" (as defined in the
Bank One Financing Agreements), $418,118 of which shall be used to prepay the
unpaid principal installments under the LPC Second Restated Note in the inverse
order of the maturities thereof, and the balance of which shall be applied to
the Revolving Loan account of LPC maintained by Congress;
(h) All representations and warranties contained herein,
in the Accounts Agreements and in the other Financing Agreements shall be true
and correct in all material respects; and
(i) No Event of Default shall have occurred and no event
shall have occurred or condition shall be existing which, with notice or
passage of time or both, would constitute an Event of Default.
7. EFFECT OF THIS AMENDMENT. Except as modified pursuant hereto,
the Accounts Agreement and all supplements to the Accounts Agreement,
including, without limitation, the Covenant Supplement and all other Financing
Agreements, are hereby specifically ratified, restated and confirmed by the
parties hereto as of the date hereof and no existing defaults or Events of
Default have been waived in connection herewith. To the extent of conflict
between the terms of this Amendment and the Accounts Agreement or any of the
other Financing Agreements, the terms of this Amendment control.
8. FURTHER ASSURANCES. LPC shall execute and deliver such
additional documents and take such additional actions as may reasonably be
requested by Congress to effectuate the provisions and purposes of this
Amendment.
9. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York without
reference to its principles of conflicts of law.
By the signatures hereto of the duly authorized officers,
-5-
<PAGE> 6
the parties hereto mutually covenant, warrant and agree as set forth herein.
Very truly yours,
CONGRESS FINANCIAL CORPORATION
By: Frank L. Chiovari
---------------------------
Title: Vice President
------------------------
AGREED AND ACCEPTED:
LEXINGTON PRECISION CORPORATION
By: Warren Delano
----------------------------
Title: President
-------------------------
-6-
<PAGE> 7
CONSENT
-------
The undersigned guarantor hereby consents to the foregoing Amendment,
agrees to be bound by its terms applicable to it, and ratifies and confirms the
terms of its Guarantee and Waiver dated January 11, 1990 as applicable to all
present and future indebtedness, liabilities and obligations of LEXINGTON
PRECISION CORPORATION ("LPC") to CONGRESS FINANCIAL CORPORATION ("Congress"),
including, without limitation, all indebtedness, liabilities and obligations
under the Financing Agreements as amended hereby.
LEXINGTON COMPONENTS, INC.
By: Warren Delano
-----------------------
Title: Vice Chairman
--------------------
-7-
<PAGE> 1
Exhibit 1064
March 14, 1996
Lexington Components, Inc.
767 Third Avenue
New York, New York 10017
Re: Amendment to Financing Agreements and Consent
---------------------------------------------
Gentlemen:
Reference is made to certain financing agreements dated January 11, 1990
between Lexington Components, Inc. ("LCI") and Congress Financial Corporation
("Congress"), including, but not limited to, an Accounts Financing Agreement
[Security Agreement], as amended (the "Accounts Agreement"), and all
supplements thereto and all other related financing and security agreements
(collectively, all of the foregoing, as the same have heretofore or
contemporaneously been or may be hereafter, amended, replaced, extended,
modified or supplemented, the "Financing Agreements").
LCI has requested Congress' consent to: (i) a mortgage lien upon certain
real property and related personal property in Vienna, Ohio, to be granted by
LCI to Bank One (as defined below) in order to secure a loan by Bank One to LCI
in the principal amount of $1,500,000 and a guarantee by LCI of certain loans
by Bank One to LPC in the aggregate principal amount of up to $4,300,000, (ii)
the security interest in certain equipment and mortgage liens upon certain real
property and related personal property of LPC, to be granted by LPC to Bank One
to secure certain loans by Bank One to LPC in the aggregate principal amount of
up to $4,300,000 and LPC's guarantee of such $1,500,000 loan to LCI, and (iii)
the security interest in certain equipment of LPC granted to CIT (as defined
below) to secure certain loans by CIT to LPC in the aggregate principal amount
of up to $5,500,000. Congress is willing to provide such consent upon the
terms and conditions set forth in this Amendment to Financing Agreements and
Consent (this "Amendment") and, in connection with such consent and other
matters pertaining to the financing arrangements pursuant to the Accounts
Agreement and the other Financing Agreements, the parties hereto hereby agree
to amend the Financing Agreements, as set forth below (capitalized terms used
herein, unless otherwise defined herein, shall have the meanings ascribed
thereto in the Accounts Agreement and the other Financing Agreements):
1. Definitions.
(a) "Bank One" shall mean Bank One, Akron, NA, a national banking
association, and its successors and assigns.
(b) "Bank One Collateral" shall mean the collateral set forth on Exhibits
A, B and C annexed hereto.
<PAGE> 2
(c) "Bank One Financing" shall mean the loans made and to be made by Bank
One to LPC and LCI in the aggregate principal amount of up to $5,800,000 and
the respective guarantees thereof by LPC and LCI in favor of Bank One, all
pursuant to the Bank One Financing Agreements.
(d) "Bank One Financing Agreements" shall mean the Credit Facility and
Security Agreement, dated as of the date hereof, among LPC, LCI and Bank One,
together with the promissory notes, guarantees and mortgages delivered
thereunder and all other documents, instruments and agreements executed in
connection therewith or pursuant thereto, as the same now exist or may
hereafter be amended, modified, supplemented, renewed, restated or replaced.
(e) "CIT" shall mean The CIT Group/Equipment Financing, Inc., and its
successors and assigns.
(f) "CIT Collateral" shall mean the equipment of LPC described on Exhibit
A to the Subordination Agreement, dated as of January 17, 1996, as amended by
Amendment No. 1 to Subordination Agreement, dated as of February 29, 1996, each
between CIT and Congress, agreed to and confirmed by LPC, together with the
proceeds thereof.
(g) "CIT Financing" shall mean the loans to LPC in the aggregate principal
amount not to exceed $5,500,000, secured by the CIT Collateral, pursuant to the
CIT Financing Agreements.
(h) "CIT Financing Agreements" shall the Loan and Security Agreement,
dated as of January 17, 1996, as amended by Amendment No. 1 thereto, dated as
of February 29, 1996, and Rider A to Loan and Security Agreement, dated as of
January 17, 1996, each between LPC and CIT, together with all notes, guarantees
and other documents, instruments and agreements executed pursuant thereto or in
connection therewith, as the same now exist or may hereafter be amended,
modified, supplemented, renewed, restated or replaced.
2. CONSENT REGARDING CIT COLLATERAL AND BANK ONE COLLATERAL. To the extent
such consent is required under the Financing Agreements, Congress hereby
consents to (i) the security interest in the CIT Collateral granted by LPC to
CIT to secure the CIT Financing pursuant to the CIT Financing Agreements, such
consent to be effective as of January 17, 1996, and (ii) the mortgage liens and
security interests in the Bank One Collateral granted by LPC and LCI to Bank
One to secure the Bank One Financing pursuant to the Bank One Financing
Agreements, including any documents contemplated thereby which are to be
executed and delivered after the date hereof in connection with the loans to be
advanced pursuant to the Bank One Financing
-2-
<PAGE> 3
Agreements after the date hereof, such consent to be effective as of the date
hereof.
3. ADDITIONAL COVENANTS RELATING TO THE BANK ONE COLLATERAL. In addition to
all other covenants, representations and warranties contained in the Financing
Agreements applicable to the types or items of property included in the Bank
One Collateral, LCI shall furnish to Congress all material written notices or
demands concerning the Bank One Financing, required to be delivered pursuant to
the Bank One Financing Agreements, other than notices under the Bank One
Financing Agreements as to future advances or loans or interest rates or
interest periods on borrowings, either received by LCI, promptly after receipt
thereof, or sent by LCI or on its behalf, promptly upon the sending thereof, as
the case may be.
4. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by LCI to Congress pursuant to the Financing Agreements, LCI hereby
represents, warrants and covenants with and to Congress as follows (which
representations, warranties and covenants are continuing and shall survive the
execution and delivery hereof and shall be incorporated into and made a part of
the Financing Agreements):
(a) No Event of Default exists or has occurred and is continuing on the
date of this Amendment and on the date of each advance in respect of the CIT
Financing and Bank One Financing.
(b) This Amendment has been duly executed and delivered by LCI and is in
full force and effect as of the date hereof, and the agreements and obligations
of LCI contained herein constitute the legal, valid and binding obligations of
LCI enforceable against LCI in accordance with their terms.
5. CONDITIONS TO THE EFFECTIVENESS OF THIS AMENDMENT. Anything contained in
this Amendment to the contrary notwithstanding, this Amendment shall be
effective only upon the satisfaction of the following conditions precedent:
(a) Congress shall have received an executed original or executed original
counterparts (as the case may be) of this Amendment together with the
following, each of which shall be in form and substance satisfactory to
Congress;
(b) Congress shall have received true and complete copies of the CIT
Financing Agreements and the Bank One Financing Agreements as in effect on the
date hereof;
(c) Congress shall have received a duly executed Intercreditor Agreement
between Congress and Bank One, duly executed and delivered on behalf of
Bank One;
-3-
<PAGE> 4
(d) Congress shall have received from LPC an executed
original or executed original counterparts of a letter agreement pursuant to
which LPC and LCI acknowledge and consent to the Intercreditor Agreement
between Congress and Bank One and agree that, although neither LPC nor LCI is a
party thereto, each of LPC and LCI will, together with its successors and
assigns, be bound by the provisions thereof;
(e) Congress shall have received from LPC an executed
original or executed original counterparts of a letter agreement re: Amendment
to Financing Agreements and Consent, pertaining to the Bank One Collateral to
be granted by LPC pursuant to the Bank One Financing and the CIT Financing and
related matters, together with the documents, instruments and agreements to be
delivered pursuant thereto;
(f) Congress shall have received from Bank One, the sum
of $1,500,000, in immediately available funds, representing full disbursement
for the account of LCI of the "Vienna Term Loan" (as defined in the Bank One
Financing Agreements), which sum shall be applied to fully prepay the
outstanding principal amount of the LCI Ohio Real Estate Loan and the balance
applied to the Revolving Loan account of LCI maintained by Congress;
(g) Congress shall have received from Bank One, the sum
of $1,000,000, in immediately available funds, representing full disbursement
for the account of LPC of the "North Canton Interim Loan" (as defined in the
Bank One Financing Agreements), $418,118 of which shall be used to prepay the
unpaid principal installments under the LPC Second Restated Note (as defined in
the LPC Financing Agreements) in the inverse order of the maturities thereof,
and the balance of which shall be applied to the Revolving Loan (as defined in
the LPC Financing Agreements) account of LPC maintained by Congress;
(h) All representations and warranties contained herein,
in the Accounts Agreements and in the other Financing Agreements shall be true
and correct in all material respects; and
(i) No Event of Default shall have occurred and no event
shall have occurred or condition shall be existing which, with notice or
passage of time or both, would constitute an Event of Default.
6. EFFECT OF THIS AMENDMENT. Except as modified pursuant hereto,
the Accounts Agreement and all supplements to the Accounts Agreement,
including, without limitation, the Covenant Supplement and all other Financing
Agreements, are hereby specifically ratified, restated and confirmed by the
parties hereto as of the date hereof and no existing defaults or Events of
Default have been waived in connection herewith. To the
-4-
<PAGE> 5
extent of conflict between the terms of this Amendment and the Accounts
Agreement or any of the other Financing Agreements, the terms of this Amendment
control.
7. FURTHER ASSURANCES. LCI shall execute and deliver such
additional documents and take such additional actions as may reasonably be
requested by Congress to effectuate the provisions and purposes of this
Amendment.
8. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York without
reference to its principles of conflicts of law.
By the signatures hereto of the duly authorized officers, the parties
hereto mutually covenant, warrant and agree as set forth herein.
Very truly yours,
CONGRESS FINANCIAL CORPORATION
By: Frank L. Chiovari
---------------------------
Title: Vice President
------------------------
AGREED AND ACCEPTED:
LEXINGTON COMPONENTS, INC.
By: Warren Delano
-----------------------
Title: Vice Chairman
--------------------
-5-
<PAGE> 6
CONSENT
-------
The undersigned guarantor hereby consents to the foregoing Amendment,
agrees to be bound by its terms applicable to it, and ratifies and confirms the
terms of its Guarantee and Waiver dated January 11, 1990 as applicable to all
present and future indebtedness, liabilities and obligations of LEXINGTON
COMPONENTS, INC. ("LCI") to CONGRESS FINANCIAL CORPORATION ("Congress"),
including, without limitation, all indebtedness, liabilities and obligations
under the Financing Agreements as amended hereby.
LEXINGTON PRECISION CORPORATION
By: Warren Delano
----------------------------
Title: President
-------------------------
-6-
<PAGE> 1
Exhibit 1065
EXHIBIT A
PROMISSORY NOTE
---------------
(Equipment Term Loan)
$1,800,000.00 North Canton, Ohio
March 26, 1996
FOR VALUE RECEIVED, LEXINGTON PRECISION CORPORATION, a corporation organized
under the laws of the State of Delaware (hereinafter collectively referred to
as the "Company"), promises to pay to the order of BANK ONE, AKRON, NA
(hereinafter referred to as the "Bank"), the principal amount of ONE MILLION
EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS ($1,800,000.00) on April 1, 2001, or
sooner as hereinafter provided, with interest on the unpaid balance of said
principal amount from the date hereof at a rate per annum equal to the LIBOR
Interest Rate (as defined in the Agreement) on the Core Borrowing Amount, if
any, pursuant to the immediately succeeding paragraph and at a rate per annum
equal to three-quarter percent (.75%) in excess of the Base Rate (as defined in
the Agreement), which definition is hereby accepted by the Company, as the same
may from time to time be established on the unpaid principal amount excluding
the Core Borrowing Amount (as defined below). If any installment of principal,
interest or other amounts due and payable hereunder are not paid when due, or
within any applicable grace periods set forth in the Agreement, the Company
shall pay interest thereon at the rate of three percent (3.0%) per annum in
excess of the Base Rate (as defined in the Agreement hereinafter referred to)
as the same may from time to time be established but not to exceed the maximum
rate allowed by law. Bank shall have the right to assess a late payment
processing fee in the amount of the greater of FIFTY AND NO/100 DOLLARS
($50.00) or five percent (5%) of the scheduled payment in the event of a
default in payment that remains uncured for a period of at least ten (10) days.
The Company shall have the right to elect to have a portion of the
outstanding balance of the Equipment Term Loan accrue interest at the LIBOR
Interest Rate (the "Core Borrowing Amount") by delivering to the Bank a
written, telephonic, or telegraphic request (effective upon receipt) by
facsimile, telephone, or telegraph by 12:00 p.m. three (3) Business Days prior
to the Business Day the LIBOR Interest Rate is to be effective, specifying (i)
the Core Borrowing Amount, which shall be in incremental strips of ONE HUNDRED
THOUSAND AND NO/100 DOLLARS ($100,000.00) and which shall not exceed the Core
Cap (as defined in the Agreement) in the aggregate and (ii) the duration of the
LIBOR Interest Period which shall be either one (1) month or two (2) months.
If the Company shall fail to give the Bank the notice as specified above for
the renewal of the LIBOR Interest Rate on the Core Borrowing Amount prior to
the end of the LIBOR Interest Period with respect thereto, the interest rate on
the Core Borrowing Amount shall automatically be converted into an interest
rate per annum equal to three-quarter percent (.75%) in excess of the Base
Rate, as the same may from time to time be established, on the last day of the
LIBOR Interest Period for such Core Borrowing Amount.
The Company agrees to pay the principal amount of this Note in fifty-nine
(59) consecutive equal installments of THIRTY THOUSAND AND NO/100 DOLLARS
($30,000.00) each, together with all accrued interest due at the time of
payment of each such installment of principal, commencing on May 1, 1996, and
continuing on the first day of each calendar month thereafter and a final
installment of THIRTY THOUSAND AND NO/100 DOLLARS ($30,000.00), together with
all accrued interest due at the time of payment of such installment, on April
1, 2001. Monthly payments
<PAGE> 2
hereunder shall be applied first to interest due and the balance to reduction
of the principal amount outstanding.
Payments of both principal of and interest on this Note shall be made in
lawful money of the United States of America, at 50 South Main Street, Akron,
Ohio 44308-1888, or at such other place as the Bank or any subsequent holder
hereof shall have designated to the Company in writing. Interest payable on
this Note shall be computed on a three hundred sixty (360) day per year basis
counting the actual number of days elapsed. If any payment under this Note
becomes due and payable on a day which is not a Business Day (as defined in
this Agreement), payment thereof shall be made on the immediately succeeding
Business Day.
This Note is issued pursuant to and is entitled to the benefits of a Credit
Facility and Security Agreement dated as of March 14, 1996, by and among the
Company, Lexington Components, Inc. ("LCI"), and the Bank (the "Agreement"), to
which Agreement reference is hereby made for a statement of the rights and
obligations of the Bank and the duties and obligations of the Company and LCI
in relation thereto; but neither this reference to said Agreement nor any
provisions thereof shall affect or impair the absolute and unconditional
obligation of the Company to pay the principal of or interest on this Note when
due.
The Company may prepay all or any portion of this Note at any time and in any
amount without penalty or premium, provided that all prepayments shall be
applied to installments of principal in the inverse order of their maturities
and subject to the terms of prepayment of the Core Borrowing Amount set forth
herein. The Core Borrowing Amount accruing interest at the LIBOR Interest Rate
may be prepaid only on the last day of the LIBOR Interest Period (as defined in
the Agreement) for the Core Borrowing Amount without premium or penalty,
provided, however, as long as the Bank has not matched funds in a money market
to fund the Core Borrowing Amount, (i) the Company may prepay the Core
Borrowing Amount during a LIBOR Interest Period if the Company pays a penalty
in the amount of one percent (1%) of the prepayment amount and (ii) the
outstanding balance of the Core Borrowing Amount upon the application of the
prepayment amount shall be an increment of ONE HUNDRED THOUSAND AND NO/100
DOLLARS ($100,000.00).
If an Event of Default (as defined in the Agreement), shall occur and shall
be continuing, the principal of this Note may be declared immediately due and
payable at the option of the Bank.
In the event that the Company fails to pay any regularly scheduled principal
or interest payment on this Note when due (other than as a result of
acceleration thereof based on a default or event of default other than the
failure to make any such regularly scheduled payments of principal or interest
on this Note when due) which failure is not cured within the ten (10)-day cure
period provided in Section 6A of the Agreement (a "Payment Default"), or if an
Event of Default occurs and is continuing, which arises from fraudulent act(s)
or practice(s) of the Company which Event of Default is not cured within three
(3) Business Days after the Company's receipt of written notice thereof from
the Bank (a "Fraud Default"), the Company hereby authorizes any attorney-at-law
to appear in any court of record in the State of Ohio, or in any other state or
territory of the United States, at any time or times after the above sum
becomes due, and waives the issuance and service of process and confesses
judgment against it, in favor of any holder of this Note, for the amount then
appearing due, together with the costs of suit, and thereupon to release all
errors and waive all rights of appeal and stay of execution. The foregoing
warrant of attorney shall survive any judgment, it being understood that should
any judgment be vacated for any reason, the foregoing warrant of attorney
nevertheless may thereafter be used for obtaining an
<PAGE> 3
additional judgment or judgments. To the extent that the provisions of the
cognovit warning set forth above the Company's signature specifically
contradict the provisions of this paragraph regarding the requirement of a
Payment Default or a Fraud Default to take a cognovit judgment, the provisions
of this paragraph control.
No delay on the part of any holder hereof in exercising any power or rights
hereunder shall operate as a waiver of any power or rights. Any demand or
notice hereunder to the Company shall be deemed duly given or made when sent,
if given by telecopier, when delivered, if given by personal delivery or
overnight commercial carrier, or the fifth calendar day after deposit in the
United States mail, certified mail, return receipt requested, addressed to the
Company at its address (or telecopier number) set forth in Rider A of the
Agreement or such other address or telecopier number as may be hereafter
designated in writing by the Company to the Bank.
This note is executed at North Canton, Stark County, Ohio.
WARNING--BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR, WHETHER
FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT, OR ANY OTHER CAUSE.
LEXINGTON PRECISION CORPORATION
By Warren Delano
-----------------------------
Warren Delano
President
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement (Form
S-8 No. 2-93448) pertaining to the Lexington Precision Corporation (formerly
Blasius Industries, Inc.) 1983 Incentive Stock Option Plan of our report dated
March 22, 1996 with respect to the consolidated financial statements and
schedule of Lexington Precision Corporation included in the Annual Report (Form
10-K) for the year ended December 31, 1995.
ERNST & YOUNG LLP
Cleveland, Ohio
March 29, 1996
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 118
<SECURITIES> 0
<RECEIVABLES> 12,959
<ALLOWANCES> 175
<INVENTORY> 8,105
<CURRENT-ASSETS> 24,478
<PP&E> 75,825
<DEPRECIATION> 30,887
<TOTAL-ASSETS> 81,876
<CURRENT-LIABILITIES> 29,253
<BONDS> 56,033
<COMMON> 1,087
510
0
<OTHER-SE> (6,063)
<TOTAL-LIABILITY-AND-EQUITY> 81,876
<SALES> 104,298
<TOTAL-REVENUES> 104,298
<CGS> 84,761
<TOTAL-COSTS> 84,761
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1
<INTEREST-EXPENSE> 7,585
<INCOME-PRETAX> 2,713
<INCOME-TAX> 425
<INCOME-CONTINUING> 2,288
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 2,288
<EPS-PRIMARY> .52
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