<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE PERIOD ENDED MARCH 31, 2000
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)
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 OFFICE) (ZIP CODE)
(212) 319-4657
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME, FORMER ADDRESS, AND FORMER FISCAL YEAR, IF CHANGED
SINCE LAST REPORT DATE)
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_
COMMON STOCK, $0.25 PAR VALUE, 4,828,036 SHARES AS OF MAY 8, 2000
(INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE)
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<PAGE> 2
LEXINGTON PRECISION CORPORATION
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements................................................1
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..........................................13
Item 3. Quantitative and Qualitative Disclosures about Market Risk.........22
PART II. OTHER INFORMATION
Item 3. Defaults on Senior Securities......................................23
Item 6. Exhibits and Reports on Form 8-K...................................23
i
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LEXINGTON PRECISION CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
-------------------------------
2000 1999
-------- --------
<S> <C> <C>
Net sales $ 37,666 $ 34,496
Cost of sales 31,834 29,404
-------- --------
Gross profit 5,832 5,092
Selling and administrative expenses 3,019 3,066
-------- --------
Income from operations 2,813 2,026
Interest expense 2,437 2,342
-------- --------
Income (loss) before income taxes and
extraordinary item 376 (316)
Income tax provision 113 (79)
-------- --------
Income (loss) before extraordinary item 263 (237)
Extraordinary gain on repurchase of debt, net of
applicable income taxes -- 1,371
-------- --------
Net income $ 263 $ 1,134
======== ========
Per share data:
Basic and diluted net income (loss) before
extraordinary item $ 0.05 $ (0.06)
Extraordinary gain on repurchase of debt, net of
applicable income taxes -- 0.32
-------- --------
Basic and diluted net income available to
common stockholders $ 0.05 $ 0.26
======== ========
</TABLE>
See notes to consolidated financial statements.
-1-
<PAGE> 4
LEXINGTON PRECISION CORPORATION
CONSOLIDATED BALANCE SHEET
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---------- ------------
ASSETS:
<S> <C> <C>
Current assets:
Cash $ 77 $ 8
Accounts receivable 23,632 24,098
Inventories 9,796 9,492
Prepaid expenses and other current assets 2,148 2,229
Deferred income taxes 1,676 1,676
-------- --------
Total current assets 37,329 37,503
-------- --------
Plant and equipment:
Land 2,343 1,570
Buildings 23,606 23,566
Equipment 101,648 96,694
-------- --------
127,597 121,830
Accumulated depreciation 62,558 60,041
-------- --------
Plant and equipment, net 65,039 61,789
-------- --------
Excess of cost over net assets of businesses acquired 8,383 8,462
-------- --------
Other assets 3,299 3,573
-------- --------
$114,050 $111,327
======== ========
</TABLE>
See notes to consolidated financial statements. (continued on next page)
-2-
<PAGE> 5
LEXINGTON PRECISION CORPORATION
CONSOLIDATED BALANCE SHEET (CONTINUED)
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
----------- -------------
LIABILITIES AND STOCKHOLDERS' DEFICIT:
<S> <C> <C>
Current liabilities:
Accounts payable $ 13,234 $ 8,597
Accrued expenses 9,527 9,794
Short-term debt 67,745 98,069
Debt in default 27,412 --
--------- ---------
Total current liabilities 117,918 116,460
--------- ---------
Long-term debt, excluding current portion 113 116
--------- ---------
Deferred income taxes and other long-term liabilities 1,892 1,884
--------- ---------
Series B preferred stock, at redemption value of $200 per share 660 660
Excess of redemption value over par value (330) (330)
--------- ---------
Series B preferred stock, at par value of $100 per share 330 330
--------- ---------
Stockholders' deficit:
Common stock, $0.25 par value, 10,000,000 shares
authorized, 4,828,036 and 4,348,951 shares issued,
respectively 1,207 1,087
Additional paid-in-capital 12,953 12,160
Accumulated deficit (20,363) (20,493)
Cost of common stock in treasury, 85,915 shares at
December 31, 1999 -- (217)
--------- ---------
Total stockholders' deficit (6,203) (7,463)
--------- ---------
$ 114,050 $ 111,327
========= =========
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE> 6
LEXINGTON PRECISION CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
-----------------------------------
2000 1999
------- -------
OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 263 $ 1,134
Adjustments to reconcile net income to net cash
provided by operating activities:
Extraordinary gain on repurchase of debt -- (1,828)
Depreciation 2,874 2,640
Amortization included in operating expense 394 435
Amortization included in interest expense 49 50
Changes in operating assets and liabilities that
provided (used) cash:
Accounts receivable 466 (2,087)
Inventories (304) 267
Prepaid expenses and other assets 129 (243)
Accounts payable 4,637 1,041
Accrued expenses (267) (953)
Other (39) 58
------- -------
Net cash provided by operating activities 8,202 514
------- -------
INVESTING ACTIVITIES:
Purchases of plant and equipment (6,151) (1,888)
Decrease in equipment deposits 156 63
Proceeds from sales of equipment 29 6
Expenditures for tooling owned by customers (189) (204)
------- -------
Net cash used by investing activities (6,155) (2,023)
------- -------
FINANCING ACTIVITIES:
Net increase in short-term debt 66 1,844
Proceeds from issuance of long-term debt -- 9,292
Repayment of long-term debt (1,981) (7,478)
Repurchase of debt -- (1,980)
Other (63) (43)
------- -------
Net cash provided (used) by financing activities (1,978) 1,635
------- -------
Net increase in cash 69 126
Cash at beginning of period 8 103
------- -------
Cash at end of period $ 77 $ 229
======= =======
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The unaudited interim consolidated financial statements include the
accounts of Lexington Precision Corporation and its subsidiaries (collectively,
the "Company"). The consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Accordingly, the consolidated financial statements do not include all the
information and footnotes included in the Company's annual consolidated
financial statements. Significant accounting policies followed by the Company
are set forth in Note 1 to the consolidated financial statements in the
Company's annual report on Form 10-K for the year ended December 31, 1999.
In the opinion of management, the unaudited interim consolidated
financial statements contain all adjustments necessary to present fairly the
financial position of the Company at March 31, 2000, and the Company's results
of operations and cash flows for the three-month periods ended March 31, 2000
and 1999. All such adjustments were of a normal recurring nature.
The results of operations for the three-month period ended March 31,
2000, are not necessarily indicative of the results to be expected for the full
year or for any succeeding quarter.
The Company's consolidated financial statements have been presented on a
going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business.
The Company's 12 3/4% senior subordinated notes, which have an
outstanding principal balance of $27,412,000, matured on February 1, 2000. The
Company is in default in respect of the 12 3/4% senior subordinated notes
because it did not make the payments of principal, in the amount of $27,412,000,
and interest, in the amount of $1,748,000, on the 12 3/4% senior subordinated
notes that were due on the maturity date.
On December 28, 1999, the Company commenced a consent solicitation
seeking consents of the holders of the 12 3/4% senior subordinated notes to
extend the maturity date of the 12 3/4% senior subordinated notes to February 1,
2003. At the date of issuance of this Form 10-Q, sufficient consents had not
been received to effect the extension. The consent solicitation has been
extended several times and is currently scheduled to expire on June 15, 2000.
The holders of substantially all of the Company's other indebtedness
have entered into agreements that have enabled the Company to continue to
operate its business without interruption, notwithstanding the default on the 12
3/4% senior subordinated notes.
- The lenders extending loans under the Company's revolving line of
credit and the lenders providing secured, amortizing term loans
have waived the cross-default provisions with respect to the
default relating to the 12 3/4% senior subordinated notes and
have amended certain covenants to eliminate defaults that would
otherwise have occurred because all of the Company's secured,
amortizing term loans have been classified as current liabilities
in the consolidated financial statements.
- The holder of the Company's 12% secured term note, in the
outstanding principal amount of $1,370,000, has extended the
maturity date of that note to July 31, 2000.
-5-
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- The holder of the Company's 10 1/2% senior note, in the
outstanding principal amount of $7,500,000, has extended the
maturity date of that note to August 1, 2000, and has waived the
cross-default provision with respect to the default relating to
the 12 3/4% senior subordinated notes.
- The holder of the Company's 14% junior subordinated
non-convertible notes, in the outstanding principal amount of
$347,000, has extended the maturity date of those notes to August
1, 2000, has deferred the interest payments on those notes that
were due on February 1 and May 1, 2000, to August 1, 2000, and
has waived the cross-default provisions with respect to the
default relating to the 12 3/4% senior subordinated notes.
- The holders of the Company's 14% junior subordinated convertible
notes, which were outstanding on December 31, 1999, in the
aggregate principal amount of $1,000,000, have deferred the
interest payments on those notes that were due on February 1,
2000, to August 1,2000, and have waived the cross-default
provisions with respect to the default relating to the 12 3/4%
senior subordinated notes. On February 1, 2000, the 14% junior
subordinated convertible notes were converted into 440,000 shares
of the Company's common stock.
Since January 31, 2000, the Company has made all scheduled payments of
interest and principal on all of its indebtedness other than the 12 3/4% senior
subordinated notes, and the Company has continued to borrow under its revolving
line of credit and its equipment lines of credit.
At the date of issuance of this Form 10-Q, the Company has not been able
to obtain the necessary consents to extend the maturity date of the 12 3/4%
senior subordinated notes. If the Company is unable to restructure or refinance
the 12 3/4% senior subordinated notes or any of the other indebtedness maturing
during 2000, the Company may be forced to seek relief from its creditors under
the Federal bankruptcy code. Any proceeding under the Federal bankruptcy code
could have a material adverse effect on the Company's results of operations and
financial position. The consolidated financial statements do not include any
adjustments to the amounts or classification of assets or liabilities to reflect
this uncertainty.
NOTE 2 -- INVENTORIES
Inventories at March 31, 2000, and December 31, 1999, are set forth
below (dollar amounts in thousands):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---------------- ----------------
<S> <C> <C>
Finished goods $ 3,739 $ 3,565
Work in process 2,620 2,503
Raw materials and purchased parts 3,437 3,424
--------- --------
$ 9,796 $ 9,492
========= ========
</TABLE>
-6-
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 -- ACCRUED EXPENSES
At March 31, 2000, and December 31, 1999, accrued expenses included
accrued interest expense of $2,583,000 and $1,751,000, respectively. (See also
Note 1, "Basis of Presentation.")
NOTE 4 -- DEBT
Debt at March 31, 2000, and December 31, 1999, is set forth below
(dollar amounts in thousands):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- -----------
<S> <C> <C>
Short-term debt:
Revolving line of credit $21,534 $21,468
Secured, amortizing term loans 36,982 38,960
12% secured term note 1,370 1,370
10 1/2% senior note 7,500 7,500
12 3/4% senior subordinated notes -- 27,412
14% junior subordinated notes 347 1,347
------- -------
Subtotal 67,733 98,057
Plus current portion of long-term debt 12 12
------- -------
Total short-term debt 67,745 98,069
------- -------
Debt in default:
12 3/4% senior subordinated notes 27,412 --
------- -------
Long-term debt:
Retirement obligations 125 128
Less current portion 12 12
------- -------
Total long-term debt 113 116
------- -------
Total debt $95,270 $98,185
======= =======
</TABLE>
REVOLVING LINE OF CREDIT
Although the revolving line of credit expires on April 1, 2002, loans
outstanding thereunder have been classified as short-term debt because the
Company's cash receipts are automatically used to reduce such loans on a daily
basis, by means of a lock-box sweep arrangement, and the lender has the ability
to modify certain terms of the revolving line of credit without the approval of
the Company. The loans were also classified as short-term debt because the
Company has only received a waiver through August 1, 2000, of the cross-default
provisions of the revolving line of credit.
At March 31, 2000, availability under the revolving line of credit
totaled $2,079,000, before outstanding checks of $1,537,000 were deducted. At
March 31, 2000, and December 31, 1999, loans outstanding under the revolving
line of credit accrued interest at the London Interbank Offered Rate (LIBOR)
plus 2 1/2% and the prime rate. At March 31, 2000, the prime rate was 9% and
LIBOR was 6.1%.
-7-
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SECURED, AMORTIZING TERM LOANS
Secured, amortizing term loans outstanding at March 31, 2000, and
December 31, 1999, are set forth below (dollar amounts in thousands):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ---------
<S> <C> <C>
Term loans payable in equal monthly principal installments based on a
180-month amortization schedule, final maturities in 2001, 8.37% $ 2,629 $ 2,688
Term loans payable in equal monthly principal installments, final
maturities in 2002, LIBOR plus 2 3/4% 1,651 1,837
Term loan payable in equal monthly principal installments based on a
180-month amortization schedule, final maturity in 2002, 9.37% 1,271 1,298
Term loan payable in equal monthly principal installments based on a
180-month amortization schedule, final maturity in 2002, 9% 2,481 2,531
Term loans payable in equal monthly principal installments, final
maturities in 2002, prime rate and LIBOR plus 2 1/2% 1,909(1) 2,139(1)
Term loan payable in equal monthly principal installments, final
maturity in 2003, prime rate 545 590
Term loan payable in equal monthly principal installments, final
maturity in 2003, prime rate and LIBOR plus 2 1/2% 341(1) 371(1)
Term loans payable in equal monthly principal installments, final
maturities in 2004, LIBOR plus 2 3/4% 1,396 1,479
Term loan payable in equal monthly principal installments, final
maturity in 2004, prime rate and LIBOR plus 2 1/2% 1,132 1,199
Term loans payable in equal monthly principal installments, final
maturities in 2004, prime rate and LIBOR plus 2 1/2% 11,244(1) 11,947(1)
Term loan payable in equal monthly principal installments, final
maturity in 2005, LIBOR plus 2 3/4% 987 1,067
Term loan payable in equal monthly principal installments, final
maturity in 2005, prime rate and LIBOR plus 2 1/2% 1,276(1) 1,336(1)
Term loan payable in equal monthly principal installments, final
maturity in 2006, prime rate 497 518
Term loans payable in equal monthly principal installments, final
maturities in 2006, prime rate and LIBOR plus 2 1/2% 9,623(1) 9,960(1)
--------- ---------
$ 36,982 $ 38,960
========= =========
</TABLE>
(1) Maturity date can be accelerated by the lender if the Company's
revolving line of credit expires prior to the stated maturity date of the term
loan.
The loans outstanding under the Company's revolving line of credit and
the secured, amortizing term loans listed above are collateralized by
substantially all of the assets of the Company, including accounts receivable,
inventories, equipment, certain real estate, and the stock of its wholly-owned
subsidiary, Lexington Rubber Group, Inc.
-8-
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
10 1/2% SENIOR NOTE
The 10 1/2% senior note, due August 1, 2000, is an unsecured obligation
of the Company. The holder of this note has waived the cross-default provision
with respect to the default relating to the 12 3/4% senior subordinated notes.
These notes are senior in right of payment to the 12 3/4 senior subordinated
notes and the 14% junior subordinated notes.
12 3/4% SENIOR SUBORDINATED NOTES
The 12 3/4% senior subordinated notes, which matured on February 1,
2000, are unsecured obligations of the Company that are subordinated in right of
payment to all of the Company's existing and future senior debt, including loans
under the revolving line of credit, the secured, amortizing term loans, the 12%
secured term note, and the 10 1/2% senior note. The Company is in default in
respect of the 12 3/4% senior subordinated notes because it did not make the
payments of principal, in the amount of $27,412,000, and interest, in the amount
of $1,748,000, on the 12 3/4% senior subordinated notes that were due on
February 1, 2000. For more information regarding the status of the 12 3/4%
senior subordinated notes, refer to Note 1, "Basis of Presentation."
14% JUNIOR SUBORDINATED NOTES
The 14% junior subordinated convertible notes and the 14% junior
subordinated nonconvertible notes are unsecured obligations of the Company. The
14% junior subordinated convertible notes, which had an aggregate principal
amount of $1,000,000, were converted into 440,000 shares of common stock on
February 1, 2000. The 14% junior subordinated nonconvertible notes are due on
August 1, 2000, and are subordinated in right of payment to all existing and
future senior debt of the Company, including loans under the revolving line of
credit, the secured, amortizing term loans, the 12% secured term note, the 10
1/2% senior note, and the 12 3/4% senior subordinated notes. The holders of the
14% junior subordinated notes have deferred, until August 1, 2000, the interest
payments that were due on February 1 and May 1, 2000, and waived the
cross-default provisions with respect to the default relating to the 12 3/4%
senior subordinated notes.
RESTRICTIVE COVENANTS
Certain of the Company's financing arrangements contain covenants that
set minimum levels of working capital, net worth, and cash flow coverage. The
covenants also place certain restrictions and limitations on the Company's
business and operations, including the incurrence or assumption of additional
debt, the level of past-due trade accounts payable, the sale of all or
substantially all of the Company's assets, the purchase of plant and equipment,
the purchase of common stock, the redemption of preferred stock, and the payment
of cash dividends. In addition, substantially all of the Company's financing
agreements include cross-default provisions.
From time to time, certain of the financial covenants contained in the
Company's various loan agreements have been amended or waived in order to
maintain or otherwise ensure current or future compliance by the Company. For
more information regarding recent amendments to and waivers of the Company's
various loan agreements, refer to Note 1, "Basis of Presentation."
-9-
<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 5 -- INCOME TAXES
During the first quarter of 2000, the Company recorded income tax
expense of $113,000, which consisted of estimated federal alternative minimum
tax and state income tax.
At March 31, 2000, and December 31, 1999, the Company's net deferred
income tax assets were fully offset by a valuation allowance.
NOTE 6 -- NET INCOME (LOSS) PER COMMON SHARE
The calculations of basic and diluted net income or loss per common
share for the three-month periods ended March 31, 2000 and 1999, are set forth
below (in thousands, except per share amounts).
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
------------------------
2000 1999
---- ----
<S> <C> <C>
Numerators:
Income (loss) before extraordinary item $ 263 $ (237)
Preferred stock dividends (7) (8)
Excess of redemption value over par value of
preferred stock redeemed during year (11) (11)
-------- --------
Numerator for basic and diluted net income (loss)
per share-- income available to common stockholders
before extraordinary item 245 (256)
Extraordinary gain, net of applicable income taxes - 1,371
-------- --------
Numerator for basic and dilutived net income
per share-- income available to common
stockholders after extraordinary item $ 245 $1,115
======== ========
Denominators:
Denominator for basic net income (loss) per share--
weighted-average common shares 4,641 4,263
Adjustments to derive denominator for diluted net income
(loss) per share:
Conversion of 14% junior subordinated convertible notes
into 440,000 common shares 150 -
Issuance of 125,000 shares of restricted common stock 37 -
-------- --------
Denominator for diluted net income (loss) per share--
adjusted weighted average common shares 4,828 4,263
======== ========
Per share data:
Basic and diluted net income (loss) per common share
before extraordinary item $ 0.05 $ (0.06)
Extraordinary gain, net of applicable income taxes - 0.32
-------- --------
Basic and diluted net income available to common
stockholders $ 0.05 $ 0.26
======== ========
</TABLE>
-10-
<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 7 -- SEGMENTS
Information relating to the Company's operating segments and its
corporate office for the three-month periods ended March 31, 2000 and 1999, is
summarized below (dollar amounts in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
--------------------------------
2000 1999
--------- ---------
<S> <C> <C>
NET SALES:
Rubber Group $ 28,971 $ 24,960
Metals Group 8,695 9,536
--------- ---------
Total net sales $ 37,666 $ 34,496
========= =========
INCOME (LOSS) FROM OPERATIONS:
Rubber Group $ 3,719 $ 3,316
Metals Group (297) (695)
Corporate office (609) (595)
--------- ---------
Total income from operations $ 2,813 $ 2,026
========= =========
ASSETS:
Rubber Group $ 74,331 $ 68,198
Metals Group 37,225 38,656
Corporate office 2,494 2,554
--------- ---------
Total assets $ 114,050 $ 109,408
========= =========
DEPRECIATION AND AMORTIZATION (1):
Rubber Group $ 2,039 $ 1,964
Metals Group 1,210 1,106
Corporate office 19 5
--------- ---------
Total depreciation and amortization $ 3,268 $ 3,075
========= =========
CAPITAL EXPENDITURES:
Rubber Group $ 4,067 $ 1,024
Metals Group 2,083 815
Corporate office 1 49
--------- ---------
Total capital expenditures $ 6,151 $ 1,888
========= =========
</TABLE>
(1) Does not include amortization of deferred
financing expenses, which totaled $49,000
and $50,000 during the three-month periods
ended March 31, 2000 and 1999, respectively.
-11-
<PAGE> 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 8 -- EXTRAORDINARY ITEM
During the three-month period ended March 31, 1999, the Company
repurchased $3,808,000 principal amount of its 12 3/4% senior subordinated notes
for $1,980,000 plus accrued interest. The Company recorded an extraordinary
gain, net of applicable income taxes, of $1,371,000 as a result of the
repurchase.
NOTE 9 -- PLANT CLOSURE
In May 1999, the Company closed a 21,000 square foot diecasting
facility in Manchester, New York. For the three-month period ended March 31,
1999, the Manchester facility had net sales of $448,000 and a loss from
operations of $119,000.
-12-
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Some of our statements in this section are "forward-looking statements,"
as that term is defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements usually can be identified by our use of words like
"believes," "expects," "may," "will," "should," "anticipates," "estimates,"
"projects," or the negative thereof. They may be used when we discuss strategy,
which typically involves risk and uncertainty, and they generally are based upon
projections and estimates rather than historical facts and events.
Forward-looking statements are subject to a number of risks and
uncertainties that could cause our actual results or performance to be
materially different from the future results or performance expressed in or
implied by those statements. Some of those risks and uncertainties are:
- increases and decreases in business awarded to us by our
customers,
- unanticipated price reductions for our products as a result of
competition,
- unanticipated operating results and cash flows,
- increases or decreases in capital expenditures,
- changes in economic conditions,
- strength or weakness in the North American automotive market,
- changes in the competitive environment,
- changes in interest rates,
- the possibility of product warranty claims,
- labor interruptions at our facilities or at our customers'
facilities, and
- our inability to obtain additional borrowings or to refinance our
existing indebtedness.
Because we have substantial borrowings for a company our size and
because those borrowings require us to make substantial interest and principal
payments, any negative event may have a greater adverse effect upon us than it
would have on a company of the same size that has less debt.
Our results of operations for any particular period are not necessarily
indicative of the results to be expected for any one or more succeeding periods.
Consequently, the use of forward-looking statements should not be regarded as a
representation that any of the projections or estimates expressed in or implied
by those forward-looking statements will be realized, and actual results may
vary materially. We cannot assure you that any of the forward-looking statements
contained herein will prove to be accurate.
All forward-looking statements are expressly qualified by the
discussion above.
-13-
<PAGE> 16
RESULTS OF OPERATIONS-- FIRST QUARTER OF 2000 VERSUS FIRST QUARTER OF 1999
The following table sets forth our consolidated operating results for
the first quarters of 2000 and 1999 (dollar amounts in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
-----------------------------------------
2000 1999
------------------ ------------------
<S> <C> <C> <C> <C>
Net sales $ 37,666 100.0% $ 34,496 100.0%
Cost of sales 31,834 84.5 29,404 85.2
--------- ------- --------- -------
Gross profit 5,832 15.5 5,092 14.8
Selling and administrative expenses 3,019 8.0 3,066 8.9
--------- ------- --------- -------
Income from operations 2,813 7.5 2,026 5.9
Add back depreciation and
amortization (1) 3,268 8.6 3,075 8.9
--------- ------- --------- -------
Earnings before interest, taxes,
depreciation, and amortization (2) $ 6,081 16.1% $ 5,101 14.8%
========= ======= ========= =======
Net cash provided by operating
activities (3) $ 8,202 21.8% $ 514 1.4%
========= ======= ========= =======
</TABLE>
(1) Does not include amortization of deferred financing expenses,
which totaled $49,000 and $50,000 during the first quarters of
2000 and 1999, respectively, and which is included in interest
expense in the consolidated financial statements.
(2) Earnings before interest, taxes, depreciation, and amortization,
which is commonly referred to as EBITDA, is not a measure of
performance under accounting principles generally accepted in the
United States and should not be used as a substitute for income
from operations, net income, net cash provided by operating
activities, or other operating or cash flow statement data
prepared in accordance with generally accepted accounting
principles. We have presented data related to EBITDA because we
believe that EBITDA is used by investors as supplemental
information to evaluate the operating performance of a business,
including its ability to incur and to service debt. In addition,
our definition of EBITDA may not be the same as the definition of
EBITDA used by other companies.
(3) The calculation of net cash provided by operating activities is
detailed in the consolidated statement of cash flows that is part
of our consolidated financial statements in Part I, Item 1.
The discussion that follows sets forth our analysis of the
operating results of the Rubber Group, the Metals Group, and the corporate
office.
-14-
<PAGE> 17
RUBBER GROUP
The Rubber Group manufactures silicone and organic rubber components
primarily for automotive industry customers. Any material reduction in the level
of activity in the automotive industry may have a material adverse effect on the
results of operations of the Rubber Group and on our company taken as a whole.
The following table sets forth the operating results of the Rubber
Group for the first quarters of 2000 and 1999 (dollar amounts in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
-----------------------------------------
2000 1999
------------------ ------------------
<S> <C> <C> <C> <C>
Net sales $ 28,971 100.0% $ 24,960 100.0%
Cost of sales 23,581 81.4 20,022 80.2
--------- ------ --------- ------
Gross profit 5,390 18.6 4,938 19.8
Selling and administrative expenses 1,671 5.8 1,622 6.5
--------- ------ --------- ------
Income from operations 3,719 12.8 3,316 13.3
Add back depreciation and
amortization 2,039 7.1 1,964 7.9
--------- ------ --------- ------
Earnings before interest, taxes,
depreciation, and amortization $ 5,758 19.9% $ 5,280 21.2%
========= ====== ======== ======
</TABLE>
During the first quarter of 2000, net sales of the Rubber Group
increased by $4,011,000, or 16.1%, compared to the first quarter of 1999. This
increase was primarily due to increased unit sales of connector seals for
automotive wiring systems, and, to a lesser extent, increased unit sales of
insulators for automotive ignition wire sets, components for medical devices,
and tooling, offset, in part, by price reductions on certain automotive
components.
During the first quarter of 2000, income from operations totaled
$3,719,000, an increase of $403,000, or 12.2%, compared to the first quarter of
1999. Cost of sales as a percentage of net sales increased during the first
quarter of 2000 to 81.4% of net sales from 80.2% of net sales during the first
quarter of 1999, primarily due to higher employee benefit costs and increased
expenses for maintenance of tooling and equipment.
Selling and administrative expenses as a percentage of net sales
decreased during the first quarter of 2000 compared to the first quarter of
1999, primarily because those expenses are partially fixed in nature.
During the first quarter of 2000, EBITDA increased to $5,758,000, an
increase of $478,000, or 9.1%, compared to the first quarter of 1999.
-15-
<PAGE> 18
METALS GROUP
The Metals Group manufactures aluminum die castings and machines
aluminum, brass, and steel components, primarily for automotive industry
customers. Any material reduction in the level of activity in the automotive
industry may have a material adverse effect on the results of operations of the
Metals Group and on our company taken as a whole.
Since 1997, we have been implementing a strategy designed to improve
the profitability and growth potential of the Metals Group by eliminating the
production of a large number of diverse, short-run components and by building
productive capacity to manufacture higher-volume components for customers in
target markets. The repositioning has entailed a shift to a new customer base
and has required that our manufacturing facilities be structured and equipped to
run high-volume parts efficiently and accurately. The repositioning of the
Metals Group has caused us to experience underabsorption of fixed overhead
resulting from the cut-back in short-run business. Additionally, the Metals
Group has incurred expenses for the implementation of improved quality systems,
expenses related to moving equipment and upgrading buildings, costs related to
establishing relationships with major new customers, and costs resulting from
inefficiencies experienced during the rollout of new products. These factors and
the fact that new high-volume business is limited at this stage of the
transition adversely affected the results of operations of the Metals Group
during the first quarters of 2000 and 1999.
In May 1999, we closed a 21,000 square foot diecasting facility in
Manchester, New York. For the three-month period ended March 31, 1999, the
Manchester facility had net sales of $448,000 and a loss from operations of
$119,000.
The following table sets forth the operating results of the Metals
Group for the first quarters of 2000 and 1999 (dollar amounts in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
---------------------------------------------------
2000 1999
---------------------- ----------------------
<S> <C> <C> <C> <C>
Net sales $ 8,695 100.0% $ 9,536 100.0%
Cost of sales 8,253 94.9 9,382 98.4
------- ------- ------- -------
Gross profit 442 5.1 154 1.6
Selling and administrative expenses 739 8.5 849 8.9
------- ------- ------- -------
Loss from operations (297) (3.4) (695) (7.3)
Add back depreciation and
amortization 1,210 13.9 1,106 11.6
------- ------- ------- -------
Earnings before interest, taxes
depreciation, and amortization $ 913 10.5% $ 411 4.3%
======= ======= ======= =======
</TABLE>
During the first quarter of 2000, net sales of the Metals Group
decreased by $841,000, or 8.8%, compared to the first quarter of 1999. This
decrease resulted primarily from a reduction in low-volume business, the
shutdown of the Manchester facility, and reduced sales of tooling.
-16-
<PAGE> 19
The Metals Group recorded a loss from operations of $297,000 during the
first quarter of 2000, compared to a loss from operations of $695,000 during the
first quarter of 1999. Cost of sales as a percentage of net sales decreased from
98.4% during the first quarter of 1999 to 94.9% during the first quarter of 2000
due to a reduction in material cost as a percentage of net sales, which resulted
primarily from reduced sales of tooling, and reduced maintenance expenses.
Selling and administrative expenses as a percentage of net sales
decreased during the first quarter of 2000 compared to the first quarter of
1999, primarily due to reductions in fees for professional services and
recruiting and relocation expenses.
During the first quarter of 2000, EBITDA increased to $913,000, an
increase of $502,000, or 122.1%, compared to the first quarter of 1999.
CORPORATE OFFICE
Expenses of the corporate office, which are not included in the
operating results for the Rubber Group or the Metals Group, represent
administrative expenses incurred primarily at our New York and Cleveland
offices. Expenses of the corporate office are consolidated with the selling and
administrative expenses of the Rubber Group and the Metals Group in our
consolidated financial statements.
The following table sets forth the operating results of the corporate
office for the first quarters of 2000 and 1999 (dollar amounts in thousands):
THREE MONTHS ENDED
MARCH 31
-------------------------
2000 1999
---- ----
Loss from operations (609) (595)
Add back: depreciation and
amortization 19 5
---- ----
Earnings before interest, taxes,
depreciation, and amortization (590) (590)
==== ====
INTEREST EXPENSE
During the first quarters of 2000 and 1999, interest expense totaled
$2,437,000 and $2,342,000, respectively. Interest expense includes amortization
of deferred financing expenses, which totaled $49,000, and
$50,000, during the first quarters of 2000 and 1999, respectively. The increase
in interest expense was primarily the result of increases in average interest
rates on our floating rate debt.
INCOME TAXES
During the first quarter of 2000, the provision for income taxes was
$113,000, which consisted of estimated federal alternative minimum tax and state
income tax.
At March 31, 2000, and December 31, 1999, our net deferred income tax
assets were fully offset by a valuation allowance.
-17-
<PAGE> 20
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES
During the first quarter of 2000, our operating activities provided
$8,202,000 of cash.
Accounts payable increased by $4,637,000. This increase was caused
primarily by an increase of $3,192,000 in payables related to the purchase of
plant, equipment, and customer-owned tooling and increased purchases of raw
materials and supplies to support higher levels of production.
INVESTING ACTIVITIES
During the first quarter of 2000, our investing activities used
$6,155,000 of cash, primarily for capital expenditures. Capital expenditures
attributable to the Rubber Group, the Metals Group, and the corporate office
totaled $4,067,000, $2,083,000, and $1,000, respectively. Capital expenditures
for the first quarter of 2000 included $5,338,000 for equipment and $813,000 for
land and buildings. We presently project that capital expenditures will total
approximately $20,900,000 during 2000, including $18,200,000 for equipment and
$2,700,000 for land and buildings. Capital expenditures for the Rubber Group and
the Metals Group are projected to total approximately $14,300,000 and
$6,600,000, respectively. At March 31, 2000, we had outstanding commitments to
purchase plant and equipment of $6,103,000, of which $4,695,000 is expected to
be expended during 2000, and $1,408,000 is expected to be expended in 2001. (See
also "Liquidity," in Part I, Item 2.)
FINANCING ACTIVITIES
During the first quarter of 2000, our financing activities used
$1,978,000 of cash, primarily to make schedule monthly payments on our secured,
amortizing term loans. Also, on February 1, 2000, our 14% junior subordinated
convertible notes, in the aggregate principal amount of $1,000,000, were
converted into 440,000 shares of common stock. During April 2000, we obtained
two new secured, amortizing term loans in the aggregate amount of $1,340,000,
which refinanced loans outstanding under the revolving line of credit.
LIQUIDITY
We finance our operations with cash from operating activities and a
variety of financing arrangements, including term loans and loans under our
revolving line of credit. Our ability to borrow under our revolving line of
credit, which expires on April 1, 2002, is subject to covenant compliance and
certain availability formulas based on the levels of our accounts receivable and
inventories. At May 11, 2000, availability under our revolving line of credit
totaled $2,285,000 before outstanding checks of $1,078,000 were deducted. We
have two equipment lines of credit that are used to finance, through five-year
or seven-year term loans, all or a portion of the purchase price of certain
equipment. As of March 31, 2000, we had unused availability under our equipment
lines of credit of $2,600,000.
We have substantial borrowings for a company our size. Because those
borrowings require us to make substantial interest and principal payments, any
negative event may have a greater adverse effect upon us than if we had less
debt. During the first quarter of 2000, our aggregate indebtedness, excluding
accounts payable, decreased by $2,915,000. During 2000, interest payments are
projected to be approximately $10,100,000 and principal payments on secured,
amortizing term loans are projected to total approximately $8,800,000.
-18-
<PAGE> 21
We had a net working capital deficit of $80,589,000 at March 31, 2000,
compared to a net working capital deficit of $78,957,000 at December 31, 1999.
Substantially all of our assets are pledged as collateral for certain
of our indebtedness. Certain of our financing arrangements contain covenants
with respect to the maintenance of minimum levels of working capital, net worth,
and cash flow coverage and other covenants that place certain restrictions on
our business and operations, including covenants relating to the incurrence or
assumption of additional debt, the level of past-due trade accounts payable, the
sale of all or substantially all of our assets, the purchase of plant and
equipment, the purchase of common stock, the redemption of preferred stock, and
the payment of cash dividends. In addition, substantially all of our financing
agreements include cross-default provisions.
From time to time, certain of the financial covenants contained in the
Company's various loan agreements have been amended or waived in order to
maintain or otherwise ensure current or future compliance by the Company.
During 2000, $36,629,000 of our indebtedness has matured or is
scheduled to mature. This indebtedness is comprised of the following:
- the 12 3/4% senior subordinated notes, in the outstanding
principal amount of $27,412,000, which matured on February 1,
2000;
- the 12% secured term note, in the outstanding principal amount of
$1,370,000, which matures on July 31, 2000;
- the 10 1/2% senior note, in the outstanding principal amount of
$7,500,000, which matures on August 1, 2000; and
- the 14% junior subordinated nonconvertible notes, in the
outstanding principal amount of $347,000, which mature on August
1, 2000.
We are currently engaged in a consent solicitation which commenced on
December 28, 1999, seeking consents of the holders of our 12 3/4% senior
subordinated notes to an extension of the maturity date of the 12 3/4% senior
subordinated notes to February 1, 2003. If the consent solicitation is
completed, we will pay a 1% fee to consenting holders and increase the interest
rate payable on the notes to the rates set forth in the following table:
PERIOD INTEREST RATE
February 1, 2000 - January 31, 2001 13 1/2%
February 1, 2001 - July 31, 2001 15 1/2%
August 1, 2001 - January 31, 2002 16%
February 1, 2002 - July 31, 2002 17%
August 1, 2002 - January 31, 2003 18%
We are in default in respect of the 12 3/4% senior subordinated notes
because we did not make the payments of principal, in the amount of $27,412,000,
and interest, in the amount of $1,748,000, on the 12 3/4% senior subordinated
notes that were due on February 1, 2000. We have extended the consent
solicitation through June 15, 2000, and we plan to amend the consent
solicitation to seek waivers of the events of default that occurred as a result
of our failure to make the payments of principal and interest.
-19-
<PAGE> 22
We can give no assurance that we will be able to obtain the necessary consents
to extend the maturity date of the 12 3/4% senior subordinated notes.
In order to enable us to continue our operations, notwithstanding the
default in respect of our 12 3/4% senior subordinated notes, we have obtained
the following agreements from the holders of substantially all of our other
indebtedness:
- The lenders extending loans under our revolving line of credit
and the lenders providing secured, amortizing term loans have
waived the cross-default provisions with respect to the default
relating to the 12 3/4% senior subordinated notes through August
1, 2000, and have amended certain covenants to eliminate defaults
that would otherwise have occurred because all of our secured,
amortizing term loans were classified as current liabilities in
our consolidated financial statements.
- The holder of our 12% secured term note, in the outstanding
principal amount of $1,370,000, has extended the maturity date of
that note from January 31, 2000, to July 31, 2000; that note has
no cross-default provision with respect to the default relating
to the 12 3/4% senior subordinated notes.
- The holder of our 10 1/2% senior note, in the outstanding
principal amount of $7,500,000, has extended the maturity date of
that note from February 1, 2000, to August 1, 2000, and has
waived the cross-default provisions with respect to the default
relating to the 12 3/4% senior subordinated notes.
- The holder of our 14% junior subordinated nonconvertible notes,
in the outstanding principal amount of $347,000, has extended the
maturity date of those notes from May 1, 2000, to August 1, 2000,
has deferred the interest payments on those notes that were due
on February 1 and May 1, 2000, to August 1, 2000, and has waived
the cross-default provisions with respect to the default relating
to the 12 3/4% senior subordinated notes.
- The holders of our 14% junior subordinated convertible notes,
which were outstanding on December 31, 1999, in the aggregate
principal amount of $1,000,000, have deferred the interest
payments on those notes that were due on February 1, 2000, to
August 1, 2000, and have waived the cross-default provision with
respect to the default relating to the 12 3/4% senior
subordinated notes. On February 1, 2000, the junior subordinated
convertible notes were converted into 440,000 shares of our
common stock.
Since January 31, 2000, we have made all scheduled payments of interest
and principal on all of our indebtedness, other than the 12 3/4% senior
subordinated notes, and we have continued to borrow under our revolving line of
credit and our equipment lines of credit.
To date, we have been unable to obtain the necessary consents to the
extension of our 12 3/4% senior subordinated notes. If we are unable to
restructure or refinance all of our matured or maturing indebtedness, we may be
forced to seek relief from our creditors under the Federal bankruptcy code. Any
proceeding under the Federal bankruptcy code could have a material adverse
effect on our results of operations and financial position.
We currently believe, although we can give you no assurance, that our
cash flow from operations, borrowings available to us under existing financing
arrangements, and additional borrowings that we believe we will be able to
obtain should be adequate to meet our projected working capital and
-20-
<PAGE> 23
debt service requirements (excluding amounts needed to refinance the $36,629,000
of indebtedness that has matured or is scheduled to mature during 2000) and to
fund projected capital expenditures through December 31, 2000. We estimate that,
in addition to our cash flow from operations and borrowings under our revolving
line of credit, we will require approximately $11,500,000 of new borrowings
during 2000 to meet our working capital and debt service requirements (excluding
amounts needed to refinance the $36,629,000 of indebtedness that has matured or
is scheduled to mature during 2000) and to fund projected capital expenditures.
If cash flows from operations or availability under existing and new
financing arrangements fall below expectations, we may be forced to delay
anticipated capital expenditures, reduce operating expenses, extend accounts
payable balances beyond terms that we believe are customary in the industries in
which we operate, and/or consider other alternatives designed to improve our
liquidity. Certain of these events or actions could have a material adverse
effect on our results of operations and financial position. In addition, if we
are unable to refinance, renegotiate, or extend the indebtedness that has
matured or is scheduled to mature during the second quarter of 2000, we may be
forced to seek relief from our creditors under the Federal bankruptcy code. Any
proceeding under the Federal bankruptcy code could have a material adverse
effect on our results of operations and financial position.
RECENTLY ISSUED ACCOUNTING STANDARDS
ACCOUNTING FOR PRE-PRODUCTION COSTS RELATED TO LONG-TERM SUPPLY
ARRANGEMENTS
In September 1999, the Emerging Issues Task Force of the Financial
Accounting Standards Board issued Abstract Number 99-5, "Accounting for
Pre-Production Costs Related to Long-Term Supply Arrangements" (Abstract 99-5),
which is effective for design and development costs incurred after December 31,
1999. Abstract 99-5 requires that, in the absence of a contractual guarantee of
reimbursement, design and development costs incurred with respect to products to
be sold under long-term supply arrangements are to be expensed as incurred.
Costs incurred to design and develop molds, dies, and other tools that are owned
by the customer and are to be used by the supplier to manufacture products for
sale under long-term supply arrangements are to be capitalized as long as the
supplier is performing under the supply arrangement. The adoption of Abstract
99-5 during the first quarter of 2000 did not have a significant effect on our
results of operations or financial position.
-21-
<PAGE> 24
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not invest in or trade market risk sensitive instruments. We also
do not have any foreign operations or any significant amount of foreign sales
and, therefore, we believe that our exposure to foreign currency exchange rate
risk is minimal.
At March 31, 2000, we had $52,135,000 of outstanding floating-rate debt
at interest rates equal to either LIBOR plus 2 1/2%, LIBOR plus 2 3/4%, or the
prime rate. Currently we do not purchase derivative financial instruments to
hedge or reduce our interest rate risk. As a result, changes in either LIBOR or
the prime rate affect the rates at which we borrow funds under these agreements.
At March 31, 2000, we had outstanding $43,135,000 of fixed rate
long-term debt with a weighted-average interest rate of 11.76%, of which
$36,629,000 has matured or is scheduled to mature during 2000. If we are able to
refinance or extend the matured or maturing debt, it may be at interest rates
that are significantly higher than the weighted-average interest rate on the
matured or maturing debt. In connection with our solicitation of consents to
extend the maturity date of our $27,412,000 of outstanding 12 3/4% senior
subordinated notes from February 1, 2000, to February 1, 2003, we have offered
to increase the interest rates thereon to the rates set forth in the following
table:
PERIOD INTEREST RATE
February 1, 2000 - January 31, 2001 13 1/2%
February 1, 2001 - July 31, 2001 15 1/2%
August 1, 2001 - January 31, 2002 16%
February 1, 2002 - July 31, 2002 17%
August 1, 2002 - January 31, 2003 18%
If the consent solicitation is successful and all of the senior
subordinated notes remain outstanding during 2000, 2001, and 2002, we will pay
$188,000, $765,000, and $1,256,000 more interest during those respective periods
than if the interest rate were to remain at 12 3/4%. For more information
regarding the status of the consent solicitation, you should refer to
Management's Discussion and Analysis of Financial Condition and Results of
Operations - "Liquidity," in Part I, Item 2, and Note 1 to the consolidated
financial statements in Part I, Item 1.
-22-
<PAGE> 25
PART II. OTHER INFORMATION
ITEM 3. DEFAULTS ON SENIOR SECURITIES
(a) We are in default in respect of our 12 3/4% senior subordinated notes
because we did not make the payments of principal, in the amount of $27,412,000,
and interest, in the amount of $1,748,000, that were due on February 1, 2000.
For more information regarding the default in respect of the 12 3/4% senior
subordinated notes, refer to "Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity" which is incorporated
by reference herein.
(b) We did not pay dividends in the aggregate amount of $7,000 on our $8
Cumulative Convertible Preferred Stock, Series B, for the quarterly period ended
March 15, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
The following exhibits are filed herewith:
10-1 Amendment No. 9 to Credit Facility and Security Agreement
dated as of December 31, 1999, among LPC, LRGI, and Bank
One, NA
10-2 New Equipment Term Note dated April 24, 2000, between
Lexington Precision Corporation ("LPC") and Congress
Financial Corporation ("Congress")
10-3 New Equipment Term Note dated April 24, 2000, between
Lexington Rubber Group, Inc. ("LRGI") and Congress
10-4 Agreement relating to 14% Junior Subordinated Notes dated
April 30, 2000, between LPC and Michael A. Lubin
10-5 Agreement relating to Junior Subordinated Convertible
Increasing Rate Note dated April 30, 2000, among LPC,
Michael A. Lubin, and Warren Delano
10-6 Note Amendment No. 2 to Note dated as of April 30, 2000,
between LPC and Tri-Links Investment Trust, as successor to
Nomura Holding America, Inc.
10-7 Fourth Amendment Agreement dated April 30, 2000, between
LRGI and Paul H. Pennell
10-8 Agreement dated as of April 30, 2000, among LPC, LRGI, and
Congress
10-9 Agreement dated as of April 30, 2000, between LPC and The
CIT Group/Equipment Financing, Inc.
10-10 Agreement dated as of April 30, 2000, among LPC, LRGI, and
Bank One, NA
10-11 Amendment to Financing Agreements dated May 12, 2000,
between LPC and Congress
-23-
<PAGE> 26
10-12 Amendment to Financing Agreements dated May 12, 2000,
between LRGI and Congress
27-1 Financial Data Schedule
(b) REPORTS ON FORM 8-K
On January 11, 2000, we filed a report on Form 8-K, which reported
that, on December 28, 1999, we issued a press release announcing that we had
commenced a consent solicitation with respect to our 12 3/4% senior subordinated
notes due February 1, 2000, and disclosed the terms of the consent solicitation.
On February 4, 2000, we filed a report on Form 8-K, which reported
that (1) on January 27, 2000, we issued a press release announcing that we had
extended the expiration date of the consent solicitation with respect to our 12
3/4% senior subordinated notes due February 1, 2000, from January 27, 2000, to
January 31, 2000, (2) on January 31, 2000, we issued a press release announcing
that we had extended the expiration date of the consent solicitation to February
15, 2000, and (3) on February 1, 2000, we issued a press release announcing that
we had not made the payments of principal, in the amount of $27,412,000, and
interest, in the amount of $1,748,000, on our 12 3/4% senior subordinated notes,
which matured on February 1, 2000, and that we had entered into certain
agreements with all of our secured and unsecured lenders, other than the holders
of the 12 3/4% senior subordinated notes, and disclosed the terms of those
agreements.
-24-
<PAGE> 27
LEXINGTON PRECISION CORPORATION
FORM 10-Q
MARCH 31, 2000
SIGNATURES
Pursuant to the requirements 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)
May 11, 2000 By: /s/ Michael A. Lubin
- ------------ ---------------------
Date Michael A. Lubin
Chairman of the Board
May 11, 2000 By: /s/ Warren Delano
- ------------ ------------------
Date Warren Delano
President
May 11, 2000 By: /s/ Dennis J. Welhouse
- ------------ -----------------------
Date Dennis J. Welhouse
Senior Vice President and
Chief Financial Officer
-25-
<PAGE> 28
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Location
------ ------- --------
<S> <C> <C>
10-1 Amendment No. 9 to Credit Facility and Filed with this Form 10-Q
Security Agreement dated as of December 31,
1999, among LPC, LRGI, and Bank One, NA
10-2 New Equipment Note dated April 24, 2000, Filed with this Form 10-Q
between Lexington Precision Corporation
("LPC") and Congress Financial Corporation
("Congress")
10-3 New Equipment Note dated April 24, 2000, Filed with this Form 10-Q
between Lexington Rubber Group, Inc.
("LRGI") and Congress
10-4 Agreement relating to 14% Junior Subordinated Filed with this Form 10-Q
Notes dated April 30, 2000, between LPC
and Michael A. Lubin
10-5 Agreement relating to Junior Subordinated Filed with this Form 10-Q
Convertible Increasing Rate Note dated
April 30, 2000, among LPC, Michael A. Lubin,
and Warren Delano
10-6 Note Amendment No. 2 to Note dated as of Filed with this Form 10-Q
April 30, 2000, between LPC and Tri-Links
Investment Trust, as successor to Nomura
Holding America, Inc.
10-7 Fourth Amendment Agreement dated April 30, Filed with this Form 10-Q
2000, between LRGI and Paul H. Pennell
10-8 Agreement dated as of April 30, 2000, among Filed with this Form 10-Q
LPC, LRGI, and Congress
10-9 Agreement dated as of April 30, 2000, between Filed with this Form 10-Q
LPC and CIT Group/Equipment Financing, Inc.
10-10 Agreement dated as of April 30, 2000, among Filed with this Form 10-Q
LPC, LRGI, and Bank One, NA
10-11 Amendment to Financing Agreements dated Filed with this Form 10-Q
May 12, 2000, between LPC and Congress
10-12 Amendment to Financing Agreements dated Filed with this Form 10-Q
May 12, 2000, between LRGI and Congress
27-1 Financial Data Schedule Filed with this Form 10-Q
</TABLE>
<PAGE> 1
EXBT10-1
AMENDMENT NO. 9 TO CREDIT FACILITY AND SECURITY AGREEMENT
This Amendment No. 9 (the "Amendment") dated as of December 31, 1999,
to Credit Facility and Security Agreement by and between Bank One,
N.A.("Lender"), Lexington Precision Corporation ("LPC"), and Lexington Rubber
Group, Inc., formerly Lexington Components, Inc. ("LRGI").
WHEREAS, Lender, LPC, and LRGI are parties to a Credit Facility and
Security Agreement dated as of January 31,1997, including Rider A thereto (the
"Agreement").
WHEREAS, LPC, LRGI, and Lender desire to amend the Agreement as
provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto,
the parties hereto hereby agree as follows:
1. Capitalized terms used herein, unless otherwise defined herein,
shall have the meanings ascribed thereto in the Agreement.
2. Section 2.C of Rider A to the Agreement is hereby amended in its
entirety to read as follows:
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 principals) (excluding all obligations payable to Congress
Financial Corporation, The CIT Group/Equipment Finance, Inc., and
Lender and the current portion of other long-term indebtedness) of not
less than (i) SIX MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($6,500,000) from July 31, 1998 through December 31, 1998 and (ii) not
less than SEVEN MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($7,500,000) from and after January 1, 1999.
3. Except as specifically amended herein, the Agreement remains in
effect in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the day and year first written above.
BANK ONE, NA
By: Rudolf G. Bentlage
---------------------------
Rudolf G. Bentlage
Vice President
<PAGE> 2
-2-
LEXINGTON PRECISION CORPORATION
By: Warren Delano
---------------------------
Warren Delano
President
LEXINGTON RUBBER GROUP, INC.
By: Warren Delano
---------------------------
Warren Delano
President
<PAGE> 1
EXBT10-2
NEW EQUIPMENT TERM NOTE
-----------------------
$740,000 April 24, 2000
FOR VALUE RECEIVED, LEXINGTON PRECISION CORPORATION, a Delaware
corporation (the "Debtor"), hereby unconditionally promises to pay to the order
of CONGRESS FINANCIAL CORPORATION, a Delaware corporation, as successor by
merger to 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 SEVEN HUNDRED FORTY THOUSAND
DOLLARS ($740,000) 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 June 1, 2000, of which the first eighty-three (83) installments
shall each be in the amount of EIGHT THOUSAND EIGHT HUNDRED DOLLARS ($8,800),
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 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 equal the Prime Rate, and as to Eurodollar Rate Loans,
a rate of two and one-half (2 1/2%) percent per annum in excess of the Adjusted
Eurodollar Rate; PROVIDED, THAT, at Payee's option, the Interest Rate shall mean
a rate of two (2%) percent per annum in excess of the Prime Rate as to Prime
Rate Loans and a rate of four and one-half (4 1/2%) 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 First Union
National Bank, or its successors, 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 March 11, 1997
between Debtor and Payee, as amended by the letter agreement re: Amendment to
Financing Agreements, dated October 20, 1998, between Debtor and Payee and the
letter agreement re: Amendment to Financing Agreements, dated January 28, 1999,
between Debtor and Payee (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.
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
-2-
<PAGE> 3
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 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.
-3-
<PAGE> 4
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
--------------------------------
Karen Novak Title: President
- ------------------------- -----------------------------
Assistant Secretary
-4-
<PAGE> 1
EXBT10-3
NEW EQUIPMENT TERM NOTE
-----------------------
$600,000 April 24, 2000
FOR VALUE RECEIVED, LEXINGTON RUBBER GROUP, INC., formerly known as
Lexington Components, Inc., a Delaware corporation (the "Debtor"), hereby
unconditionally promises to pay to the order of CONGRESS FINANCIAL CORPORATION,
a Delaware corporation, as successor by merger to 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 eighty-four (84)
consecutive monthly installments (or earlier as hereinafter referred to) on the
first day of each month commencing June 1, 2000, of which the first eighty-three
(83) installments shall each be in the amount of SEVEN THOUSAND ONE HUNDRED
FIFTY DOLLARS ($7,150), 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 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 equal the Prime Rate, and as to Eurodollar Rate Loans,
a rate of two and one-half (2 1/2%) percent per annum in excess of the Adjusted
Eurodollar Rate; PROVIDED, THAT, at Payee's option, the Interest Rate shall mean
a rate of two (2%) percent per annum in excess of the Prime Rate as to Prime
Rate Loans and a rate of four and one-half (4 1/2%) 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 First Union
National Bank, or its successors, as its prime rate, whether or not such
announced rate is the best rate available at such bank. Unless otherwise defined
herein, all
<PAGE> 2
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 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 March 11, 1997
between Debtor and Payee, as amended by the letter agreement re: Amendment to
Financing Agreements, dated October 20, 1998, between Debtor and Payee and the
letter agreement re: Amendment to Financing Agreements, dated January 28, 1999,
between Debtor and Payee (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
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.
-3-
<PAGE> 4
Whenever used herein, the terms "Debtor" and "Payee" shall be deemed to
include their respective successors and assigns.
LEXINGTON RUBBER GROUP, INC.
ATTEST:
By: Warren Delano
----------------------------
Karen Novak
- --------------------------
Assistant Secretary Title: President
-------------------------
-4-
<PAGE> 1
EXBT10-4
AGREEMENT
(14% Junior Subordinated Notes)
This Agreement dated as of April 30, 2000 (the "Agreement"), between
Lexington Precision Corporation, a Delaware corporation (the "Company"), and
Michael A. Lubin ("Holder").
WHEREAS, Holder is the holder of certain 14% Junior Subordinated Notes
due May 1, 2000, of the Company in the aggregate original principal amount of
the U.S. $346,666.67 (individually, a "Note" and collectively, the "Notes");
WHEREAS, the Company and Holder desire to, among other things, extend
the maturity date of the Notes, defer the payment of certain interest on the
Notes, and provide for the waiver of certain events of default, all on and
subject to the terms hereof;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto intending to be legally
bound, hereby agree as follows:
1. WAIVER. Subject to paragraph 2 hereof, the Holder hereby waives any
Event of Default under the Notes resulting solely from the failure of the
Company to pay any principal or interest due on February 1, 2000 in respect of
the Company's 12 3/4% Senior Subordinated Notes due February 1, 2000 (the "Other
Indebtedness").
2. RESCISSION OF WAIVERS. The waivers in paragraph 1(b) hereof shall be
automatically rescinded, without notice to the Company, in the event that the
holders of the Other Indebtedness, or the trustee in respect thereof, seeks to
enforce or exercise any remedies in respect thereof.
3. MODIFICATION OF NOTES.
Notwithstanding anything to the contrary in the Notes, the Company and
the Holder hereby agree that (a) the maturity date of the Notes is extended to
August 1, 2000, and (b) the interest on the Notes that is due and payable on May
1, 2000 (the "May 2000 Interest Payment"), will be deemed to be Defaulted
Interest but will be payable on the earlier of (i) August 1, 2000, or (ii) a
date that is substantially contemporaneous with the amendment of the Other
Indebtedness, as contemplated by the Company's Consent Solicitation Statement
dated December 28, 1999.
4. EFFECTIVE DATE; APPLICABILITY; LEGEND.
This Agreement shall be deemed effective as of April 30, 2000. This
Agreement shall modify each Note and any replacement note issued upon transfer
of, in exchange for, or in lieu of any Note or any replacement note. Holder
agrees that Holder will cause the following legend to be placed prominently on
each Note and that any replacement note or notes issued by the Company upon
transfer of, in exchange for, or in lieu of the Note or any replacement note
shall have such legend placed thereon:
THIS NOTE HAS BEEN MODIFIED PURSUANT TO THOSE CERTAIN
AGREEMENTS DATED AS OF JANUARY 31, 2000, AND APRIL 30, 2000, COPIES OF
WHICH ARE AVAILABLE FOR INSPECTION AT THE OFFICES OF THE COMPANY AT
<PAGE> 2
767 THIRD AVENUE, 29TH FLOOR, NEW YORK, NEW YORK, AND REFERENCE SHOULD
BE MADE THERETO FOR THE TERMS THEREOF.
5. REPRESENTATIONS AND WARRANTIES. Each of the parties represents and
warrants that: (a) the execution, delivery and performance of this Agreement
have been duly authorized by all requisite action on his or its part; and (b)
this Agreement has been duly executed and delivered by him or it and constitutes
his or its legal, valid, and binding agreement, enforceable against him or it in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the enforceability of creditors' rights generally or general equitable
principles.
6. NO OTHER AMENDMENTS.
Except as expressly amended, waived, modified, and supplemented hereby,
each Note shall remain in full force and effect in accordance with its terms.
Without limiting the generality of the foregoing, except as set forth in Section
1, 2 or 3 of this Agreement, nothing herein shall constitute a waiver of any
rights or remedies of the Holder upon the occurrence of any Event of Default.
7. GENERAL PROVISIONS.
(a) DEFINED TERMS. Capitalized terms used herein, unless otherwise
defined herein, shall have the meaning ascribed thereto in the Notes.
(b) COUNTERPARTS. This Agreement may be executed by the parties in any
number of counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. This Amendment may be signed
by facsimile transmission of the relevant signature pages hereof.
(c) GOVERNING LAW. This Agreement shall be governed by, and construed
and interpreted in accordance with, the internal laws of the State of New York.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the heirs, successors, and assigns of the parties hereto
and any and all transferees and holders of the Notes or any replacement note.
(e) HEADINGS. The paragraph headings of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.
<PAGE> 3
IN WITNESS WHEREOF, the Company and Holder have caused this Agreement
to be duly executed and delivered as of the date first written above.
LEXINGTON PRECISION CORPORATION
By: Warren Delano
--------------------------------
Name: Warren Delano
------------------------------
Title: President
-----------------------------
Michael A. Lubin
---------------------------------
Michael A. Lubin
<PAGE> 1
EXBT10-5
AGREEMENT
(Junior Subordinated Convertible Increasing Rate Notes)
This Agreement dated as of April 30, 2000 (the "Agreement"), among
Lexington Precision Corporation, a Delaware corporation (the "Company"), Michael
A. Lubin ("Lubin"), and Warren Delano ("Delano"; Lubin and Delano are sometimes
referred to herein individually as "Holder" and collectively as the "Holders").
WHEREAS, Lubin and Delano were the holders of certain Junior
Subordinated Convertible Increasing Rate Notes due May 1, 2000, of the Company
in the aggregate original principal amounts of U.S. $505,000 and $495,000,
respectively (individually, a "Note" and collectively, the "Notes");
WHEREAS, on January 31, 2000, the Holders agreed to defer the payment
of certain Defaulted Interest to May 1, 2000;
WHEREAS, on February 1, 2000, Lubin & Delano converted the Notes into
shares of common stock, par value $.25 per share, of the Company;
WHEREAS, the Company and Holders desire to, among other things, further
defer the payment of such Defaulted Interest and provide for the waiver of
certain events of default, all on and subject to the terms hereof;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto intending to be legally
bound, hereby agree as follows:
1. WAIVER. Subject to paragraph 2 hereof, each Holder hereby waives any
Event of Default under the Notes resulting solely from the failure of the
Company to pay any principal or interest due on February 1, 2000, in respect of
the Company's 12 3/4% Senior Subordinated Notes due February 1, 2000 (the "Other
Indebtedness").
2. RESCISSION OF WAIVERS. The waivers in paragraph 1(b) hereof shall be
automatically rescinded, without notice to the Company, in the event that the
holders of the Other Indebtedness, or the trustee in respect thereof, seeks to
accelerate the maturity of any such Other Indebtedness or to enforce or exercise
any remedies in respect thereof.
3. MODIFICATION OF ORIGINAL NOTES.
Notwithstanding anything to the contrary in the Notes, the Company and
each Holder hereby agree that the interest on the Notes which is due and payable
on May 1, 2000 (the "May 2000 Interest Payment"), will be deemed to be Defaulted
Interest but will be payable on the earlier of (i) August 1, 2000, or (ii) a
date that is substantially contemporaneous with the amendment of the Other
Indebtedness, as contemplated by the Company's Consent Solicitation Statement
dated December 28, 1999.
<PAGE> 2
4. EFFECTIVE DATE; APPLICABILITY; LEGEND.
This Agreement shall be deemed effective as of April 30, 2000. This
Agreement shall modify each Note and each replacement note issued upon transfer
of, in exchange for, or in lieu of any Note or any replacement note. Each Holder
agrees that the Holder will cause the following legend to be placed prominently
on each Note and that any replacement note or notes issued by the Company upon
transfer of, in exchange for, or in lieu of the Note or any replacement note
shall have such legend placed thereon:
THIS NOTE HAS BEEN MODIFIED PURSUANT TO THAT CERTAIN AGREEMENT
DATED AS OF JANUARY 31, 2000, A COPY OF WHICH IS AVAILABLE FOR
INSPECTION AT THE OFFICES OF THE COMPANY AT 767 THIRD AVENUE, 29TH
FLOOR, NEW YORK, NEW YORK, AND REFERENCE SHOULD BE MADE THERETO FOR THE
TERMS THEREOF.
5. REPRESENTATIONS AND WARRANTIES. Each of the parties represents and
warrants that: (a) the execution, delivery and performance of this Agreement
have been duly authorized by all requisite action on his or its part; and (b)
this Agreement has been duly executed and delivered by him or it and constitutes
his or its legal, valid, and binding agreement, enforceable against him or it in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the enforceability of creditors' rights generally or general equitable
principles.
6. NO OTHER AMENDMENTS.
Except as expressly amended, waived, modified, and supplemented hereby,
each Note shall remain in full force and effect in accordance with its terms.
Without limiting the generality of the foregoing, except as set forth in Section
1, 2 or 3 of this Agreement, nothing herein shall constitute a waiver of any
rights or remedies of any Holder upon the occurrence of any Event of Default.
7. GENERAL PROVISIONS.
(a) DEFINED TERMS. Capitalized terms used herein, unless otherwise
defined herein, shall have the meaning ascribed thereto in the Notes.
(b) COUNTERPARTS. This Agreement may be executed by the parties in any
number of counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. This Agreement may be signed
by facsimile transmission of the relevant signature pages hereof.
(c) GOVERNING LAW. This Agreement shall be governed by, and construed
and interpreted in accordance with, the internal laws of the State of New York.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the heirs, successors, and assigns of the parties hereto
and any and all transferees and holders of the Notes or any replacement note.
-2-
<PAGE> 3
(e) HEADINGS. The paragraph headings of this Agreement are for convenience
of reference only and are not to be considered in construing this Agreement.
IN WITNESS WHEREOF, the Company and each Holder have caused this Agreement to be
duly executed and delivered as of the date first written above.
LEXINGTON PRECISION CORPORATION
By: Warren Delano
----------------------------------
Name: Warren Delano
--------------------------------
Title: President
-------------------------------
Michael A. Lubin
------------------------------------
Michael A. Lubin
Warren Delano
-------------------------------------
Warren Delano
-3-
<PAGE> 1
EXBT10-6
NOTE AMENDMENT
(10 1/2% Senior Unsecured Note)
This Amendment No. 2 to Note dated as of April 30, 2000 (the
"Amendment"), between Lexington Precision Corporation, a Delaware corporation
(the "Company"), and Tri-Links Investment Trust, a Delaware trust (as
successor-in-trust to Nomura Holding America, Inc.) ("Tri-Links").
WHEREAS, Tri-Links is the holder of that certain 10 1/2% Senior
Unsecured Note due May 1, 2000, of the Company in the original principal amount
of the U.S. $7,500,000, dated October 27, 1997, No. SU-1, as amended by
Amendment No. 1 dated as of January 31, 2000 (the "Note");
WHEREAS, the Company and Tri-Links desire to amend the Note on and
subject to the terms hereof;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto intending to be legally
bound, hereby agree as follows:
1. AMENDMENT OF NOTE.
The first paragraph on page 1 of the Note is hereby amended to extend
the maturity date of the Note from May 1, 2000, to August 1, 2000, by replacing
the reference to "May 1, 2000," with "August 1, 2000."
2. WAIVER.
Subject to paragraph 3, hereof, Tri-Links hereby waives, until August
1, 2000, any Event of Default under the Note resulting solely from the failure
of the Company to pay any principal or interest due on February 1, 2000 in
respect of the Company's 12 3/4% Senior Subordinated Notes due February 1, 2000
("Other Indebtedness").
3. RESCISSION OF WAIVER.
The foregoing waiver shall be automatically rescinded, without
notice to the Company, in the event that the holders of the Other Indebtedness,
or the trustee in respect thereof, seeks to enforce or exercise any remedies in
respect thereof.
4. EFFECTIVE DATE.
This Amendment shall be deemed effective as of April 30, 2000.
Tri-Links hereby waives any Default or Event of Default as a result of the
failure to pay the principal amount of the Note on May 1, 2000. Tri-Links agrees
that interest shall be paid at the rate set forth in paragraph 1 of the Note and
that the provisions of paragraphs 2.2 and 4(b) of the Note shall not apply to
any payment that is made when due on the Note, as amended pursuant to Section 1
of this Amendment.
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<PAGE> 2
5. APPLICABILITY; LEGEND.
This Amendment shall amend the Note and each replacement note issued
upon transfer of, in exchange for or in lieu of the Note. Tri-Links agrees that
it will cause the following legend to be placed prominently on the Note and that
any replacement notes issued by the Company upon transfer of, in exchange for,
or in lieu of the Note shall have such legend placed thereon:
THIS NOTE HAS BEEN AMENDED PURSUANT TO THAT CERTAIN AMENDMENT
NO. 2 TO NOTE DATED AS OF JANUARY 28, 2000, A COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE OFFICES OF THE COMPANY AT 767 THIRD
AVENUE, 29TH FLOOR, NEW YORK, NEW YORK, AND REFERENCE SHOULD BE MADE
THERETO FOR THE TERMS THEREOF.
6. REPRESENTATIONS AND WARRANTIES. Each of the parties represents and
warrants that: (a) the execution, delivery and performance of this Amendment
have been duly authorized by all requisite action on its part; and (b) this
Amendment has been duly executed and delivered by it and constitutes its legal,
valid, and binding agreement, enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the
enforceability of creditors' rights generally or general equitable principles.
7. NO OTHER AMENDMENTS.
Except as expressly amended, waived, modified, and supplemented hereby,
the Note shall remain in full force and effect in accordance with its terms.
8. GENERAL PROVISIONS.
(a) DEFINED TERMS. Capitalized terms used herein, unless otherwise
defined herein, shall have the meaning ascribed thereto in the Note.
(b) COUNTERPARTS. This Amendment may be executed by the parties in any
number of counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. This Amendment may be signed
by facsimile transmission of the relevant signature pages hereof.
(c) GOVERNING LAW. This Amendment shall be governed by, and construed
and interpreted in accordance with, the internal laws of the State of New York.
(d) SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and
inure to the benefit of the successors and assigns of the parties hereto and any
and all transferees and holders of the Note or any replacement note.
(e) HEADINGS. The paragraph headings of this Amendment are for
convenience of reference only and are not to be considered in construing this
Amendment.
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<PAGE> 3
IN WITNESS WHEREOF, the Company and Tri-Links have caused this
Amendment to be duly executed and delivered by their respective proper and duly
authorized officers effective as of the first date written above.
LEXINGTON PRECISION CORPORATION
By: Warren Delano
-------------------------------
Name: Warren Delano
-------------------------------
Title: President
-------------------------------
TRI-LINKS INVESTMENT TRUST by Wilmington
Trust Company as Owner Trustee
By: David A. Vanaskey, Jr.
-------------------------------
Name: David A. Vanaskey, Jr.
-------------------------------
Title: Vice President
-------------------------------
CONSENT
The undersigned, Lexington Rubber Group, Inc. (formerly Lexington
Components, Inc.), a Delaware corporation, hereby consents to Amendment No. 2 to
Note (the "Amendment") dated and effective as of April 30, 2000, between
Lexington Precision Corporation (the "Company") and Tri-Links Investment Trust
(as successor-in-interest to Nomura Holding America, Inc.), which amends the
Company's 10 1/2% Senior Unsecured Note due May 1, 2000 (the "Note"), as amended
by Amendment No. 1 dated as of January 31, 2000, and hereby confirms and agrees
that its Guarantee of the Note shall continue to be in full force and effect and
shall apply to the Note as amended by the Amendment and that all references in
said Guarantee to "Note" or "Notes" shall refer to the Note as amended by the
Amendment.
LEXINGTON RUBBER GROUP, INC.
By: Warren Delano
-------------------------------
Name: Warren Delano
-----------------------------
Title: President
----------------------------
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<PAGE> 1
EXBT10-7
FOURTH AMENDMENT AGREEMENT
FOURTH AMENDMENT AGREEMENT dated as of April 30, 2000 between Lexington
Rubber Group, Inc., a Delaware corporation ("LRGI"), formerly known as Lexington
Components, Inc., which, in turn, was formerly known as EPI Acquisitions Corp.
("EPI"), and Paul H. Pennell ("Pennell").
WHEREAS, EPI and Pennell entered into certain financing agreements
pursuant to that certain Asset Purchase Agreement dated as of November 30, 1988
(the "Purchase Agreement") between EPI and Pennell;
WHEREAS, such financings agreements consist of a Promissory Note dated
November 30, 1988 from EPI to Pennell in the original principal amount of
$3,530,000, (the "Note"; the Note, as heretofore amended and as amended by this
Amendment Agreement, is referred to as the "Amended Note"), a Mortgage dated as
of November 30, 1988 from EPI to Pennell (the "Mortgage") and a Security
Agreement dated as of November 30, 1988 between EPI and Pennell (the "Security
Agreement"; the Note, the Mortgage and the Security Agreement, as the same have
heretofore have been or contemporaneously are being amended, modified or
supplemented, are herein collectively referred to as the "Financing
Agreements");
WHEREAS, the Note was amended by that certain Amendment Agreement dated
as of November 30, 1991, and recorded with the Clerk of Court of York County,
South Carolina as Book 355 at Page 195 on December 16, 1991.
WHEREAS, pursuant to the terms thereof, the principal amount of the
Note and the term thereof have been amended as a result of that certain Release
and Notice Agreement dated as of March 31, 1993 between LCI and Pennell;
WHEREAS, the Note was amended by that certain Second Amendment
Agreement dated as of June 23, 1998 and effective on May 1, 1998, and recorded
with the Clerk of Court of York County, South Carolina, in Volume 2294 at Page
107 on June 24, 1998;
WHEREAS, the Note was amended by that certain Third Amendment Agreement
dated as of January 31, 2000 and recorded with the Clerk of Court of York
County, South Carolina; and
WHEREAS, LRGI and Pennell desire to further amend the Note in the
manner set forth below;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, LRGI and Pennell, intending to be
legally bound, hereby agree as follows:
1. AMENDMENT OF NOTE. (a) The Note, as amended, is hereby further
amended by deleting therefrom the second and third paragraph on page 1 thereof
in their entirety and substituting therefor the following paragraph:
The principal of and interest on this Note shall be payable as follows:
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<PAGE> 2
(i) Monthly interest only payments in the amount of $13,700.16 each
shall be payable on the last day of each month commencing May 31, 1998 and on
the last day of each month thereafter until July 31, 2000. Simple interest on
the principal amount hereunder shall accrue at the rate of 12% per annum until
the principal balance is paid in full;
(ii) The principal sum of the Note, together with all accrued and
unpaid interest thereon, if any, shall be due and payable on July 31, 2000; and
(iii) Any payment which is required to be made on a Saturday, Sunday or
legal holiday shall be payable on the next succeeding day which is not a
Saturday, Sunday or legal holiday.
(b) Pennell shall cause the following legend to be placed prominently
on the Note;
THIS NOTE HAS BEEN AMENDED BY A FOURTH
AMENDMENT AGREEMENT DATED AS OF APRIL 30,
2000, A COPY OF WHICH IS AVAILABLE FOR
INSPECTION AT THE OFFICES OF BUYER AT 767
THIRD AVENUE, 29TH FLOOR, NEW YORK, NEW
YORK.
(c) To the extent that this Fourth Amendment Agreement amends the Note,
as heretofore amended, the Note is hereby amended. All references to the Note in
the Purchase Agreement and the Financing Agreements or any other agreement or
document relating to the Financing Agreements shall be deemed to refer to the
Amended Note.
2. FURTHER ASSURANCES. Each of the parties hereto shall execute and deliver
such additional documents and take such additional actions as may be requested
by the other party to effectuate the provisions and purposes of this Fourth
Amendment Agreement. In connection therewith, LRGI shall cause Lexington
Precision Corporation to execute and deliver to Pennell a consent in the form of
EXHIBIT A hereto (the "Consent").
3. MORTGAGE. For purposes of notifying persons of the amendment of the Note
pursuant to this Fourth Amendment Agreement and the effect thereof upon the
Mortgage, it is intended that this Fourth Amendment Agreement shall be filed
with the real estate mortgages of York County, South Carolina. For purposes of
the foregoing, EXHIBIT B hereto sets forth a description of the real property to
which the Mortgage relates.
4. REPRESENTATIONS AND WARRANTIES. LRGI hereby represents and warrants to
Pennell that: (a) LRGI has full power and authority to execute and deliver this
Fourth Amendment Agreement; (b) this Fourth Amendment Agreement constitutes the
legal, valid and binding obligation of LRGI, enforceable against LRGI in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting enforceability of creditors' rights generally or equitable principles
at the time in effect; (c) the execution, delivery and performance by LRGI of
this Fourth Amendment Agreement have been duly authorized by all requisite
corporate action of LRGI; and (d) the execution and delivery by LRGI of this
Fourth Amendment Agreement and the performance by LRGI of the Amended Note will
not (i) violate any law or regulation binding upon LRGI or the Certificate of
Incorporation or By-laws of LRGI, (ii) violate or constitute
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<PAGE> 3
(with due notice or lapse of time or both) a default under any indenture,
agreement, license or other instrument to which LRGI is a party or by which it
or any of its properties may be bound, (iii) violate any order of any court,
tribunal or governmental agency binding upon LRGI or its properties, (iv) result
in the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of LRGI other than pursuant to the Financing Agreements, or
(v) require any license, consent or approval of any governmental agency or
regulatory authority.
5. MISCELLANEOUS. (a) (a) This Fourth Amendment Agreement shall be governed
by and construed and interpreted in accordance with the laws of the State of New
York without reference to its principles of conflicts of law.
(b) Except as expressly amended hereby, all terms and conditions of the
Financing Agreements and all rights of Pennell and obligations of LRGI
thereunder and under all related documents, shall remain in full force and
effect.
(c) LRGI hereby agrees to pay on demand all costs and expenses
(including without limitation the reasonable fees and expenses of counsel to
Pennell) incurred by Pennell in connection with the negotiation, preparation,
execution and delivery of this Fourth Amendment Agreement and all related
documents.
(d) This Fourth Amendment Agreement may be executed by one or more of
the parties hereto on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Fourth Amendment
Agreement as of the date first above written.
<TABLE>
<S> <C> <C>
IN THE PRESENCE OF: LEXINGTON RUBBER GROUP, INC. (SEAL)
Karen Novak By: Warren Delano
- -------------------------------------------- ------------------------------------------
Witness (as to Lexington Rubber Group, Inc.) Warren Delano
President
Linda Green Hawkins
- --------------------------------------------
Witness (as to Lexington Rubber Group, Inc.)
Phyllis Pennell Paul H. Pennell (SEAL)
- -------------------------------------------- ----------------------------------------------
Witness (as to Paul H. Pennell) Paul H. Pennell
Paula E. Morris
- -------------------------------------------
Witness (as to Paul H. Pennell)
</TABLE>
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<PAGE> 1
EXBT10-8
AGREEMENT
This Agreement dated as of April 30, 2000 (the "Agreement"), among
Lexington Precision Corporation, a Delaware corporation (the "LPC"), Lexington
Rubber Group, Inc., a Delaware corporation formerly known as Lexington
Components, Inc. ("LRG"; LPC and LRG are referred to individually as "Borrower"
and collectively as the "Borrowers"), and Congress Financial Corporation
("Congress").
WHEREAS, Congress and each of the Borrowers have entered into an
Accounts Financing Agreement [Security Agreement] dated as of January 11, 1990,
as amended, and all supplements thereto and related financing and security
agreements (all of the foregoing, as the same have been or may be amended,
replaced, extended, modified, or supplemented, are referred to as the "Financing
Agreements").
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. WAIVER. Subject to paragraph 2 hereof, Congress hereby waives, until
August 1, 2000, any Event of Default resulting solely from the failure of the
LPC to pay any principal or interest due on February 1, 2000, or May 1, 2000, in
respect of (a) LPC's 14% Junior Subordinated Notes due May 1, 2000, (b) LPC's
Junior Subordinated Convertible Increasing Rate Notes due May 1, 2000, and/or
(c) LPC's 12 3/4% Senior Subordinated Notes due February 1, 2000 (the
indebtedness referred to in clauses (a), (b) and (c) is referred to herein as
the "Other Indebtedness").
2. RESCISSION OF WAIVERS. The foregoing waivers shall be automatically
rescinded, without notice to LPC or LRG, in the event that the holder of any
Other Indebtedness or trustee in respect thereof seeks to accelerate the
maturity of any such Other Indebtedness or to enforce or exercise any remedies
in respect thereto.
3. EFFECTIVE DATE.
This Agreement shall be deemed effective as of April 30, 2000.
4. REPRESENTATIONS AND WARRANTIES. Each of the parties represents and
warrants that: (a) the execution, delivery, and performance of this Agreement
have been duly authorized by all requisite action on its part; and (b) this
Agreement has been duly executed and delivered by it and constitutes its legal,
valid, and binding agreement, enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the
enforceability of creditors' rights generally or by general equitable
principles.
5. NO OTHER AMENDMENTS.
Except as set forth herein, all terms and provisions of the Financing
Agreements among Congress, LPC and LRG shall remain in full force and effect.
Except as expressly set forth herein, no other or further amendment, waiver or
consent is implied by, and LPC and LRG shall not be entitled to, any other or
further amendment, waiver or consent by virtue of the provisions of this
Agreement. In addition, without limiting the foregoing, the waivers of Congress
set forth herein do not constitute an
<PAGE> 2
agreement to, and LPC and LRG acknowledge that Congress may decline to, grant
any other or further waivers with respect to the subject matter hereof or any
other matters regardless of whether or not there occurs any change in facts or
circumstances relating to LPC and/or LRG.
6. GENERAL PROVISIONS.
(a) DEFINED TERMS. Capitalized terms used herein, unless otherwise
defined herein, shall have the meaning ascribed thereto in the Financing
Agreements.
(b) COUNTERPARTS. This Agreement may be executed by the parties in any
number of counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. This Agreement may be signed
by facsimile transmission of the relevant signature pages hereof.
(c) GOVERNING LAW. This Agreement shall be governed by, and construed
and interpreted in accordance with, the internal laws of the State of New York.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the parties hereto.
(e) HEADINGS. The paragraph headings of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.
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<PAGE> 3
IN WITNESS WHEREOF, each Borrower and Congress have caused this
Agreement to be duly executed and delivered as of the date first written above.
LEXINGTON PRECISION CORPORATION
By: Michael A. Lubin
------------------------------------
Name: Michael A. Lubin
----------------------------------
Title: Chairman of the Board
---------------------------------
LEXINGTON RUBBER GROUP, INC.
By: Michael A. Lubin
------------------------------------
Name: Michael A. Lubin
----------------------------------
Title: Chairman of the Board
---------------------------------
CONGRESS FINANCIAL CORPORATION
By: Herbert C. Korn
------------------------------------
Name: Herbert C. Korn
----------------------------------
Title: Vice President
---------------------------------
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<PAGE> 1
EXBT10-9
AGREEMENT
This Agreement dated as of April 30, 2000 (the "Agreement"), between
Lexington Precision Corporation, a Delaware corporation (the "LPC"), and The CIT
Group/Equipment Financing, Inc. ("Lender").
WHEREAS, Lender and LPC have entered into a certain Loan and Security
Agreement dated as of March 19, 1997, including Rider A thereto, as amended, and
certain supplements, documents, instruments, and agreements in connection
therewith and LPC has executed certain promissory notes in connection therewith
(all of the foregoing, as amended, modified, and supplemented, being referred to
collectively as the "Loan Documents").
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. WAIVER. Subject to paragraph 2, hereof, the Lender hereby waives,
until August 1, 2000, any Default or Event of Default under any of the Loan
Documents, resulting solely from the failure of LPC to pay any principal or
interest due on February 1, 2000, or May 1, 2000, in respect of (a) LPC's 14%
Junior Subordinated Notes due May 1, 2000, (b) LPC's Junior Subordinated
Convertible Increasing Rate Notes due May 1, 2000, and/or (c) LPC's 12 3/4%
Senior Subordinated Notes due February 1, 2000 (the indebtedness referred to in
clauses (a), (b) and (c) is referred to herein as the "Other Indebtedness").
2. RESCISSION OF WAIVERS. The foregoing waivers shall be automatically
rescinded, without notice to LPC, in the event that the holder of any Other
Indebtedness or trustee in respect thereof seeks to accelerate the maturity of
any such Other Indebtedness or to enforce or exercise any remedies in respect
thereto.
3. EFFECTIVE DATE.
This Agreement shall be deemed effective as of April 30, 2000.
4. REPRESENTATIONS AND WARRANTIES. Each of the parties represents and
warrants that: (a) the execution, delivery, and performance of this Agreement
have been duly authorized by all requisite action on its part; and (b) this
Agreement has been duly executed and delivered by it and constitutes its legal,
valid, and binding agreement, enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the
enforceability of creditors' rights generally or by general equitable
principles.
5. NO OTHER AMENDMENTS.
Except as set forth herein, all terms and provisions of the Loan
Documents among Lender and LPC shall remain in full force and effect. Except as
expressly set forth herein, no other or further amendment, waiver or consent is
implied by, and LPC shall not be entitled to, any other or further amendment,
waiver or consent by virtue of the provisions of this Agreement. In addition,
without limiting the foregoing, the waivers of Lender set forth herein do not
constitute an agreement to, and LPC acknowledges that Lender may decline to,
grant any other or further waivers with respect to the subject
<PAGE> 2
matter hereof or any other matters regardless of whether or not there occurs any
change in facts or circumstances relating to LPC.
6. GENERAL PROVISIONS.
(a) DEFINED TERMS. Capitalized terms used herein, unless otherwise
defined herein, shall have the meaning ascribed thereto in the Loan Documents.
(b) COUNTERPARTS. This Agreement may be executed by the parties in
any number of counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. This Agreement may be signed
by facsimile transmission of the relevant signature pages hereof.
(c) GOVERNING LAW. This Agreement shall be governed by, and
construed and interpreted in accordance with, the internal laws of the State of
New York.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the successors and assigns of the parties hereto.
(e) HEADINGS. The paragraph headings of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.
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<PAGE> 3
IN WITNESS WHEREOF, LPC and Lender have caused this Agreement to be
duly executed and delivered as of the date first written above.
LEXINGTON PRECISION CORPORATION
By: Michael A. Lubin
------------------------------------
Name: Michael A. Lubin
----------------------------------
Title: Chairman of the Board
---------------------------------
THE CIT GROUP/EQUIPMENT FINANCING, INC.
By: Anthony G. Joseph
-------------------------------------
Name: Anthony G. Joseph
-----------------------------------
Title: Vice President
----------------------------------
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<PAGE> 1
EXBT10-10
AGREEMENT
This Agreement dated as of April 30, 2000 (the "Agreement"), among
Lexington Precision Corporation, a Delaware corporation (the "LPC"), Lexington
Rubber Group, Inc., a Delaware corporation formerly known as Lexington
Components, Inc. ("LRG"; LPC and LRG are referred to individually as "Borrower"
and collectively as the "Borrowers"), and Bank One, NA (formerly known as Bank
One, Akron, NA) ("Lender").
WHEREAS, Lender and each of the Borrowers have entered into a certain
Credit Facility and Security Agreement dated as of January 31, 1997, including
Rider A thereto, as amended, modified, and supplemented, and certain mortgages,
security agreements, deeds of trust and other documents, instruments, and
agreements in connection therewith, and the Borrowers have executed certain
promissory notes in connection therewith (all of the foregoing, as amended,
modified, and supplemented, being referred to collectively as the "Loan
Documents").
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. WAIVER. Subject to paragraph 2 hereof, the Lender hereby waives,
until August 1, 2000, any Default or Event of Default under any of the Loan
Documents resulting solely from the failure of the LPC to pay any principal or
interest due on February 1, 2000, or May 1, 2000, in respect of (a) LPC's 14%
Junior Subordinated Notes due May 1, 2000, (b) LPC's Junior Subordinated
Convertible Increasing Rate Notes due May 1, 2000, and/or (c) LPC's 12 3/4%
Senior Subordinated Notes due February 1, 2000 (the indebtedness referred to in
clauses (a), (b) and (c) is referred to herein as the "Other Indebtedness").
2. RESCISSION OF WAIVERS. The foregoing waivers shall be automatically
rescinded, without notice to LPC or LRG, in the event that the holder of any
Other Indebtedness or trustee in respect thereof seeks to accelerate the
maturity of any such Other Indebtedness or to enforce or exercise any remedies
in respect thereto.
3. EFFECTIVE DATE.
This Agreement shall be deemed effective as of April 30, 2000.
4. REPRESENTATIONS AND WARRANTIES. Each of the parties represents and
warrants that: (a) the execution, delivery, and performance of this Agreement
have been duly authorized by all requisite action on its part; and (b) this
Agreement has been duly executed and delivered by it and constitutes its legal,
valid, and binding agreement, enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the
enforceability of creditors' rights generally or by general equitable
principles.
5. NO OTHER AMENDMENTS.
Except as set forth herein, all terms and provisions of the Loan
Documents among Lender, LPC and LRG shall remain in full force and effect.
Except as expressly set forth herein, no other or further amendment, waiver or
consent is implied by, and LPC and LRG shall not be entitled to,
<PAGE> 2
any other or further amendment, waiver or consent by virtue of the provisions of
this Agreement. In addition, without limiting the foregoing, the waivers of
Lender set forth herein do not constitute an agreement to, and LPC and LRG
acknowledge that Lender may decline to, grant any other or further waivers with
respect to the subject matter hereof or any other matters regardless of whether
or not there occurs any change in facts or circumstances relating to LPC and/or
LRG
6. GENERAL PROVISIONS.
(a) DEFINED TERMS. Capitalized terms used herein, unless otherwise
defined herein, shall have the meaning ascribed thereto in the Loan Documents.
(b) COUNTERPARTS. This Agreement may be executed by the parties in any
number of counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. This Agreement may be signed
by facsimile transmission of the relevant signature pages hereof.
(C) GOVERNING LAW. This Agreement shall be governed by, and construed
and interpreted in accordance with, the internal laws of the State of New York.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the parties hereto.
(e) HEADINGS. The paragraph headings of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.
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<PAGE> 3
IN WITNESS WHEREOF, each Borrower and Lender have caused this Agreement
to be duly executed and delivered as of the date first written above.
LEXINGTON PRECISION CORPORATION
By: Michael A. Lubin
------------------------------------
Name: Michael A. Lubin
----------------------------------
Title: Chairman of the Board
---------------------------------
LEXINGTON RUBBER GROUP, INC.
By: Michael A. Lubin
------------------------------------
Name: Michael A. Lubin
----------------------------------
Title: Chairman of the Board
---------------------------------
BANK ONE, NA
By: Rudolf G. Bentlage
------------------------------------
Name: Rudolf G. Bentlage
----------------------------------
Title: Vice President
---------------------------------
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<PAGE> 1
EXBT10-11
May 12, 2000
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:
1. Definitions:
-----------
(a) The definition of "Working Capital" contained in Section
I(m) of the Covenants Supplement to Accounts Financing Agreement, dated January
11, 1990, as amended by the letter agreement re: Amendment to Financing
Agreements, dated August 13, 1998, between LPC and Congress, is hereby deleted
in its entirety and replaced with the following:
"(m) "Working Capital" shall mean, as of December 31, 1999 and
at all times thereafter, as to Borrower, at any time, the amount, if
any, by which (i) the aggregate net book value of all assets of
Borrower which would, in accordance with generally accepted accounting
principles, consistently applied, be classified as current assets at
such time, exceeds (ii) all Indebtedness of Borrower 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, (i) none of the current
portion of long- term Indebtedness of Borrower, determined in
accordance with generally accepted accounting principles consistently
applied, (ii) none of the Obligations of
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<PAGE> 2
Borrower to Congress, (iii) none of the outstanding Indebtedness of
Borrower arising under the CIT Financing Agreements (as such term is
defined in the letter agreement re: Amendment to Financing Agreements,
dated March 30, 1999, by and between Borrower and Congress) and (iv)
none of the outstanding Indebtedness of Borrower and LRG arising under
the Bank One Financing Agreements (as such term is defined in the
letter agreement re: Amendment to Financing Agreements, dated as of
March 10, 1999, by and between Borrower and Congress), shall be
considered current liabilities."
(b) Capitalized terms used herein, unless otherwise defined
herein, shall have the meanings ascribed thereto in the Accounts Agreement and
the other Financing Agreements.
2. 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) Except for the Event of Default referenced in the
Agreement, dated as of April 30, 2000, among LPC, LRG and Congress, no Event of
Default exists or has occurred and is continuing on the date of this Amendment.
(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.
3. CONDITIONS TO EFFECTIVENESS OF AMENDMENT. Anything contained in this
Amendment to the contrary notwithstanding, the terms and provisions of this
Amendment shall only become effective 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 Amendment, together
with an Amendment between LRG and Congress with respect to the LRG Financing
Agreements and the documents and instruments required thereunder (if any) and
the satisfaction of all conditions precedent to the effectiveness thereof, which
shall be in form and substance satisfactory to Congress;
(b) All representations and warranties contained herein, in
the Accounts Agreement and in the other Financing Agreements shall be true and
correct in all material respects; and
-2-
<PAGE> 3
(c) Except for the Event of Default referenced in the
Agreement, dated as of April 30, 2000, among LPC, LRG and Congress, no Event of
Default shall have occurred and no event shall have occurred or condition be
existing which, with notice or passage of time or both, would constitute an
Event of Default.
4. 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.
5. 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.
6. 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: Herbert C. Korn
---------------------------
Title: Vice President
------------------------
AGREED AND ACCEPTED:
LEXINGTON PRECISION CORPORATION
By: Warren Delano
-------------------------
Title: President
-----------------------
-3-
<PAGE> 1
EXBT10-12
May 12, 2000
Lexington Rubber Group, Inc., formerly
known as Lexington Components, Inc.
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 Rubber Group, Inc. ("LRG") 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:
1. Definitions:
-----------
(a) The definition of "Working Capital" contained in Section
I(o) of the Covenants Supplement to Accounts Financing Agreement, dated January
11, 1990, as amended by the letter agreement re: Amendment to Financing
Agreements, dated August 13, 1998, between LRG and Congress, is hereby deleted
in its entirety and replaced with the following:
"(o) "Working Capital" shall mean, as of December 31, 1999 and
at all times thereafter, as to Borrower, at any time, the amount, if
any, by which (i) the aggregate net book value of all assets of
Borrower which would, in accordance with generally accepted accounting
principles, consistently applied, be classified as current assets at
such time, exceeds (ii) all Indebtedness of Borrower 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, (i) none of the current
portion of long- term Indebtedness of Borrower, determined in
accordance with generally accepted
-1-
<PAGE> 2
accounting principles consistently applied, (ii) none of the
Obligations of Borrower to Congress, (iii) none of the outstanding
Indebtedness of LPC arising under the CIT Financing Agreements (as such
term is defined in the letter agreement re: Amendment to Financing
Agreements, dated March 30, 1999, by and between LPC and Congress) and
(iv) none of the outstanding Indebtedness of Borrower and LPC arising
under the Bank One Financing Agreements (as such term is defined in the
letter agreement re: Amendment to Financing Agreements, dated as of
March 10, 1999, by and between Borrower and Congress), shall be
considered current liabilities."
(b) Capitalized terms used herein, unless otherwise defined
herein, shall have the meanings ascribed thereto in the Accounts Agreement and
the other Financing Agreements.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by LRG to Congress pursuant to the Financing Agreements, LRG 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) Except for the Event of Default referenced in the
Agreement, dated as of April 30, 2000, among LPC, LRG and Congress, no Event of
Default exists or has occurred and is continuing on the date of this Amendment.
(b) This Amendment has been duly executed and delivered by LRG
and is in full force and effect as of the date hereof, and the agreements and
obligations of LRG contained herein constitute the legal, valid and binding
obligations of LRG enforceable against LRG in accordance with their terms.
3. CONDITIONS TO EFFECTIVENESS OF AMENDMENT. Anything contained in this
Amendment to the contrary notwithstanding, the terms and provisions of this
Amendment shall only become effective 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 Amendment, together
with an Amendment between LPC and Congress with respect to the LPC Financing
Agreements and the documents and instruments required thereunder (if any) and
the satisfaction of all conditions precedent to the effectiveness thereof, which
shall be in form and substance satisfactory to Congress;
(b) All representations and warranties contained herein, in
the Accounts Agreement and in the other Financing Agreements shall be true and
correct in all material respects; and
-2-
<PAGE> 3
(c) Except for the Event of Default referenced in the
Agreement, dated as of April 30, 2000, among LPC, LRG and Congress, no Event of
Default shall have occurred and no event shall have occurred or condition be
existing which, with notice or passage of time or both, would constitute an
Event of Default.
4. 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.
5. FURTHER ASSURANCES. LRG 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.
6. 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: Herbert C. Korn
---------------------------
Title: Vice President
-------------------------
AGREED AND ACCEPTED:
LEXINGTON RUBBER GROUP, INC.
By: Warren Delano
--------------------------
Title: President
-----------------------
-3-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 77
<SECURITIES> 0
<RECEIVABLES> 23,632
<ALLOWANCES> 0
<INVENTORY> 9,796
<CURRENT-ASSETS> 37,329
<PP&E> 127,597
<DEPRECIATION> 62,558
<TOTAL-ASSETS> 114,050
<CURRENT-LIABILITIES> 117,918
<BONDS> 113
330
0
<COMMON> 1,207
<OTHER-SE> (7,410)
<TOTAL-LIABILITY-AND-EQUITY> 114,050
<SALES> 37,666
<TOTAL-REVENUES> 37,666
<CGS> 31,834
<TOTAL-COSTS> 31,834
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,437
<INCOME-PRETAX> 376
<INCOME-TAX> 113
<INCOME-CONTINUING> 263
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 263
<EPS-BASIC> .05
<EPS-DILUTED> .05
</TABLE>
