EXHIBIT 10.9
PAYOFF AGREEMENT
PAYOFF AGREEMENT (this "Agreement"), dated as of December 18,
2003, by and between NOMURA SPECIAL SITUATIONS INVESTMENT TRUST, a Delaware
trust (the "Holder") (as successor-in-interest to Tri-Links Investment Trust, a
Delaware trust, successor-in-interest to Nomura Holdings America Inc.
("Nomura")), and LEXINGTON PRECISION CORPORATION, a Delaware corporation (the
"Company").
R E C I T A L S:
WHEREAS, the Company and Nomura heretofore entered into that
certain Note Purchase Agreement, dated as of October 27, 1997, as amended from
time to time as described on Exhibit A hereto (the "Note Purchase Agreement")
(unless otherwise defined, capitalized terms used herein without definition
shall have the meanings assigned to them in the Note Purchase Agreement);
WHEREAS, Nomura loaned certain sums to the Company (the
"Loan") pursuant to the Note Purchase Agreement and such Loan is evidenced by a
promissory note dated as of October 27, 1997, as amended from time to time as
described on Exhibit A hereto (the "Note" and, together with the Note Purchase
Agreement and all of the other agreements, documents and instruments executed in
connected therewith, the "Note Documents");
WHEREAS, the Loan matured on April 30, 2002 and, pursuant to
the terms of the Note Documents, the Company is indebted to the Holder in the
principal amount of U.S.$7,500,000 plus accrued unpaid interest and other costs
and expenses (together with the other obligations set forth in the Note
Documents, the "Outstanding Debt");
WHEREAS, the Company has experienced certain financial
difficulties, which make the Company unable to repay the Loan in full at this
time and to comply with certain provisions of the Note Documents; and
WHEREAS, in connection with the Company's overall financial
restructuring plan described on Exhibit B hereto (the "Restructuring Plan"), the
Company has requested the Holder to accept, and the Holder has agreed to accept,
the Payoff Consideration (as defined below) in full and complete satisfaction of
the Outstanding Debt, effective as of the Forgiveness Date (as defined below)
upon satisfaction of the Forgiveness Conditions (as defined below), on the terms
and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the payment of the Payoff
Consideration, the terms and conditions contained in this Agreement, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby covenant and agree as follows:
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1. Payoff and Termination.
(a) As of the date hereof, the Company shall pay or cause
to be paid to the Holder the aggregate sum of U.S. $5,550,000 (plus per diem
interest after October 31, 2002 based on the Prime Rate) in immediately
available funds by wire transfer (the "Payoff Consideration") in full
satisfaction of the Outstanding Debt, effective as of the Forgiveness Date upon
satisfaction of the Forgiveness Conditions, subject to Section 1(c) hereof. Upon
delivery of the Payoff Consideration, the Holder shall deliver to the Company
the executed original Note (or, if not available, a lost note affidavit) and the
Note, the Note Purchase Agreement and the other Note Documents shall be
terminated effective as of the Forgiveness Date upon satisfaction of the
Forgiveness Conditions, subject to Section 1(c) hereof; provided, however, that
Sections 8.1 and 8.10(a) of the Note Purchase Agreement shall survive any such
termination.
(b) Effective as of the first date upon which each of the
Forgiveness Conditions is satisfied (the "Forgiveness Date"), subject to Section
1(c) hereof, the Outstanding Debt shall be deemed fully and completely
satisfied, the Note Documents shall be deemed terminated (except as otherwise
provided in Section 1(a)) and the Company shall be released and discharged from
its obligations with respect to the Outstanding Debt and the Note Documents
(except as otherwise provided in Section 1(a)).
For the purposes of this Agreement, the term "Forgiveness
Conditions" shall mean each of the following:
(i) 124 days shall have elapsed since the date of this
Agreement;
(ii) all of the representations and warranties made by the
Company in Section 2 shall be true and correct as if such
representations and warranties were made on and as of the date hereof
and as of the Forgiveness Date;
(iii) the Company shall have performed and complied with
all of its covenants and obligations contained in this Agreement; and
(iv) either (A) no federal or state bankruptcy,
reorganization or similar proceeding with respect to the Company shall
have been initiated, whether voluntarily or involuntarily, and the
Company shall not have made a general assignment for the benefit of its
creditors under applicable law; (B) if a federal bankruptcy proceeding
with respect to the Company shall have been initiated, whether
voluntarily or involuntarily, and no attempt shall have been made to
recover the Payoff Consideration, a plan of reorganization of the
Company shall have been confirmed by a final order which is not subject
to further appeal or review; or (C) if a federal bankruptcy proceeding
with respect to the Company shall have been initiated, whether
voluntarily or involuntarily, and an attempt shall have been made to
recover the Payoff Consideration,
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(x) such attempt shall have been defeated, (y) a plan of reorganization
of the Company shall have been confirmed by a final order which is not
subject to further appeal or review and (z) the Company shall have
reimbursed the Holder for all costs and expenses of the Holder
(including reasonable legal fees and expenses) incurred in connection
with such proceeding.
(c) Notwithstanding any other provision of this
Agreement, if for any reason at any time the Holder or any of its affiliates is
required by law, rule or regulation, court order or order or mandate of any
governmental authority, or any third party acting under authority conferred by
any of the foregoing, to return, surrender, turn over, relinquish, give up or
disgorge all or any portion of the Payoff Consideration, then, effective
immediately, the Outstanding Debt, the Note Documents and the Company's
obligations with respect thereto shall be fully and completely reinstated and
restored (except to the extent the Holder and its affiliates retain any portion
of the Payoff Consideration).
2. Representations and Warranties of the Company. The
Company hereby represents and warrants to the Holder that on and as of the date
hereof:
(a) The Company has been duly incorporated and is validly
existing in good standing under the laws of Delaware, and has full power and
authority to enter into and perform its obligations under this Agreement and the
Release (as defined below) (together with any other agreements, documents and
instruments executed in connection herewith, the "Payoff Documents"). Each of
the Payoff Documents has been duly authorized and validly executed and delivered
by the Company. Each of the Payoff Documents constitutes a legal, valid, binding
and enforceable agreement of the Company.
(b) The Company is not in violation of its certificate of
incorporation or bylaws or in default under any agreement, indenture, document
or instrument, the effect of which violation or default would have a material
adverse effect on the ability of the Company to perform its obligations under
any of the Payoff Documents.
(c) No authorization, consent or approval of, or filing
with, any court or any public body or authority and no consent or approval of
any third party or parties is necessary on the part of the Company for the
execution, delivery and performance of any of the Payoff Documents or the
consummation by the Company of the transactions contemplated thereby, other than
those consents, approvals or filings which have already been obtained.
(d) There are no actions or proceedings against, or
investigations of, the Company pending, or, to the knowledge of the Company,
threatened, before any court, arbitrator, administrative agency or other
tribunal (i) asserting the invalidity of any of the Payoff Documents or (ii)
seeking to prevent the consummation of the transactions contemplated thereby.
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(e) The Loan is in default and has been in default since
April 30, 2002 and has a remaining unpaid principal balance of U.S. $7,500,000.
The Company has no defenses, offsets or counterclaims to the exercise of any
remedies available to the Holder in respect of such default.
(f) This Agreement is an essential part of the
Restructuring Plan. The Company has provided or made available to the Holder
accurate and complete copies of all documentation in connection with the
Restructuring Plan. No direct or indirect dividend or other distribution in
respect of equity securities of the Company is being made in connection with the
Restructuring Plan, except for payments not in excess of U.S. $106,000 in the
aggregate in respect of dividends on the Company's Series B Preferred Stock. No
payment (excluding any payment in capital stock of the Company) is being or will
be made to Lubin, Delano & Company, or any partner thereof, any member of the
immediate family of any partner of Lubin, Delano & Company or any affiliate of
Lubin, Delano & Company or any partner thereof in connection with the
performance of investment banking or other services in connection with the
Restructuring Plan. The other elements of the Restructuring Plan are being
consummated as of the date of this Agreement.
(g) The Company has no intention nor foresees any need to
become a debtor in any proceeding under Title 11, U.S. Code or any similar
federal or state law for the relief of debtors ("Bankruptcy Law") or to make a
general assignment for the benefit of its creditors under any applicable law.
(h) The Company and its creditors (other than the Holder)
have received substantial benefits from the execution and performance of this
Agreement.
(i) After giving effect to this Agreement and the
consummation of the transactions contemplated hereby, after taking into account
the contingent agreement of the Holder to forgive the unpaid balance of the
Outstanding Debt, subject to Section 1(c) hereof, as of the Forgiveness Date
upon satisfaction of the Forgiveness Conditions, (i) the fair value of the
assets of the Company will exceed its debts and liabilities, subordinated,
contingent or otherwise, (ii) the present fair saleable value of the property of
the Company will be greater than the amount that will be required to pay the
probable liability of its debts and other liabilities, subordinated, contingent
or otherwise, as such debts and other liabilities become absolute and matured,
(iii) the Company will be able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured and (iv) the Company will not have unreasonably small capital with which
to conduct its business in which it is engaged as such business is now conducted
and is proposed to be conducted following the date hereof.
(j) The Company has consulted with counsel and relied
upon counsel's advice in connection with the negotiation and execution of this
Agreement and the other Payoff Documents.
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(k) At the request of the Company and in reliance on this
Agreement and the other Payoff Documents, the Holder has agreed, effective as of
the Forgiveness Date upon satisfaction of the Forgiveness Conditions, subject to
Section 1(c) hereof, to forgive the unpaid balance of the Outstanding Debt.
(l) The Company has no subsidiaries other than Lexington
Rubber Group, Inc. and its wholly-owned subsidiary, Lexington Precision GmbH
("LPG"). LPG is not currently engaged in business operations and has assets of
less than $50,000. LPG does not have any Released Claims (as defined in the
Release).
All representations and warranties made by the Company in this
Section 2 shall survive the consummation of the transactions contemplated by
this Agreement and the other Payoff Documents and/or any termination of this
Agreement or any other Payoff Documents.
3. Representations and Warranties of the Holder. The
Holder hereby represents and warrants to the Company as follows:
(a) The Holder has full power and authority to enter into
and perform its obligations under this Agreement.
(b) This Agreement has been duly authorized and validly
executed and delivered by the Holder. This Agreement constitutes a
legal, valid, binding and enforceable agreement of the Holder.
(c) The Holder is the holder of the Note free and clear
of all liens, pledges and security interests.
All representations and warranties made by the Holder in this
Section 3 shall survive until the earlier of the Forgiveness Date and any
termination of this Agreement.
4. Additional Covenants.
(a) The Company, recognizing that the Holder is changing
its position in reliance on this Agreement, covenants and agrees that:
(i) for a period of 124 days following the date of this
Agreement, it will not, directly or indirectly, file a petition under
any Bankruptcy Law or make a general assignment for the benefit of its
creditors under applicable law; and
(ii) if, at any time after the date hereof, the Company,
directly or indirectly, becomes a debtor in any proceeding under any
Bankruptcy Law or makes a general assignment for the benefit of its
creditors under applicable law: (A) it will not attempt to recover, or
suffer to exist any application or action to recover, any payment
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received by the Holder pursuant to this Agreement or otherwise; (B)
such petition or proceeding (if voluntary), assignment or application
or action shall have been filed, made or brought in bad faith and in
violation of this Agreement, and shall be deemed to have been so filed,
made or brought by the bankruptcy or other applicable court, unless, in
the case of any such voluntary federal bankruptcy petition or
proceeding (but not any petition, proceeding, application or action to
recover any payment received by the Holder pursuant to this Agreement
or otherwise), the Company can establish to the reasonable satisfaction
of the Holder that such petition or proceeding was (x) attributable to
a material adverse change with respect to the Company's financial
condition that was not foreseeable as of the date hereof and (y)
necessary for the survival of the Company (such a petition or
proceeding, a "Qualified Proceeding") (it being understood that, for
the avoidance of doubt, a Qualified Proceeding constitutes a federal
bankruptcy proceeding for purposes of, and subject to, Sections
1(b)(iv)(B) and 1(b)(iv)(C) hereof); (C) it will consent to the
dismissal of any such petition or proceeding (except for any such
Qualified Proceeding) or any proceeding with respect to any such
assignment, application or action; (D) in the case of any such
assignment, it will consent to the discharge of the assignee and the
authorization of the assignee to release the estate to it; and (E) in
addition to any rights the Holder may have under the Payoff Documents,
at law or in equity, the Holder shall have the right (and the Company
will interpose no objection thereto and hereby waives its rights with
respect thereto) to request and receive from the bankruptcy court or
any other court of competent jurisdiction, a dismissal of such
bankruptcy or other proceeding (except for any such Qualified
Proceeding) or such a discharge and release.
(b) Nothing in this Agreement or any of the other Payoff
Documents shall be deemed in any way to limit or restrict any of the Holder's
rights to seek in a bankruptcy court or any other court of competent
jurisdiction any relief the Holder may deem appropriate in the event that a
voluntary or involuntary petition under any Bankruptcy Law is filed by or
against the Company or in the event the Company makes a general assignment for
the benefit of its creditors.
(c) The Company acknowledges and agrees that the
representations, acknowledgments, agreements and warranties in this Agreement
and the other Payoff Documents have been made by the Company as a material
inducement to the Holder to enter into this Agreement, that the Holder is
relying on such representations and warranties, that the Holder is changing its
position in reliance thereon and that the Holder would not enter into this
Agreement without such representations, acknowledgments, agreements and
warranties.
(d) Prior to the Forgiveness Date, if at any time the
Company shall disclose to a third party the existence or forgiveness of debt
owed to the Holder by the Company, then the Company shall also disclose to such
third party the contingent forgiveness of debt described in Sections 1(b) and
1(c) hereof.
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(e) The Company agrees that if it makes a voluntary
bankruptcy filing or otherwise violates its obligations under this Section 4 and
any amount is recovered from the Holder or any of its affiliates in a bankruptcy
or other proceeding involving the Company or any of its creditors, then the
Company shall be obligated to pay the recovered amount to the Holder and all
related costs and expenses of the Holder (including reasonable legal fees and
expenses).
(f) On the date of this Agreement, the Company shall pay
in full the invoice of Cahill Gordon & Reindel for services rendered to the
Holder in connection with this matter.
(g) The Company agrees that, from and after the date
hereof and until the Forgiveness Date, it shall not, directly or indirectly, use
any Remaining Restructuring Plan Proceeds (as defined below) for any purpose
other than to fund the operations of, or to invest in, the Company's and its
subsidiaries' business, make mandatory payments of principal and interest on,
and other payments required in respect of, indebtedness of the Company and its
subsidiaries and to pay dividends on and purchase or redeem shares of the
Company's Series B Preferred Stock in accordance with its Restated Certificate
of Incorporation, as amended. The term "Remaining Restructuring Plan Proceeds"
means: (i) any and all proceeds from the Restructuring Plan that are not used on
or after the date hereof to (x) make mandatory payments of principal of and
interest on indebtedness of the Company, (y) make payments not in excess of U.S.
$106,000 in the aggregate in respect of dividends on the Company's Series B
Preferred Stock or (z) pay related fees and expenses of the Restructuring Plan;
and (ii) any and all amounts available as of the date hereof under the Company's
senior secured revolving line of credit. The Company agrees to confirm in
writing to the Holder its compliance with this Section 4(g), and to provide the
Holder with evidence of such compliance, in each case as the Holder may
reasonably request from time to time.
5. Other Deliveries. Concurrently with the execution of
this Agreement, the Company shall deliver or cause to be delivered to the Holder
(i) a release by the Company and each of its subsidiaries in favor of the Holder
and its affiliates in the form of Exhibit C hereto (the "Release") and (ii) a
legal opinion of counsel for the Company with respect to this Agreement, the
Release and the other Payoff Documents and the transactions contemplated hereby
and thereby, addressed to the Holder, in the form of Exhibit D hereto.
6. Indemnification. The Company agrees to indemnify and
hold harmless the Holder and its affiliates and their respective officers,
directors, stockholders, partners, trustees, employees, agents, representatives
and attorneys (the "Indemnified Persons") from and against any and all actions,
causes of action, suits, losses, liabilities and damages, and all expenses in
connection therewith, as incurred, including, without limitation, reasonable
attorneys' fees and disbursements, incurred in the investigation and defense of
claims and actions, incurred by any Indemnified Persons as a result of any
matter arising out of or relating to this Agreement, any of the other Payoff
Documents, any of the Note Documents,
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any transaction contemplated herein or therein and any past, present or future
relationship between the Holder or any affiliated entity on the one hand and the
Company on the other hand relating to any of the foregoing, except to the extent
that any future actions of the Indemnified Persons are determined to have been
willful misconduct or in bad faith. The Company shall control the investigation
and defense of any such claim or action, at the Company's expense, with counsel
selected by the Company and reasonably acceptable to the Indemnified Persons,
unless (i) the Company and one or more Indemnified Persons are actual or
potential defendants in, or targets of, such claim or action and such
Indemnified Person(s) shall have reasonably concluded that there may be legal
defenses available to such Indemnified Person(s) which are different from or in
addition to those available to the Company or (ii) the Indemnified Persons have
reasonable doubts as to the Company's ability to satisfy in full its
indemnification obligations under this Section 6 with respect to such claim or
action, in either of which cases the Indemnified Persons shall automatically
control the investigation and defense of such claim or action, at the Company's
expense, with counsel selected by the Indemnified Persons and reasonably
acceptable to the Company. At any time when the Company controls the
investigation and defense of any such claim or action, the Indemnified Persons
shall have the right, at their expense, to employ separate counsel (reasonably
acceptable to the Company) in such claim or action and to participate in the
investigation and defense thereof. No compromise or settlement of any such claim
or action may be effected by the Company without the consent of the Indemnified
Persons, which consent shall not be unreasonably withheld, delayed or
conditioned, unless such compromise or settlement (i) provides only for monetary
relief, (ii) includes a complete and unconditional release of the Indemnified
Persons and (iii) does not include any admission of fault or culpability on
behalf of the Indemnified Persons, in which case the consent of the Indemnified
Persons shall not be required.
7. Further Assurances. The parties agree to execute and
deliver such instruments and take such further actions as another party may,
from time to time, reasonably request in order to effectuate the purposes and to
carry out the terms of this Agreement and the other Payoff Documents. The
Company shall pay any costs or expenses incurred by the Holder in connection
with this Section 7, including, without limitation, the Holder's reasonable
legal fees and expenses.
8. Notices. Any notice required or permitted by or in
connection with this Agreement or any of the other Payoff Documents, without
implying the obligation to provide any such notice, shall be in writing and
shall be delivered to the appropriate addresses set forth below or to such other
addresses as may be hereafter specified by written notice. Any such notice shall
be deemed to be effective one (1) day after dispatch if sent by guaranteed
overnight delivery or five (5) days after mailing if sent by first class mail
with postage prepaid. All notices shall be deemed to be effective upon receipt
if accomplished by hand delivery or by facsimile (with answerback confirmation).
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If to the Holder:
Nomura Special Situations Investment Trust
Two World Financial Center, Building B
New York, New York 10281
Attention: Stuart Simon
Facsimile: (212) 667-1861
With a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: Robert Usadi
Facsimile: (212) 269-5420
If to the Company:
Lexington Precision Corporation
767 Third Avenue
New York, New York 10017
Attention: President
Facsimile: (212) 319-4659
With a copy to:
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Attention: Marcia L. Goldstein
Facsimile: (212) 310-8007
9. Choice of Law. The laws of the State of New York
shall govern the rights and obligations of the parties to this Agreement, and
the interpretation and construction and enforceability hereof, and any and all
issues relating to the transactions contemplated hereby, without regard to
conflicts of law principles.
10. Assignment. This Agreement may not be assigned by the
Company without the written consent of the Holder, which consent may be granted
or withheld in the Holder's sole and absolute discretion, and any such
assignment by the Company without the Holder's consent shall be null and void
and of no effect. This Agreement may be freely assigned by the Holder without
the consent of any other party hereto.
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11. Entire Agreement; Amendments. This Agreement
(including the exhibits hereto) and the other Payoff Documents constitute the
final and entire agreement and understanding of the parties with respect to the
payoff of the Loan, and any terms and conditions not set forth in this Agreement
and the other Payoff Documents are not a part of the agreement and understanding
of the parties with respect to the payoff of the Loan and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral agreements
of the parties. No variation, modification, or changes hereof shall be binding
on any party hereto unless set forth in a document executed by all parties
hereto.
12. Severability. If any paragraph, section, sentence,
clause or phrase contained in this Agreement shall become illegal, null or void
or against public policy, for any reason, or shall be held by any court of
competent jurisdiction to be illegal, null or void or against public policy, the
remaining paragraphs, sections, sentences, clauses or phrases contained in this
Agreement shall not be affected thereby to the extent that the intent of the
parties hereto can be carried out absent such provision.
13. No Third Party Beneficiary. The parties hereto do not
intend to create rights in or to grant remedies to any third party as a
beneficiary of this Agreement or of any duty, covenant, obligation or
undertaking established herein.
14. Confidentiality; Public Disclosure. The Company shall
not make any disclosure to any person (other than its legal or other advisors on
a need-to-know basis and its lenders) or to the public at large (by press
release, public filing or otherwise), without the Holder's prior written
consent, with respect to the name or identity of the Holder or any of its
affiliates, the nature or amount of the Payoff Consideration or any other
material term of this Agreement, unless required by applicable law, rule or
regulation, court order or order of any governmental authority, or any third
party acting under authority conferred by any of the foregoing, in which case
the Company shall advise the Holder as soon as possible in advance of making
such disclosure so that the Holder may seek any appropriate protective order or
other remedy. Subject to the foregoing, the Company shall disclose only such
information that, in the opinion of its legal counsel, it is so required to
disclose. In connection with any such disclosure, the Company shall use its best
efforts to obtain reliable assurance that any available confidential treatment
will be accorded any such information, except in connection with any disclosure
made in any filing by the Company or its affiliates pursuant to the Securities
Exchange Act of 1934, as amended, or any rules and regulations thereunder.
15. Counterparts. This Agreement may be executed in
separate counterparts, each of which shall be an enforceable document, but all
of which together shall constitute one and the same document. The delivery of an
executed counterpart of this Agreement by facsimile shall have the same force
and effect as the delivery of an original executed counterpart of this
Agreement.
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16. Trial by Jury, Etc. EACH PARTY HERETO, TO THE FULLEST
EXTENT THAT IT MAY LAWFULLY DO SO, HEREBY WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY ANY PARTY
HERETO WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT SHALL BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN NEW YORK COUNTY,
NEW YORK, NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW, AND EACH PARTY HERETO WAIVES ANY OBJECTION WHICH IT MAY NOW
HAVE OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF ANY SUCH COURT IN ANY ACTION, SUIT OR PROCEEDING.
17. Rule of Construction. The parties acknowledge that
each party and its legal counsel have reviewed this Agreement (including the
exhibits hereto) and the parties hereby agree that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement
(including the exhibits hereto) or any amendments hereof.
[Signature page follows]
IN WITNESS WHEREOF, the parties have executed this Payoff
Agreement as of the date first written above.
NOMURA SPECIAL SITUATIONS INVESTMENT TRUST
By: Wilmington Trust Company
as Owner Trustee
By: /s/ Jeanne M. Oller
------------------------------------------
Name: Jeanne M. Oller
Title: Financial Services Officer
LEXINGTON PRECISION CORPORATION
By: /s/ Michael A. Lubin
-------------------------------------------
Name: Michael A. Lubin
Title: Chairman
EXHIBIT A
NOTE DOCUMENTS
1. Note Purchase Agreement, dated as of October 27, 1997, between
Lexington Precision Corporation and Nomura Holding America Inc.
2. 10-1/2% Senior Unsecured Note due February 1, 2000, dated October 27,
1997, issued by Lexington Precision Corporation in favor of Nomura
Holding America Inc.
3. Note Amendment No. 1, dated as of January 28, 2000, between Lexington
Precision Corporation and Tri-Links Investment Trust (as
successor-in-trust to Nomura Holding America Inc.).
4. Agreement, dated as of January 31, 2000, between Lexington Precision
Corporation and Tri-Links Investment Trust (as successor-in-trust to
Nomura Holding America Inc.).
5. Note Amendment No. 2, dated as of April 30, 2000, between Lexington
Precision Corporation and Tri-Links Investment Trust (as
successor-in-trust to Nomura Holding America Inc.).
6. Note Amendment No. 3, dated as of July 31, 2000, between Lexington
Precision Corporation and Tri-Links Investment Trust (as
successor-in-trust to Nomura Holding America Inc.).
7. Note Amendment No. 4, dated as of October 31, 2000, between Lexington
Precision Corporation and Tri-Links Investment Trust (as
successor-in-trust to Nomura Holding America Inc.).
8. Note Amendment No. 5, dated as of January 31, 2001, between Lexington
Precision Corporation and Tri-Links Investment Trust (as
successor-in-trust to Nomura Holding America Inc.).
9. Note Amendment No. 6, dated as of April 30, 2001, between Lexington
Precision Corporation and Tri-Links Investment Trust (as
successor-in-trust to Nomura Holding America Inc.).
10. Note Amendment No. 7, dated as of July 31, 2001, between Lexington
Precision Corporation and Tri-Links Investment Trust (as
successor-in-trust to Nomura Holding America Inc.).
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11. Note Amendment No. 8, dated as of October 31, 2001, between Lexington
Precision Corporation and Nomura Special Situations Investment Trust
(as successor-in-trust to Nomura Holding America Inc.).
12. Note Amendment No. 9, dated as of January 31, 2002, between Lexington
Precision Corporation and Tri-Links Investment Trust (as
successor-in-trust to Nomura Holding America Inc.).
EXHIBIT B
RESTRUCTURING PLAN
[See Attached]
LEXINGTON PRECISION CORPORATION
SUMMARY OF TERMS OF
PURCHASE OF SENIOR UNSECURED NOTE
PRINCIPAL OUTSTANDING: $ 7,500,000.00
PURCHASE PRICE: $ 5,810,089.73
LEXINGTON PRECISION CORPORATION
SUMMARY OF TERMS OF
13% JUNIOR SUBORDINATED NOTES
PRINCIPAL AMOUNT: $ 346,667
MATURITY: November 1, 2009.
INTEREST RATE: 13% per annum.
INTEREST PAYMENT DATES: February 1, May 1, August 1, and
November 1.
WARRANTS TO PURCHASE COMMON STOCK: 3,467 Warrants, each of which will entitle
the holder to purchase one share of common
stock at a purchase price of $3.50 per
share at any time during the period August
1, 2005, through August 1, 2009. The
Warrants will be detachable from the New
Junior Subordinated Notes at any time
after July 31, 2005. Prior to that time,
the New Junior Subordinated Notes and the
Warrants will be transferable only as a
unit.
OPTIONAL REDEMPTIONS: At any time, at par plus accrued interest.
COMMON STOCK TO BE ISSUED TO HOLDERS OF OLD JUNIOR SUBORDINATED NOTES:
ACCRUED INTEREST TO BE CONVERTED: $ 235,469.63
============
CONVERSION PRICE: $ 2.27 per share
============
COMMON SHARES TO BE ISSUED: 103,731 shares
============
LEXINGTON PRECISION CORPORATION
SUMMARY OF TERMS OF
ABLECO SECURED TERM LOAN (REAL PROPERTY)
AMOUNT: $11,500,000.00
BORROWERS: Lexington Precision Corporation and Lexington Rubber
Group, Inc.
LENDER(S): Ableco Finance LLC and/or an affiliate thereof, and
participants.
AMORTIZATION: Equal monthly payments of $95,833.33 with a balloon
payment due at maturity.
SECURITY: First lien on all real property and a second lien on
all other assets, tangible and intangible.
INTEREST RATE: Four percent (4.0%) over the Prime Rate publicly
announced by a major commercial bank selected by
Lender (the "Prime Rate"), but not less than eight
and one quarter percent (8.25%) per annum.
FUNDING FEE: $215,625 payable at the closing and on each
anniversary of the closing.
CONTRACT TERM: Four years from the date of closing. There shall be
no early termination fee associated with this
transaction, provided the loan is repaid in full
Optional prepayments will be permitted in minimum
increments of $100,000.
COVENANTS: Financial covenants (including minimum EBITDA,
maximum secured debt/EBITDA, and minimum fixed charge
coverage) and other affirmative and negative
covenants customary for similar transactions.
MINIMUM AVAILABILITY: Borrower shall have excess availability under the
revolving credit facility at closing of not less than
$5,500,000 after giving effect to all transactions
related to closing, Including all related fees and
expenses. Accounts payable must be in a condition
satisfactory to Lender.
LEXINGTON PRECISION CORPORATION
SUMMARY OF TERMS OF
CONGRESS/CIT REVOLVING CREDIT FACILITY
Amount: $23,500,000.00
Borrowers: Lexington Precision Corporation and Lexington Rubber
Group, Inc.
Lenders: Congress Financial Corporation and CIT Business
Credit, Inc.
Availability Formulae:
Accounts Receivable: 88% of eligible domestic accounts receivable and 80%
of eligible foreign accounts receivable.
Inventory: 65% of eligible inventory.
Security: First lien on all assets other than real property.
Interest Rate: 3.25% over LIBOR or 1 % over the Prime Rate.
Funding Fee: $352,500 payable at closing.
Contract Term: June 30, 2006.
Covenants; Financial covenants (including minimum net worth,
minimum EBITDA, and minimum fixed charge coverage)
and other affirmative and negative covenants
customary for similar transactions.
Minimum Availability: Borrower shall have excess availability under the
revolving credit facility of not less than $5,500,000
at closing after giving effect to all transactions
related to closing, including all related fees and
expenses and not less than $3,000,000 thereafter.
LEXINGTON PRECISION CORPORATION
SUMMARY OF TERMS OF
CONGRESS/CIT SECURED TERM LOAN (EQUIPMENT)
Amount: $13,500,000.00
Borrowers: Lexington Precision Corporation and Lexington Rubber
Group. Inc.
Lenders: Congress Financial Corporation and CIT Business
Credit, Inc.
Amortization: Equal monthly payments of $300,000 with a balloon
payment due at maturity.
Security: First lien on all assets other than real property.
Interest Rate: 3.75% over LIBOR.
Funding Fee: $202,500 payable at closing.
Maturity: June 30, 2006.
Covenants: Financial covenants (including minimum net worth,
minimum EBITDA, and minimum fixed charge coverage)
and other affirmative and negative covenants
customary for similar transactions.
Minimum Availability: Borrower shall have excess availability under the
revolving credit facility of not less than $5,500,000
at closing after giving effect to all transactions
related to closing, including all related fees and
expenses, and not less than $3,000,000 thereafter.
LEXINGTON PRECISION CORPORATION
SUMMARY OF TERMS OF
12% SENIOR SUBORDINATED NOTES
Maturity Date: August 1, 2009
Principal Amount: $42,515,084.63
Interest Rate: 12% per annum.
Interest Payments: Quarterly on each February 1, May 1, August 1, and
November 1.
Optional Redemption: At any time, at par plus accrued interest.
Participation Fee: None.
Warrants: 425,151 Warrants, each of which will entitle the
holder to purchase one share of common stock at a
purchase price of $3.50 per share at any time during
the period August 1, 2005, through August 1, 2009.
The Warrants will be detachable from the New Senior
Subordinated Notes at any time after July 31, 2005.
Prior to that time, the New Senior Subordinated Notes
and the Warrants will be transferable only as a unit.
Covenants: Limitations on the incurrence of debt, payment of
cash dividends, and repurchase of capital stock.
LEXINGTON PRECISION CORPORATION
PROJECTED SOURCES AND USES OF FUNDS AT CLOSING
AS OF DECEMBER 18, 2003
PROJECTED SOURCES OF FUNDS:
LOANS RECEIVED:
Projected Congress Financial revolving loans 12,815,684
Congress Financial term loans 13,500,000
Ableco term loan 11,500,000
----------
Total projected sources of funds 37,815,684
==========
PROJECTED USES OF FUNDS:
LOANS PAID:
Projected Congress Financial revolving loans 16,800,000
Congress Financial term loans 7,065,791
Bank One term loans 4,664,110
CIT/Equipment Financing term loans 498,227
Rock Hill, SC, real estate loan 901,241
Senior unsecured note 5,810,090
----------
35,739,459
==========
PROJECTED FEES AND EXPENSES PAID:
Congress Financial 555,000
Ableco 215,625
Projected other fees and expenses 500,000
----------
1,270,625
----------
PROJECTED REDUCTION IN ACCOUNTS PAYABLE 700,000
----------
PREFERRED DIVIDENDS PAID 105,600
----------
Total projected uses of funds 37,815,684
==========
EXHIBIT C
FORM OF RELEASE
This Release (this "Release") is made as of December ___,
2003, by Lexington Precision Corporation, a Delaware corporation (the
"Company"), and Lexington Rubber Group, Inc., a wholly-owned subsidiary of the
Company (the "Subsidiary"), in favor of Nomura Special Situations Investment
Trust ("NSSIT") (as successor-in-interest to Tri-Links Investment Trust,
successor-in-interest to Nomura Holdings America Inc.), and each of the persons
and entities identified below as the "Released Parties".
WHEREAS, the Company and NSSIT are entering into that certain
Payoff Agreement, dated as of the date hereof (the "Payoff Agreement"), pursuant
to which NSSIT shall agree to accept certain sums in satisfaction of certain
outstanding debts owed by the Company to NSSIT on certain terms and subject to
certain conditions; and
WHEREAS, the execution and delivery of this Release by each of
the Company and the Subsidiary is a condition to NSSIT entering into the Payoff
Agreement.
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, each of the Company and
the Subsidiary hereby agrees as follows:
1. Release of Released Parties. Each of the Company and
the Subsidiary for itself and any parent, subsidiary and/or affiliated companies
and entities and the stockholders, trustees, officers, directors, partners,
members, employees, agents, representatives and attorneys of all of the
foregoing and their respective heirs, executors, administrators, successors,
predecessors, legal representatives and assigns (as hereinafter defined) and all
persons claiming by, through or under them or any of them (all hereinafter
collectively referred to as the "Releasing Parties"), do hereby remise, release,
acquit and forever discharge NSSIT and each of its parent, subsidiary and
affiliated companies and entities and the stockholders, trustees, officers,
directors, partners, members, employees, agents, accountants, representatives
and attorneys of all of the foregoing and their respective heirs, executors,
administrators, successors, predecessors, legal representatives and assigns,
including, without limitation, Nomura Holding America Inc., Tri-Links Investment
Trust and Long Drive Management Trust, as Investment Advisor to certain of the
other Released Parties (all hereinafter collectively referred to as the
"Released Parties"), of, from and against any and all manner of actions, causes
of action, choses in action, suits, debts, dues, sums of money, compensation,
accounts, rentals, commissions, reckonings, bonds, bills, specialties,
covenants, rights, contracts, controversies, agreements, promises, costs,
damages, judgments, executions, claims and demands whatsoever, whether known or
unknown, foreseen or unforeseen (regardless of by whom raised), in law or in
equity, which the Releasing Parties, and/or any of them, and/or anyone claiming
by, through or under any of the Releasing Parties and/or any other person or
entity, now have, ever had or may ever have from the beginning of time against
the Released Parties (directly or indirectly) or any of them, singly or in any
combination, on account of, arising out of, related to or in connection with any
thing, cause, matter,
-2-
transaction, act or omission of any nature whatsoever of, or involving any of
the Released Parties (i) in the case of matters on account of, arising out of,
or in connection with the Payoff Agreement, the Outstanding Debt (as defined in
the Payoff Agreement) or the Note Documents (as defined in the Payoff
Agreement), from the beginning of time through the end of time, other than with
respect to the Company's rights to enforce the Payoff Agreement and the Lost
Note Agreement dated as of December 18, 2003 by NSSIT in favor of the Company,
and (ii) in the case of all other matters, from the beginning of time through
the date hereof (collectively, the "Released Claims").
2. Covenant Not to Sue. Each of the Company and the
Subsidiary hereby covenants and agrees, for and on behalf of itself and the
Releasing Parties, that it shall forever refrain, and is hereby estopped, from
instituting, prosecuting, asserting or otherwise pursuing or pressing against
any Released Parties any of the Released Claims.
3. Representations and Warranties. Each of the Company
and the Subsidiary jointly and severally represent and warrant that as of the
date hereof:
3.1. Organization. Each of the Company and the Subsidiary
(i) is a duly incorporated and validly existing entity in good standing under
the laws of the jurisdiction of its incorporation, (ii) has the requisite
corporate power and authority to carry on its business as now being conducted,
and (iii) has the requisite corporate power to execute and deliver, and perform
its obligations under, this Release.
3.2. Authorization. The execution and delivery by the
Company and the Subsidiary of this Release and the performance of their
respective obligations hereunder (i) have been duly authorized by all requisite
corporate and stockholder action, (ii) will not violate any provision of any
applicable legal requirements, any order, writ, decree, injunction or demand of
any court or other governmental authority binding upon any of them, any of their
respective organizational documents or any indenture or agreement or other
instrument to which any of them is a party or by which any of them is bound and
(iii) will not be in conflict with, result in a breach of, or constitute (with
due notice or lapse of time or both) a default under, or result in the creation
or imposition of any lien of any nature whatsoever upon any of their respective
property or assets pursuant to, any indenture or agreement or instrument.
Neither the Company nor the Subsidiary is required to obtain any consent,
approval or authorization from or to file any declaration or statement with, any
governmental authority or other agency in connection with or as a condition to
the execution, delivery or performance of this Release. This Release has been
duly authorized, executed and delivered by each of the Company and the
Subsidiary.
3.3. Enforceability. This Release is a legal, valid and
binding obligation of the Company and the Subsidiary, enforceable against each
of the Company and the Subsidiary in accordance with its terms.
4. Governing Law; Submission to Jurisdiction. This
Release shall be construed in accordance with and governed by the substantive
laws of the State of New York, without reference to conflict of laws principles.
Any legal suit, action or proceeding arising out of or relating to this Release
shall be instituted in any federal or state court in New York County, New York,
pursuant to section 5-1402 of the New York general obligations law and each of
the
-3-
Company and the Subsidiary waives any objection that it may now or hereafter
have to the laying of venue of any such suit, action or proceeding, and each of
the Company and the Subsidiary hereby irrevocably submits to the sole and
exclusive jurisdiction of any such court in any such action, suit or proceeding.
5. Integration; Amendment. This Release constitutes the
sole agreement of the parties with respect to the subject matter hereof and
supersedes all oral negotiations and prior writings with respect to the subject
matter hereof. This Release may not be modified or amended except in a writing
executed by the Company, the Subsidiary and NSSIT.
6. Successors and Assigns. This Release (i) shall be
binding upon each of the Company and the Subsidiary and, where applicable, their
respective heirs, executors, administrators, successors and permitted assigns,
and (ii) shall inure to the benefit of the Released Parties and, where
applicable, their respective heirs, executors, administrators, successors and
assigns.
7. Severability and Consistency. The illegality,
unenforceability or inconsistency of any provisions of this Release shall not in
any way affect or impair the legality, enforceability or consistency of the
remaining provisions of this Release or any instrument or agreement executed in
connection herewith.
8. Enforcement Costs. The Releasing Parties shall pay
all costs, charges and expenses, including reasonable attorneys' fees and
disbursements, that may be incurred by any of the Released Parties in enforcing
the covenants, agreements, obligations and liabilities of the Company and the
Subsidiary under this Release.
9. Counterparts. This Release may be executed in any
number of counterparts and by the different parties on separate counterparts.
Each such counterpart shall be deemed an original, but all such counterparts
shall together constitute one and the same agreement.
[Signature Page Follows]
-4-
IN WITNESS WHEREOF, each of the Company and the Subsidiary has
executed this Release on the day and year first above written.
LEXINGTON PRECISION CORPORATION
By: ____________________________________
Name:
Title:
LEXINGTON RUBBER GROUP, INC.
By: ____________________________________
Name:
Title:
Acknowledged:
NOMURA SPECIAL SITUATIONS
INVESTMENT TRUST
By: Wilmington Trust Company
as Owner Trustee
By: ____________________________________
Name:
Title:
-1-
EXHIBIT D
FORM OF OPINION OF COUNSEL
December __, 2003
Nomura Special Situations Investment Trust
Two World Financial Center
New York, New York 10281
Ladies and Gentlemen:
As special counsel to Lexington Precision Corporation, a
Delaware corporation ("Company"), and Lexington Rubber Group, Inc., a Delaware
corporation (the "Subsidiary"), we are furnishing this opinion to you pursuant
to Section 5 of the Payoff Agreement, dated as of December __, 2003, among
Nomura Special Situations Investment Trust ("Nomura"), the Company and the
Subsidiary (the "Payoff Agreement"). Unless otherwise defined herein,
capitalized terms used herein have the meanings set forth in the Payoff
Agreement.
In connection with this opinion, we have examined, among other
documents, copies of the Payoff Agreement and the Release dated as of the date
hereof by each of the Company and of the Subsidiary in favor of Nomura (the
"Release"; the Payoff Agreement and the Release are referred to herein
collectively as the "Payoff Documents"). Subject to the assumptions and
qualifications contained herein, we also have examined originals or copies,
certified or otherwise identified to our satisfaction of such corporate records
of the Company and the Subsidiary, agreements and such other instruments and
certificates of public or governmental officials and of officers and
representatives of the Company and the Subsidiary, and made such investigations
of law, as we have deemed necessary or appropriate as a basis for the opinions
expressed below. We have relied as to factual matters upon representations and
certificates of the Company and the Subsidiary and their respective officers. We
have not independently investigated or verified the facts represented in such
certificates and do not opine as to the accuracy of any such facts.
In rendering the following opinions, we have assumed, without
investigation, that the representations and warranties as to factual matters of
each of the Company and the Subsidiary in the Agreement are true and correct. In
addition, we have assumed, without investigation, the authenticity of any
document or instrument submitted to us as original, the conformity to the
originals of any document or instrument submitted to us as a copy, the
authenticity of the originals of such latter documents, the legal capacity of
natural persons and the genuineness of all signatures on such originals or
copies.
The phrase "to our knowledge", when used herein, means that
our opinion is based solely on matters within the actual present knowledge of
the attorneys in this firm who have performed substantive legal services on
behalf of the Company in connection with the Payoff Agreement derived from
inquiry of the officers of the Company or the Subsidiary (without any
independent investigation) and reviewing certificates of such officers.
-2-
We express no opinion herein as to (i) the waiver of
inconvenient forum or any claim that venue is improper or provisions relating to
subject matter jurisdiction of the courts set forth in any of the Payoff
Documents, (ii) the enforceability of the Payoff Documents, (iii) any laws
regarding fraudulent transfers or conveyances, state securities or blue sky
laws, rules or regulations, or ERISA or tax laws, rules and regulations. We
express no opinion herein with respect to any documents or instruments other
than the Payoff Documents.
With respect to the opinions set forth in paragraph 1 below,
we have relied solely on certificates of good standing or other certificates
from the Secretary of State of the State of Delaware.
Members of our firm involved in the preparation of this opinion are
licensed to practice law in the State of New York and, in rendering the
following opinions, do not purport to be experts on, or to express an opinion
herein concerning, any law other than the laws of the State of New York, the
General Corporation Law of the State of Delaware and the federal law of the
United States.
Based upon and subject to the foregoing and the other assumptions and
qualifications contained herein, we are of the opinion that:
B. Each of the Company and the Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware.
C. Each of the Company and the Subsidiary has the corporate power
and authority to execute, deliver and perform the Payoff Documents to which it
is party and has taken all necessary corporate action to authorize the
execution, delivery and performance by it of each of the Payoff Documents to
which it is a party.
D. Each of the Company and the Subsidiary has duly executed and
delivered each of the Payoff Documents to which it is party.
E. The execution, delivery and performance by the Company and the
Subsidiary of the Payoff Documents to which it is a party do not violate (i) any
provision of the Restated Certificate of Incorporation, as amended, of the
Company, the Certificate of Incorporation, as amended, of the Subsidiary or
By-laws of the Company or the Subsidiary, or (ii) those agreements set forth on
attached Schedule 1.
F. No approval, consent, authorization or order of, or filing
with, any governmental authority of the United States of America or the State of
New York is required on the part of the Company or the Subsidiary for the
execution or delivery by the Company or the Subsidiary of the Payoff Documents
to which it is a party, except for filing of a report under the Securities
Exchange Act of 1934, as amended.
G. To our knowledge, no legal or governmental proceedings are
pending or threatened against the Company or the Subsidiary or any of their
respective properties or assets that seeks to enjoin, prevent or otherwise
challenge the consummation of the transactions contemplated by the Payoff
Documents.
-3-
This opinion is provided to you pursuant to the Payoff
Agreement and may not be furnished or relied upon by any other Person or for any
purpose other than in connection with the transactions contemplated by the
Payoff Agreement without our prior written consent in each instance. The
opinions expressed herein are rendered as of the date hereof, and we disclaim
any undertaking to advise you of changes in law or fact which may affect the
continued correctness of any of our opinions as of a later date.
Very truly yours,
Schedule 1
Contracts
Each of the following agreements as in effect on the date hereof:
1. Indenture, dated as of December __, 2003, between Lexington Precision
Corporation ("LPC"), as issuer, and Wilmington Trust Company, as
trustee, with respect to the 12% Senior Subordinated Notes due August
1, 2009 issued by LPC (the "Senior Subordinated Notes").
2. 13% Junior Subordinated Note, dated as of December __, 2003, by LPC
payable to Michael A. Lubin in the original principal amount of
$347,667.
3. Amended and Restated Loan and Security Agreement dated as of December
__, 2003, among LPC, Lexington Rubber Group, Inc. ("LRG"), the lenders
as are or may become parties thereto ("Lenders"), and Congress
Financial Corporation, as Administrative Agent for the Lenders, and The
CIT Group/Commercial Financing, Inc., as co-agent for the Lenders.
4. Loan and Security Agreement, dated as of December __, 2003, among LPC,
LRG, the lenders as are or may become parties thereto ("Lenders") and
Ableco Finance LLC, as Administrative Agent for the Lenders.