1
January 31, 1995
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 Components, Inc. ("LCI") and Congress Financial
Corporation ("Congress"), including, but not limited to, an Accounts Financing
Agreement [Security Agreement], as amended (the "Accounts Agreement"), and all
supplements thereto and all other related financing and security agreements
(collectively, all of the foregoing, as the same have heretofore or
contemporaneously been or may be hereafter, amended, replaced, extended,
modified or supplemented, the "Financing Agreements").
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) Additional Definitions. As used herein or in any of
the other Financing Agreements, the following terms shall have the respective
meanings given to them below and the Accounts Agreement (including all
supplements thereto) shall be deemed and is hereby amended to include, in
addition and not in limitation, each of the following definitions:
"Adjusted Eurodollar Rate" shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded
upwards, if necessary, to the next one-sixteenth (1/16) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for such Interest Period by (b)
a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For
purposes hereof, "Reserve Percentage" shall mean the reserve percentage,
expressed as a decimal, prescribed by any United States or foreign banking
authority for determining the reserve requirement which is or would be
applicable to deposits of United States dollars in a non-United States or an
international banking office of Reference Bank used to fund a Eurodollar Rate
Loan or any Eurodollar Rate Loan made with the proceeds of such deposit,
whether or not the Reference Bank actually holds or has made any such deposits
or loans. The Adjusted Eurodollar Rate shall be adjusted on and as of the
effective day of any change in the Reserve Percentage.
2
"Business Day" or "business day" shall mean (a) for the Prime
Rate Loans, any day other than a Saturday, Sunday, or other day on which
commercial banks are authorized or required to close under the laws of the
State of New York or the Commonwealth of Pennsylvania, and a day on which the
Reference Bank and Congress are open for the transaction of business, and (b)
for all Eurodollar Rate Loans, any such day as described in (a) above in this
definition, excluding any day on which banks are closed for dealings in dollar
deposits in the London interbank market or other applicable Eurodollar Rate
market.
"Eurodollar Rate Loans" shall mean any Loans or portion
thereof on which interest is payable based on the Adjusted Eurodollar Rate in
accordance with the terms hereof.
"Eurodollar Rate" shall mean with respect to the Interest
Period for a Eurodollar Rate Loan, the interest rate per annum equal to the
arithmetic average of the rates of interest per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%) percent) at which
Reference Bank is offered deposits of United States dollars in the London
interbank market (or other Eurodollar Rate market selected by LCI and approved
by Congress) on or about 9:00 a.m. (New York time) two (2) Business Days prior
to the commencement of such Interest Period in amounts substantially equal to
the principal amount of the Eurodollar Rate Loans requested by and available to
LCI in accordance with this Agreement, with a maturity of comparable duration
to the Interest Period selected by LCI.
"Interest Period" shall mean for any Eurodollar Rate Loan, a
period of approximately one (1), two (2), or three (3) months duration as LCI
may elect, the exact duration to be determined in accordance with the customary
practice in the applicable Eurodollar Rate market; provided, that, LCI may not
elect an Interest Period which will end after the last day of the then-current
term of the Financing Agreements or after the effective date of any notice of
termination given under the Financing Agreements.
"Interest Rate" shall mean, as to Prime Rate Loans, a rate of
one (1%) percent per annum in excess of the Prime Rate and, as to Eurodollar
Rate Loans, a rate of three and one-quarter (3 1/4%) percent per annum in
excess of the Adjusted Eurodollar Rate (based on the Eurodollar Rate applicable
for the Interest Period selected by LCI as in effect three (3) Business Days
after the date of receipt by Congress of the request of LCI for such Eurodollar
Rate Loans in accordance with the terms hereof, whether such rate is higher or
lower than any rate previously quoted to LCI); provided, that, Interest Rate
shall mean the rate of three (3%) percent per annum in excess of the Prime Rate
as to Prime Rate Loans and the rate of five and one quarter (5 1/4%) percent
per annum in excess of the Adjusted Eurodollar Rate as to
-2-
3
Eurodollar Rate Loans, at Congress' option, without notice, (a) for the period
on and after the effective date of termination or non-renewal hereof, or the
date of the occurrence of any Event of Default, and for so long as such Event
of Default is continuing as determined by Congress and until such time as all
Obligations are indefeasibly paid in full (notwithstanding entry of any
judgment against LCI) and (b) on the Revolving Loans at any time outstanding in
excess of the amounts available to LCI under the Accounts Agreement and
supplements thereto, which excess(es) continue to exist or arise after three
(3) days' telephonic or written notice to LCI of any such excess(es) (whether
or not such excess(es), arise or are made with or without Congress' knowledge
or consent and whether made before or after an Event of Default); provided,
further, that, the higher Interest Rate under the immediately preceding proviso
shall be inapplicable in the case of any excess(es) described in clause (b)
thereof if and to the extent that Congress shall, at Congress' option, have
agreed not to charge the higher Interest Rate otherwise permitted to be charged
under such proviso, as evidenced by a writing expressly so stating and signed
by Congress.
"Loans" shall mean the Revolving Loans and the Term Loans.
"Participant" shall mean any person which at any time
participates with Congress in respect of the Loans, the Credits or other
Obligations or any portion thereof.
"Prime Rate Loans" shall mean any Loans or portions thereof on
which interest is payable based on the Prime Rate in accordance with the terms
thereof.
"Reference Bank" shall mean CoreStates Bank, N.A., or such
other bank as Lender may from time to time designate.
"Revolving Loans" shall mean the loans now or hereafter made
by Congress to or for the benefit of LCI on a revolving basis (involving
advances, repayments and readvances) as set forth in Section 2.1 of the
Accounts Agreement and Paragraph 3 of the letter agreement re: Inventory Loans,
dated March 23, 1990, by LCI, in favor of Congress.
"Term Loans" shall mean the term loans made by Congress to LCI
evidenced by the LCI Second Restated Note (as defined below), the Term
Promissory Note, dated as of January 13, 1995, made by LCI in favor of Congress
in the original principal amount of $1,500,000 (the "LCI" Georgia Real Estate
Note"), the LCI Ohio Real Estate Note (as defined below) and the New Equipment
Term Notes by LCI in favor of Congress, as such notes may hereafter be amended,
supplemented, renewed, extended, restated or replaced.
-3-
4
(b) Interpretation. Capitalized terms used herein,
unless otherwise defined herein, shall have the meanings ascribed thereto in
the Accounts Agreement and the other Financing Agreements.
2. Acknowledgement of Obligations. LCI hereby acknowledges and
agrees that, as of the close of business on January 26, 1995, LCI was indebted
to Congress for Obligations under the Financing Agreements (including LCI's
Guarantee with respect to the Obligations of LPC) in a principal amount of not
less than $20,980,920.61, together with interest accrued and accruing thereon,
plus the fees, charges, costs and expenses provided under the Financing
Agreements, all of which is owed without offset, defense or counterclaim of any
kind, nature or description.
3. Maximum Credit.
(a) Section 1.7 of the Accounts Agreement, as heretofore
amended, is hereby deleted in its entirety and replaced with the following:
"1.7. "Maximum Credit" shall mean the amount of
$40,000,000."
(b) For purposes of Section 2.3 of the Accounts
Agreement, all existing and future Term Loans, including, without limitation,
the Loans evidenced by the LCI Second Restated Note, the LCI Georgia Real
Estate Note, the LCI Ohio Real Estate Note (if the LCI Ohio Real Estate Loan is
made) and any and all New Equipment Term Notes by LCI shall be considered made
pursuant to a supplement to the Accounts Agreement, and the "Loans" to LPC
evidenced by the "LPC Second Restated Note", the "LPC Real Estate Note" and the
"New Equipment Term Notes" (as each such quoted term is defined in the LPC
Financing Agreements), shall be considered made pursuant to a supplement to the
Accounts Financing Agreement [Security Agreement], dated January 11, 1990,
between LPC and Congress.
4. Additional Term Loans.
(a) Contemporaneously herewith, in order to evidence the
balance of the outstanding Obligations owed by LCI pursuant to the Amended and
Restated Promissory Note, dated January 14, 1994, made payable by LCI in favor
of Congress, in the original principal amount of $3,700,000 and the New
Equipment Term Note, dated as of August 1, 1994, made payable by LCI in favor
of Congress, in the original principal amount of $2,000,000, and in order to
evidence an additional one-time advance to LCI, which is deemed to be made upon
the effective date hereof, in the principal amount of $2,161,999.59 LCI is
executing and delivering to Congress a Second Amended and Restated Promissory
Note in the
-4-
5
original principal amount of $6,957,000.00 (as the same now exists or
may hereafter be amended, supplemented, renewed, extended, restated or
replaced, the "LCI Second Restated Note"). The Obligations evidenced
by the LCI Second Restated Note shall be payable, including interest
and other amounts, as provided therein and, to the extent not
inconsistent with the terms of the LCI Second Restated Note, as
provided in the other Financing Agreements, and shall be secured by
all Collateral, other than the owned real property of LCI in Troup
County, Georgia, presently subject to a Deed to Secure Debt, dated as
of January 13, 1995 (the "LCI Georgia Real Estate").
(b) At LCI's request made within ninety (90) days after
the date hereof and upon not less than five (5) business days' prior written
notice by LCI to Congress and provided all of the conditions precedent set
forth in Section 12 are then satisfied, Congress agrees to make an additional
one-time advance to LCI (the "LCI Ohio Real Estate Loan") in an amount equal to
the lesser of (i) eighty (80%) percent of the orderly liquidation value of
LCI's owned real property in Trumbull County, Ohio, as shown on the appraisal
required to be delivered under Section 12 below, minus $340,000, or (ii)
$2,500,000 minus the sum of (A) $1,500,000 plus (B) the original principal
amount of the LPC Real Estate Loan (as defined in the LPC Financing
Agreements). The LCI Ohio Real Estate Loan shall be evidenced by a Term
Promissory Note in the principal amount of the LCI Ohio Real Estate Loan in the
form annexed hereto as Exhibit A (as the same now exists or may hereafter be
amended, supplemented, renewed, extended, restated or replaced, the "LCI Ohio
Real Estate Note"). The Obligations evidenced by the LCI Ohio Real Estate Note
shall be payable, including interest and other amounts, as provided therein,
and, to the extent not inconsistent with the terms of the LCI Ohio Real Estate
Note, as provided in the other Financing Agreements, and shall be secured by
all Collateral (other than the LCI Georgia Real Estate).
5. New Equipment Term Loans.
(a) Sections 2(a) and 2(b) of the letter agreement re:
Amendment to Financing Agreements, dated as of March 25, 1994, between Congress
and LCI, as heretofore amended by the letter agreement re: Amendment to
Financing Agreement, dated as of August 1, 1994 (as so amended, the "New
Equipment Term Loan Agreement") are hereby deleted in their entirety and
replaced with the following:
"(a) Subject to and upon the terms and conditions
contained herein and in the other Financing
Agreements, including the sublimit set forth below in
Section 2(b), Congress shall, in its discretion, make
New Equipment Term Loans to LCI, from time to time,
at LCI's request, of up to
-5-
6
eighty (80%) percent of the orderly liquidation value
of such Eligible New Equipment, as set forth in an
appraisal report prepared for Congress, at LCI's
expense, by MB Valuation Services, Inc., Daley-Hodkin
Appraisal Corporation or other appraiser reasonably
satisfactory to Congress.
(b) Except in Congress' discretion (i) the aggregate
original principal amount of all New Equipment Term
Loans made to LCI plus the aggregate original
principal amount of all "New Equipment Term Loans"
(as defined in the LPC Financing Agreements) made to
LPC under the LPC Financing Agreements after the date
hereof, shall not exceed $11,300,000, and (ii) the
aggregate principal amount of all Obligations
evidenced by the LCI Second Restated Note, the LCI
Georgia Real Estate Note, the LCI Ohio Real Estate
Note, the "LPC Second Restated Note" (as defined in
the LPC Financing Agreements), the "LPC Real Estate
Note" (as defined in the LPC Financing Agreements)
and each of the New Equipment Term Notes made by each
of LCI and LPC in favor of Congress, shall not exceed
the sum of $26,000,000 at any one time outstanding.
Except in Congress' discretion, New Equipment Term
Loans shall only be available (subject to the
foregoing lending formula and sublimits set forth
herein) in integral multiples of $100,000 and in
amounts not less than $500,000 for each New Equipment
Term Loan."
(b) Section 2(d)(iii) of the New Equipment Term Loan
Agreement is hereby deleted in its entirety and replaced with the following:
"(iii) Congress shall have received a copy(ies) of
the invoice(s) covering the Cost of New Equipment with respect to the Eligible
New Equipment and all other amounts required to be paid in connection
therewith, together with a copy of an appraisal report as required under
Section 2(a) above setting forth the orderly liquidation value of the Eligible
New Equipment as provided in Section 2(a)."
(c) Exhibit I to the New Equipment Term Loan Agreement is
hereby replaced with the form designated as Exhibit I annexed hereto.
6. Interest.
(a) Section 3.1 of the Accounts Agreement, as heretofore
amended, is hereby deleted in its entirety and replaced with the following:
-6-
7
"3.1 (a) We shall pay to you interest on the
outstanding principal amount of the non-contingent
Obligations at the Interest Rate. All interest
accruing hereunder on and after the date of any Event
of Default or following the effective date of
termination or non-renewal hereof shall be payable on
demand.
(b) We may from time to time request that Prime
Rate Loans be converted to Eurodollar Rate Loans or
that any existing Eurodollar Rate Loans continue for
an additional Interest Period. Such request from us
shall specify the amount of the Prime Rate Loans
which will constitute Eurodollar Rate Loans (subject
to the limits set forth below) and the Interest
Period to be applicable to such Eurodollar Rate
Loans. Subject to the terms and conditions contained
herein, three (3) Business Days after receipt by you
of such a request from us, such Prime Rate Loans
shall be converted to Eurodollar Rate Loans or such
Eurodollar Rate Loans shall continue, as the case may
be, provided, that, each of the following additional
conditions are satisfied: (i) no Event of Default,
or event which with notice or passage of time or both
would constitute an Event of Default exists or has
occurred and is continuing, (ii) we shall have
complied with such customary procedures as are
established by you and specified by you to us from
time to time for requests by us for Eurodollar Rate
Loans, (iii) no more than three (3) Interest Periods
may be in effect at any one time with respect to LCI
and no more than four (4) Interest Periods in the
aggregate may be in effect with respect to LCI and
LPC at any one time, (iv) the amount of the
Eurodollar Rate Loans subject to a given Interest
Period must be in the amount of $1,000,000 or an
integral multiple thereof, (v) the minimum aggregate
amount of Eurodollar Rate Loans outstanding and/or
requested by us and LPC shall not be less than
$5,000,000, (vi) the maximum amount of the Eurodollar
Rate Loans at any time outstanding and/or requested
by us shall not exceed the amount equal to
ninety-five (95%) percent of the principal amount of
the Term Loans plus eighty (80%) percent of the
Revolving Loans which it is anticipated will be
outstanding on the last day of the applicable
Interest Period, as determined by you, and (vii) you
shall have determined that the Adjusted Eurodollar
Rate is available to you for such Interest Period
through the Reference Bank and can be readily
determined
-7-
8
as of the date of the request for such Eurodollar
Rate Loan by us. Any request by us to convert Prime
Rate Loans to Eurodollar Rate Loans or to continue
any existing Eurodollar Rate Loans shall be
irrevocable. Notwithstanding anything to the
contrary contained herein, you and the Reference Bank
shall not be required to purchase United States
Dollar deposits in the London interbank market or
other applicable Eurodollar Rate market to fund any
Eurodollar Rate Loans, but the provisions hereof
shall be deemed to apply as if you and Reference Bank
had purchased such deposits to fund the Eurodollar
Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically
convert to Prime Rate Loans upon the last day of the
applicable Interest Period, unless you have received
a request complying with the terms hereof to continue
such Eurodollar Rate Loan at least three (3) Business
Days prior to such last day in accordance with the
terms hereof. Any Eurodollar Rate Loans shall, at
your option, upon notice by you to us, convert to
Prime Rate Loans in the event that (i) an Event of
Default has occurred and is continuing, (ii) this
Agreement shall terminate or not be renewed, or (iii)
the aggregate principal amount of the Prime Rate
Loans which have previously been converted to
Eurodollar Rate Loans or existing Eurodollar Rate
Loans continued, as the case may be, at the beginning
of an Interest Period shall at any time during such
Interest Period exceed either (A) the aggregate
principal amount of the Loans then outstanding or (B)
the sum of the then outstanding principal amount of
the Term Loans plus the Revolving Loans then
available to us under the Accounts Agreement and
supplements thereto. We shall pay to you, upon
demand by you (or you may, at your option, charge any
of our loan accounts) any amounts required to
compensate you, the Reference Bank or any Participant
with you for any loss (including loss of anticipated
profits), cost or expense incurred by such person, as
a result of the conversion of Eurodollar Rate Loans
to Prime Rate Loans pursuant to any of the foregoing.
(d) Interest shall be payable by us to you
monthly in arrears not later than the first day of
each calendar month and shall be calculated on the
basis of a three hundred sixty (360) day year and
actual days elapsed. The Interest Rate on
non-contingent Obligations (other than Eurodollar
Rate
-8-
9
Loans) shall increase or decrease by an amount equal
to each increase or decrease in the Prime Rate
effective on the first day of the month after any
change in such Prime Rate is announced based on the
Prime Rate in effect on the last day of the month in
which any such change occurs. In no event shall
charges constituting interest payable by us to you
exceed the maximum amount or the rate permitted under
any applicable law or regulation, and if any such
part or provision of this Agreement is in
contravention of any such law or regulation, such
part or provision shall be deemed amended to conform
thereto.
(e) Notwithstanding anything to the contrary
contained herein, all Eurodollar Rate Loans shall,
upon notice by you to us, subject to our option (if
applicable) set forth in the following sentence,
convert to Prime Rate Loans in the event that (i) any
change in applicable law or regulation (or the
interpretation or administration thereof) shall
either (A) make it unlawful for you, Reference Bank
or any Participant to make or maintain Eurodollar
Rate Loans or to comply with the terms hereof in
connection with the Eurodollar Rate Loans, by an
amount deemed by you to be material, or (B) shall
result in the increase in the costs to you, Reference
Bank or any Participant of making or maintaining any
Eurodollar Rate Loans or (C) reduce the amounts
received or receivable by you in respect thereof, by
an amount deemed by you to be material or (ii) the
cost to you, Reference Bank or any Participant of
making or maintaining any Eurodollar Rate Loans shall
otherwise increase by an amount deemed by you to be
material. In the circumstances described in clauses
(i)(B), (i)(C) or (ii), in lieu of conversion to
Prime Rate Loans, we shall have the option, for the
balance of the Interest Period(s) for
then-outstanding Eurodollar Rate Loans, of paying any
and all increased costs to you, Reference Bank and
each Participant, together with the aggregate amount
by which the amounts received or receivable by you
have been reduced in respect of such Eurodollar Rate
Loans. In the event of any conversion of Eurodollar
Rate Loans to Prime Rate Loans, we shall pay to you,
upon demand by you (or you may, at your option,
charge any of our loan accounts) any amounts required
to compensate you, the Reference Bank or any
Participant with you for any loss (including loss of
anticipated profits), cost
-9-
10
or expense incurred by you or any such person as a
result of any conversion of Eurodollar Rate Loans to
Prime Rate Loans, including, without limitation, any
such loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other
funds acquired by you or any such person to make or
maintain the Eurodollar Rate Loans or any portion
thereof. A certificate signed by you setting forth
the basis for the determination of such amount
necessary to compensate you as aforesaid shall be
delivered to us and shall be conclusive, absent
manifest error.
(f) If any payments or prepayments in respect of
the Eurodollar Rate Loans are received by you other
than on the last day of the applicable Interest
Period (whether pursuant to acceleration, upon
maturity or otherwise), including any payments
pursuant to the application of collections under
Section 5 of this Agreement or any other payments
made with the proceeds of Collateral, we shall pay to
you upon demand by you (or you may, at your option,
charge any of our loan accounts) any amounts required
to compensate you, the Reference Bank or any
Participant for any additional loss (including loss
of anticipated profits), cost or expense incurred by
such person as a result of such prepayment or
payment, including, without limitation, any loss,
cost or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired
by you or any such person to make or maintain such
Eurodollar Rate Loans or any portion thereof."
(b) Section 3.2 of the Accounts Agreement is hereby
deleted in its entirety and replaced with the following:
"[INTENTIONALLY OMITTED]"
(c) Any and all references in the Financing Agreements to
the post-default rate of interest continued in Section 3.2 of the Accounts
Agreement are hereby amended to refer to the post-default rate of interest
contained in Section 3.1 of the Accounts Agreement, as herein amended.
7. Net Worth Covenants. Section IV (g)(ii) of the Covenant
Supplement to the Accounts Agreement, dated January 11, 1990, as amended, is
hereby further amended by deleting it in its entirety and replacing it with the
following:
"(ii) Borrower shall, at all times, maintain on a
basis consolidated with LPC and LPC's direct and
-10-
11
indirect Subsidiaries, a Net Worth not less than
negative $9,500,000."
8. Term. The first sentence of Section 9.1 of the Accounts
Agreement, as heretofore amended, is hereby deleted in its entirety and
replaced with the following:
"This Agreement shall become effective upon
acceptance by you and shall continue in full force
and effect for a term ending January 2, 1998 (the
"Renewal Date"), unless sooner terminated pursuant to
the terms hereof."
9. Inventory Sublimit. Paragraph 3 of the letter agreement re:
Inventory Loans, dated March 23, 1990, is hereby amended by deleting the
reference to "$3,000,000" and replacing it with "$5,000,000".
10. Fees.
(a) LCI shall pay to Congress a facility fee in an amount
equal to $62,500, payable simultaneously with the execution hereof, which fee
is fully earned as of the date hereof.
(b) Section 3.5 of the Account Agreement is hereby
deleted in its entirety and replaced with the following:
"3.5 If the average outstanding daily
principal balance of all Loans made and Credits
provided by you to us under this Agreement or any
supplement hereto in any calendar month during the
applicable time period set forth below, plus the
average outstanding daily principal balance of all
"Loans" made or "Credits" provided by you to LPC
under (and as such quoted terms are defined in) the
LPC Financing Agreements for such time period, shall
be less than the corresponding amount set forth below
(the "Unused Line Base Amount"), we and LPC shall be
jointly and severally obligated to pay to you, on or
before the tenth (10th) day of the next succeeding
calendar month, an unused line fee calculated at the
rate of one- half of one (1/2 of 1%) percent per
annum upon the amount by which the Unused Line Base
Amount exceeds the average outstanding daily
principal balance of all such Loans and Credits to
LCI and LPC in respect of such month:
-11-
12
Unused Line
Time Period Base Amount
----------- -----------
(i) April 1, 1995 through $25,000,000
and including
December 31, 1995
(ii) January 1, 1996 through $20,000,000
and including
December 31, 1996
(iii) January 1, 1997 and $15,000,000
thereafter
(c) Section 9.2 of the Accounts Agreement, as heretofore
amended, is hereby deleted in its entirety and replaced with the following:
"9.2 If for any reason the Financing Agreements are
terminated prior to January 2, 1998, in view of the
impracticability and extreme difficulty of
ascertaining actual damages and by mutual agreement
of the parties as to a reasonable calculation of your
lost profits as a result thereof, we hereby agree to
pay to you upon the effective date of such
termination, jointly and severally with LPC, an early
termination fee in an amount equal to: (i) two (2%)
percent of the average outstanding balance of all
Loans and Credits provided by you to us and LPC
during the twelve (12) calendar month period ended
immediately prior to the effective date of
termination (such average balance, the "Average Line
Usage") if such termination occurs on or prior to
December 31, 1995, (ii) one (1%) percent of the
Average Line Usage if such termination occurs after
December 31, 1995, but on or prior to December 31,
1996, or (iii) one-half of one (1/2 of 1%) of the
Average Line Usage if such termination occurs after
December 31, 1996 but on or prior to June 30, 1997;
provided, that, the early termination fee for a
termination effective after December 31, 1996 as
provided for in this clause (iii) of Section 9.2 will
not be payable by us and/or LPC (A) if we and LPC
have obtained and delivered to you a written proposal
for a complete replacement and refinancing of our and
LPC's Obligations to you, (B) you determine in your
sole and absolute discretion not to offer us and LPC
continued financing on substantially the same terms
and conditions of such written proposal (such
determination by you to be made within
-12-
13
fifteen (15) business days after your receipt of such written
proposal) and (C) we enter into new financing arrangements with such
replacement lender on the same terms and conditions of such written
proposal and we pay and perform all of our Obligations hereunder upon
and in connection with such termination. No early termination fee
shall be payable if termination occurs effective after June 30, 1997.
The early termination fee payable as provided for herein shall be
presumed to be the amount of damages sustained by you as a result of
said early termination and we agree that it is reasonable under the
circumstances currently existing. The early termination fee provided
for herein shall be deemed included in the Obligations."
(d) Section 1.8 of the Trade Financing Agreement
Supplement to the Accounts Agreement, dated January 11, 1990, is hereby amended
by deleting the reference to "two and one-half percent (2-1/2%)" and replacing
it with "one percent (1%)".
11. Representations, Warranties and Covenants. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by LCI to Congress pursuant to the Financing Agreements, LCI hereby
represents, warrants and covenants with and to Congress as follows (which
representations, warranties and covenants are continuing and shall survive the
execution and delivery hereof and shall be incorporated into and made a part of
the Financing Agreements):
(a) No Event of Default exists or has occurred and is
continuing on the date of this Amendment.
(b) This Amendment has been duly executed and delivered
by LCI and is in full force and effect as of the date hereof, and the
agreements and obligations of LCI contained herein constitute the legal, valid
and binding obligations of LCI enforceable against LCI in accordance with their
terms.
(c) As of the date hereof, LCI is not liable for any
outstanding purchase money indebtedness or indebtedness under capitalized
leases, which indebtedness is secured by any of the equipment of LCI, except
purchase money indebtedness to Congress secured by equipment (among other
Collateral).
12. 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, subject to Section 13 below:
-13-
14
(a) Congress shall have received an executed original or
executed original counterparts (as the case may be) of this Amendment together
with the following, each of which shall be in form and substance satisfactory
to Congress:
(i) the LCI Second Restated Note;
(ii) LCI Ohio Real Estate Note;
(iii) Second Amended and Restated Open-End Mortgage
and Security Agreement between LCI and
Congress which amends the terms of the
existing mortgage in favor of Congress to
reflect, inter alia, the increase in the
Maximum Credit and all of the Term Loans,
together with an updating endorsement, at
LCI's expense, to the existing title policy
with respect thereto;
(iv) a Phase I Environmental Assessment
addressed to Congress or upon which Congress
is expressly permitted to rely, an ALTA
standard survey certified to Congress, and an
orderly liquidation value appraisal report
addressed to Congress or upon which Congress
is expressly permitted to rely, showing an
orderly liquidation value of not less than
the sum of $425,000 plus one hundred
twenty-five (125%) percent of the LCI Ohio
Real Estate Loan (such orderly liquidation
value to be determined by using methodology
acceptable to Congress), each with respect to
LCI's real property in Trumbull County, Ohio
and each currently dated and prepared, at
LCI's expense, by an environmental
engineering firm, a surveyor and an
appraiser, respectively, reasonably
satisfactory to Congress;
(v) an appraisal report with respect to
the orderly liquidation values of
LCI's Equipment, currently dated and
prepared for Congress, at LCI's
expense, by MB Valuation Services,
Inc., Daley-Hodkin Appraisal
Corporation or other appraiser
reasonably satisfactory to Congress;
(vi) the resolutions of the Board of
Directors of LCI duly authorizing the
-14-
15
execution and delivery of this
Amendment and the instruments and
transactions hereunder;
(vii) an Amendment between LPC and Congress
with respect to the LPC Financing
Agreements and the documents and
instruments required thereunder and
the satisfaction of all conditions
precedent to the effectiveness
thereof;
(viii) evidence of insurance and loss
payable endorsements naming Congress
as a loss payee thereunder, issued by
an insurance company satisfactory to
Congress, and certificates of
insurance policies and/or
endorsements naming Congress as
additional insured and loss payee,
all at LCI's cost and expense;
(ix) evidence that LCI's owned real
property in Trumbull County, Ohio is
not within an area having special
flood hazard or flood prone
characteristics;
(x) additional landlord/mortgagee waivers
as required by Congress; and
(xi) legal opinion of counsel to LCI and
LPC addressed to Congress with
respect to the Amendment and the
instruments delivered hereunder and
such other matters as Congress shall
reasonably request.
(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
(c) 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.
13. Deliveries Relating to Real Estate.
(a) Anything contained in Section 12(a) to the contrary
notwithstanding, the instruments, documents and other items required to be
executed and/or delivered to Congress pursuant to Sections 12(a)(ii), (iii),
(iv) and (ix) need only be executed and/or delivered (as the case may be) at or
before the
-15-
16
funding of the LCI Ohio Real Estate Loan; provided, that, in the event that a
timely request for the LCI Ohio Real Estate Loan is not received by Congress as
required herein, or LCI is otherwise not entitled to receive the LCI Ohio Real
Estate Loan pursuant to the other terms and conditions of this Amendment, then
LCI shall, within ninety (90) days after the date hereof, nevertheless execute
and/or deliver (as the case may be) to Congress all of the instruments,
documents and other items required under Sections 12(a) (iii), (iv) and (ix),
and the failure to do so shall, at Congress' option, constitute an Event of
Default.
(b) Anything contained in Section 12(a) to the contrary
notwithstanding, the instruments required to be executed and/or delivered to
Congress pursuant to Section 12(a)(x) shall only be required to be executed
and/or delivered within ninety (90) days after the date hereof. Failure to
timely deliver any such instruments shall entitle Congress to establish, from
time to time, reserves against availability of Loans or Credits in amounts
determined by Congress to be necessary to cover risks or increased risks to
which the Collateral or Congress' rights (including rights of access) and
enforcement remedies may be subject or exposed by reason of the absence of such
instruments.
14. 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.
15. Further Assurances. LCI shall execute and deliver such
additional documents and take such additional actions as may reasonably be
requested by Congress to effectuate the provisions and purposes of this
Amendment.
16. 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.
-16-
17
By the signatures hereto of the duly authorized officers, the parties
hereto mutually covenant, warrant and agree as set forth herein.
Very truly yours,
CONGRESS FINANCIAL CORPORATION
By: Lawrence S. Forte
-----------------
Title: Vice President
--------------
AGREED AND ACCEPTED:
LEXINGTON COMPONENTS, INC.
By: Warren Delano
-------------
Title: Vice Chairman
-------------
-17-
18
CONSENT
The undersigned guarantor hereby consents to the foregoing Amendment,
agrees to be bound by its terms applicable to it, and ratifies and confirms the
terms of its Guarantee and Waiver dated January 11, 1990 as applicable to all
present and future indebtedness, liabilities and obligations of LEXINGTON
COMPONENTS, INC. ("LCI") to CONGRESS FINANCIAL CORPORATION ("Congress"),
including, without limitation, all indebtedness, liabilities and obligations
under the Financing Agreements as amended hereby.
LEXINGTON PRECISION CORPORATION
By: Warren Delano
---------------------------
Title: President
------------------------
-18-
19
EXHIBIT A
TERM PROMISSORY NOTE
$_______________ New York, New York
____________ __, 1995
FOR VALUE RECEIVED, LEXINGTON COMPONENTS, INC., a Delaware corporation
(the "Debtor"), hereby unconditionally promises to pay to the order of CONGRESS
FINANCIAL CORPORATION, a California corporation (the "Payee"), at the offices
of Payee at 1133 Avenue of the Americas, New York, New York 10036, or at such
other place as the Payee or any holder hereof may from time to time designate,
the principal sum of __________________________ DOLLARS ($_____________) 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
_______________ 1, 1995, of which the first eighty-three (83) installments
shall each be in the amount of _____________________________________ DOLLARS
($____________), 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 _____________ 1, 1995 and on the first day of each month thereafter
until the indebtedness evidenced by this Note is paid in full. Interest
payable upon and during the continuance of an Event of Default or following the
effective date of termination or non-renewal of the Financing Agreements shall
be payable upon demand.
For purposes hereof (a) the term "Interest Rate" shall mean, as to
Prime Rate Loans, a rate of one and one-half (1-1/2%) percent per annum in
excess of the Prime Rate and as to Eurodollar Rate Loans, a rate of three and
one-quarter (3-1/4%) percent per annum in excess of the Adjusted Eurodollar
Rate; provided, that, at Payee's option, the Interest Rate shall mean a rate of
four and one-half (4-1/2%) percent per annum in excess of the Prime Rate as to
Prime Rate Loans and a rate of five and one-quarter (5-1/4%) percent per annum
in excess of the Adjusted Eurodollar Rate as to Eurodollar Rate Loans, upon and
during the continuance of an Event of Default or following the effective date
of termination or non-renewal of the Financing Agreements, and (b) the term
"Prime Rate" shall mean the rate from time to time publicly announced by
CoreStates Bank, N.A., or its successors, at its office in Philadelphia,
Pennsylvania, as its prime rate, whether or not such announced rate is the best
rate available at such bank. Unless otherwise defined herein, all capitalized
terms used herein shall
20
have the meanings assigned thereto in the Accounts Agreement (as hereinafter
defined) and the other Financing Agreements.
The Interest Rate applicable to Prime Rate Loans payable hereunder
shall increase or decrease by an amount equal to each increase or decrease,
respectively, in the Prime Rate, effective on the first day of the month after
any change in the Prime Rate, based on the Prime Rate in effect on the last day
of the month in which any such change occurs. Interest shall be calculated on
the basis of a three hundred sixty (360) day year and actual days elapsed. In
no event shall the interest charged hereunder exceed the maximum permitted
under the laws of the State of New York or other applicable law.
This Note is issued pursuant to the terms and provisions of the letter
agreement re: Amendment to Financing Agreements, dated as of January __, 1995,
between Debtor and Payee (the "Amendment") to evidence the "LCI Ohio Real
Estate Loan" (as defined in the Amendment) made by Payee to Debtor. This Note
is secured by the "Collateral" described in the Accounts Financing Agreement
[Security Agreement], dated January 11, 1990, by and between Payee and Debtor,
as amended (the "Accounts Agreement") and any agreement, document or instrument
now or at any time hereafter executed and/or delivered in connection therewith
or related thereto (the foregoing, as the same now exist or may hereafter be
amended, modified, supplemented, renewed, extended, restated or replaced, are
hereinafter collectively referred to as the "Financing Agreements") and is
entitled to all of the benefits and rights thereof and of the Financing
Agreements. At the time any payment is due hereunder, at its option, Payee may
charge the amount thereof to any account of Debtor maintained by Payee.
If any principal or interest payment is not made when due hereunder,
and such failure shall continue for three (3) days, or if any other Event of
Default (as defined in the Accounts Agreement) shall occur for any reason, or
if the Financing Agreements shall be terminated or not renewed for any reason
whatsoever, then and in any such event, in addition to all rights and remedies
of Payee under the Financing Agreements, applicable law or otherwise, all such
rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively and concurrently, Payee may, at its option, declare
any or all of Debtor's obligations, liabilities and indebtedness owing to Payee
under the Financing Agreements (the "Obligations"), including, without
limitation, all amounts owing under this Note, to be due and payable, whereupon
the then unpaid balance hereof together with all interest accrued thereon,
shall forthwith become due and payable, together with interest accruing
thereafter at the then applicable rate stated above until the indebtedness
evidenced by this Note is paid in full, plus the costs and expenses of
collection hereof, including, but not limited to, reasonable attorneys' fees.
-2-
21
Debtor (i) waives diligence, demand, presentment, protest and notice
of any kind, (ii) agrees that it will not be necessary for any holder hereof to
first institute suit in order to enforce payment of this Note and (iii)
consents to any one or more extensions or postponements of time of payment,
release, surrender or substitution of collateral security, or forbearance or
other indulgence, without notice or consent. Upon the occurrence and during
the continuance of any Event of Default, Payee shall have the right, but not
the obligation to setoff against this Note all money owed by Payee to Debtor.
Payee shall not be required to resort to any Collateral for payment,
but may proceed against Debtor and any guarantors or endorsers hereof in such
order and manner as Payee may choose. None of the rights of Payee shall be
waived or diminished by any failure or delay in the exercise thereof.
Debtor hereby waives the right to a trial by jury and all rights of
setoff and rights to interpose counterclaims and cross-claims in any litigation
or proceeding arising in connection with this Note, the Accounts Agreement, the
other Financing Agreements, the Obligations or the Collateral, other than
compulsory counterclaims, the non-assertion of which would result in a
permanent waiver. Debtor hereby irrevocably consents to the non-exclusive
jurisdiction of the Supreme Court of the State of New York and of the United
States District Court for the Southern District of New York for all purposes in
connection with any action or proceeding arising out of or relating to this
Note, the Accounts Agreement, the other Financing Agreements, the Obligations
or the Collateral and further consents that any process or notice of motion or
other application to said Courts or any judge thereof, or any notice in
connection with any proceeding hereunder may be served (i) inside or outside
the State of New York by registered or certified mail, return receipt
requested, and service or notice so served shall be deemed complete five (5)
days after the same shall have been posted or (ii) in such other manner as may
be permissible under the rules of said Courts. Within thirty (30) days after
such mailing, Debtor shall appear in answer to such process or notice of motion
or other application to said Courts, failing which Debtor shall be deemed in
default and judgment may be entered by Payee against Debtor for the amount of
the claim and other relief requested therein.
The execution and delivery of this Note has been authorized by the
Board of Directors of Debtor.
This Note, the other Obligations and the Collateral shall be governed
by and construed in accordance with the laws of the State of New York and shall
be binding upon the successors and assigns of Debtor and inure to the benefit
of Payee and its successors, endorsees and assigns. If any term or provision
of this Note shall be held invalid, illegal or unenforceable, the validity of
all
-3-
22
other terms and provisions hereof shall in no way be affected thereby.
This Note may not be changed, modified or terminated orally, but only
by an agreement in writing signed by the Payee or the holder hereof.
Whenever used herein, the terms "Debtor" and "Payee" shall be deemed
to include their respective successors and assigns.
LEXINGTON COMPONENTS, INC.
ATTEST: By:
--------------------------------
-------------------------------- Title:
-----------------------------
[Corporate Seal]
-4-
23
EXHIBIT I
NEW EQUIPMENT TERM NOTE *
$_____________ ______________, 19__
FOR VALUE RECEIVED, LEXINGTON COMPONENTS, INC., a Delaware corporation
(the "Debtor"), hereby unconditionally promises to pay to the order of CONGRESS
FINANCIAL CORPORATION, a California corporation (the "Payee"), at the offices
of Payee at 1133 Avenue of the Americas, New York, New York 10036, or at such
other place as the Payee or any holder hereof may from time to time designate,
the principal sum of ____________________________ DOLLARS ($_________) in
lawful money of the United States of America and in immediately available
funds, in _________ (__) consecutive monthly installments (or earlier as
hereinafter referred to) on the first day of each month commencing __________,
19__, of which the first ____________ (__) installments shall each be in the
amount of ___________________ DOLLARS ($________), and the last (i.e.
___________ (___)) installment shall be in the amount of the entire unpaid
balance of this Note.
Debtor hereby further promises to pay interest to the order of Payee
on the unpaid principal balance hereof at the Interest Rate. Such interest
shall be paid in like money at said office or place from the date hereof,
commencing on the first day of the month next following the date hereof, and on
the first day of each month thereafter until the indebtedness evidenced by this
Note is paid in full. Interest payable upon and during the continuance of an
Event of Default or following the effective date of termination or non-renewal
of the Financing Agreements shall be payable upon demand.
For purposes hereof, (a) the term "Interest Rate" shall mean, as to
Prime Rate Loans, a rate of one (1%) percent per annum in excess of the Prime
Rate, and as to Eurodollar Rate Loans, a rate of three and one-quarter (3 1/4%)
percent per annum in excess of the Adjusted Eurodollar Rate; provided, that, at
Payee's option, the Interest Rate shall mean a rate of three (3%) percent per
annum in excess of the Prime Rate as to Prime Rate Loans and a rate of five and
one-quarter (5 1/4%) percent per annum in excess of the Adjusted Eurodollar
Rate as to Eurodollar
__________________________________
*For preparation of Note:
The blanks are to be completed such that the principal amount of the
New Equipment Term Loan is amortized in equal, consecutive monthly
installments of principal commencing on the first day of the month
following the date of advance and ending on February 1, 2002.
24
Rate Loans, upon and during the continuance of an Event of Default or following
the effective date of termination or non-renewal of the Financing Agreements,
and (b) the term "Prime Rate" shall mean the rate from time to time publicly
announced by CoreStates Bank, N.A., or its successors, at its office in
Philadelphia, Pennsylvania, as its prime rate, whether or not such announced
rate is the best rate available at such bank. Unless otherwise defined herein,
all capitalized terms used herein shall have the meanings assigned thereto in
the Accounts Agreement (as hereinafter defined) and the other Financing
Agreements.
The Interest Rate payable hereunder shall increase or decrease by an
amount equal to each increase or decrease, respectively, in such Prime Rate,
effective on the first day of the month after any change in such Prime Rate,
based on the Prime Rate in effect on the last day of the month in which any
such change occurs. Interest shall be calculated on the basis of a three
hundred sixty (360) day year and actual days elapsed. In no event shall the
interest charged hereunder exceed the maximum permitted under the laws of the
State of New York or other applicable law.
This Note is issued pursuant to the terms and provisions of the letter
agreement re: Amendment to Financing Agreements, dated as of January __, 1995
between Debtor and Payee (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
-2-
25
Debtor's obligations, liabilities and indebtedness owing to Payee under the
Financing Agreements (the "Obligations"), including, without limitation, all
amounts owing under this Note, to be due and payable, whereupon the then unpaid
balance hereof together with all interest accrued thereon, shall forthwith
become due and payable, together with interest accruing thereafter at the then
applicable rate stated above until the indebtedness evidenced by this Note is
paid in full, plus the costs and expenses of collection hereof, including, but
not limited to, reasonable attorneys' fees.
Debtor (i) waives diligence, demand, presentment, protest and notice
of any kind, (ii) agrees that it will not be necessary for any holder hereof to
first institute suit in order to enforce payment of this Note and (iii)
consents to any one or more extensions or postponements of time of payment,
release, surrender or substitution of collateral security, or forbearance or
other indulgence, without notice or consent. Upon the occurrence 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
-3-
26
Debtor for the amount of the claim and other relief requested therein.
The execution and delivery of this Note has been authorized by the
Board of Directors of Debtor.
This Note, the other Obligations and the Collateral shall be governed
by and construed in accordance with the laws of the State of New York and shall
be binding upon the successors and assigns of Debtor and inure to the benefit
of Payee and its successors, endorsees and assigns. If any term or provision
of this Note shall be held invalid, illegal or unenforceable, the validity of
all other terms and provisions hereof shall in no way be affected thereby.
This Note may not be changed, modified or terminated orally, but only
by an agreement in writing signed by the Payee or the holder hereof.
Whenever used herein, the terms "Debtor" and "Payee" shall be deemed
to include their respective successors and assigns.
LEXINGTON COMPONENTS, INC.
ATTEST:
By:
-----------------------------
-------------------------------
Secretary Title:
--------------------------
[Corporate Seal]
-4-