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January 13, 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, 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:
"Interest Rate" shall mean a rate of one and one-half (1-1/2%)
percent per annum in excess of the Prime Rate; provided, that, Interest Rate
shall mean the rate of four and one-half (4-1/2%) percent per annum in excess
of the Prime Rate at Congress' option, without notice (a) for the period on and
after the 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 (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)
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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 signed by
Congress at or prior to the date Congress makes a Revolving Loan(s) that is
expressly identified in such writing as giving rise to such excess(es) with
Congress' knowledge and consent
"Loans" shall mean the Revolving Loans and the Term Loans.
"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.
"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 Term Note, the LCI Real Estate Note (as defined below) and the
New Equipment Term Note dated August 1, 1994 in the principal sum of
$2,000,000, each made by LCI in favor of Congress, as such notes may hereafter
be amended, supplemented, renewed, extended, restated or replaced.
(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. Maximum Credit
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 Amended and Restated Note, the LCI Real Estate Note 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 and advances to LPC evidenced by the
"LPC Amended and Restated 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.
3. Additional Term Loan.
(a) Contemporaneously herewith, in order to evidence an
additional one-time advance to LCI (the "LCI Real Estate
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Loan"), which is deemed to be made upon the effective date hereof, LCI is
executing and delivering to Congress a Term Promissory Note in the principal
amount of $1,500,000 (as the same now exists or may hereafter be amended,
supplemented, renewed, extended, restated or replaced, the "LCI Real Estate
Note"). The Obligations evidenced by the LCI 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 Real Estate Note, as provided
in the other Financing Agreements, and shall be secured by all Collateral.
(b) As of the effective date of this Amendment, there is
no option for any of the Loans to bear interest at any rate other than the
Interest Rate, as herein defined. Accordingly, as of the effective date of
this Amendment, all Loans are and shall be Prime Rate Loans, and all references
in the LCI Real Estate Note, to "Eurodollar Rate Loans" or "Adjusted Eurodollar
Rate", shall not be deemed operative, unless and until such quoted terms are
defined in, and any such provisions are made operative by, a subsequent written
amendment to the Financing Agreements signed by LCI and Congress.
4. Interest.
(a) Section 3.1 of the Accounts Agreement, as heretofore
amended, is hereby deleted in its entirety and replaced with the following:
"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 termination or
non-renewal hereof shall be payable on demand.
(b) 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 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
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any such law or regulation, such part or provision
shall be deemed amended to conform thereto."
(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.
5. 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.
6. 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 that:
(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 Real Estate Note;
(ii) Deed to Secure Debt, Security
Agreement and Assignment of Leases
and Rents covering LCI's owned
property in Troup County, Georgia
(the "Georgia Deed to Secure Debt")
between LCI and Congress which
secures the Obligations evidenced by
the LCI Real Estate Note and certain
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other Obligations as therein
provided, together with a 1,500,000
ALTA Loan title insurance policy
insuring Congress' interest under
the Georgia Deed to Secure Debt;
(iii) Uniform Commercial Code financing
statements (form UCC-1) and notice
filing (form UCC-2) executed by LCI
to be filed in Troup County, Georgia
as to personal property and fixtures;
(iv) a Phase I Environmental Assessment,
ALTA standard survey, and an orderly
liquidation value appraisal report,
each with respect to LCI's real
property in Troup County, Georgia
and each prepared, at LCI's expense,
by an environmental engineering
firm, a surveyor and an appraiser,
respectively, reasonably
satisfactory to Congress;
(v) the resolutions of the Board of
Directors of LCI duly authorizing
the execution and delivery of this
Amendment;
(vi) 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; and
(vii) evidence that LCI's owned real
property in Troup County, Georgia is
not within an area having special
flood hazard or flood prone
characteristics;
(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.
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7. 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.
8. Further Assurances. LCI shall execute and deliver such
additional documents and take such additional actions as may be reasonably
requested by Congress to effectuate the provisions and purposes of this
Amendment.
9. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York without
reference to its principles of conflicts of law.
By the signatures hereto of the duly authorized officers, the parties
hereto mutually covenant, warrant and agree as set forth herein.
Very truly yours,
CONGRESS FINANCIAL CORPORATION
By: Lawrence S. Forte
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Title: Vice Presicent
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AGREED AND ACCEPTED:
LEXINGTON COMPONENTS, INC.
By: Warren Delano
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Title: Vice Chairman
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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
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Title: President
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