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August 1, 1995
Lexington Precision Corporation
767 Third Avenue
New York, New York 10017
Re: Amendment to Financing Agreements
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Gentlemen:
Reference is made to certain financing agreements dated January 11,
1990 between Lexington Precision Corporation ("LPC") and Congress Financial
Corporation ("Congress"), including, but not limited to, an Accounts Financing
Agreement [Security Agreement], as amended (the "Accounts Agreement"), and all
supplements thereto and all other related financing and security agreements
(collectively, all of the foregoing, as the same have heretofore or
contemporaneously been or may be hereafter, amended, replaced, extended,
modified or supplemented, the "Financing Agreements").
In connection with the financing arrangements pursuant to the Accounts
Agreement and the other Financing Agreements, the parties hereto hereby agree
to amend the Financing Agreements, as set forth below (capitalized terms used
herein shall have the meanings assigned thereto in the Accounts Agreement and
in the other Financing Agreements, unless otherwise defined herein):
1. Definitions.
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(a) The definition of "LPC Financing Agreements"
contained in the Covenant Supplement to the Accounts Agreement is hereby
amended to include, without limitation, the Additional Term Note (as defined
below).
(b) The definition of "LCI Financing Agreements"
contained in the Covenant Supplement to the Accounts Financing Agreement
[Security Agreement] between LCI and Congress is hereby amended to include,
without limitation, the Term Promissory Note, dated of even date herewith, by
LCI in favor of Congress, in the original principal amount of $1,000,000.
2. ADDITIONAL TERM LOAN. Contemporaneously herewith, in order to
evidence an additional one-time advance to LPC in the principal amount of
$1,000,000 (the "Additional Term Loan"), LPC is executing and delivering to
Congress the Term Promissory Note, dated of even date herewith, in the original
principal amount of $1,000,000 (as the same now exists or may hereafter be
amended, supplemented, renewed, extended, restated or replaced, the "Additional
Term Note"). The Obligations evidenced by the Additional Term Note shall be
payable, including interest and other amounts, as provided therein and, to the
extent not inconsistent with the terms of the Additional Term Note, as
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provided in the other Financing Agreements, and shall be secured by all
Collateral.
3. Inventory Loans.
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(a) ELIGIBLE INVENTORY. Subparagraph 1a. of the Letter
re: Inventory Loans, dated March 23, 1990, by LPC in favor of Congress, as
amended (the "Inventory Loan Letter") is hereby amended by adding the following
sentence at the end of such subparagraph:
"Notwithstanding the foregoing, finished goods
Inventory shall not be considered Eligible Inventory unless,
in addition to satisfying all of your other criteria for
determining Eligible Inventory, such Inventory is the subject
of written purchase agreements providing for delivery of such
Inventory no later than ninety (90) days following the
applicable date of your determination of Eligible Inventory
hereunder."
(b) INVENTORY ADVANCE RATES. Paragraph 2 of the
Inventory Loan Letter is hereby amended by deleting the phrase "up to fifty
(50%) percent of the value of eligible finished goods and raw materials
Inventory and up to thirty (30%) percent of the scrap value of eligible
work-in-process Inventory" and replacing it with the following:
"(i) up to sixty-five (65%) percent of the Value
of eligible finished goods Inventory, (ii) up to fifty (50%)
percent of the Value of eligible raw materials Inventory and
(iii) up to thirty (30%) percent of the scrap value of
eligible work-in-process Inventory".
(c) INVENTORY ADVANCE SUBLIMITS. Paragraph 3 of the
Inventory Loan Letter is hereby restated in its entirety as follows:
"3. Except in your sole discretion, the
outstanding aggregate principal amount of loans by you to us
hereunder plus the outstanding aggregate principal amount of
loans by you to our subsidiary, Lexington Components, Inc.
("LCI"), pursuant to the Letter re: Inventory Loans executed
the date hereof by LCI and you, shall not exceed, at any time,
the lower of (a) the aggregate amount of the above percentages
of Value of Eligible Inventory or (b) $5,000,000".
4. FEE. In consideration of Congress' entering into this
Amendment, LPC agrees to pay Congress a fee in the sum of $7,500, which fee is
fully earned as of the date hereof and may be charged directly to LPC's
Revolving Loan account maintained by Congress under the Financing Agreements.
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5. AMENDMENT TO NEW EQUIPMENT TERM NOTE. The form of New
Equipment Term Note attached as Exhibit I to the Letter Agreement re: Amendment
to Financing Agreements dated as of January 31, 1995 is hereby amended as of
January 31, 1995, such that the phrase "The Interest Rate payable hereunder
shall increase or" appearing on the first line of the fourth paragraph thereof,
is replaced with the following: "The Interest Rate payable hereunder as to
Prime Rate Loans shall increase or".
6. REPRESENTATIONS, WARRANTIES AND COVENANTS. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by LPC to Congress pursuant to the Financing Agreements, LPC hereby
represents, warrants and covenants with and to Congress as follows (which
representations, warranties and covenants are continuing and shall survive the
execution and delivery hereof and shall be incorporated into and made a part of
the Financing Agreements):
(a) No Event of Default exists or has occurred and is
continuing on the date of this Amendment.
(b) This Amendment has been duly executed and delivered
by LPC and is in full force and effect as of the date hereof, and the
agreements and obligations of LPC contained herein constitute the legal, valid
and binding obligations of LPC enforceable against LPC in accordance with their
terms.
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. To the extent of any
conflict between the terms of this Amendment and the Accounts Agreement, the
terms of this Amendment control.
8. FURTHER ASSURANCES. LPC 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.
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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 President
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AGREED AND ACCEPTED:
LEXINGTON PRECISION CORPORATION
By: Warren Delano
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Title: President
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CONSENT
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The undersigned guarantor hereby consents to the foregoing Amendment
and ratifies and confirms that the terms of its Guarantee and Waiver dated
January 11, 1990 are applicable to all present and future indebtedness,
liabilities and obligations of LEXINGTON PRECISION CORPORATION to CONGRESS
FINANCIAL CORPORATION including, without limitation, all indebtedness,
liabilities and obligations under the amended Financing Agreements.
LEXINGTON COMPONENTS, INC.
By: Warren Delano
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Title: Vice Chairman
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