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August 1, 1995
Lexington Components, Inc.
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 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 (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 "LCI 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 "LPC Financing Agreements" contained in the
Covenant Supplement to the Accounts Financing Agreement [Security Agreement]
between LPC and Congress is hereby amended to include, without limitation, the
Term Promissory Note, dated of even date herewith, by LPC 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 LCI in the principal amount of
$1,000,000 (the "Additional Term Loan"), LCI 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 provided
in the other Financing Agreements, and shall be secured
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by all Collateral, other than LCI's real estate in La Grange, Georgia.
3. Inventory Loans.
(a) ELIGIBLE INVENTORY. Subparagraph 1a. of the Letter re:
Inventory Loans, dated March 23, 1990, by LCI 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 and work-in-
process 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 finished
goods, and finished goods to be made from such work-in- process
Inventory, in each case, 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, (2) up to fifty (50%) percent of the
Value of eligible raw materials Inventory and (3) up to fifty
(50%) percent of the Value of eligible work-in-process Inventory".
(c) INVENTORY ADVANCE SUBLIMITS. Paragraph 3 of the
Inventory Loan Letter is hereby deleted in its entirety and replaced with the
following:
"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
parent, Lexington Precision Corporation ("LPC"), pursuant to the
Letter re: Inventory Loans executed the date hereof by LPC 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; PROVIDED, THAT, the outstanding aggregate
principal amount of loans by you to us based on the percentage of
Value of eligible work-in-process Inventory set forth in paragraph
2(iii) above, shall not exceed $1,000,000 at any time."
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4. FEE. In consideration of Congress' entering into this Amendment,
LCI 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 LCI's Revolving
Loan account maintained by Congress under the Financing Agreements.
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 and the outstanding New
Equipment Term Note dated as of June 26, 1995 made by LCI in the original
principal sum of $1,300,000, are each hereby amended as of January 31, 1995 and
June 26, 1995, respectively, 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 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.
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. 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.
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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 COMPONENTS, INC.
By: Warren Delano
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Title: Vice Chairman
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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 COMPONENTS, INC. to CONGRESS FINANCIAL
CORPORATION including, without limitation, all indebtedness, liabilities and
obligations under the amended Financing Agreements.
LEXINGTON PRECISION CORPORATION
By: Warren Delano
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Title: President
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