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Exhibit 1060
COGNOVIT GUARANTEE OF
LEXINGTON PRECISION CORPORATION
In consideration of the extension of credit by BANK ONE, AKRON, NA (the
"Bank"), to LEXINGTON COMPONENTS, INC. (the "Debtor"), and for the purpose of
inducing the Bank, its successors and assigns, to continue, in whole or in
part, existing indebtedness, or to advance credit, to loan money to the Debtor,
and as a condition to the continuance of credit to the Debtor and other good
and valuable considerations, the receipt of which is acknowledged, the
undersigned, Lexington Precision Corporation (hereinafter referred to as the
"undersigned" or "Guarantor"), hereby guarantees to the Bank the prompt
payment, when due, of all debts, liabilities and obligations of the Debtor to
Bank pursuant to a Credit Facility and Security Agreement of even date herewith
(the "Credit Facility") and also any and all other debts, liabilities and
obligations of Debtor to Bank of every kind and description, direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, including without limiting the generality of the foregoing,
any debt, liability or obligation of Debtor to Bank under any guarantee, and
all interest, fees, charges and expenses which at any time may be payable by
Debtor to Bank thereunder, provided that in no event shall the Obligations
include any obligation, guarantee, or other liability of any kind whatsoever to
Bank or any affiliate of Bank as a result of or arising out of Bank's or any
affiliate of Bank's participation in any loan, credit facility, or other
extension of credit to or with Debtor by Congress Financial Corporation or any
other person or any obligation, guarantee, or liability of Debtor to any other
person which Bank may have obtained by assignment, grant, or transfer
(hereinafter collectively referred to as the "Obligations"). This is a
guarantee of payment and not of collection.
All sums at any time to the credit of the undersigned and any property of
the undersigned on which the Bank at any time has a security interest or lien
or of which the Bank at any time has possession, shall secure payment and
performance of all this Guarantee and all other obligations of the undersigned
to the Bank, however arising (except any property to which the Truth-in-Lending
Act and Regulation Z promulgated thereunder apply), including, but not limited
to, the following collateral, together with all re-issues, renewals,
replacements, and extensions or substitutions thereof and the income and
proceeds thereof:
The collateral granted to Bank pursuant to an Ohio Open-End Mortgage of even
date herewith in regard to certain real estate located in North Canton,
Ohio.
The liability of the undersigned hereunder is direct, absolute, and
unconditional, and may be enforced against the undersigned irrespective of the
validity or enforceability of the Obligations. This is an absolute,
unconditional, and continuing guarantee and will remain in full force and
effect until revoked by written notice received by the Bank. Such revocation
shall not affect then existing liabilities of the undersigned hereunder,
including but not limited to, any outstanding obligation or liability
hereunder, or any unpaid portion thereof which may be renewed or extended. In
no event shall such notice relieve the undersigned from liability for any
Obligations incurred before termination or for post-termination collection
expenses and interest pertaining to any Obligations arising before termination.
After the effective date of such termination, the Bank may apply, in the
exercise of its absolute discretion, any proceeds received upon realization of
any collateral securing the Obligations to Obligations incurred by Debtor or
otherwise arising after the effective date of such termination. This Guarantee
will extend to and cover renewals of the Obligations and any number of
extensions of time
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for payment thereof and will not be affected by any surrender, exchange,
acceptance, or release by the Bank of the Debtor, any other guarantee or any
security held by it for any of the Obligations. Except for notices of Event(s)
of Default given to the Debtor pursuant to the Credit Facility and Security
Agreement of even date herewith, notice of acceptance of this Guarantee, notice
of extensions of credit to the Debtor from time to time, notice of default,
diligence, presentment, protest, demand for payment, notice of nonpayment,
notice of demand or protest, and to the extent allowed by applicable law any
defense based upon a failure of the Bank to comply with the notice requirements
of the applicable version of Uniform Commercial Code Section 9-504 are hereby
waived. The Bank at any time and from time to time, without the consent of the
undersigned, may change the manner, place, or terms of payment of or interest
rates on, or change or extend the time of payment of, or renew or alter, any of
the Obligations, without impairing or releasing the liabilities of the
undersigned hereunder. Undersigned consents to any impairment of collateral,
including, but not limited to release of the collateral to a third party or
failure to perfect any security interest. The Bank in its sole discretion may
determine the reasonableness of the period which may elapse prior to the making
of demand for any payment upon the Debtor and it need not pursue any of its
remedies against said Debtor before having recourse against the undersigned
under this Guarantee. The Bank may enforce this Guarantee against the
undersigned without being first required to resort to any other Guarantors of
the Obligations. In addition to the waiver set forth above, undersigned waives
any other defense at law or in equity that may be available to the undersigned.
Notwithstanding anything to the contrary in this Guarantee, the Guarantor
hereby irrevocably waives all rights it may have at law or in equity
(including, without limitation, any law subrogating the Guarantor to the rights
of the Bank) to seek contribution, indemnification, or any other form of
reimbursement from the Debtor, any other Guarantor of any Obligations, or any
other person now or hereafter primarily or secondarily liable for any
Obligations of the Debtor to the Bank, for any disbursement made by the
Guarantor under or in connection with this Guarantee until the Obligations are
paid in full.
Upon the dissolution, or insolvency of the undersigned, or if proceedings
are instituted by or against the undersigned in bankruptcy or insolvency, or
for reorganization, arrangement, receivership, or the like, or if the
undersigned calls a meeting of creditors or commits any act of bankruptcy, the
liability of the undersigned for the Obligations shall mature, even if the
liability of Debtor therefor has or does not.
The undersigned agrees that, to the extent that Debtor makes a payment or
payments to the Bank, or the Bank receives any proceeds of collateral securing
the Obligations, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to the Debtor, its estate, trustee, receiver, or any
other party, including, without limitation, the undersigned, under any
bankruptcy law, state or federal law, common law, or equity, then to the extent
of such payment or repayment, the Obligations or part thereof which has been
paid, reduced, or satisfied by such amount shall be reinstated and continued in
full force and effect as of the date such initial payment, reduction, or
satisfaction occurred. If any demand is made at any time upon the Bank for the
repayment or recovery of any amount or amounts received by it in payment or on
account of any of the Obligations and if the Bank repays all or any part of
such amount or amounts by reason of any judgment, decree, or order of any court
or administrative body or by reason of any settlement or compromise of any such
demand, the undersigned will be and remain liable hereunder for the amount or
amounts so repaid or recovered to the same extent as if such amount or amounts
had never been received originally by the Bank.
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The Bank's books and records showing the account between the Bank and Debtor
shall be admissible in evidence in any action or proceeding as prima facie
proof of the items therein set forth; and the Bank's monthly or other periodic
statements rendered to Debtor to the extent to which no written objection is
made within thirty (30) days after the date thereof, shall constitute an
account stated between the Bank and Debtor and shall be binding on the
undersigned.
At any time or times after the occurrence of and during the continuance of
an event of default under the documents evidencing the Obligations or after
maturity of any of the Obligations, by acceleration or otherwise, Bank at its
option and with only such notice as required by law, may appropriate and apply
any balances, credits, deposits, accounts, or monies of the undersigned, now or
hereafter in the possession or control of Bank, toward payment of any or all of
the Obligations, with the undersigned agreeing to remain liable for the full
balance of Obligations remaining unpaid after any such setoff.
Guarantor shall pay all the reasonable costs, expenses, and fees, including
all reasonable attorneys' fees and litigation costs, which may be incurred by
the Bank in enforcing or attempting to enforce this Guarantee following any
default on the part of Guarantor hereunder, whether the same shall be enforced
by suit or otherwise. If any such fees and expenses are not so reimbursed, the
amount thereof shall, to the extent permitted by law, constitute indebtedness
guaranteed hereby, and in any action brought to collect such indebtedness the
Bank shall be entitled to seek the recovery of such fees and expenses in such
action except as limited by law or by judicial order or decision entered in
such proceedings.
No waiver of Bank's rights or options hereunder shall be effective unless in
writing and signed by Bank; and any rights and remedies hereunder are
cumulative and not alternative.
If any term, restriction or covenant of this Guarantee is deemed illegal or
unenforceable, all other terms, restrictions and covenants, and the application
thereof to all persons and circumstances subject hereto, shall remain
unaffected to the extent permitted by law; and if any application of any term,
restriction or covenant to any person or circumstance is deemed illegal, the
application of such term, restriction or covenant to other persons and
circumstances shall remain unaffected to the extent permitted by law.
The obligations and liabilities hereunder shall be binding upon the
successors and assigns of the Guarantor.
In the event that Debtor fails to pay any regularly scheduled principal or
interest payment on the Vienna Term Note (the "Note") when due (other than as a
result of acceleration thereof based on a default or event of default other
than the failure to make any such regularly scheduled payments of principal or
interest on the Note when due) which failure is not cured within the ten
(10)-day cure period provided in Section 6A of the Credit Facility (a "Payment
Default"), or if an Event of Default occurs and is continuing, which arises
from fraudulent act(s) or practice(s) of the Debtor which Event of Default is
not cured within three (3) Business Days after the Debtor's receipt of written
notice thereof from the Bank (a "Fraud Default"), the undersigned hereby
authorizes any attorney-at-law to appear in any court of record and lawful
jurisdiction in the State of Ohio or in any state or territory of the United
States, or in any court of the United States, from time to time, after any or
all of Obligations become due by acceleration or otherwise, to admit the
maturity thereof, to waive the issuance and service of process and
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confess a judgment against the undersigned in favor of payee or any other
holder of such Obligations for the amount then appearing due, together with
costs of suit, and thereupon to waive all errors and rights of appeal and stay
of execution, but no such judgment or judgments against less than all of those
obligated hereunder, or based on nonpayment of less than all of the
Obligations, shall bar subsequent judgment or judgments against any other
Guarantor, or based on nonpayment of other guaranteed Obligations. It is
agreed that the identification of any obligation as a guaranteed Obligation and
the amount due thereon under this Guarantee shall be conclusively evidenced by
any statement relative thereto in any petition filed in any court by any holder
hereof against any Guarantor for judgment thereon. To the extent that the
provisions of the cognovit warning set forth above the undersigned's signature
specifically contradict the provisions of this paragraph regarding the
requirement of a Payment Default or a Fraud Default to take a cognovit
judgment, the provisions of this paragraph control.
This Guarantee will be governed by and construed in accordance with the laws
of the State of Ohio and will be binding upon the undersigned and the
successors and assigns thereof and inure to the benefit of the Bank and its
successors and assigns. The undersigned agrees that legal action or
proceedings between the Bank and the undersigned may be brought in any court of
competent jurisdiction in the State of Ohio and waives objections to summons,
service of process, jurisdiction of the person or venue of any such court. THE
UNDERSIGNED WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED ON THIS
GUARANTEE.
Signed at Canton, Stark County, Ohio, this 14 day of March, 1996.
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WARNING--BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR, WHETHER
FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT, OR ANY OTHER CAUSE.
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LEXINGTON PRECISION CORPORATION
By Dennis J. Welhouse
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Dennis J. Welhouse
Senior Vice President and Assistant Secretary