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Exhibit 1065
EXHIBIT A
PROMISSORY NOTE
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(Equipment Term Loan)
$1,800,000.00 North Canton, Ohio
March 26, 1996
FOR VALUE RECEIVED, LEXINGTON PRECISION CORPORATION, a corporation organized
under the laws of the State of Delaware (hereinafter collectively referred to
as the "Company"), promises to pay to the order of BANK ONE, AKRON, NA
(hereinafter referred to as the "Bank"), the principal amount of ONE MILLION
EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS ($1,800,000.00) on April 1, 2001, or
sooner as hereinafter provided, with interest on the unpaid balance of said
principal amount from the date hereof at a rate per annum equal to the LIBOR
Interest Rate (as defined in the Agreement) on the Core Borrowing Amount, if
any, pursuant to the immediately succeeding paragraph and at a rate per annum
equal to three-quarter percent (.75%) in excess of the Base Rate (as defined in
the Agreement), which definition is hereby accepted by the Company, as the same
may from time to time be established on the unpaid principal amount excluding
the Core Borrowing Amount (as defined below). If any installment of principal,
interest or other amounts due and payable hereunder are not paid when due, or
within any applicable grace periods set forth in the Agreement, the Company
shall pay interest thereon at the rate of three percent (3.0%) per annum in
excess of the Base Rate (as defined in the Agreement hereinafter referred to)
as the same may from time to time be established but not to exceed the maximum
rate allowed by law. Bank shall have the right to assess a late payment
processing fee in the amount of the greater of FIFTY AND NO/100 DOLLARS
($50.00) or five percent (5%) of the scheduled payment in the event of a
default in payment that remains uncured for a period of at least ten (10) days.
The Company shall have the right to elect to have a portion of the
outstanding balance of the Equipment Term Loan accrue interest at the LIBOR
Interest Rate (the "Core Borrowing Amount") by delivering to the Bank a
written, telephonic, or telegraphic request (effective upon receipt) by
facsimile, telephone, or telegraph by 12:00 p.m. three (3) Business Days prior
to the Business Day the LIBOR Interest Rate is to be effective, specifying (i)
the Core Borrowing Amount, which shall be in incremental strips of ONE HUNDRED
THOUSAND AND NO/100 DOLLARS ($100,000.00) and which shall not exceed the Core
Cap (as defined in the Agreement) in the aggregate and (ii) the duration of the
LIBOR Interest Period which shall be either one (1) month or two (2) months.
If the Company shall fail to give the Bank the notice as specified above for
the renewal of the LIBOR Interest Rate on the Core Borrowing Amount prior to
the end of the LIBOR Interest Period with respect thereto, the interest rate on
the Core Borrowing Amount shall automatically be converted into an interest
rate per annum equal to three-quarter percent (.75%) in excess of the Base
Rate, as the same may from time to time be established, on the last day of the
LIBOR Interest Period for such Core Borrowing Amount.
The Company agrees to pay the principal amount of this Note in fifty-nine
(59) consecutive equal installments of THIRTY THOUSAND AND NO/100 DOLLARS
($30,000.00) each, together with all accrued interest due at the time of
payment of each such installment of principal, commencing on May 1, 1996, and
continuing on the first day of each calendar month thereafter and a final
installment of THIRTY THOUSAND AND NO/100 DOLLARS ($30,000.00), together with
all accrued interest due at the time of payment of such installment, on April
1, 2001. Monthly payments
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hereunder shall be applied first to interest due and the balance to reduction
of the principal amount outstanding.
Payments of both principal of and interest on this Note shall be made in
lawful money of the United States of America, at 50 South Main Street, Akron,
Ohio 44308-1888, or at such other place as the Bank or any subsequent holder
hereof shall have designated to the Company in writing. Interest payable on
this Note shall be computed on a three hundred sixty (360) day per year basis
counting the actual number of days elapsed. If any payment under this Note
becomes due and payable on a day which is not a Business Day (as defined in
this Agreement), payment thereof shall be made on the immediately succeeding
Business Day.
This Note is issued pursuant to and is entitled to the benefits of a Credit
Facility and Security Agreement dated as of March 14, 1996, by and among the
Company, Lexington Components, Inc. ("LCI"), and the Bank (the "Agreement"), to
which Agreement reference is hereby made for a statement of the rights and
obligations of the Bank and the duties and obligations of the Company and LCI
in relation thereto; but neither this reference to said Agreement nor any
provisions thereof shall affect or impair the absolute and unconditional
obligation of the Company to pay the principal of or interest on this Note when
due.
The Company may prepay all or any portion of this Note at any time and in any
amount without penalty or premium, provided that all prepayments shall be
applied to installments of principal in the inverse order of their maturities
and subject to the terms of prepayment of the Core Borrowing Amount set forth
herein. The Core Borrowing Amount accruing interest at the LIBOR Interest Rate
may be prepaid only on the last day of the LIBOR Interest Period (as defined in
the Agreement) for the Core Borrowing Amount without premium or penalty,
provided, however, as long as the Bank has not matched funds in a money market
to fund the Core Borrowing Amount, (i) the Company may prepay the Core
Borrowing Amount during a LIBOR Interest Period if the Company pays a penalty
in the amount of one percent (1%) of the prepayment amount and (ii) the
outstanding balance of the Core Borrowing Amount upon the application of the
prepayment amount shall be an increment of ONE HUNDRED THOUSAND AND NO/100
DOLLARS ($100,000.00).
If an Event of Default (as defined in the Agreement), shall occur and shall
be continuing, the principal of this Note may be declared immediately due and
payable at the option of the Bank.
In the event that the Company fails to pay any regularly scheduled principal
or interest payment on this 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 this Note when due) which failure is not cured within the ten (10)-day cure
period provided in Section 6A of the Agreement (a "Payment Default"), or if an
Event of Default occurs and is continuing, which arises from fraudulent act(s)
or practice(s) of the Company which Event of Default is not cured within three
(3) Business Days after the Company's receipt of written notice thereof from
the Bank (a "Fraud Default"), the Company hereby authorizes any attorney-at-law
to appear in any court of record in the State of Ohio, or in any other state or
territory of the United States, at any time or times after the above sum
becomes due, and waives the issuance and service of process and confesses
judgment against it, in favor of any holder of this Note, for the amount then
appearing due, together with the costs of suit, and thereupon to release all
errors and waive all rights of appeal and stay of execution. The foregoing
warrant of attorney shall survive any judgment, it being understood that should
any judgment be vacated for any reason, the foregoing warrant of attorney
nevertheless may thereafter be used for obtaining an
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additional judgment or judgments. To the extent that the provisions of the
cognovit warning set forth above the Company'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.
No delay on the part of any holder hereof in exercising any power or rights
hereunder shall operate as a waiver of any power or rights. Any demand or
notice hereunder to the Company shall be deemed duly given or made when sent,
if given by telecopier, when delivered, if given by personal delivery or
overnight commercial carrier, or the fifth calendar day after deposit in the
United States mail, certified mail, return receipt requested, addressed to the
Company at its address (or telecopier number) set forth in Rider A of the
Agreement or such other address or telecopier number as may be hereafter
designated in writing by the Company to the Bank.
This note is executed at North Canton, Stark County, Ohio.
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.
LEXINGTON PRECISION CORPORATION
By Warren Delano
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Warren Delano
President