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Exhibit 1049
January 16, 1996
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, unless otherwise defined herein, shall have the meanings ascribed
thereto in the Accounts Agreement and the other Financing Agreements):
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 LPC Arizona Real Estate Note and
the LPC New York Real Estate Notes (as each such term is defined below).
(b) The definition of "Term Loans" contained in the
letter agreement re: Amendment to Financing Agreements, dated January 31, 1995,
between LPC and Congress is hereby amended to include, without limitation, the
term loans made by Congress to LPC evidenced by the LPC Arizona Real Estate
Note and the LPC New York Real Estate Notes (as each such term is defined
below).
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2. Additional Term Loans.
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(a) Contemporaneously herewith, in order to evidence an
additional one-time advance to LPC in the principal amount of $375,000 (the
"LPC Arizona Real Estate Loan"), LPC is executing and delivering to Congress
the Term Promissory Note, dated of even date herewith, in the original
principal amount of $375,000 (as the same now exists or may hereafter be
amended, supplemented, renewed, extended, restated or replaced, the "LPC
Arizona Real Estate Note"). The Obligations evidenced by the LPC Arizona 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 LPC Arizona
Real Estate Note, as provided in the other Financing Agreements, and shall be
secured by all Collateral.
(b) Contemporaneously herewith, in order to evidence an
additional one-time advance to LPC in the principal amount of $450,000 (the
"LPC New York Real Estate Loan A"), LPC is executing and delivering to Congress
the Term Promissory Note, dated of even date herewith, in the original
principal amount of $450,000 (as the same now exists or may hereafter be
amended, supplemented, renewed, extended, restated or replaced, the "LPC New
York Real Estate Note A"). The Obligations evidenced by the LPC New York Real
Estate Note A shall be payable, including interest and other amounts, as
provided therein and, to the extent not inconsistent with the terms of the LPC
New York Real Estate Note A, as provided in the other Financing Agreements, and
shall be secured by all Collateral.
(c) At LPC's request made on or before May 31, 1996, and
upon not less than five (5) business days' prior written notice by LPC to
Congress and provided all of the conditions precedent set forth in Section 5
are then satisfied, Congress agrees to make an additional one-time advance to
LPC in the principal amount of $375,000 (the "LPC New York Real Estate Loan B";
and together with the LPC New York Real Estate Loan A, collectively, the "LPC
New York Real Estate Loans"). The LPC New York Real Estate Loan B shall be
evidenced by a Term Promissory Note in the principal amount of $375,000 in the
form annexed hereto as Exhibit A (as the same now exists or may hereafter be
amended, supplemented, renewed, extended, restated or replaced, the "LPC New
York Real Estate Note B; and together with the LPC New York Real Estate Note A,
collectively, the "LPC New York Real Estate Notes"). The Obligations evidenced
by the LPC New York Real Estate Note B shall be payable, including interest and
other amounts, as provided therein, and, to the extent not inconsistent with
the terms of the LPC New York Real Estate Note B, as provided in the other
Financing Agreements, and shall be secured by all Collateral.
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3. 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 and on the date of each advance in
respect of the LPC Arizona Real Estate Loan and the LPC New York Real Estate
Loans;
(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; and
(c) LPC agrees that, in connection with each of the
proposed equipment and real estate financing arrangements between LPC and Bank
One, Akron, NA ("Bank One") as set forth in the proposal letter dated October
26, 1995 between LPC and Bank One and the proposed equipment financing
arrangements between LPC and The CIT Group/Capital Equipment Financing, Inc.
("CIT") as set forth in the proposal letter dated October 30, 1995 between LPC
and CIT, LPC shall not enter into any such arrangements, or any other similar
financing arrangements with Bank One or CIT or other lender(s), unless Congress
has consented in writing to such arrangements and has approved in writing the
collateral to be granted thereunder, and unless the lender providing such
financing has entered into an intercreditor agreement with Congress, in form
and substance satisfactory to Congress, setting forth the relative priorities
of Congress and such lender in the collateral securing such financing
arrangements, and providing Congress rights of access and use of the equipment
and real estate subject to the senior security interests (if any) of such
lender, as well as notice and opportunity to cure defaults before the exercise
by such lender of enforcement rights against LPC or its property.
4. CONDITIONS TO THE EFFECTIVENESS OF AMENDMENT. Anything
contained in this Amendment to the contrary notwithstanding, LPC shall only be
entitled to receive the LPC Arizona Real Estate Loan and the LPC New York Real
Estate Loans pursuant to the terms and other conditions of this Amendment upon
the satisfaction of the following additional conditions precedent:
(a) Congress shall have received an executed original or
executed original counterparts (as the case may be) of this
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Amendment together with the following, each of which shall be in form and
substance satisfactory to Congress:
(i) the LPC Arizona Real Estate Note;
(ii) an Amendment to the Second Amended and
Restated Deed of Trust and Assignment of
Rents with Security Agreement and
Financing Statement (Fixture Filing)
between LPC and Congress which amends the
terms of the existing deed of trust in
favor of Congress previously granted with
respect to LPC's real property in Pinal
County, Arizona to expressly secure, INTER
ALIA, the LPC Arizona Real Estate Loan,
together with an updating endorsement, at
LPC's expenses, to the existing title
policy with respect thereto;
(iii) an updated Phase I Environmental
Assessment addressed to Congress or upon
which Congress is expressly permitted to
rely, a certification that there has been
no change in the facts set forth on the
existing ALTA standard survey previously
certified to Congress, and an appraisal
report addressed to Congress or upon which
Congress is expressly permitted to rely,
showing a fair market value of not less
than $500,000 (such fair market value to
be determined by using methodology
acceptable to Congress), each with respect
to LPC's owned real property in Pinal
County, Arizona and each dated as of a
date acceptable to Congress and prepared,
at LPC's expense, by an environmental
engineering firm, a surveyor and an
appraiser, respectively, reasonably
satisfactory to Congress;
(iv) a Landlord Waiver, by Tri-Valley Electric
Supply Co., as lessor of LPC's premises at
3011 N. Piper Dr., Casa Grande, Pinal
County, Arizona, in favor of Congress,
duly authorized, executed and delivered by
Tri- Valley Electric Supply Co.;
(v) the LPC New York Real Estate Note A;
(vi) a Mortgage and Security Agreement between
LPC and Congress, together with a title
policy, with respect to LPC's owned real
property in Lakewood, New York;
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(vii) a Phase I Environmental Assessment
addressed to Congress or upon which
Congress is expressly permitted to rely,
together with a NYSAPLS standard survey
certified to Congress, each with respect
to LPC's real property in Lakewood, New
York and each dated as of a date
acceptable to Congress and prepared, at
LPC's expenses, by an environmental
engineering firm and a surveyor
respectively, reasonably satisfactory to
Congress;
(viii) an appraisal report addressed to Congress,
or upon which Congress is expressly
permitted to rely, showing a fair market
value of LPC's owned real property in
Lakewood, New York of not less than
$925,000 as such real property existed
prior to the construction of the Lakewood
Improvements (as defined below), and of
not less than $1,650,000 assuming the
construction of the Lakewood Improvements
(such fair market values to be determined
by using methodology acceptable to
Congress), each dated as of a date
acceptable to Congress and prepared, at
LPC's expense, by an appraiser reasonably
satisfactory to Congress;
(ix) the resolutions of the Boards of Directors
of LPC and LCI duly authorizing the
execution and delivery of this Amendment
and the instruments and transactions
contemplated by this Amendment;
(x) evidence of casualty, hazard and business
interruption insurance and loss payable
endorsements naming Congress as a loss
payee thereunder and certificates of
insurance policies naming Congress as
additional insured as to liability
insurance, at LPC's cost and expense, in
each case with respect to the Pinal
County, Arizona and Lakewood, New York
real property of LPC (including the
Lakewood Improvements) and issued by an
insurance company and in amounts
satisfactory to Congress; and
(xi) evidence that none of LPC's owned real
property in Pinal County, Arizona and
Lakewood, New York is within an area
having
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special flood hazard or flood prone
characteristics, unless LPC has obtained
insurance coverage with respect to such
flood hazard issued by an insurance
company and in amounts satisfactory to
Congress, and as to which Congress has
been named as a loss payee thereunder.
(b) All representation and warranties contained herein,
in the Accounts Agreements 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 shall be existing which, with notice or
passage of time or both, would constitute an Event of Default.
5. DELIVERIES RELATING TO LPC NEW YORK REAL ESTATE LOAN B.
Anything contained in this Amendment to the contrary notwithstanding, LPC shall
only be entitled to receive the LPC New York Real Estate Loan B pursuant to the
terms and other conditions of this Amendment upon the satisfaction of the
following additional conditions precedent:
(a) Congress shall have received an executed original or
executed original counterparts (as the case may be) of each of the following,
each of which shall be in form and substance satisfactory to Congress:
(i) the LPC New York Real Estate Note B;
(ii) a Mortgage and Agreement of Consolidation
and Modification between LPC and Congress
which amends, modifies and consolidates
the terms of the existing Mortgage and
Security Agreement in favor of Congress
with respect to LPC's Lakewood, New York
owned real property to secure, with a
consolidated first mortgage lien upon such
real property of LPC, all of LPC's
Obligations in respect of the LPC New York
Real Estate Loan A and the LPC New York
Real Estate Loan B, and which shall
contain terms and conditions substantially
similar to those contained in the existing
Mortgage and Security Agreement;
(iii) a title policy issued to Congress insuring
the Mortgage and Agreement of
Consolidation and Modification referred to
above;
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(iv) a Certificate of Occupancy or other
municipal certification of completion, by
no later than May 31, 1996, of the
improvements to LPC's Lakewood, New York
real property described in the Building
Proposal of Kessel Construction dated June
15, 1995 which has been submitted to
Congress; and
(v) an updated NYSAPLS standard survey
certified to Congress reflecting the
completion of the improvements described
in subparagraph (iv) above (the "Lakewood
Improvements") by no later than May 31,
1996.
(b) All of the conditions precedent set forth in Section
4 above are satisfied;
(c) All representations and warranties contained herein,
in the Accounts Agreements and in the other Financing Agreements shall be true
and correct in all material respects; and
(d) No Event of Default shall have occurred an no event
shall have occurred or condition shall be existing which, with notice or
passage of time or both, would constitute an Event of Default.
6. 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.
7. FURTHER ASSURANCES. LPC shall execute and deliver such
additional documents and take such additional actions as may reasonably be
requested by Congress to effectuate the provisions and purposes of this
Amendment.
8. 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,
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
PRECISION CORPORATION ("LPC") to CONGRESS FINANCIAL CORPORATION ("Congress"),
including, without limitation, all indebtedness, liabilities and obligations
under the Financing Agreements as amended hereby.
LEXINGTON COMPONENTS, INC.
By: Warren Delano
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Title: Vice Chairman
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EXHIBIT A
LPC NEW YORK TERM PROMISSORY NOTE B*
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$375,000 New York, New York
____________ __, 1996
FOR VALUE RECEIVED, LEXINGTON PRECISION CORPORATION, a Delaware
corporation (the "Debtor"), hereby unconditionally promises to pay to the order
of CONGRESS FINANCIAL CORPORATION, a California corporation (the "Payee"), at
the offices of Payee at 1133 Avenue of the Americas, New York, New York 10036,
or at such other place as the Payee or any holder hereof may from time to time
designate, the principal sum of THREE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS
($375,000) in lawful money of the United States of America and in immediately
available funds, in _____ (___) consecutive monthly installments (or earlier as
hereinafter referred to) on the first day of each month commencing
_______________ 1, 1996, of which the first __________ (__) installments shall
each be in the amount of _____________________________________ DOLLARS
($____________), and the last (i.e. ____________ (__)) installment shall be in
the amount of the entire unpaid balance of this Note.
Debtor hereby further promises to pay interest to the order of Payee
on the unpaid principal balance hereof at the Interest Rate. Such interest
shall be paid in like money at said office or place from the date hereof,
commencing _____________ 1, 1996 and on the first day of each month thereafter
until the indebtedness evidenced by this Note is paid in full. Interest
payable upon and during the continuance of an Event of Default or following the
effective date of termination or non-renewal of the Financing Agreements shall
be payable upon demand.
For purposes hereof (a) the term "Interest Rate" shall mean, as to
Prime Rate Loans, a rate of one (1%) percent per annum in excess of the Prime
Rate and as to Eurodollar Rate Loans, a rate of three and one-quarter (3-1/4%)
percent per annum in excess of the Adjusted Eurodollar Rate; PROVIDED, THAT, at
Payee's option, the Interest Rate shall mean a rate of three (3%) percent per
annum in excess of the Prime Rate as to Prime Rate Loans and a
__________________________________
* For preparation of Note:
The blanks are to be completed such that the principal amount
of the LPC New York Term Promissory Note B is amortized in
equal, consecutive monthly installments of principal
commencing on the first day of the month following the date of
advance and ending December 1, 2002.
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rate of five and one-quarter (5-1/4%) percent per annum in excess of the
Adjusted Eurodollar Rate as to Eurodollar Rate Loans, upon and during the
continuance of an Event of Default or following the effective date of
termination or non-renewal of the Financing Agreements, and (b) the term "Prime
Rate" shall mean the rate from time to time publicly announced by CoreStates
Bank, N.A., or its successors, at its office in Philadelphia, Pennsylvania, as
its prime rate, whether or not such announced rate is the best rate available
at such bank. Unless otherwise defined herein, all capitalized terms used
herein shall have the meanings assigned thereto in the Accounts Agreement (as
hereinafter defined) and the other Financing Agreements.
The Interest Rate applicable to Prime Rate Loans payable hereunder
shall increase or decrease by an amount equal to each increase or decrease,
respectively, in the Prime Rate, effective on the first day of the month after
any change in the Prime Rate, based on the Prime Rate in effect on the last day
of the month in which any such change occurs. Interest shall be calculated on
the basis of a three hundred sixty (360) day year and actual days elapsed. In
no event shall the interest charged hereunder exceed the maximum permitted
under the laws of the State of New York or other applicable law.
This Note is issued pursuant to the terms and provisions of the letter
agreement re: Amendment to Financing Agreements, dated as of December __, 1995,
between Debtor and Payee (the "Amendment") to evidence the "LPC New York Real
Estate Loan B" (as defined in the Amendment) made by Payee to Debtor. This
Note is secured by the "Collateral" described in the Accounts Financing
Agreement [Security Agreement], dated January 11, 1990, by and between Payee
and Debtor, as amended (the "Accounts Agreement") and any agreement, document
or instrument now or at any time hereafter executed and/or delivered in
connection therewith or related thereto (the foregoing, as the same now exist
or may hereafter be amended, modified, supplemented, renewed, extended,
restated or replaced, are hereinafter collectively referred to as the
"Financing Agreements") and is entitled to all of the benefits and rights
thereof and of the Financing Agreements. At the time any payment is due
hereunder, at its option, Payee may charge the amount thereof to any account of
Debtor maintained by Payee.
If any principal or interest payment is not made when due hereunder,
and such failure shall continue for three (3) days, or if any other Event of
Default (as defined in the Accounts Agreement) shall occur for any reason, or
if the Financing Agreements shall be terminated or not renewed for any reason
whatsoever, then and in any such event, in addition to all rights and remedies
of Payee under the Financing Agreements, applicable law or otherwise, all such
rights and remedies being cumulative, not exclusive and enforceable
alternatively, successively and
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concurrently, Payee may, at its option, declare any or all of Debtor's
obligations, liabilities and indebtedness owing to Payee under the Financing
Agreements (the "Obligations"), including, without limitation, all amounts
owing under this Note, to be due and payable, whereupon the then unpaid balance
hereof together with all interest accrued thereon, shall forthwith become due
and payable, together with interest accruing thereafter at the then applicable
rate stated above until the indebtedness evidenced by this Note is paid in
full, plus the costs and expenses of collection hereof, including, but not
limited to, reasonable attorneys' fees.
Debtor (i) waives diligence, demand, presentment, protest and notice
of any kind, (ii) agrees that it will not be necessary for any holder hereof to
first institute suit in order to enforce payment of this Note and (iii)
consents to any one or more extensions or postponements of time of payment,
release, surrender or substitution of collateral security, or forbearance or
other indulgence, without notice or consent. Upon the occurrence and during
the continuance of any Event of Default, Payee shall have the right, but not
the obligation to setoff against this Note all money owed by Payee to Debtor.
Payee shall not be required to resort to any Collateral for payment,
but may proceed against Debtor and any guarantors or endorsers hereof in such
order and manner as Payee may choose. None of the rights of Payee shall be
waived or diminished by any failure or delay in the exercise thereof.
Debtor hereby waives the right to a trial by jury and all rights of
setoff and rights to interpose counterclaims and cross-claims in any litigation
or proceeding arising in connection with this Note, the Accounts Agreement, the
other Financing Agreements, the Obligations or the Collateral, other than
compulsory counterclaims, the non-assertion of which would result in a
permanent waiver. Debtor hereby irrevocably consents to the non-exclusive
jurisdiction of the Supreme Court of the State of New York and of the United
States District Court for the Southern District of New York for all purposes in
connection with any action or proceeding arising out of or relating to this
Note, the Accounts Agreement, the other Financing Agreements, the Obligations
or the Collateral and further consents that any process or notice of motion or
other application to said Courts or any judge thereof, or any notice in
connection with any proceeding hereunder may be served (i) inside or outside
the State of New York by registered or certified mail, return receipt
requested, and service or notice so served shall be deemed complete five (5)
days after the same shall have been posted or (ii) in such other manner as may
be permissible under the rules of said Courts. Within thirty (30) days after
such mailing, Debtor shall appear in answer to such process or notice of motion
or other application to said Courts, failing which Debtor shall
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be deemed in default and judgment may be entered by Payee against Debtor for
the amount of the claim and other relief requested therein.
The execution and delivery of this Note has been authorized by the
Board of Directors of Debtor.
This Note, the other Obligations and the Collateral shall be governed
by and construed in accordance with the laws of the State of New York and shall
be binding upon the successors and assigns of Debtor and inure to the benefit
of Payee and its successors, endorsees and assigns. If any term or provision
of this Note shall be held invalid, illegal or unenforceable, the validity of
all other terms and provisions hereof shall in no way be affected thereby.
This Note may not be changed, modified or terminated orally, but only
by an agreement in writing signed by the Payee or the holder hereof.
Whenever used herein, the terms "Debtor" and "Payee" shall be deemed
to include their respective successors and assigns.
LEXINGTON PRECISION CORPORATION
ATTEST:
By:________________________
_____________________
Title:_____________________
[Corporate Seal]
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