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Exhibit 10.2
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NOTE PURCHASE AGREEMENT
DATED AS OF OCTOBER 27, 1997
BETWEEN
LEXINGTON PRECISION CORPORATION
and
NOMURA HOLDING AMERICA, INC.
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TABLE OF CONTENTS
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Page
SECTION 1
Purchase and Sale of Notes
1.1 Description of Transaction.......................................... 1
1.2 Purchase and Sale of Notes.......................................... 1
SECTION 2
Closing Date; Delivery
2.1 Closing Date........................................................ 1
2.2 Transactions at Closing; Delivery................................... 2
SECTION 3
Representations and Warranties of the Company
3.1 Organization and Standing; Certificate of Incorporation and By-laws. 2
3.2 Corporate Power..................................................... 2
3.3 Subsidiaries........................................................ 2
3.4 Authorization....................................................... 3
3.5 Compliance with Other Instruments................................... 3
3.6 Litigation, etc..................................................... 3
3.7 Governmental Consent, etc........................................... 3
3.8 Disclosure.......................................................... 4
3.9 Financial Condition................................................. 4
3.10 No Change........................................................... 4
3.11 Taxes............................................................... 4
3.12 Compliance with ERISA............................................... 5
3.13 Private Sale........................................................ 5
3.14 Title to Properties................................................. 5
3.15 Labor Relations..................................................... 6
3.16 Insurance........................................................... 6
3.17 Investment Company Act.............................................. 6
3.18 Existing Indebtedness............................................... 6
3.19 Senior Debt......................................................... 6
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SECTION 4
Representations and Warranties of Purchaser
4.1 Investment.......................................................... 6
4.2 Experience and Information ........................................ 7
4.3 Rule 144............................................................ 7
4.4 Additional Representations.......................................... 8
SECTION 5
Transactions at Closing
5.1 Conditions to Obligations of Purchaser............................... 8
5.2 Conditions to Obligations of the Company............................. 9
SECTION 6
Covenants of the Company
6.1 Basic Financial Information......................................... 10
6.2 Additional Information and Rights................................... 11
6.3 Obligations Upon Merger or Consolidation............................ 12
SECTION 7
Restrictions on Transferability of Securities;
Compliance with Securities Act of 1933
7.1 Restrictions on Transferability..................................... 12
7.2 Restrictive Legend.................................................. 12
7.3 Notice of Proposed Transfers........................................ 13
SECTION 8
Miscellaneous
8.1 Governing Law; Consent to Forum..................................... 13
8.2 Survival............................................................ 14
8.3 Successors and Assigns.............................................. 14
8.4 Entire Agreement; Amendment......................................... 14
8.5 Notices, etc........................................................ 14
8.6 Delay or Omission................................................... 15
8.7 Brokers, etc........................................................ 15
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8.8 Information Confidential............................................ 15
8.9 Expenses............................................................ 16
8.10 Indemnification..................................................... 16
8.11 Titles.............................................................. 16
8.12 Severability........................................................ 16
8.13 Interpretation...................................................... 16
8.14 Counterparts........................................................ 17
8.15 Schedules........................................................... 17
SCHEDULE 1 Form of Note....................................... 19
SCHEDULE 2 List of Subsidiaries and Investments............... 20
SCHEDULE 3 Pending or Threatened Legal Actions or
Proceedings........................................ 21
SCHEDULE 4 Changes............................................ 22
SCHEDULE 5 Certain Liens...................................... 23
SCHEDULE 6 Labor Relations.................................... 24
SCHEDULE 7 Existing Indebtedness.............................. 25
SCHEDULE 8 Form of Opinion of Counsel to the Company.......... 26
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NOTE PURCHASE AGREEMENT
-----------------------
THIS NOTE PURCHASE AGREEMENT is made as of the 27th day of October,
1997 by and between Lexington Precision Corporation, a Delaware corporation (the
"COMPANY"), and Nomura Holding America, Inc., a Delaware corporation
("PURCHASER").
WHEREAS, the Company wishes to sell and Purchaser wishes to buy certain
securities of the Company as described in and subject to the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto, intending to be legally
bound hereby, agree as follows:
SECTION 1
Purchase and Sale of Notes
--------------------------
1.1 DESCRIPTION OF TRANSACTION. Purchaser proposes to purchase from the
Company, and the Company proposes to sell to Purchaser, $7,500,000 aggregate
principal amount of the Company's 10 1/2% Senior Unsecured Notes due February 1,
2000 (the "NOTES") at the Closing provided for in Section 2.1 for a purchase
price of $7,500,000.00 (the "PURCHASE PRICE"). The Notes shall be issued in
substantially the form annexed hereto as SCHEDULE 1.
1.2 PURCHASE AND SALE OF NOTES. Subject to the terms and conditions
hereof, Purchaser shall purchase from the Company, and the Company shall sell to
Purchaser, at the Closing provided for in Section 2.1, the Notes for an amount
equal to the Purchase Price. At the Closing, and upon delivery of the Notes and
upon completion of the transactions described in Section 5 hereof, the Company
shall issue and deliver the Notes to Purchaser in consideration of the payment
by Purchaser of the Purchase Price in immediately available funds.
SECTION 2
Closing Date; Delivery
----------------------
2.1 CLOSING DATE. Subject to the terms and conditions of this
Agreement, the closing of the purchase and sale of the Notes (the "CLOSING")
shall be held on October 27, 1997 (the "CLOSING DATE") or such other date as the
parties may mutually agree upon in writing.
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2.2 TRANSACTIONS AT CLOSING; DELIVERY. At the Closing, and upon
completion of the transactions described in Section 5 hereof, the Company shall
deliver instruments in such denominations as Purchaser may request evidencing
the Notes against payment to the Company of the Purchase Price therefor in
accordance with Section 1.2 hereof. Payment of the Purchase Price shall be made
in immediately available funds to such account or accounts as may be designated
by the Company. At the Closing, the Company shall pay Nomura Holding America,
Inc. a fee in the amount of $75,000 (the "TRANSACTION FEE").
SECTION 3
Representations and Warranties of the Company
---------------------------------------------
The Company hereby represents and warrants to Purchaser as follows:
3.1 ORGANIZATION AND STANDING; CERTIFICATE OF INCORPORATION AND
BY-LAWS. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Company has all
requisite corporate power and authority to own and operate its properties and
assets and to carry on its business as presently conducted. The Company is
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the ownership, leasing or operation of its properties
or the nature of its activities makes such qualification necessary, except where
the failure to so qualify would not have a material adverse effect on the
condition (financial or otherwise), properties, assets, business, or results of
operations of the Company. The Company has furnished to Purchaser a copy,
certified by the Secretary or an Assistant Secretary of the Company, of its
Restated Certificate of Incorporation and By-laws, as amended. Said copies are
true, correct and complete and contain all amendments thereto.
3.2 CORPORATE POWER. The Company has all requisite corporate power and
authority to execute and deliver this Agreement, and has all requisite corporate
power and authority to issue the Notes in the manner contemplated by this
Agreement and to carry out and perform its obligations hereunder.
3.3 SUBSIDIARIES. The Company does not own or control, directly or
indirectly, any interest or investment in any corporation, association or
business entity, except as set forth on SCHEDULE 2 hereto. Each of the
corporations listed on SCHEDULE 2 hereto of which the Company, as of the Closing
Date, will own at least a majority of the outstanding capital stock as indicated
on SCHEDULE 2 hereto (each, a "SUBSIDIARY" and, collectively, the
"SUBSIDIARIES"), is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each
Subsidiary has all requisite corporate power and authority to own and operate
its properties and assets, and to carry on its business as presently conducted.
Each Subsidiary is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the ownership, leasing or operation of
its properties or the nature of its activities makes
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such qualification necessary, except where the failure to so qualify would not
have a material adverse effect on the condition (financial or otherwise),
properties, assets, business, or results of operations of such Subsidiary.
Lexington Components, Inc., a Delaware corporation that is a Subsidiary of the
Company ("LCI"), has all requisite corporate power and authority to execute and
deliver its guarantee of the Notes (the "GUARANTEE")
3.4 AUTHORIZATION. All corporate action on the part of the Company
necessary for the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein, and for the issuance and
delivery of the Notes has been taken. This Agreement, is, and each of the Notes
upon issuance by the Company will be, a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms. All
corporate action on the part of LCI necessary for the execution, delivery and
performance of the Guarantee and the consummation of the transactions
contemplated therein has been taken. Upon execution thereof by LCI, the
Guarantee will be a valid and binding obligation of LCI, enforceable against LCI
in accordance with its terms.
3.5 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the Company nor any of
its Subsidiaries is in violation of any term or condition of its Certificate of
Incorporation or By-laws or any law, rule or regulation applicable to it, and,
on the Closing Date, will not be in violation of or default under any term or
condition of any material mortgage, indenture, contract, agreement, lease,
license, instrument, judgment, decree or order to which it is a party or by
which it or any of its properties is bound. The execution, delivery and
performance of this Agreement by the Company, the issuance and delivery of the
Notes, the execution, delivery and performance by LCI of the Guarantee and the
consummation of the transactions contemplated hereby and thereby, will not (i)
as of the Closing Date, result in any such violation or be in conflict with or
constitute any such default under any such term or condition, or (ii) except as
expressly provided by this Agreement, result in the creation as of the Closing
Date of any mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of the Company or any of its Subsidiaries pursuant to any
such term or condition.
3.6 LITIGATION, ETC. Except as set forth in SCHEDULE 3 annexed hereto,
there are no actions or proceedings pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary or any of their respective
properties which relate to or call into question the validity or legality of
this Agreement, the issuance and delivery of the Notes, the Guarantee or the
transactions contemplated hereby or thereby or which either individually or in
the aggregate can reasonably be expected to have a material and adverse effect
on the condition (financial or otherwise), properties, assets, business,
prospects or results of operations of the Company.
3.7 GOVERNMENTAL CONSENT, ETC. (a) Except as set forth in paragraph
3.7(b) hereof, no consent, approval, license or authorization of, or
designation, declaration, notification, registration, qualification or filing
with (each, an "APPROVAL") any governmental authority on the part of the Company
or LCI is required in connection with the valid execution, delivery and
performance of this Agreement, the issuance and delivery of the Notes, the
execution, delivery
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and performance by LCI of the Guarantee, or the consummation of any other
transaction contemplated hereby.
(b) Any required Approval under applicable federal securities laws and
state Blue Sky laws of the issuance and delivery of the Notes or the execution
and delivery of the Guarantee has been obtained on or before the date hereof or
will have been obtained within the applicable period for obtaining such
Approval.
3.8 DISCLOSURE. Neither this Agreement, the Company's Annual Report on
Form 10-K for the year ended December 31, 1996 (the "1996 10-K") nor any of the
Company's periodic reports or forms filed with the Securities and Exchange
Commission (the "COMMISSION") after the filing of the 1996 10-K, as of the
respective dates thereof, contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances under
which such statements were made. There exists no fact or circumstance which, to
the knowledge of the Company, materially and adversely affects the business,
properties or assets, or condition (financial or otherwise), prospects (other
than those facts and circumstances affecting generally any industry in which the
Company operates or the economy generally) or results of operations of the
Company, which has not been set forth in this Agreement or the Schedules hereto
or disclosed in such reports or forms filed with the Commission.
3.9 FINANCIAL CONDITION. The consolidated balance sheets of the Company
as at December 31, 1995 and December 31, 1996 and the related consolidated
statements of operations, stockholders' deficit and cash flows (together with
the notes thereto) for the fiscal years ended on such dates, certified by Ernst
& Young LLP, and the unaudited consolidated balance sheets of the Company as of
June 30, 1997 and the related unaudited consolidated statements of operations,
stockholders' deficit and cash flows for the six-month period then ended
contained in the Company's Quarterly Report on Form 10-Q for the period ended
June 30, 1997, are complete and correct and present fairly (subject, in the case
of the interim statements described above, to normal year-end adjustments) the
consolidated financial condition of the Company as at such dates, and the
consolidated results of its operations, its stockholders' deficit and its
consolidated cash flows for the fiscal periods then ended. All such consolidated
financial statements, including the related schedules and notes thereto, have
been prepared in accordance with generally accepted accounting principles
applied consistently throughout the periods involved.
3.10 NO CHANGE. Since June 30, 1997, there has been no material adverse
change in the business, operations, properties, assets, financial or other
condition (other than those changes in prospects affecting generally any
industry in which the Company operates or the economy generally) of the Company
or any Subsidiary except as set forth on SCHEDULE 4 hereto.
3.11 TAXES. The Company and each Subsidiary has filed all tax returns
which are required to be filed, and has paid all taxes, assessments and other
governmental charges levied upon it and its respective properties or assets,
income or franchises which are due and payable.
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Federal tax liabilities for the Company and its Subsidiaries have been finally
determined by the Internal Revenue Service and satisfied, or the time for audit
has expired, for all fiscal periods through December 31, 1993 (except with
respect to net operating loss carryforwards relating to such periods). The
Company has made adequate provision consistent with past practice on its balance
sheet for the payment of all federal, state and local income taxes.
3.12 COMPLIANCE WITH ERISA. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby will not
involve any prohibited transaction within the meaning of the Employee Retirement
Income Security Act of 1974, as amended, and the rules and regulations
thereunder (collectively and as from time to time in effect, the "PENSION REFORM
ACT"). Each pension or other employee benefit plan (a "PLAN") subject to the
Pension Reform Act which the Company or any Subsidiary maintains, contributes
to, or otherwise participates in (other than a multiemployer plan) is in
compliance with those provisions of the Pension Reform Act the failure to be in
compliance with which could, individually or in the aggregate, have a material
and adverse effect on the Company and its Subsidiaries (taken as a whole).
Neither the Company nor any Subsidiary has, as a result of any previous
sale of assets of the Company or any Subsidiary, any contingent withdrawal
liability under the Pension Reform Act. The Company and each Subsidiary has met
all of the minimum funding standards applicable to such Plans.
3.13 PRIVATE SALE. Based upon the representations and warranties of
Purchaser contained in Sections 4.1 through 4.4 of this Agreement, and assuming
compliance by Purchaser and any transferee thereof with the terms of this
Agreement and with the transfer restrictions set forth on the Notes, the
issuance of the Notes is exempt from the registration requirement of Section 5
of the Securities Act of 1933, as amended (the "1933 ACT")
3.14 TITLE TO PROPERTIES. To the Company's knowledge, the Company has
insurable title to all of the material real property owned by it and title to
the material personal property owned by it, all as reflected in the audited
consolidated balance sheets referred to in Section 3.9 hereof subject only to
(a) the liens and security interests, if any, listed on SCHEDULE 5 hereto or
referred to in or reflected on the financial statements (or notes thereto)
referred to in Section 3.9 hereof, (b) liens for taxes not yet due or which are
being contested in good faith and by appropriate proceedings, (c) carriers',
warehousemen's, mechanics', materialmen's, repairmen's or other like liens
arising in the ordinary course of business, (d) pledges or deposits in
connection with workmen's compensation, unemployment insurance and other social
security legislation, (e) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business, and (f) easements, rights-of-way,
restrictions and other similar encumbrances incurred in the ordinary course of
business, none of which materially impair the ability of the Company or any
Subsidiary to use such property in the course of its ordinary business or
operations.
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3.15 LABOR RELATIONS. Except as disclosed in SCHEDULE 6 hereto, there
is no material dispute or controversy with any union or other organization
representing the employees of the Company or any Subsidiary. Except as disclosed
in SCHEDULE 6 hereto, the Company is not aware of any pending union elections or
organizing activity involving any employees of the Company or any Subsidiary.
3.16 INSURANCE. The Company keeps insured, by financially sound and
reputable insurers, all of its property of a character usually insured by
entities engaged in the same or similar businesses similarly situated, against
loss or damage of the kinds and in amounts customarily insured against by such
entities and with such deductibles, self-insurance or coinsurance as is
customary for entities engaged in the same or similar businesses similarly
situated.
3.17 INVESTMENT COMPANY ACT. The Company is not an "investment company"
or a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
3.18 EXISTING INDEBTEDNESS. SCHEDULE 7 hereto sets forth a true and
correct list of all indebtedness for borrowed money of the Company and its
Subsidiaries outstanding as of September 30, 1997. The Company has provided
Purchaser or its representatives with true and correct copies of (i) the
Indenture dated as of August 1, 1993 between the Company and IBJ Schroder Bank &
Trust Company, as Trustee, relating to the Company's 12 3/4% Senior Subordinated
Notes due February 1, 2000, (ii) the Company's Junior Subordinated Convertible
Increasing Rate Notes due May 1, 2000, and (iii) the Company's 14% Junior
Subordinated Notes due May 1, 2000 (collectively, the "SUBORDINATED DEBT
DOCUMENTS").
3.19 SENIOR DEBT. Upon the issuance thereof, the Notes shall constitute
"Senior Debt" as such term is defined in the Subordinated Debt Documents.
SECTION 4
Representations and Warranties of Purchaser
-------------------------------------------
4.1 INVESTMENT. Purchaser hereby represents and warrants to the Company
that the Notes will, on the Closing Date, be acquired for its own account, and
that it has no present intention of selling, granting participation in, or
otherwise distributing any of the Notes to be issued to it in any transaction
which would be in violation of the securities laws of the United States of
America or any state or other jurisdiction thereof, without prejudice, however,
to Purchaser' rights at all times to sell or otherwise dispose of all or any
part of such securities under a registration under 1933 Act or under an
exemption from such registration available under the 1933 Act and subject,
nevertheless, to the disposition of Purchaser' property being at all times
within its control. Purchaser acknowledges that the Notes will not, on the
Closing Date, be
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registered under the 1933 Act, on the ground that the sale provided for in this
Agreement and the issuance of securities hereunder is exempt from registration
under the 1933 Act, and that the Company's reliance on such exemption is
predicated on the representations set forth in this Section 4.
4.2 EXPERIENCE AND INFORMATION. Purchaser represents to the Company
that (a) Purchaser, by and through its officers (each of whom is experienced in
evaluating companies such as the Company), is experienced in evaluating
companies such as the Company; (b) Purchaser, by and through its officers (each
of whom has such knowledge and experience in financial and business matters as
to be capable of evaluating Purchaser's investment), has such knowledge and
experience in financial and business matters as to be capable of evaluating its
investment, and Purchaser has the ability to bear the economic risks of its
investment; (c) Purchaser, by and through its officers, has reviewed this
Agreement, including all exhibits and schedules hereto, and has received the
Company's annual reports to shareholders for fiscal years ended December 31,
1994 through 1996, and all of the Company's periodic reports and amendments
thereto and forms and amendments thereto prepared for filing with the Commission
(including, without limitation, the Company's Annual Reports on Form 10-K for
fiscal years ended December 31, 1994 through 1996, the Company's Quarterly
Reports on Form 10-Q for the periods ended March 31, 1997 and June 30, 1997, and
the Company's proxy statements prepared in connection with the Company's annual
meeting of shareholders held on May 15, 1997 and the financial statements
included in such periodic reports and forms and the financial statements
referred to in Section 3.12 hereof; and (d) Purchaser, by and through its
officers, has had, during the course of the transactions contemplated hereby and
prior to its receipt of the Notes, the opportunity to ask questions of, and has
received answers from, the Company concerning the transactions contemplated
hereby and to obtain any additional information which the Company possesses or
could acquire without unreasonable effort or expense; PROVIDED, HOWEVER, that no
such investigation by Purchaser or by its officers shall limit, diminish, or
constitute a waiver of any representation or warranty made under this Agreement
by the Company or impair any rights which Purchaser may have with respect
thereto.
4.3 RULE 144. Purchaser understands that the Notes may not be sold,
transferred, or otherwise disposed of without registration under the 1933 Act or
the availability of an exemption therefrom and that in the absence of such
registration or exemption, the Notes must be held indefinitely. In particular,
Purchaser is aware that the Notes may not be sold pursuant to Rule 144
promulgated under the 1933 Act unless all of the applicable conditions of that
Rule are met, and that the Company is making no representation that such
conditions will be met in the future. Purchaser represents that, in the absence
of an effective registration statement covering the Notes, it will sell,
transfer, or otherwise dispose of the Notes only in a manner consistent with its
representations set forth in Section 4.1.
4.4 ADDITIONAL REPRESENTATIONS. Purchaser represents that (a) it is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
execute and deliver this Agreement, to purchase the Notes and to carry out and
perform its obligations hereunder; (b) the execution, delivery and
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performance by Purchaser of this Agreement, the purchase of the Notes and the
consummation of the transactions contemplated hereby and thereby (i) will not
result in any violation of, or conflict with, any term or condition of the
certificate of Incorporation or By-laws of Purchaser or of any material term of
any material agreement, instrument or indenture to which it is a party or by
which it or any of its assets is bound or any law, rule or regulation applicable
to it, and (ii) have been duly authorized by all necessary corporate action on
behalf of Purchaser; and (c) this Agreement has been duly authorized by and duly
executed and delivered on behalf of Purchaser and constitutes a legal, valid and
binding obligation of Purchaser enforceable against Purchaser in accordance with
its terms.
SECTION 5
Transactions at Closing
-----------------------
5.1 CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser under this Agreement are, at the option of Purchaser, subject to the
fulfillment of each of the following conditions:
(a) REPRESENTATIONS, ETC. All representations and warranties
of the Company contained herein shall be true and accurate in all material
respects as of the date when made and shall be deemed to be made again on and as
of the Closing Date and shall then be true and accurate in all material
respects; and the Company shall have performed and complied in all material
respects with every covenant, agreement and condition to be performed or
complied with by the Company prior to or at the Closing Date.
(b) OFFICER'S CERTIFICATE. The Company shall have delivered to
Purchaser a certificate executed on behalf of the Company by an executive
officer of the Company dated the Closing Date, certifying to the fulfillment of
the conditions set forth in Section 5.1(a) hereof.
(c) NOTES; GUARANTEE. The Company shall have delivered the
Notes in the manner set forth in Sections 1 and 2 hereof and LCI shall have
delivered the Guarantee.
(d) OPINION OF COUNSEL. Nixon, Hargrave, Devans & Doyle LLP,
counsel to the Company, shall have delivered to Purchaser its opinion in the
form attached as SCHEDULE 8.
(e) PROCEEDINGS. No judicial or administrative proceeding
shall be pending or threatened seeking to enjoin or prevent, nor shall any order
or injunction have been issued prohibiting, consummation of any of the
transactions contemplated hereby.
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(f) CONSENTS. The Company and Purchaser shall have obtained
all necessary consents of third parties, to the execution and delivery of this
Agreement, the purchase and sale of the Notes and the consummation of the
transactions contemplated by this Agreement.
(g) TRANSACTION FEE. The Company shall have paid the
Transaction Fee to Nomura Holding America, Inc. in immediately available funds.
(h) OTHER INSTRUMENTS. The Company shall have delivered to
Purchaser such other instruments, documents and certificates as shall have been
reasonably requested by Purchaser.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the
Company under this Agreement are, at the option of the Company, subject to the
fulfillment of each of the following conditions:
(a) REPRESENTATIONS, ETC. All representations and warranties
of Purchaser contained herein shall be true and accurate in all material
respects as of the date when made and shall be deemed to be made again on and as
of the Closing Date and shall then be true and accurate in all material
respects; and Purchaser shall have performed and complied in all material
respects with every covenant, agreement and condition to be performed or
complied with by Purchaser prior to or at the Closing Date.
(b) OFFICER'S CERTIFICATE. Purchaser shall have delivered to
the Company a certificate executed on behalf of the Purchaser by an executive
officer of Purchaser, dated the Closing Date, certifying to the fulfillment of
the conditions set forth in Section 5.2(a) hereof.
(c) PURCHASE PRICE. Purchaser shall have paid the Purchase
Price to the Company in immediately available funds.
(d) PROCEEDINGS. No judicial or administrative proceeding
shall be pending or threatened seeking to enjoin or prevent, nor shall any order
or injunction have been issued prohibiting, consummation of any of the
transactions contemplated hereby.
(e) CONSENTS. The Company and Purchaser shall have obtained
all necessary consents of third parties to the execution and delivery of this
Agreement, the purchase and sale of the Notes and the consummation of the
transactions contemplated by this Agreement.
(f) OTHER INSTRUMENTS. Purchaser shall have delivered to the
Company such other instruments, documents and certificates as shall have been
reasonably requested by the Company.
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SECTION 6
Covenants of the Company
------------------------
The Company hereby covenants and agrees that from and after the Closing
Date so long as any of the Notes shall remain outstanding:
6.1 BASIC FINANCIAL INFORMATION. The Company will furnish the following
reports to the Holders:
(a) As soon as practicable after the end of each fiscal year, and in
any event within 100 days thereafter, consolidated balance sheets of the Company
and its Subsidiaries as of the end of such fiscal year, and consolidated
statements of operations and of cash flows of the Company and its Subsidiaries
for such year, prepared in accordance with generally accepted accounting
principles consistently applied and setting forth in each case in comparative
form the corresponding figures for the previous fiscal year, all in reasonable
detail, accompanied by a report of an independent public accounting firm of
nationally recognized standing selected by the Company;
(b) As soon as practicable after the end of the first, second and third
quarterly accounting periods in each fiscal year of the Company and its
Subsidiaries and in any event within 55 days thereafter, consolidated balance
sheets of the Company and its Subsidiaries as of the end of each such quarterly
period, consolidated statements of operations of the Company and its
Subsidiaries for such periods and for the current fiscal year to date and
consolidated statements of cash flows of the Company and its Subsidiaries for
the current fiscal year to date, prepared in accordance with generally accepted
accounting principles consistently applied and setting forth in comparative form
the corresponding figures for the corresponding periods of the previous fiscal
year, all in reasonable detail;
(c) As soon as practicable, copies of any special or interim audit
reports with respect to the Company, its Subsidiaries or their operations
submitted to the Company by independent public accountants otherwise than in the
ordinary course of business and intended for public dissemination; and
(d) As soon as practicable, copies of all financial statements, proxy
material or reports sent to the stockholders of the Company and all reports or
final registration statements, including accompanying prospectuses, filed with
the Securities and Exchange Commission pursuant to the 1933 Act or the
Securities Exchange Act of 1934, as amended (the "1934 ACT").
(e) As soon as practicable, copies of any other documents or
information as may be reasonably requested by the Holders.
6.2 ADDITIONAL INFORMATION AND RIGHTS.
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(a) The Company will afford to the Holders the following:
(i) Promptly upon the occurrence thereof, written notice to
the Purchaser of (A) any material violation or default by the Company in the
performance of its agreements or covenants contained herein or in any material
agreement to which the Company is a party or (B) the commencement of any action
or proceeding against the Company or any of its Subsidiaries which could have a
material adverse effect on any of them;
(ii) Upon the occurrence and during the continuance of an
"Event of Default" (as defined in the Notes), the right to, or to designate in
writing any agent of Purchaser to, visit and inspect any of the properties of
the Company and its Subsidiaries; and
(iii) The right to, or to designate in writing any agent of
Purchaser to, examine books of account and other records and make copies
thereof, and discuss the financial, accounting, business and other affairs of
the Company and any of its Subsidiaries with the Company's officers, directors
and accountants, all at such reasonable times and as often as may be reasonably
requested, and all in accordance with the requirements of Section 8.8 hereof and
such other confidentiality restrictions as may be reasonably requested by the
Company.
(b) The Company will, and will cause each Subsidiary to:
(i) Maintain their respective tangible properties and assets
in good repair, working order and condition so far as necessary or advantageous
to the proper conduct of their respective businesses;
(ii) Comply in all material respects with all applicable laws,
orders, rules, regulations and decrees applicable to the Company or such
Subsidiary; PROVIDED, HOWEVER, that such compliance shall not be necessary so
long as the applicability or validity of any such law, order, rule, regulation
or decree shall be contested by or on behalf of the Company or a Subsidiary in
good faith by appropriate proceedings and an adequate reserve shall have been
established by or on behalf of the Company or a Subsidiary with respect thereto;
(iii) Pay promptly when due all taxes, fees, assessments and
other governmental charges imposed upon their respective properties, assets or
income which might by law become a lien upon such properties or assets;
PROVIDED, HOWEVER, that payment of any such tax, fee, assessment or charge shall
not be necessary so long as the applicability or validity thereof shall be
contested by or on behalf of the Company or a Subsidiary in good faith by
appropriate proceedings and an adequate reserve shall have been established by
or on behalf of the Company or a Subsidiary with respect thereto; and
(iv) Keep adequately insured, by financially sound and
reputable insurers, all their respective property of a character usually insured
by entities engaged in the same or similar businesses similarly situated,
against loss or damage of the kinds and in amounts customarily
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insured against by such entities and with such deductibles, self-insurance or
coinsurance as is customary for entities engaged in the same or similar
businesses similarly situated.
6.3 OBLIGATIONS UPON MERGER OR CONSOLIDATION. In the event of a merger
or consolidation of the Company with or into another corporation in which the
Company is not the surviving corporation (the surviving corporation to such
merger or consolidation hereinafter being referred to as the "SURVIVING
CORPORATION"), the Company shall ensure that the Surviving Corporation shall
assume all obligations of the Company under this Agreement.
SECTION 7
Restrictions on Transferability of Securities;
Compliance with Securities Act of 1933
--------------------------------------
7.1 RESTRICTIONS ON TRANSFERABILITY. The Notes shall not be
transferable except upon compliance with the conditions specified in this
Section 7.
7.2 RESTRICTIVE LEGEND.
(a) Each certificate representing any of the Notes shall (unless
otherwise permitted by the provisions of Section 7.3 below) be stamped or
otherwise imprinted with a legend in substantially the following form (in
addition to any legend required under applicable state securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT
OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED. THESE SECURITIES ARE SUBJECT TO THE
TERMS OF A NOTE PURCHASE AGREEMENT DATED AS OF OCTOBER 27, 1997 WITH
THE COMPANY, A COPY OF WHICH IS ON FILE AND AVAILABLE FOR INSPECTION AT
THE PRINCIPAL CORPORATE OFFICE OF THE COMPANY.
An appropriate "stop transfer" order may be placed with the Company's
transfer agent with respect to each such certificate.
(b) Any legend endorsed on an instrument pursuant to Section 7.2(a)
hereof and the stop transfer instructions with respect to such Notes shall be
removed, and the Company shall issue an instrument without such legend to the
holder of such Notes, if (i) such holder provides
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the Company with an opinion of counsel who shall be reasonably satisfactory to
the Company, in form and substance reasonably satisfactory to the Company, that
a public sale, transfer or assignment of such Notes may be made without
registration, or (ii) such Notes may be sold to the public without restriction
pursuant to Rule 144 promulgated under the Securities Act or any similar
provision.
7.3 NOTICE OF PROPOSED TRANSFERS. The holder of each certificate
representing Notes, by acceptance thereof, agrees to comply in all respects with
the provisions of this Section 7.3. Prior to any proposed transfer of any Notes
the holder thereof shall give written notice to the Company of such holder's
intention to effect such transfer. Each such notice shall describe the manner
and circumstances of the proposed transfer in sufficient detail, and shall be
accompanied (except in transactions in compliance with Rule 144 promulgated
under the 1933 Act or any similar provision where the holder provides the
Company with information for it to make a determination as to such compliance)
by a written opinion of legal counsel who shall be reasonably satisfactory to
the Company, addressed to the Company, to the effect that the proposed transfer
of the Notes may be effected without registration under the 1933 Act. Each
certificate evidencing the Notes transferred as above provided shall bear the
appropriate restrictive legend set forth in Section 7.2 above, except that such
certificate evidencing Notes shall not bear such restrictive legend if the sale
is made pursuant to Rule 144 promulgated under the Securities Act or any similar
provision or if the opinion of counsel referred to above is to the further
effect that such legend is not required in order to establish compliance with
any provisions of the 1933 Act.
SECTION 8
Miscellaneous
-------------
8.1 GOVERNING LAW; CONSENT TO FORUM. (a) This Agreement shall be
governed in all respects by the internal laws of the State of New York without
reference to its principles of conflict of laws.
(b) Any action or suit in connection with this Agreement may be brought
in a court of record of the State of New York or a United States District Court
situated in the State of New York, the parties to this Agreement hereby
consenting to the nonexclusive jurisdiction of each thereof.
8.2 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive the closing of the transactions contemplated hereby.
8.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors and assigns of the parties hereto.
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8.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subject matter hereof and
thereof and supersede all other prior agreements and understandings, written and
oral, among any or all of the parties, with respect to the subject matter
hereof. Neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated orally, but only by a written instrument signed by the
Company and Purchaser.
8.5 NOTICES, ETC. All notices, claims, demands and other communications
required or permitted hereunder shall be deemed to have been duly given or
served if in writing and delivered by hand (effective upon delivery) or sent by
registered or certified mail, return receipt requested (effective five days
following the time of postmark), or by facsimile (effective upon receipt of
confirmation of transmission) to the parties (and other persons or entities
receiving copies thereof) at the following addresses or facsimile numbers (or to
such other address or facsimile number as a party may have specified by notice
given to the other party pursuant to this provision):
If to the Company:
Lexington Precision Corporation
767 Third Avenue
29th Floor
New York, New York 10017-2023
Attention: President
Facsimile: (212) 319-4659
with a copy to:
Nixon, Hargrave, Devans & Doyle LLP
437 Madison Avenue
New York, New York 10022
Attention: Richard F. Langan, Jr.
Facsimile: (212) 940-3740
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If to Purchaser:
Nomura Holding America, Inc.
Special Situations Group
21st Floor
Two World Financial Center
New York, New York 10281-1198
Attention: Mr. Thomas Fuller
Facsimile: (212) 667-1708
with a copy to:
Robinson, Silverman, Pearce, Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104-0053
Attention: Thomas Moers Mayer
Facsimile: (212) 541-4630
8.6 DELAY OR OMISSION. No delay or omission to exercise any right,
power or remedy accruing to any holder of any Notes upon any breach or default
by the Company under this Agreement, shall impair such right, power or remedy of
such holder nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring.
8.7 BROKERS, ETC.
(a) The Company represents, warrants and agrees that there is no finder
or broker or other person who would have a valid claim against either party to
this Agreement for a commission or brokerage fee in connection with the
transactions contemplated by this Agreement (other than the Transaction Fee
payable by the Company) as a result of any agreement, understanding or action by
the Company.
(b) Purchaser represents, warrants and agrees that there is no finder
or broker or other person who would have a valid claim against either party to
this Agreement for a commission or brokerage fee in connection with the
transactions contemplated by this Agreement (other than the Transaction Fee
payable by the Company) as a result of any agreement, understanding or action by
Purchaser.
8.8 INFORMATION CONFIDENTIAL. Purchaser acknowledges that certain of
the information received or to be received by it pursuant hereto may be
confidential and proprietary and for its use only, and Purchaser will not use
such confidential or proprietary information in violation of the 1934 Act or any
other law, rule or regulation and will use its reasonable efforts to maintain
the
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confidentiality of any confidential or proprietary information so received by it
which is otherwise not available from other sources; PROVIDED, HOWEVER, that the
foregoing shall in no way limit or otherwise restrict the ability of Purchaser
or its authorized representatives or employees to disclose any such information
concerning the Company to its shareholders in accordance with its ordinary
disclosure policies or procedures provided that such information (a) is already
in the public domain through no fault or action on the part of Purchaser or (b)
is required to be disclosed pursuant to or as required by law or as directed by
any court of competent jurisdiction in connection with any action to which
Purchaser or the Company is a party.
8.9 EXPENSES. The Company and Purchaser shall each bear its own
expenses and legal fees incurred with respect to this Agreement and the
transactions contemplated hereby; provided, however, that the Company will pay
the reasonable legal fees and out-of-pocket expenses of Robinson, Silverman,
Pearce, Aronsohn & Berman LLP, counsel to Purchaser, incurred by Purchaser in
connection with the preparation, execution and delivery hereof and of the Notes.
8.10 INDEMNIFICATION. (a) The Company shall indemnify, defend and hold
Purchaser harmless against all liability, losses, damages, claims, actions,
suits, proceedings, judgments, costs and expenses of any nature whatsoever
(including, without limitation, reasonable attorneys' fees, settlement costs
incurred with the prior written consent of the indemnifying party, disbursements
and other costs and expenses reasonably incurred in investigating, defending or
attempting to avoid or oppose the bringing of, any actions or threatened
actions) (collectively, "DAMAGES") incurred by Purchaser, together with all
reasonable costs and expenses related thereto, including reasonable attorneys'
fees, arising from, relating to or resulting from any misrepresentation or
breach of warranty or agreement of the Company contained in this Agreement or in
any certificate delivered by the Company at the Closing pursuant to this
Agreement.
(b) Purchaser shall indemnify, defend and hold the Company harmless
against all Damages incurred by the Company, together with all reasonable costs
and expenses related thereto, including reasonable attorney's fees, arising from
any misrepresentation or breach of warranty or agreement of Purchaser contained
in this Agreement or in any certificate delivered by Purchaser at the Closing
pursuant to this Agreement.
8.11 TITLES. The titles of the sections of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.
8.12 SEVERABILITY. Any provision or provisions hereof found to be
unenforceable or prohibited by law will be ineffective only to the extent of
such unenforceability or prohibition and no other provision of this Agreement
will be invalidated thereby.
8.13 INTERPRETATION. The parties acknowledge and agree that (i) each
party and its counsel reviewed and negotiated the terms and provisions of this
Agreement and have contributed
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to its revision, (ii) the rule of construction to the effect that any
ambiguities are resolved against the drafting party shall not be employed in the
interpretation of this Agreement, and (iii) the terms and provisions of this
Agreement shall be construed fairly as to both parties hereto, regardless of
which party was generally responsible for the preparation of this Agreement or
any provision hereof.
8.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
8.15 SCHEDULES. The disclosure of information in any Schedule hereto
shall be deemed to be disclosure in each other Schedule hereto. The inclusion of
any information in any Schedule hereto shall not be deemed to be an admission by
the Company that such information is material or outside the ordinary course of
business.
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NOTE PURCHASE AGREEMENT SIGNATURE PAGE
IN WITNESS WHEREOF, the Company and Purchaser have each caused this
Agreement to be duly executed and delivered in its name and on its behalf, all
as of the date first written above.
LEXINGTON PRECISION CORPORATION
By: /s/ Warren Delano
------------------------------
Warren Delano
President
NOMURA HOLDING AMERICA, INC.
By: /s/ Dennis Dolan
------------------------------
Dennis Dolan
Managing Director
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Schedules to the Note Purchase Agreement dated as of October
27, 1997 have been omitted.
The following is a list of the omitted Schedules which the
Registrant agrees to furnish supplementary to the Commission upon request:
Schedules:
SCHEDULE 1 Form of Note
SCHEDULE 2 List of Subsidiaries and Investment
SCHEDULE 3 Pending or Threatened Legal Actions or
Proceedings
SCHEDULE 4 Changes
SCHEDULE 5 Certain Liens
SCHEDULE 6 Labor Relations
SCHEDULE 7 Existing Indebtedness
SCHEDULE 8 Form of Opinion of Counsel to the
Company
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