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Exhibit 10-4
August 13, 1998
Lexington Components, Inc.
767 Third Avenue
New York, New York 10017
Re: AMENDMENT TO FINANCING AGREEMENTS
Gentlemen:
Reference is made to certain financing agreements dated January 11,
1990 between Lexington Components, Inc. ("LCI") and Congress Financial
Corporation ("Congress"), including, but not limited to, an Accounts Financing
Agreement [Security Agreement], as amended (the "Accounts Agreement"), and all
supplements thereto and all other related financing and security agreements
(collectively, all of the foregoing, as the same have heretofore or
contemporaneously been or may be hereafter, amended, replaced, extended,
modified or supplemented, the "Financing Agreements").
In connection with the financing arrangements pursuant to the Accounts
Agreement and the other Financing Agreements, the parties hereto hereby agree to
amend the Financing Agreements, as set forth below:
1. DEFINITIONS:
(a) The definition of "Working Capital" contained in Section
I(o) of the Covenants Supplement to Accounts Financing Agreement, dated
January 11, 1990, is hereby amended by deleting such definition in its entirety
and replacing it with the following:
"(o) "Working Capital" shall mean and include, as to Borrower,
at any time, the amount, if any, by which (i) the aggregate net book
value of all assets of Borrower which would, in accordance with
generally accepted accounting principles, consistently applied, be
classified as current assets at such time, exceeds (ii) all
Indebtedness of Borrower which would, in accordance with generally
accepted accounting principles, consistently applied, be classified as
current liabilities at such time; PROVIDED, THAT, in computing Working
Capital hereunder, none of the current portion of long-term
Indebtedness of Borrower, determined in accordance with generally
accepted accounting principles consistently applied, and none of the
Obligations of Borrower to Congress, shall be considered current
liabilities."
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(b) Capitalized terms used herein, unless otherwise defined
herein, shall have the meanings ascribed thereto in the Accounts Agreement and
the other Financing Agreements.
2. FINANCIAL COVENANTS. Sections IV(g)(i) and IV(g)(ii) of the Covenant
Supplement to the Accounts Agreement, are each hereby further amended, effective
as of July 31, 1998, by deleting such Sections in their entirety and replacing
such Sections with the following:
"(i) Borrower shall, at all times, maintain on a
basis consolidated with LPC and LPC's direct and indirect
Subsidiaries, Working Capital:
(a) not less than $6,500,000 for the period
from July 31, 1998 through December 31,
1998; and
(b) not less than $7,500,000 from and after
January 1, 1999; and
(ii) Borrower shall, at all times on and after
July 31, 1998, maintain on a basis consolidated with LPC and
LPC's direct and indirect Subsidiaries, a Net Worth not less
than negative $12,000,000 (-$12,000,000)."
3. REPRESENTATIONS, WARRANTIES AND COVENANTS. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by LCI to Congress pursuant to the Financing Agreements, LCI hereby
represents, warrants and covenants with and to Congress as follows (which
representations, warranties and covenants are continuing and shall survive the
execution and delivery hereof and shall be incorporated into and made a part of
the Financing Agreements):
(a) No Event of Default exists or has occurred and is
continuing on the date of this Amendment.
(b) This Amendment has been duly executed and delivered by LCI
and is in full force and effect as of the date hereof, and the agreements and
obligations of LCI contained herein constitute the legal, valid and binding
obligations of LCI enforceable against LCI in accordance with their terms.
4. CONDITIONS TO EFFECTIVENESS OF AMENDMENT. Anything contained in this
Amendment to the contrary notwithstanding, the terms and provisions of this
Amendment shall only become effective upon the satisfaction of the following
additional conditions precedent: Congress shall have received an executed
original or executed original counterparts (as the case may be)
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of this Amendment, together with an Amendment between LPC and Congress with
respect to the LPC Financing Agreements and the documents and instruments
required thereunder (if any) and the satisfaction of all conditions precedent to
the effectiveness thereof, which shall be in form and substance satisfactory to
Congress.
5. 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.
6. FURTHER ASSURANCES. LCI 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.
7. 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.
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: Laurence S. Forte
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Title: First Vice President
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AGREED AND ACCEPTED:
LEXINGTON COMPONENTS, INC.
By: Dennis J. Welhouse
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Title: Senior Vice 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
COMPONENTS, INC. ("LCI") to CONGRESS FINANCIAL CORPORATION ("Congress"),
including, without limitation, all indebtedness, liabilities and obligations
under the Financing Agreements as amended hereby.
LEXINGTON PRECISION CORPORATION
By: Dennis J. Welhouse
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Title: Senior Vice President
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