FIRST AMENDMENT AND DEFAULT WAIVER AGREEMENT
Exhibit 10.1
This First Amendment and Default Waiver Agreement (the “Agreement”), made and effective
November 20, 2006, by and among Lexington Precision Corporation (“LPC”) and Lexington Rubber Group
(“LRG”) (collectively “Lexington”), as borrowers under that certain Credit and Security Agreement
dated as of May 31, 2006 (the “Credit Agreement”), and CapitalSource Finance LLC (“CapitalSource”),
as a lender, as Agent, and as Co-Documentation Agent, and Xxxxxxx Business Credit Corporation
(“Xxxxxxx”) as a lender and as Co-Documentation Agent, and by and among Lexington as borrowers
under that certain Loan and Security Agreement dated as of May 31, 2006 (the “Loan Agreement”) and
CSE Mortgage LLC (“CSE”), as a lender and an Agent, and DMD Special Situations, LLC, as a lender
(“DMD”). Capitalized terms in this Agreement shall have the meaning ascribed to them in the Credit
Agreement and Loan Agreement unless otherwise defined in this Agreement. CapitalSource, Xxxxxxx,
CSE and DMD may be referred to herein, collectively, as the “Lenders.”
RECITALS
WHEREAS, the parties executing this Agreement are parties to the Credit Agreement and/or Loan
Agreement; and
WHEREAS, LPC has failed to make the interest payment due November 1, 2006 under that certain
Indenture dated as of December 18, 2003, (as supplemented or amended, the “Indenture”) in respect
of LPC’s 12% Senior Subordinated Notes due August 1, 2009 (the “Subordinate Debt Issue”) and the
failure to make the
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interest payment due November 1, 2006 under the Subordinate Debt Issue is a Default under the
Credit Agreement and Loan Agreement. In addition, should LPC fail to cure the Default by on or
about November 30, 2006, the Default will become an Event of Default under the Credit Agreement and
the Loan Agreement (collectively, the Default and Event of Default under the Credit Agreement and
Loan Agreement arising from the non-payment of interest due November 1, 2006 under the Subordinate
Debt Issue, the “Bond Default”); and
WHEREAS, Lexington has asked the Agents and Lenders to waive the Bond Default; and
WHEREAS, the Agents and Lenders are willing to provide such waiver in consideration of the
mutual covenants contained herein and for other good and valuable consideration; and
NOW, THEREFORE, the Agents, Lenders and Lexington desiring to be legally bound, do hereby make
the following agreements:
1. Reaffirmation by Lexington of Binding Nature of Documents and Acknowledgement of
Indebtedness Owed. Lexington hereby reaffirms, acknowledges and agrees that the Credit
Agreement, the Loan Agreement and the Other Documents executed and delivered by Lexington
(collectively, the “Documents”) are valid, binding upon Lexington, fully enforceable and that all
liens granted thereunder are in full force and effect, and that all Documents are subject to no
offset, objection, recoupment, claim or defense by Lexington against any Agent or Lender. Further,
Lexington stipulates and agrees that, as of November 20, 2006,
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(a) $21,338,455.87 is due and owing in respect of Loans and there is $2,024,000.00 in face amount
of Letters of Credit outstanding under the Credit Agreement, and (b) $14,907,344.27 is
due and owing under the Loan Agreement, not including any and all reasonable attorneys’ fees,
Agents’ and Lenders’ fees, default interest or other costs or expenses of any Agent or Lender
chargeable under the Credit Agreement and Loan Agreement, and that neither amount is subject to any
offset, objection, recoupment, claim or defense by Lexington.
2. Acknowledgment of Occurrence of Default. Lexington acknowledges to the Agents and
Lenders that a Default exists under the Credit Agreement and the Loan Agreement. Lexington further
acknowledges that the existence of the Default, without the waiver contained in this Agreement,
would be subject to no defense by Lexington to its enforcement in accordance with its terms or any
claim by Lexington against the Agents and Lenders.
3. Amendment to the Definition of “Target Amount.” The definition of “Target Amount”
in the Credit Agreement shall now read:
“Target Amount” shall mean (a) Five Million Dollars ($5,000,000.00) until February 1,
2007, or (b) Three Million Dollars ($3,000,000.00) on or after February 1, 2007
less any voluntary prepayments or mandatory prepayments made after the Closing Date
with respect to the Term Loans, to the extent such payments are permitted by this Agreement
and the Intercreditor Agreement.
The definition of “Target Amount” in the Loan Agreement shall now read:
“Target Amount” shall mean (a) Five Million Dollars ($5,000,000.00) until February
1, 2007, or (b) Three Million Dollars ($3,000,000.00) on or after February 1, 2007
less any voluntary prepayments made under Section 2.2 of this Agreement or
mandatory prepayments made under
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Section 2.3 of this Agreement, in each case with respect to the Term Loan A.
4. Waiver of Default. Subject to the terms of paragraph 5, the Agents and Lenders
waive any Default or Event of Default under Sections 11.12 and 11.13 of the Credit Agreement and
Loan Agreement to the extent arising from the Bond Default. Nothing contained in this Agreement
shall be construed as a waiver of Section 7.14 of the Credit Agreement or Section 7.14 of the Loan
Agreement (as originally executed and as amended herein), or any applicable subordination
provisions of the Indenture.
5. Termination of Waiver. The waiver granted hereunder shall continue until the
occurrence of the earliest of the following events (along with the date of expiration of this
Agreement, a “Termination Event”):
(A) A Default under the Documents, other than the Bond Default, occurs (whether the Agent or
Lender has knowledge of the occurrence or not);
(B) A notice of default is given pursuant to the Indenture or Subordinate Debt Issue by the
indenture trustee or any noteholder in respect of the Subordinate Debt Issue (indenture trustee or
noteholder, a “Creditor”) and the indebtedness owed to such Creditor by Lexington in respect of the
Subordinated Debt Issue is accelerated;
(C) An involuntary petition is filed under the United States Bankruptcy Code against either
LPC or LRG, or LPC or LRG files such petition, or any subsidiary of LPC or LRG files, or has filed
against it, a petition under the United States Bankruptcy Code;
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(D) Any insolvency proceeding, such as an action seeking the appointment of a receiver, a
proceeding under laws invoking Assignments for the Benefit of Creditors, or any other creditors’
remedies under state or federal law is commenced by or against LPC, LRG or any of their
subsidiaries;
(E) A lawsuit is filed against any Agent or Lender by LPC, LRG or any of their affiliates or
subsidiaries.
In addition to the Termination Events set forth above, the waiver granted hereunder shall
expire at 5:00 p.m. (Eastern) on February 1, 2007, unless further extended by a writing signed by
the Agents and all the Lenders (or their successors or assigns).
In the event any Termination Event occurs, the waiver provided hereunder shall automatically
and immediately terminate, without notice to Lexington. In the event any Termination Event occurs
without the knowledge of any Agent or Lender, the Termination Event shall have been deemed to have
occurred at 6:00 a.m. (Eastern) on the day the notice of default is given or the lawsuit is filed
with a Court or at 6:00 a.m. on the day Lexington has knowledge of its occurrence.
6. Effect of Waiver. The waiver granted under this Agreement shall mean that for so
long as no Termination Event has occurred, Lenders (and the Agent under each of the Credit
Agreement and Loan Agreement, collectively, the “Agents’) shall not take action to enforce any of
the rights or remedies provided to it under the Documents or at law or equity in respect of the
Default or Event of Default waived pursuant to this Agreement. Notwithstanding the preceding
sentence, upon
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a Termination Event, the Agent and Lender may enforce its remedies related to the Bond Default
(whether a Default or Event of Default), or any other Default or Event of Default then in existence
to the fullest extent allowed by the Documents or at law or equity. Except as specifically waived
pursuant to this Agreement, the Agents’ and Lenders’ agreement herein does not waive, diminish, or
limit any term or condition contained in the Credit Agreement or Loan Agreement. All parties
acknowledge that while the Bond Default is being waived, it is not being forgiven and that
automatically upon a Termination Event the Agents and Lenders shall have all rights and remedies
available to them with respect to the Bond Default and that this waiver shall not be invoked nor be
the basis of any claim or defense by Lexington that the Bond Default was forgiven or otherwise
became unenforceable.
7. Release. In consideration of the waiver provided to Lexington hereunder, each of
LPC and LRG, jointly and severally, on its own behalf and on behalf of its respective officers,
directors, employees, agents, affiliates, shareholders, successors and assigns, hereby irrevocably
releases and forever discharges each Agent, its agents, affiliates, subsidiaries, successors,
assigns, directors, officers, employees, consultants, attorneys, auditors, and accountants, and
each Lender, its agents, affiliates, subsidiaries, successors, assigns, directors, officers,
employees, consultants, attorneys, auditors and accountants (each, a “Released Person”) of and from
all damages, losses, claims, demands, liabilities, actions and causes of action whatsoever that
Lexington, jointly and severally, may now have or may now claim to have against any Released Person
on account of or in any way touching,
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concerning, arising out of or founded upon the Documents, including the Loan Agreement and Credit
Agreement, whether presently known or unknown and of every nature and extent whatsoever.
8. Agents’ and Lenders’ Expenses. Lexington acknowledges its obligation to pay all of
Agents’ and Lenders’ reasonable attorneys’ fees and expenses related to the Bond Default.
Accordingly, Lexington agrees that Agents and Lenders may charge the Credit Agreement (and apply
proceeds of payments made on the Credit Agreement in the manner provided therein) for the
reasonable fees and expenses of the professionals Agents and Lenders employ in connection with the
Bond Default.
9. Successors and Assigns. This Agreement shall be binding upon Lexington and Agents’
and Lenders’ successors and assigns.
10. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, and all of which, when taken together, shall constitute one and
the same instrument. Facsimile and pdf versions of signatures hereto shall be deemed original
signatures, which may be relied upon by all parties hereby and shall be binding on the respective
xxxxxx.
11. Further Assurances. Lexington covenants and agrees that it will at any time and
from time to time do, execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered, all such further acts, documents and instruments as reasonably may be
required by Agents and Lenders to effectuate fully the intent of this Agreement.
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12. Amendment to Documents. This Agreement shall be deemed to amend the Credit
Agreement and the Loan Agreement. Amendments made in this Agreement shall survive any Termination
Event. Except as expressly waived hereby, all terms and conditions of the Credit Agreement and
Loan Agreement remain in full force and effect and shall constitute legal, valid, binding and
enforceable obligations of Lexington. This Agreement is not a novation, nor is it to be construed
as a release, waiver, extension of forbearance or modification of any of the terms, conditions,
representations, warranties, covenants, rights or remedies set forth in any of the Documents,
except as expressly stated herein.
13. Severability. If any term or provision of this Agreement or the application
thereof to any party or circumstance shall be held to be invalid, illegal or unenforceable in any
respect by a court of competent jurisdiction, the validity, legality and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be affected or impaired
thereby, and the affected term or provision shall be modified to the minimum extent permitted by
law so as to achieve most fully the intention of this Agreement.
14. Captions. The captions in this Agreement are inserted for convenience of reference
only and in no way define, describe or limit the scope or intent of this Agreement or any of the
provisions hereof.
15. Entire Agreement. This Agreement contains the entire agreement among the parties
hereto with respect to the Bond Default, and with respect to the
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agreement to waive the Bond Default and the limitation on the exercise of rights and remedies
on account of the terms and conditions of this Agreement.
16. Notices. All notices, requests, demands and other communications hereunder shall
be given in the manner outlined in the Credit Agreement and Loan Agreement with the exception that
notices to the Agents and Lenders shall be sent, in addition to the parties set forth in the Credit
Agreement and Loan Agreement to: Xxxx X. Xxxxxxx, Esq., Xxxxxx Xxxxxxx Xxxxxx & Xxxxx, LLP, 000
Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, XX 00000; phone: 000-000-0000; fax: 000-000-0000; email:
xxxxxxxx@xxxxxxxxx.xxx.
17. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to conflict of laws principles.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the
day and year first above written.
| LEXINGTON PRECISION CORPORATION | ||||||
| By: Name: |
/s/ Xxxxxxx X. Xxxxx
|
|||||
| Its: | Chairman of the Board | |||||
| LEXINGTON RUBBER GROUP, INC. | ||||||
| By: Name: |
/s/ Xxxxxxx X. Xxxxx
|
|||||
| Its: | Chairman of the Board | |||||
| CAPITALSOURCE FINANCE LLC, as Agent and a Lender | ||||||
| By: Name: |
/s/ Xxxxxxx Xxxxx
|
|||||
| Its: | Managing Director | |||||
| XXXXXXX BUSINESS CREDIT CORPORATION | ||||||
| By: Name: |
/s/ Xxxx X. XxXxx
|
|||||
| Its: | Vice President | |||||
| CSE MORTGAGE LLC, as Agent and a Lender | ||||||
| By: Name: |
/s/ Xxxxxxx Xxxxx
|
|||||
| Its: | Managing Director | |||||
| DMD SPECIAL SITUATIONS FUNDING LLC | ||||||
| By: | CapitalSource Servicing LLC, its servicer | |||||
| By: Name: |
/s/ Xxxxx X. Xxxxxx
|
|||||
| Its: | Director | |||||
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