EXHIBIT 10.3
WAIVER AND CONSENT
Dated as of: September 3, 2004
Reference is made to that certain Loan and Security Agreement, dated as of
December 18, 2003 (as amended, restated, supplemented or otherwise modified from
time to time, the "Loan Agreement"), among Lexington Precision Corporation and
Lexington Rubber Group, Inc., as Borrowers (each a "Borrower" and, collectively,
the "Borrowers"), Ableco Finance LLC, as Agent and a Lender ("Ableco"), and the
lenders from time to time party thereto. Capitalized terms used but not
otherwise defined herein shall have the meanings given to them in the Loan
Agreement.
Borrowers contemplate entering into a proposed Loan Agreement, to be dated
as of September 3, 2004 (as in effect on such date, the "Proposed Loan
Agreement"), with Cohanzick High Yield Partners, L.P. (the "Proposed Lender"),
pursuant to which, among other things, the Proposed Lender will make an
unsecured term loan to the Borrowers in the aggregate principal amount of
$7,000,000, at an increasing rate of interest that is payable monthly (the
"Proposed Indebtedness"). The proceeds of the Proposed Indebtedness may be used
by the Borrowers only to purchase Senior Subordinated Notes and/or for working
capital and general corporate purposes. Under the terms of the Proposed Loan
Agreement, the Borrowers may purchase from time to time for cash Senior
Subordinated Notes for aggregate consideration of not more than $10,000,000 (the
"Purchased Notes"). The principal amount of the Proposed Indebtedness is to be
repaid on June 30, 2007.
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Ableco and the Borrowers hereby agree as follows:
(i) The provisions set forth in clauses (i), (iii) and (iv) of Section
9.9(h) of the Loan Agreement are hereby waived in their entirety
with respect to the Borrowers' incurrence of the Proposed
Indebtedness pursuant to the Proposed Loan Agreement;
(ii) Notwithstanding any provision of the Financing Agreements to the
contrary, the Lenders hereby consent to the Borrowers incurring the
Proposed Indebtedness pursuant to the Proposed Loan Agreement and
entering into and performing the Proposed Loan Agreement; and any
provision of Section 9.9 of the Loan Agreement, or any other
provision of any Financing Agreement, purporting to prohibit or
otherwise restrict the Borrowers' ability to incur such Proposed
Indebtedness is hereby waived;
(iii) Notwithstanding any provision of the Financing Agreements to the
contrary, any Borrower may use all or any part of the proceeds of
the Proposed Indebtedness (x), subject to clause (iv) and clause
(v) of this Waiver and Consent below, to purchase Senior
Subordinated Notes; and/or (y) for working capital and general
corporate purposes; and any provision of Section 2.4(b), Section
9.9(h), Section 9.9(f)(v) or Section 9.10 of the Loan Agreement, or
any
other provision of any Financing Agreement, purporting to prohibit
or otherwise restrict the use of such proceeds in the manner
described herein is hereby waived;
(iv) The Borrowers shall not use more than $5,500,000 of the proceeds of
the Proposed Indebtedness to purchase Senior Subordinated Notes;
(v) The Borrowers shall not use proceeds of the Proposed Indebtedness
(i) to purchase Senior Subordinated Notes from any shareholder,
director or officer of the Borrower or any other Affiliate of any
Borrower or (ii) to knowingly purchase Senior Subordinated Notes
from the Proposed Lender or any shareholder, director or officer or
any other Affiliate of the Proposed Lender;
(vi) The Borrowers confirm that the Proposed Indebtedness shall
constitute "Indebtedness" for all purposes under the Loan
Agreement, including, without limitation, for purposes of Section
9.9(h)(vi) and Section 10.1(i) of the Loan Agreement;
(vii) The Borrowers may prepay all or any portion of the principal amount
of the Proposed Indebtedness at any time, or from time to time,
after December 31, 2004; provided that, at the time of and after
giving effect to such prepayment, (x) the Borrower has Excess
Availability of not less than $4,000,000; and (y) no Default or
Event of Default shall have occurred and be continuing;
(viii) The Borrowers shall request a borrowing of not less than $2,000,000
under the Proposed Loan Agreement on the closing date of the
Proposed Loan Agreement;
(ix) The Borrowers shall use at least $2,000,000 of the proceeds of the
Proposed Indebtedness for working capital and general corporate
purposes, such proceeds to be paid to the Working Capital Agent to
be applied to the WC Revolving Loans;
(x) The Borrowers shall not amend, supplement or otherwise modify the
Proposed Loan Agreement or any agreement, instrument or document
executed or delivered in connection therewith, without the prior
written consent of the Required Lenders, except as permitted under
Section 9.9(h)(vi) of the Loan Agreement
(xi) The Purchased Notes shall not be deemed to be Indebtedness for any
purpose under the Financing Agreements and may be held by any
Borrower or cancelled by any Borrower;
(xii) Ableco acknowledges that Borrowers are entering into a waiver and
consent with respect to the Working Capital Lender Agreements on
substantially the same terms as the terms hereof, and Ableco
consents thereto for all purposes pursuant to Section 9.9(e)(v) of
the Loan Agreement. Ableco further confirms its consent to
Amendment No. 1 and Amendment No. 2 to the Working Capital Lender
Agreements; and
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(xiii) The signature of Ableco below, on behalf of itself and its
affiliate assigns, represents the consent and authorization of the
Required Lenders under the Loan Agreement with respect to the
matters set forth in this Waiver and Consent.
Except as provided above, the Loan Agreement and the other Financing
Agreements shall remain in full force and effect, and the foregoing waivers and
consents shall be limited to the Proposed Indebtedness and the Proposed Loan
Agreement and shall not extend to any transaction proposed or contemplated by
any Borrower after the date hereof. The foregoing waivers and consents do not
allow any other or further departure from the terms of the Loan Agreement or any
other Financing Agreement.
Each Borrower hereby acknowledges and agrees that this Waiver and Consent
constitutes a "Financing Agreement" under the Loan Agreement. Accordingly, it
shall be an Event of Default under the Loan Agreement if (i) any representation
or warranty made by a Borrower under or in connection with this Waiver and
Consent shall have been untrue, false or misleading in any material respect when
made, or (ii) a Borrower shall fail to perform or observe any term, covenant or
agreement contained in this Waiver and Consent.
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This Waiver and Consent may be executed in any number of counterparts,
each of which, when so executed and delivered, shall be deemed to be an original
and all of which, taken together, shall constitute one and the same Waiver and
Consent. The delivery of an executed counterpart of this Waiver and Consent
shall have the same force and effect as delivery of any original executed
counterpart of this Waiver and Consent.
LEXINGTON PRECISION CORPORATION,
Borrower
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
LEXINGTON RUBBER GROUP, INC.,
Borrower
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
ABLECO FINANCE LLC, on behalf of itself and
its affiliate assigns, as Agent and a Lender
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
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