SECOND AMENDMENT TO FORBEARANCE AGREEMENT

Exhibit 10-1

SECOND AMENDMENT TO FORBEARANCE AGREEMENT

     This SECOND AMENDMENT to that certain Agreement made as of May 18, 2007 (the “ Agreement ”) is executed October 17, 2007, but upon the Effective Date is deemed effective as of September 24, 2007 (the “ Second Amendment ”) by and between Lexington Precision Corporation (“ LPC ”) and Lexington Rubber Group, Inc. (“ LRG ”) (collectively, the “ Borrowers ”), as borrowers under that certain Credit and Security Agreement with Borrower dated May 31, 2006 (as amended to date and as may be amended, restated or otherwise modified from time to time, the “ Credit Agreement ”), and CapitalSource Finance LLC (“ CapitalSource ”), as a lender, as collateral agent and administrative agent for itself and other lenders under the Credit Agreement (CapitalSource, when acting in such capacity, is herein called the “ Revolver Agent ”), and as Co-Documentation Agent, and Webster Business Credit Corporation (“ Webster ”) as a lender (CapitalSource and Webster, as lenders, collectively the “ Revolver Lenders ”) and as Co-Documentation Agent (CapitalSource and Webster in such capacity, collectively the “ Co-Documentation Agents ”), and by and among Borrowers as borrowers under that certain Loan and Security Agreement dated May 31, 2006 (as amended to date and as may be amended, restated or otherwise modified from time to time, the “ Loan Agreement ”) and CSE Mortgage LLC (“ CSE ”), as a lender and as collateral agent for itself and each other lender under the Loan Agreement (CSE, when acting in such capacity, is herein called the “ Loan Agent ”) (Revolver Agent and Loan Agent, collectively, the “ Agents ”), and DMD Special Situations Funding LLC, (“ DMD ”), as a lender under the Loan Agreement (CSE and DMD collectively, the “ Mortgage Loan Lenders ”) (Revolver Lenders and Mortgage Loan Lenders collectively, the “ Lenders ”; those Lenders agreeing to this Second Amendment the “ Forbearing Lenders ”).

RECITALS:

     A. Revolver Lenders have loaned money and made credit available to Borrowers in accordance with the terms of the Credit Agreement. Mortgage Loan Lenders have loaned money and made credit available to Borrowers in accordance with the terms of the Loan Agreement.

     B. Borrowers and CapitalSource, Webster, CSE and DMD in their various capacities have entered into that certain First Amendment and Default Waiver Agreement dated as of November 20, 2006 (the “ Former Forbearance Agreement ”).

     C. Borrowers and CapitalSource, Webster, CSE and DMD in their various capacities are parties to the Agreement, as amended by that certain First Amendment to Forbearance Agreement as of July 20, 2007 (the “ First Amendment ”). Collectively the Credit Agreement, Loan Agreement, Former Forbearance Agreement and Agreement, along with the First Amendment and this Second Amendment, may be referred to herein as the “ Documents .”

     D. The Lenders have asserted that certain Defaults and Events of Default (each as defined in the Documents) have occurred under the Documents, as set forth in: (a) the Former Forbearance Agreement, (b) the Agreement, the First Amendment, (c) that Notice of Default and Notice of Termination letter issued to Borrowers by the Agents, dated February 2, 2007; (d) that certain Notice of Events of Default dated March 5, 2007; (e) that certain Notice of Events of Default dated April 4, 2007; (f) those certain Notices of Events of Termination dated June 22, 2007 and September 25, 2007, respectively; and (g) those certain letters, the most recent of which is dated October 16, 2007, between Agent and the Borrowers related to amounts being borrowed by Borrowers under the Revolver (the “ Discretionary Funding Letters ” and, collectively with the correspondence identified in (c)-(g), the

“ Default Letters ”). The Defaults and Events of Default set forth in the Former Forbearance Agreement, the Default Letters, the Agreement and the First Amendment are hereby incorporated herein verbatim. The parties hereto agree that “ Designated Defaults ” as used herein include:

i.		the Borrowers’ failure to meet the covenant set forth in Section 8.2 of the Credit Agreement and Loan Agreement as a result of their failure to meet their Fixed Charge Coverage requirement for the period ending January 31, 2007;
ii.		the Borrowers’ failure to furnish, as required under Section 11.3 of the Credit Agreement, December 2006 covenant calculations pursuant to the request of Revolver Agent on or before February 15, 2007;
iii.		the Borrowers’ failure to obtain a landlord waiver for the Borrowers’ New York City location;
iv.		the Borrowers’ failure to make those certain interest payments arising under that certain Indenture dated as of November 18, 2003 (as supplemented or amended) in respect of LPC’s 12% Senior Subordinated Notes due August 1, 2009 (the “ Subordinate Debt Issue ”) due (1) November 1, 2006; (2) February 1, 2007; and (3) May 1, 2007 (or to cure such payment defaults within the applicable cure period);
v.		the Borrowers’ failure to meet the covenant set forth in Section 8.2 of the Credit Agreement and Loan Agreement as a result of their failure to meet their Fixed Charge Coverage requirements for the periods ending February 28, 2007, and March 31, 2007;
vi.		the Borrowers’ failure to make that certain interest payment on account of the Subordinate Debt Issue due August 1, 2007 or otherwise cure such payment default within the applicable cure period;
vii.		the Borrowers will fail, prior to the Termination Date of this Second Amendment, to make that certain interest payment on account of the Subordinate Debt Issue due November 1, 2007 (and will not cure such payment defaults within the applicable cure period);
viii.		the Borrowers’ failure to comply with the covenants in Section 13c of the Agreement, including the Borrowers’ failure to timely provide to the Agents proof of execution of an engagement agreement with W.Y. Campbell and initial marketing materials.

Borrowers contest that Designated Defaults i, ii, and iii are Defaults or Events of Default but acknowledge that Designated Defaults iv, v, vi, and viii have occurred and, except for viii, are continuing to occur through the date of this agreement and that Designated Default vii will occur in the future. Borrowers acknowledge that the failure to list an alleged Default or Event of Default herein or in the Agreement, Former Forbearance Agreement, Default Letters or other Documents shall not impair Agents’ or Lenders’ abilities to pursue any rights or exercise any remedies related to such alleged Defaults or Events of Default upon an Event of Termination (as defined below).

     E. Borrowers have requested to amend the Agreement to amend certain terms related to the Forbearance Period, and the Forbearing Lenders have agreed to do so under the terms and conditions set forth in this Second Amendment.

     F. To the extent not specifically modified by the terms of the First Amendment or this Second Amendment, the Recitals set forth in the Agreement are incorporated in their entirety herein by reference and shall survive this Second Amendment.

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, Agents, Lenders and Borrowers agree as follows:

     1. Incorporation of Recitals; Definitions . Each of the foregoing recitals is hereby acknowledged and affirmed as being accurate and complete and is hereby incorporated as part of this Second Amendment. Capitalized terms defined in the Recitals section of this Second Amendment are incorporated herein by this reference and are used herein as so defined. Capitalized terms used herein to the extent not otherwise defined herein, shall have the same meaning as provided in the Agreement. Capitalized terms used herein but not otherwise defined in this Second Amendment or in the Agreement shall have the same meaning as given to them in the Documents.

     2. Forbearance . Section 2 of the Agreement is deleted in its entirety and replaced with the following:

Subject to the satisfaction of the terms and conditions set forth herein, until that date (the “ Forbearance Termination Date ”), which is the earliest to occur of (a) 4:00 p.m. (Eastern) on November 26, 2007, plus an additional thirty (30) days (or sixty (60) days in the event of the execution of an LOI with a Deposit or an APA, as set forth in paragraph 3) should an Extending Event (as defined in the following paragraph) occur, or (b) the consummation of a refinancing or a sale of the stock or assets of Borrowers (other than in the ordinary course), or (c) the date of the occurrence of any one or more Events of Termination (defined herein) (the “ Forbearance Period ”), Lenders will not exercise or enforce their rights or remedies against Borrowers which Agents or Lenders would be entitled to exercise or enforce under the terms of the Documents by reason of the occurrence or continuance of the Designated Defaults. This Agreement shall not act as a waiver of Agents or Lenders’ right to enforce any claims, rights or remedies, nor shall this Agreement act as a forbearance in the event Defaults or Events of Default (other than the Designated Defaults) occur at any time prior to the Forbearance Termination Date. Further, this forbearance shall not act as a waiver of Agents or Lenders’ right to enforce any claims, rights or remedies upon the occurrence of an Event of Termination. Nothing contained herein shall be construed as requiring the Forbearing Lenders to extend the Forbearance Termination Date. On the Forbearance Termination Date, without notice, the Obligations shall be deemed automatically accelerated and immediately due and payable in full by Borrowers (unless Agents notify Borrowers otherwise in writing) to Lenders and the Borrowers’ ability to borrow additional amounts under any of the Documents shall be deemed terminated.

     3. Extending Events . An “Extending Event” shall be the delivery to Agents and Lenders of one of the following: (i) a letter conveying a financing proposal executed by Borrowers and an entity or person that has the financial capability to provide the proposed financing and which is not an affiliate or subsidiary in, or officer or director of, any Borrower (the “ Refinancing Lender ”), pursuant to which such Refinancing Lender commits to provide credit to the Borrowers, prior to the expiration of the Forbearance Period, in an amount equal to or in excess of the amount necessary to pay in full and in cash all Obligations owing on the date such amounts are remitted to the Lenders, provided that, as of such initial Forbearance Termination Date, such proposal or commitment letter does not have a contingency that makes the obligations of the Refinancing Lender subject to completing any due diligence (other than, with respect to any real estate, the completion of satisfactory surveys, title reports, environmental reports or other reports prepared by a governmental agency, engineer or attorney which such governmental agency or attorney advises the Borrowers will take more than

thirty (30) days to complete) (the “ Commitment Letter ”); or (ii) one or more letters of intent (“LOI”) executed by Borrowers and entities or persons (the “ Buyers ”) pursuant to which the Borrowers, prior to the expiration of the Forbearance Period will sell such stock and/or assets and receive and tender the funds from such sale to Lenders at a price sufficient to repay in full and in cash all Obligations on the date the funds are remitted to the Lenders or (iii) an LOI executed by Borrowers and Buyers pursuant to which the Borrowers, prior to the expiration of the Forbearance Period will sell all or substantially all of the assets of its Lexington Medical business for not less than $30 million in cash, United States currency. In the event an LOI conforming to (ii) or (iii) of this paragraph is executed during the initial Forbearance Period, the Forbearance Period shall be extended automatically to December 26, 2007. In the event an earnest money deposit in connection with an LOI equal to at least three percent (3%) of the purchase price (the “Deposit”) is made, or if an Asset Purchase Agreement or Stock Purchase Agreement (collectively the “APA”) is executed, or if the Deposit requirement of this Agreement is specifically waived by Agents, in writing, then the Forbearance Period (whether prior to the expiration of the initial Forbearance Period or during any extended Forbearance Period) will be extended, automatically, to January 24, 2008. The Deposit shall be remitted to an institutional Escrow Agent mutually satisfactory to the Borrowers, Buyers, Agents and Lenders.

     4. Forbearance Fee . The non-refundable forbearance fee referenced in Section 8 of the Agreement in the amount equal to one percent of the Obligations outstanding on the Effective Date (the “Forbearance Fee”) has been charged in accordance with the terms of the Agreement. Borrowers have received a credit of $130,140.64 against the Forbearance Fee for Default Interest charged during December 2006 and January 2007; the balance was properly charged as an Advance under the Revolving Credit Facility on September 25, 2007.

     5. Amendment Fee . A non-refundable amendment fee in the amount equal to one-quarter percent (1/4%) of the Obligations outstanding on the Effective Date (the “Amendment Fee”) shall be charged and is deemed fully earned upon execution of this Second Amendment by the Borrowers. The Amendment Fee shall be paid as follows: In the event an Extend