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EXHIBIT 10-8
TERMINATION AGREEMENT
May 31, 2006
Lexington Precision Corporation
40 East 52nd Street
20th Floor
New York, NY 10022
Gentlemen:
Wachovia Bank, National Association, successor by merger to
Congress
Financial Corporation, a national banking association, in its
capacity as agent
pursuant to the Loan Agreement (as hereinafter defined) acting for
and on behalf
of the parties thereto as lenders (in such capacity, "Agent"), the
parties to
the Loan Agreement as lenders (individually, each a "Lender" and
collectively,
"Lenders"), Lexington Precision Corporation, a Delaware corporation
("LPC") and
Lexington Rubber Group, Inc., a Delaware corporation ("LRG" and
together with
LPC, individually, each a "Borrower" and collectively, "Borrowers")
have entered
into financing arrangements pursuant to which to which Lenders (or
Agent on
behalf of Lenders) have made loans and advances (collectively, the
"Loans") and
provided other financial accommodations to Borrowers as set forth
in the Loan
and Security Agreement, dated December 18, 2003, by and among
Agent, Lenders and
Borrowers (as the same has been amended or supplemented prior to
the date
hereof, the "Loan Agreement", and together with all related
agreements,
documents and instruments, as each may have been amended,
modified,
supplemented, extended, renewed or restated, collectively, the
"Financing
Agreements").
Concurrently herewith, Borrowers are entering into financing
arrangements
with (i) CapitalSource Finance LLC, in its capacity as agent (in
such capacity,
"New Revolver Agent") for the lenders under such financing
arrangements (such
lenders being collectively the "New Revolver Lenders"), and (ii)
CSE Mortgage
LLC, in its capacity as agent (in such capacity, "New Term Agent")
for the
lenders under such financing arrangements (such lenders being
collectively the
"New Term Lenders"), and utilizing a portion of the initial loans
provided by
the New Revolver Lenders and/or the New Term Lenders to repay all
of the Loans
and related indebtedness to Agent and Lenders, other than the
obligations,
liabilities and indebtedness of Borrowers to Agent and Lenders
arising pursuant
to or in connection with the letters of credit arranged for by
Agent for the
account of a Borrower and listed on Exhibit A hereto (individually,
a "Letter of
Credit", and collectively, the "Letters of Credit").
In
consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged,
each of the undersigned hereby agrees as follows:
1.
Repayment; Pledge. Borrowers shall pay or cause to be repaid to
Agent,
at Borrowers' cost and expense, on the date hereof, by federal
funds wire
transfer the amount of
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2.
$25,123,761.37 consisting of (a) $23,128,761.37, which reflects
the
total amount of the Obligations of Borrowers owing to Agent and
Lenders under
the Financing Agreements as of May 31, 2006, and (b) $1,995,000,
which shall be
pledged by Borrowers to Agent as Cash Collateral (as hereinafter
defined) as
provided herein (collectively, the "Total Release Amount"). In the
event that
Agent does not receive notice of receipt of the Total Release
Amount in its
deposit account below prior to 3:00 p.m., New York City time, on
the date
hereof, the Total Release Amount shall be recalculated on each day
until the
Total Release Amount has been received by Agent; provided, that, if
Agent
receives notice of receipt of the Total Release Amount in its
deposit account
below after 3:00 p.m., New York City time, on any day, such funds
shall be
deemed received by Agent on the next business day. The Total
Release Amount
shall be sent to the following account of Agent:
Wachovia Bank, National Association
Charlotte, North Carolina
ABA No. 053 000 219
For credit to: Wachovia Bank, National Association
Account No.:
5000000030279
Re: Lexington Precision
3.
Releases.
(a) Immediately upon the satisfaction of the conditions precedent
set
forth in Section 8 hereof, (i) the financing arrangements relating
to the Loans
as between Borrowers, on the one hand, and Agent and Lenders, on
the other hand,
pursuant to the Financing Agreements are hereby terminated,
cancelled and of no
further force and effect except for those provisions of the
Financing Agreements
set forth in Sections 3(a) and 3(b) below relating to the
Continuing Obligations
(as hereinafter defined) or those provisions thereof that otherwise
expressly
survive termination by their terms, (ii) Agent and Lenders shall
have no further
obligation to make any Loans, provide any Letter of Credit
Accommodation (as
defined in the Loan Agreement) or other financial accommodations or
have any
other duties or responsibilities in connection with the Financing
Agreements
except as provided in Sections 9 and 10 hereof, and to allow the
continuation of
the Letters of Credit (provided, that, Agent and Lenders shall have
no
obligation to extend the expiration date of any Letter of Credit or
agree to any
other amendment thereof or any waiver with respect thereto) and
(iii) all
security interests, pledges and liens upon any and all properties
and assets of
any Borrower heretofore granted by any Borrower to Agent pursuant
to the
Financing Agreements are hereby irrevocably released, discharged
and terminated
(except with respect to the Cash Collateral as provided herein).
Such release,
discharge and termination shall be effective notwithstanding the
Continuing
Obligations or Section 7 hereof.
(b) Each Borrower hereby releases, discharges and acquits Agent
and
Lenders, their respective officers, directors, agents and employees
and its and
their respective successors and assigns, from all obligations to
any Borrower
(and its respective successors and assigns), except as set forth in
Sections 9
and 10 hereof, and from any and all claims, demands, debts,
accounts, contracts,
liabilities, actions and causes of actions, whether in law or in
equity, that
any Borrower at any time had or has, or that its successors and
assigns
hereafter can or may have against Agent and Lenders, their
respective officers,
directors, agents or employees and its and their respective
successors and
assigns, except to the extent arising out of this Agreement.
2
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4.
Cash Collateral.
(a) As collateral security for the prompt performance, observance
and
indefeasible payment in full of all of the Continuing Obligations
set forth in
Sections 4(a) and (b) in respect of the Letters of Credit,
Borrowers hereby
irrevocably assign, pledge, hypothecate, transfer, set over to
Agent, and grant
to Agent a security interest in and right to set off against the
sum specified
in clause (b) of Section 1 above, which sum has been remitted to
Agent, and all
proceeds thereof (the "Cash Collateral"). The Cash Collateral shall
be held by
Agent in an account designated by Agent for such purpose in its
books and
records and may be commingled with Agent's own funds.
(b) Agent shall hold the Cash Collateral (less any amounts
thereof
applied to such Continuing Obligations, including payments of the
Letter of
Credit Obligations or Letters of Credit returned to Borrowers
pursuant to this
paragraph) in an amount equal to one hundred five (105%) percent of
the undrawn
face amount of each of the Letters of Credit until, as to each
Letter of Credit,
the earlier of (i) thirty (30) days after the expiration date of
such Letter of
Credit, after which Agent shall remit to Borrowers, without
interest, an amount
equal to the face value of such Letter of Credit (provided, that,
no drawing or
purported drawing has been received prior to the thirtieth (30th)
day following
the stated expiration date of such Letter of Credit), and (ii) five
(5) days
after the receipt by Agent of either (A) the original Letters of
Credit returned
for cancellation or (B) evidence, in form and substance reasonably
satisfactory
to Agent, that such Letter of Credit has been cancelled, and
thereafter Agent
shall remit to Borrowers an amount equal to the face value of each
letter of
credit so cancelled, less any costs or fees accrued in connection
therewith. In
the event of a drawing on any Letter of Credit, Agent will apply
the cash
Collateral to satisfy any reimbursement obligations of the
Borrowers in respect
of any
