Exhibit 10-2
THIRD AMENDED AND RESTATED
TERM PROMISSORY NOTE

     
$7,206,000
  New York, New York
 
  May 18, 2006

     FOR VALUE RECEIVED, LEXINGTON RUBBER GROUP, INC., a Delaware corporation
(the “Debtor”), hereby unconditionally promises to pay to the order of WACHOVIA
BANK, NATIONAL ASSOCIATION (as 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 to the Loan Agreement as lenders (in such capacity, “Payee”), at the
offices of Payee at 1133 Avenue of the Americas, New York, New York 10036, or at
such other place as the Payee or any holder hereof may from time to time
designate, the principal sum of SEVEN MILLION TWO HUNDRED SIX THOUSAND DOLLARS
($7,206,000) in lawful money of the United States of America and in immediately
available funds, in fourteen (14) consecutive monthly installments (or earlier
as provided herein), of which the first thirteen (13) installments shall payable
on the first day of each month commencing June 1, 2006 and shall be in the
amount of ONE HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($150,000), and the last
installment due on June 30, 2007, shall be in the amount of the entire unpaid
balance of this Note.
     Debtor hereby further promises to pay interest to the order of Payee on the
unpaid principal balance hereof at the Interest Rate. Such interest shall be
paid in like money at said office or place from the date hereof, commencing
June 1, 2006 and on the first day of each month thereafter until the
indebtedness evidenced by this Note is paid in full. Interest payable upon and
after an Event of Default or termination or non-renewal of the Loan Agreement
shall be payable upon demand.
     For purposes hereof, (a) subject to clause (i) below, the term “Interest
Rate” shall mean, a rate equal to four and three quarters(4 3/4 %) percent per
annum in excess of the Prime Rate (determined as provided in the Loan
Agreement); provided, that, (i) notwithstanding anything to the contrary
contained above, the Interest Rate shall mean the rate of six and three-quarters
(6 3/4%) percent per annum in excess of the Prime Rate, at Payee’s option,
without notice, (A) either (1) for the period on and after the date of
termination or non-renewal hereof until such time as all Obligations are
indefeasibly paid and satisfied in full in immediately available funds, or
(2) for the period from and after the date of the occurrence of any Event of
Default, and for so long as such Event of Default is continuing as determined by
Payee, (b) the term “Prime Rate” shall mean the rate from time to time publicly
announced by Wachovia Bank, National Association, or its successors, as its
prime rate, whether or not such announced rate is the best rate available at
such bank, (c) the term “Event of Default” shall mean an Event of Default as
such term is defined in the Loan Agreement, and (d) the term “Loan Agreement”
shall mean the Amended and Restated Loan and Security Agreement, dated of even
date herewith, by and among Payee, the lenders party thereto, Debtor and
Lexington Precision Corporation, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced. Unless
otherwise defined herein, all capitalized terms used herein shall

 

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have the meaning assigned thereto in the Loan Agreement.
     The Interest Rate applicable to the Term Loans payable hereunder shall
increase or decrease as to by an amount equal to each increase or decrease,
respectively, in the Prime Rate, effective on the first day of the month after
any change in the Prime Rate is announced. The increase or decrease shall be
based on the Prime Rate in effect on the last day of the month in which any such
change occurs. Interest shall be calculated on the basis of a three hundred
sixty (360) day year and actual days elapsed. In no event shall the interest
charged hereunder exceed the maximum permitted under the laws of the State of
New York or other applicable law.
     This Note is issued pursuant to the terms and provisions of the Loan
Agreement to evidence the LRG Term Loan made by Payee to Debtor and to amend and
restate the Existing LRG Term Notes, and as so amended and restated, the
Existing LRG Term Notes are replaced and superseded by this Note in their
entirety. Debtor is, as of the date hereof, indebted to Payee in the principal
amount of this Note, together with interest accruing after the date hereof,
without offset, defense or counterclaim of any kind, nature or description
whatsoever. The substitution and replacement of the Existing LRG Term Notes
shall not, in any manner, be construed to constitute payment of the unpaid
indebtedness and other obligations and liabilities of Debtor evidenced by or
arising under the Existing LRG Term Notes.
     This Note is secured by the Collateral described in the Loan Agreement and
the other Financing Agreements, and is entitled to all of the benefits and
rights thereof and of the other Financing Agreements. At the time any payment is
due hereunder, at its option, Payee may charge the amount thereof to any account
of Debtor maintained by Payee.
     If any payment of principal or interest is not made when due hereunder, or
if any other Event of Default shall occur for any reason, or if the Loan
Agreement shall be terminated or not renewed for any reason whatsoever, then and
in any such event, in addition to all rights and remedies of Payee under the
Financing Agreements, applicable law or otherwise, all such rights and remedies
being cumulative, not exclusive and enforceable alternatively, successively and
concurrently, Payee may, at its option, declare any or all of Debtor’s
Obligations, including, without limitation, all amounts owing under this Note,
to be due and payable in accordance with the terms of the Loan Agreement,
whereupon the then unpaid balance hereof, together with all interest accrued
thereon, shall forthwith become due and payable, together with interest accruing
thereafter at the then applicable Interest Rate stated above until the
Obligations are paid in full.
     Debtor (i) waives diligence, demand, presentment, protest and notice
(except as otherwise expressly provided in Section 10.2 of the Loan Agreement)
of any kind, (ii) agrees that it will not be necessary for Payee to first
institute suit in order to enforce payment of this Note and (iii) consents to
any one or more extensions or postponements of time of payment, release,
surrender or substitution of collateral security, or forbearance or other
indulgence, without notice or consent. The pleading of any statute of
limitations as a defense to any demand against Debtor is hereby expressly waived
by Debtor. Upon any Event of Default or termination or non-renewal of the Loan
Agreement, Payee shall have the right, but not the obligation to setoff against
this Note all money owed by Payee to Debtor.
     Payee shall not be required to resort to any Collateral for payment, but
may proceed against Debtor and any guarantors or endorsers hereof in such order
and manner (consistent with the terms of the Loan Agreement) as Payee may
choose. None of the rights of Payee shall be

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waived or diminished by any failure or delay in the exercise thereof.
     The validity, interpretation and enforcement of this Note and the other
Financing Agreements and any dispute arising in connection herewith or therewith
shall be governed by the internal laws of the State of New York, but excluding
any principles of conflicts of law or other rule of law that would result in the
application of the law of any jurisdiction other than the laws of the State of
New York.
     Debtor irrevocably consents and submits to the non-exclusive jurisdiction
of the Supreme Court of the State of New York for New York County and the United
States District Court for the Southern District of New York, whichever Payee may
elect, and waives any objection based on venue or forum non conveniens with
respect to any action instituted therein arising under this Note or any of the
other Financing Agreements or in any way connection with or related or
incidental to the dealings of Debtor and Payee in respect of this Note or any of
the other Financing Agreements or the transactions related hereto or thereto, in
each case whether now existing or hereafter arising, and whether in contract,
tort, equity or otherwise, and agrees that any dispute arising out of the
relationship between Debtor and Payee or the conduct of such persons in
connection with this Note or otherwise shall be heard only in the courts
described above (except that Payee shall have the right to bring any action or
proceeding against Debtor or its property in the courts of any other
jurisdiction which Payee deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against Debtor or its
property).
     Debtor hereby waives personal service of any and all process upon it and
consents that all such service of process may be made by certified mail (return
receipt requested) directed to it and service so made shall be deemed to be
completed five (5) days after the same shall have been so deposited in the U.S.
mails, or, at Payee’s option, by service upon Debtor in any other manner
provided under the rules of any such courts. Within thirty (30) days after such
service, Debtor shall appear in answer to such process, failing which Debtor
shall be deemed in default and judgment may be entered by Payee against Debtor
for the amount of the claim and other relief requested.
     DEBTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS NOTE OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS BETWEEN DEBTOR AND PAYEE
IN RESPECT OF THIS NOTE OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. DEBTOR
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRIAL WITHOUT A JURY.

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     This Note shall be binding upon the successors and assigns of Debtor and
inure to the benefit of Payee and its successors, endorsees and assigns.
Whenever used herein, the term “Debtor” shall be deemed to include its
successors and assigns and the term “Payee” shall be deemed to include its
successors, endorsees and assigns. If any term or provision of this Note shall
be held invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall in no way be affected thereby.

                  LEXINGTON RUBBER GROUP, INC.    
 
           
 
  By:   /s/ Warren Delano
 
   
 
                Title: President    

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