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                                                                    Exhibit 10.7





                      LEXINGTON PRECISION CORPORATE OFFICE





                         1998 MANAGEMENT CASH BONUS PLAN



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                      LEXINGTON PRECISION CORPORATE OFFICE

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
 SECTION
  NUMBER                                                             PAGE
  ------                                                             ----
<S>                                                                <C>
  I.    PURPOSE OF PLAN                                               1

  II.   ELIGIBILITY                                                   1

  III.  PLAN YEAR                                                     1

  IV.   GROUPING OF PARTICIPANTS                                      1

  V.    SETTING OF TARGET BONUS PERCENTAGES                           1

  VI.   AUTHORIZATION FORM                                            2

  VII.  NOTIFICATION OF EMPLOYEES                                     2

  VIII. BASIS FOR BONUS PAYMENTS                                      3

  IX.   SETTING OF GOALS                                              3

  X.    CALCULATING THE BONUS POOL                                    4

  XI.   TIMING OF BONUS PAYMENTS                                      5

  XII.  OTHER                                                         5
</TABLE>



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                      LEXINGTON PRECISION CORPORATE OFFICE

                         1998 MANAGEMENT CASH BONUS PLAN

I.       PURPOSE OF PLAN

         The "1998 MANAGEMENT CASH BONUS PLAN" (the "PLAN") is designed to
         provide meaningful incentives for officers and key employees of the
         Corporate Office (the "Bonus Group") of Lexington Precision Corporation
         (the "COMPANY") to increase profitability while efficiently managing
         the Company's assets.

II.      ELIGIBILITY

         A "PARTICIPANT" shall mean an individual who meets both of the
         following criteria:

                  (1)      The individual has been selected to participate in
                           the Plan by the Compensation Committee of the Board
                           of Directors of Lexington Precision Corporation upon
                           recommendation of the president of Lexington
                           Precision Corporation; and

                  (2)      The individual is a full-time, salaried, exempt
                           employee of the Company on the last day of the plan
                           year.

         Participants who retire during the plan year and are aged 62 or older
         on the date of retirement and estates of Participants who die during
         the plan year will be paid bonuses (if and to the extent earned) at the
         same time that all other Participants receive their bonuses after the
         end of the plan year.

III.     PLAN YEAR

         The plan year shall mean the year ending December 31, 1998.

IV.      GROUPING OF PARTICIPANTS

         The Participants in the Bonus Group, will be designated at the
         beginning of the plan year by the Compensation Committee of the Board
         of Directors of Lexington Precision Corporation upon recommendation of
         the president of Lexington Precision Corporation.

                                       -1-


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V.       SETTING OF TARGET BONUS PERCENTAGES

         Subject to the adjustment for Personal Performance (defined in 
         Section XI below), the "TARGET BONUS" for each Participant shall mean 
         the amount calculated by multiplying the Participant's aggregate
         base-salary received during the year by a "TARGET BONUS PERCENTAGE"
         which will be set at the beginning of the plan year by the Compensation
         Committee of the Board of Directors of Lexington Precision Corporation
         upon recommendation of the president of Lexington Precision
         Corporation. The "GROUP TARGET BONUS" shall mean the aggregate of the
         Target Bonuses of all Participants in a Bonus Group. The Target Bonus
         Percentage for the president of the Company will be set by the
         president of Lexington Precision Corporation.

         A Participant's bonus will always be based on the aggregate base-salary
         received during the year, not on the base-salary level at any
         particular point during the year (i.e., when calculating bonuses for
         Participants who received salary increases during the year, for
         Participants who are hired during the year or for Participants who
         retire or die during the year).

         As a general guideline, the Target Bonus Percentage levels which would
         typically be assigned to various categories of employees in the Bonus
         Group are set forth below:
<TABLE>
<CAPTION>
                  
                                                            TARGET BONUS    
                          POSITION                           PERCENTAGE     
                          --------                           ----------     
                 <S>                                       <C>              
                 Senior Vice Presidents                       20-35%        
                                                                            
                 Vice Presidents                              15-25%        
                                                                            
                 Junior Officers                               5-15%        
</TABLE>

         If a Participant moves to a higher management level during the year,
         such Participant's Target Bonus Percentage will be reset at an
         appropriate higher level determined by the Compensation Committee of
         the Board of Directors of Lexington Precision Corporation upon
         recommendation of the president of Lexington Precision Corporation, as
         if the Target Bonus Percentage had been at the higher level for the
         entire year. If a Participant moves to a lower management level during
         the year, such Participant's Target Bonus Percentage will be reset at
         an appropriate lower level determined by the Compensation Committee of
         the Board of Directors of Lexington Precision Corporation upon
         recommendation of the president of Lexington Precision Corporation, as
         if the Target Bonus Percentage had been at the lower level for the
         entire year.

VI.      AUTHORIZATION FORM

         Attached hereto as Exhibit A is the "AUTHORIZATION FORM" which shall be
         used by the Compensation Committee of the Board of Directors of
         Lexington Precision Corporation upon recommendation of the president of
         Lexington

                                       -2-


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         Precision Corporation at the beginning of each plan year when
         designating Participants, Target Bonus Percentages and the Bonus
         Group's Target Pre- Bonus Operating Profit (defined in Section IX
         below).

VII.     NOTIFICATION OF EMPLOYEES

         Attached hereto as Exhibit B is the form of memorandum which shall be
         used at the beginning of each plan year to inform employees of their
         participation in the Plan and their Target Bonus Percentages and Target
         Bonuses.

VIII.    BASIS FOR BONUS PAYMENTS

         After the end of the plan year, when financial results for the year are
         available, a calculation will be made to determine the bonus that will
         be paid to each Participant.

         The percentage of Target Bonus earned by each Participant will depend
         on the following:

                  (1)      how well the Bonus Group performed relative to its
                           Target Pre-Bonus Operating Profit; and

                  (2)      the Participant's Personal Performance (discussed
                           below).

         All bonuses will be subject to the review and approval of the Board Of
         Directors of Lexington Precision Corporation.

IX.      SETTING OF GOALS

         "OPERATING PROFIT" means profit before interest, income taxes and other
         non-operating expenses in accordance with the Company's standard
         accounting procedures.

         "PRE-BONUS OPERATING PROFIT" means operating profit before deducting
         any expenses for bonuses relating to the 1998 Management Cash Bonus
         Plan.

         The "TARGET PRE-BONUS OPERATING PROFIT" for the Bonus Group will be set
         at the beginning of the year by the Compensation Committee of the Board
         of Directors of Lexington Precision Corporation upon recommendation of
         the president of Lexington Precision Corporation. The Target Pre-Bonus
         Operating Profit will equal ONE of the following:

                  (1)      the Bonus Group's "BUDGETED PRE-BONUS OPERATING
                           PROFIT" as reflected in the annual budget for the
                           Company;

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                  (2)      an amount higher than the Company's Budgeted
                           Pre-Bonus Operating Profit if the Budgeted Pre- Bonus
                           Operating Profit is below reasonable
                           performance-standards (taking into account, among
                           other things, industry performance standards,
                           historical performance standards, and the amount of
                           capital invested in the Company); or

                  (3)      an amount lower than the Company's Budgeted Pre-Bonus
                           Operating Profit if the Budgeted Pre- Bonus Operating
                           Profit is above reasonable performance-standards
                           (taking into account, among other things, industry
                           performance standards, historical performance
                           standards, and the amount of capital invested in the
                           Company).

         The "reasonable performance standards" discussed above will be
         determined in the sole discretion of the Compensation Committee of the
         Board of Directors of Lexington Precision Corporation upon
         recommendation by the president of Lexington Precision Corporation.

         The Target Pre-Bonus Operating Profit will not be revised during the
         plan year, except in cases where an acquisition or divestiture of a
         business completed during the plan year materially affects reported
         operating results during that plan year.

X.       CALCULATING THE BONUS POOL

         To calculate the bonus for each of the Participants in the Bonus Group,
         it is first necessary to calculate the "GROUP BONUS POOL".

         The Group Bonus Pool will be calculated by multiplying the Group Target
         Bonus by the percentage in the column on the right below, opposite the
         percentage of the Target Pre-Bonus Operating Profit which was attained
         by that Bonus Group.
<TABLE>
<CAPTION>
                   PERCENTAGE                               PERCENTAGE OF TARGET
                    OF TARGET                                   BONUS EARNED
                    PRE-BONUS                               (BEFORE ADJUSTING FOR
            OPERATING PROFIT ATTAINED                       PERSONAL PERFORMANCE)
            -------------------------                       ---------------------
<S>                                                              <C>
                   less than 85.00%                                  None
                 85.00    -  89.99%                                   25%
                 90.00    -  94.99%                                   50
                 95.00    -  99.99%                                   75
                100.00    -  109.99%    (target)                      100
                110.00    -  119.99%                                  125
                120.00    -  129.99%                                  150
                130.00    -  139.99%                                  175
                140.00% or more                                       200 (maximum)
</TABLE>

                                       -4-


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         The percentage of Target Bonus earned, before giving effect to
         adjustments for Personal Performance, must be in the increments shown
         on the above chart. For example, if the Bonus Group attained 108% of
         the Target Pre-Bonus Operating Profit, the percentage used for each
         Participant in the Bonus Group would be 100% (not 120% or 125%). The
         percentages of Target Bonus earned are "stepped," not linear. No
         bonuses will be earned by any Participants in the Bonus Group if less
         than 85% of the Target Pre-Bonus Operating Profit is attained. The
         Group Bonus Pool cannot exceed 200% of the Group Target Bonus.

XI.      TIMING OF BONUS PAYMENTS

         All bonus payments will be made as soon as practicable after the end of
         the plan year. Before any bonus payments can be made the following two
         requirements must be met:

                  (1)      necessary accounting and audit work must be completed
                           so that all bonus calculations can be made; and

                  (2)      the bonus must be approved by a vote of the Board of
                           Directors of Lexington Precision Corporation.

         It is anticipated that bonuses will be paid approximately 45-75 days
         after the end of the plan year.

XII.     OTHER

         Bonuses will be subject to income and employment tax withholding to the
         extent required by applicable law.

         Bonuses and the right to receive bonuses cannot be pledged, assigned or
         alienated, voluntarily or involuntarily, by any Participant.

         THE 1998 MANAGEMENT CASH BONUS PLAN AND ANY BONUSES GRANTED UNDER THE
         1998 MANAGEMENT CASH BONUS PLAN SHALL NOT CONFER UPON ANY PARTICIPANT
         ANY RIGHT WITH RESPECT TO THE CONTINUANCE OF EMPLOYMENT BY THE COMPANY,
         NOR SHALL THEY INTERFERE IN ANY WAY WITH THE RIGHT OF THE COMPANY TO
         TERMINATE A PARTICIPANT'S EMPLOYMENT AT ANY TIME.

         THE 1998 MANAGEMENT CASH BONUS PLAN MAY BE REVISED, MODIFIED OR
         TERMINATED IN ANY WAY, FOR ANY REASON AND AT ANY TIME AT THE SOLE
         DISCRETION OF THE BOARD OF DIRECTORS OF LEXINGTON PRECISION CORPORATION
         BY VOTE OF A MAJORITY OF THE BOARD AT ANY REGULAR OR SPECIAL MEETING OF
         THE BOARD.

         Revised and approved by the Board of Directors of Lexington Precision
         Corporation on October 18, 1994

                                       -5-