February 6, 1997
Xx. Xxxxxx Xxxxxxxx, Pres.
INRAD, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Re: Loan No.: 1627-706837
Dear Xx. Xxxxxxxx,
Reference is made to the First Amendment and Waiver (the "Amendment"), dated as
of August 31, 1995 of a certain Amended and Restated Agreement dated as of May
1, 1994 between INRAD, Inc. (the "Company") and The Chase Manhattan Bank,
formerly know as Chemical Bank (the "Bank")(the "Letter Agreement").
WHEREAS, the Company has requested the Bank to restructure the previous
Amendment and Letter Agreement as to waive certain covenants, release collateral
and restructure the terms of payment of the remaining principal balance.
NOW THEREFORE, in consideration of the premises and mutual agreements herein
contained, the parties hereto agree as follows:
1. The remaining principal balance in the amount of $310,000.00 shall be
payable in monthly consecutive installments of principal as follows:
$7,500.00 per month from February, 1997 through December, 1997; $10,000.00
per month from January, 1998 through December 1998; and $12,500.00 per
month from January, 1999 through August, 1999 with a final payment in the
amount $7,500.00 due in September, 1999;
2. all principal payments plus monthly interest shall be automatically debited
from the Company's DDA #590001086 on the first day of each month;
3. interest shall continue to accrue on the outstanding principal balance at
Prime plus 2.25%;
4. the Bank shall maintain security interests in both the accounts receivable
and the cash collateral in the amount of $245,000.00 which was provided by
the Investor Group (Clarex). Once the cash collateral to debt ratio is
reduced to 1.1x, a portion of the cash collateral will be released,
however, the 1.1x ratio of cash collateral to debt must be maintained
through the term of this loan. Any portion of the cash collateral in excess
of the 1.1x cash collateral to debt ratio shall be released on a quarterly
basis;
5. the Bank shall release all liens on all of borrower's equipment;
Exhibit 10.16
6. the Bank hereby waives the 1996 fiscal year violation of subsection 7(j) as
amended in the Amendment of the Letter Agreement pertaining to cash debt
service (EBITDA) > 1.5x. In addition, subsection 7(j) is hereby deleted in
its entirety. The Company shall continue to adhere to the financial
covenants pertaining to the limitation on capital expenditures up to
$250,000.00 and maintaining a debt to the eligible accounts receivable
ratio of .80x;
7. maintain the personal guarantee of Xx. Xxxxxx Xxxxxxxx and the corporate
guarantee of INRAD International, Inc. Each guarantor shall have confirmed
its guarantee to the Bank;
8. a restructuring fee in the amount of 1% of the outstanding principal
balance;
9. the Bank shall have received a copy of the resolution of the Board of
Directors of the Company authorizing the execution, delivery and
performance of this letter agreement, certified by an appropriate officer
of the Company;
10. this letter agreement may be signed in any number of counterparts, each of
which shall be an original and all of which taken shall constitute a single
instrument with the same effect as if the signatures thereto and hereto
were upon the same instrument; and
11. except as expressly modified by this letter agreement, all of the terms of
the Letter Agreement and Amendment shall continue in full force and effect,
and all parties hereto shall be entitled to the benefits thereof.
Please acknowledge your acceptance of the terms above by signing below and
returning the original to my attention at the address referenced above.
Very Truly Yours,
Xxxxxxx X. Xxxxxxxxx
Assistant Vice President
Agreed and Accepted:
INRAD, INC.
By: __________________
The Chase Manhattan Bank
CPBG Special Loan
000 Xxxxxxx Xxxxxxxxxx, 0xx Xxxxx
Xxxxxxx, XX 00000-0000
Phone No. (000) 000-0000
Fax No. (000) 000-0000
