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Exhibit 10.10(d)
SUPPLEMENTAL TERMS LETTER
As of January 3, 1997
International Remote Imaging Systems, Inc.
0000 Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. XxXxxxxx, Vice President, Finance & Administration & CFO
RE: CHANGE IN TERMS AGREEMENT ("CHANGE IN TERMS AGREEMENT") DATED
AS OF JANUARY 3, 1997, RELATING TO A PROMISSORY NOTE (THE
"NOTE") IN THE ORIGINAL PRINCIPAL AMOUNT OF $1,500,000.00
EXECUTED BY INTERNATIONAL REMOTE IMAGING SYSTEMS, INC., A
DELAWARE CORPORATION ("BORROWER") IN FAVOR OF CITY NATIONAL
BANK, A NATIONAL BANKING ASSOCIATION ("CNB")
Dear Xx. XxXxxxxx:
This is to confirm that CNB will extend the credit facility more
completely described in the enclosed Note, subject to the additional terms and
conditions set forth herein and in the Change in Terms Agreement. Capitalized
terms not defined in this letter have the meanings given them in the Note. This
letter is hereby incorporated into the Note (this letter, the Note, the Terms
Letter and in the Change in Terms Agreement, collectively, the "Note").
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS. Capitalized terms used in this Amendment without
definition shall have the meanings set forth in the Supplemental Terms Letter
dated July 29, 1996 related to the Note ("Terms Letter").
2. AMENDMENTS. The Terms Letter is amended as follows:
2.1 Section 2. of the Terms Letter is hereby deleted in its
entirely, and shall be added and inserted a new Section 2. as follows:
"2. Failure of Borrower to furnish CNB, within the times
specified, the following statements:
2.1 Within forty-five (45) days after the end of
each monthly accounting period of each
fiscal year, a financial statement
consisting of not less than a balance sheet
and income
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Xxxxxx X. XxXxxxxx, VP, Finance & Administration, CFO
International Remote Imaging Systems, Inc.
As of January 3, 1997
Page 2
statement, prepared in accordance with
generally accepted accounting principles
consistently applied, which financial
statement may be internally prepared;
2.2 Within sixty (60) days after the end of each
quarterly accounting period of each fiscal
year, a financial statement consisting of
not less than a Form 10-Q.;
2.3 Within ninety (90) days after the close of
each fiscal year, a copy of the annual
report, on Form 10-K for such year for
Borrower and the Subsidiaries; and
2.4 Such additional information, reports and/or
statements as CNB may, from time to time,
reasonably request;"
2.2 Section 3. of the Terms Letter is hereby deleted in its
entirely, and shall be added and inserted a new Section 3. as follows:
"3. Failure of Borrower to maintain the following:
3.1 Tangible Net Worth plus Subordinated Debt of
not less than the following amounts as of
the stated effective date;
Effective Date Minimum Amount
-------------- ----------------
3/31/97 $ (1,300,000.00)
6/30/97 $ (1,000,000.00)
9/30/97 $ (750,000.00)
12/31/97 $ (50,000.00)
3/31/98 $ 550,000.00
3.2 A ratio of Total Senior Liabilities to
Tangible Net Worth plus Subordinated Debt of
not more than 21.50 to 1 as of March 31,
1998;
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Xxxxxx X. XxXxxxxx, VP, Finance & Administration, CFO
International Remote Imaging Systems, Inc.
As of January 3, 1997
Page 3
3.3 A ratio of Current Assets to Current
Liabilities of not less than the following
amounts as of the stated effective date; and
Effective Date Minimum Ratio
-------------- -------------
3/31/97 0.76 to 1
6/30/97 0.76 to 1
9/30/97 0.77 to 1
12/31/97 0.83 to 1
3/31/98 0.87 to 1
3.4 A ratio of Cash Flow from Operations to Debt
Service of not less than the following
amounts as of the stated effective date.
Effective Date Minimum Ratio
-------------- -------------
3/31/97 0.60 to 1
6/30/97 0.90 to 1
9/30/97 1.00 to 1
12/31/97 1.25 to 1
3/31/98 1.25 to 1"
2.3 Section 4. of the Terms Letter is hereby deleted in its
entirely, and there shall be added and inserted a new Section 4. as follows:
"4. Failure of Borrower within five (5) days after
execution and delivery of this Supplemental Terms
Letter to grant CNB a duly perfected security
interest, with the exception of the existing TOA
lien, in all patents, copyrights and trademarks held
by borrower."
2.4 There shall be added and inserted a definition as follows:
"DEBT SERVICE" shall mean (a) the $1,200,000.00 annual
principal payments under the Amended and Restated Note dated
January 3, 1997 in the original principal amount of
$4,900,000.00, prorated per the appropriate period, plus (b)
all interest incurred on borrowed money during the twelve
month period ending on the date of determination."
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Xxxxxx X. XxXxxxxx, VP, Finance & Administration, CFO
International Remote Imaging Systems, Inc.
As of January 3, 1997
Page 4
2.5 The definition "TANGIBLE NET WORTH" contained in the Terms
Letter is hereby deleted in its entirely, and there shall be added and inserted
a definition as follows:
"TANGIBLE NET WORTH" shall mean the total of all assets
appearing on a balance sheet prepared in accordance with
generally accepted accounting principles consistently applied
for Borrower and the Subsidiaries on a consolidated basis,
minus (a) all intangible assets, including, without
limitation, unamortized debt discount, affiliate, employee and
officer receivables or advances, goodwill, research and
development costs, patents, trademarks, the excess of purchase
price over underlying values of acquired companies, any
covenants not to compete, deferred charges, copyrights,
franchises and appraisal surplus; minus (b) all obligations
which are required by generally accepted accounting principles
consistently applied to be reflected as a liability on the
consolidated balance sheet of Borrower and the Subsidiaries;
minus, (c) the amount, if any, at which shares of stock of a
non-wholly owned Subsidiary appear on the asset side of
Borrower's consolidated balance sheet, as determined in
accordance with generally accepted accounting principles
consistently applied; minus (d) minority interests; and minus
(e) deferred income and reserves not otherwise reflected as a
liability on the consolidated balance sheet of Borrower and
the Subsidiaries."
2.6 There shall be added and inserted a definition as follows:
"CASH FLOW FROM OPERATIONS" shall be determined on a
consolidated basis for Borrower and the Subsidiaries and shall
mean the sum of (a) net income after taxes earned, plus (b)
amortization of intangible assets, plus (c) interest expense,
plus (d) depreciation expensed, plus (e) any other non-cash
charges, in each case, as adjusted for (f) change in deferred
taxes."
3. EXISTING AGREEMENTS. Except as expressly amended herein, the Terms
Letter shall remain in full force and effect, and in all other respects is
affirmed.
4. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.
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Xxxxxx X. XxXxxxxx, VP, Finance & Administration, CFO
International Remote Imaging Systems, Inc.
As of January 3, 1997
Page 5
5. GOVERNING LAW. This Amendment and the rights and obligations of the
parties hereto shall be construed in accordance with, and governed by the laws
of the State of California.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
day and year first above written.
"Borrower" INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.,
a Delaware corporation
By: /s/ Xxxxxx X. XxXxxxxx
--------------------------
Xxxxxx X. XxXxxxxx, Vice President,
Finance and Administration/CFO
"CNB" CITY NATIONAL BANK, a national
banking association
By: /s/ Xxxxxxx Xxxxxxx
--------------------------
Xxxxxxx Xxxxxxx, Senior Vice
President/Manager
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx, Vice President
