EXHIBIT 10.13
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 Chemical Bank (the "Bank") (the "Letter
Agreement").
WITNESSETH:
WHEREAS, the Company and the Bank are parties to the Letter Agreement; and
WHEREAS, the Company has requested the Bank to modify the Letter Agreement
and to waive certain violations of the Letter Agreement, and the Bank is
agreeable to such requests;
NOW THEREFORE, in consideration of the premises and mutual agreements
herein contained, the parties hereby agree as follows:
1. Definitions. Except as otherwise stated, capitalized terms defined in
the Letter Agreement and used herein without definition shall have the
respective meanings assigned to them in the Letter Agreement.
2. Waivers. The Bank hereby waives the violations of the Letter Agreement
described below (which have taken place on or before the date hereof) and any
Defaults or Events of Default resulting therefrom, solely to the extent set
forth below:
(a) Subsection 5(k) of the Letter Agreement requires the Company to
not allow the ratio of the Company's account payables to Banks Indebtedness
due under the Note to be below 1.1::1 or above 1.5::1. The Company was in
default of this provision for the period April 30, 1995, May 31, 1995, June
30, 1995 and July 31, 1995.
(b) Subsection 5(l) of the Letter Agreement requires the Company to
not allow the ratio of the Company's principal Indebtedness under the
Letter Agreement to accounts receivable as of December 31, 1994, January,
1995 and February, 1995 to be greater than 85%. During that period such
ratio was 85.4%, 97% and 91% at the respective month ends.
(c) Subsection 7(j) of the Letter Agreement requires the Company to
have an operating profit of at least $50,000 for fiscal year ending
12/31/94. During fiscal year ending 12/31/94, the Company had a $554,000
operating loss.
3. Amendment of the Letter Agreement.
(a) Subsection 2(b) of the Letter Agreement is hereby amended by
deleting the entire subsection and substituting the following:
"2(b) The Company shall execute and deliver to the Bank a Note,
substantially in the form annexed hereto as Exhibit "A", with
appropriate insertions therein, which shall evidence the term loan
borrowing pursuant to Subsection 2(a) hereof. The Note (a) shall be
dated the date hereof, (b) shall be payable in monthly consecutive
installments of principal as follows:
15,000 5/1/94
15,000 6/1/94
15,000 7/1/94
15,000 8/1/94
15,000 9/1/94
15,000 10/1/94
15,000 11/1/94
15,000 12/1/94
15,000 1/1/95
15,000 2/1/95
15,000 3/1/95
15,000 4/1/95
15,000 5/1/95
15,000 6/1/95
15,000 7/1/95
15,000 8/1/95
5,000 9/1/95
5,000 10/1/95
5,000 11/1/95
5,000 12/1/95
5,000 1/1/96
5,000 2/1/96
5,000 3/1/96
5,000 4/1/96
5,000 5/1/96
5,000 6/1/96
5,000 7/1/96
5,000 8/1/96
5,000 9/1/96
5,000 10/1/96
5,000 11/1/96
5,000 12/1/96
10,000 1/1/97
10,000 2/1/97
10,000 3/1/97
10,000 4/1/97
10,000 5/1/97
10,000 6/1/97
10,000 7/1/97
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10,000 8/1/97
10,000 9/1/97
10,000 10/1/97
10,000 11/1/97
10,000 12/1/97
10,000 1/1/98
10,000 2/1/98
10,000 3/1/98
170,000 4/1/98 (Final Balloon Payment)"
(b) Subsection 2 of the Letter Agreement is hereby amended by
inserting new paragraph (2(e)) and 2(f) at the end thereof to read as
follows:
"2(e) Collateral Terms. The Investor Group shall provide
$245,000 cash collateral pursuant to the terms in Schedule I
hereto, to secure the last $245,000 of principal due under
the Note, provided, however that once the principal balance
of the Note is reduced to below $245,000, with each
principal payment made by the Company thereafter, a like
amount of said cash collateral shall be returned to the
Investor Group. The cash collateral provided hereunder shall
be applied by Bank to the Note only if there is an Event of
Default under Section 7(a) or 7(g) of the Agreement,
otherwise the cash collateral shall remain with Bank until
the occurrence of such Events of Default under 7(a) or 7(g)
or until such time as the Note is paid in full.
(f) Other Collateral Provision. The second lien on platinum
inventory of Bank will be released on the effective date of
this Amendment. Additionally, the security agreement of the
Bank on equipment shall be released either in part or in
whole, as appropriate, at such time or times as Company
secures financing on currently unfinanced equipment,
provided, the proceeds of such financings are shared equally
between Company and Bank, with Bank's share to be applied to
principal payments due hereunder in the inverse order of
maturity."
(c) Subsection 5(k) of the Letter Agreement is deleted in its
entirety.
(d) Subsection 5(l) of the Letter Agreement is amended by deleting the
words "to eligible accounts receivable" from the first line thereof and
substituting therefore "to the sum of eligible accounts receivable and cash
collateral delivered pursuant to subsection 2(e) hereof, if any."
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(e) Subsection 5(m) of the Letter Agreement is amended by deleting the
"." at the end thereof and by adding thereto, "; or liens on equipment
given to the Investor Group, which liens are subordinate to that of the
Bank and the documentation for which is in form and substance satisfactory
to Bank."
(f) Section 7(j) of the Letter Agreement is amended by deleting it in
its entirety and substituting therefore:
"The Company fails to have earnings before cash interest,
taxes, depreciation and amortization less capital
expenditures divided by cash debt service (Chemical Bank
Debt and Equipment Lease Debt) equal to or greater than 1.25
at 12/31/96 and 1.5 at first quarter 1997 and each fiscal
quarter thereafter each calculated on the four prior fiscal
quarters which have elapsed."
4. Representations and Warrants. To induce the Bank to enter into this
Amendment, the Company hereby represents and warrants that:
(a) The Company has the power, authority and legal right to make and
deliver this Amendment and to perform its obligations under the Letter
Agreement, as amended by this Amendment, without any notice, consent,
approval or authorization not already obtained, and the Company has taken
all necessary action to authorize the same.
(b) The making and delivery of this Amendment and the performance of
the Letter Agreement as amended by this Amendment do not violate any
provision of law or any regulation or of the Company's charter or by-laws
or result in the breach of or constitute a default under or require any
consent under any indenture or other agreement or instrument to which the
Company is a party or by which the Company or any of its property may be
bound or affected. The Agreement as amended by this Amendment constitutes a
legal, valid and binding obligation of the Company, enforceable against it
in accordance with its terms, except as the enforceability thereof may be
limited by any applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally.
(c) The representations and warranties contained in Section 4 of the
Letter Agreement are true and correct on and as of the date of this
Amendment and after giving effect thereto.
(d) No default or Event of Default has occurred and is continuing
under the Letter Agreement as of the date of this Amendment and after
giving effect thereto.
5. Effective Date. This Amendment shall become effective when all of the
following shall have occurred:
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(a) The Bank shall have received counterparts of this Amendment, duly
executed by each of the parties hereto.
(b) 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 Amendment, certified by an appropriate officer of the
Company.
(c) The Bank shall have received a $2,500 non-refundable fee in
accordance with its terms as so amended.
(d) The Investor Group shall have delivered the cash collateral and
pledge to Bank of the same.
(e) Each current Guarantor shall have confirmed its guarantee to the
Bank.
6. Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original and all of which taken together
shall constitute a single instrument with the same effect as if the signatures
thereto and hereto were upon the same instrument.
7. Full Force and Effect. Except as expressly modified by this Amendment,
all of the terms and provisions of the Letter Agreement shall continue in full
force and effect, and all parties hereto shall be entitled to the benefits
thereof.
8. Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
New York.
IN WITNESS WHEREOF, the parties have hereto caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the date set forth above.
INRAD, Inc.
By: /s/ Warren Ruderman
-------------------------
Title: President
CHEMICAL BANK
By: /s/ Frank Apollo
-------------------------
Title: Vice President
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CONFIRMATION OF INDIVIDUAL GUARANTOR
The undersigned, (an "Individual Guarantor") entered into a Guarantee
Agreement (the "Guarantee"), dated January 9, 1991, absolutely and
unconditionally guaranteeing to Chemical Bank, its successors, endorsees and
assigns (the "Bank"), the payment of any and all obligations (as defined in the
Guarantee) and liabilities related thereto, of INRAD, INC. (the "Company"),
whether then existing or thereafter contracted or incurred by Company, and any
and all renewals or extensions thereof, or any part thereof, together with
interest thereon and all expenses of collection thereof and of the Guarantee,
including reasonable attorney's fees. Reference is made to the Guarantee for a
complete statement of its terms and conditions.
To induce the Bank to accept the First Amendment and Waiver to the Letter
Agreement (the "Letter Agreement") being executed and delivered concurrently
herewith, the Guarantor hereby (i) ratifies and confirms its Guarantee to Bank,
and (ii) confirms that such Guarantee continues in full force and effect with
respect to such Individual Guarantor.
/s/ Warren Ruderman
---------------------------
WARREN RUDERMAN
CONFIRMATION OF CORPORATE GUARANTOR
The undersigned, (a "Corporate Guarantor") entered into a Guarantee
Agreement (the "Guarantee"), dated January 9, 1991, absolutely and
unconditionally guaranteeing to Chemical Bank, its successors, endorsees and
assigns (the "Bank"), the payment of any and all obligations (as defined in the
Guarantee) and liabilities related thereto, of INRAD, INC. (the "Company"),
whether then existing or thereafter contracted or incurred by Company, and any
and all renewals or extensions thereof, or any part thereof, together with
interest thereon and all expenses of collection thereof and of the Guarantee,
including reasonable attorney's fees. Reference is made to the Guarantee for a
complete statement of its terms and conditions.
To induce the Bank to accept the First Amendment and Waiver to the Letter
Agreement (the "Letter Agreement") being executed and delivered concurrently
herewith, the Guarantor hereby (i) ratifies and confirms its Guarantee to Bank,
and (ii) confirms that such Guarantee continues in full force and effect with
respect to such Corporate Guarantor.
INRAD INTERNATIONAL, INC.
By: /s/ Warren Ruderman
---------------------------
Title: President