1
EXHIBIT 10.10(g)
WAIVER OF DEFAULT UNDER PROMISSORY NOTE
As of January 3, 1997
International Remote Imaging Systems, Inc.
9162 Eton Avenue
Chatsworth, CA 91311
Attention: Martin S. McDermut, Vice President, Finance &
Administration & CFO
RE: WAIVER OF DEFAULT UNDER PROMISSORY NOTE DATED JULY 29, 1996 IN THE
ORIGINAL PRINCIPAL SUM OF $1,500,000.00 (TOGETHER WITH THE RELATED
SUPPLEMENTAL TERMS LETTER, "NOTE") AND PROMISSORY NOTE DATED JULY 29,
1996 IN THE ORIGINAL PRINCIPAL SUM OF $7,800,000.00 (TOGETHER WITH
THE RELATED SUPPLEMENTAL TERMS LETTER, "NOTE") EXECUTED BY
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC., A DELAWARE CORPORATION
("BORROWER") IN FAVOR OF CITY NATIONAL BANK, A NATIONAL BANKING
ASSOCIATION ("CNB")
Dear Mr. McDermut:
Section 3.1 of each Note requires that Borrower maintain a Tangible Net
Worth plus Subordinated Debt of not less than $9,500,000.00 at all times. Based
on Borrower's financial statements for the periods ending September 30, 1996 and
December 31, 1996, Borrower is out of compliance of this covenant.
Section 3.2 of each Note requires that Borrower maintain a ratio of
Total Senior Liabilities to Tangible Net Worth plus Subordinated Debt of not
more than 1.5 to 1 at all times. Based on Borrower's financial statements for
the periods ending September 30, 1996 and December 31, 1996, Borrower is out of
compliance of this covenant.
Section 3.3 of each Note requires that Borrower maintain a ratio of
Current Assets to Current Liabilities of not less than 1.0 to 1 at all times.
Based on Borrower's financial statements for the periods ending September 30,
1996 and December 31, 1996, Borrower is out of compliance of this covenant.
Section 3.4 of the $7,800,000.00 Note requires that Borrower maintain a
ratio of Cash Flow from Operations to Debt Service of not less than 1.1 to 1
from and after
2
Martin S. McDermut, VP, Finance & Administration, CFO
International Remote Imaging Systems, Inc.
As of January 3, 1997
Page 2
December 1, 1996. Based on Borrower's financial statement for the period ending
December 31, 1996, Borrower is out of compliance of this covenant.
Under the terms of the Note, Borrower's failure to comply with or
observe the provisions of the foregoing Sections constitutes an Events of
Default. You have requested that CNB waive the provisions of such Sections in
connection with such Events of Default. CNB represents that it does not have
knowledge of any other facts which constitute an Event of Default under either
Note or any related Security Agreement.
Subject to the terms and conditions hereof, CNB hereby waives the
specific Events of Default set forth in the above paragraphs only for the
quarters ending September 30, 1996 and December 31, 1996. This waiver shall be
effective solely with respect to the matters described above and shall not be
deemed or construed to be a waiver of any other term or condition of either Note
or any other term or condition of any of the instruments or agreements referred
to therein or executed in connection therewith, or to prejudice any right or
rights that CNB may now have or may have in the future under or in connection
with either Note or the instruments or agreements referred to therein or
otherwise executed in connection therewith with respect to any other Events of
Default that may exist or arise. Except as expressly waived herein or amended by
other written agreements executed concurrently herewith, all of the terms and
conditions of each Note shall remain unchanged and in full force and effect.
Capitalized terms not defined herein shall have the respective meanings given
them in the Notes.
3
Martin S. McDermut, VP, Finance & Administration, CFO
International Remote Imaging Systems, Inc.
As of January 3, 1997
Page 3
This waiver shall become effective only upon receipt by CNB of
counterparts hereof acknowledged by you.
Very truly yours,
CITY NATIONAL BANK, a
national banking association
By: /s/ Charles Solomon
--------------------------
Charles Solomon, Senior Vice
President/Manager
By: /s/ Bruce E. Corey
--------------------------
Bruce E. Corey, Vice President
ACKNOWLEDGED BY BORROWER:
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.,
a Delaware corporation
By: /s/ Martin S. McDermut
-----------------------------------
Martin S. McDermut, Vice President,
Finance & Administration & CFO
Date: April 9, 1997
---------------------------------
RECEIVED BY CITY NATIONAL BANK:
Date: April 9, 1997
------------------------
By: /s/ Bruce E. Corey
--------------------------
Bruce E. Corey, Vice President