EXHIBIT 10.23
AGREEMENT OF
AMENDMENT
TO
REVOLVING LOAN AND SECURITY
AGREEMENT
This Agreement of Amendment to
Revolving Loan and Security Agreement ("Agreement") is effective
May 14, 2008 by and among SOVEREIGN BANK , a federal savings
bank, having an address of 101 Wood Avenue South, Iselin NJ 08830
("Lender"), MEDIA SCIENCES INTERNATIONAL, INC., a Delaware
corporation, MEDIA SCIENCES, INC., a New Jersey corporation,
and CADAPULT GRAPHIC SYSTEMS, INC., a New Jersey
corporation, having their chief executive office at 8 Allerman
Road, Oakland NJ 07436 (either separately, jointly, or jointly and
severally, "Borrower").
RECITALS
A. Borrower has
executed and delivered a certain (i) Secured Revolving Note dated
February 12, 2008, in the original maximum principal sum of Eight
Million Dollars ($8,000,000.00), and a certain (ii) Term Loan Note
in the original maximum principal sum of One Million Five Hundred
Thousand Dollars($1,500,000.00) payable to the order of Lender
(collectively, "Note")
B. In
connection with the execution and delivery of the Note and to
secure payment and performance of the Note and other obligations of
Borrower to Lender, the Lender and Borrower have executed, among
other things, a Revolving Loan and Security Agreement dated
February12, 2008 ("Loan Agreement").
C. In
addition to the foregoing documents, Media Sciences International,
Inc. and Media Sciences, Inc. (jointly and severally, "Pledgor")
have executed certain Pledge and Control Agreements dated February
12, 2008 ("Pledge Agreement"). For purposes of convenience, the
Borrower and Pledgor are jointly and severally referred to as
"Obligors."
D. In
addition to the foregoing documents, the Obligors and Lender have
executed or delivered other collateral agreements, certificates and
instruments perfecting or otherwise relating to the security
interests created. For purposes of convenience, the'Note, Loan
Agreement, Pledge Agreement and related collateral agreements,
certificates and instruments are collectively referred to as the
"Loan Documents."
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E.
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Borrower has requested a modification of the
Loan Documents.
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F. Lender and
Obligors wish to clarify their rights and duties to one another as
set forth in the Loan Documents.
NOW, THEREFORE
, in consideration of the promises,
covenants and understandings set forth in this Agreement and the
benefits to be received from the performance of such promises,
covenants and understandings, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
AGREEMENTS
1. Lender
and Obligors reaffirm, consent and agree to all of the terms and
conditions of the Loan Documents as binding, effective and
enforceable according to their stated terms, except to the extent
that such Loan Documents are hereby expressly modified by this
Agreement.
2.
In the case of any ambiguity or
inconsistency between the Loan Documents and this Agreement, the
language and interpretation of this Agreement is to be deemed
binding and paramount.
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3.
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The Loan Agreement is hereby amended as
follows:
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A. Section 1.3(a) is hereby amended to read as follows:
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1.3(a) Interest accrues on the
Revolving Loan based upon Borrower's compliance with the provisions
of Section 7.16 (Fixed Charge Coverage Ratio) at Borrower's option,
asset forth in the grid below (which applies only in the absence of
an event of Default) identifying such options based upon Borrower's
range of Fixed Charge Coverage compliance, with each such
determination to be made by Lender monthly based upon the then most
recent covenant compliance submissions made pursuant to this
Agreement for the trailing 12 month period preceding Lender's
determination:
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Fixed Charge Coverage
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LIBOR Option
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Prime Option
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<1.05:1*
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None
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Prime Rate plus 1
percent floating
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1.05:1 < 1.10:1
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LIBOR Rate plus 275
basis points
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Prime Rate plus one-
half (1/2%) percent
floating
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1.10:1 < 1.25:1
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LIBOR Rate plus 250
basis points
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Prime Rate plus one-
quarter (1/4%) percent
floating
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> 1.25: 1
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LIBOR Rate plus 225
basis points
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Prime Rate floating
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* Borrower is to pay an additional
fee of $3,500.00 to Lender at each time that Lender makes a
determination that the Borrower's Fixed Charge Coverage Ratio is
< 1.05:1.
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B. Section 7.16 is hereby amended to read as follows:
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Section 7.16 Fixed Charge
Coverage Ratio
The Borrower is not to cause or
permit its Fixed Charge coverage ratio, tested quarterly, on a
rolling three month basis for the quarter endingJune30, 2008, on a
rolling six, nine and twelve month basis for each quarter ending
thereafter, and thereupon based on a trailing twelve month basis,
to be less than 1.05:1. Fixed Charge is defined as earnings before
interest, taxes, depreciation and amortization ("EBITDA") less the
sum of: cash taxes, cas
