EXHIBIT 10.1
AMENDMENT TO LOAN DOCUMENTS
THIS AMENDMENT TO LOAN DOCUMENTS (this "Amendment") is made as of January
23, 2006, by and between MEDIA SCIENCES, INC., a New Jersey corporation, and
CADAPULT GRAPHIC SYSTEMS, INC., a New Jersey corporation (collectively, the
"Borrower"), and PNC BANK, NATIONAL ASSOCIATION (the "Bank").
BACKGROUND
A. The Borrower has executed and delivered to the Bank (or a predecessor
which is now known by the Bank's name as set forth above), one or more
promissory notes, letter agreements, loan agreements, security agreements,
mortgages, pledge agreements, collateral assignments, and other agreements,
instruments, certificates and documents, some or all of which are more fully
described on attached Exhibit A, which is made a part of this Amendment
(collectively as amended from time to time, the "Loan Documents") which evidence
or secure some or all of the Borrower's obligations to the Bank for one or more
loans or other extensions of credit (the "Obligations").
B. The Borrower and the Bank desire to amend the Loan Documents as provided
for in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and intending to be legally bound hereby, the parties hereto agree as follows:
1. Certain of the Loan Documents are amended as set forth in Exhibit A. Any
and all references to any Loan Document in any other Loan Document shall be
deemed to refer to such Loan Document as amended by this Amendment. This
Amendment is deemed incorporated into each of the Loan Documents. Any initially
capitalized terms used in this Amendment without definition shall have the
meanings assigned to those terms in the Loan Documents. To the extent that any
term or provision of this Amendment is or may be inconsistent with any term or
provision in any Loan Document, the terms and provisions of this Amendment shall
control.
2. The Borrower hereby certifies that: (a) all of its representations and
warranties in the Loan Documents, as amended by this Amendment, are, except as
may otherwise be stated in this Amendment: (i) true and correct as of the date
of this Amendment, (ii) ratified and confirmed without condition as if made
anew, and (iii) incorporated into this Amendment by reference, (b) no Event of
Default or event which, with the passage of time or the giving of notice or
both, would constitute an Event of Default, exists under any Loan Document which
will not be cured by the execution and effectiveness of this Amendment, (c) no
consent, approval, order or authorization of, or registration or filing with,
any third party is required in connection with the execution, delivery and
carrying out of this Amendment or, if required, has been obtained, and (d) this
Amendment has been duly authorized, executed and delivered so that it
constitutes the legal, valid and binding obligation of the Borrower, enforceable
in accordance with its terms. The Borrower confirms that the Obligations remain
outstanding without defense, set off, counterclaim, discount or charge of any
kind as of the date of this Amendment.
3. The Borrower hereby confirms that any collateral for the Obligations,
including liens, security interests, mortgages, and pledges granted by the
Borrower or third parties (if applicable), shall continue unimpaired and in full
force and effect, and shall cover and secure all of the Borrower's existing and
future Obligations to the Bank, as modified by this Amendment.
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4. As a condition precedent to the effectiveness of this Amendment, the
Borrower shall comply with the terms and conditions (if any) specified in
Exhibit A.
5. This Amendment may be signed in any number of counterpart copies and by
the parties to this Amendment on separate counterparts, but all such copies
shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Amendment by facsimile transmission
shall be effective as delivery of a manually executed counterpart. Any party so
executing this Amendment by facsimile transmission shall promptly deliver a
manually executed counterpart, provided that any failure to do so shall not
affect the validity of the counterpart executed by facsimile transmission.
6. This Amendment will be binding upon and inure to the benefit of the
Borrower and the Bank and their respective heirs, executors, administrators,
successors and assigns.
7. This Amendment has been delivered to and accepted by the Bank and will
be deemed to be made in the State where the Bank's office indicated in the Loan
Documents is located. This Amendment will be interpreted and the rights and
liabilities of the parties hereto determined in accordance with the laws of the
State where the Bank's office indicated in the Loan Documents is located,
excluding its conflict of laws rules.
8. Except as amended hereby, the terms and provisions of the Loan Documents
remain unchanged, are and shall remain in full force and effect unless and until
modified or amended in writing in accordance with their terms, and are hereby
ratified and confirmed. Except as expressly provided herein, this Amendment
shall not constitute an amendment, waiver, consent or release with respect to
any provision of any Loan Document, a waiver of any default or Event of Default
under any Loan Document, or a waiver or release of any of the Bank's rights and
remedies (all of which are hereby reserved). THE BORROWER EXPRESSLY RATIFIES AND
CONFIRMS THE CONFESSION OF JUDGMENT (IF APPLICABLE) AND WAIVER OF JURY TRIAL
PROVISIONS CONTAINED IN THE LOAN DOCUMENTS.
WITNESS the due execution of this Amendment as a document under seal as of
the date first written above.
WITNESS / ATTEST: Media Sciences, Inc.
/s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxx
------------------------------ --------------------------------
(SEAL)
Xxxxxx Xxxxxxx, Xxxxxxx X. Xxxxx, President
Secretary
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WITNESS / ATTEST: Cadapult Graphic Systems, Inc.
/s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxx
------------------------------ --------------------------------
(SEAL)
Xxxxxx Xxxxxxx, Xxxxxxx X. Xxxxx, President
Secretary
Secretary
PNC BANK,NATIONAL ASSOCIATION
By: /s/ Xxxxxx Xxxxxxx
--------------------------------
(SEAL)
Print Name: Xxxxxx Xxxxxxx
Title: Vice President
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EXHIBIT A TO
AMENDMENT TO LOAN DOCUMENTS
DATED AS OF January 23, 2006
A. The "Loan Documents" that are the subject of this Amendment include the
following (as any of the foregoing have previously been amended, modified
or otherwise supplemented):
1. Closing Statement dated December 16, 2004 of Media Sciences, Inc. and
Cadapult Graphic Systems, Inc.
2. Loan Agreement dated December 16, 2004 of Media Sciences, Inc. and
Cadapult Graphic Systems, Inc. (the "Loan Agreement")
3. Line of Credit Note dated December 16, 2004 in the principal amount of
$3,000,000.00 of Media Sciences, Inc. and Cadapult Graphic Systems,
Inc.
4. Security Agreement dated December 16, 2004 of Media Sciences, Inc.
5. Security Agreement dated December 16, 2004 of Cadapult Graphic
Systems, Inc.
6. Security Agreement dated December 16, 2004 of Media Sciences
International, Inc.
7. Financing Statements delivered as of December 16, 2004 of Media
Sciences, Inc., Cadapult Graphic Systems, Inc., and Media Sciences
International, Inc.
8. Guaranty and Surety Agreement dated December 16, 2004 of Media
Sciences International, Inc. 9. Amendment to Loan Documents dated
March 28, 2005.
10. Term Loan Note dated March 28, 2005 in the principal amount of
$500,000.00 of Media Sciences, Inc. and Cadapult Graphic Systems, Inc.
11. All other documents, instruments, agreements, and certificates
executed and delivered in connection with the Loan Documents listed in
this Section A.
B. The Loan Agreement is hereby amended as follows:
1. 4.2/4.3 Financial Statements. The Financial Reporting Requirements
section in the Loan Agreement is hereby amended by amending and restating
same in its entirety as follows:
"The Bank shall be provided with the following financial information:
(a) Quarterly unaudited consolidated financial statements of
Media Sciences International, Inc. within 45 days of quarter
end.
(b) Annual audited consolidated financial statements of Media
Sciences International, Inc. within 120 days of year end.
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(c) Accounts receivable agings of each Borrower, and accounts
payable agings of each Borrower, in form acceptable to the
Bank, within 45 days of the end of each quarter.
(d) Management prepared inventory report of each Borrower, in
form acceptable to the Bank, within 45 days of the end of
each quarter.
(e) Management prepared warranty activity report of each
Borrower, in form acceptable to the Bank, within 45 days of
the end of each quarter.
(f) Certification by Xxxxxxx Xxxxx, attached to a true and
complete copy of each annual and quarterly report filed with
the Securities and Exchange Commission, that states that he
has reviewed and signed such report, within 45 days of
filing.
(g) The Bank shall have the right to conduct an annual field
exam of the Borrower's and Media Sciences International,
Inc.'s books and records and operations, including but not
limited to accounts receivable and inventory reports. The
related expenses shall be for the account of the Bank unless
there has been an Event of Default, in which case all such
expenses shall be for the account of the Borrower."
2. Financial Covenants. The Financial Covenants section in the Loan
Agreement is hereby amended by amending and restating same in its entirety
as follows:
"(a) Media Sciences International, Inc. will maintain as of the
end of each fiscal quarter a ratio of Funded Debt to EBITDA
of not more than 2.50 to 1.00. Measured on a rolling four
quarter basis commencing with quarter ending 6/30/05.
(b) Media Sciences International, Inc. will maintain as of the
end of each fiscal quarter a ratio of EBITDA to Fixed Charge
("EBITDA to Fixed Charge") of more than 1.00 to 1.00.
Measured on a rolling four quarter basis commencing with
quarter ending 6/30/06. (Measurement will be on a six month
basis for quarter ending 12/31/05 and a nine month basis for
quarter ending 3/30/06).
As used herein:
"Current Maturities" means the scheduled payments of principal on
all indebtedness for borrowed money having an original term of
more than one year (including but not limited to amortization of
capitalized lease obligations), as shown on the Guarantor's
financial statements as of one year prior to the date of
determination.
"EBITDA" means net income plus interest expense plus income tax
expense plus depreciation plus amortization.
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"EBITDA to Fixed Charge" means (i) EBITDA minus Unfunded Capital
Expenditures divided by (ii) cash taxes plus CPLTD and interest
expense.
"Funded Debt" means all borrowed debt including senior borrowed
debt and subordinated debt.
"Tangible Net Worth" means stockholder's equity in the Guarantor
less any advances to affiliated parties less all items properly
classified as intangibles, in accordance with GAAP.
"Unfunded Capital Expenditures" Represents the difference between
actual capital expenditures and term financing, the proceeds of
which were used to purchase such capital expenditures. In effect,
this represents capital expenditures which were purchased with
operating cash flow.
C. Concurrently with the execution and delivery of this Amendment, Media
Sciences, Inc. shall execute and deliver to the Bank an amended and restated
committed line of credit note (the"Restated Note"), evidencing the line of
credit in the principal amount of $3,000,000.00 in form and substance
satisfactory to the Bank. Upon receipt by the Bank of the Restated Note, the
original committed line of credit note of Media Sciences, Inc. and Cadapult
Graphic Systems, Inc. in the principal amount of $3,000,000.00 shall be canceled
and returned to the Borrower; the loan and all accrued and unpaid interest on
the original committed line of credit note in the principal amount of
$3,000,000.00 shall thereafter be evidenced by the Restated Note; and all
references to the "Note" evidencing the Loan in any documents relating thereto
shall thereafter be deemed to refer to the Restated Note. Without duplication,
the Restated Note shall not constitute a novation and shall in no way extinguish
the Borrower's unconditional obligation to repay all indebtedness, including
accrued and unpaid interest, evidenced by the original committed line of credit
note in the principal amount of $3,000,000.00. As evidenced by the Restated
Note, Cadapult Graphic Systems, Inc. shall no longer be a co-borrower on the
subject credit facility and, as such, will no longer be permitted to request
credit thereunder. Cadapult Graphic Systems, Inc. shall hereafter guarantee all
obligations of Media Sciences, Inc. on the terms of that certain Guaranty and
Suretyship Agreement of Cadapult Graphic Systems, Inc. of even date herewith
including, without limitation, the obligations under the Restated Note. The line
of credit evidenced by the Restated Note will include an investment and
borrowing sweep feature on the terms and conditions of a Working Cash(R), Line
of Credit, Investment Sweep Rider (the "Sweep Rider") to be executed and
delivered by the Borrower to the Bank in form and substance satisfactory to the
Bank, the terms of which are hereby incorporated in the Loan Agreement by
reference. The Sweep Rider will remain in effect until such time (if any) as it
is terminated in accordance with its terms.
D. Conditions to Effectiveness of Amendment: The Bank's willingness to agree
to the amendments set forth in this Amendment are subject to the prior
satisfaction of the following conditions:
1. Delivery of this Amendment properly executed by all parties.
2. Delivery of the Restated Note.
3. Delivery of the Sweep Rider.
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4. Delivery of the Guaranty and Suretyship Agreement of Cadapult Graphic
Systems, Inc.
5. Delivery of Resolutions For Extensions of Credit and Incumbency
Certificate(3).
6. Payment of fee of Bank's counsel for document preparation.
CONSENT OF GUARANTOR/PLEDGOR/CREDITOR
Each of the undersigned (jointly and severally if more than one, the
"Party") consents to the provisions of the foregoing Amendment (the "Amendment")
and all prior amendments (if any) and confirms and agrees that: (a) the Party's
obligations under its Guaranty and Suretyship Agreement, dated December 16, 2004
(collectively the "Loan Documents"), relating to the Obligations mentioned in
the Amendment, shall be unimpaired by the Amendment; (b) the Party has no
defenses, set offs, counterclaims, discounts or charges of any kind against the
Bank, its officers, directors, employees, agents or attorneys with respect to
the Loan Documents; and (c) all of the terms, conditions and covenants in the
Loan Documents remain unaltered and in full force and effect and are hereby
ratified and confirmed and apply to the Obligations, as modified by the
Amendment. The Party certifies that all representations and warranties made in
the Loan Documents are true and correct.
The Party hereby confirms that any collateral for the Obligations,
including liens, security interests, mortgages, and pledges granted by the Party
or third parties (if applicable), shall continue unimpaired and in full force
and effect, shall cover and secure all of the Party's existing and future
Obligations to the Bank, as modified by this Amendment.
The Party ratifies and confirms the indemnification, confession of judgment
(if applicable) and waiver of jury trial provisions contained in the Loan
Documents.
WITNESS the due execution of this Consent as a document under seal as of
the date of this Amendment, intending to be legally bound hereby.
WITNESS / ATTEST: Media Sciences International, Inc.
/s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxx
---------------------------- -------------------------------
(SEAL)
Print Name: Xxxxxx Xxxxxxx Name: Xxxxxxx X. Xxxxx
Title:Secretary Title: President
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