Exhibit 10.1

 

 

SECOND AMENDMENT TO CREDIT AGREEMENT

 

This Second Amendment to Credit Agreement (this “Amendment”), dated as of March
28, 2014, is made by and between MOCON, Inc., a Minnesota corporation (the
“Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association (the “Bank”).

 

The Borrower and the Bank are parties to that certain Credit Agreement dated as
of March 28, 2012, as amended by a First Amendment to Credit Agreement dated as
of September 24, 2013 (as amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”), pursuant to which the Bank has
agreed to make certain financial accommodations available to the Borrower.

 

The Borrower has requested that the Bank make certain amendments to the Credit
Agreement, and the Bank is willing to accommodate such request on the terms and
subject to the conditions set forth below.

 

NOW THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:

 

1.     Definitions; References. Capitalized terms used in this Amendment that
are defined in the Credit Agreement shall have the same meanings as defined
therein, unless otherwise defined herein.

 

2.     Amendments to Credit Agreement.

 

(a)     Line of Credit. Section 1.1(a) of the Credit Agreement is hereby amended
in its entirety to read as follows:

 

(b)     Line of Credit. Subject to the terms and conditions of this Agreement,
the Bank hereby agrees to make advances to Borrower from time to time up to and
including March 28, 2016 (the “Maturity Date”), not to exceed at any time (a)
the aggregate principal amount of Six Million Dollars ($6,000,000) from March
28, 2014 to and including December 31, 2014 and (b) Five Million Dollars
($5,000,000) from January 1, 2015 to and including the Maturity Date (“Line of
Credit”), the proceeds of which shall be used by Borrower to
(i) provide for the working capital and general corporate purpose needs of
Borrower (including the issuance of Letters of Credit, as defined below) and
Baseline-MOCON, Inc., a Colorado corporation and a wholly owned subsidiary of
Borrower (“Baseline”, and together with Borrower, collectively, “Obligors”), and
(ii) provide for Permitted Acquisitions (as defined below). Borrower’s
obligation to repay advances under the Line of Credit shall be evidenced by a
promissory note originally dated March 28, 2012, as amended by an amended and
restated promissory note dated March 28, 2014 (as such promissory note may be
amended, extended or otherwise modified from time to time, and including each
other promissory note accepted from time to time in substitution therefor or in
renewal thereof, the “Revolving Line of Credit Note”), all terms of which are
incorporated herein by this reference.

 

 
 

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(c)     Financial Condition. Section 4.9(a) of the Credit Agreement is hereby
amended in its entirety to read as follows:

 

(a)     Total Net Funded Debt (as defined below) to EBITDA (as defined below)
not greater than (a) 1.25 to 1.00 as of the fiscal quarters ending March 31,
2014 and June 30, 2014 and (b) 1.00 to 1.00 as of the fiscal quarter ending
September 30, 2014 and each fiscal quarter-end thereafter, determined on a
rolling four-quarter basis;

 

3.     Retroactive Consent to Dissolution of Microanalytics Instrumentation
Corp. The Borrower has indicated to the Bank that Microanalytics Instrumentation
Corp., a wholly-owned subsidiary of the Borrower, has been dissolved and the
assets thereof have been contributed to the Borrower. Accordingly, the Bank
retroactively consents to such dissolution pursuant to Section 5.6 of the Credit
Agreement and the reference to Microanalytics Instrumentation Corp. in Section
1.6 of the Credit Agreement is hereby deleted. The foregoing consent shall be
effective only in this specific instance and for the specific purpose for which
it is given, and shall not entitle the Borrower to any other or further consent
in any similar or other circumstances and shall not establish a course of
dealing between the parties.

 

4.     No Other Changes. Except as explicitly amended by this Amendment, all of
the terms and conditions of the Credit Agreement remain in full force and effect
and apply to any advance or Letter of Credit thereunder.

 

5.     Amendment Fee. In consideration of the Bank’s entering into this
Amendment, the Borrower will pay to the Bank a non-refundable and fully earned
amendment fee in the amount of $10,000 (the “Amendment Fee”). The Amendment Fee
shall be paid in immediately available funds by the Borrower to the Bank on or
before the date of this Amendment.

 

6.     Conditions Precedent. This Amendment shall be effective only if the Bank
has received, on or before the date hereof (or such later date as the Bank may
agree to in writing), each of the following, each in form and substance
acceptable to the Bank:

 

(a)     this Amendment, duly executed by the Borrower;

 

(b)     the Revolving Line of Credit Note;

 

(c)     the Acknowledgment and Agreement of Guarantors set forth at the end of
this Amendment, duly executed by the guarantors;

 

(d)     payment of the Amendment Fee as set forth in paragraph 5; and

 

(e)     such other items as the Bank shall require.

 

7.     Representations and Warranties. To induce the Bank to enter into this
Amendment, the Borrower hereby represents, warrants and acknowledges that as of
the date hereof:

 

 
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(a)     this Amendment has been duly executed and delivered by the Borrower and
constitutes the legal, valid and binding obligation of the Borrower, enforceable
in accordance with its terms;

 

(b)     the execution, delivery and performance by the Borrower of this
Amendment does not: (i) violate any provision of any law, rule or regulation or
of any order, writ, injunction or decree presently in effect, having
applicability to the Borrower; or (ii) result in a breach of, or constitute a
default under, any indenture, loan or credit agreement or any other agreement,
lease or instrument to which the Borrower is a party or by which the Borrower or
its properties may be bound or affected;

 

(c)     no default or Event of Default exists under the Credit Agreement or any
other Loan Document; and

 

(d)     the representations and warranties contained in Article II of the Credit
Agreement are true and correct on and as of the date hereof as though made on
and as of the date hereof, except to the extent that such representations and
warranties relate solely to an earlier date.

 

8.     Costs and Expenses. Without limiting Section 7.3 of the Credit Agreement,
the Borrower agrees to pay on demand all costs and expenses incurred by the Bank
in connection with the preparation, execution and delivery of this Amendment and
all related documents herein described, including, without limitation, all
reasonable fees and disbursements of legal counsel.

 

9.     Miscellaneous.

 

(a)     The Bank wishes (and the Borrower agrees) to eliminate any possibility
that any past conditions, acts, omissions, events, circumstances or matters
would impair or otherwise adversely affect the remedies of the Bank. Therefore,
the Borrower unconditionally releases, waives and forever discharges: (i) any
and all liabilities, obligations, duties, promises or indebtedness of any kind
of the Bank to the Borrower regarding the execution, delivery or performance of
the Credit Agreement, as amended by this Amendment, the other Loan Documents, or
any document delivered thereunder arising prior to the date hereof; and (ii) all
claims, counterclaims, offsets, causes of action, suits or defenses of any kind
whatsoever (if any), whether known or unknown, which the Borrower might
otherwise have against the Bank or any of its directors, officers or employees
on account of any condition, act, omission, event, contract, liability,
obligations, indebtedness, claim, counterclaim, cause of action, defense,
circumstance or matter of any kind whatsoever, which existed, arose or occurred
at any time prior to the date hereof.

 

(b)     Except as amended hereby, the provisions of the Credit Agreement shall
remain in full force and effect. After the effective date hereof, all references
in the Loan Documents to the “Credit Agreement” shall be deemed to refer to the
Credit Agreement as amended hereby.

 

(c)     This Amendment may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each complete set of which,
when so executed and delivered by all parties, shall be an original, but all
such counterparts shall together constitute but one and the same instrument.

 

 
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(d)     The execution of this Amendment shall not be deemed to be a waiver of
any default or Event of Default that may exist under the Credit Agreement or any
other Loan Document.

 

(e)     This Amendment shall be governed by the substantive laws (other than
conflict laws) of the State of Minnesota.

 

10.     Release of Bank. The Borrower hereby absolutely and unconditionally
releases and forever discharges the Bank, and any and all participants, parent
corporations, subsidiary corporations, affiliated corporations, insurers,
indemnitors, successors and assigns thereof, together with all of the present
and former directors, officers, agents and employees of any of the foregoing,
from any and all claims, counterclaims, demands or causes of action of any kind,
nature or description, whether arising in law or equity or upon contract or tort
or under any state or federal law or otherwise, which the Borrower has had, now
has or has made claim to have against any such Person for or by reason of any
act, omission, matter, cause or thing whatsoever arising from the beginning of
time to and including the date of this Amendment, whether such claims,
counterclaims, demands or causes of action are matured or unmatured.

 

Signature page follows

 

 

 
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the day and year first above written.

 

 

MOCON, INC.

 

By: /s/ Darrell B.
Lee                                                                         

      Name: Darrell B. Lee

      Title: Chief Financial Officer

 

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

 

By: /s/ R. James
Hancock                                                                

      Name: R. James Hancock

      Title: Vice President

 

 

Signature Page to Second Amendment to Credit Agreement

 

 

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ACKNOWLEDGMENT AND AGREEMENT OF GUARANTOR

 

The undersigned, a guarantor of the indebtedness of MOCON, Inc., a Minnesota
corporation (the “Borrower”), to Wells Fargo Bank, National Association, a
national banking association (the “Bank”), pursuant to a Continuing Guaranty,
dated as of March 28, 2012 (as amended, restated, supplemented or otherwise
modified from time to time, the “Guaranty”), hereby: (i) acknowledges receipt of
the foregoing Second Amendment to Credit Agreement (the “Amendment”); (ii)
consents to the terms and execution thereof; (iii) reaffirms its obligations to
the Bank pursuant to the terms of the Guaranty; (iv) absolutely and
unconditionally releases and forever discharges the Bank, and any and all
participants, parent corporations, subsidiary corporations, affiliated
corporations, insurers, indemnitors, successors and assigns thereof, together
with all of the present and former directors, officers, agents and employees of
any of the foregoing, from any and all claims, counterclaims, demands or causes
of action of any kind, nature or description, whether arising in law or equity
or upon contract or tort or under any state or federal law or otherwise, which
the undersigned has had, now has or has made claim to have against any such
person or entity for or by reason of any act, omission, matter, cause or thing
whatsoever arising from the beginning of time to and including the date hereof,
whether such claims, counterclaims, demands or causes of action are matured or
unmatured; and (v) acknowledges that the Bank may amend, restate, extend, renew
or otherwise modify the Loan Documents (as defined in the Credit Agreement
referenced in the Amendment) and any indebtedness or agreement of the Borrower,
or enter into any agreement or extend additional or other credit accommodations,
without notifying or obtaining the consent of the undersigned and without
impairing the liability of the undersigned under the Guaranty for all of the
Borrower’s present and future indebtedness to the Bank.

 

 

BASELINE-MOCON, INC.

 

 

By: /s/ Darrell B. Lee                                                   

       Name: Darrell B. Lee

       Title: Vice President

 

 

 

     

 

 

 

 

 

 

 

 

Acknowledgement to Second Amendment to Credit Agreement

 

 

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Exhibit A

AMENDED AND RESTATED
REVOLVING LINE OF CREDIT NOTE

 

$6,000,000

    Minneapolis, Minnesota

March 28, 2014

 

FOR VALUE RECEIVED, the undersigned, MOCON, INC., a Minnesota corporation
(“Borrower”) promises to pay to the order of WELLS FARGO BANK, NATIONAL
ASSOCIATION, a national banking association (“Bank”) at its office at MAC
N9305-187, 90 South Seventh Street, Suite 1800, Minneapolis, Minnesota, or at
such other place as the holder hereof may designate, in lawful money of the
United States of America and in immediately available funds, the principal sum
of Six Million Dollars ($6,000,000), or so much thereof as may be advanced and
be outstanding, with interest thereon, to be computed on each advance from the
date of its disbursement as set forth herein.

 

DEFINITIONS:

 

As used herein, the following terms shall have the meanings set forth after
each, and any other term defined in this Note shall have the meaning set forth
at the place defined:

 

(a)     “Business Day” means any day except a Saturday, Sunday or any other day
on which commercial banks in Minnesota are authorized or required by law to
close.

 

(b)     “Daily One Month LIBOR” means, for any day, the rate of interest equal
to LIBOR then in effect for delivery for a one (1) month period.

 

(c)     “LIBOR” means the rate per annum (rounded upward, if necessary, to the
nearest whole 1/8 of 1%) and determined pursuant to the following formula:

 

LIBOR =

Base LIBOR

   

100% - LIBOR Reserve Percentage

 

 

(i)     “Base LIBOR” means the rate per annum for United States dollar deposits
quoted by Bank as the Inter-Bank Market Offered Rate, with the understanding
that such rate is quoted by Bank for the purpose of calculating effective rates
of interest for loans making reference thereto, for delivery of funds for one
(1) month in an amount equal to the outstanding principal balance of this Note.
Borrower understands and agrees that Bank may base its quotation of the
Inter-Bank Market Offered Rate upon such offers or other market indicators of
the Inter-Bank Market as Bank in its discretion deems appropriate including, but
not limited to, the rate offered for U.S. dollar deposits on the London
Inter-Bank Market.

 

 
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(ii)     “LIBOR Reserve Percentage” means the reserve percentage prescribed by
the Board of Governors of the Federal Reserve System (or any successor) for
“Eurocurrency Liabilities” (as defined in Regulation D of the Federal Reserve
Board, as amended), adjusted by Bank for expected changes in such reserve
percentage during the term of this Note.

 

INTEREST:

 

(a)     Interest. The outstanding principal balance of this Note shall bear
interest (computed on the basis of a 360-day year, actual days elapsed) at a
fluctuating rate per annum determined by Bank to be one and three-quarters of
one percent (1.75%) above the Daily One Month LIBOR in effect from time to time.
Each change in the rate of interest hereunder shall become effective on each
Business Day a change in the Daily One Month LIBOR is announced within Bank.
Bank is hereby authorized to note the date and interest rate applicable to this
Note and any payments made thereon on Bank's books and records (either manually
or by electronic entry) and/or on any schedule attached to this Note, which
notations shall be prima facie evidence of the accuracy of the information
noted.

 

(b)     Taxes and Regulatory Costs. Borrower shall pay to Bank immediately upon
demand, in addition to any other amounts due or to become due hereunder, any and
all (i) withholdings, interest equalization taxes, stamp taxes or other taxes
(except income and franchise taxes) imposed by any domestic or foreign
governmental authority and related in any manner to LIBOR, and (ii) future,
supplemental, emergency or other changes in the LIBOR Reserve Percentage,
assessment rates imposed by the Federal Deposit Insurance Corporation, or
similar requirements or costs imposed by any domestic or foreign governmental
authority or resulting from compliance by Bank with any request or directive
(whether or not having the force of law) from any central bank or other
governmental authority and related in any manner to LIBOR to the extent they are
not included in the calculation of LIBOR. In determining which of the foregoing
are attributable to any LIBOR option available to Borrower hereunder, any
reasonable allocation made by Bank among its operations shall be conclusive and
binding upon Borrower.

 

(c)     Payment of Interest. Interest accrued on this Note shall be payable on
the first day of each month, commencing May 1, 2012.

 

(d)     Default Interest. From and after the maturity date of this Note, or such
earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, or at Bank's option upon the occurrence, and during
the continuance of an Event of Default, the outstanding principal balance of
this Note shall bear interest at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed) equal to two percent (2%) above
the rate of interest from time to time applicable to this Note.

 

BORROWING AND REPAYMENT:

 

(a)     Borrowing and Repayment. Borrower may from time to time during the term
of this Note borrow, partially or wholly repay its outstanding borrowings, and
reborrow, subject to all of the limitations, terms and conditions of this Note
and of any document executed in connection with or governing this Note;
provided, however, that the total outstanding borrowings under this Note shall
not at any time exceed the principal amount stated above. The unpaid principal
balance of this obligation at any time shall be the total amounts advanced
hereunder by the holder hereof less the amount of principal payments made hereon
by or for Borrower, which balance may be endorsed hereon from time to time by
the holder. The outstanding principal balance of this Note shall be due and
payable in full on March 28, 2016.

 

 
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(b)     Advances. Advances hereunder, to the total amount of the principal sum
stated above, may be made by the holder at the oral or written request of (i)
Darrell B. Lee or Patricia A. Johnson, any one of them acting alone, who are
authorized to request advances and direct the disposition of any advances until
written notice of the revocation of such authority is received by the holder at
the office designated above, or (ii) any person, with respect to advances
deposited to the credit of any deposit account of Borrower, which advances, when
so deposited, shall be conclusively presumed to have been made to or for the
benefit of Borrower regardless of the fact that persons other than those
authorized to request advances may have authority to draw against such account.
The holder shall have no obligation to determine whether any person requesting
an advance is or has been authorized by Borrower.

 

(c)     Application of Payments. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof.

 

EVENTS OF DEFAULT:

 

This Note is made pursuant to and is subject to the terms and conditions of that
certain Credit Agreement between Borrower and Bank dated as of March 28, 2012,
as amended by a First Amendment to Credit Agreement dated as of September 24,
2013(as amended, restated, supplemented or otherwise modified from time to time,
the “Credit Agreement”). Any default in the payment or performance of any
obligation under this Note, or any defined event of default under the Credit
Agreement, shall constitute an “Event of Default” under this Note.

 

MISCELLANEOUS:

 

(a)     Remedies. Upon the occurrence of any Event of Default, the holder of
this Note, at the holder's option, may declare all sums of principal and
interest outstanding hereunder to be immediately due and payable without
presentment, demand, notice of nonperformance, notice of protest, protest or
notice of dishonor, all of which are expressly waived by Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder shall
immediately cease and terminate. Borrower shall pay to the holder immediately
upon demand the full amount of all payments, advances, charges, costs and
expenses, including reasonable attorneys’ fees (to include outside counsel fees
and all allocated costs of the holder’s in-house counsel), expended or incurred
by the holder in connection with the enforcement of the holder's rights and/or
the collection of any amounts which become due to the holder under this Note,
and the prosecution or defense of any action in any way related to this Note,
including without limitation, any action for declaratory relief, whether
incurred at the trial or appellate level, in an arbitration proceeding or
otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to
Borrower or any other person or entity.

 

 
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(b)     Obligations Joint and Several. Should more than one person or entity
sign this Note as a Borrower, the obligations of each such Borrower shall be
joint and several.

 

(c)     Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of Minnesota.     

 

(d)     Amendment and Restatement. This Note is issued in substitution for and
replacement of, but not repayment of, the Revolving Line of Credit Note issued
by Borrower in favor of Bank dated March 28, 2012, in the original principal
amount of $5,000,000, as such promissory note may have been amended, extended or
otherwise modified from time to time, and including each other promissory note
accepted from time to time in substitution therefor or in renewal thereof.

 

 
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IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first
written above.

 

 

MOCON, INC.

 

 

By: /s/ Darrell B. Lee                                                 

       Name: Darrell B. Lee

       Title: Chief Financial Officer

 

 

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