Exhibit 10.1

 

SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (“Amendment”) is entered
into as of April 3, 2017 (“Effective Date”), between NANOFILM, LTD., an Ohio
limited liability company (“Borrower”) and MACKINAC COMMERCIAL CREDIT ABL
DIVISION OF MBANK, a Michigan banking corporation and successor in interest to
Mackinac Commercial Credit, LLC, a Michigan limited liability company (together
with its successors and assigns, the “Lender”).

 

RECITALS

 

A. Lender and Borrower entered into a Loan and Security Agreement dated April 4,
2014, as amended by a First Amendment to Loan and Security Agreement dated
effective as of April 4, 2015 (as amended, the “Loan Agreement”). All
capitalized terms not defined herein shall have the same meanings ascribed to
such terms in the Loan Agreement.

 

B. Lender and Borrower have agreed to modify the terms and conditions of the
Loan Agreement and Borrower and Lender wish to set forth their agreement
regarding the foregoing in this Amendment.

 

NOW, THEREFORE, in consideration of the mutual covenants, conditions, and
provisions as hereinafter set forth, the parties hereto agree as follows:

 

1. Restated Note. Concurrently with the execution and delivery of this
Amendment, the Borrower shall execute and deliver to the Lender an Amended and
Restated Revolving Credit Loan Note, evidencing the Revolving Credit Loan in the
principal amount of $1,500,000 in form and substance satisfactory to the Lender
(the “Restated Note”). Upon receipt by the Lender of the Restated Note, the
Revolving Credit Loan and all accrued and unpaid interest on that certain
Revolving Credit Loan Note dated April 4, 2014 in the original principal amount
of $1,500,000 (the “Existing Revolving Note”) shall thereafter be evidenced by
the Restated Note; and all references to the “Revolving Credit Loan Note” or
“Note” evidencing the Revolving Credit Loan in the Loan 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 Existing
Revolving Note.

 

2. Interest Rate. The definition of “Interest Rate” as set forth in Paragraph
2(c) of the Term Sheet to the Loan Agreement is hereby amended to the “Prime
Rate plus 3.0%”.

 

(a) The following definition of “Prime Rate” is hereby added to Section 1 of the
Loan Agreement in appropriate alphabetical sequence:

 

“Prime Rate” shall mean the U.S. prime rate of interest as published in the
Money and Investing Section of the Wall Street Journal (or other comparable
publication if the Wall Street Journal is no longer being published, as
determined by the Lender). The Prime Rate is not necessarily the lowest rate of
interest which may be available from the Lender on fluctuating rate loans.

 

3. Maturity Date. The definition of “Maturity Date” as set forth in Paragraph
2(e) of the Term Sheet to the Loan Agreement is hereby amended to the earlier of
demand or April 4, 2018.

 

4. Renewal. Section 2(e) of the Loan Agreement is hereby amended and restated in
its entirety to read as follows:

 

(e) Term; Automatic Renewal. The term of this Agreement and of the Loan shall be
on Demand, but if Demand is not made, then no later than the date set forth on
the Term Sheet (the “Maturity Date”). Notwithstanding anything to the contrary
or inconsistent contained herein, provided no Default exists, the Maturity Date,
as extended to April 4, 2018 pursuant to the Second Amendment to Loan and
Security Agreement dated April 3, 2017 will automatically be further extended
one time for one (1) year (“Renewal Term”), unless either party notifies the
other party in writing of its intent not to so extend the Maturity Date at least
sixty (60) days prior to the original Maturity Date. If the Maturity Date is
extended, Borrower shall pay to Lender a renewal fee in the amount of one
percent (1.0%) of the Maximum Loan Amount, which shall be due and payable on or
before the beginning of the Renewal Term.

 

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5. Change in Name. Section 10(i) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:

 

(i) use any other corporate or fictitious name; provided however, that Borrower
may change its entity name to “Pen Brands LLC” on or prior to December 31, 2017
so long as it has provided Lender with 10 days’ prior written notice thereof.
Upon the effectiveness of such name change, any and all references herein or in
the other Loan Documents to “nanoFILM, Ltd.” or “Nanofilm, Ltd.” shall be deemed
to refer to “Pen Brands, LLC.”

 

6. Tri-Annual Exams. The first sentence of Section 5(a) of the Loan Agreement is
hereby amended and restated in its entirety to read as follows:

 

Lender may, at all reasonable times, but no less than three times in any fiscal
year, have access to, examine, audit, make extracts from and inspect Borrower’s
records, files, books of account and the Collateral.

 

7. Conditions to Effectiveness. The effectiveness of this Amendment shall be
subject to satisfaction of the following conditions:

 

(a) Amendment Documents. Borrower shall have executed and delivered, or cause to
be executed and delivered to Lender, this Amendment (including the
acknowledgement and agreement to the amendments contained herein of the
Guarantors), the Restated Note, and all other documents and instruments required
by Lender in connection with this Amendment.

 

(b) Lender Expenses. Borrower shall have paid to Lender all of Lender’s legal
fees and expenses incurred in connection with the preparation, negotiation and
closing of this Amendment.

 

8. Effect of Amendment. Except for the amendments set forth in this Amendment,
the Loan Agreement and all other Loan Documents shall remain unchanged and in
full force and effect. Nothing in this Amendment is intended, or shall be
construed, to constitute a novation or an accord and satisfaction of any of
Borrower’s obligations under or in connection with the Loan Agreement or any
other Loan Document.

 

9. Miscellaneous.

 

(a) Entire Agreement. This Amendment, together with the Loan Agreement and other
Loan Documents constitutes the entire agreement and understanding among the
parties relating to the subject matter hereof, and supersedes all prior
proposals, negotiations, agreements and understandings relating to such subject
matter. In entering into this Amendment, Borrower acknowledges that it is
relying on no statement, representation, warranty, covenant or agreement of any
kind made by the Lender or any employee or agent of Lender, except for the
agreements of Lender set forth herein.

 

(b) Binding Effect. This Amendment shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns,
provided that no party other than Lender may assign any of its rights or
obligations hereunder without the prior written consent of Lender.

 

(c) Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF MICHIGAN APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE.

 

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(d) Counterparts; Facsimile or Electronic Signatures. This Amendment may be
executed in multiple counterparts, each of which shall be deemed to be an
original and all of which when taken together shall constitute one and the same
instrument. A facsimile or PDF signature shall be effective as an original
signature.

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
and delivered as of the date first hereinabove set forth.

 

BORROWER:      

NANOFILM, LTD.,

  an Ohio limited liability company         By: /s/ Anne Marie Thomas     Anne
Marie Thomas   Title: President  

 

LENDER:       MCC-ABL DIVISION OF MBANK,   a Michigan banking corporation      
  By: /s/ Edward P. Lewan     Edward P. Lewan   Title: President  

 

ACKNOWLEDGEMENT OF GUARANTOR

 

Scott E. Rickert, guarantor under that certain Validity Guaranty dated April 4,
2014 in favor of Lender (the “Validity Guaranty”), and PEN, Inc., a Delaware
corporation, a guarantor under that certain Corporate Guaranty dated May 1, 2015
(the “Corporate Guaranty”), each acknowledge the above Amendment and agrees that
their respective Guaranty shall continue in full force and effect.

 

  GUARANTOR:         /s/ Scott E. Rickert      Scott E. Rickert, an individual  
       PEN, INC.    a Delaware corporation          By: /s/ Scott E. Rickert    
Scott E. Rickert    Title: Chief Executive Officer

 

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