Exhibit 10.1
 
EIGHTH AMENDMENT
TO
LOAN AND SECURITY AGREEMENT

THIS EIGHTH AMENDMENT to Loan and Security Agreement (this “Amendment”) is
entered into this June 20, 2014, by and between Silicon Valley Bank (“Bank”) and
ADVANCED PHOTONIX, INC., PICOMETRIX, LLC and ADVANCED PHOTONIX CANADA, INC.
(individually, a “Borrower” and, collectively, the “Borrowers”).
 
Recitals
 
A.           Bank and Borrowers are parties to that certain Loan and Security
Agreement dated as of January 31, 2012, as amended by a First Amendment to Loan
and Security Agreement dated as of October 25, 2012 and a Second Amendment to
Loan and Security Agreement dated as of February 8, 2013, a Third Amendment to
Loan and Security Agreement dated as of March 1, 2013, a Fourth Amendment to
Loan and Security Agreement dated as of January 22, 2014, a Fifth Amendment and
Forbearance to Loan and Security Agreement dated as of February 10, 2014, a
Sixth Amendment and Waiver to Loan and Security Agreement dated as of March 5,
2014, and a Seventh Amendment to Loan and Security Agreement dated as of April
30, 2014 (as the same may from time to time be further amended, modified,
supplemented or restated, collectively, the “Loan Agreement”).
 
B.           Borrowers have requested that Bank amend the Loan Agreement.
 
C.           In reliance upon the representations and warranties set forth
below, Bank has agreed to so amend certain provisions of the Loan Agreement in
accordance with the terms and subject to the conditions set forth herein.
 
Agreement
 
Now, Therefore, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:
 
1.             Definitions.  Capitalized terms used but not defined in this
Amendment shall have the meanings given to them in the Loan Agreement.
 
2.             Amendments to Loan Agreement.
 
2.1           Section 12.1 Termination Prior to Revolving Line Maturity Date is
amended to read as follows:
 
This Agreement may be terminated prior to the Revolving Line Maturity Date by
Borrower, effective three (3) Business Days after written notice of termination
is given to Bank.  Notwithstanding and such termination, Bank’s lien and
security interest in the collateral shall continue until Borrower fully
satisfies its Obligations.  If such termination is at Borrower’s election or at
Bank’s election due to the occurrence and continuance of an Event of Default,
Borrowers shall pay to Bank, in addition to the payment of any other expenses or
fees then owing, a termination fee in an amount equal to 0.5% of the Revolving
Line if terminated before the first anniversary of the Eighth Amendment Date,
0.25% of the Revolving Line if payment occurs after the first anniversary of the
Eighth Amendment Date provided that no termination fee shall be charged if the
credit facility hereunder is replaced with a new facility from another division
of the Bank.

2.2           Section 6.9 (Financial Covenants). Section 6.9 of the Loan
Agreement is amended and restated in its entirety to read as follows:
 
6.9           Financial Covenants. Maintain at all times, to be tested as of the
last day of each fiscal month, unless otherwise noted, on a consolidated basis
with respect to Borrowers:
 
 
 

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(a)            Liquidity Ratio.  Borrowers’ unrestricted cash and Cash
Equivalents at Bank plus the net balance sheet billed Accounts divided by
Borrowers’ Indebtedness to Bank of not less than 1.30 to 1.00 through May 31,
2014, and not less than 2.00 to 1.00 thereafter.
 
(b)            EBITDA.  Measured as of the end of each fiscal month, on a
trailing 6-month basis, EBITDA of at least the following:
 
Period
Minimum EBITDA
   
Through fiscal month ending June 30, 2014
($850,000)
   
July 31, 2014 through fiscal month ending September 30, 2014
($300,000)
   
October 31, 2014 through fiscal month ending December 31, 2014
$1.00
   
January 31, 2015 through fiscal month ending March 31, 2015
$100,000    
Covenant for periods ending each month thereafter to be based on updated
projections, but  will not be less than $100,000.
 

 
2.3          Section 13 (Definitions).
 
(a)           The following terms in Section 13.1 are amended and restated in
their entirety to read as follows:
 
“Eighth Amendment Date” means June 20, 2014.
 
“Revolving Line Maturity Date” means June 20, 2016.
 
“Revolving Margin” is 0.5% when the Liquidity Ratio is greater than or equal to
3.0 and trailing 6 month EBITDA is greater than or equal to $1.00, 1.5% when the
Liquidity Ratio is greater than or equal to 3.0 and trailing 6 month EBITDA is
less than $1.00, but greater than or equal to negative $500,000, 3.0% when the
Liquidity Ratio is greater than or equal to 3.0 and trailing 6 month EBITDA is
less than negative $500,000 but greater than or equal to negative $850,000;
1.25% when the Liquidity Ratio is greater than or equal to 2.5 but less than 3.0
and trailing 6 month EBITDA is greater than or equal to $1.00, 2.25% when the
Liquidity Ratio is greater than or equal to 2.5 but less than 3.0 and trailing 6
month EBITDA is less than $1.00 but greater than or equal to negative $500,000,
3.50% when the Liquidity Ratio is greater than or equal to 2.5 but less than 3.0
and trailing 6 month EBITDA is less than negative $500,000 but greater than or
equal to negative $850,000; and 1.75% when the Liquidity Ratio is less than 2.5
and trailing 6 month EBITDA is greater than or equal to $1.00, 2.75% when the
Liquidity Ratio is less than 2.5 and trailing 6 month EBITDA is less than $1.00
but greater than or equal to negative $500,000, 4.00% when the Liquidity Ratio
is less than 2.5 and trailing 6 month EBITDA is less than negative $500,000 but
greater than or equal to negative $850,000.
 
“Streamline Period” is, on and after the Effective Date, provided no Default or
Event of Default has occurred and is continuing, the period beginning on the
first (1st) day of the month following the month in which Borrower has more than
$1,500,000 of availability remaining on the Revolving Line, in each case as
determined by Bank, in its sole discretion (the “Streamline Threshold”); and
(ii) ending on the earlier to occur of (A) the occurrence of a Default or an
Event of Default; and (B) the first day thereafter in which Borrower fails to
maintain the Streamline Threshold, as determined by Bank, in its sole
discretion.  Upon the termination of a Streamline Period, Borrower must maintain
the Streamline Threshold for one (1) month, as determined by Bank, in its sole
discretion, prior to entering into a subsequent Streamline Period.  Borrower
shall give Bank prior-written notice of Borrower’s intention to enter into any
such Streamline Period.
 
 
 

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“Term Margin” is 1.0% when the Liquidity Ratio is greater than or equal to 3.0
and trailing 6 month EBITDA is greater than or equal to $1.00, 2.0% when the
Liquidity Ratio is greater than or equal to 3.0 and trailing 6 month EBITDA is
less than $1.00, but greater than or equal to negative $500,000, 3.5% when the
Liquidity Ratio is greater than or equal to 3.0 and trailing 6 month EBITDA is
less than negative $500,000 but greater than or equal to negative $850,000;
1.75% when the Liquidity Ratio is greater than or equal to 2.5 but less than 3.0
and trailing 6 month EBITDA is greater than or equal to $1.00, 2.75% when the
Liquidity Ratio is greater than or equal to 2.5 but less than 3.0 and trailing 6
month EBITDA is less than $1.00 but greater than or equal to negative $500,000,
4.0% when the Liquidity Ratio is greater than or equal to 2.5 but less than 3.0
and trailing 6 month EBITDA is less than negative $500,000 but greater than or
equal to negative $850,000; and 2.25% when the Liquidity Ratio is less than 2.5
and trailing 6 month EBITDA is greater than or equal to $1.00, 3.25% when the
Liquidity Ratio is less than 2.5 and trailing 6 month EBITDA is less than $1.00
but greater than or equal to negative $500,000, 4.50% when the Liquidity Ratio
is less than 2.5 and trailing 6 month EBITDA is less than negative $500,000 but
greater than or equal to negative $850,000.
 
2.4          Fees.  Bank waives all success fees that would otherwise be due
pursuant to the Seventh Amendment to Loan and Security Agreement, including but
not limited to, the success fee otherwise payable by Borrower due to its failure
to meet or exceed a Liquidity Ratio of 2.00 to 1.00 for the fiscal month ended
May 2014.  Borrower shall pay Bank a commitment fee of $25,000 on the Eighth
Amendment Date and the first anniversary of the Eighth Amendment Date.  Borrower
acknowledges Bank is entitled to retain the $50,000 fee paid in connection with
the Sixth Amendment to Loan and Security Agreement.
 
2.5          Exhibits.  Exhibit D (Compliance Certificate) and Schedule 1
attached to the Loan Agreement are replaced with Exhibit D and Schedule 1
attached hereto.
 
3.             Limitation of Amendments.
 
3.1          The amendments set forth in Section 2, above, are effective for the
purposes set forth herein and shall be limited precisely as written and shall
not be deemed to (a) be a consent to any amendment, waiver or modification of
any other term or condition of any Loan Document, or (b) otherwise prejudice any
right or remedy which Bank may now have or may have in the future under or in
connection with any Loan Document.
 
3.2          This Amendment shall be construed in connection with and as part of
the Loan Documents and all terms, conditions, representations, warranties,
covenants and agreements set forth in the Loan Documents, except as herein
amended, are hereby ratified and confirmed and shall remain in full force and
effect.
 
4.             Representations and Warranties.  To induce Bank to enter into
this Amendment, Borrower hereby represents and warrants to Bank as follows:
 
4.1          Immediately after giving effect to this Amendment (a) the
representations and warranties contained in the Loan Documents are true,
accurate and complete in all material respects as of the date hereof (except to
the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date), and (b) no Event of
Default has occurred and is continuing;
 
4.2          Borrower has the power and authority to execute and deliver this
Amendment and to perform its obligations under the Loan Agreement, as amended by
this Amendment;
 
4.3          Except with respect to Borrower’s By-Laws, which were amended on
October 16, 2012, the organizational documents of Borrower delivered to Bank on
the Effective Date remain true, accurate and complete and have not been amended,
supplemented or restated and are and continue to be in full force and effect;
 
 
 

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4.4          The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, have been duly authorized;
 
4.5          The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, do not and will not contravene (a) any law or regulation
binding on or affecting Borrower, (b) any contractual restriction with a Person
binding on Borrower, (c) any order, judgment or decree of any court or other
governmental or public body or authority, or subdivision thereof, binding on
Borrower, or (d) the organizational documents of Borrower;
 
4.6          The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, do not require any order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by any governmental or public body or authority, or subdivision
thereof, binding on Borrower, except as already has been obtained or made; and
 
4.7          This Amendment has been duly executed and delivered by Borrower and
is the binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws of general application and equitable principles relating to or affecting
creditors’ rights.
 
5.             Counterparts.  This Amendment may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
 
6.             Effectiveness.  This Amendment shall be deemed effective upon (a)
the due execution and delivery to Bank of this Amendment by each party hereto,
(b) Borrower’s payment of a fee of $25,000, plus the Bank Expenses incurred in
connection with this Amendment, and (c) and such other documents as Bank may
reasonably request.
 
[Signature page follows.]
 
 
 

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In Witness Whereof, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.

 
BANK
 
BORROWERS
   
SILICON VALLEY BANK
 
ADVANCED PHOTONIX, INC.
         
By:
   
By:
 
Name:
   
Name:
 
Title:
   
Title:
                           
PICOMETRIX, LLC
               
By:
       
Name:
       
Title:
                           
ADVANCED PHOTONIX CANADA, INC.
         
By:
       
Name:
       
Title:
 

 
 
 

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EXHIBIT D
 
COMPLIANCE CERTIFICATE
 
TO:         SILICON VALLEY BANK
Date:
 
FROM:  ADVANCED PHOTONIX INC., ADVANCED PHOTONIX CANADA and PICOMETRIX, LLC
   

 
The undersigned authorized officer of ADVANCED PHOTONIX INC., ADVANCED PHOTONIX
CANADA and PICOMETRIX, LLC (collectively, “Borrowers”) certifies that under the
terms and conditions of the Amended and Restated Loan and Security Agreement
between Borrowers and Bank (the “Agreement”):
 
(1) Borrowers are in complete compliance for the period ending _______________
with all required covenants except as noted below; (2) there are no Events of
Default; (3) all representations and warranties in the Agreement are true and
correct in all material respects on this date except as noted below; provided,
however, that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date;
(4) Borrowers, and each of their Subsidiaries, have timely filed all required
tax returns and reports, and Borrowers have timely paid all foreign, federal,
state and local taxes, assessments, deposits and contributions owed by Borrowers
except as otherwise permitted pursuant to the terms of Section 5.8 of the
Agreement; and (5) no Liens have been levied or claims made against Borrowers or
any of their Subsidiaries relating to unpaid employee payroll or benefits of
which Borrowers have not previously provided written notification to Bank.
 
Attached are the required documents supporting the certification.  The
undersigned certifies that these are prepared in accordance with GAAP
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.  The undersigned acknowledges that no
borrowings may be requested at any time or date of determination that Borrowers
are not in compliance with any of the terms of the Agreement, and that
compliance is determined not just at the date this certificate is
delivered.  Capitalized terms used but not otherwise defined herein shall have
the meanings given them in the Agreement.
 
Please indicate compliance status by circling Yes/No under “Complies” column.
 
Reporting Covenant
Required
Complies
     
Transaction Report, A/R & A/P Agings
monthly within 15 days and with each Advance Request when in Streamline (weekly
when not in Streamline)
Yes No
Board projections
30 days prior to FYE
Yes No
Monthly financial statements with Compliance Certificate
Within 30 days of fiscal month ends except
quarter ends which have 45 days
Yes No
Annual financial statement (CPA Audited) with Compliance Certificate
FYE within 120 days
Yes No
10-Q, 10-K and 8-K
Within 5 days after filing with SEC
Yes No
 

 
The following Intellectual Property was registered (or a registration
application submitted) after the Effective Date (if no registrations, state
“None”)
                   

 
 
 

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Financial Covenant
Required
Actual
Complies
       
Maintain on a Monthly Basis:
             
Minimum Liquidity Ratio
 
1.3:1.0 through 5/31/14, 2:0:
1.0 thereafter
___:1.0
Yes   No
Minimum EBITDA, monthly on trailing 6 month basis        
($850,000) through 6/30/14
($300,000) 7/31-9/30;
$1.00 10/31-12/31
$100,000 thereafter
FY 2016 TBD, not less than
$100,000
$__________
 
Yes   No
 

The following financial covenant analys[is][es] and information set forth in
Schedule 1 attached hereto are true and accurate as of the date of this
Certificate.
 
The following are the exceptions with respect to the certification above:  (If
no exceptions exist, state “No exceptions to note.”)

     

API Pricing Matrix
 
Revolver
 
Trailing 6 month EBITDA
   
≥$1 EBITDA
   If <$1, but ≥
-$500k EBITDA
 
If <-$500k, but ≥
      -$850,000
        EBITDA
 
LQR≥3.0
P+50 bps
P+150 bps
 
P+300 bps
 
LQR <3.0≥2.50
P+125 bps
P+225 bps
 
P+350 bps
 
LQR <2.5
P+175 bps
P+275 bps
 
P+400 bps
 

 
Term Loan
 
Trailing 6 month EBITDA
   
≥$1 EBITDA
  If <$1, but ≥
-$500k EBITDA
 
If <-$500k, but ≥
      -$850,000
        EBITDA
 
LQR≥3
P+100 bps
P+200 bps
 
P+350 bps
 
LQR <3≥2.50
P+175 bps
P+275 bps
 
P+400 bps
 
LQR <2.5
P+225 bps
P+325 bps
 
P+450 bps
 

 
ADVANCED PHOTONIX INC.                                              
 
ADVANCED PHOTONIX CANADA, INC. 
              By:     By:      Name:      Name:      Title:      Title:         
                   
PICOMETRIX, LLC
                   
By:
          Name:            Title:           

 
 
 

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Schedule 1 to Compliance Certificate
 
Financial Covenant of Borrower
 
In the event of a conflict between this Schedule and the Loan Agreement, the
terms of the Loan Agreement shall govern.
 
Dated:           ____________________
 
I.           Liquidity Ratio (Section 6.9(a))
 
Required:                      1.30:1.0 through 5/31/14, 2.0:1.0 thereafter
 
Actual:
 
A.
Unrestricted cash and Cash Equivalents at Bank
$_______
 
B.
Net balance sheet billed A/R
$_______ 
 
C.
Liquidity (line A plus line B)
$_______ 
 
D.
Total Indebtedness to Bank
$_______
 
E.
Liquidity Ratio (line C divided by line D)
________

 
Is line C equal to or greater than 2.00 to1:00 (1.30:1.0 through 5/31/14)?
 
 
______ No, not in compliance
______Yes, in compliance 

 
II.
EBITDA (Section 6.9(b))
 

 
Required:                      Monthly, on trailing 6 month basis
 

 
Period
 
EBITDA
 
Closing through June 30, 2014
 
($850,000)
 
July 31, 2014 through September 30, 2014
 
($300,000)
 
October 31, 2014 through December 31, 2014
 
$1
 
Thereafter
 
$100,000
 
FY 2016 to be set based on updated projections, but not less than $100,000
   

 
Actual:
 
A.
Net Income
$_______ 
 
B.
To the extent included in the determination of Net Income
 
   
1.           The provision for income taxes
$_______ 
 
 
2.           Depreciation expense
$_______
 
 
3.           Amortization expense
$_______
 
 
4.           Net Interest Expense
  $_______   
5.           Non-cash stock compensation plus All other non-cash items including
intangible asset writeoffs
  $_______ 

 
 
 

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6.           Non-cash Warrant (income) or expense
 
($______)  
7.           The sum of lines 1 through 5 plus or minus line 6
$_______       
C.
EBITDA (line A plus line B.7)
________ 

 
Is line C equal to or greater than the amount specified in the chart?
 
 
______ No, not in compliance
______Yes, in compliance 

 
 
 

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Logo [logo.jpg]
 
 
PRO FORMA INVOICE FOR LOAN CHARGES
 
 

BORROWER:  
ADVANCED PHOTONIX, INC.
         
(Eighth Amendment)
            LOAN OFFICER:  
Tom Hertzberg
      DATE:  
June 20, 2014
                           
Loan Fee
$25,000
         
Legal Fees
$_____
                       
TOTAL FEE DUE
$_____
              Please indicate the method of payment:            
{  }
A check for the total amount is attached.                    
{  }
Debit DDA #________________ for the total amount.                    
{  }
Loan proceeds
                  Borrower: ADVANCED PHOTONIX, INC.          
By:
 
          (Authorized Signer)                                         Silicon
Valley Bank                                         (Date)     Account Officer's
Signature