Document:

a50892508ex10_2.htm

Exhibit 10.1

 

SIXTH AMENDMENT

 

THIS SIXTH AMENDMENT, dated as of June 23, 2014 (this “Sixth Amendment”), is between INGLES MARKETS, INCORPORATED, a North Carolina corporation (the “Borrower”), the Lenders (as defined below) party hereto, and BANK OF AMERICA, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”) for the Lenders.

 

W I T N E S S E T H:

 

WHEREAS, the Borrower is a party to a Credit Agreement, dated as of May 12, 2009 (as amended by that certain First Amendment and Waiver, dated as of July 31, 2009, by that Second Amendment, dated as of December 29, 2010, by that Third Amendment, dated as of September 6, 2012, by that Fourth Amendment, dated as of June 12, 2013, by that Fifth Amendment, dated as of January 31, 2014, and as otherwise amended, restated, supplemented or modified on or prior to the date hereof, the “Existing Credit Agreement”; and as hereby amended and otherwise amended, restated, supplemented or modified from time to time on or after the Sixth Amendment Effective Date (as defined herein), the “Amended Credit Agreement”), among the Borrower, the lenders from time to time party thereto (the “Lenders”), Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, and the other agents, joint lead arrangers and joint book managers party thereto.  Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Existing Credit Agreement; and

 

WHEREAS, the Borrower has requested that the Administrative Agent and the Lenders agree to amend the Existing Credit Agreement as more specifically set forth herein and, subject to the terms and conditions hereof, the Administrative Agent and the undersigned Lenders have agreed to grant such request of the Borrower.

 

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

SECTION 1.01.   Amendment to the Existing Credit Agreement.

 

(a)   Section 1.01 of the Existing Credit Agreement is hereby amended by inserting the following defined terms in alphabetical order:

 

“Special Share Repurchase” means a repurchase of up to 2,500,000 shares of Borrower’s common stock made in accordance with the terms and conditions in Section 7.05(a) on or after June 23, 2014.

 

(b)   Section 7.01(f) of the Existing Credit Agreement is hereby amended by replacing the reference therein to “Section 7.01(a)” with a reference to “Section 7.02(d)”.

 

(c)   Section 7.05(a)(iv) of the Existing Credit Agreement is hereby amend and restated in its entirety to read as follows:

 

  

  

  

 

(iv)           additional Restricted Payments that, when taken with all other Restricted Payments made pursuant to this clause (a)(iv) since the Closing Date (including, without limitation, the amount of the Special Share Repurchase, if any) and during the term of this Agreement, do not exceed $110,000,000.

 

(d)   Section 7.10(c) of the Existing Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(c)           Consolidated Net Worth.  Permit Consolidated Net Worth at any time to be less than (i) an amount equal to 85% of the Consolidated Net Worth as of March 30, 2013, plus (ii) an amount equal to 50% of the Consolidated Net Income earned in each full fiscal quarter ending after March 30, 2013 (with no deduction for a net loss in any such fiscal quarter) plus (iii) an amount equal to 50% of the aggregate increases in Shareholders’ Equity of the Borrower and its Subsidiaries after the date hereof by reason of the issuance and sale of Equity Interests of the Borrower or any Subsidiary (other than issuances to the Borrower or a wholly-owned Subsidiary), including upon any conversion of debt securities of the Borrower into such Equity Interests minus (iv) an amount equal to the lesser of (x) the actual amount paid by the Borrower to repurchase shares in connection with the Special Share Repurchase or (y) $67,500,000.

 

SECTION 1.02.   Representations and Warranties.  The Borrower hereby represents and warrants to the Administrative Agent and the Lenders, as follows:

 

(a)   After giving effect to this Sixth Amendment, the representations and warranties of the Borrower contained in Article V of the Amended Credit Agreement or any other Loan Document or which are contained in any document furnished at any time under or in connection therewith are true and correct in all material respects on and as of the date hereof, (i) except to the extent such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects as of such earlier date, (ii) except the representations and warranties contained in subsections (a) and (b) of Section 5.05 of the Amended Credit Agreement shall be deemed to refer to the most recent financial statements furnished pursuant to subsections (a) and (b), respectively, of Section 6.01 of the Amended Credit Agreement and (iii) references to Schedules shall be deemed to refer to the most updated supplements to the Schedules furnished pursuant to subsection (a) of Section 6.02 of the Amended Credit Agreement.

 

(b)   After giving effect to this Sixth Amendment, each of the Borrower and the other Loan Parties is in compliance with all the terms and conditions of the Amended Credit Agreement, as amended by this Sixth Amendment, and the other Loan Documents on its part to be observed or performed and no Default has occurred or is continuing under the Amended Credit Agreement.

 

  

2

  

 

(c)   The execution, delivery and performance by the Borrower of this Sixth Amendment have been duly authorized by the Borrower.

 

(d)   This Sixth Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as enforceability may be limited by Debtor Relief Laws and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

 

SECTION 1.03.   Effectiveness.  This Sixth Amendment shall become effective only upon satisfaction of the following conditions precedent (the first date upon which each such condition has been satisfied being herein called the “Sixth Amendment Effective Date”):

 

(a)   The Administrative Agent shall have received duly executed counterparts of this Sixth Amendment which, when taken together, bear the authorized signatures of the Borrower, the Administrative Agent and the Lenders necessary in accordance with Section 10.01(h) of the Existing Credit Agreement.

 

(b)   There shall exist no actions, suits, proceedings, claims or disputes pending or, to the actual knowledge of the Borrower, threatened, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of the Subsidiaries or against any of their respective properties or revenues or injunctions, writs, temporary restraining orders or other orders of any nature issued by any court or Governmental Authority that (i) purport to affect, pertain to or enjoin or restrain the execution, delivery or performance of this Sixth Amendment or the Amended Credit Agreement or any other Loan Document, or any transactions contemplated hereby or thereby or (ii) either individually or in the aggregate, in the case of any such suit, proceeding, claim or dispute which is reasonably likely to be adversely determined, either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse Effect.

 

(c)   The Administrative Agent on behalf of the Lenders shall have received such other documents, instruments and certificates as they shall reasonably request and such other documents, instruments and certificates shall be satisfactory in form and substance to the Lenders and their counsel.

 

SECTION 1.04.   Lender Consent.  For purposes of determining compliance with the conditions specified in Section 1.03, each Lender that has signed this Sixth Amendment shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Sixth Amendment Effective Date specifying its objection thereto.

 

SECTION 1.05.         APPLICABLE LAW.  THIS SIXTH AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA, EXCEPT TO THE EXTENT THAT THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA MAY APPLY.

 

  

3

  

 

SECTION 1.06.   Costs and Expenses.  The Borrower shall pay all reasonable fees and out-of-pocket costs and expenses of the Administrative Agent in connection with the preparation, execution and delivery of this Sixth Amendment and the other instruments and documents to be delivered hereunder (including, without limitation, the reasonable fees and expenses of counsel for the Administrative Agent) in accordance with the terms of Section 10.04(a) of the Amended Credit Agreement.

 

SECTION 1.07.   Counterparts.  This Sixth Amendment may be executed in any number of counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one agreement.  Delivery by facsimile or PDF by any of the parties hereto of an executed counterpart of this Sixth Amendment shall be as effective as an original executed counterpart hereof and shall be deemed a representation that an original executed counterpart hereof will be delivered, but the failure to deliver a manually executed counterpart shall not affect the validity, enforceability or binding effect of this Sixth Amendment.

 

SECTION 1.08.   Existing Credit Agreement.  Except as expressly set forth herein, the amendment provided herein shall not, by implication or otherwise, limit, constitute a waiver of, or otherwise affect the rights and remedies of the Lenders or the Administrative Agent under the Existing Credit Agreement or any other Loan Document, nor shall it constitute a waiver of any Default, nor shall it alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Existing Credit Agreement or any other Loan Document.  The amendments provided herein shall apply and be effective only on the Sixth Amendment Effective Date and only with respect to the provisions of the Existing Credit Agreement specifically referred to by such amendments.  Except to the extent a provision in the Existing Credit Agreement is expressly amended herein, the Existing Credit Agreement shall continue in full force and effect in accordance with the provisions thereof.

 

 

[Signature pages follow]

 

 

  

4

  

 

IN WITNESS WHEREOF, the parties hereto have caused this Sixth Amendment to be duly executed by their duly authorized officers, all as of the date first above written.

 

	  	
INGLES MARKETS, INCORPORATED,

	  	a North Carolina corporation, as the Borrower
	 	 	 
	 	By:	 
	  	
Name:

	
 

	  	
Title:

	
 

 

 

Ingles Markets, Incorporated

Sixth Amendment to Credit Agreement

Signature Page

 

 

 

 

	  	

BANK OF AMERICA, N.A., as

	  	
Administrative Agent

	 	 	 
	 	By:	 
	  	
Name:

	
 

	  	
Title:

	
 

 

 

Ingles Markets, Incorporated

Sixth Amendment to Credit Agreement

Signature Page

  

  

  

 

	  	

BANK OF AMERICA, N.A., as a

	  	
Lender, Swing Line Lender and L/C Issuer

	 	 	 
	 	By:	 
	  	
Name:

	
 

	  	
Title:

	
 

 

 

Ingles Markets, Incorporated

Sixth Amendment to Credit Agreement

Signature Page

  

  

  

 

	  	

BRANCH BANKING AND TRUST 

	  	
COMPANY, as a Lender

	 	 	 
	 	By:	 
	  	
Name:

	
 

	  	
Title:

	
 

 

 

Ingles Markets, Incorporated

Sixth Amendment to Credit Agreement

Signature Page

  

  

  

 

	  	

CAPITAL BANK, as a Lender

	 	 	 
	 	By:	 
	  	
Name:

	
 

	  	
Title:

	
 

 

 

Ingles Markets, Incorporated

Sixth Amendment to Credit Agreement

Signature Page

  

  

  

 

	  	

FIRST TENNESSEE BANK NATIONAL

	 	ASSOCIATION, as a Lender
	 	 	 
	 	By:	 
	  	
Name:

	
 

	  	
Title:

	
 

 

 

Ingles Markets, Incorporated

Sixth Amendment to Credit Agreement

Signature Page

  

  

  

                                                       

	  	

SUNTRUST BANK, as a Lender

	 	 	 
	 	By:	 
	  	
Name:

	
 

	  	
Title:

	
 

 

 

Ingles Markets, Incorporated

Sixth Amendment to Credit Agreement

Signature Page

  

  

  

	 	

WELLS FARGO BANK, NATIONAL

	 	ASSOCIATION, as a Lender
	 	 	 
	 	By:	 
	  	
Name:

	
 

	  	
Title:

	
 

 

 

Ingles Markets, Incorporated

Sixth Amendment to Credit Agreement

Signature Pagea50892196ex10_1.htm

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:

 

  

  

  

 

(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.

 

  

  

  

 

“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;

 

  

  

  

 

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.]

 

  

  

  

 

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:

	  

 

  

  

  

 

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”)

	 
	 	 	 
	 	 	 
	 	 	 

 

  

  

  

 

	
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: 	 	 	 	 	 

 

  

  

  

 

 

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

 	$_______ 

 

  

  

  

 

	 	
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  

 

  

  

  

 

 

 

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00232-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00232-of-00352.parquet"}]]