LOAN AND SECURITY AGREEMENT by ADVANCED PHOTONIX INC
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Company: ADVANCED PHOTONIX INC
SEC CIK: 869986
SEC Type: EX-10.1
SIC Code: 3674
SIC Industry: SEMICONDUCTORS & RELATED DEVICES
Date Filed:
02/03/2012 SKU: RDOT5F-C-DU-2
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EXHIBIT 10.1
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this
"Agreement") dated as of January __, 2012
(the "Effective Date") between SILICON VALLEY BANK ("Bank"), ADVANCED PHOTONIX, INC. and PICOMETRIX, LLC (individually, a "Borrower" and collectively, the "Borrowers"), provides the terms on which Bank shall
lend to Borrowers and Borrowers shall repay Bank. The parties agree as follows:
1. ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement shall be construed following
GAAP. Calculations and determinations must be made following
GAAP. Capitalized terms not otherwise defined in this Agreement shall have the meanings
set forth in Section 13. All other terms contained in this Agreement, unless
otherwise indicated, shall have the meaning provided by the Code to the extent such terms are
defined therein.
2. LOAN AND TERMS OF PAYMENT
2.1 Promise to Pay. Borrowers hereby
unconditionally promise to pay Bank the outstanding principal amount of all Credit Extensions and
accrued and unpaid interest thereon as and when due in accordance with this Agreement.
2.1.1 Revolving
Advances.
(a) Availability. Subject to the terms and conditions of this
Agreement and to deduction of Reserves, Bank shall make Advances not exceeding the Availability Amount. Amounts borrowed hereunder
may be repaid and, prior to the Revolving Line Maturity Date, reborrowed, subject to the applicable
terms and conditions precedent herein. The
aggregate EX-IM Advances under the Exim Loan Agreement and Advances under this Agreement may not in
any case exceed the lesser of (a) $5,000,000 or (b) the sum of the Borrowing Base under the this
Agreement and the Foreign Borrowing Base under the Exim Loan Agreement. If at any time
such aggregate exceeds such lesser amount, Borrowers shall immediately pay Bank the amount of such
excess.
(b) Termination; Repayment. The
Revolving Line terminates on the Revolving Line Maturity Date, when the principal amount of all
Advances, the unpaid interest thereon, and all other Obligations relating to the Revolving Line
shall be immediately due and payable.
2.1.2 Term
Loan.
(a) Availability. Bank shall
make one (1) term loan available to Borrower in an amount up to $1,000,000 on Effective Date
subject to the satisfaction of the terms and conditions of this Agreement. Borrower
shall use the first proceeds of the Term Loan to repay all Indebtedness that Borrower owes to Robin
Risser and Steve Williamson.
(b) Repayment. Borrower shall
repay the Term Loan in (i) thirty six (36) equal installments of principal, plus (ii) monthly
payments of accrued interest (the "Term Loan
Payment"). Beginning on the last day of the month following the month in which
the Funding Date occurs, each Term Loan Payment shall be payable on the last day of each
month. Borrower's final Term Loan Payment, due on the third anniversary of the Effective
Date, shall include all outstanding principal and accrued and unpaid interest under the Term
Loan. Once repaid, no part of the Term Loan may be reborrowed.
(c) Prepayment. Borrower may
elect to prepay all, but not less than all, of the Term Loan by paying a prepayment premium equal
to 1.0% of the outstanding Term Loan principal if prepayment occurs before the first anniversary of
the Effective Date, 0.5% of the outstanding Term Loan principal if prepayment occurs after the
first, but before the second anniversary of the Effective Date, and 0.25% of the outstanding Term
Loan principal if prepayment occurs after the second anniversary of the Effective
Date. If the Term Loan has become due and payable according to the terms hereof because
of the occurrence and continuance of an Event of Default, Borrower shall pay to Bank on the date
that the Term Loan has become due and payable according to the terms hereof, in addition to any
other sums owing, a termination fee equal to 1.0% of the outstanding Term Loan principal, and such
fee shall bear interest until paid at a rate equal to the highest rate applicable to the
Obligations.
2.2 Overadvances. If, at any time, the
outstanding principal amount of any Advances (such sum being an "Overadvance") exceeds the lesser of either the
Revolving Line or the Borrowing Base, Borrowers shall immediately pay to Bank in cash such
Overadvance. Without limiting Borrowers' obligation to repay Bank any amount of the
Overadvance, Borrowers agree to pay Bank interest on the outstanding amount of any Overadvance, on
demand, at the Default Rate if not repaid within three business days.
2.3 Payment
of Interest on the Credit Extensions.
(a) Interest Rates. Subject to
Section 2.3(b), the principal amount outstanding under the Revolving Line shall accrue interest at
a floating per annum rate equal to the Prime Rate plus the Revolving Margin. Subject to Section
2.3(b), the principal amount outstanding on the Term Loan shall accrue interest at a floating per
annum rate equal to the Prime Rate plus the Term Margin.
(b) Default Rate. Immediately
upon the occurrence and during the continuance of an Event of Default, Obligations shall bear
interest at a rate per annum which is up to five percentage points (5.00%) above the rate that is
otherwise applicable thereto (the "Default
Rate") unless Bank otherwise elects from time to time in its sole discretion to impose a
smaller increase. Fees and expenses which are required to be paid by Borrower pursuant
to the Loan Documents (including, without limitation, Bank Expenses) but are not paid when due
shall bear interest until paid at a rate equal to the highest rate applicable to the
Obligations. Payment or acceptance of the increased interest rate provided in this
Section 2.3(b) is not a permitted alternative to timely payment and shall not constitute a
waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of
Bank.
(c) Adjustment to Interest
Rate. Changes to the interest rate of any Credit Extension based on changes to
the Prime Rate shall be effective on the effective date of any change to the Prime Rate and to the
extent of any such change.
(d) Debit of Accounts. Bank may
debit any of a Borrower's deposit accounts, including the Designated Deposit Account, for principal
and interest payments or any other amounts a Borrower owes Bank when due. These debits
shall not constitute a set-off.
(e) Payment; Interest
Computation. Interest is payable monthly on the last calendar day of each month
and shall be computed on the basis of a 360-day year for the actual number of days
elapsed. In computing interest, (i) all Payments received after 12:00 p.m. Pacific
time on any day shall be deemed received at the opening of business on the next Business Day, and
(ii) the date of the making of any Credit Extension shall be included and the date of payment
shall be excluded; provided, however, that
if any Credit Extension is repaid on the same day on which it is made, such day shall be included
in computing interest on such Credit Extension. Bank shall not, however, be required to
credit a Borrower's account for the amount of any item of payment which is unsatisfactory to Bank
in its good faith business judgment, and Bank may charge Borrower's Designated Deposit Account for
the amount of any item of payment which is returned to Bank unpaid.
2.4 Fees. Borrowers shall pay to
Bank:
(a) Commitment Fee. A fully
earned, non-refundable commitment fee of $25,000, on the Effective Date and each anniversary of the
Effective Date;
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(b) Unused Revolving Line Facility
Fee. A fee (the "Unused
Revolving Line Facility Fee"), payable monthly, in arrears, on a calendar year basis, in an
amount equal to 0.25% per annum of the average unused portion of the Revolving Line, as determined
by Bank. Borrowers shall not be entitled to any credit, rebate or repayment of any
Unused Revolving Line Facility Fee previously earned by Bank pursuant to this Section
notwithstanding any termination of the Agreement or the suspension or termination of Bank's
obligation to make loans and advances hereunder;
(c) Term Loan Commitment Fee. A
fully earned, non-refundable commitment fee of $5,000, on the Effective Date;
(d) Collateral Monitoring
Fee. Collateral
Monitoring Fee. A monthly collateral monitoring fee of Five Hundred Fifty Dollars
($500), payable in arrears on the last day of each month (prorated for any partial month at the
beginning and upon termination of this Agreement); provided that during a Streamline Period, such monthly
collateral monitoring fee shall be Zero Dollars ($0.00); and
(e) Bank Expenses. All Bank
Expenses (including reasonable attorneys' fees and expenses for documentation and negotiation of
this Agreement incurred through and after the Effective Date, when due.
2.5 Payments;
Application of Payments.
(a) All
payments (including prepayments) to be made by a Borrower under any Loan Document shall be made in
immediately available funds in U.S. Dollars, without setoff or counterclaim, before 12:00 p.m.
Pacific time on the date when due. Payments of principal and/or interest received after
12:00 p.m. Pacific time are considered received at the opening of business on the next Business
Day. When a payment is due on a day that is not a Business Day, the payment shall be due
the next Business Day, and additional fees or interest, as applicable, shall continue to accrue
until paid.
(b) All
payments with respect to the Obligations may be applied in such order and manner as Bank shall
determine in its sole discretion. Borrowers shall have no right to specify the order or
the accounts to which Bank shall allocate or apply any payments required to be made by a Borrower
to Bank or otherwise received by Bank under this Agreement when any such allocation or application
is not specified elsewhere in this Agreement.
3. CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Credit
Extension. Bank's obligation to make the initial Credit Extension is subject to
the condition precedent that Bank shall have received, in form and substance satisfactory to Bank,
such documents, and completion of such other matters, as Bank may reasonably deem necessary or
appropriate, including, without limitation:
(a) duly
executed original signatures to the Loan Documents;
(b) duly
executed original signatures to the Control Agreement[s];
(c) each
Borrower's Operating Documents and a good standing certificate of each Borrower certified by the
Secretary of State of the State of Delaware as of a date no earlier than thirty (30) days prior to
the Effective Date;
(d) duly
executed original signatures to the completed Borrowing Resolutions for Borrowers;
(e) the
Subordination Agreement by Michigan Economic Development Corporation in favor of Bank, together
with the duly executed original signatures thereto;
(f) certified
copies, dated as of a recent date, of financing statement searches, as Bank shall request,
accompanied by written evidence (including any UCC termination statements) that the Liens indicated
in any such financing statements either constitute Permitted Liens or have been or, in connection
with the initial Credit Extension, will be terminated or released;
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(g) the
Perfection Certificate(s) of each Borrower, together with the duly executed original signature[s]
thereto;
(h) a
payoff letter from Private Bank;
(i) a
payoff letter from Robin Risser and Steve Williamson;
(j) the
insurance policies and/or endorsements required pursuant to this Agreement; and
(k) payment
of the fees and Bank Expenses then due as specified in Section 2.4 hereof.
3.2 Conditions Precedent to all Credit
Extensions. Bank's obligations to make each Credit Extension, including the
initial Credit Extension, is subject to the following conditions precedent:
(a)
timely receipt of an executed Transaction Report;
(b) the
representations and warranties in this Agreement shall be true, accurate, and complete in all
material respects on the date of the Transaction Report and on the Funding Date of each Credit
Extension; 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, and no
Event of Default shall have occurred and be continuing or result from the Credit
Extension. Each Credit Extension is Borrower's representation and warranty on that date
that the representations and warranties in this Agreement remain true, accurate, and complete in
all material respects; 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;
and
(c) in
Bank's sole discretion, any material impairment in the general affairs, management, results of
operation, financial condition or the prospect of repayment of the Obligations, or any material
adverse deviation by Borrower from the most recent business plan of Borrower presented to and
accepted by Bank.
3.3 Covenant
to Deliver.
Borrowers agree to deliver to Bank each item required to be delivered to Bank under this Agreement
as a condition precedent to any Credit Extension. Borrowers agree that a Credit
Extension made prior to the receipt by Bank of any such item shall not constitute a waiver by Bank
of a Borrower's obligation to deliver such item, and the making of any Credit Extension in the
absence of a required item shall be in Bank's sole discretion. Any Intellectual Property of
Picometrix in which a third party has a security interest as of the Effective Date shall be made
subject to Bank's first priority security interest within sixty days after the Effective
Date.
3.4 Procedures for Borrowing. Subject to
the prior satisfaction of all other applicable conditions to the making of an Advance set forth in
this Agreement, to obtain an Advance, a Borrower shall notify Bank (which notice shall be
irrevocable) by electronic mail, facsimile, or telephone by 12:00 p.m. Pacific time on the Funding
Date of the Advance. Together with such notification, Borrower must promptly deliver to
Bank by electronic mail or facsimile a completed Transaction Report executed by a Responsible
Officer or his or her designee. Bank shall credit Advances to the Designated Deposit
Account. Bank may make Advances under this Agreement based on instructions from a
Responsible Officer or his or her designee or without instructions if the Advances are necessary to
meet Obligations which have become due. Bank may rely on any telephone notice given by a
person whom Bank believes is a Responsible Officer or designee.
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4. CREATION OF SECURITY INTEREST
4.1 Grant of Security Interest. Each
Borrower hereby grants Bank, to secure the payment and performance in full of all of the
Obligations, a continuing security interest in, and pledges to Bank, the Collateral, wherever
located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof.
Borrower acknowledges that it previously has entered, and/or may in the future enter, into Bank
Services Agreements with Bank. Regardless of the terms of any Bank Services Agreement,
Borrower agrees that any amounts Borrower owes Bank thereunder shall be deemed to be Obligations
hereunder and that it is the intent of Borrower and Bank to have all such Obligations secured by
the first priority perfected security interest in the Collateral granted herein (subject only to
Permitted Liens that may have superior priority to Bank's Lien in this Agreement).
4.2 Priority of Security Interest. Each
Borrower represents, warrants, and covenants that the security interest granted herein is and shall
at all times continue to be a first priority perfected security interest in the Collateral (subject
only to Permitted Liens that may have superior priority to Bank's Lien under this
Agreement). If a Borrower shall acquire a commercial tort claim, such Borrower shall
promptly notify Bank in a writing signed by Borrower of the general details thereof and grant to
Bank in such writing a security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance reasonably satisfactory to
Bank.
If this Agreement is terminated, Bank's Lien in the Collateral shall continue until the Obligations
(other than inchoate indemnity obligations) are satisfied in full, and at such time, Bank shall, at
Borrower's sole cost and expense, terminate its security interest in the Collateral and all rights
therein shall revert to Borrower. In the event (x) all Obligations (other than
inchoate indemnity obligations), except for Bank Services, are satisfied in full, and (y) this
Agreement is terminated, Bank shall terminate the security interest granted herein upon Borrower
providing cash collateral acceptable to Bank in its good faith business judgment for Bank Services,
if any. In the event such Bank Services consist of outstanding Letters of Credit,
Borrower shall provide to Bank cash collateral in an amount equal to 105% of the Dollar Equivalent
of the face amount of all such Letters of Credit plus all interest, fees, and costs due or to
become due in connection therewith (as estimated by Bank in its good faith business judgment), to
secure all of the Obligations relating to such Letters of Credit.
4.3 Authorization to File Financing
Statements. Each Borrower hereby authorizes Bank to file financing statements,
without notice to such Borrower, with all appropriate jurisdictions to perfect or protect Bank's
interest or rights hereunder, including a notice that any disposition of the Collateral, by either
Borrower or any other Person, shall be deemed to violate the rights of Bank under the
Code. Such financing statements may indicate the Collateral as "all assets of the
Debtor" or words of similar effect, or as being of an equal or lesser scope, or with greater
detail, all in Bank's discretion.
5. REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants as follows:
5.1 Due Organization, Authorization; Power and
Authority. Borrower is duly existing and in good standing as a Registered
Organization in its jurisdiction of formation and is qualified and licensed to do business and is
in good standing in any jurisdiction in which the conduct of its business or its ownership of
property requires that it be qualified except where the failure to do so could not reasonably be
expected to have a material adverse effect on Borrower's business. In connection with
this Agreement, Borrower has delivered to Bank a completed certificate signed by Borrower, entitled
"Perfection Certificate". Borrower represents and warrants to Bank that
(a) Borrower's exact legal name is that indicated on the Perfection Certificate and on the
signature page hereof; (b) Borrower is an organization of the type and is organized in the
jurisdiction set forth in the Perfection Certificate; (c) the Perfection Certificate accurately
sets forth Borrower's organizational identification number or accurately states that Borrower has
none; (d) the Perfection Certificate accurately sets forth Borrower's place of business, or, if
more than one, its chief executive office as well as Borrower's mailing address (if different than
its chief executive office); (e) Borrower (and each of its predecessors) has not, in the past
five (5) years, changed its jurisdiction of formation, organizational structure or type, or any
organizational number assigned by its jurisdiction; and (f) all other information set forth on the
Perfection Certificate pertaining to Borrower and each of its Subsidiaries is accurate and complete
(it being understood and agreed that Borrower may from time to time update certain information in
the Perfection Certificate after the Effective Date to the extent permitted by one or more specific
provisions in this Agreement). If Borrower is not now a Registered Organization but
later becomes one, Borrower shall promptly notify Bank of such occurrence and provide Bank with
Borrower's organizational identification number.
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The execution, delivery and performance by Borrower of the Loan Documents to which it is a party
have been duly authorized, and do not (i) conflict with any of Borrower's organizational documents,
(ii) contravene, conflict with, constitute a default under or violate any material Requirement
of Law, (iii) contravene, conflict or violate any applicable order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority by which Borrower or any
of its Subsidiaries or any of their property or assets may be bound or affected, (iv) require
any action by, filing, registration, or qualification with, or Governmental Approval from, any
Governmental Authority except for filings under the Uniform Commercial Code, or (v) constitute
an event of default under any material agreement by which Borrower is bound. Borrower is
not in default under any agreement to which it is a party or by which it is bound in which the
default could reasonably be expected to have a material adverse effect on Borrower's
business.
5.2 Collateral. Borrower has good title
to, has rights in, and the power to transfer each item
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