[GRAPHIC OMITTED] Silicon Valley Bank
Amendment to Loan Agreement
Borrower: Advanced Photonix, Inc.
Address: 0000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Dated as of: July 15, 1997
THIS AMENDMENT TO LOAN AGREEMENT is entered into between SILICON VALLEY
BANK ("Silicon") and the borrower named above (the "Borrower").
The Parties agree to amend the Loan and Security Agreement between them dated
September 6, 1995, as amended by that Amendment to Loan Agreement dated
September 6, 1996 (as so amended and as otherwise amended from time to time, the
"Loan Agreement") as follows, effective as of the date hereof. (Capitalized
terms used but not defined in this Agreement, shall have the meanings set forth
in the Loan Agreement.)
1. Amended Schedule. The Schedule to Loan and Security Agreement is
hereby amended in its entirety and replaced with the Amended Schedule
to Loan and Security Agreement attached hereto.
2. Amended Section 4.5. Section 4.5 of the Loan Agreement is hereby
amended in its entirety to read as follows:
"4.5 Access to Collateral, Books and Records. At all reasonable times,
and upon one business day notice, Silicon, or its agents, shall have
the right to inspect the Collateral, and the right to audit and copy
the Borrower's accounting books and records and Borrower's books and
records relating to the Collateral. Silicon shall take reasonable steps
to keep confidential all information obtained in any such inspection or
audit, but Silicon shall have the right to disclose any such
information to its auditors, regulatory agencies, and attorneys, and
pursuant to any subpoena or other legal process. The foregoing audits
shall be at Silicon's expense, except that the Borrower shall reimburse
Silicon for its reasonable out of pocket costs for semi-annual accounts
receivable audits by Silicon, its agents, or third parties retained by
Silicon (the "Borrower's Reimbursement Obligation"), and Silicon may
debit Borrower's deposit accounts with Silicon for the cost of such
semi-annual accounts receivable audits (in which event Silicon shall
send notification thereof to the
Borrower) *. Notwithstanding the foregoing, after the occurrence
of an Event of Default all audits shall be at the Borrower's expense.
* , provided, however, that after the performance of the first audit
after September 6, 1996 which will be subject to Borrower's
Reimbursement Obligation, if the Loans outstanding do not exceed
$200,000 the Borrower's Reimbursement Obligation shall not apply as
long as the amount of such Loans does not exceed $200,000. Borrower
agrees to provide Silicon with 30 days prior written notice of its
intent to borrow more than $200,000 so that an audit may be conducted
(a "Borrowing Audit") and such audit shall be subject to the
Reimbursement Obligation"
3. Fee. Borrower shall concurrently herewith pay a fee to Silicon in the
amount of $5,250, which shall be in addition to all interest and all
other amounts payable hereunder, and which shall not be refundable.
4. Representations True. Borrower represents and warrants to Silicon that
all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct.
5r. General Provisions. This Extension Agreement, the Loan Agreement, any
prior written amendments to the Loan Agreement signed by Silicon and
the Borrower, and the other written documents and agreements between
Silicon and the Borrower set forth in full all of the representations
and agreements of the parties with respect to the subject matter
hereof and supersede all prior discussions, representations,
agreements and understandings between the parties with respect to the
subject hereof. Except as herein expressly amended, all of the terms
and provisions of the Loan Agreement, as so amended, and all other
documents and agreements between Silicon and the Borrower shall
continue in full force and effect and the same are hereby ratified and
confirmed.
Borrower: Silicon:
ADVANCED PHOTONIX, INC. SILICON VALLEY BANK
By /s/Xxxxx Xxxxxxxxx By Xxxx X. Xxxxx
------------------ -------------
President or Vice President
Title Vice President
--------------
By /s/X. X. Xxxxxx
-------------------
Secretary or Ass't Secretary
[GRAPHIC OMITTED] SILICON VALLEY BANK
Schedule to
Loan and Security Agreement
Borrower: Advanced Photonix, Inc.
Address: 0000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Dated: July 15, 1997
THIS SCHEDULE is an integral part of the Loan and Security Agreement
between Silicon Valley Bank ("Silicon") and the above-named borrower
("Borrower") of even date.
Credit Limit
(Section 1.1): An amount not to exceed the lesser of: (i) $1,000,000 at any
one time outstanding; or (ii) 75% * of the Net Amount of Borrower's
accounts, which Silicon in its discretion deems eligible for
borrowing. "Net Amount" of an account means the gross amount of the
account, minus all applicable sales, use, excise and other similar
taxes and minus all discounts, credits and allowances of any nature
granted or claimed.
* (provided that on and after a Borrowing Audit (as defined in Section
4.5 of the Loan Agreement), this percentage may be modified in the
reasonable discretion of Silicon based on the results of any such
audit)
Without limiting the fact that the determination of which accounts are
eligible for borrowing is a matter of Silicon's discretion, the
following will not be deemed eligible for borrowing: accounts
outstanding for more than 90 days from the invoice date, accounts
subject to any contingencies, accounts owing from the United States or
any department, agency or instrumentality of the United States or any
state, city or municipality, accounts owing from an account debtor
outside the United States (unless pre- approved by Silicon in its
discretion, or backed by a letter of credit satisfactory to Silicon,
or FCIA insured satisfactory to Silicon), accounts owing from one
account debtor to the extent they exceed 25% of the total eligible
accounts outstanding, accounts owing from an affiliate of Borrower,
and accounts owing from an account debtor to whom Borrower is or may
be liable for goods purchased from such account debtor or otherwise.
In addition, if more than 50% of the accounts owing from an account
debtor are outstanding more than 90 days from the invoice date or are
otherwise not eligible accounts, then all accounts owing from that
account debtor will be deemed ineligible for borrowing.
Letter of Credit Sublimit
Silicon, in its reasonable discretion, will from time to time during
the term of this Agreement issue letters of credit for the account of
the Borrower ("Letters of Credit"), in an aggregate amount at any one
time outstanding not to exceed $100,000, upon the request of the
Borrower, provided that, on the date the Letters of Credit are to be
issued, Borrower has available to it Loans in an amount equal to or
greater than the face amount of the Letters of Credit to be issued.
Prior to the issuance of any Letters of Credit, Borrower shall execute
and deliver to Silicon Applications for Letters of Credit and such
other documentation as Silicon shall specify (the "Letter of Credit
Documentation"). Fees for the Letters of Credit shall be as provided
in the Letter of Credit Documentation. Letters of Credit may have a
maturity date up to twelve months beyond the Maturity Date in effect
from time to time, provided that if on the Maturity Date, or on any
earlier effective date of termination, there are any outstanding
letters of credit issued by Silicon or issued by another institution
based upon an application, guarantee, indemnity or similar agreement
on the part of Silicon, then on such date Borrower shall provide to
Silicon cash collateral in an amount equal to the face amount of all
such letters of credit plus all interest, fees and costs due or to
become due in connection therewith, to secure all of the Obligations
relating to said letters of credit, pursuant to Silicon's then
standard form cash pledge agreement.
The Credit Limit set forth above and the Loans available under this
Agreement at any time shall be reduced by the face amount of Letters
of Credit from time to time outstanding.
Interest Rate (Section 1.2):
A rate equal to the "Prime Rate" in effect from time to time, plus
1.25% per annum. Interest shall be calculated on the basis of a
360-day year for the actual number of days elapsed. "Prime Rate" means
the rate announced from time to time by Silicon as its "prime rate;"
it is a base rate upon which other rates charged by Silicon are based,
and it is not necessarily the best rate available at Silicon. The
interest rate applicable to the Obligations shall change on each date
there is a change in the Prime Rate.
Loan Origination Fee
(Section 1.3): See Amendment to Loan Agreement.
Maturity Date
(Section 5.1): July 15, 1998
Prior Names of Borrower
(Section 3.2): Xsirius Photonix, Inc.
Trade Names of Borrower
(Section 3.2): None
Other Locations and Addresses
(Section 3.3): None
Material Adverse Litigation
(Section 3.10): None
Negative Covenants-Exceptions
(Section 4.6):
Without Silicon's prior written consent, Borrower may do the
following, provided that, after giving effect thereto, no Event of
Default has occurred and no event has occurred which, with notice or
passage of time or both, would constitute an Event of Default, and
provided that the following are done in compliance with all applicable
laws, rules and regulations: (i) repurchase shares of Borrower's stock
pursuant to any employee stock purchase or benefit plan, provided that
the total amount paid by Borrower for such stock does not exceed
$100,000 in any fiscal year.
Financial Covenants
(Section 4.1):
Borrower shall comply with all of the following covenants beginning
with the period ending March 30, 1997 (and shall be deemed amended as
of such date). Compliance shall be determined as of the end of each
fiscal month, except as otherwise specifically provided below:
Quick Asset Ratio:
Borrower shall maintain a ratio of "Quick Assets" to current
liabilities of not less than 1.50 to 1.
Tangible Net Worth:
Borrower shall maintain a tangible net worth of not less than
$3,250,000 plus 50% of Borrower's net profits (after taxes) for each
quarter (without deduction for losses) after the date hereof plus 80%
of the net proceeds that the Borrower receives from equity financing
transactions that are consummated after the date hereof.
Debt to Tangible
Net Worth Ratio:
Borrower shall maintain a ratio of total liabilities to tangible net
worth of not more than 0.75 to 1.
Profitability
For fiscal year starting April 1996, Borrower shall not incur a loss
(after taxes), on a cumulative basis, in excess of $2,000,000; and for
the fiscal year starting April 1997, Borrower shall not incur a loss
(after taxes), on a cumulative basis, in excess of $1,000,000
Definitions:
"Current assets," and "current liabilities" shall have the meanings
ascribed to them in accordance with generally accepted accounting
principles.
"Tangible net worth" means the excess of total assets over total
liabilities, determined in accordance with generally accepted
accounting principles, excluding however all assets which would be
classified as intangible assets under generally accepted accounting
principles, including without limitation goodwill, licenses, patents,
trademarks, trade names, copyrights, capitalized software and
organizational costs, licences and franchises.
"Quick Assets" means cash on hand or on deposit in banks, readily
marketable securities issued by the United States, readily marketable
commercial paper rated "A-1" by Standard & Poor's Corporation (or a
similar rating by a similar rating organization), certificates of
deposit and banker's acceptances, and accounts receivable (net of
allowance for doubtful accounts).
Subordinated Debt:
"Liabilities" for purposes of the foregoing covenants do not include
indebtedness which is subordinated to the indebtedness to Silicon
under a subordination agreement in form specified by Silicon or by
language in the instrument evidencing the indebtedness which is
acceptable to Silicon.
Other Covenants
(Section 4.1):
Borrower shall at all times comply with all of the following
additional covenants:
1. Banking Relationship. Borrower shall at all times maintain its
primary banking relationship with Silicon.
2. Monthly Borrowing Base Certificate and Listing. When any Loans or
Obligations relating thereto are outstanding, within 20 days after the
end of each month, Borrower shall provide Silicon with a Borrowing
Base Certificate in such form as Silicon shall specify, and
an aged listing of Borrower's accounts receivable and accounts
payable. At all other times, within 20 days after the end of each
quarter, Borrower shall provide Silicon with a Borrowing Base
Certificate in such form as Silicon shall specify, and an aged listing
of Borrower's accounts receivable and accounts payable 3.
Indebtedness. Without limiting any of the foregoing terms or
provisions of this Agreement, Borrower shall not in the future incur
indebtedness for borrowed money, except for (i) indebtedness to
Silicon, and (ii) indebtedness incurred in the future for the purchase
price of or lease of equipment in an aggregate amount not exceeding
$750,000 at any time outstanding.
3. Update. At such time that the Borrower requests Loans such that the
Obligations outstanding hereunder shall exceed $200,000, Borrower
shall supply an update to Silicon of the intellectual property portion
of the representations and warranties form Borrower has previously
supplied to Silicon in order to allow Silicon to prepare such
supplemental security agreements and take such additional actions as
Silicon deems necessary or advisable in order to perfect its security
interest in such items of Borrower's intellectual property not already
subject to Silicon's perfected security interest.
Borrower:
ADVANCED PHOTONIX, INC.
By /s/Xxxxx Xxxxxxxxx
President or Vice President
By /s/X. X. Xxxxxx
Secretary or Ass't Secretary
Silicon:
SILICON VALLEY BANK
By /s/Xxxx X. Xxxxx
Title Vice President
