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Item 1.01 - Entry Into a Material Definitive Agreement.
Fifth Amendment to Loan Agreement
On September 23, 2011, Advanced Photonix, Inc. (the “Company”) executed a Fifth Amendment to the loan agreement (the “Fifth Amendment”), effective as of September 23, 2011, which amended that certain loan agreement, dated September 25, 2008 (as amended on May 29, 2009, June 25, 2010, August 27, 2010 and November 30, 2010 and from time to time, the “Loan Agreement”), between the Company and The PrivateBank and Trust Company (the “Bank”).
Among other things, the Fifth Amendment (1) amends the definition of “Base Net Worth” to provide that Base Net Worth will initially be set at $16.2 million dollars; (2) amends the definition of “Borrowing Base Amount” to increase the potential availability of borrowings under the Line of Credit (as defined in the Loan Agreement); (3) amends the definition of “Net Worth” to permit the Company to add back certain non-cash goodwill or intangible asset impairment charges when calculating “Net Worth”; (4) decreases the amount of the Term Loan (as defined in the Loan Agreement) to $1.0 million; and (5) requires the Company to maintain (i) a minimum Debt Service Coverage Ratio (as defined in the Loan Agreement) of 1.10:1.00 (through September 30, 2013) and 1.20:1.00 (December 31, 2013 and thereafter), (ii) Adjusted EBITDA (as defined in the Loan Agreement) of not less than $1,500,000 on a trailing twelve month basis, and (iii) a minimum Net Worth (as defined in the Loan Agreement) of not less than the Base Net Worth.
Amendment of Term Loan and Line of Credit Promissory Notes
As a condition to the effectiveness to the Fifth Amendment, on September 23, 2011, the Company and the Bank (i) amended and restated the term loan promissory note executed in connection with the Loan Agreement (as amended and restated, the “Amended Term Loan Note”) to, among other things, reduce the principal from $1,735,716.61 to $1,000,000, extend the maturity date to October 1, 2015, and decrease the Applicable Margin (as defined in the Amended Term Loan Note) to 0.5%; and (ii) amended the line of credit promissory note executed in connection with the Loan Agreement (as amended, the “Amended Line of Credit Note”) to extend the maturity to September 25, 2014, and decrease the Applicable Margin (as defined in the Amended Line of Credit Note) to 0.5%
The description of the Fifth Amendment, the Amended Term Loan Note and the Amended Line of Credit Note are qualified in their entirety by reference to the copies of the agreements filed herewith as Exhibits 10.1, 10.2, and 10.3, respectively, which are incorporated herein by reference.