UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 8, 2005
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Advanced Photonix, Inc.
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(Exact Name of Registrant as specified in its Charter)
Delaware 1-11056 33-0325836
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1240 Avenida Acaso, Camarillo, California 93012
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(Address of Principal Executive Offices) (ZIP Code)
Registrant's telephone number, including area code: (805) 987-0146
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
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On March 8, 2005, Advanced Photonix, Inc. ("API") and its wholly owned
subsidiary, Michigan Acquisition Sub, LLC ("Newco"), a Delaware limited
liability company, entered into an Agreement and Plan of Merger (the
"Agreement") with Picotronix, Inc. (doing business as and referred to herein as
"Picometrix"), a Michigan corporation, Robin Risser and Steven Williamson, the
stockholders of Picometrix, whereby Picometrix will merge with and into Newco,
with Newco being the surviving entity. The merger consideration to be paid to
the stockholders of Picometrix at the closing of the transaction will consist of
$3,500,000 in cash, four-year API promissory notes in the aggregate principal
amount of $2,900,500 (the "API Notes") and 2,575,000 shares of API's Class A
Common Stock. This merger consideration was determined through arm's-length
negotiations between the parties.
The API Notes will be payable in four annual installments with the first being a
payment of $500,000, the second being a payment of $550,000, the third being a
payment of $900,000 and the fourth being a payment of $950,500. The API Notes
will bear an interest rate of prime plus 1.0% and will be secured by all of the
intellectual property of Picometrix. API will have the option of prepaying the
API Notes without penalty.
The transaction is anticipated to close in April, subject to customary closing
conditions, including American Stock Exchange listing of the API shares of Class
A Common Stock to be issued in connection with the transaction. Picometrix, a
privately held company located in Ann Arbor, MI, is a developer and manufacturer
of ultra high-speed photoreceivers and instrumentation for the
telecommunication, data communication, and test and measurement markets.
Upon the signing of the Agreement, API agreed to provide a loan in the amount of
approximately $4,200,000 to Picometrix (the "API Loan"), the proceeds of which
are to be used to prepay existing long-term indebtedness of Picometrix to a
third party. The API Loan is secured by all of the intellectual property of
Picometrix. The API Loan will be contributed to the capital of Newco at the
closing of the transaction. In the event the transaction does not close, the API
loan will mature 12 months after issuance and will bear interest at the annual
rate of prime plus 1.0%.
Upon the closing of the transaction, API will enter into a three-year employment
agreement with Robin Risser. Mr. Risser's position with API will be President
and General Manager of the Picometrix business unit with a base salary of
$185,000 per year and a bonus to be determined and approved by the Board of
Directors of API. Upon the signing of the employment agreement, Mr. Risser will
be entitled to a signing bonus of $30,000. The employment agreement will provide
that API will agree to cause the Board of Directors of API to appoint Mr. Risser
as API's Chief Financial Officer at API's 2005 Annual Shareholders Meeting. In
addition, the employment agreement will provide that API will use its reasonable
best efforts to cause Mr. Risser to be elected to the Board of Directors of API
as soon as reasonably practicable, including the designation of Mr. Risser as
one of API's nominees for election as a director at API's 2005 Annual
Shareholders Meeting.
Upon the closing of the transaction, API will enter into a three-year employment
agreement with Steven Williamson. Mr. Williamson's position with API will be
Chief Technology Officer with a base salary of $200,000 per year and a bonus to
be determined and approved by the Board of Directors of API. Upon the signing of
the employment agreement, Mr. Williamson will be entitled to a signing bonus of
$30,000.
The description of the Agreement is qualified in its entirety by reference to
the copy of the Agreement filed as Exhibit 10.1 hereof, which is incorporated by
reference herein.
On March 9, 2005, API entered into a letter agreement (the "Amendment") amending
certain of the definitive agreements API entered into on October 11, 2004 in
connection with the previously disclosed private placement to three
institutional investors of $5 million aggregate principal amount of API's senior
convertible notes, warrants and additional investment rights (the "Private
Placement"). The Amendment amends the Securities Purchase Agreement dated
October 11, 2004 by and among API and the investors (the "Purchase Agreement")
to (i) extend the "Agreement Condition" (as such term is defined in the Purchase
Agreement) from January 31, 2005 to March 11, 2005 and (ii) extend the
"Transaction Condition" (as such term is defined in the Purchase Agreement) from
March 31, 2005 to May 1, 2005. The Amendment amends the warrants issued and, the
additional warrants to be issued, in the Private Placement (collectively, the
"Warrants") to the investors to reduce the "Exercise Price" (as such term is
defined in the Warrants) from $2.1156 per share of Class A Common Stock of API
to $1.78 per share.
The notes issued in connection with the Private Placement (the "Notes") have
been amended to (i) provide that the "Interest Rate" (as such term is defined
the Notes) shall not be less than 6.5% at any time and (ii) increase the amount
of "Permitted Indebtedness" (as such term is defined in the Notes) from $3
million to $6 million and (iii) decrease the amount of "Permitted Acquisition
Indebtedness" (as such term is defined in the Notes) from $6 million to $3
million. In addition, the investors in the Private Placement have agreed to
subordinate, pursuant to a form of subordination agreement in form and substance
reasonable satisfactory to them, (i) the principal and interest payments on the
Notes to the "Permitted Bank Debt" (as such term is defined in the Amendment)
and (ii) their liens on API's assets to any lien granted by API as security for
the "Permitted Bank Debt".
The description of the Amendment is qualified in its entirety by reference to
the copies of the Amendments filed as Exhibit 10.2, 10.3, 10.4 and 10.5 hereof,
which are incorporated by reference herein. Capitalized terms used herein but
not defined herein shall have the meanings given to such terms in the Amendment
or the other definitive agreements referenced herein filed as exhibits to the
Current Report on Form 8-K filed on October 12, 2004.
Item 7.01 Regulation FD Disclosure
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On March 9, 2005, API issued the attached press release regarding the
acquisition of Picometrix. The release is attached to this Form 8-K as Exhibit
99.1.
The information in Item 7.01 of this Current Report on Form 8-K and the Exhibits
attached hereto shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the
liabilities of that section, nor shall they be deemed incorporated by reference
in any filing under the Securities Act of 1933 or the Exchange Act, regardless
of any general incorporation language in such filing. By filing this report on
Form 8-K and furnishing or referring to this information, API makes no admission
as to the materiality of any information in this report that is required to be
disclosed solely by reason of Regulation FD or that the information includes
material investor information that was not previously publicly available.
Exhibits:
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Exhibit
Number Exhibit
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2.1 Agreement and Plan of Merger dated March 8, 2005, by and among API,
Michigan Acquisition Sub, LLC, Picotronix, Inc., Robin Risser
and Steven Williamson.
10.1 Promissory Note to Picotronix, Inc. dated March 10, 2005.
10.2 Letter Agreement dated March 9, 2005, by and among API and
Bluegrass Growth Fund, Ltd.
10.3 Letter Agreement dated March 9, 2005, by and among API and
Bluegrass Growth Fund, LP.
10.4 Letter Agreement dated March 9, 2005, by and among API and
Smithfield Fiduciary LLC.
10.5 Letter Agreement dated March 9, 2005, by and among API and
Iroquois Capital, LP.
99.1 Press Release of API, dated March 9, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ADVANCED PHOTONIX, INC.
By: /s/ Richard Kurtz
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Richard Kurtz, Chief Executive Officer
Dated: March 14, 2005