8-K

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):  June 30, 2008

Advanced Photonix, Inc.

(Exact Name of Registrant as specified in its Charter)

Delaware	1-11056	33-0325836
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

2925 Boardwalk, Ann Arbor, Michigan 48104

(Address of Principal Executive Offices) (ZIP Code)

Registrant's telephone number, including area code:  (734) 864-5647

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):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o 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.

On June 30, 2008, Advanced Photonix, Inc. (“Company”) and Fifth Third Bank (“Fifth Third”) entered into a second amendment (“Second Amendment”) to the business loan agreement dated March 6, 2007, as amended (the “Loan Agreement”) pursuant to which the Company has established a revolving line of credit with Fifth Third. Pursuant to the Second Amendment, the line of credit was reduced from $3,000,000 to $2,500,000, the required minimum cash deposits were reduced from $1,500,000 to $500,000, the interest rate was increased from prime to prime plus two percent, and the maturity date was extended from July 1, 2008 to October 1, 2008. The Loan Agreement contains customary financial covenants, including a minimum debt service coverage ratio requirement (as defined in the Loan Agreement), which has been amended to be not less than 1.20:1.00 on a rolling four-quarter basis, commencing with the quarter-ended June 30, 2008, and the two-quarters ended September 30, 2008. In connection with the transaction, the Company executed a new Promissory Note and the original Promissory Note dated March 6, 2007 was canceled.

The availability under the facility continues to be determined by the calculation of a borrowing base that includes a percentage of eligible accounts receivable and inventory. The Loan Agreement contains customary representations, warranties and covenants.

This summary of the Second Amendment does not purport to be complete and is subject to, and is qualified in its entirety by, reference to all of the provisions of the Loan Agreement, copies of which were filed with the Company’s Current Report on Form 8-K filed on March 9, 2007, and the provisions of the first amendment, copies of which were filed with the Company’s Quarterly Report on Form 10-Q/A filed on June 17, 2008 and the provisions of the Second Amendment and the Promissory Note dated June 30, 2008, copies of which are attached to this Current Report on Form 8-K as Exhibits 10.1 and 10.2 and incorporated by reference herein.

Item 9.01 - Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number	Exhibit
10.1	Second Amendment To Business Loan Agreement dated June 30, 2008 by and between Advanced Photonix, Inc. and Fifth Third Bank.

10.2 Promissory Note dated June 30, 2008 by and between Advanced Photonix, Inc. and Fifth Third Bank.

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
	Richard Kurtz, Chief Executive Officer

Dated:  June 30, 2008

EXHIBIT INDEX

Exhibit Number	Exhibit
10.1	Second Amendment To Business Loan Agreement dated June 30, 2008 by and between Advanced Photonix, Inc. and Fifth Third Bank.

10.2 Promissory Note dated June 30, 2008 by and between Advanced Photonix, Inc. and Fifth Third Bank.

EX-10.1

Exhibit 10.1

SECOND AMENDMENT TO BUSINESS LOAN AGREEMENT

THIS SECOND AMENDMENT TO BUSINESS LOAN AGREEMENT, dated as of June 30, 2008 (this "Amendment"), is between ADVANCED PHOTONIX, INC., a Delaware corporation (the "Borrower") and FIFTH THIRD BANK (the "Bank").

RECITAL

The Borrower and the Bank are parties to a Business Loan Agreement dated as of March 6, 2007, as amended by a First Amendment to Business Loan Agreement dated as of November 13, 2007 (the "Loan Agreement"). The Borrower and the Bank desire to amend the Loan Agreement on the terms set forth herein.

TERMS

In consideration of the premises and of the mutual agreements herein contained, the parties hereby agree as follows:

ARTICLE I. AMENDMENTS TO LOAN AGREEMENT.

The Loan Agreement shall be amended as follows:

1.1Section I shall be amended and restated in its entirety to read as follows:

A.Revolving Line of Credit to the Borrower in aggregate principal amount up to TWO MILLION FIVE HUNDRED THOUSAND DOLLARS ($2,500,000) expiring October 1, 2008, upon the terms and conditions herein set forth.

1.2Section 5.1 shall be amended (i) by deleting the reference therein to "THREE MILLION AND 00/100 ($3,000,000)" and inserting "TWO MILLION FIVE HUNDRED THOUSAND AND 00/100 ($2,500,000)" in place thereof and (ii) by amending and restating clause b. therein to read as follows:

“b.25% of Borrower’s and each Guarantor’s Eligible Inventory constituting finished goods or raw material at that time, not to exceed $500,000.”

1.3Section 6.1A. shall be amended and restated in its entirety to read as follows:

6.1A.Internally prepared consolidated financial statements for the Borrower and its Subsidiaries monthly, within 30 days after the end of each month, together with a comparison of such statements to forecasts.

1.4Section 6.11 shall be amended by deleting the reference to “$1,500,000” and inserting “$500,000” in place thereof.

1.5Section 7.1 shall be amended and restated in its entirety to read as follows:

7.1Permit the Debt Service Coverage Ratio at the end of any fiscal quarter, to be less than 1.2 to 1.0, commencing with the fiscal quarter ending June 30, 2008 and calculated (i) as of June 30, 2008 for such fiscal quarter, and (ii) as of September 30, 2008 for the two consecutive fiscal quarters then ending.

1.6The definitions of “Debt Service Coverage Ratio” and “EBITDA” set forth in Article XI. shall be amended and restated in their entirety to read as follows:

“Debt Service Coverage Ratio” shall mean, for any period, the ratio of (a) the sum of (i) EBITDA for such period, plus any non-cash expenses for stock options, stock grants or warrants vesting during such period, plus (iii) any expenses associated with the convertible note discounts during such period, plus (iv) with respect to any calculation of this ratio during fiscal year 2007, any expenses related to the moving costs of the wafer consolidation, not to exceed $500,000, to (b) the sum of (i) all principal payments paid during such period on any Indebtedness plus (ii) all interest paid or payable during such period on any Indebtedness and any other interest expense during such period, all calculated on a consolidated basis for the Borrower and its Subsidiaries in accordance with generally accepted accounting principles.

“EBITDA” shall mean, for any period, the sum of (a) net income plus (b) all amounts deducted in determining such net income on account of (i) interest paid or payable during such period, (ii) taxes based on or measured by income, (iii) depreciation and amortization expense, and (iv) goodwill and intangibles impairments, all calculated on a combined basis for the Borrower and its Subsidiaries in accordance with generally accepted accounting principles.

ARTICLE II. WAIVER

2.1The Borrower has informed the Bank that an Event of Default has occurred under the Loan Agreement due to the breach of Section 7.1 of the Loan Agreement as of the fiscal quarter ending March 31, 2008 (the "Existing Default"), and the Borrower has requested that the Bank waive the Existing Default, subject to the terms and conditions set forth herein. Pursuant to such request and subject to the other conditions described in this Amendment, the Bank hereby waives the Existing Default and any Event of Default caused by a breach of Section 7.1 for the period indicated above, but not at any time thereafter.

2.2The Borrower acknowledges and agrees that the waiver contained herein is a limited waiver, limited to the specific one time waiver described above. Such limited waiver (a) shall not waive any other term, covenant or agreement of the Loan Agreement or any other Loan Document, (b) shall not be deemed to be a waiver, or consent to any modification or amendment, of any other term, covenant or agreement of the Loan Agreement or any other Loan Document, and (c) shall not be deemed to prejudice any present or future right or rights which the Bank now has or may have thereunder. Additionally, this limited waiver shall not be deemed to waive any Event of Default, whether now existing or hereafter existing, whether known, unknown or otherwise, except as specifically set forth herein.

ARTICLE III. REPRESENTATIONS.

The Borrower represents and warrants to the Bank that:

3.1The execution, delivery and performance of this Amendment and the new Note delivered pursuant to Article IV are within its powers, have been duly authorized and are not in contravention with any law, or the terms of its articles of incorporation or organization, or by-laws or operating agreement, or any undertaking to which it is a party or by which it is bound.

3.2The Amendment is, and the new Note when executed and delivered will be, valid and binding in accordance with their respective terms.

3.3After giving effect to the amendments herein contained, the representations and warranties contained in the Loan Agreement and the other Loan Documents are true on and as of the date hereof with the same force and effect as if made on and as of the date hereof and, other than the Existing Default, no Event of Default or Default has occurred and is continuing.

ARTICLE IV. CONDITIONS PRECEDENT.

This Amendment shall not become effective until each of the following conditions are satisfied:

4.1This Amendment shall be signed by the Borrower and the Bank and the Consent and Agreement at the end hereof shall be signed by each Guarantor.

4.2The Borrower shall have executed and delivered a new Note to the Bank, in form and substance satisfactory to the Bank.

4.3The Borrower shall have paid an amendment fee to the Bank in the amount of $7,500 and all other fees and expenses described in Section 5.1 below.

4.4The Bank shall have received an appraisal of all machinery and equipment of the Borrower [and the Guarantors], which appraisal shall be in form and substance satisfactory to the Bank.

4.5The Borrower shall have delivered such other certificates or agreements reasonably requested by the Bank in connection herewith.

ARTICLE V. MISCELLANEOUS.

5.1The Borrower agrees to pay and to save the Bank harmless for the payment of all costs and expenses arising in connection with this Amendment, including the reasonable fees of counsel to the Bank in connection with preparing this Amendment and the related documents and all equipment appraisal fees.

5.2The Borrower acknowledges and agrees that the Bank has fully performed all of its obligations under all documents executed in connection with the Loan Agreement and all actions taken by the Bank are reasonable and appropriate under the circumstances and within its rights under the Loan Agreement and all other documents executed in connection therewith and otherwise available. The Borrower represents and warrants that it is not aware of any claims or causes of action against the Bank.

5.3Except as expressly amended hereby, the Borrower agrees that the Loan Agreement, the other Loan Documents and all other documents and agreements executed by it in connection with the Loan Agreement in favor of the Bank are ratified and confirmed and shall remain in full force and effect and that it has no set off, counterclaim or defense with respect to any of the foregoing. Terms used but not defined herein shall have the respective meanings ascribed thereto in the Loan Agreement.

5.4This Amendment may be signed upon any number of counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument and telecopied signatures shall be enforceable as originals.

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and delivered as of the day and year first above written.

ADVANCED PHOTONIX, INC.
By:	/s/ Richard D. Kurtz
	Richard D. Kurtz
	Its: Chief Executive Officer

FIFTH THIRD BANK
By:	/s/ J. Matthew Lowman
	J. Matthew Lowman
	Its: Vice President

EX-10.2

Exhibit 10.2

Promissory Note	Fifth Third Bank
	Address: 1000 Town Center, Suite J300
	City: Southfield State: Michigan Zip: 48075

Obligor No. ________________	June 30, 2008
Obligation No. ______________

FOR VALUE RECEIVED, the undersigned (the "Obligor") promises to pay to the order of the bank named above ("Bank") the principal amount of TWO MILLION FIVE HUNDRED THOUSAND AND NO/100 Dollars ($2,500,000.00) and interest (computed on the basis of a 360-day year for the actual number of days elapsed) on the unpaid principal balance at a rate per annum of:

Interest shall be payable on this Note at a rate per annum equal to 2% above Index Rate, floating (the “Note Rate”) from time to time in effect until Maturity and 2% above the Note Rate from time to time in effect after Maturity. The interest rate on this Note shall be adjusted on the same day that the change occurs to the specified percentage above the Index Rate in effect on the date of adjustment.

INDEX RATE: As used in this Note, "Index Rate means:

The rate of interest announced from time to time by Bank as its "prime" interest rate. The Index Rate is a variable rate and each change in the Index Rate is effective from and including the date the change in the "prime" interest rate is announced as being effective.

The rate announced by Bank as its "prime" interest rate at any given time may not necessarily be the lowest rate of interest available to commercial customers of Bank at that time.

The principal and interest on this Note shall be paid as follows:

Principal shall be paid in full on October 1, 2008 or at Maturity (as defined in paragraph 11 of Schedule A), if earlier. Accrued interest shall be paid on July 1, 2008 and on the first day of each month thereafter until the principal balance shall be paid in full.

LATE PAYMENTS; FEES: If any payment is not paid when due (whether by acceleration or otherwise) or within 10 days thereafter, each of the undersigned agrees, jointly and severally, to pay to Bank a late payment fee as provided for in any loan agreement or 5% of the payment amount, whichever is greater with a minimum fee of $20.00. Bank may impose a non-sufficient funds fee for any check that is presented for payment that is returned for any reason. This is in addition to Bank's other rights and remedies for default in payment of an installment of principal or interest when due.

EXPENSES AND LOAN PROCESSING FEE: Obligor shall reimburse Bank for all out-of-pocket expenses heretofore or hereafter incurred by Bank in connection with making the loan evidenced by this Note and any renewals, extensions or modifications of the loan and in connection with taking any security for the loan, including, without limitation, filing and recording fees, attorneys' fees and expenses, and costs of credit reports, surveys, appraisals, title work and mortgagee's title insurance. Each out-of-pocket expense (if not reimbursed to Bank on or before the date of this Note) shall be reimbursed to Bank at the time of the first required interest payment under this Note after the expense is incurred.

REVOLVING CREDIT: This Note is issued in exchange and substitution for a Promissory Note dated November 13, 2007 given by the Borrower in favor of the Bank, which was issued in exchange and substitution for a Promissory Note dated March 6, 2007 given by Borrower in favor of Bank. The principal of this Note may be borrowed, repaid and reborrowed by any Obligor from time to time, subject to the provisions of any written agreement among Bank and Obligor, as heretofore or hereafter amended, extended or replaced. Bank's records shall be prima facie evidence of all loans and repayments and of the indebtedness outstanding under this Note at any time.

THE ADDITIONAL PROVISIONS PRINTED ON SCHEDULE A ATTACHED TO THIS NOTE ARE PART OF THIS NOTE AND ARE INCORPORATED IN THIS NOTE BY REFERENCE.

Accepted:	Obligor(s):
Fifth Third Bank	Advanced Photonix, Inc.,
	a Delaware corporation
By:  /s/ J. Matthew Lowman	By:  /s/ Richard D. Kurtz
J. Matthew Lowman	Richard D. Kurtz
Its: Vice President	Its: Chief Executive Officer
	Address:
	2925 Boardwalk Ann Arbor, MI 48104

SCHEDULE A

ADDITIONAL PROVISION OF PROMISSORY NOTE

1.Prepayments. Obligor may prepay all or part of the principal of this Note at any time, unless prepayment is prohibited, limited or conditioned in any Rider to this Note or in any other agreement signed by Obligor.

2.Security. This Note and all obligations of Obligor hereunder are secured by any and all security agreements, guaranties, mortgages, assignments and all other agreements and instruments heretofore or hereafter given by Obligor or any third party to Bank ("Security Documents"). As additional security for the payment of Obligor's obligations under this Note, Obligor grant(s) to Bank a security interest in all tangible and intangible property of Obligor now or hereafter in the possession of Bank, including, without limitation, all deposit accounts. Obligor grants the foregoing security interests to Bank for itself and as agent for all affiliates of Fifth Third Bancorp for all obligations of Obligor to such affiliates.

3.Acceleration (Non-Demand Note). Upon the occurrence of any Event of Default (as defined in the Loan Agreement), all or any part of the indebtedness evidenced hereby and all or any part of all other indebtedness and obligations then owing by Obligor to Bank shall, at the option of Bank or any affiliate of Fifth Third Bancorp, become immediately due and payable without notice or demand. All or any part of the indebtedness evidenced hereby also may become, or may be declared to be, immediately due and payable under the terms and conditions contained in any loan agreement, Security Document or other agreement heretofore or hereafter entered into between Obligor and Bank or any affiliate of Fifth Third Bancorp.

4.Bankruptcy. If a voluntary or involuntary case in bankruptcy, receivership or insolvency shall at any time be begun by or against Obligor or any Guarantor or any of Obligor's or any Guarantor's partners (if Obligor or Guarantor is a partnership), or if any attachment, garnishment, execution, levy or similar process shall at any time be placed upon any deposit account at any time maintained with Bank by Obligor or any Guarantor, then the indebtedness evidenced by this Note and all other indebtedness and obligations then owing by Obligor to Bank shall automatically become immediately due and payable.

5.Place and Application of Payments. Each payment upon this Note shall be made at any of Bank's offices or such other place as the holder hereof may direct in writing. Any payment upon this Note shall be applied first to any accrued and unpaid interest, then to the unpaid principal balance, then to any expenses or loan processing fee then due and payable to Bank and then to any unpaid late charges, except that after Maturity of this Note, Bank may apply any payment or collection to any such amounts owing under this Note in such manner as Bank shall determine in its sole discretion. If Obligor at any time owes Bank any indebtedness or obligation in addition to the indebtedness evidenced by this Note, and if any indebtedness owed by Obligor to Bank is then in default, Obligor shall not have, and hereby waives, any right to direct or designate the particular indebtedness or obligation upon which any payment made by, or collected from, Obligor or from any Guarantor or other security shall be applied. The manner of application of any such payment, as between or amount of such indebtedness and obligations, shall be determined by Bank in its sole discretion.

6.Minimum Interest Rate. Notwithstanding any other provision of this Note, Bank shall never be entitled to charge, take or receive as interest on this Note any amount in excess of simple interest calculated at the lesser of (a) a rate of thirty-five percent (35%) per year or (b) the highest rate to which Obligor may lawfully agree in writing ("Maximum Rate"). If Bank ever receives interest in excess of the Maximum Rate, the excess shall be considered a partial prepayment of the principal of the Note or, if the principal has been paid in full, shall be refunded to Obligor.

7.Setoff. At any time after the occurrence and during the continuance of an Event of Default (as defined in the Loan Agreement), Bank shall have the right to set off any indebtedness that Bank then owes to Obligor (including any deposit account) against any indebtedness evidenced by this Note that is then due and payable.

8.Remedies. Bank shall have all rights and remedies provided by law and by agreement of Obligor. Any requirement of reasonable notice with respect to any sale or other disposition of collateral shall be met if Banks sends the notice at least five (5) days before the date of sale or other disposition. Obligor agrees to pay any and all expenses, including reasonable attorneys' fees and legal expenses, paid or incurred by Bank in protection and enforcing the right of and obligations to Bank under any provisions of this Note or any Security Document.

9.Environmental Compliance. Obligor represents and warrants to, and agrees with, Bank that, to Obligor's knowledge: (a) none of Obligor's real or personal property is, and Obligor will not permit it to become, contaminated by any substance that is now or hereafter regulated by or subject to any present or future law or regulation that establishes liability for the removal or clean-up of, or damage caused by, any environmental contamination; (b) Obligor's operations, activities, and real and personal properties are, and Obligor shall cause them to continue to be, in compliance with each such law and regulation; (c) if the indebtedness evidenced by this Note is not paid at Maturity, then at any time thereafter Bank may, but shall not be obligated to, conduct or obtain an environmental investigation or audit of any or all of Obligor's properties, and Obligor shall reimburse Bank for all costs and expenses incurred by Bank in connection with any such investigation or audit; and (d) Obligor shall indemnify and, at Bank's option, defend Bank with respect to all claims, damages, losses, liabilities and expenses (including attorneys' fees) asserted against or incurred by Bank by reason of any failure to comply with, or any inaccuracy in, any of the agreements, representations and warranties contained in this paragraph.

10.Waivers. No delay by Bank in the exercise of any right or remedy shall operate as a waiver thereof. No single or partial exercise by Bank of any right or remedy shall preclude any other or future exercise thereof or the exercise of any other right or remedy. No waiver by Bank of any default or of any provisions hereof shall be effective unless in writing and signed by Bank. No waiver of any right or remedy on one occasion shall be waiver of that right or remedy on any future occasion. The modification or waiver of any of Obligor's obligations or Bank's rights under this Note must be contained in a writing signed by Bank. Bank may perform Obligor's obligations without causing a waiver of those obligations or rights. Obligor's obligations under this Note shall not be affected if Bank amends, compromises, exchanges, fails to exercise, impairs or releases and of the following obligations under this Note and the documents referred to herein: (i) any of the obligations belonging to any co-obligor, endorser or guarantor, (ii) any of its rights against any co-obligor, guarantor or endorser, or (iii) any interest in the collateral securing the obligations.

Obligor waives demand for payment, presentment, notice of dishonor and protest of this Note and consents to any extension or postponement of time of its payment to any substitution, exchange or release of all or any part of any security given to secure this Note, to the addition of any hereto, and to the release, discharge, waiver, modification, or suspension of any rights and remedies against any person who may be liable for the indebtedness evidenced by this Note. Obligor, including but not limited to all co-makers and accommodation makers of this Note, hereby waives all suretyship defenses including but not limited to all defenses based upon impairment of collateral and all suretyship defenses described in Section 3-605 of the Uniform Commercial Code (the "UCC"). Such waiver is entered to the full extent permitted by Section 3-605(i) of the UCC.

11.General. If Obligor is more than one person, firm or corporation, (a) each of them is primarily liable on this Note, (b) receipt of value by any one of them constitutes receipt of value by both or all of them, (c) their liability on this Note is joint and several, and (d) the term "Obligor" means each of them and all of them. In this Note, "Maturity" means such time as the entire remaining unpaid principal balance shall be or shall become due and payable for any reason, including acceleration under paragraph 3 or paragraph 4 hereof.

12.Applicable Law and Jurisdiction. This Note shall be governed by and interpreted according to the laws of the State of Michigan without giving effect to principles of conflict of laws. Obligor irrevocably agrees and consents that any action against Obligor for collection or enforcement of this Note may be brought in any state or federal court that has subject matter jurisdiction and is located in, or whose district includes, any county in which Bank has an office and that any such court shall have personal jurisdiction over Obligor for purposes of the action.

13.JURY WAIVER. OBLIGOR, AND ANY ENDORSER OR GUARANTOR HEREOF, WAIVE THE RIGHT TO A TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY.

14.Entire Agreement. Obligor acknowledges and confirms that this Note and the documents referred to herein constitute the entire agreement between Obligor and Bank, and that there are no conditions or understandings between the parties that are not expressed therein.

15.Severability. The declaration of invalidity or unenforceability of any provision of this Note or the documents referred to herein shall not affect the validity or enforceability of the remaining provisions of any of the foregoing.

16.Assignment. Obligor agrees not to assign any of Obligor's rights, remedies or obligations described in this Note without the prior written consent of Bank, which consent may be withheld in Bank's sole discretion. Obligor agrees that Bank may assign some or all of its rights and remedies described in this Note without notice to, or prior consent from, the Obligor.

17.Financial Statements. Obligor shall maintain a standard and modern system for accounting in conformance with generally accepted accounting principles and will furnish to Bank all financial statements as described in Section VI of the Loan Agreement.