Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
 
This SECURITIES PURCHASE AGREEMENT (this “Agreement”) is dated as of November 4,
2010, by and between Advanced Photonix, Inc., a Delaware corporation (the
“Company”), and In-Q-Tel, Inc., a Delaware corporation (“Investor”).
 
RECITALS
 
A.     The Company and Investor are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the “Securities Act”).
 
B.     Investor wishes to purchase, and the Company wishes to sell, upon the
terms and conditions stated in this Agreement, shares of the Company’s Class A
Common Stock, par value $0.001 a share (the “Common Stock”) pursuant to the
terms and conditions of this Agreement.
 
C.     Investor has reviewed copies of the various documents referred to in
Schedule 1 attached hereto (the “Disclosure Documents”).
 
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and Investor hereby agree
as follows:
 
Section 1.  Purchase and Sale of Shares
 
1.1. Purchase of Shares and Payment.  Upon the terms and subject to the
conditions contained in this Agreement, at the Closing the Company shall issue
and sell to Investor, and Investor shall purchase from the Company, at an
aggregate purchase price of $200,000.00 (the “Purchase Price”), the number of
shares of Common Stock determined by dividing the Purchase Price by the Formula
Price (collectively, the “Shares” and each a “Share”); provided, however, that
the number of shares of Common Stock determined pursuant to this Section 1.1
shall be rounded down to the nearest whole number.  For purposes of this
Agreement, “Formula Price” shall mean the volume-weighted average price per
share of the Company’s Common Stock on the NYSE Amex stock exchange (“AMEX”) for
the five (5) trading days ending on the business day immediately preceding the
date hereof.
 
1.2. Use of Proceeds.  The proceeds from the sale of Shares hereunder will be
used for working capital.
 
1.3. Closing.  The Closing of the purchase and sale of the Shares shall take
place at the offices of the Company’s attorney, Dornbush Schaeffer Strongin &
Venaglia, LLP, 747 Third Avenue, New York, New York 10017, on the Closing Date
or at such other locations or remotely by facsimile transmission or other
electronic means as the parties may mutually agree. For purposes of this
Agreement, “Closing Date” shall mean the day when this Agreement has been
executed and delivered by the parties hereto, and all of the conditions set
forth in Section 5 hereof are satisfied, or such other date as the parties may
agree, and “Closing” shall mean the closing of the purchase and sale of the
Shares pursuant to this Agreement.
 
 
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1.4. Form of Payment.  Unless otherwise agreed to by the Company and Investor,
on the Closing Date, (x) as full payment for the Shares, Investor shall wire the
Purchase Price, in United States dollars and in immediately available funds, in
accordance with the Company’s written wire transfer instructions, which
instructions shall be delivered to Investor not less than three (3) business
days prior to Closing and (y) upon receipt thereof, the Company shall deliver
(or irrevocably instruct its transfer agent (the “Transfer Agent”) to deliver to
Investor, certificates representing the Shares.
 
Section 2.  Representations and Warranties
 
2.1. Representations and Warranties of the Company.  The Company hereby
represents and warrants to Investor as of the date hereof and the Closing Date
that:
 
(a) Organization, Good Standing and Qualification.  The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own and
operate its assets and properties, to conduct its business as it is currently
being conducted and as described in the Disclosure Documents, to execute and
deliver this Agreement and to consummate the transactions contemplated
herein.  Other than Picometrix, LLC (f/k/a Picotronix, Inc.), a Delaware limited
liability company and Silicon Sensors, Inc., a Delaware corporation (the
“Subsidiaries”), the Company does not own securities of any kind in any other
entity.  The Company and the Subsidiaries are qualified to do business as
foreign corporations or as a limited liability company, as applicable, and are
in good standing in every jurisdiction in which the nature of the business
conducted or property owned by them makes such qualification necessary, except
for any jurisdiction(s) (alone or in the aggregate) in which the failure to be
so qualified will not have a Material Adverse Effect.  For the purposes of this
Agreement, “Material Adverse Effect” means any effect on the business,
operations, properties or financial condition of the Company and its
Subsidiaries that is material and adverse to the Company and its Subsidiaries,
taken as a whole, and any condition, circumstance or situation that would
prohibit the Company from entering into and performing its obligations
hereunder.
 
(b) Valid Issuance.  The Shares have been duly authorized by all necessary
corporate action and, when issued in accordance with the terms hereof and
thereof, will be validly issued, fully paid and non-assessable and free and
clear of all taxes, liens, options, calls, rights of first refusal of any kind,
contracts, commitments, demands, charges, security interests, encumbrances or
restrictions on transfer, other than restrictions on transfer under applicable
state and federal securities laws, and Investor shall be entitled to all rights
accorded to a holder of Common Stock.
 
(c) Authorization.
 
(i) The Company has all requisite corporate power and authority to enter into
and perform its obligations under this Agreement and to issue the Shares in
accordance with the terms hereof;
 
(ii) The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby, including the
issuance of the Shares, have been duly authorized by all necessary corporate
action, and no further consent or authorization of the Company or its Board of
Directors (or any committee or subcommittee thereof) or stockholders is
required;
 
 
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(iii) This Agreement has been duly executed and delivered by the Company; and
 
(iv) This Agreement constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
 
(d) Disclosure Documents, Financial Statements.
 
(i) The Disclosure Documents constitute all documents filed by the Company with
the Securities and Exchange Commission (the “SEC”) pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended, since March 31,
2010, through the date hereof, and as at the respective dates of filing thereof,
complied in all material respects with the published rules and regulations of
the SEC or other applicable rules and regulations with respect thereto.
 
(ii) As of their respective dates, the financial statements of the Company
included in the Disclosure Documents (the “Financial Statements”) complied in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and regulations with
respect thereto.  Such Financial Statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except (i) as may be otherwise disclosed or
indicated in such Financial Statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements), and fairly present in all material
respects the consolidated financial position of the Company as of the dates
thereof and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).  Any “off-balance sheet” transactions to which the Company is a
party are reflected in the notes to such Financial Statements.
 
(e) No Material Adverse Change.  Except as disclosed in the Disclosure
Documents, since July 2, 2010, neither the Company nor any of its Subsidiaries
has (i) experienced or suffered any Material Adverse Effect, (ii) incurred any
liabilities, obligations, claims or losses (whether liquidated or unliquidated,
secured or unsecured, absolute, accrued, contingent or otherwise) other than (A)
those incurred in the ordinary course of the Company’s or its Subsidiaries’
respective businesses or (B) as set forth herein or (iii) declared, made or paid
any dividend or distribution of any kind on their capital stock.
 
(f) No Undisclosed Events or Circumstances.  Except as disclosed in the
Disclosure Documents, since July 2, 2010, except for the consummation of the
transactions contemplated herein, no event or circumstance has occurred or
exists with respect to the Company or its Subsidiaries or their respective
businesses, properties, prospects, operations or financial condition, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed.
 
 
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(g) Delisting Notification.  The Common Stock is listed on AMEX, and the Company
has taken no action designed to, or likely to have the effect of, de-listing the
Common Stock from AMEX, nor has the Company received any notification from AMEX
to the effect that the Company is not in compliance with the listing or
maintenance requirements of such securities exchange.
 
(h) No General Solicitation.  The Company did not offer the Shares to Investor
by means of any advertisement, article, notice or other communication regarding
the Shares published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or any other general
advertisement that would be deemed a “general solicitation” under the provisions
of Regulation D under the Securities Act.
 
(i) No Conflicts.  The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby and the issuance of the Shares will not:
 
(i) result in a violation of (x) the Company’s certificate of incorporation, (y)
any certificate of designations, preferences and rights of any outstanding
series of preferred stock of the Company or (z) the Company’s by-laws that would
have a Material Adverse Effect;
 
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party, or
 
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including United States federal and state securities laws and
regulations and the rules and regulations of AMEX or any other principal
securities exchange or trading market on which the Common Stock is traded or
listed) applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound or affected
that would have a Material Adverse Effect.
 
(j) Absence of Litigation.  There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the Company
or any of its Subsidiaries, threatened against or affecting the Company, the
Common Stock or any of the Subsidiaries or any of the Company’s or the
Subsidiaries’ officers or directors in their capacities as such, which would be
material to the Company except as set forth in Disclosure Documents which were
filed prior to the date hereof.
 
(k) No Integrated Offering.  Assuming the accuracy of Investor’s representations
and warranties set forth in Section 2.2, neither the Company, nor to the
knowledge of the Company, any of its affiliates or any person acting on its
behalf has, directly or indirectly, at any time within the past six months, made
any offers or sales of any Company security or solicited any offers to buy any
security under circumstances that would cause such offers and sales to be
integrated for purposes of the Securities Act with the offer and sale by the
Company of the Shares as contemplated hereby.
 
 
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2.2. Representations and Warranties of Investor.  Investor hereby represents and
warrants to the Company as of the date hereof and the Closing Date that:
 
(a) Review of Agreements.  Investor has reviewed the Disclosure Documents and
acknowledges that certain of the Disclosure Documents include “forward looking”
statements that involve a number of risks and uncertainties, including the risks
and uncertainties referred to in the Company’s Annual Report on Form 10-K for
the fiscal year ended March 31, 2010.
 
(b) Suitability of Investment.
 
(i) Investor understands that the Shares are “restricted securities” and have
not been registered under the Securities Act or any applicable state securities
law.
 
(ii) Investor is acquiring the Shares as principal for its own account, for
investment purposes only and not with a view to the resale or distribution
thereof.
 
(iii) Investor has not and will not, directly or indirectly, offer, sell,
transfer, assign, exchange or otherwise dispose of all or any part of the
Shares, except in accordance with applicable federal and state securities laws.
 
(iv) Investor has such knowledge and experience in financial, business and tax
matters that Investor is capable of evaluating the merits and risks relating to
Investor’s investment in the Shares and making an investment decision with
respect to the Company.  Investor has independently evaluated the risks and
merits of purchasing the Shares and has independently determined that the Shares
are a suitable investment for such Investor.  Investor acknowledges that except
as otherwise expressly provided herein, the Company has made no representation
or warranty to Investor with respect to the legal, income or other tax
consequences to Investor under the laws of any jurisdiction with respect to an
investment in the Shares.  Investor has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Shares.
 
(v) To the full satisfaction of Investor, Investor has been given the
opportunity to obtain information and documents relating to the Company and to
ask questions of and receive answers from representatives of the Company
concerning the Company and the investment made hereby.
 
(vi) Investor is able at this time, and in the foreseeable future, to bear the
economic risk of a total loss of its investment in the Company.
 
(vii) Investor is aware that there are substantial risks incident to an
investment in the Company, including without limitation, those set forth in the
Disclosure Documents.
 
(viii) Investor understands that, unless he, she or it notifies the Company in
writing to the contrary at or before the Closing, all Investor’s representations
and warranties contained in this Agreement will be deemed to have been
reaffirmed and confirmed as of the Closing, taking into account all information
received by Investor.
 
 
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(ix) Investor is an “accredited investor” within the meaning of that term as set
forth in Rule 501(a) under Regulation D promulgated by the SEC under the
Securities Act (“Regulation D”).
 
(x) Investor understands that no United States federal or state agency or any
other government or governmental agency has passed on or made any recommendation
or endorsement of the Shares or the fairness or suitability of the investment in
the Shares nor have such authorities passed upon or endorsed the merits of the
offering of the Shares.
 
(c) General Solicitation.  Investor is not purchasing the Shares as a result of
any advertisement, article, notice or other communication regarding the Shares
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
advertisement that would be deemed a “general solicitation” under the provisions
of Regulation D.
 
(d) Reliance on Exemptions.  Investor understands that the Shares are being
offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and Investor’s
compliance with, the representations, warranties, agreements, acknowledgements
and understandings of Investor set forth herein in order to determine the
availability of such exemptions and the eligibility of Investor to acquire the
Shares.
 
(e) Organization, Good Standing and Qualification.  Investor is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own and
operate its assets and properties, to conduct its business as it is currently
being conducted, to execute and deliver this Agreement and to consummate the
transactions contemplated herein.
 
(f) Authorization.  All corporate action on the part of Investor necessary for
the authorization, execution and delivery of this Agreement and for the
performance of all obligations of Investor hereunder has been taken.  This
Agreement has been duly executed and delivered by Investor and constitutes the
valid and binding obligation of Investor, enforceable against Investor in
accordance with its terms.
 
(g) Trading in Common Stock.  Since September 13, 2010, neither Investor nor its
affiliates have executed, and during the period between September 13, 2010 and
the Closing, neither Investor nor its affiliates will execute, any purchase or
sale of the Common Stock or any short sales.  For purposes of this Section
2.2(g), the term short sale means all types of direct and indirect stock
pledges, forward sale contacts, options, puts, calls, short sales, swaps
(including on a total return basis), and any other similar transactions whether
or not having the effect of hedging any position in the Common Stock.
 
 
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Section 3.  Indemnification
 
3.1. Company Indemnification.  The Company covenants and agrees to defend,
indemnify and save and hold harmless Investor, together with its officers,
directors, partners, members, employees, trustees, and affiliates, attorneys and
representatives (collectively, “Representatives”), from and against any and all
losses, out-of-pocket costs or expenses, liabilities, claims or legal damages
(including, without limitation, reasonable fees and disbursements of counsel and
accountants and other out-of-pocket costs or expenses incident to any actual or
threatened claim, suit, action or proceeding, whether incurred in connection
with a claim against the Company or a third party claim) (collectively,
“Investor Losses”) up to the amount of the Purchase Price (the “Indemnity Cap”)
arising out of or resulting from: (i) any inaccuracy in or breach of any
representation, warranty, covenant or agreement made by the Company in this
Agreement; or (ii) the failure of the Company to perform or observe fully any
covenant, agreement or provision to be performed or observed by it pursuant to
this Agreement.  Investor Losses resulting directly from the gross negligence,
bad faith or willful misconduct of Investor or any of its Representatives are
not covered under this Section.
 
3.2. Investor Indemnification.  Investor covenants and agrees to defend,
indemnify and save and hold harmless the Company and its Representatives from
and against any and all losses, out-of-pocket costs or expenses, liabilities,
claims or legal damages (including, without limitation, reasonable fees and
disbursements of counsel and accountants and other out-of-pocket costs or
expenses incident to any actual or threatened claim, suit, action or proceeding,
whether incurred in connection with a claim against Investor or a third party
claim) (collectively, “Company Losses”) up to the Indemnity Cap relating to
violations of the Securities Act or other applicable law arising out of or
resulting from: (i) any inaccuracy in or breach of any representation, warranty,
covenant or agreement made by Investor in this Agreement; or (ii) the failure of
Investor to perform or observe fully any covenant, agreement or provision to be
performed or observed by it pursuant to this Agreement.  Company Losses
resulting directly from the gross negligence, bad faith or willful misconduct of
the Company or any of its Representatives are not covered under this Section.
 
3.3. Indemnification Procedure.
 
(a) Each party entitled to be indemnified pursuant to Section 3.1 and 3.2 (each,
an “Indemnified Party”) shall notify the other party (the “Indemnifying Party”)
in writing of any action against such Indemnified Party in respect of which the
other party is or may be obligated to provide indemnification pursuant to
Section 3.1 or 3.2, promptly after the receipt of notice or knowledge of the
commencement thereof.  The omission of any Indemnified Party so to notify the
other party of any such action shall not relieve the Indemnifying Party from any
liability which it may have to such Indemnified Party except to the extent the
Indemnifying Party shall have been prejudiced by the omission of such
Indemnified Party so to notify it, pursuant to this Section 3.3.
 
(b) In case any such action shall be brought against any Indemnified Party, the
Indemnifying Party shall be entitled to participate therein and, to the extent
that the Indemnifying Party may wish, to assume the defense thereof, with
counsel reasonably satisfactory to such Indemnified Party, and after notice from
it to such Indemnified Party of its election so to assume the defense thereof,
the Indemnifying Party will not be liable to such Indemnified Party for any
legal or other expense subsequently incurred by such Indemnified Party in
connection with the defense thereof; provided, however, that (i) if the
Indemnifying Party shall elect not to assume the defense of such claim or action
or (ii) if the Indemnified Party reasonably determines that there is a
substantial actual conflict between the positions of the Indemnifying Party and
of the Indemnified Party in defending such claim or action, then separate
counsel for the Indemnified Party shall be entitled to participate in and
conduct the defense, and the Indemnifying Party shall be liable for any
reasonable legal or other expenses incurred by the Indemnified Party in
connection therewith.
 
 
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(c) The Indemnifying Party shall not be liable for any settlement of any
proceeding affected without its prior written consent, which consent shall not
be unreasonably withheld, delayed or conditioned.  Without the prior written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld, delayed or conditioned, the Indemnifying Party shall not affect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such proceeding.
 
3.4. Indemnification Exclusive.  The foregoing indemnification provisions are
exclusive, and in lieu of any statutory, equitable or common law remedy any
party may have for breach of representation, warranty, covenant or agreement
hereunder, all of which are hereby irrevocably waived and relinquished to the
maximum legal effect.
 
Section 4. Transfer Restrictions
 
4.1. Compliance with Laws.  Notwithstanding any other provision of this Section
4, Investor covenants that Shares may be disposed of only pursuant to an
effective registration statement under, and in compliance with the requirements
of, the Securities Act, or pursuant to an available exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act,
and in compliance with any applicable state, federal or foreign securities
laws.  In connection with any transfer of Shares other than (i) pursuant to an
effective registration statement, (ii) to the Company or (iii) pursuant to Rule
144 promulgated under the Securities Act (provided that the transferor provides
the Company with reasonable assurances (in the form of seller and broker
representation letters) that such securities may be sold pursuant to such rule),
the Company may require the transferor thereof to provide to the Company and the
Transfer Agent, at the transferor’s expense, an opinion of counsel selected by
the transferor and reasonably acceptable to the Company and the Transfer Agent,
the form and substance of which opinion shall be reasonably satisfactory to the
Company and the Transfer Agent, to the effect that such transfer does not
require registration of such Shares under Securities Act.  As a condition of
transfer (other than pursuant to clauses (i), (ii) or (iii) of the preceding
sentence), any such transferee shall agree in writing to be bound by the terms
of this Agreement with respect to such transferred Shares.
 
4.2. Legends.  Certificates evidencing Shares shall bear any legend as required
by the “blue sky” laws of any state and a restrictive legend in substantially
the following form, until such time as they are not required under Section 4.3
or applicable law:
 
 
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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS.  THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS
TRANSFER AGENT OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT (PROVIDED
THAT THE TRANSFEROR PROVIDES THE COMPANY WITH REASONABLE ASSURANCES (IN THE FORM
OF SELLER AND BROKER REPRESENTATION LETTERS) THAT THE SECURITIES MAY BE SOLD
PURSUANT TO SUCH RULE).  NO REPRESENTATION IS MADE BY THE ISSUER AS TO THE
AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR
RESALES OF THESE SECURITIES.
 
4.3. Removal of Legends.  The restrictive legend set forth in Section 4.2 above
shall be removed and the Company shall issue a certificate without such
restrictive legend or any other restrictive legend to the holder of the
applicable Shares upon which it is stamped, if (i) such Shares are registered
for resale under the Securities Act, (ii) such Shares are sold or transferred
pursuant to Rule 144 (if the transferor is not an affiliate of the Company), or
(iii) such Shares are eligible for sale under Rule 144, without the requirement
for the Company to be in compliance with the current public information required
under Rule 144(c)(1) (or Rule 144(i)(2), if applicable) as to such Shares and
without volume or manner-of-sale restrictions.  Following the date Rule 144
becomes available for the resale of Shares, without the requirement for the
Company to be in compliance with the current public information required under
144(c) (1) (or Rule 144(i) (2), if applicable) as to Shares and without volume
or manner-of-sale restrictions, the Company shall instruct the Transfer Agent to
remove the legend from Shares and shall cause its counsel to issue any legend
removal opinion required by the Transfer Agent.  Any fees (with respect to the
Transfer Agent, Company counsel or otherwise) associated with the issuance of
such opinion or the removal of such legend shall be borne by the Company.  If a
legend is no longer required pursuant to the foregoing, the Company will no
later than three (3) trading days following the delivery by Investor to the
Transfer Agent (with notice to the Company) of a legended certificate or
instrument representing such Shares (endorsed or with stock powers attached,
signatures guaranteed, and otherwise in form necessary to affect the reissuance
and/or transfer) and a representation letter to the extent required by Section
4.1, deliver or cause to be delivered to Investor a certificate or instrument
(as the case may be) representing such Shares that is free from all restrictive
legends.  The Company may not make any notation on its records or give
instructions to the Transfer Agent that enlarge the restrictions on transfer set
forth in this Section 4.3.
 
 
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4.4.           Acknowledgement.  Investor hereunder acknowledges its primary
responsibilities under the Securities Act and accordingly will not sell or
otherwise transfer Shares or any interest therein without complying with the
requirements of the Securities Act.
 
Section 5.  Conditions Precedent to Closing
 
5.1. Conditions Precedent to the Obligations of Investor to Purchase
Shares.  The obligation of Investor to acquire Shares at the Closing is subject
to the fulfillment to Investor’s satisfaction, on or prior to the Closing Date,
of each of the following conditions, any of which may be waived by Investor:
 
(a) Representations and Warranties.  The representations and warranties of the
Company in Section 2.1 hereof shall be true and correct as of the date when made
and as of the Closing Date, as though made on and as of such date, except for
such representations and warranties that speak as of a specific date.
 
(b) Performance.  The Company shall have performed, satisfied and complied in
all material respects with all covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by it at or prior to
the Closing.
 
(c) No Injunction.  No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction that prohibits
the consummation of any of the transactions contemplated by this Agreement.
 
(d) Company Deliverables.  The Company shall have delivered a duly executed
counterpart to this Agreement.
 
(e) Additional Listing Application. AMEX shall have approved the Company’s
Additional Listing Application with respect to the Shares to be issued pursuant
to this Agreement.
 
5.2. Conditions Precedent to the Obligations of the Company to sell Shares.  The
Company’s obligation to sell and issue the Shares to Investor at the Closing is
subject to the fulfillment to the satisfaction of the Company on or prior to the
Closing Date of the following conditions, any of which may be waived by the
Company:
 
(a) Representations and Warranties.  The representations and warranties made by
Investor in Section 2.2 hereof shall be true and correct as of the date when
made, and as of the Closing Date as though made on and as of such date, except
for representations and warranties that speak as of a specific date.
 
(b) Performance.  Investor shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by Investor at or prior to
the Closing Date.
 
 
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(c) No Injunction.  No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction that prohibits
the consummation of any of the transactions contemplated by this Agreement.
 
(d) Investor Deliverables.
 
(i) Investor shall have delivered a duly executed counterpart to this Agreement;
 
(ii) Investor shall have delivered the Purchase Price in accordance with Section
1.4.
 
(e) Additional Listing Application. AMEX shall have approved the Company’s
Additional Listing Application with respect to the Shares to be issued pursuant
to this Agreement.
 
Section 6.  Miscellaneous
 
6.1. Survival of Warranties and Covenants.  The representations, warranties and
rights to indemnification set forth in Section 2 shall survive indefinitely
except as limited by applicable laws.
 
6.2. Successors and Assigns.  This Agreement may not be assigned by Investor
without the prior written consent of the Company.  Nothing in this Agreement,
express or implied, is intended to confer upon any party, other than the parties
hereto or their respective successors and permitted assigns, any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
 
6.3. Waiver and Amendment.  Neither this Agreement nor any provisions hereof
shall be modified, amended, discharged or terminated, except by an instrument in
writing, signed by the party against whom any modification, amendment, discharge
or termination is sought.  Any term or condition of this Agreement may be waived
at any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition.  No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion.  All remedies, either under
this Agreement or by law or otherwise afforded, will be cumulative and not
alternative.
 
6.4. Submission to Jurisdiction.  Each party hereto hereby submits to the
exclusive jurisdiction of the courts of the State of New York and the federal
courts of the United States located in the State of New York, for purposes of
all legal proceedings arising out of or relating to this Agreement and the
transactions contemplated hereby.  Each party hereto irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum.
 
 
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6.5. Waiver of Jury Trial.  Each party hereto hereby waives its rights to a jury
trial of any claim or cause of action based upon or arising out of this
Agreement.  The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to or arise
under the subject matter of this transaction, including, without limitation,
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims.  Each party hereto hereby further warrants and represents that
such party knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel.  This waiver is irrevocable, meaning that it
may not be modified either orally or in writing, and this waiver shall apply to
any subsequent amendments, supplement or modifications to (or assignments of)
this Agreement.  In the event of litigation, this Agreement may be filed as a
written consent to a trial (without a jury) by the court.
 
6.6. Section and Other Headings.  The section and other headings contained in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
 
6.7. Counterparts.  This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.  The parties hereto agree that facsimile signatures of this Agreement
shall be deemed a valid and binding execution of this Agreement.
 
6.8. Notices.  Unless otherwise provided, any notice or other communication
required or permitted to be given or effected under this Agreement shall be in
writing and shall be deemed effective upon personal or facsimile delivery to the
party to be notified or three business days after deposit with an
internationally recognized courier service, delivery fees prepaid, and addressed
to the party to be notified at the following respective addresses, or at such
other addresses as may be designated by written notice; provided, however, that
any notice of change of address shall be deemed effective only upon receipt:
 
 
If to the Company:
Advanced Photonix, Inc.

 
2925 Boardwalk

 
Ann Arbor, MI  48104

 
Attention:  President

 
 
With a copy to:
Dornbush Schaeffer Strongin & Venaglia, LLP

 
747 Third Avenue

 
New York, New York 10017

 
Attention:  Landey Strongin, Esq.

 
 
If to Investor:
At the address of Investor indicated on the signature page hereof.

 
6.9. Entire Agreement.  This Agreement, including the Schedules and Exhibits
attached hereto, supersedes all prior discussions and agreements among the
parties hereto with respect to the subject matter hereof and contains the sole
and entire agreement among the parties hereto with respect to the subject matter
hereof.
 
 
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6.10. Further Assurances.  Each party hereto shall execute and deliver such
additional documents as may reasonably be necessary or desirable to consummate
the transactions contemplated by this Agreement.
 
6.11. Severability.  Whenever possible, each provision of this Agreement shall
be interpreted in such a manner as to be effective and valid under applicable
law, but if any provision of this Agreement shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
 
6.12. Money Laundering.  Investor acknowledges that due to money laundering laws
and regulations that may be applicable to the operation of the Company and its
business, the Company may require such proof of identity or other documentation
as may be required to comply with such laws and regulations before this
Agreement can be processed and the Company and its directors, officers,
employees, and agents shall be held harmless and indemnified against any loss
ensuing due to the failure of Investor to truthfully provide any such proof as
may be so required.
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
 

 
ADVANCED PHOTONIX, INC.
     
By: /s/ Richard Kurtz
 
Name: Richard D. Kurtz
 
Title: Chief Executive Officer and Director

 
 
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGES FOR INVESTOR TO FOLLOW]
 
 
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IN-Q-TEL, INC.
                 
By:
           
Name:
     
Title:
             
Aggregate Purchase Price (Subscription Amount):
 
$200,000.00
           
Number of Shares to be Acquired:
       
Tax ID No.:
             
Address for Notice:
                           
Telephone No.:
             
Facsimile No.:
             
E-mail Address:
             
Attention:
   

 
Delivery Instructions:
(if different than above)
     
c/o
         
Street:
         
City/State/Zip:
         
Attention:
   

 
 
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SCHEDULE 1
 
ADVANCED PHOTONIX, INC.
 
List of Disclosure Documents
 
The following documents constitute the Disclosure Documents referred to in the
attached Securities Purchase Agreement and are available upon request to the
Company’s Chief Financial Officer, Robin Risser, or by linking to the websites
indicated below.  When this document is open on a computer screen, each website
below may be accessed directly from this document by holding down the “control”
key on a keyboard, rolling the mouse cursor over any portion of the text of the
website address and clicking the mouse.
 
1. Definitive Proxy Statement of the Company and any amendment thereto, with
respect to fiscal year ended March 31, 2010, filed with the Securities and
Exchange Commission (“SEC”) on July 15, 2010.
 
-  http://www.sec.gov/Archives/edgar/data/869986/000120677410001602/advancedphotonix_def14a.htm
 
2. Annual Report of the Company on Form 10-K, with respect to the fiscal year
ended March 31, 2010, filed with the SEC on June 29, 2010.
 
-  http://www.sec.gov/Archives/edgar/data/869986/000120677410001537/api_10k.htm
 
3. Quarterly Report of the Company on Form 10-Q, with respect to fiscal quarter
year ended July 2, 2010, filed with the SEC on August 16, 2010.
 
-  http://www.sec.gov/Archives/edgar/data/869986/000120677410001849/api_10q.htm
 
4. Current Reports of the Company on Form 8-K, filed with the SEC since March
31, 2010.
 
-  Form 8-K filed with the SEC on May 25, 2010:
http://www.sec.gov/Archives/edgar/data/869986/000120677410001326/api_8k.htm
 
-  Form 8-K filed with the SEC on August 23, 2010:
http://www.sec.gov/Archives/edgar/data/869986/000120677410001872/api_8k.htm
 
-  Form 8-K filed with the SEC on August 27, 2010:
http://www.sec.gov/Archives/edgar/data/869986/000120677410001916/advancedphotonix_8k.htm
 
-  Form 8-K filed with the SEC on September 20, 2010:
http://www.sec.gov/Archives/edgar/data/869986/000120677410002024/api_8k.htm
 
5.  Company response letter dated March 31, 2010 to SEC Staff comment letter
dated March 4, 2010, filed with the SEC on March 31, 2010.
 
-  http://www.sec.gov/Archives/edgar/data/869986/000120677410000813/filename1.htm
 
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