NON-QUALIFIED STOCK OPTION

THIS NON-QUALIFIED  STOCK OPTION (the "Option") is granted this 16th day of May,
1995, by ADVANCED  PHOTONIX,  INC., a Delaware  corporation (the "Company"),  to
BERNHARDT DENMARK (the "Optionee").

                                               W I T N E S S E T H:
1. Grant. The Company hereby grants to the Optionee an Option to purchase on the
terms and conditions  hereinafter  set forth all or part of an aggregate of Four
Hundred  Thousand  (400,000)  shares of the Company's Class A Common Stock,  par
value $.001 per share, (the "Option Shares"), at the purchase price of $2.25 per
share (the "Option Price"), subject to adjustment as provided herein.

2. Term. The Option granted  hereunder shall expire in all events five (5) years
from the date hereof.

3.  Time of  Exercise.  The  Option  shall be  immediately  exercisable  in full
commencing  on the date of  grant,  except  that the  Option  may in no event be
exercised (i) with respect to fractional  shares or (ii) after expiration of the
Option term specified  under  Paragraph 2 hereof.

4. No Rights as Stockholder until Exercise.

                                      - 1 -
<PAGE>

Optionee shall have no rights as a stockholder with respect to Shares subject to
this Agreement  until a stock  certificate  therefor has been issued to Optionee
and is fully paid for.

5. Transfers.  The Option is not transferable by the Optionee  otherwise than by
will or  pursuant to the laws of descent  and  distribution  in the event of the
Optionee's  death,  in which event the Option may be  exercised  for the term of
this agreement by the heirs or legal representatives of the Optionee. The Option
may be exercised  during the lifetime of the Optionee only by the Optionee.  Any
attempt at assignment, transfer, pledge or disposition of the Option contrary to
the provisions hereof or the levy of an execution, attachment or similar process
upon the Option shall be null and void and without  effect.  Any exercise of the
Option by a person other than the Optionee  shall be  accompanied by appropriate
proofs of the right of such person to exercise the Option.

6. Method of Exercise  and  Payment.  When  exercisable  under  Paragraph 3, the
Option may be exercised  by written  notice,  pursuant to  Paragraph  13, to the
Company's  Secretary or Treasurer  specifying  the number of Option Shares to be
purchased  and,  unless  the  Option  Shares  are  covered  by  a  then  current
registration statement or a Notification under Regulation A under


                                      - 2 -
<PAGE>

the   Securities   Act  of  1933  (the   "Act"),   containing   the   Optionee's
acknowledgement,  in form and substance satisfactory to the Company,  certifying
that the Optionee (a) is purchasing  such Option Shares for investment  purposes
only and not for  distribution  or resale (other than a  distribution  or resale
which,  in the  opinion  of counsel  satisfactory  to the  Company,  may be made
without  violating  the  registration  provisions  of the  Act) and (b) has been
advised and  understands  that (i) the Option  Shares  have not been  registered
under the Act and are  "restricted  securities"  within the  meaning of Rule 144
under the Act and are subject to  restrictions  on transfer;  and (ii) except as
expressly  provided  herein,  the Company is under no obligation to register the
Option Shares under the Act or to take any action which would make  available to
the  Optionee  any  exemption  from  such  registration.  The  notice  shall  be
accompanied  by payment in full of the Option  Price of the Option  Shares being
purchased.  Payment  shall be in cash or by  certified or cashiers  check.  Such
exercise shall be effective  upon the actual receipt by the Company's  Secretary
or Treasurer of such written notice and payment.

7.  Adjustment  on Changes  in Common  Stock.  In the  event,  that prior to the
delivery by the Company of all of the


                                      - 3 -
<PAGE>

Option  Shares in  respect  of which the Option is  granted,  there  shall be an
increase  or  decrease  in the  number of issued  shares of Common  Stock of the
Company as a result of a subdivision or consolidation of shares or other capital
adjustment,  or the payment of a stock dividend or other increase or decrease in
such shares,  effected  without  receipt of  consideration  by the Company,  the
remaining  number of Option  Shares  still  subject to the Option and the Option
Price  therefor  shall  be  adjusted  in a  manner  determined  by the  Board of
Directors  of the Company so that the adjusted  number of Option  Shares and the
adjusted  Option  Price  shall be the  substantial  equivalent  of the number of
Option Shares  subject to the Option and the Option Price  therefor  immediately
prior to such change.  For purposes of this  Paragraph,  no adjustment  shall be
made as a result of the  issuance of Common Stock upon the  conversion  of other
securities  of the Company  which are  convertible  into the Common  Stock.  The
decision of the Board of Directors shall be final and binding.

8. Reorganization,  Consolidation, Mergers. In case of any reorganization of the
Company,  or any other  corporation  the stock or securities of which are at the
time deliverable on the exercise of this Option,  or in case the Company or such
other corporation shall consolidate with or merge into another


                                      - 4 -
<PAGE>

corporation,  the Optionee, upon the exercise of this Option thereafter and upon
payment of the Option Price, shall be entitled to receive, in lieu of the Option
Shares called for hereby, the securities and/or other property  (including cash)
to which the Optionee  would have been  entitled upon the  consummation  of such
reorganization, consolidation or merger if the Optionee had purchased the Option
Shares  called for  hereby  immediately  prior  thereto,  and in such case,  the
provisions  of this Option shall be applicable  to the  securities  and/or other
property thereafter deliverable upon the exercise of this Option.

9. Legal  Requirements.  If the listing,  registration or  qualification  of the
Option Shares upon any securities exchange or under any federal or state law, or
the consent or approval of any  governmental  regulatory  body is necessary as a
condition  of or in  connection  with the  purchase of such Option  Shares,  the
Company shall not be obligated to issue or deliver the certificates representing
the Option  Shares as to which the Option  has been  exercised  unless and until
such listing, registration,  qualification,  consent or approval shall have been
effected or obtained.  If registration is considered  unnecessary by the Company
or its  counsel,  the  Company  may place a legend on the  Option  Shares  being
issued, calling attention to the fact


                                      - 5 -
<PAGE>

that they have been acquired for investment and have not been registered.

10.      Registration Rights.
(a)  During  the period  commencing  on the date  hereof and ending on the tenth
anniversary of the date hereof,  the Company shall give the Optionee thirty (30)
days prior written notice of its intention to engage in a registration of Common
Stock under the Federal  securities  laws (other than a  registration  of Common
Stock in connection with any stock plan, stock purchase plan, savings or similar
plan,  or an  acquisition,  merger or  exchange  of stock),  and shall  offer to
include the Option  Shares  (which,  for  purposes of this  Paragraph  10, shall
include  shares issued as a stock  dividend or stock split on the Option Shares)
in such registration.  At the written request of the Optionee, the Company shall
include  the  Option  Shares (or such  portion  of the  Option  Shares as may be
requested by the Optionee) in the  registration  statement;  provided,  however,
that if, in the reasonable judgment of the managing  underwriter,  if any (which
underwriter shall be in all cases a nationally  recognized  underwriting  firm),
the inclusion of the Option Shares would materially  adversely affect the public
offering of the Common Stock, the number of Option Shares to be registered shall

                                      - 6 -
<PAGE>

be reduced,  pro rata,  together with the shares of other shareholders to whom a
similar  registration  right also has been granted by the  Company,  so that the
public offering shall not be materially adversely affected.

(b)  During  the period  commencing  on the date  hereof and ending on the tenth
anniversary  of the date hereof,  the  Optionee  shall have the right to request
that the  Company  register  the Option  Shares  (or such  portion of the Option
Shares as may be requested by the Optionee) under the Federal securities laws by
giving written  notice of such request to the Company.  Upon the receipt of such
request, and provided that sufficient  financial  statements are available,  the
Company  shall  promptly,  but no  later  than  120 days  after  receipt  of the
Optionee's  request,  cause  a  registration  statement  to be  filed  with  the
Securities and Exchange  Commission,  and shall commence to use its best efforts
to case such registration statement to be declared effective.  The right granted
to the Optionee under this subparagraph  10(b) to request  registration shall be
exercisable only on one occasion unless the registration  statement covering the
Option Shares is for whatever  reason not declared  effective by the  Securities
and  Exchange  Commission,  in which case the  undersigned  shall be entitled to
exercise his right to request


                                      - 7 -
<PAGE>

registration hereunder until a registration statement with
respect to the Option Shares is declared effective.

(c) The Company  shall bear the costs and  expenses of any  registration  of the
Option  Shares under  subparagraphs  10(a) and 10(b) on such number of occasions
during  the  period  that  such  registration  may be  sought  by the  Optionee;
provided,  however,  that  the  Optionee  shall  bear  the  cost of fees for the
Optionee's  counsel,  and any registration fees,  transfer taxes or underwriting
discounts and commissions applicable to the Option Shares sold hereunder.

(d) Whenever the Company shall register any of the Option Shares pursuant to any
of the  provisions  of this  Paragraph  10, the Company shall also be obligated,
with the cost of performing such obligation to be incurred by the Company, to do
the following:

(i)  Prepare  for  filing  with the  Securities  and  Exchange  Commission  such
amendments  and  supplements to said  registration  statement and the prospectus
used in  connection  therewith  as may be  necessary  to keep said  registration
statement effective and to comply with the provisions of the Act with respect to
the sale of the Option  Shares  covered by said  registration  statement for the
period necessary to complete the


                                      - 8 -
<PAGE>

proposed  offering of the Option  Shares,  which period shall be no greater than
one year from the date of effectiveness of the registration statement;

(ii) Furnish to the Optionee such copies of preliminary  and final  prospectuses
and such other  documents as the Optionee may  reasonably  request to facilitate
the offering of the Option Shares;

(iii) Use reasonable efforts to register or qualify the Option Shares covered by
the  registration  statement  under  the  securities  or blue  sky  laws of such
jurisdictions  as the  Optionee  may  reasonably  request and at the  Optionee's
expense; provided, however, that the Company will not be required to (A) qualify
generally to do business in any jurisdiction  where it would not be required but
for this clause (iii); (B) subject itself to taxation in such jurisdiction;  (C)
consent to general service of process in jurisdiction; (D) register in any state
requiring  as a  condition  to such  registration,  escrow or  surrender  or any
securities of any security holder; and (E) incur expenses in excess of $2,000 in
connection with such registration or qualification;

(iv) Furnish to the Optionee an opinion of counsel for the Company for inclusion
as an exhibit to the


                                      - 9 -
<PAGE>

registration  statement  pursuant to the requirements of the Act and a letter or
letters of the independent  certified public  accountants of the Company in form
and substance customary for similar offerings;

(v)  Permit  the  Optionee  or  the  Optionee's   counsel  or  other  authorized
representatives to inspect and copy such corporate  documents and records as may
be reasonably requested by the Optionee;

(vi)  Furnish  the  Optionee  with  a  copy  of  all  documents  filed  and  all
correspondence  to or from the Securities and Exchange  Commission in connection
with the offering.

(e) In connection with the registration of the Option Shares, the Optionee shall
furnish the Company  with  appropriate  information  as may be  necessary  to be
included in the registration statement covering the Option Shares.

(f) The Company  shall  indemnify  the  Optionee  against  all  losses,  claims,
damages, liabilities,  expenses or actions in respect thereof (whether under the
Act, common law or otherwise)  caused by any untrue  statement or alleged untrue
statement  of  a  material  fact  relating  to  the  Company  contained  in  any
registration  statement  under which the Option Shares are registered  under the
Act, any preliminary or final prospectus


                                     - 10 -
<PAGE>

contained  therein,  or any  amendment or supplement  thereto,  or caused by any
omission or alleged omission  required to be stated therein or necessary to make
the statements  therein not misleading;  and will reimburse the Optionee for any
legal  or  out-  of-pocket  expenses  reasonably  incurred  by the  Optionee  in
connection with the investigation or defense against such loss,  claim,  damage,
liability or action;  provided,  however, that if such losses, claims,  damages,
liabilities or expenses are caused by any untrue statement or omission contained
in information furnished in writing to the Company by the Optionee expressly for
use therein, the indemnification provided above shall be afforded to the Company
by the  Optionee.  The Company  further  agrees  that,  in  connection  with any
underwritten  public  offering,  it will also enter into customary  contribution
arrangement  with the  Optionee,  and,  if, and to the extent  requested  by any
underwriters or broker-dealers through whom the Option Shares may be sold, then,
with such underwriters or broker-dealers.

11. Withholding Taxes. Optionee hereby agrees that the Company may withhold from
Optionee's  compensation  the  appropriate  amount of  federal,  state and local
withholding  taxes  attributable to Optionee's  exercise of this Option.  At the
Company's


                                     - 11 -
<PAGE>

discretion,  the amount  required  to be  withheld  may be withheld in cash from
wages,  fees or other  amounts  due from the  Company to the  Optionee  or (with
respect to compensation  income  attributable to the exercise of this Option) in
kind from the Shares  otherwise  deliverable  to  Optionee  on  exercise of this
Option.

12. Governing Law. The  interpretation  and construction of this Agreement,  and
all  matters  relating  hereto,  shall be  governed  by the laws of the State of
California  applicable to agreements  executed and to be performed solely within
the state.

13.  Notices.  Any notice to be given to the Company  shall be  addressed to the
Secretary or Treasurer of the Company at its principal executive office, and any
notice to be given to the  Optionee  shall be  addressed  to the Optionee at the
address then appearing on the corporate records of the Company, or at such other
address as either party  hereafter  may  designate in writing to the other.  Any
such notice shall be deemed to have been duly given when deposited in the United
States Mail,  addressed as  aforesaid,  registered or certified  mail,  and with
proper postage and registration or certification fees prepaid.


                                     - 12 -

<PAGE>

14. Miscellaneous.  In no event shall this Option be deemed to be an "incentive"
option as such term is defined under Section 422A of the Code.

IN WITNESS  WHEREOF,  the Company  has  granted  this option on the day and year
first above written.


 ADVANCED PHOTONIX, INC.


By:  /s/ James W. Ward
     -----------------
     James W. Ward, President


ACCEPTANCE BY:



By:  /s/ Bernhardt Denmark
    ----------------------
     Bernhardt Denmark



                                     - 13 -