THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE
                BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.

                                APA OPTICS, INC.
                        INCENTIVE STOCK OPTION AGREEMENT

                                October 30, 2003


Dear Cheri Podzimek:

     You  are  hereby  notified  that  you  have been granted an Incentive Stock
Option  ("Option"),  pursuant  to and as defined in Section 5 of the APA Optics,
Inc.  1997  Stock  Compensation  Plan  (the  "Plan").

     THE  EFFECTIVENESS  OF  THIS  STOCK OPTION AGREEMENT IS CONTINGENT UPON THE
COMPANY'S RECEIPT OF AN EXECUTED COPY OF THIS AGREEMENT.

     The  Option  granted  to  you  is to purchase 35,000 shares of Common Stock
("Stock")  of  the  Company  at a price of $2.55 per share. The date of grant of
this Option is the date of this letter, and it is the determination of the Board
of  Directors  that  on  this  date  the fair market value of the Stock does not
exceed  $2.55  per  share.

     Your  Option is in all respects limited and conditioned by the terms of the
Plan,  including,  but  not  limited  to,  the  following:

     1.  The  Plan  is  administered  by  the  Board of Directors or a Committee
appointed  by  the Board of Directors of the Company, which, in either case, has
final  and  conclusive  authority  to  administer  the  Plan  and  determine all
questions  arising  thereunder.

     2.  Your  Option  is  exercisable  as  follows:

          a. 11,000 shares of Stock subject to the Option may be purchased on or
     after October 31, 2005, provided you remain employed by the Company through
     October  31,2005;

          b.  An  additional  7,000 shares of Stock subject to the Option may be
     purchased on or after October 31, 2006, provided you remain employed by the
     Company  through  October  31,  2006;

          c.  An  additional  8,000 shares of Stock subject to the Option may be
     purchased on or after October 31, 2007, provided you remain employed by the
     Company  through  October  31,  2007;

          d.  An  additional  9,000 shares of Stock subject to the Option may be
     purchased on or after October 31, 2008, provided you remain employed by the
     Company  through  October  31,  2008,  and

     3.  The  Option  will  expire,  to the extent not exercised, on October 30,
2009.


<PAGE>
     4. The purchase price of any shares of Stock purchased pursuant to exercise
of  this  Option  may  be  paid  in cash, by certified or cashier's check, or by
transfer  to the Company of shares of Stock owned by you for at least six months
prior  to  the exercise of the Option having a fair market value, as of the date
of your exercise of the Option, which is not less than the purchase price of the
Stock  being acquired pursuant to your Option, or any combination thereof, or by
any  other  method  authorized  by  the  Board  of  Directors.

     5.  In  the  event  of  termination  of your employment, your Option may be
exercised  at any time within three months after the date of termination of your
employment  or  until the expiration of the stated term of the Option, whichever
is  shorter, but only to the extent you were entitled to exercise your Option at
the  date  of  termination  of  your  employment.

     6.  In  the  event  of  termination  of  your  employment  as  a  result of
"Disability"  (as defined in the Plan), your Option may be exercised at any time
within  one  year of such termination or until the expiration of the stated term
of the Option, whichever is shorter, to the extent you were entitled to exercise
the Option at the time of your Disability. In the event of your death within one
year after termination of your employment as a result of Disability, your Option
may be exercised at any time within one year following the date of your death or
until  the expiration of the stated term of the Option, whichever is shorter, by
your  estate  or  by  a person who acquired the right to exercise your Option by
will or by the laws of descent and distribution, but only to the extent you were
entitled  to  exercise the Option at the time of termination of your employment.

     7. In the event of your death while you are an employee, your Option may be
exercised  at  any time within one year after your death or until the expiration
of  the  stated term of the Option, whichever is shorter, by your estate or by a
person  who  acquired the right to exercise the Option by will or by the laws of
descent and distribution, to the extent the Option was exercisable by you at the
time  of  your  death.

     8. You may not transfer, sell, pledge, assign, or otherwise dispose of your
Option, other than at death by will or the laws of descent and distribution, and
your  Option  during  your  lifetime  is  exercisable  only  by  you.

     9.  In  the  event  of a "Change in Control" (as defined in the Plan), this
Option  shall  become  fully  exercisable.

     10.  The  shares  of  Stock you acquire upon exercise of your Option may be
subject to restrictions against transfer as set forth in Section 11 of the Plan.

     11.  Unless  a registration statement under the Securities Act of 1933 (and
applicable  state  securities  laws) is in effect with respect to this Option or
Stock to be purchased pursuant to this Option, you agree with, and represent to,
the  Company  that  you  are  acquiring  the Option and Stock for the purpose of
investment  and  not  with a view to transfer, sell, or otherwise dispose of the
Option  or  Stock,  except  as  may  be  permitted


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<PAGE>
under the Plan. The Company may require an opinion of counsel satisfactory to it
prior to the transfer of any Stock to you to assure at all times that it will be
in  compliance  with  applicable federal and state securities laws. Reference is
made  to  Section 11 of the Plan in connection with restrictions on transfer and
the legending of any stock certificates issued to you upon your exercise of this
Option.

     The  exercise of this Option and the disposition of the Stock acquired upon
exercise are subject to certain tax benefits and consequences under the Internal
Revenue  Code  of  1986, as amended (the "Code"), which you are urged to discuss
with  your  tax  adviser  prior  to exercise of the Option or disposition of the
Stock.  The Company assumes no liability for any tax consequences to you on your
exercise  of  this  Option  or  disposition  of  the  Stock.

     If you dispose of the Stock in a "disqualifying disposition" (as defined in
the  Code),  you  authorize  the  Company  to  withhold all applicable state and
federal withholding taxes from your other compensation or any other amounts owed
to  you  by  the  Company  or,  alternatively, you will pay the Company any such
amount.  Such  payment may be made by authorizing the Company to withhold shares
issuable upon exercise of this Option in an amount equal in fair market value to
the  taxes  required  to  be  paid.

     At the time or times when you wish to exercise this Option, in whole, or in
parts  of  not  less than 100 shares, please refer to the provisions of the Plan
dealing  with  methods  and  formalities  of  exercise  of  your  Option.

                                           APA OPTICS. INC.


                                           By  /s/  Anil Jain
                                             ---------------------------------
                                             Its   President
                                                ------------------------------


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<PAGE>
                                   ACCEPTANCE


     I  hereby  accept  the  terms  and  provisions of the above Incentive Stock
Option  Agreement and acknowledge that I have received a copy of the APA OPTICS,
INC.  1997  Stock  Compensation  Plan and agree to be bound by its terms. I also
agree  to  accept  as  binding,  conclusive,  and  final  all  decisions  or
interpretations  of  the Board of Directors upon any questions arising under the
Plan.

Dated effective October 30, 2003



                                                    /s/ Cheri Podzimek
                                                    -------------------------
                                                    Cheri Podzimek


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