Promissory Note	Fifth Third Bank
              
	 	Address: 1000 Town Center,
              Suite
              J300
	 	City: Southfield State: Michigan
              Zip:
              48075
	 	 
	Obligor No. _________________
              March
              6, 2007	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 AND NO/100 Dollars
      ($2,000,000.00) 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: 

    


    See
      Grid
      below for Rate (the "Grid Note Rate") from time to time in effect until Maturity
      and 2% above the Grid Note Rate from time to time in effect after Maturity.
      

    


    The
      Grid
      Note Rate based upon Debt Service Coverage Ratio (as calculated in accordance
      with the Section 7.1 of the Business Loan Agreement dated as of March 6, 2007,
      as now and hereafter amended, between the Obligor and the Bank (the "Loan
      Agreement")): 

    


    Less
      than
      or equal to 1.25:1.00 at
      Index,
      Floating

    


    Greater
      than 1.25:1.00  .25%
      below Index Rate, floating

    


    The
      Grid
      Note Rate shall be adjusted, if necessary based on the Debt Service Coverage
      Ratio, on the date which is 30 days after the end of each fiscal quarter of
      the
      Borrower and 120 days after the end of each fiscal year of the Borrower, and,
      subject to changes in the Index Rate described below, shall remain in effect
      until the next change to be effected pursuant to this Note. 

    


    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 March 6, 2008 or at Maturity (as defined in paragraph
      11 of Schedule A), if earlier. Accrued interest shall be paid on April 1, 2007
      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: 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/ Tanya
              R.
              Gietzen	 	
              By:
                

            	/s/ Richard
              Kurtz
	 	
              
Its:
              Vice President	 	 	
              
It:
              CEO
	 	 	 	 	
              Address:

               

              2925
                Boardwalk

              Ann
                Arbor, MI 48104

            


    

     

    
      
         

      

      
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    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. 

    


    
      
         

      

      
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    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.
      

     

    
      
         

      

      
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    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. 

    


    
      
         

      

      
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