EXHIBIT 10.5


                              EMPLOYMENT AGREEMENT

This  Agreement,  made  this  1st day of June,  1998,  by and  between  Advanced
Photonix,  Inc., a Delaware  corporation  (hereinafter  called  "Company"),  and
Patrick J. Holmes, an individual (hereinafter called "Employee").

                              W I T N E S S E T H :

Company wishes to employ  Employee and Employee  wishes to enter into the employ
of the Company on the terms and conditions contained in this Agreement.

NOW,  THEREFORE,  in consideration  of the facts,  mutual promises and covenants
contained herein and intending to be legally bound hereby,  Company and Employee
agree as follows:

1.  Employment

Company hereby employs  Employee and Employee  hereby accepts  employment by the
Company  for the  period  and upon the terms and  conditions  contained  in this
Agreement.  Both the  Company  and  Employee  acknowledge  and  agree  that this
Agreement supercedes all previous Employment Agreements between the parties.

2.  Office and Duties

a) Employee  shall serve Company  generally as Executive Vice  President,  Chief
Financial Officer and Corporate Secretary & Treasurer. In his capacity, Employee
shall have such  authority  and such  responsibilities  as the President and the
Board of Directors reasonably may determine from time to time.

b)  Throughout  the term of this  Agreement,  Employee  shall  devote his entire
working time,  energy,  skill and best efforts to the  performance of his duties
hereunder in a manner which will faithfully and diligently  further the business
and interests of the Company.  Notwithstanding the foregoing,  Employee shall be
permitted  to  maintain   memberships   on  the  Boards  of  Directors   and  in
organizations  identified  to  the  Company  in  writing,   provided  that  such
activities shall not, at any time, preclude Company or any Subsidiary (as herein
defined) of the  Company,  from  obtaining  contracts  from any such  company or
organization.  Employee  shall  also be  permitted  to  serve as a  director  or
consultant of additional  organizations  and participate in other activities for
the federal  government and other groups upon the prior written  approval by the
Company, which approval shall not unreasonably be withheld;  provided,  however,
that no such activities shall, at any time, exclude Company or any subsidiary of
the  Company  from  obtaining   contracts  from  the  government  or  any  other
organizations.  For purposes of this Agreement,  any corporation with respect to
which  Company has the ability to control more than fifty  percent of the voting
power shall be a "subsidiary" and all such corporations shall be "Subsidiaries".

3.  Term

This Agreement  shall be for a term of twenty one months,  commencing on June 1,
1998,  and ending on March 31, 2000,  unless sooner  terminated  as  hereinafter
provided.  Unless either party elects to terminate  this Agreement at the end of
the  original  or any  renewal  term by giving  the other  party  notice of such
election at least  ninety (90) days before the  expiration  of the then  current
term,  this  Agreement  shall be 

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deemed to have been extended for an additional  term of one (1) year  commencing
on the day after the expiration of the then current term.

4.  Compensation and Benefits

a) For all the services rendered by the Employee to the Company,  Employee shall
receive a base salary at the rate of $125,000 per year, ("Base Salary"), payable
in  reasonable   installments  in  accordance  with  Company's  regular  payroll
practices in effect from time to time.

b) Employee  shall be eligible for additional  salary  increases as well as cash
and stock  bonuses  during the term of this  Agreement at the  discretion of the
Board of Directors. Incentive cash bonus will be $15,000 or greater on an annual
basis.

c) Benefits to the Employee shall be the same as those  customarily  provided by
the Company to other  employees  except employee  accrues  vacation at a rate of
three  weeks  per  year  since  original  date of  employment  with  the  normal
progression as outlined in the Company's employee manual.

5.  Expenses

Company will reimburse Employee for all reasonable expenses incurred by Employee
in connection  with the  performance of the Employee's  duties  hereunder,  upon
receipt of appropriate  documentation  and in accordance with Company's  regular
reimbursement procedures and practices in effect from time to time.

6.  Disability

a) If Employee  becomes unable to perform his duties hereunder due to partial or
total  disability or  incapacity  resulting  from a mental or physical  illness,
injury or other cause,  Company will  continue  the payment of  Employee's  Base
Salary at its current rate for a period of twenty-six  (26) weeks  following the
date  Employee is first unable to perform his duties due to such  disability  or
incapacity.  Thereafter,  Company  shall have no  obligation  for Base Salary or
other  compensation   payments  to  Employee  during  the  continuance  of  such
disability of incapacity.

b) If Employee is unable to perform his duties hereunder due to partial or total
disability or incapacity resulting from a mental or physical illness,  injury or
any other  cause  for a period of  twenty-six  (26)  consecutive  weeks or for a
cumulative  period of  twenty-six  (26) weeks  during any twelve  month  period,
Company shall have the right to terminate  this Agreement  thereafter,  in which
event company shall have no further  obligations or liabilities  hereunder after
the date of such termination.

7.  Death

If Employee dies, all payments  hereunder shall cease at the end of the month in
which Employee's death shall occur and Company shall have no further obligations
or  liabilities  hereunder  to  Employee's  estate  or legal  representative  or
otherwise.

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8.  Discharge for Cause

Company may discharge  Employee at any time for criminal conduct (whether or not
related to Employee's employment),  intoxication or drug addiction (if either of
these  conditions  impairs  the  Employee's  ability  to  perform  his  duties),
insubordination, gross negligence, any violation of any express direction or any
reasonable  rule or  regulation  established  by the  Company  from time to time
regarding  the  conduct  of its  business,  any  misrepresentation  made in this
Agreement,  or any  violation  by Employee of the terms and  conditions  of this
Agreement,  in  which  event  Company  shall  have  no  further  obligations  or
liabilities hereunder after the date of such discharge.

9.  Termination of Employment

(a) In the event Company shall terminate  Employee's  employment during the term
of this agreement (the "termination date"), other than as a result of disability
as set forth in  Paragraph  6 or for cause as set forth in  Paragraph  8, at any
time prior to the expiration date of this Agreement as set forth in Paragraph 3,
Company shall be obligated to continue Employee's  compensation and benefits set
forth in Paragraph 4 and 5 hereof until the later of the expiration date of this
Agreement or nine months from the  termination  date. In either such event,  (i)
Company's  liability  to Employee as a result of any such  termination  shall be
limited  as set forth  above and (ii)  Employee  shall  have the  obligation  to
mitigate his damages by using his best efforts to seek  employment  for which he
is  suitably  trained  and  experienced  elsewhere.   In  the  event  Employee's
compensation  from any such employment  during the applicable period in which he
is entitled to receive  compensation and benefits as set forth in this paragraph
shall be less than that available to him under this Agreement, Company shall pay
Employee any such difference.  Employment from consulting  activities defined in
Paragraph  2.b) and  identified to the Company in writing will not be considered
for purposes of this section.

(b) In the event Company terminates  Employee's  employment after termination of
this agreement, other than as a result of disability or for cause, Company shall
continue  compensation  and medical  benefits  for a period of nine months after
such termination.  Employee shall have the obligation to mitigate his damages by
using his best efforts to seek  employment for which he is suitably  trained and
experienced  elsewhere.  In the  event  Employee's  compensation  from  any such
employment  during  the  applicable  period in which he is  entitled  to receive
compensation and benefits as set forth in this paragraph shall be less than that
available  to him under this  Agreement,  Company  shall pay  Employee  any such
difference.  Employment from consulting  activities identified to the Company in
writing will not be considered for purposes of this section.

10.  Company Property

All  research,  technology  developed or being  developed,  advertising,  sales,
manufacturers' and other materials or article or information,  including without
limitation data processing  reports,  customer sales analyses,  invoices,  price
lists  or  information,  samples  or any  other  materials  or data of any  kind
furnished to Employee by Company,  learned by Employee from Company's  direction
or for  Company's  use or otherwise in  connection  with  Employee's  employment
hereunder,  are and shall remain the sole and confidential  property of Company;
provided,  however,  the  foregoing  shall not apply to any such material in the
public  domain  other  than by reason of a breach of this  Paragraph  10. If the
Company  requests the return of such materials at any time during or at or after
the termination of Employee's employment, Employee shall immediately deliver the
same to Company.

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11.  Noncompetition, Trade Secrets, Etc.

a) During  the term of this  Agreement  and for a period  of one year  after the
termination  of his  employment  with the  Company  for any  reason  whatsoever,
Employee  shall not,  directly or  indirectly,  solicit,  induce,  encourage  or
attempt to influence  any client,  customer,  salesman or supplier of Company to
cease to do business with or to terminate his employment  with Company and shall
not utilize for any such purpose any names and addresses of customers or clients
of Company or any data on or relating to past,  present or  prospective  (at the
time of termination of Employee's employment) customers or clients of Company.

b)  During  the term of this  Agreement,  Employee  shall  not  engage  in (as a
principal, partner, director, officer, agent, employee, consultant or otherwise)
or be financially interested in any business operating within the United States,
which is  involved  in business  activities  which are the same as the  business
activities  carried on by  Company,  or being  definitely  planned  by  Company,
including exploitation of the technology developed by Company or being developed
by Company at the time of the  termination  of Employee's  employment.  However,
nothing  contained in this paragraph 11 shall prevent  Employee from holding for
investment no more than five percent (5%) of any class of equity securities of a
company whose securities are traded on a national securities exchange.

c) During the term of this Agreement and at all times thereafter, Employee shall
not use for his personal benefit,  or disclosure,  communicate or divulge to, or
use for the direct or  indirect  benefit of any  person,  firm,  association  or
company other than Company, any material referred to in this paragraph 11 or any
confidential  information  regarding the business  methods,  business  policies,
procedures,  techniques,  research or  development  projects  or results,  trade
secrets, or other knowledge or processes of or developed by Company or any names
and  addresses  of  customers  or  clients or any data on or  relating  to past,
present  or  prospective   customers  or  clients  or  any  other   confidential
information relating to or dealing with the business operations or activities of
Company,  made known to Employee or learned or acquired by Employee while in the
employ of Company.

d) Any and all writings, inventions, improvements,  processes, procedures and/or
techniques which Employee may make, conceive, discover or develop, either solely
or jointly with any other person or persons, at any time during the term of this
Agreement,  whether during working hours or at any other time and whether at the
request or upon the  suggestion of the Company or otherwise,  which relate to or
are  useful in  connection  with any  business  now or  hereafter  carried on or
contemplated by the Company, including developments or expansions of its present
fields of  operations,  shall be the sole and  exclusive  property  of  Company.
Employee shall make full disclosure to Company of all such writings, inventions,
improvements,  processes,  procedures  and  techniques,  and shall do everything
necessary or desirable to vest the absolute  title thereto in Company.  Employee
shall  write and  prepare  all  specifications  and  procedures  regarding  such
inventions, improvements, processes, procedures and techniques and otherwise aid
and assist  Company so the Company can  prepare  and  present  applications  for
copyright or Letters of Patent wherever possible, as well as reissues, renewals,
and extensions thereof in all countries in which it may desire to have copyright
or patent  protection.  Employee  shall not be  entitled  to any  additional  or
special  compensation  or  reimbursement  regarding  any and all such  writings,
inventions, improvements, processes, procedures and techniques.

e)  Employee  acknowledges  that the  restrictions  contained  in the  foregoing
subparagraphs  a), b), and c), in view of the  nature of the  business  in which
Company  is  engaged  are  reasonable  and  necessary  in order 

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to protect the legitimate  interests of Company,  and that any violation thereof
would  result  in  irreparable  injuries  to  Company,  and  Employee  therefore
acknowledges  that, in the event of his violation of any of these  restrictions,
Company  shall be entitled to obtain  from any court of  competent  jurisdiction
preliminary and permanent  injunctive relief as well as damages and an equitable
accounting  of all  earnings,  profits  and  other  benefits  arising  from such
violation,  which rights shall be cumulative and in addition to any other rights
or remedies to which Company may be entitled.

f) If the period of time or the area specified in  subparagraphs  a) or b) above
should be adjudged unreasonable in any proceeding, then the period of time shall
be  reduced  by such  number  of  months  or the area  shall be  reduced  by the
elimination  of such portion  thereof or both so that such  restrictions  may be
enforced  in such area and for such time as is  adjusted  to be  reasonable.  If
Employee violates any of the restrictions  extended for that period beginning at
the time of the  commencement  of any such violation and running until such time
as such violation shall be cured by Employee to the satisfaction of Company,  on
a day to day basis.

12.  Prior Agreements

Employee represents to Company a) that there are no restrictions,  agreements or
understandings  whatsoever  to which  Employee is a party which would prevent or
make unlawful his execution of this Agreement and his employment hereunder shall
not  constitute a breach of any contract,  agreement or  understanding,  oral or
written,  to which he is a party or by which he is bound  and b) that he is free
and able to execute this Agreement and to enter into employment by Company.

13.  Personal Rights and Obligations

This Agreement and all rights and  obligations  hereunder are personal and shall
not be assignable by either party except as provided in this  subparagraph,  and
any  purported  assignment  in  violation  thereof  shall be null and void.  Any
person,  firm or  corporation  succeeding  to the  business  of Company (or that
portion  of  the   business   with  which   Employee  is  involved)  by  merger,
consolidation,  purchase  of assets or  otherwise,  must  assume by  contract or
operation  of law  the  obligations  of  Company  hereunder  and in  such a case
Employee  shall  continue  to honor this  Agreement  with such  person,  firm or
corporation  substituted for Company as the employer;  provided,  however,  that
Company shall,  if it still exists as a separate  entity,  notwithstanding  such
assumption and/or assignment,  remain liable and responsible for the fulfillment
of the terms and conditions of this Agreement on the part of the Company.

14.  Miscellaneous

a)  Indulgences, Etc.

Neither the failure  nor any delay on the part of either  party to exercise  any
right, remedy, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or
privilege preclude any other or further exercise of the same or any other right,
remedy, power or privilege,  nor shall any waiver of any right, remedy, power or
privilege with respect to any occurrence be construed as a waiver of such right,
remedy, power or privilege with respect to any other occurrence. No waiver shall
be effective unless it is in writing and is signed by the party asserted to have
granted such waiver.

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b)     Notices

All notices,  requests,  demands and other communications  required or permitted
under this  Agreement  shall be in writing and shall be deemed to have been duly
given,  made and received only when delivered  (personally,  by courier  service
such as Federal Express,  or by other messenger) or when deposited in the United
States mails,  registered or certified  mail,  postage  prepaid,  return receipt
requested, addressed as set forth below:


(i) if to Employee:                         (ii) if to Company:
Patrick J. Holmes                   Advanced Photonix, Inc.
259 High Meadow St.                         1240 Avenida Acaso
Simi Valley, CA 93065               Camarillo, CA 93012

In  addition,  notice  by mail  shall be by air mail if  posted  outside  of the
continental United States.

Any party may alter the address to which communications or copies are to be sent
by giving notice of such change of address in conformity  with the provisions of
this paragraph for the giving of notice.

c)  Binding Nature of Agreement

This Agreement shall be binding upon and inure to the benefit of Company and its
successors and assigns and shall be binding upon  Employee,  his heirs and legal
representatives.

d)  Execution in Counterparts

This  Agreement  may be  executed in any number of  counterparts,  each of which
shall be deemed to be an original as against any party whose  signature  appears
thereon, and all of which shall together constitute one and the same instrument.
This  Agreement  shall  become  binding  when one or more  counterparts  hereof,
individually or taken together,  shall bear the signatures of all of the parties
reflected hereon as the signatories.

e)  Provisions Separable

The  provisions of this  Agreement are  independent  of and separable  from each
other,  and no provision shall be affected or rendered  invalid or unenforceable
by  virtue of the fact  that for any  reason  any other or others of them may be
invalid or unenforceable in whole or in part.

f)  Entire Agreement

This Agreement contains the entire  understanding  among the parties hereto with
respect  to  the  subject   matter   hereof,   and   supersedes  all  prior  and
contemporaneous  agreements  and  understandings,   inducements  or  conditions,
express or implied,  oral or written,  except as herein  contained.  The express
terms hereof control and supersede any course of performance and/or usage of the
trade  inconsistent  with any of the terms  hereof.  This  Agreement  may not be
modified or amended other than by agreement in writing.

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g)  Paragraph Headings

The paragraph  headings in this Agreement are for convenience only; they form no
part of this Agreement and shall not affect its interpretation.

h)    Gender, Etc.

Words used herein,  regardless of the number and gender specifically used, shall
be deemed and construed to include any other number, singular or plural, and any
other  gender,  masculine,  feminine  or neuter,  as the  context  indicates  is
appropriate.

i)  Number of Days

In computing the number of days for purposes of this  Agreement,  all days shall
be counted, including Saturdays,  Sundays and holidays;  provided, however, that
if the final day of any time period  falls on a  Saturday,  Sunday or holiday on
which federal  banks are or may elect to be closed,  then the final day shall be
deemed to be the next day which is not a Saturday, Sunday or holiday.

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first above written.

ADVANCED PHOTONIX, Inc.



By: /s/ Harry Melkonian
-----------------------
Harry Melkonian
President & Chief Executive Officer


EMPLOYEE



By: /s/P. J. Holmes
-------------------
Patrick J. Holmes



Attest:


/s/Robert G. Allison
--------------------
Robert G. Allison
Chairman, Compensation Committee

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