Document:

Unassociated Document

    SUBSCRIPTION
      AGREEMENT

    (For
      Subscriptions by Investors who are Insiders of the
      Company)

     

     

    SUBSCRIPTION
      AGREEMENT (this “Agreement” or this “Subscription Agreement”) dated as
      of _________ __, 2007 between Advanced Photonix, Inc., a Delaware
      corporation (the “Company”) and the undersigned investor (the “Investor” and
      together with all other investors in the offering herein described, the
“Investors”)

     

    The
      Company is offering (the “Offering”) a limited number of eligible investors the
      opportunity to purchase up to 786,725 units of its securities (the “Units”) at a
      price equal to the Formula Price (as defined below), each Unit consisting of
      (i)
      four (4) shares of its Class A Common Stock, par value $.001 a share (“Common
      Stock” ), and (ii) one (1) warrant to purchase a share of Common Stock
      (the “2007 Series Warrants”).

     

    The
      Investor desires to participate in the Offering.

     

    The
      Investor has reviewed copies of the various documents referred to in
Schedule 1
      attached
      hereto (the “Disclosure Documents”).

     

    NOW,
      THEREFORE, the Company and the Investor hereby agree as follows:

     

           
      Section 1.   Purchase
      and Sale of Units; Description of 2007 Series Warrants; Use of Proceeds; Power
      of Attorney

     

    1.1.      
      Purchase
      of Units and Payment; Description of Warrants.
      Upon
      the terms and subject to the conditions contained in this Agreement, the
      Investor has on or prior to this day paid to the Company, by check, by wire
      transfer of immediately available funds, or by other means acceptable to the
      Company, the sum of money set forth opposite the Investor’s name on the
      signature page to this Agreement (the "Purchase Price"). In consideration of
      such payment, by (and subject to) its acceptance of this Subscription Agreement,
      the Company will issue to the Investor at the Closing (as defined below) the
      number of Units determined by dividing the Purchase Price by the Fair Market
      Value provided that no fractional shares or warrants are to be issued, but
      rather the number of shares and warrants to be issued shall be rounded down
      to
      the nearest whole number. “Fair Market Value” means the product of four (4)
      multiplied by the closing price of the Company’s Common Stock on the American
      Stock Exchange on the business day immediately preceding the Closing. The
      Investor acknowledges that the Investor’s Purchase Price is non-refundable
      except to the limited extent expressly provided by the last sentence of the
      first paragraph of Section 1.5 below. 

       

     Each
      2007 Series Warrant will have a term of five years (subject to earlier exercise
      or termination if the closing price of the Common Stock on the AMEX equals
      or
      exceeds $4.50 for at least twenty (20) consecutive Business Days (as defined
      in
      2007 Series Warrant to Purchase Class A Common Stock)), will be exercisable
      for the number of shares Common Stock stated therein at any time and from time
      to time during its term at an exercise price of $1.85 per share, subject to
      adjustment in certain circumstances, and will be substantially in the form
      attached hereto as Exhibit
      A.
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

        The
      Common Stock and
      the 2007 Series Warrants comprising the Units shall be immediately separable
      upon issuance.

     

    1.2.  Maximum/Minimum.
      The
      Company will not accept subscriptions having an aggregate Purchase Price of
      more
      than $4,500,000 or less than $2,500,000, and the Offering will terminate and
      be
      of no force and effect unless the Company has received and accepted valid
      subscription agreements from one or more Investors having an aggregate Purchase
      Price of at least $2,500,000 (the “Minimum Condition”) on or prior to the
      Closing.

     

    1.3.  Use
      of
      Proceeds.
      The
      proceeds of the Offering will provide a portion of the funds required to
      discharge in full (the “Debt Retirement”) the indebtedness under the Company’s
      outstanding convertible notes as provided on Schedule
      1.3
      (the
“Convertible Notes”). The balance of the funds required to discharge such
      indebtedness is expected to be provided out of cash on hand and bank
      indebtedness. In this connection, the Company has received a formal commitment
      from Fifth Third Bank with respect to a proposed increase in the Company’s
      existing credit facility with that bank. No assurances can be given that the
      financing contemplated in such commitment letter can be consummated.

     

    In
      the
      unlikely event that the outstanding Convertible Notes are converted prior to
      the
      Debt Retirement, the proceeds of the Offering will be used to pay down other
      indebtedness of the Company and/or working capital.

     

    1.4.  Closing.
      Subject
      to this Section 1.4 and assuming the Minimum Condition has been met, the closing
      of the Offering with respect to each individual Investor (the "Closing") shall
      take place at the offices of the Company’s attorney, Dornbush Schaeffer Strongin
& Venaglia, LLP (at the address in Section 5.8, Notices) upon the Company’s
      acceptance of such Investor’s Subscription Agreement on such date as may be
      determined by the Company, but which shall be no later than September 7, 2007.
      The Investor understands and agrees that the Company, in its sole discretion,
      has the right to reject any Subscription Agreement proffered to it by an
      Investor at any time prior to the Closing, and/or to waive any of the
      requirements for the purchase of the Units set forth herein with respect to
      any
      Investor or Investors (which waivers need not be uniform as among or between
      Investors). In the event that this Subscription Agreement is not accepted by
      the
      Company on or before the September 7, 2007 or in the event that the Company
      withdraws or terminates this Offering, the Company will promptly return to
      the
      undersigned Investor, without interest, all funds received from the undersigned
      Investor in respect hereof. 

     

        At
      the
      Closing, the Company (i) shall deliver (or irrevocably instruct its transfer
      agent to deliver) to the Investor, certificates representing the number of
      shares of Common Stock and 2007 Series Warrants to be purchased by the Investor
      hereunder, (ii) shall execute and deliver (or cause to be delivered) to the
      Investor, a fully executed copy of the Registration Rights Agreement attached
      hereto as Exhibit
      B
      and
      (iii) shall execute and deliver (or cause to be delivered) to the Investor
      a
      signed counterpart of this Subscription Agreement. The Investor expressly
      acknowledges and agrees that the certificates to be issued to him at the Closing
      shall bear a legend to the following effect:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    THE
      ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
      STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
      TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER
      THE
      ACT OR PURSUANT TO AN EXEMPTION THEREFROM.

     

    
      	Section
              2.  	
               Representations
                and Warranties

            

    

     

    2.1.  Representations
      and Warranties of the Company.
      The
      Company hereby represents and warrants to the Investor as of the date hereof
      and
      the Closing Date that:

     

    (a)  Organization,
      Good Standing and Qualification.
      The
      Company is a corporation duly incorporated and existing in good standing under
      the General Corporation Law 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.

     

    (b)  Valid
      Issuance.
      The
      Common Stock subscribed for hereunder and issuable upon the exercise of the
      2007
      Series Warrants, when issued in accordance with the terms hereof and thereof,
      will be duly authorized, validly issued and non-assessable and free and clear
      of
      all taxes, liens, options, calls, contracts, commitments, demands, charges,
      security interests, encumbrances or restrictions on transfer, other than
      restrictions on transfer under applicable state and federal securities
      laws.

     

    (c)  Authorization.
      

     

    (i)  The
      Company has all requisite corporate power and authority to enter into and
      perform its obligations under this Agreement and the Registration Rights
      Agreement (collectively, the “Transaction Documents”) and to issue the Common
      Stock and Warrants in accordance with the terms hereof; 

     

    (ii)  the
      execution and delivery of the Transaction Documents by the Company and the
      consummation by it of the transactions contemplated hereby and thereby,
      including the issuance of the Common Stock and Warrants, 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; 

     

    (iii)  the
      Transaction Documents have been duly executed and delivered by the Company;
      

     

    (iv)  the
      Transaction Documents constitute valid and binding obligations of the Company
      enforceable against the Company; and 

     

    (v)  the
      Common Stock and the Warrants, and shares of Common Stock issuable upon the
      exercise of the Warrants thereof, have been duly authorized and, upon issuance
      thereof and payment therefor in accordance with the terms of this Agreement,
      will be validly issued, fully paid and non-assessable, free and clear of any
      and
      all liens, claims and encumbrances.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d)  Public
      Information.
      The
      Disclosure Documents as at the respective dates of filing thereof:

     

    (i)  complied
      as to form in all material respects with applicable accounting requirements
      and
      the published rules and regulations of the Securities Exchange Commission with
      respect thereto;

     

    (ii)  all
      financial statements included therein were prepared in accordance with generally
      accepted accounting principles, consistently applied during the periods involved
      (except (x) as may otherwise be disclosed or indicated in such financial
      statements or the notes thereto or (y) in the case of unaudited interim
      statements, to the extent they may exclude footnotes or may be condensed or
      summary statements) and fairly present in all material respects the financial
      position of the Company as of the dates thereof and the results of its
      operations and cash flows for the periods then ended (subject, in the case
      of
      year end statements to normal year-end audit adjustments); and

     

    (iii)  did
      not
      contain any untrue statement of a material fact or omit to state any material
      fact necessary in order to make the statements therein, in the light of the
      circumstances under which they were made, not misleading.

     

    (e)    No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the transactions contemplated hereby
      and
      thereby and issuance of the Common Stock and Warrants, and the shares Common
      Stock issuable upon exercise of the Warrants will not:

     

    (i)  result
      in
      a violation of the Certificate of Incorporation, any certificate of
      designations, preferences and rights of any outstanding series of preferred
      stock of the Company or the 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 the American Stock Exchange (“Principal Market”) or 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. 

     

    (f)    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 Company’s
      subsidiaries or any of the Company’s or the Company’s subsidiaries’ officers or
      directors in their capacities as such, which would be material to the Company
      except as set forth in SEC Documents which were filed at least 10 days before
      the date hereof. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (g)  No
      Integrated Offering.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf has, directly or indirectly, made any offers or sales of any security
      or
      solicited any offers to buy any security, under circumstances that would cause
      this offering of the Common Stock and Warrants to the Investors to be integrated
      with prior offerings by the Company for purposes of the Securities Act of 1933,
      as amended (the “1933 Act”), or any applicable stockholder approval provisions,
      including, without limitation, under the rules and regulations of the Principal
      Market, nor will the Company or any of its subsidiaries take any action or
      steps
      that would cause the offering of the Common Stock and Warrants to be integrated
      with other offerings.

     

    (h)  Manner
      of Sale.
      Sales
      of the Common Stock offered hereby will be made directly by the Company to
      a
      limited number of accredited investors as defined in Rule 501of Regulation
      D of
      the 1933 Act and no brokers or other intermediaries will be retained by the
      Company in connection with the Offering.

     

    2.2.  Representations
      and Warranties of the Investor.
      The
      Investor hereby represents and warrants to the Company as of the date hereof
      and
      the Closing Date that:

     

    (a)  Review
      of Agreements.
      The
      Investor has reviewed the Disclosure Documents. The Investor 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 most
      recently filed with the Securities and Exchange Commission. 

     

    (b)  Suitability
      of Investment.

     

    (i)  The
      Investor is acquiring the Units for the Investor’s own account, for investment
      purposes only and not with a view to the resale or distribution
      thereof.

     

    (ii)  The
      Investor has not and will not, directly or indirectly, offer, sell, transfer,
      assign, exchange or otherwise dispose of all or any part of the Units, except
      in
      accordance with applicable federal and state securities laws.

     

    (iii)  The
      Investor has such knowledge and experience in financial, business and tax
      matters that the Investor is capable of evaluating the merits and risks relating
      to the Investor’s investment in the Units and making an investment decision with
      respect to the Company. The Investor has independently evaluated the risks
      and
      merits of purchasing the Units and has independently determined that the Units
      are a suitable investment for such Investor. The Investor acknowledges that
      except as otherwise expressly provided herein, the Company has made no
      representation or warranty to the Investor with respect to the income or other
      tax consequences to the Investor under the laws of any jurisdiction with respect
      to an investment in the Units.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (iv)  To
      the
      full satisfaction of the Investor, the 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.

     

    (v)  Neither
      the Investor nor any of its affiliates has engaged in any activity that would
      be
      deemed a “general solicitation” under the provisions of Regulation D under the
      1933 Act.

     

    (vi)  The
      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)  The
      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)  The
      Investor understands that, unless he, she or it notifies the Company in writing
      to the contrary at or before the Closing, all the undersigned’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 the undersigned Investor.

     

    (ix)  The
      Investor is an “accredited investor” within the meaning of that term as set
      forth in Rule 501(a) under the 1933 Act, and the Investor has completed the
      Investor Certificate attached as Annex
      A
      hereto
      to indicate the qualifications that make the Investor such an accredited
      investor.

     

    (c)  American
      Stock Exchange Investor Questionnaire.
      The
      Investor has completed and returned to the Company the AMEX Investor
      Questionnaire if applicable.

     

    (d)  Accuracy
      of Information.
      The
      information concerning the Investor (and its executive officers, directors
      and
      owners, if applicable) which is set forth in the Investor Certificate and the
      AMEX Investor Questionnaire, is true and correct on the date of the Investor’s
      execution and delivery of this Agreement and the Investor will promptly notify
      the Company of any event which would cause the same not to be true and
      correct.

     

    (e)  Authorization.
      All
      action on the part of the Investor necessary for the authorization, execution
      and delivery of this Agreement and for the performance of all obligations of
      the
      Investor hereunder has been taken. This Agreement has been duly executed and
      delivered by the Investor and constitutes the valid and binding obligation
      of
      the Investor, enforceable against the Investor in accordance with its
      terms.

     

    (f)  Trading
      in Common Stock.
      Since
      August 1, 2007 the Investor has not executed, and during the period between
      August 1, 2007 and the Closing the Investor will not execute, any purchase
      or
      sale of the Common Stock or any short sales. For purposes of this clause (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. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	Section
              3.  	
               Indemnification

            

    

     

    3.1.  Company
      Indemnification.
      The
      Company covenants and agrees to defend, indemnify and save and hold harmless
      the
      Investor, together with its officers, directors, partners, members, employees,
      trustees, and affiliates, attorneys and representatives, from and against any
      and all losses, costs, expenses, liabilities, claims or legal damages
      (including, without limitation, reasonable fees and disbursements of counsel
      and
      accountants and other costs and 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 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 or willful misconduct of the Investor or any of its
      respective officers, directors, employees, affiliates and attorneys are not
      covered under this Section. 

     

    3.2.  Investor
      Indemnification. The Investor covenants and agrees to defend, indemnify and
      save and hold harmless the Company, its officers, directors, partners, members,
      employees, trustees, affiliates, attorneys and representatives, from and against
      any and all losses, costs, expenses, liabilities, claims or legal damages
      (including, without limitation, reasonable fees and disbursements of counsel
      and
      accountants and other costs and expenses incident to any actual or threatened
      claim, suit, action or proceeding, whether incurred in connection with a claim
      against the Investor or a third party claim) (collectively, “Company Losses”),
      relating to violations of 1933 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 the Investor in this Agreement; or (ii) the
      failure of the Investor to perform or observe fully any covenant, agreement
      or
      provision to be performed or observed by it pursuant to this Agreement.
      Notwithstanding the foregoing, the Investor shall only be liable to make any
      indemnification pursuant to this Section 3.2 to the extent of the aggregate
      dollar amount invested by the Investor pursuant to the offering. Company Losses
      resulting directly from the gross negligence or willful misconduct of the
      Company or any of its respective officers, directors, employees, affiliates
      and
      attorneys are not covered under this Section. 

     

    3.3.  Indemnification
      Procedure.
      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. 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 nor for any settlement thereof entered into without the
      consent of the Indemnifying Party; 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 (x)
      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 or (y)
      that
      there may be legal defenses available to such Indemnified Party different from
      or in addition to those available to the Indemnifying Party, 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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    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, all of which are hereby
      irrevocably waived and relinquished to the maximum legal effect.

     

    Section
      4.  
Registration
      Rights.
      The
      Investor is aware that except as set forth below, the Company does not intend
      (and is not required) to register the offer or sale of the Common Stock and
      2007
      Series Warrants offered hereby under the Securities Act of 1933, as amended
      or
      under any similar law of any other jurisdiction (the “Act”), that such offer and
      sale are intended to be exempt from registration under the Acts, and that the
      Acts may prohibit or severely limit the Investor’s ability to sell, assign,
      transfer or otherwise dispose of the Common Stock and 2007 Series Warrants
      to be
      purchased hereunder unless and until any such registration is completed.
      Notwithstanding the foregoing, at
      the
      Closing the Investor and the Company shall enter into the Registration Rights
      Agreement providing, among other things, that the Company will (i) file a
      registration statement covering the resale of the shares of Common Stock of
      the
      Investor purchased hereunder and issuable upon exercise of the 2007 Series
      Warrants with the Securities Exchange Commission not later than December 7,
      2007
      (the “Filing Deadline”) and (ii) cause such registration statement to
      become effective not later than 120 days following the Filing Deadline, in
      each
      case as more fully provided and subject to the terms and conditions of such
      Registration Rights Agreement, provided that if there
      is
      a full review of the Registration Statement by the Securities and Exchange
      Commission, 150 days after the Filing Deadline.

     

    
      	Section
              5.  	
               Miscellaneous

            

    

     

    5.1.  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.

     

    5.2.  Successors
      and Assigns.
      This
      Agreement may not be assigned by the 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.

     

    5.3.  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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5.4.  Submission
      to Jurisdiction.
      Each of
      the Investor and the Company 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 of the Investor and the Company 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.

     

    5.5.  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 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.

     

    5.6.  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.

     

    5.7.  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 agree
      that facsimile signatures of this Agreement shall be deemed a valid and binding
      execution of this Agreement.

     

    5.8.  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 the Investor:

            	
              At
                the address of the Investor indicated on the signature page
                hereof.

            

    

    

    5.9.  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.

     

    5.10.  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.

     

    5.11.  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.

     

    5.12.  Money
      Laundering.
      The
      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 the
      Investor to truthfully provide any such proof as may be so
      required.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the undersigned has executed this Agreement on this
      _____ day of ___________, 2007.

    

    
      	
              Name
                of Investor:

            	
              Aggregate
                Purchase Price: 

              $__________________________________

            

    

    
      	
               

               

              ___________________________________

              By:
                 

              Name:
                

              Title:

               

               

              Witness’
                Signature: ___________________________________

            	 
	
              Number
                and Street

               

               

            
	
               

              City,
                State and Zip

               

               

            
	
               Subscriber’s
                Social Security or Taxpayer Identification Number:

               

            	 

    

    

    If
      Fiduciary or Corporation, check one:

     

    
      	o Trust 	o Estate 	o Power
              of Attorney  	o 
              Corporation

    

     

    ALL
      INVESTORS MUST COMPLETE THE QUESTIONNAIRE 

    ATTACHED
      AS ANNEX A 

    

    Accepted
      by:

    

    ADVANCED
      PHOTONIX, INC.

    

    

    

    By:
      _____________________________________________

    Richard
      D. Kurtz, Chief Executive Officer and President        Dated:
      ________ ___, 2007Unassociated Document

    NEITHER
      THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
      THE
      SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISEABLE HAVE BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, 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 OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL,
      IN A
      GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
      OR
      (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.
      NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
      WITH
      A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY
      THE
      SECURITIES.

    

    ADVANCED
      PHOTONIX, INC.

    

    2007
      Series Warrant To Purchase Class A Common Stock

    

    Warrant
      No.: _____ 

    Number
      of
      Shares of Class A Common Stock: 

    Date
      of
      Issuance: _________ __, 2007 ("Issuance
      Date")

    

    Advanced
      Photonix, Inc., a Delaware corporation (the "Company"),
      hereby certifies that, for good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, [INSERT
      NAME OF INVESTOR],
      the
      registered holder hereof or its permitted assigns (the "Holder"),
      is
      entitled, subject to the terms set forth below, to purchase from the Company,
      at
      the Exercise Price (as defined below) then in effect, upon surrender of this
      Warrant to Purchase Common Stock (as defined below) (the "Warrant"),
      at
      any time or times on or after the date hereof, and prior to the Expiration
      Date
      (as defined below), up to __________________________________ (the "Maximum
      Warrant Share Number")
      fully
      paid nonassessable shares of Common Stock (as defined below) (the
      "Warrant
      Shares").
      Except as otherwise defined herein, capitalized terms in this Warrant shall
      have
      the meanings set forth in Section 15. This Warrant is one of the Warrants to
      Purchase Common Stock (the "2007
      Series Warrants")
      issued
      pursuant to Section 1 of that certain Subscription Agreement, accepted by the
      Company on _________ __, 2007 (the "Subscription
      Date"),
      by
      and among the Company and the investors (the "Investors")
      referred to therein (the "Subscription
      Agreement").

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.  EXERCISE
      OF WARRANT.

     

    (a)  Mechanics
      of Exercise.
      Subject
      to the terms and conditions hereof, (including,
      without limitation, the limitations set forth in Section 1(c)) this
      Warrant may be exercised by the Holder on any day on or after the date hereof,
      in whole or in part, by (i) delivery of a written notice, in the form
      attached hereto as Exhibit
      A
      (the
      "Exercise
      Notice"),
      of
      the Holder's election to exercise this Warrant, via overnight courier to the
      Company, and (ii) (A) payment to the Company of an amount equal to the
      applicable Exercise Price multiplied by the number of Warrant Shares as to
      which
      this Warrant is being exercised (the "Aggregate
      Exercise Price")
      in
      cash or wire transfer of immediately available funds. The Holder shall not
      be
      required to deliver the original Warrant in order to effect an exercise
      hereunder. Execution and delivery of the Exercise Notice with respect to less
      than all of the Warrant Shares shall have the same effect as cancellation of
      the
      original Warrant and issuance of a new Warrant evidencing the right to purchase
      the remaining number of Warrant Shares. On or before the first Business Day
      following the date on which the Company has received each of the Exercise
      Notices and the Aggregate Exercise Price (the "Exercise
      Delivery Documents"),
      the
      Company shall transmit by facsimile or electronic mail ("e-mail")
      an
      acknowledgment of confirmation of receipt of the Exercise Delivery Documents
      to
      the Holder and the Company's transfer agent (the "Transfer
      Agent").
      On or
      before the fifth Business Day following the date on which the Company has
      received all of the Exercise Delivery Documents (the "Share
      Delivery Date"),
      the
      Company shall (X) provided that the Transfer Agent is participating in the
      Depository Trust Company ("DTC")
      Fast
      Automated Securities Transfer Program, upon the request of the Holder, credit
      such aggregate number of shares of Common Stock to which the Holder is entitled
      pursuant to such exercise to the Holder's or its designee's balance account
      with
      DTC through its Deposit Withdrawal Agent Commission system, or (Y) if the
      Transfer Agent is not participating in the DTC Fast Automated Securities
      Transfer Program, issue and dispatch by overnight courier to the address as
      specified in the Exercise Notice, a certificate, registered in the Company's
      share register in the name of the Holder or its designee, for the number of
      shares of Common Stock to which the Holder is entitled pursuant to such
      exercise. Upon delivery of the Exercise Notice and Aggregate Exercise Price
      referred to in clause (ii)(A) above, the Holder shall be deemed for all
      corporate purposes to have become the holder of record of the Warrant Shares
      with respect to which this Warrant has been exercised, irrespective of the
      date
      of delivery of the certificates evidencing such Warrant Shares. If this Warrant
      is submitted in connection with any exercise pursuant to this Section 1(a)
      and
      the number of Warrant Shares represented by this Warrant submitted for exercise
      is greater than the number of Warrant Shares being acquired upon an exercise,
      then the Company shall as soon as practicable and in no event later than five
      Business Days after any exercise and at its own expense, issue a new Warrant
      (in
      accordance with Section 7(d)) representing the right to purchase the number
      of
      Warrant Shares purchasable immediately prior to such exercise under this
      Warrant, less the number of Warrant Shares with respect to which this Warrant
      is
      exercised. No fractional shares of Common Stock are to be issued upon the
      exercise of this Warrant, but rather the number of shares of Common Stock to
      be
      issued shall be rounded down to the nearest whole number. The Company shall
      pay
      any and all taxes which may be payable with respect to the issuance and delivery
      of Warrant Shares upon exercise of this Warrant. 

     

    (b)  Exercise
      Price.
      For
      purposes of this Warrant, "Exercise
      Price"
      means
      $1.85, subject to adjustment as provided in Section 2.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (c)  Limitations
      on Exercises.
      The
      Company shall not be obligated to issue any shares of Common Stock upon exercise
      of this Warrant if the issuance of such shares of Common Stock would exceed
      that
      number of shares of Common Stock which the Company may issue upon exercise
      of
      this Warrant (including, as applicable, any shares of Common Stock issued upon
      exercise of the other 2007 Series Warrants) without breaching the Company's
      obligations under the rules or regulations of the Principal Market (the
      "Exchange
      Cap"),
      except that such limitation shall not apply in the event that the Company (A)
      obtains the approval of its shareholders as required by the applicable rules
      of
      the Principal Market for issuances of shares of Common Stock in excess of such
      amount or (B) obtains a written opinion from outside counsel to the Company
      that
      such approval is not required, which opinion shall be reasonably satisfactory
      to
      the Company and the Holders. Until such approval or written opinion is obtained,
      no Holder shall be issued, upon exercise of any 2007 Series Warrants, shares
      of
      Common Stock in an amount greater than the product of the Exchange Cap
      multiplied by a fraction, the numerator of which is the total number of shares
      of Common Stock issued to such Investor pursuant to the Subscription Agreement
      on the Issuance Date and the denominator of which is the aggregate number of
      shares of Common Stock issued to the Investors pursuant to the Subscription
      Agreement on the Issuance Date (with respect to each Investor, the "Exchange
      Cap Allocation").
      In
      the event that any Investor shall sell or otherwise transfer any of such
      Investor's 2007 Series Warrants, the transferee shall be allocated a pro rata
      portion of such Investor's Exchange Cap Allocation, and the restrictions of
      the
      prior sentence shall apply to such transferee with respect to the portion of
      the
      Exchange Cap Allocation allocated to such transferee. In the event that any
      holder of 2007 Series Warrants shall exercise all of such holder's 2007 Series
      Warrants into a number of shares of Common Stock which, in the aggregate, is
      less than such holder's Exchange Cap Allocation, then the difference between
      such holder's Exchange Cap Allocation and the number of shares of Common Stock
      actually issued to such holder shall be allocated to the respective Exchange
      Cap
      Allocations of the remaining holders of 2007 Series Warrants on a pro rata
      basis
      in proportion to the shares of Common Stock underlying the 2007 Series Warrants
      then held by each such holder. In the event that the Company is prohibited
      from
      issuing any Warrant Shares for which an Exercise Notice has been received as
      a
      result of the operation of this Section 1(c), the Company shall pay cash in
      exchange for cancellation of such Warrant Shares, at a price per Warrant Share
      equal to the difference between the Closing Sale Price and the Exercise Price
      as
      of the date of the attempted exercise.

     

    (d)  Cashless
      Exercise.
      In the
      event the Registration Statement (as defined in the Registration Rights
      Agreement) covering the 2007 Series Warrants is not effective by the
      Effectiveness Deadline (as defined in the Registration Rights Agreement), then
      from and after the Effectiveness Deadline until such time as the Registration
      Statement covering the resale of shares of Common Stock underlying the 2007
      Series Warrants is declared effective by the Securities Exchange Commission,
      notwithstanding anything contained herein to the contrary, the Holder may,
      in
      its sole discretion, exercise this Warrant in whole or in part and, in lieu
      of
      making the cash payment otherwise contemplated to be made to the Company upon
      such exercise in payment of the Aggregate Exercise Price, elect instead to
      receive upon such exercise the "Net Number" of shares of Class A Common Stock
      determined according to the following formula (a "Cashless
      Exercise"):

     

    Net
      Number = A - (A x C/B)   

     

    For
      purposes of the foregoing formula:

     

    A=
      the
      total number of shares with respect to which this Warrant is then being
      exercised.

     

    B=
      the
      Closing Sale Price of the shares of Class A Common Stock (as reported by
      Bloomberg) on the date immediately preceding the date of the Exercise
      Notice.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	 	 	
              C=
                the Exercise Price then in effect for the applicable Warrant Shares
                at the
                time of such exercise.

            

    

    

    2.  ADJUSTMENT
      OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.
      The
      Exercise Price and the number of Warrant Shares shall be adjusted from time
      to
      time as follows:

     

    (a)  Adjustment
      upon Issuance of shares of Common Stock.
      If and
      whenever on or after the Subscription Date the Company issues or sells, or
      in
      accordance with this Section 2 is deemed to have issued or sold, any shares
      of
      Common Stock (including the issuance or sale of shares of Common Stock owned
      or
      held by or for the account of the Company, but excluding shares of Common Stock
      deemed to have been issued by the Company in connection with any Excluded
      Securities) for a consideration per share less than a price (the "Applicable
      Price")
      equal
      to the Exercise Price in effect immediately prior to such issue or sale or
      deemed issuance or sale (the foregoing a "Dilutive
      Issuance"),
      then
      immediately after such Dilutive Issuance, the Exercise Price then in effect
      shall be reduced to an amount equal to the
      product of (A) the Exercise Price in effect immediately prior to such
      Dilutive Issuance and (B) the quotient determined by dividing (1) the
      sum of (I) the product derived by multiplying the Exercise Price in effect
      immediately prior to such Dilutive Issuance and the number of Common Stock
      Deemed Outstanding immediately prior to such Dilutive Issuance plus
      (II) the consideration, if any, received by the Company upon such Dilutive
      Issuance, by (2) the product derived by multiplying (I) the Exercise Price
      in effect immediately prior to such Dilutive Issuance by (II) the number of
      Common Stock Deemed Outstanding immediately after such Dilutive
      Issuance.
      Upon
      each such adjustment of the Exercise Price hereunder, the number of Warrant
      Shares shall be adjusted to the number of shares of Common Stock determined
      by
      multiplying the Exercise Price in effect immediately prior to such adjustment
      by
      the number of Warrant Shares acquirable upon exercise of this Warrant
      immediately prior to such adjustment and dividing the product thereof by the
      Exercise Price resulting from such adjustment. For purposes of determining
      the
      adjusted Exercise Price under this Section 2(a), the following shall be
      applicable:

     

    (i) Issuance
      of Options.
      If the
      Company in any manner grants any Options and the lowest price per share for
      which one share of Common Stock is issuable upon the exercise of any such Option
      or upon conversion, exercise or exchange of any Convertible Securities issuable
      upon exercise of any such Option is less than the Applicable Price, then such
      share of shares of Common Stock shall be deemed to be outstanding and to have
      been issued and sold by the Company at the time of the granting or sale of
      such
      Option for such price per share. For purposes of this Section 2(a)(i), the
      "lowest price per share for which one share of Common Stock is issuable upon
      exercise of such Options or upon conversion, exercise or exchange of such
      Convertible Securities" shall be equal to the sum of the lowest amounts of
      consideration (if any) received or receivable by the Company with respect to
      any
      one share of Common Stock upon the granting or sale of the Option, upon exercise
      of the Option and upon conversion, exercise or exchange of any Convertible
      Security issuable upon exercise of such Option. No further adjustment of the
      Exercise Price or number of Warrant Shares shall be made upon the actual
      issuance of such shares of Common Stock or of such Convertible Securities upon
      the exercise of such Options or upon the actual issuance of such shares of
      Common Stock upon conversion, exercise or exchange of such Convertible
      Securities.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (ii) Issuance
      of Convertible Securities.
      If the
      Company in any manner issues or sells any Convertible Securities and the lowest
      price per share for which one share of Common Stock is issuable upon the
      conversion, exercise or exchange thereof is less than the Applicable Price,
      then
      such share of shares of Common Stock shall be deemed to be outstanding and
      to
      have been issued and sold by the Company at the time of the issuance or sale
      of
      such Convertible Securities for such price per share. For the purposes of this
      Section 2(a)(ii), the "lowest price per share for which one share of Common
      Stock is issuable upon the conversion, exercise or exchange" shall be equal
      to
      the sum of the lowest amounts of consideration (if any) received or receivable
      by the Company with respect to one share of shares of Common Stock upon the
      issuance or sale of the Convertible Security and upon conversion, exercise
      or
      exchange of such Convertible Security. No further adjustment of the Exercise
      Price or number of Warrant Shares shall be made upon the actual issuance of
      such
      shares of Common Stock upon conversion, exercise or exchange of such Convertible
      Securities, and if any such issue or sale of such Convertible Securities is
      made
      upon exercise of any Options for which adjustment of this Warrant has been
      or is
      to be made pursuant to other provisions of this Section 2(a), no further
      adjustment of the Exercise Price or number of Warrant Shares shall be made
      by
      reason of such issue or sale. 

     

    (iii) Change
      in Option Price or Rate of Conversion.
      If the
      purchase price provided for in any Options, the additional consideration, if
      any, payable upon the issuance, conversion, exercise or exchange of any
      Convertible Securities, or the rate at which any Convertible Securities are
      convertible into or exercisable or exchangeable for shares of Common Stock
      increases or decreases at any time, the Exercise Price and the number of Warrant
      Shares in effect at the time of such increase or decrease shall be adjusted
      to
      the Exercise Price and the number of Warrant Shares which would have been in
      effect at such time had such Options or Convertible Securities provided for
      such
      increased or decreased purchase price, additional consideration or increased
      or
      decreased conversion rate, as the case may be, at the time initially granted,
      issued or sold. For purposes of this Section 2(a)(iii), if the terms of any
      Option or Convertible Security that was outstanding as of the date of issuance
      of this Warrant are increased or decreased in the manner described in the
      immediately preceding sentence, then such Option or Convertible Security and
      the
      shares of Common Stock deemed issuable upon exercise, conversion or exchange
      thereof shall be deemed to have been issued as of the date of such increase
      or
      decrease. No adjustment pursuant to this Section 2(a) shall be made if such
      adjustment would result in an increase of the Exercise Price then in effect
      or a
      decrease in the number of Warrant Shares.

     

    (iv) Calculation
      of Consideration Received.
      In case
      any Option is issued in connection with the issuance or sale of other securities
      of the Company, together comprising one integrated transaction in which no
      specific consideration is allocated to such Options by the parties thereto,
      the
      Options will be deemed to have been issued for a consideration of $0.01. If
      any
      shares of Common Stock, Options or Convertible Securities are issued or sold
      or
      deemed to have been issued or sold for cash, the consideration received therefor
      will be deemed to be the net amount received by the Company therefor. If any
      shares of Common Stock, Options or Convertible Securities are issued or sold
      for
      a consideration other than cash, the amount of such consideration received
      by
      the Company will be the fair value of such consideration, except where such
      consideration consists of securities, in which case the amount of consideration
      received by the Company will be the Closing Sale Price of such security on
      the
      date of receipt. If any shares of Common Stock, Options or Convertible
      Securities are issued to the owners of the non-surviving entity in connection
      with any merger in which the Company is the surviving entity, the amount of
      consideration therefor will be deemed to be the fair value of such portion
      of
      the net assets and business of the non-surviving entity as is attributable
      to
      such shares of Common Stock, Options or Convertible Securities, as the case
      may
      be. The fair value of any consideration other than cash or securities will
      be
      determined jointly by the Company and the Required Holders. If such parties
      are
      unable to reach agreement within ten (10) days after the occurrence of an event
      requiring valuation (the "Valuation Event"), the fair value of such
      consideration will be determined within five (5) Business Days after the tenth
      day following the Valuation Event by an independent, reputable appraiser jointly
      selected by the Company and the Required Holders. The determination of such
      appraiser shall be final and binding upon all parties absent manifest error
      and
      the fees and expenses of such appraiser shall be borne by the
      Company.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (v) Record
      Date.
      If the
      Company takes a record of the holders of shares of Common Stock for the purpose
      of entitling them (A) to receive a dividend or other distribution payable
      in shares of Common Stock, Options or in Convertible Securities or (B) to
      subscribe for or purchase shares of Common Stock, Options or Convertible
      Securities, then such record date will be deemed to be the date of the issue
      or
      sale of the shares of Common Stock deemed to have been issued or sold upon
      the
      declaration of such dividend or the making of such other distribution or the
      date of the granting of such right of subscription or purchase, as the case
      may
      be.

     

    (vi) No
      adjustment pursuant to Section 2(a) shall cause the Exercise Price to be less
      than $1.79, as adjusted for any stock dividend, stock split, stock combination,
      reclassification or similar transaction.

     

    (b)  Adjustment
      upon Subdivision or Combination of shares of Common Stock.
      If the
      Company at any time on or after the Subscription Date subdivides (by any stock
      split, stock dividend, recapitalization or otherwise) one or more classes of
      its
      outstanding shares of Common Stock into a greater number of shares, the Exercise
      Price in effect immediately prior to such subdivision will be proportionately
      reduced and the number of Warrant Shares will be proportionately increased.
      If
      the Company at any time on or after the Subscription Date combines (by
      combination, reverse stock split or otherwise) one or more classes of its
      outstanding shares of Common Stock into a smaller number of shares, the Exercise
      Price in effect immediately prior to such combination will be proportionately
      increased and the number of Warrant Shares will be proportionately decreased.
      Any adjustment under this Section 2(b) shall become effective at the close
      of
      business on the date the subdivision or combination becomes
      effective.

     

    (c)  Other
      Events.
      If any
      event occurs of the type contemplated by the provisions of this Section 2 but
      not expressly provided for by such provisions (including, without limitation,
      the granting of stock appreciation rights, phantom stock rights or other rights
      with equity features), then the Company's Board of Directors will make an
      appropriate adjustment in the Exercise Price and the number of Warrant Shares
      so
      as to protect the rights of the Holder; provided that no such adjustment
      pursuant to this Section 2(c) will increase the Exercise Price or decrease
      the
      number of Warrant Shares as otherwise determined pursuant to this Section
      2.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    3.  RIGHTS
      UPON DISTRIBUTION OF ASSETS.
      If the
      Company shall declare or make any dividend or other distribution of its assets
      (or rights to acquire its assets) to holders of shares of Common Stock, by
      way
      of return of capital or otherwise (including, without limitation, any
      distribution of cash, stock or other securities, property or options by way
      of a
      dividend, spin off, reclassification, corporate rearrangement, scheme of
      arrangement or other similar transaction) (a "Distribution"),
      at
      any time after the issuance of this Warrant, then, in each such
      case:

     

    (a)  any
      Exercise Price in effect immediately prior to the close of business on the
      record date fixed for the determination of holders of shares of Common Stock
      entitled to receive the Distribution shall be reduced, effective as of the
      close
      of business on such record date, to a price determined by multiplying such
      Exercise Price by a fraction of which (i) the numerator shall be the
      Closing Bid Price of the shares of Common Stock on the trading day immediately
      preceding such record date minus the value of the Distribution (as determined
      in
      good faith by the Company's Board of Directors) applicable to one share of
      shares of Common Stock, and (ii) the denominator shall be the Closing Bid Price
      of the shares of Common Stock on the trading day immediately preceding such
      record date; and

     

    

    (b)  the
      number of Warrant Shares shall be increased to a number of shares equal to
      the
      number of shares of Common Stock obtainable immediately prior to the close
      of
      business on the record date fixed for the determination of holders of shares
      of
      Common Stock entitled to receive the Distribution multiplied by the reciprocal
      of the fraction set forth in the immediately preceding paragraph (a); provided
      that in the event that the Distribution is of shares of Common Stock (or common
      stock) ("Other
      Shares of Common Stock")
      of a
      company whose common shares are traded on a national securities exchange or
      a
      national automated quotation system, then the Holder may elect to receive a
      warrant to purchase Other Shares of Common Stock in lieu of an increase in
      the
      number of Warrant Shares, the terms of which shall be identical to those of
      this
      Warrant, except that such warrant shall be exercisable into the number of shares
      of Other Shares of Common Stock that would have been payable to the Holder
      pursuant to the Distribution had the Holder exercised this Warrant immediately
      prior to such record date and with an Aggregate Exercise Price equal to the
      product of the amount by which the Exercise Price of this Warrant was decreased
      with respect to the Distribution pursuant to the terms of the immediately
      preceding paragraph (a) and the number of Warrant Shares calculated in
      accordance with the first part of this paragraph (b).

     

    4.  PURCHASE
      RIGHTS; FUNDAMENTAL TRANSACTIONS.

     

    (a)  Purchase
      Rights.
      In
      addition to any adjustments pursuant to Section 2 above, if at any time the
      Company grants, issues or sells any Options, Convertible Securities or rights
      to
      purchase stock, warrants, securities or other property pro rata to the record
      holders of any class of shares of Common Stock (the "Purchase
      Rights"),
      then
      the Holder will be entitled to acquire, upon the terms applicable to such
      Purchase Rights, the aggregate Purchase Rights which the Holder could have
      acquired if the Holder had held the number of shares of Common Stock acquirable
      upon complete exercise of this Warrant (without regard to any limitations on
      the
      exercise of this Warrant) immediately before the date on which a record is
      taken
      for the grant, issuance or sale of such Purchase Rights, or, if no such record
      is taken, the date as of which the record holders of shares of Common Stock
      are
      to be determined for the grant, issue or sale of such Purchase
      Rights.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (b)  Fundamental
      Transactions.
      The
      Company shall not enter into or be party to a Fundamental Transaction unless
      (i)  the Successor Entity assumes in writing all of the obligations of the
      Company under this Warrant, including agreements to deliver to each holder
      of
      Warrants in exchange for such Warrants a security of the Successor Entity
      evidenced by a written instrument substantially similar in form and substance
      to
      this Warrant, including, without limitation, an adjusted exercise price equal
      to
      the value for the shares of Common Stock reflected by the terms of such
      Fundamental Transaction, and exercisable for a corresponding number of shares
      of
      capital stock equivalent to the shares of Common Stock acquirable and receivable
      upon exercise of this Warrant (without regard to any limitations on the exercise
      of this Warrant) prior to such Fundamental Transaction, and satisfactory to
      the
      Required Holders and (ii) the Successor Entity (including its Parent
      Entity) is a publicly traded corporation whose common stock is quoted on or
      listed for trading on an Eligible Market. Upon the occurrence of any Fundamental
      Transaction, the Successor Entity shall succeed to, and be substituted for
      (so
      that from and after the date of such Fundamental Transaction, the provisions
      of
      this Warrant referring to the "Company" shall refer instead to the Successor
      Entity), and may exercise every right and power of the Company and shall assume
      all of the obligations of the Company under this Warrant with the same effect
      as
      if such Successor Entity had been named as the Company herein. Upon consummation
      of the Fundamental Transaction, the Successor Entity shall deliver to the Holder
      confirmation that there shall be issued upon exercise of this Warrant
at
      any
      time after the consummation of the Fundamental Transaction, in lieu of the
      shares of the Common Stock (or
      other
      securities, cash, assets or other property) purchasable
      upon the exercise of the Warrant
      prior
      to
      such Fundamental Transaction,
      such
      shares of stock, securities, cash, assets or any other property whatsoever
      (including warrants or other purchase or subscription rights) which the Holder
      would have been entitled to receive upon the happening of such Fundamental
      Transaction had this Warrant
      been
      converted immediately prior to such Fundamental Transaction, as adjusted in
      accordance with the provisions of this Warrant.
      In
      addition to and not in substitution for any other rights hereunder, prior to
      the
      consummation of any Fundamental Transaction pursuant to which holders of shares
      of Common Stock are entitled to receive securities or other assets with respect
      to or in exchange for shares of Common Stock (a "Corporate
      Event"),
      the
      Company shall make appropriate provision to insure that the Holder will
      thereafter have the right to receive upon an exercise of this Warrant
at
      any
      time after the consummation of
      the
      Fundamental Transaction but
      prior
      to the Expiration Date,
      in lieu
      of the shares of the Common Stock (or
      other
      securities, cash, assets or other property) purchasable
      upon the exercise of the Warrant prior to such Fundamental
      Transaction,
      such
      shares of stock, securities, cash, assets or any other property whatsoever
      (including warrants or other purchase or subscription rights) which the Holder
      would have been entitled to receive upon the happening of such Fundamental
      Transaction had the Warrant been exercised immediately prior to such Fundamental
      Transaction. The
      provisions of this Section shall apply similarly and equally to successive
      Fundamental Transactions and Corporate Events. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    5.  NONCIRCUMVENTION.
      The
      Company hereby covenants and agrees that the Company will not, by amendment
      of
      its Articles of Incorporation, Bylaws or through any reorganization, transfer
      of
      assets, consolidation, merger, scheme of arrangement, dissolution, issue or
      sale
      of securities, or any other voluntary action, avoid or seek to avoid the
      observance or performance of any of the terms of this Warrant, and will at
      all
      times in good faith carry out all the provisions of this Warrant and take all
      action as may be required to protect the rights of the Holder. Without limiting
      the generality of the foregoing, the Company (i) shall not increase the par
      value of any shares of Common Stock receivable upon the exercise of this Warrant
      above the Exercise Price then in effect, (ii) shall take all such actions
      as may be necessary or appropriate in order that the Company may validly and
      legally issue fully paid and nonassessable shares of Common Stock upon the
      exercise of this Warrant, and (iii) shall, so long as any of the 2007 Series
      Warrants are outstanding, take all action necessary to reserve and keep
      available out of its authorized and unissued shares of Common Stock, solely
      for
      the purpose of effecting the exercise of the 2007 Series Warrants, the number
      of
      shares of Common Stock as shall from time to time be necessary to effect the
      exercise of the 2007 Series Warrants then outstanding (without regard to any
      limitations on exercise).

     

    6.  WARRANT
      HOLDER NOT DEEMED A STOCKHOLDER.
      Except
      as otherwise specifically provided herein, the Holder, solely in such Person's
      capacity as a holder of this Warrant, shall not be entitled to vote or receive
      dividends or be deemed the holder of share capital of the Company for any
      purpose, nor shall anything contained in this Warrant be construed to confer
      upon the Holder, solely in such Person's capacity as the Holder of this Warrant,
      any of the rights of a shareholder of the Company or any right to vote, give
      or
      withhold consent to any corporate action (whether any reorganization, issue
      of
      stock, reclassification of stock, consolidation, merger, conveyance or
      otherwise), receive notice of meetings, receive dividends or subscription
      rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
      which such Person is then entitled to receive upon the due exercise of this
      Warrant. In addition, nothing contained in this Warrant shall be construed
      as
      imposing any liabilities on the Holder to purchase any securities (upon exercise
      of this Warrant or otherwise) or as a shareholder of the Company, whether such
      liabilities are asserted by the Company or by creditors of the Company.
      Notwithstanding this Section 6, the Company shall provide the Holder with copies
      of the same notices and other information given to the shareholders of the
      Company generally, contemporaneously with the giving thereof to the
      shareholders.

     

    7.  REISSUANCE
      OF WARRANTS.

     

    (a)  Transfer
      of Warrant.
      If this
      Warrant is to be transferred pursuant to Section 14, the Holder shall surrender
      this Warrant to the Company, whereupon the Company will forthwith issue and
      deliver upon the order of the Holder a new Warrant (in accordance with Section
      7(d)), registered as the Holder may request, representing the right to purchase
      the number of Warrant Shares being transferred by the Holder and, if less then
      the total number of Warrant Shares then underlying this Warrant is being
      transferred, a new Warrant (in accordance with Section 7(d)) to the Holder
      representing the right to purchase the number of Warrant Shares not being
      transferred

     

    (b)  Lost,
      Stolen or Mutilated Warrant.
      Upon
      receipt by the Company of evidence reasonably satisfactory to the Company of
      the
      loss, theft, destruction or mutilation of this Warrant, and, in the case of
      loss, theft or destruction, of any indemnification undertaking by the Holder
      to
      the Company in customary form and, in the case of mutilation, upon surrender
      and
      cancellation of this Warrant, the Company shall execute and deliver to the
      Holder a new Warrant (in accordance with Section 7(d)) representing the right
      to
      purchase the Warrant Shares then underlying this Warrant.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (c)  Exchangeable
      for Multiple Warrants.
      This
      Warrant is exchangeable, upon the surrender hereof by the Holder at the
      principal office of the Company, for a new Warrant or Warrants (in accordance
      with Section 7(d)) representing in the aggregate the right to purchase the
      number of Warrant Shares then underlying this Warrant, and each such new Warrant
      will represent the right to purchase such portion of such Warrant Shares as
      is
      designated by the Holder at the time of such surrender; provided, however,
      that
      no Warrants for fractional shares of Common Stock shall be given.

     

    (d)  Issuance
      of New Warrants.
      Whenever the Company is required to issue a new Warrant pursuant to the terms
      of
      this Warrant, such new Warrant (i) shall be of like tenor with this Warrant,
      (ii) shall represent, as indicated on the face of such new Warrant, the right
      to
      purchase the Warrant Shares then underlying this Warrant (or in the case of
      a
      new Warrant being issued pursuant to Section 7(a) or Section 7(c), the Warrant
      Shares designated by the Holder which, when added to the number of shares of
      Common Stock underlying the other new Warrants issued in connection with such
      issuance, does not exceed the number of Warrant Shares then underlying this
      Warrant), (iii) shall have an issuance date, as indicated on the face of such
      new Warrant which is the same as the Issuance Date, and (iv) shall have the
      same
      rights and conditions as this Warrant.

     

    8.  NOTICES.
      Whenever notice is required to be given under this Warrant, unless otherwise
      provided herein, such notice shall be given in accordance with Section 5.8
      of
      the Subscription Agreement. The Company shall provide the Holder with prompt
      written notice of all actions taken pursuant to this Warrant, including in
      reasonable detail a description of such action and the reason therefore. Without
      limiting the generality of the foregoing, the Company will give written notice
      to the Holder (i) immediately upon any adjustment of the Exercise Price, setting
      forth in reasonable detail, and certifying, the calculation of such adjustment
      and (ii) at least ten (10) days prior to the date on which the Company closes
      its books or takes a record (A) with respect to any dividend or
      distribution upon the shares of Common Stock, (B) with respect to any
      grants, issuances or sales of any Options, Convertible Securities or rights
      to
      purchase stock, warrants, securities or other property to holders of shares
      of
      Common Stock or (C) for determining rights to vote with respect to any
      Fundamental Transaction, dissolution or liquidation, provided in each case
      that
      such information shall be made known to the public prior to or in conjunction
      with such notice being provided to the Holder.

     

    9.  AMENDMENT
      AND WAIVER.
      Except
      as otherwise provided herein, the provisions of this Warrant may be amended
      and
      the Company may take any action herein prohibited, or omit to perform any act
      herein required to be performed by it, only if the Company has obtained the
      written consent of the Required Holders; provided that no such action may
      increase the exercise price of any 2007 Series Warrant or decrease the number
      of
      shares or class of stock obtainable upon exercise of any 2007 Series Warrant
      without the written consent of the Holder. No such amendment shall be effective
      to the extent that it applies to less than all of the holders of the 2007 Series
      Warrants then outstanding.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    10.  GOVERNING
      LAW.
      This
      Warrant shall be governed by and construed and enforced in accor-dance with,
      and
      all questions concerning the construction, validity, interpretation and
      performance of this Warrant shall be governed by, the internal laws of the
      State
      of New York, without giving effect to any choice of law or conflict of law
      provision or rule (whether of the State of New York or any other jurisdictions)
      that would cause the application of the laws of any jurisdictions other than
      the
      State of New York.

     

    11.  CONSTRUCTION;
      HEADINGS.
      This
      Warrant shall be deemed to be jointly drafted by the Company and all the
      Investors and shall not be construed against any person as the drafter hereof.
      The headings of this Warrant are for convenience of reference and shall not
      form
      part of, or affect the interpretation of, this Warrant.

     

    12.  DISPUTE
      RESOLUTION.
      In the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall submit the
      disputed determinations or arithmetic calculations via facsimile or e-mail
      within two (2) Business Days of receipt of the Exercise Notice giving rise
      to
      such dispute, as the case may be, to the Holder. If the Holder and the Company
      are unable to agree upon such determination or calculation of the Exercise
      Price
      or the Warrant Shares within three (3) Business Days of such disputed
      determination or arithmetic calculation being submitted to the Holder, then
      the
      Company shall, within two (2) Business Days submit via facsimile or e-mail
      (a)
      the disputed determination of the Exercise Price to an independent, reputable
      investment bank selected by the Company and approved by the Holder or (b) the
      disputed arithmetic calculation of the Warrant Shares to the Company's
      independent, outside accountant. The Company shall cause the investment bank
      or
      the accountant, as the case may be, to perform the determinations or
      calculations and notify the Company and the Holder of the results no later
      than
      ten (10) Business Days from the time it receives the disputed determinations
      or
      calculations. Such investment bank's or accountant's determination or
      calculation, as the case may be, shall be binding upon all parties absent
      demonstrable error, and the fees and expenses of the investment bank or the
      accountant, as the case may be, shall be shared payable one-half (1⁄2) by the
      Company and one-half (1⁄2)
      by any other holder the 2007 Series Warrants participating in such dispute
      pro
      rata in accordance with number of 2007 Series Warrants owed by
      them.

     

    13.  REMEDIES,
      OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.
      The
      remedies provided in this Warrant shall be cumulative and in addition to all
      other remedies available under this Warrant and the other Transaction Documents,
      at law or in equity (including a decree of specific performance and/or other
      injunctive relief), and nothing herein shall limit the right of the Holder
      right
      to pursue actual damages for any failure by the Company to comply with the
      terms
      of this Warrant. The Company acknowledges that a breach by it of its obligations
      hereunder will cause irreparable harm to the Holder and that the remedy at
      law
      for any such breach may be inadequate. The Company therefore agrees that, in
      the
      event of any such breach or threatened breach, the holder of this Warrant shall
      be entitled, in addition to all other available remedies, to an injunction
      restraining any breach, without the necessity of showing economic loss and
      without any bond or other security being required.

     

    14.  TRANSFER.
      Subject
      to the provisions of the legend set forth on the first page hereof, this Warrant
      may be offered for sale, sold, transferred or assigned without the consent
      of
      the Company.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    15.   CERTAIN
      DEFINITIONS.
      For
      purposes of this Warrant, the following terms shall have the following
      meanings:

     

    (a)  "Bloomberg"
      means
      Bloomberg Financial Markets.

     

    (b)  "Business
      Day"
      means
      any day other than Saturday, Sunday or other day on which commercial banks
      in
      the City of New York are authorized or required by law to remain
      closed.

     

    (c)  "Common
      Stock"
      means
      (i) the Company's shares of Class A Common Stock, par value $0.001 per
      share, and (ii) any share capital into which such Class A Common Stock
      shall have been changed or any share capital resulting from a reclassification
      of such Class A Common Stock.

     

    (d)  "Common
      Stock Deemed Outstanding"
      means, at any given time, the number of shares of Common Stock actually
      outstanding at such time, plus the number of shares of Common Stock deemed
      to be
      outstanding pursuant to Sections 2(a)(i) and 2(a)(ii) hereof regardless of
      whether the Options or Convertible Securities are actually exercisable at such
      time, but excluding any shares of Common Stock owned or held by or for the
      account of the Company or issuable upon conversion and exercise, as applicable,
      of the 2007 Securities and the Warrants.

     

    (e)  "Closing
      Bid Price"
      and
      "Closing
      Sale Price"
      means,
      for any security as of any date, the last closing bid price and last closing
      trade price, respectively, for such security on the Principal Market, as
      reported by Bloomberg, or, if the Principal Market begins to operate on an
      extended hours basis and does not designate the closing bid price or the closing
      trade price, as the case may be, then the last bid price or last trade price,
      respectively, of such security prior to 4:00:00 p.m., New York Time, as reported
      by Bloomberg, or, if the Principal Market is not the principal securities
      exchange or trading market for such security, the last closing bid price or
      last
      trade price, respectively, of such security on the principal securities exchange
      or trading market where such security is listed or traded as reported by
      Bloomberg, or if the foregoing do not apply, the last closing bid price or
      last
      trade price, respectively, of such security in the over-the-counter market
      on
      the electronic bulletin board for such security as reported by Bloomberg, or,
      if
      no closing bid price or last trade price, respectively, is reported for such
      security by Bloomberg, the average of the bid prices, or the ask prices,
      respectively, of any market makers for such security as reported in the "pink
      sheets" by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).
      If
      the Closing Bid Price or the Closing Sale Price cannot be calculated for a
      security on a particular date on any of the foregoing bases, the Closing Bid
      Price or the Closing Sale Price, as the case may be, of such security on such
      date shall be the fair market value as mutually determined by the Company and
      the Holder. If the Company and the Holder are unable to agree upon the fair
      market value of such security, then such dispute shall be resolved pursuant
      to
      Section 12. All such determinations to be appropriately adjusted for any stock
      dividend, stock split, stock combination or other similar transaction during
      the
      applicable calculation period.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (f)  "Convertible
      Securities"
      means
      any stock or securities (other than Options) directly or indirectly convertible
      into or exercisable or exchangeable for shares of Common Stock.

     

    (g)  "Eligible
      Market"
      means
      the Principal Market, the New York Stock Exchange, Inc., the Nasdaq National
      Market or the Nasdaq SmallCap Market.

     

    (h)  "Expiration
      Date"
      means
      the earlier of either (i) 11:59:00 p.m. on the fifth annual anniversary of
      the
      Issuance Date or, if such date falls on a day other than a Business Day or
      on
      which trading does not take place on the Principal Market (a "Holiday"),
      the
      next date that is not a Holiday; or (ii) the close of business on the tenth
      Business Day following any consecutive twenty (20) Business Day period during
      which the closing price of the Common Stock equals or exceeds $4.50 (subject
      to
      appropriate adjustments for stock splits, stock dividends, stock combinations
      and other similar transactions after the Subscription Date.).

     

    (i)  "Excluded
      Securities"
      means
      any Common Stock issued or issuable: (i) in connection with any equity
      incentive or similar plan designed primarily for the benefit of the directors,
      officers and employees of the Company and which has been approved by the
      stockholders of the Company; (ii) upon the exercise of the 2007 Series
      Warrants; (iii) pursuant to a bona fide firm commitment underwritten public
      offering with a nationally recognized underwriter which generates gross proceeds
      to the Company in excess of $10,000,000 (other than an "at-the-market offering"
      as defined in Rule 415(a)(4) under the 1933 Act and "equity lines");
      (iv) in connection with any acquisition by the Company, whether through an
      acquisition for stock or a merger, of any business, assets or technologies
      the
      primary purpose of which is not to raise equity capital; and (v) upon
      exercise of any Options or conversion of any convertible securities which are
      outstanding on the day immediately preceding the Subscription Date or which
      are
      issued on or after the Subscription Date pursuant to the terms of an Option
      or
      Convertible Security outstanding on the day immediately preceding the
      Subscription Date, provided that the terms of such options or convertible
      securities are not amended, modified or changed on or after the Subscription
      Date.

     

    (j)  "Fundamental
      Transaction"
      means
      that the Company shall, directly or indirectly, in one or more related
      transactions, (i) consolidate or merge with or into (whether or not the Company
      is the surviving corporation) another Person, or (ii) sell, assign, transfer,
      convey or otherwise dispose of all or substantially all of the properties or
      assets of the Company to another Person, or (iii) allow another Person to make
      a
      purchase, tender or exchange offer that is accepted by the holders of more
      than
      the fifty-percent (50%) of either the outstanding shares of Common Stock or
      the
      outstanding shares of Common Stock (not including any shares of common stock
      held by the Person or Persons making or party to, or associated or affiliated
      with the Persons making or party to, such purchase, tender or exchange offer),
      or (iv) consummate a stock purchase agreement or other business combination
      (including, without limitation, a reorganization, recapitalization, spin-off
      or
      scheme of arrangement) with another Person whereby such other Person acquires
      more than the fifty-percent (50%) of the outstanding shares of Common Stock
      (not
      including any shares of Common Stock held by the other Person or other Persons
      making or party to, or associated or affiliated with the other Persons making
      or
      party to, such stock purchase agreement or other business combination), or
      (v)
      reorganize, recapitalize or reclassify its common stock.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (k)  "Options"
      means
      any rights, warrants or options to subscribe for or purchase shares of Common
      Stock or Convertible Securities.

     

    (l)  "Parent
      Entity"
      of a
      Person means an entity that, directly or indirectly, controls the applicable
      Person and whose common stock or equivalent equity security is quoted or listed
      on an Eligible Market, or, if there is more than one such Person or Parent
      Entity, the Person or Parent Entity with the largest public market
      capitalization as of the date of consummation of the Fundamental
      Transaction.

     

    (m)  "Person"
      means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization, any other entity and
      a
      government or any department or agency thereof.

     

    (n)  "Principal
      Market"
      means
      at any time the American Stock Exchange or such other nationally recognized
      market on which the common stock may then be traded.

     

    (o)  "Registration
      Rights Agreement"
      means
      that certain registration rights agreement by and among the Company and the
      Investors.

     

    (p)  "Required
      Holders"
      means
      the holders of the 2007 Series Warrants representing at least a majority of
      shares of Common Stock underlying the 2007 Series Warrants then
      outstanding.

     

    (q)  "Successor
      Entity"
      means
      the Person (or, if so elected by the Required Holders, the Parent Entity) formed
      by, resulting from or surviving any Fundamental Transaction or the Person (or,
      if so elected by the Required Holders, the Parent Entity) with which such
      Fundamental Transaction shall have been entered into.

     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Warrant to Purchase Class A Common Stock to be duly
      executed as of the Issuance Date set out above.

    

    

    
      	 	 	 
	 	ADVANCED
              PHOTONIX, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name: Richard
              D. Kurtz
	 	
              Title: Chief
                Executive Officer & President

            

    

     

    
      
        
        

      

      
        15

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