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Unassociated Document

    REGISTRATION
      RIGHTS AGREEMENT

     

    REGISTRATION
      RIGHTS AGREEMENT (this
      "Agreement"),
      dated
      as of _________ ___,
      2007, by and among Advanced Photonix, Inc., a Delaware corporation, with
      headquarters located at 2925 Boardwalk, Ann Arbor, Michigan 48104 (the
"Company"),
      and
      the undersigned Investors (each, an "Investor,"
      and
      collectively, the "Investors").

    

    WHEREAS:

    

    A.
       In
      connection with the Subscription Agreement by and among the parties hereto
      of
      even date herewith (the "Subscription
      Agreement"),
      the
      Company has agreed, upon the terms and subject to the conditions set forth
      in
      the Subscription Agreement, to issue and sell to each Investor the number of
      shares of the Company’s Class A common stock, par value $.001 a share (the
“Common Stock”) and warrants (the "Warrants")
      which
      will be exercisable to purchase the number of shares of Common Stock (the
"Warrant
      Shares")
      set
      forth at the foot of this Agreement next to such Investor’s name.

    

    B.
       To
      induce
      the Investors to execute and deliver the Subscription Agreement, the Company
      has
      agreed to provide certain registration rights under the Securities Act of 1933,
      as amended, and the rules and regulations thereunder, or any similar successor
      statute (collectively, the "1933
      Act"),
      and
      applicable state securities laws.

    

    NOW,
      THEREFORE, in
      consideration of the premises and the mutual covenants contained herein and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the Company and each of the Investors hereby agree as
      follows:

    

    1.    
Definitions.

    

    Capitalized
      terms used herein and not otherwise defined herein shall have the respective
      meanings set forth in the Subscription Agreement. As used in this Agreement,
      the
      following terms shall have the following meanings:

    

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

    

    b.     "Closing
      Date"
      shall
      mean the date of the Closing, as the term Closing is defined in the Subscription
      Agreement.

    

    c.     "Effective
      Date"
      means
      the date the Registration Statement has been declared effective by the
      SEC.

    

    d.      
      "Effectiveness
      Deadline"
      means
      the date which is 120 days after the Filing Deadline, or if there is a full
      review of the Registration Statement by the SEC, 150 days after the Closing
      Date.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    e.     "Filing
      Deadline"
      means
      any day on or prior to December 7, 2007, or as otherwise agreed upon by the
      parties.

    

    f.     "Investor"
      includes
      any transferee or assignee to whom an Investor assigns its rights under this
      Agreement and who agrees to become bound by the provisions of this Agreement
      in
      accordance with Section 9 and any transferee or assignee thereof to whom a
      transferee or assignee assigns its rights under this Agreement and who agrees
      to
      become bound by the provisions of this Agreement in accordance with Section
      9.

     

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

     

    h.     "register,"
      "registered,"
      and
"registration"
      refer to
      a registration effected by preparing and filing one or more Registration
      Statements (as defined below) in compliance with the 1933 Act and pursuant
      to
      Rule 415 and the declaration or ordering of effectiveness of such Registration
      Statement(s) by the SEC.

     

    i.     "Registrable
      Securities"
      means
      (i) the shares of Common Stock purchased by the Investors pursuant to the
      Subscription Agreement, (ii) the Warrant Shares issuable upon exercise of the
      Warrants and (iii) any share capital of the Company issuable with respect to
      the
      Warrant Shares or the Warrants as a result of any share split, share dividend,
      recapitalization, exchange or similar event or otherwise, without regard to
      any
      limitations on exercises of the Warrants.

     

    j.     "Registration
      Statement"
      means a
      registration statement or registration statements of the Company filed under
      the
      1933 Act covering the Registrable Securities.

     

    k.     "Required
      Holders"
      means
      the holders of at least a majority of the Registrable Securities.

     

    l.     "Required
      Registration Amount" means
      the
      sum of the shares of Common Stock purchased pursuant to the Subscription
      Agreement and the number of Warrant Shares issuable pursuant to the
      Warrants.

     

    m.     "Rule
      415"
      means
      Rule 415 under the 1933 Act or any successor rule providing for offering
      securities on a continuous or delayed basis.

     

    n.     "SEC"
      means
      the United States Securities and Exchange Commission.

     

    2.   
Registration.
      

    

    a.     A
      Mandatory Registration.
      The
      Company shall prepare, and, as soon as practicable but in no event later than
      the Filing Deadline, file with the SEC a Registration Statement on Form S-3
      covering the resale of all of the Registrable Securities. In the event that
      Form
      S-3 is unavailable for such a registration, the Company shall use such other
      form as is available for such a registration in accordance with the 1933 Act.
      The Registration Statement prepared pursuant hereto shall register for resale
      at
      least the number of Shares of Common Stock equal to the Required Registration
      Amount as of date the Registration Statement is initially filed with the SEC.
      The Registration Statement shall contain (except if otherwise directed by the
      Required Holders) a "Plan
      of Distribution"
      section
      in substantially the form attached hereto as Exhibit A. The Company shall use
      its best efforts to have the Registration Statement declared effective by the
      SEC as soon as practicable, but in no event later than the Effectiveness
      Deadline.

    

    
      
        
        

      

      
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    b.     Effect
      of Failure to File and Obtain and Maintain Effectiveness of Registration
      Statement.
      If (i)
      a Registration Statement covering all of the Registrable Securities required
      to
      be covered thereby and required to be filed by the Company pursuant to this
      Agreement is (A) not filed with the SEC on or before the respective Filing
      Deadline (a "Filing
      Failure")
      or (B)
      not declared effective by the SEC on or before the respective Effectiveness
      Deadline (an "Effectiveness
      Failure")
      or (ii)
      on any day after the Effective Date sales of all of the Registrable Securities
      required to be included on such Registration Statement cannot be made (other
      than during an Allowable Grace Period (as defined in Section 3(n)) pursuant
      to
      such Registration Statement (including, without limitation, because of a failure
      to keep such Registration Statement effective for a period of two (2) years
      after the Effective Date, to disclose such information as is necessary for
      sales
      to be made pursuant to such Registration Statement or to register a sufficient
      number of Shares of Common Stock) (a "Maintenance
      Failure")
      then,
      as partial relief for the damages to any holder by reason of any such delay
      in
      or reduction of its ability to sell the underlying shares of Common Stock (which
      remedy shall not be exclusive of any other remedies available at law or in
      equity), the Company shall pay to each holder of Registrable Securities relating
      to such Registration Statement an amount in cash equal to one and one-half
      percent (1.5%) of the Aggregate Purchase Price (as such term is defined in
      the
      Subscription Agreement) of such Investor's Registrable Securities included
      in
      such Registration Statement on each of the following dates: (i) the day of
      a
      Filing Failure and on every thirtieth day (pro rated for periods totaling less
      than thirty (30) days) thereafter until such Filing Failure is cured; (ii)
      the
      day of an Effectiveness Failure and on every thirtieth day (pro rated for
      periods totaling less than thirty (30) days) thereafter until such Effectiveness
      Failure is cured; (iii) the initial day of a Maintenance Failure and on every
      thirtieth day (pro rated for periods totaling less than thirty (30) days)
      thereafter until such Maintenance Failure is cured. The payments to which a
      holder shall be entitled pursuant to this Section 2(b) are referred to herein
      as
"Registration
      Delay Payments."
      Registration Delay Payments shall be paid on the earlier of (I) the last day
      of
      the calendar month during which such Registration Delay Payments are incurred
      and (II) the third Business Day after the event or failure giving rise to the
      Registration Delay Payments is cured. In the event the Company fails to make
      Registration Delay Payments in a timely manner, such Registration Delay Payments
      shall bear interest at the rate of one-percent (1.0%) per month (prorated for
      partial months) until paid in full.

     

    
      
        
        

      

      
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    3.     Related
      Obligations.

    

    At
      such
      time as the Company is obligated to file a Registration Statement with the
      SEC
      pursuant to Section 2(a) the Company will use its best efforts to effect the
      registration of the Registrable Securities in accordance with the intended
      method of disposition thereof and, pursuant thereto, the Company shall have
      the
      following obligations: 

    

    a.    The
      Company shall submit to the SEC, within three (3) Business Days after the
      Company learns that no review of a particular Registration Statement will be
      made by the staff of the SEC or that the staff has no further comments on a
      particular Registration Statement, as the case may be, a request for
      acceleration of effectiveness of such Registration Statement to a time and
      date
      not later than forty-eight (48) hours after the submission of such request.
      The
      Company shall keep each Registration Statement effective pursuant to Rule 415
      at
      all times until the earlier of (i) the date as of which the Investors may sell
      all of the Registrable Securities covered by such Registration Statement without
      restriction pursuant to Rule 144(k) (or any successor thereto) promulgated
      under
      the 1933 Act or (ii) the date on which the Investors shall have sold all of
      the
      Registrable Securities covered by such Registration Statement (the "Registration
      Period").
      The
      Company shall ensure that each Registration Statement including any amendments
      or supplements thereto and prospectuses contained therein) shall not contain
      any
      untrue statement of a material fact or omit to state a material fact required
      to
      be stated therein, or necessary to make the statements therein (in the case
      of
      prospectuses, in the light of the circumstances in which they were made) not
      misleading.

    

    b.    The
      Company shall prepare and file with the SEC such amendments (including
      post-effective amendments) and supplements to a Registration Statement and
      the
      prospectus used in connection with such Registration Statement, which prospectus
      is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may
      be
      necessary to keep such Registration Statement effective at all times during
      the
      Registration Period, and, during such period, comply with the provisions of
      the
      1933 Act with respect to the disposition of all Registrable Securities of the
      Company covered by such Registration Statement until such time as all of such
      Registrable Securities shall have been disposed of in accordance with the
      intended methods of disposition by the seller or sellers thereof as set forth
      in
      such Registration Statement. In the case of amendments and supplements to a
      Registration Statement which are required to be filed pursuant to this Agreement
      (including pursuant to this Section 3(b) by reason of the Company filing a
      report on Form 10-Q, Form 10-K or any analogous report under the Securities
      Exchange Act of 1934, as amended (the "1934
      Act"),
      the
      Company shall have incorporated such report by reference into such Registration
      Statement, if applicable, or shall file such amendments or supplements with
      the
      SEC on the same day on which the 1934 Act report is filed which created the
      requirement for the Company to amend or supplement such Registration
      Statement.

    

    c.    The
      Company shall furnish to each Investor whose Registrable Securities are included
      in any Registration Statement, without charge, (i) promptly after the same
      is
      prepared and filed with the SEC, at least one (1) copy of such Registration
      Statement and any amendment(s) thereto, including financial statements and
      schedules, all documents incorporated therein by reference, if requested by
      an
      Investor, all exhibits and each preliminary prospectus, (ii) upon the
      effectiveness of any Registration Statement, ten (10) copies of the prospectus
      included in such Registration Statement and all amendments and supplements
      thereto (or such other number of copies as such Investor may reasonably request)
      and (iii) such other documents, including copies of any preliminary or final
      prospectus, as such Investor may reasonably request from time to time in order
      to facilitate the disposition of the Registrable Securities owned by such
      Investor.

     

    
      
        
        

      

      
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    d.   The
      Company shall use its best efforts to (i) register and qualify, unless an
      exemption from registration and qualification applies, the resale by Investors
      of the Registrable Securities covered by a Registration Statement under such
      other securities or "blue sky" laws of all applicable jurisdictions in the
      United States, (ii) prepare and file in those jurisdictions, such amendments
      (including post-effective amendments) and supplements to such registrations
      and
      qualifications as may be necessary to maintain the effectiveness thereof during
      the Registration Period, (iii) take such other actions as may be necessary
      to
      maintain such registrations and qualifications in effect at all times during
      the
      Registration Period, and (iv) take all other actions reasonably necessary
      or advisable to qualify the Registrable Securities for sale in such
      jurisdictions; provided, however, that the Company shall not be required in
      connection therewith or as a condition thereto to (x) qualify to do business
      in
      any jurisdiction where it would not otherwise be required to qualify but for
      this Section 3(d), (y) subject itself to general taxation in any such
      jurisdiction, or (z) file a general consent to service of process in any such
      jurisdiction. The Company shall promptly notify each Investor who holds
      Registrable Securities of the receipt by the Company of any notification with
      respect to the suspension of the registration or qualification of any of the
      Registrable Securities for sale under the securities or "blue sky" laws of
      any
      jurisdiction in the United States or its receipt of actual notice of the
      initiation or threatening of any proceeding for such purpose.

    

    e.   
         The
      Company shall notify each Investor in writing of the happening of any event,
      as
      promptly as practicable after becoming aware of such event, as a result of
      which
      the prospectus included in a Registration Statement, as then in effect, includes
      an untrue statement of a material fact or omission to state a material fact
      required to be stated therein or necessary to make the statements therein,
      in
      the light of the circumstances under which they were made, not misleading
      (provided that in no event shall such notice contain any material, nonpublic
      information), and, subject to Section 3(n), promptly prepare a supplement or
      amendment to such Registration Statement to correct such untrue statement or
      omission, and deliver ten (10) copies of such supplement or amendment to each
      Investor (or such other number of copies as such Investor may reasonably
      request). The Company shall also promptly notify each Investor in writing (i)
      when a prospectus or any prospectus supplement or post-effective amendment
      has
      been filed, and when a Registration Statement or any post-effective amendment
      has become effective, (ii) of any request by the SEC for amendments or
      supplements to a Registration Statement or related prospectus or related
      information, and (iii) of the Company's reasonable determination that a
      post-effective amendment to a Registration Statement would be
      appropriate.

    

    f.    The
      Company shall use its best efforts to prevent the issuance of any stop order
      or
      other suspension of effectiveness of a Registration Statement, or the suspension
      of the qualification of any of the Registrable Securities for sale in any
      jurisdiction and, if such an order or suspension is issued, to obtain the
      withdrawal of such order or suspension at the earliest possible moment and
      to
      notify each Investor who holds Registrable Securities being sold of the issuance
      of such order and the resolution thereof or its receipt of actual notice of
      the
      initiation or threat of any proceeding for such purpose.

     

    
      
        
        

      

      
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    g.    The
      Company shall hold in confidence and not make any disclosure of information
      concerning an Investor provided to the Company unless (i) disclosure of such
      information is necessary to comply with federal or state securities laws, (ii)
      the disclosure of such information is necessary to avoid or correct a
      misstatement or omission in any Registration Statement, (iii) the release of
      such information is ordered pursuant to a subpoena or other final,
      non-appealable order from a court or governmental body of competent
      jurisdiction, or (iv) such information has been made generally available to
      the
      public other than by disclosure in violation of this Agreement or any other
      agreement. The Company agrees that it shall, upon learning that disclosure
      of
      such information concerning an Investor is sought in or by a court or
      governmental body of competent jurisdiction or through other means, give prompt
      written notice to such Investor and allow such Investor, at the Investor's
      expense, to undertake appropriate action to prevent disclosure of, or to obtain
      a protective order for, such information.

    

    h.    The
      Company shall cooperate with the Investors who hold Registrable Securities
      being
      offered and, to the extent applicable, facilitate the timely preparation and
      delivery of certificates (not bearing any restrictive legend) representing
      the
      Registrable Securities to be offered pursuant to a Registration Statement and
      enable such certificates to be in such denominations or amounts, as the case
      may
      be, as the Investors may reasonably request and registered in such names as
      the
      Investors may request.

    

    i.    If
      requested by an Investor, the Company shall (i) as soon as practicable
      incorporate in a prospectus supplement or post-effective amendment such
      information as an Investor reasonably requests to be included therein relating
      to the sale and distribution of Registrable Securities, including, without
      limitation, information with respect to the number of Registrable Securities
      being offered or sold, the purchase price being paid therefor and any other
      terms of the offering of the Registrable Securities to be sold in such offering;
      (ii) as soon as practicable make all required filings of such prospectus
      supplement or post-effective amendment after being notified of the matters
      to be
      incorporated in such prospectus supplement or post-effective amendment; and
      (iii) as soon as practicable, supplement or make amendments to any Registration
      Statement if reasonably requested by an Investor holding any Registrable
      Securities.

    

    j.    The
      Company shall use its best efforts to cause the Registrable Securities covered
      by a Registration Statement to be registered with or approved by such other
      governmental agencies or authorities as may be necessary to consummate the
      disposition of such Registrable Securities.

    

    k.   
         The
      Company shall make generally available to its security holders as soon as
      practical, but not later than ninety (90) days after the close of the period
      covered thereby, an earnings statement (in form complying with, and in the
      manner provided by, the provisions of Rule 158 under the 1933 Act) covering
      a
      twelve (12) month period beginning not later than the first day of the Company's
      fiscal quarter next following the effective date of a Registration
      Statement.

     

    
      
        
        

      

      
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    l.    The
      Company shall otherwise use its best efforts to comply with all applicable
      rules
      and regulations of the SEC in connection with any registration
      hereunder.

    

    m.          Within
      two (2) Business Days after a Registration Statement which covers Registrable
      Securities is ordered effective by the SEC, the Company shall deliver, and
      shall
      cause legal counsel for the Company to deliver, to the transfer agent for such
      Registrable Securities (with copies to the Investors whose Registrable
      Securities are included in such Registration Statement) confirmation that such
      Registration Statement has been declared effective by the SEC.

    

    n.          
      Notwithstanding
      anything to the contrary herein, at any time after the Registration Statement
      has been declared effective by the SEC, the Company may delay the disclosure
      of
      material, non-public information concerning the Company the disclosure of which
      at the time is not, in the good faith opinion of the Board of Directors of
      the
      Company and its counsel, in the best interest of the Company and, in the opinion
      of counsel to the Company, otherwise required (a "Grace
      Period");
      provided, that the Company shall promptly (i) notify the Investors in writing
      of
      the existence of material, non-public information giving rise to a Grace Period
      (provided that in each notice the Company will not disclose the content of
      such
      material, non-public information to the Investors) and the date on which the
      Grace Period will begin, and (ii) notify the Investors in writing of the date
      on
      which the Grace Period ends; and, provided further, that no Grace Period shall
      exceed fifteen (15) consecutive days and during any three hundred sixty five
      (365) day period such Grace Periods shall not exceed an aggregate of forty-five
      (45) days and the first day of any Grace Period must be at least two (2) trading
      days after the last day of any prior Grace Period (each, an "Allowable
      Grace Period").
      For
      purposes of determining the length of a Grace Period above, the Grace Period
      shall begin on and include the date the Investors receive the notice referred
      to
      in clause (i) and shall end on and include the later of the date the Investors
      receive the notice referred to in clause (ii) and the date referred to in such
      notice. Upon expiration of the Grace Period, the Company shall again be bound
      by
      the first sentence of Section 3(d) with respect to the information giving rise
      thereto unless such material, non-public information is no longer applicable.
      Notwithstanding anything to the contrary, the Company shall cause its transfer
      agent to deliver unlegended Shares of Common Stock to a transferee of an
      Investor in accordance with the terms of the Subscription Agreement in
      connection with any sale of Registrable Securities with respect to which an
      Investor has entered into a contract for sale, and delivered a copy of the
      prospectus included as part of the applicable Registration Statement, prior
      to
      the Investor's receipt of the notice of a Grace Period and for which the
      Investor has not yet settled.

    

    4.    Obligations
      of the Investors.

    

    a.   At
      least
      five (5) Business Days prior to the first anticipated filing date of a
      Registration Statement, the Company shall notify each Investor in writing of
      the
      information the Company requires from each such Investor if such Investor elects
      to-have any of such Investor's Registrable Securities included in such
      Registration Statement. It shall be a condition precedent to the obligations
      of
      the Company to complete the registration pursuant to this Agreement with respect
      to the Registrable Securities of a particular Investor that such Investor shall
      furnish to the Company such information regarding itself, the Registrable
      Securities held by it and the intended method of disposition of the Registrable
      Securities held by it as shall be reasonably required to effect the
      effectiveness of the registration of such Registrable Securities and shall
      execute such documents in connection with such registration as the Company
      may
      reasonably request.

     

    
      
        
        

      

      
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    b.  
Each
      Investor, by such Investor's acceptance of the Registrable Securities, agrees
      to
      cooperate with the Company as reasonably requested by the Company in connection
      with the preparation and filing of any Registration Statement hereunder, unless
      such Investor has notified the Company in writing of such Investor's election
      to
      exclude all of such Investor's Registrable Securities from such Registration
      Statement.

    

    c.   Each
      Investor agrees that, upon receipt of any notice from the Company of the
      happening of any event of the kind described in Section 3(f) or the first
      sentence of 3(e), such Investor will immediately discontinue disposition of
      Registrable Securities pursuant to any Registration Statement(s) covering such
      Registrable Securities until such Investor's receipt of the copies of an
      appropriated supplemented or amended prospectus or receipt of notice that no
      supplement or amendment is required. Notwithstanding anything to the contrary,
      the Company shall cause its transfer agent to deliver unlegended shares of
      Common Stock to a transferee of an Investor in accordance with the terms of
      the
      Subscription Agreement in connection with any sale of Registrable Securities
      with respect to which an Investor has entered into a contract for sale prior
      to
      the Investor's receipt of a notice from the Company of the happening of any
      event of the kind described in Section 3(f) or the first sentence of 3(e) and
      for which the Investor has not yet settled.

    

    d.   Each
      Investor covenants and agrees that it will comply with the prospectus delivery
      requirements of the 1933 Act as applicable to it in connection with sales of
      Registrable Securities pursuant to the Registration Statement.

    

    5.    Expenses
      of Registration.

    

    All
      reasonable expenses, other than underwriting discounts and commissions, incurred
      in connection with registrations, filings or qualifications pursuant to Sections
      2 and 3, including, without limitation, all registration, listing and
      qualifications fees, printers and accounting fees, and fees and disbursements
      of
      counsel for the Company shall be paid by the Company. 

    

    6.    Indemnification.

    

    In
      the
      event any Registrable Securities are included in a Registration Statement under
      this Agreement:

     

    
      
        
        

      

      
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    a.    To
      the
      fullest extent permitted by law, the Company will, and hereby does, indemnify,
      hold harmless and defend each Investor, the directors, officers, members,
      partners, employees, agents, representatives of, and each Person, if any, who
      controls any Investor within the meaning of the 1933 Act or the 1934 Act (each,
      an "Indemnified
      Person"),
      against any losses, claims, damages, liabilities, judgments, fines, penalties,
      charges, costs, reasonable attorneys' fees, amounts paid in settlement or
      expenses, joint or several, (collectively, "Claims")
      incurred in investigating, preparing or defending any action, claim, suit,
      inquiry, proceeding, investigation or appeal taken from the foregoing by or
      before any court or governmental, administrative or other regulatory agency,
      body or the SEC, whether pending or threatened, whether or not an indemnified
      party is or may be a party thereto ("Indemnified
      Damages"),
      to
      which any of them may become subject insofar as such Claims (or actions or
      proceedings, whether commenced or threatened, in respect thereof) arise out
      of
      or are based upon: (i) any untrue statement or alleged untrue statement of
      a
      material fact in a Registration Statement or any post-effective amendment
      thereto or in any filing made in connection with the qualification of the
      offering under the securities or other "blue sky" laws of any jurisdiction
      in
      which Registrable Securities are offered ("Blue Sky Filing"), or the omission
      or
      alleged omission to state a material fact required to be stated therein or
      necessary to make the statements therein not misleading, (ii) any untrue
      statement or alleged untrue statement of a material fact contained in any
      preliminary prospectus if used prior to the effective date of such Registration
      Statement, or contained in the final prospectus (as amended or supplemented,
      if
      the Company files any amendment thereof or supplement thereto with the SEC)
      or
      the omission or alleged omission to state therein any material fact necessary
      to
      make the statements made therein, in the light of the circumstances under which
      the statements therein were made, not misleading, (iii) any violation or alleged
      violation by the Company of the 1933 Act, the 1934 Act, any other law,
      including, without limitation, any state securities law, or any rule or
      regulation thereunder relating to the offer or sale of the Registrable
      Securities pursuant to a Registration Statement or (iv) any violation of this
      Agreement (the matters in the foregoing clauses (i) through (iv) being,
      collectively, "Violations").
      Subject to Section 6(c), the Company shall reimburse the Indemnified Persons,
      promptly as such expenses are incurred and are due and payable, for any legal
      fees or other reasonable expenses incurred by them in connection with
      investigating or defending any such Claim. Notwithstanding anything to the
      contrary contained herein, the indemnification agreement contained in this
      Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising
      out of or based upon a Violation which occurs in reliance upon and in conformity
      with information furnished in writing to the Company by such Indemnified Person
      for such Indemnified Person expressly for use in connection with the preparation
      of the Registration Statement or any such amendment thereof or supplement
      thereto, if such prospectus was timely made available by the Company pursuant
      to
      Section 3(c); (ii) with respect to any preliminary prospectus, shall not inure
      to the benefit of any such Person from whom the Person asserting any such Claim
      purchased the Registrable Securities that are the subject thereof (or to the
      benefit of any Person controlling such Person) if the untrue statement or
      omission of material fact contained in the preliminary prospectus was corrected
      in the prospectus, as then amended or supplemented, if such prospectus was
      timely made available by the Company pursuant to Section 3(c), and the
      Indemnified Person was promptly advised in writing not to use the incorrect
      prospectus prior to the use giving rise to a violation and such Indemnified
      Person, notwithstanding such advice, used it or failed to deliver the correct
      prospectus as required by the 1933 Act and such correct prospectus was timely
      made available pursuant to Section 3(c); (iii) shall not be available to
      the extent such Claim is based on a failure of the Investor to deliver or to
      cause to be delivered the prospectus made available by the Company, including
      a
      corrected prospectus, if such prospectus or corrected prospectus was timely
      made
      available by the Company pursuant to Section 3(c); and (iv) shall not apply
      to
      amounts paid in settlement of any Claim if such settlement is effected without
      the prior written consent of the Company, which consent shall not be
      unreasonably withheld or delayed. Such indemnity shall remain in full force
      and
      effect regardless of any investigation made by or on behalf of the Indemnified
      Person and shall survive the transfer of the Registrable Securities by the
      Investors pursuant to Section 9.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    b.    In
      connection with any Registration Statement in which an Investor is
      participating, each such Investor agrees to severally and not jointly indemnify,
      hold harmless and defend, to the same extent and in the same manner as is set
      forth in Section 6(a), the Company, each of its directors, each of its officers
      who signs the Registration Statement and each Person, if any, who controls
      the
      Company within the meaning of the 1933 Act or the 1934 Act (each, an
"Indemnified
      Party"),
      against any Claim or Indemnified Damages to which any of them may become
      subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim
      or
      Indemnified Damages arise out of or are based upon any Violation, in each case
      to the extent, and only to the extent, that such Violation occurs in reliance
      upon and in conformity with written information furnished to the Company by
      such
      Investor expressly for use in connection with such Registration Statement;
      and,
      subject to Section 6(c), such Investor will reimburse any legal or other
      expenses reasonably incurred by an Indemnified Party in connection with
      investigating or defending any such Claim; provided, however, that the indemnity
      agreement contained in this Section 6(b) and the agreement with respect to
      contribution contained in Section 7 shall not apply to amounts paid in
      settlement of any Claim if such settlement is effected without the prior written
      consent of such Investor, which consent shall not be unreasonably withheld
      or
      delayed; provided, further, however, that the Investor shall be liable under
      this Section 6(b) for only that amount of a Claim or Indemnified Damages as
      does
      not exceed the net proceeds to such Investor as a result of the sale of
      Registrable Securities pursuant to such Registration Statement. Such indemnity
      shall remain in full force and effect regardless of any investigation made
      by or
      on behalf of such Indemnified Party and shall survive the transfer of the
      Registrable Securities by the Investors pursuant to Section 9. Notwithstanding
      anything to the contrary contained herein, the indemnification agreement
      contained in this Section 6(b) with respect to any preliminary prospectus shall
      not inure to the benefit of any Indemnified Party if the untrue statement or
      omission of material fact contained in the preliminary prospectus was corrected
      on a timely basis in the prospectus, as then amended or
      supplemented.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    c.    Promptly
      after receipt by an Indemnified Person or Indemnified Party under this Section
      6
      of notice of the commencement of any action or proceeding (including any
      governmental action or proceeding) involving a Claim, such Indemnified Person
      or
      Indemnified Party shall, if a Claim in respect thereof is to be made against
      any
      indemnifying party under this Section 6, deliver to the indemnifying party
      a
      written notice of the commencement thereof, and the indemnifying party shall
      have the right to participate in, and, to the extent the indemnifying party
      so
      desires, jointly with any other indemnifying party similarly noticed, to assume
      control of the defense thereof with counsel mutually satisfactory to the
      indemnifying party and the Indemnified Person or the Indemnified Party, as
      the
      case may be; provided, however, that an Indemnified Person or Indemnified Party
      shall have the right to retain its own counsel with the fees and expenses of
      not
      more than one counsel for such Indemnified Person or Indemnified Party to be
      paid by the indemnifying party, if, in the reasonable opinion of counsel
      retained by the indemnifying party, the representation by such counsel of the
      Indemnified Person or Indemnified Party and the indemnifying party would be
      inappropriate due to actual or potential differing interests between such
      Indemnified Person or Indemnified Party and any other party represented by
      such
      counsel in such proceeding. In the case of an Indemnified Person, legal counsel
      referred to in the immediately preceding sentence shall be selected by the
      Investors holding at least a majority in interest of the Registrable Securities
      included in the Registration Statement to which the Claim relates. The
      Indemnified Party or Indemnified Person shall cooperate fully with the
      indemnifying party in connection with any negotiation or defense of any such
      action or Claim by the indemnifying party and shall furnish to the indemnifying
      party all information reasonably available to the Indemnified Party or
      Indemnified Person which relates to such action or Claim. The indemnifying
      party
      shall keep the Indemnified Party or Indemnified Person reasonably apprised
      at
      all times as to the status of the defense or any settlement negotiations with
      respect thereto. No indemnifying party shall be liable for any settlement of
      any
      action, claim or proceeding effected without its prior written consent,
      provided, however, that the indemnifying party shall not unreasonably withhold,
      delay or condition its consent. No indemnifying party shall, without the prior
      written consent of the Indemnified Party or Indemnified Person, consent to
      entry
      of any judgment or enter into any settlement or other compromise which does
      not
      include as an unconditional term thereof the giving by the claimant or plaintiff
      to such Indemnified Party or Indemnified Person of a release from all liability
      in respect to such Claim or litigation. Following indemnification as provided
      for hereunder, the indemnifying party shall be subrogated to all rights of
      the
      Indemnified Party or Indemnified Person with respect to all third parties,
      firms
      or corporations relating to the matter for which indemnification has been made.
      The failure to deliver written notice to the indemnifying party within a
      reasonable time of the commencement of any such action shall not relieve such
      indemnifying party of any liability to the Indemnified Person or Indemnified
      Party under this Section 6, except to the extent that the indemnifying party
      is
      prejudiced in its ability to defend such action.

     

    d.    The
      indemnification required by this Section 6 shall be made by periodic payments
      of
      the amount thereof during the course of the investigation or defense, as and
      when bills are received or Indemnified Damages are incurred.

    

    e.    The
      indemnity agreements contained herein shall be in addition to (i) any cause
      of
      action or similar right of the Indemnified Party or Indemnified Person against
      the indemnifying party or others, and (ii) any liabilities the indemnifying
      party may be subject to pursuant to the law.

    

    7. Contribution.

    

    To
      the
      extent any indemnification by an indemnifying party is prohibited or limited
      by
      law, the indemnifying party agrees to make the maximum contribution with respect
      to any amounts for which it would otherwise be liable under Section 6 to the
      fullest extent permitted by law; provided, however, that: (i) no Person involved
      in the sale of Registrable Securities which Person is guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in
      connection with such sale shall be entitled to contribution from any Person
      involved in such sale of Registrable Securities who was not guilty of fraudulent
      misrepresentation; and (ii) contribution by any seller of Registrable
      Securities shall be limited in amount to the net amount of proceeds received
      by
      such seller from the sale of such Registrable Securities pursuant to such
      Registration Statement.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    8.     Reports
      Under the 1934 Act.

    

    With
      a
      view to making available to the Investors the benefits of Rule 144 promulgated
      under the 1933 Act or any other similar rule or regulation of the SEC that
      may
      at any time permit the Investors to sell securities of the Company to the public
      without registration ("Rule
      144"),
      the
      Company agrees to:

    

    a.    make
      and
      keep public information available, as those terms are understood and defined
      in
      Rule 144;

    

    b.    file
      with
      the SEC in a timely manner all reports and other documents required of the
      Company under the 1933 Act and the 1934 Act so long as the Company remains
      subject to such requirements and the filing of such reports and other documents
      is required for the applicable provisions of Rule 144; and

     

    c.    furnish
      to each Investor so long as such Investor owns Registrable Securities, promptly
      upon request, (i) a written statement by the Company, if true, that it has
      complied with the reporting requirements of Rule 144, the 1933 Act and the
      1934
      Act, (ii) a copy of the most recent annual report of the Company and such other
      reports and documents so filed by the Company, and (iii) such other information
      as may be reasonably requested to permit the Investors to sell such securities
      pursuant to Rule 144 without registration.

    

    9.    Assignment
      of Registration Rights.

    

    The
      rights under this Agreement shall be automatically assignable by the Investors
      to any transferee of all or any portion of such Investor's Registrable
      Securities if: (i) the Investor agrees in writing with the transferee or
      assignee to assign such rights, and a copy of such agreement is furnished to
      the
      Company within a reasonable time after such assignment; (ii) the Company
      is, within a reasonable time after such transfer or assignment, furnished with
      written notice of (a) the name and address of such transferee or assignee,
      and
      (b) the securities with respect to which such registration rights are being
      transferred or assigned; (iii) immediately following such transfer or assignment
      the further disposition of such securities by the transferee or assignee is
      restricted under the 1933 Act and applicable state securities laws; (iv) at
      or
      before the time the Company receives the written notice contemplated by clause
      (ii) of this sentence the transferee or assignee agrees in writing with the
      Company to be bound by all of the provisions contained herein; and (v) such
      transfer shall have been made in accordance with the applicable requirements
      of
      the Subscription Agreement.

    

    10.   Amendment
      of Registration Rights.

    

    Provisions
      of this Agreement may be amended and the observance thereof may be waived
      (either generally or in a particular instance and either retroactively or
      prospectively), only with the written consent of the Company and the Required
      Holders. Any amendment or waiver effected in accordance with this Section 10
      shall be binding upon each Investor and the Company. No such amendment shall
      be
      effective to the extent that it applies to less than all of the holders of
      the
      Registrable Securities. No consideration shall be offered or paid to any Person
      to amend or consent to a waiver or modification of any provision of any of
      this
      Agreement unless the same consideration also is offered to all of the parties
      to
      this Agreement.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    
 

    11.    Miscellaneous.

    

    a.    A
      Person
      is deemed to be a holder of Registrable Securities whenever such Person owns
      or
      is deemed to own of record such Registrable Securities. If the Company receives
      conflicting instructions, notices or elections from two or more Persons with
      respect to the same Registrable Securities, the Company shall act upon the
      basis
      of instructions, notice or election received from such record owner of such
      Registrable Securities.

    

    b.    Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered: (i) upon receipt, when delivered personally; (ii) upon
      receipt, when sent by facsimile (provided confirmation of transmission is
      mechanically or electronically generated and kept on file by the sending party);
      or (iii) one Business Day after deposit with a nationally recognized overnight
      delivery service, in each case properly addressed to the party to receive the
      same. The addresses and facsimile numbers for such communications shall
      be:

    

    If
      to the
      Company:

    

    Advanced
      Photonix, Inc.

    2925
      Boardwalk

    Ann
      Arbor, Michigan 48104

    Telephone: (734)
      864-5600

    Facsimile: (734)
      572-8815

    Attention:
       President

    

    With
      a
      copy to:

    

    Dornbush
      Schaeffer Strongin & Venaglia, LLP

    747
      Third
      Avenue

    New
      York,
      New York 10017

    Telephone: (212)
      759-3300

    Facsimile: (212)
      753-7673

    Attention:
       Landey
      Strongin, Esq.

    

    If
      to an
      Investor, to its address and facsimile number set forth on the Schedule of
      Investors attached hereto, or to such other address and/or facsimile number
      and/or to the attention of such other Person as the recipient party has
      specified by written notice given to each other party five (5) days prior
      to the effectiveness of such change. Written confirmation of receipt
      (A) given by the recipient of such notice, consent, waiver or other
      communication, (B) mechanically or electronically generated by the sender's
      facsimile machine containing the time, date, recipient facsimile number and
      an
      image of the first page of such transmission or (C) provided by a courier
      or overnight courier service shall be rebuttable evidence of personal service,
      receipt by facsimile or receipt from a nationally recognized overnight delivery
      service in accordance with clause (i), (ii) or (iii) above,
      respectively.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    c.    Failure
      of any party to exercise any right or remedy under this Agreement or otherwise,
      or delay by a party in exercising such right or remedy, shall not operate as
      a
      waiver thereof.

    

    d.    All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement 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. Each party hereby irrevocably submits to the exclusive jurisdiction
      of
      the state and federal courts sitting in the City of New York, Borough of
      Manhattan, for the adjudication of any dispute hereunder or in connection
      herewith or with any transaction contemplated hereby or discussed herein, and
      hereby irrevocably waives, and agrees not to assert in any suit, action or
      proceeding, any claim that it is not personally subject to the jurisdiction
      of
      any such court, that such suit, action or proceeding is brought in an
      inconvenient forum or that the venue of such suit, action or proceeding is
      improper. Each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof to such party at the address for such notices to it
      under
      this Agreement and agrees that such service shall constitute good and sufficient
      service of process and notice thereof. Nothing contained herein shall be deemed
      to limit in any way any right to serve process in any manner permitted by law.
      If any provision of this Agreement shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement in that jurisdiction or
      the
      validity or enforceability of any provision of this Agreement in any ether
      jurisdiction. EACH
      PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
      CONTEMPLATED HEREBY.

    

    e.    This
      Agreement, the Subscription Agreement, the Warrant Agreements and the
      instruments referenced herein and therein constitute the entire agreement among
      the parties hereto with respect to the subject matter hereof and thereof. There
      are no restrictions, promises, warranties or undertakings, other than those
      set
      forth or referred to herein and therein. This Agreement, the Subscription
      Agreements, the Warrant Agreements and the instruments referenced herein and
      therein supersede all prior agreements and understandings among the parties
      hereto with respect to the subject matter hereof and thereof.

    

    f.    Subject
      to the requirements of Section 9, this Agreement shall inure to the benefit
      of
      and be binding upon the permitted successors and assigns of each of the parties
      hereto.

    

    g.    The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    h.    This
      Agreement may be executed in identical counterparts, each of which shall be
      deemed an original but all of which shall constitute one and the same agreement.
      This Agreement, once executed by a party, may be delivered to the other party
      hereto by facsimile transmission of a copy of this Agreement bearing the
      signature of the party so delivering this Agreement. 

    

    i.    Each
      party shall do and perform, or cause to be done and performed, all such further
      acts and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents, as any other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

    

    j.    All
      consents and other determinations required to be made by the Investors pursuant
      to this Agreement shall be made, unless otherwise specified in this Agreement,
      by the Required Holders.

    

    k.    The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent and no rules of strict construction
      will
      be applied against any party.

    

    l.    This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person.

    

    m.     The
      obligations of each Investor hereunder are several and not joint with the
      obligations of any other Investor, and no provision of this Agreement is
      intended to confer any obligations on any Investor vis-à-vis any other Investor.
      Nothing contained herein; and no action taken by any Investor pursuant hereto,
      shall be deemed to constitute the Investors as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Investors are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated herein.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

       

    

    IN
      WITNESS WHEREOF, each Investor and the Company have caused their respective
      signature page to this Registration Rights Agreement to be duly executed as
      of
      the date first written above.

     

    

    COMPANY:

    

    ADVANCED
      PHOTONIX, INC.

    

    

    

    By:
      _______________________________

    Name:
      Richard D. Kurtz

    Title:
      Chief Executive Officer & President

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    INVESTOR:

    
      
        

      

    

    

    

    

    By:_____________________________________

    Name:
      

    Title:
      

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

       

    

    Exhibit
      A

    

    PLAN
      OF DISTRIBUTION

     

    We
      are
      registering the shares of Common Stock owned by the selling shareholders to
      permit the resale of these shares of Common Stock by them. We will not receive
      any of the proceeds from the sale by the selling shareholders of the shares
      of
      Common Stock. We will bear all fees and expenses incident to our obligation
      to
      register the shares of Common Stock.

    

    The
      selling shareholders may sell all or a portion of the shares of Common Stock
      beneficially owned by them and offered hereby from time to time directly or
      through one or more underwriters, broker-dealers or agents. If the shares of
      Common Stock are sold through underwriters or broker-dealers, the selling
      shareholders will be responsible for underwriting discounts or commissions
      or
      agent's commissions. The shares of Common Stock may be sold in one or more
      transactions at fixed prices, at prevailing market prices at the time of the
      sale, at varying prices determined at the time of sale, or at negotiated prices.
      These sales may be effected in transactions, which may involve crosses or block
      transactions,

    

    
      	·  	
              on
                any national securities exchange or quotation service on which the
                securities may be listed or quoted at the time of
                sale;

            

    

     

    
      	·  	
              in
                the over-the-counter market;

            

    

     

    
      	·  	
              in
                transactions otherwise than on these exchanges or systems or in the
                over-the- counter market;

            

    

     

    
      	·  	
              through
                the writing of options, whether such options are listed on an options
                exchange or otherwise;

            

    

     

    
      	·  	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits purchasers;

            

    

     

    
      	·  	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            

    

     

    
      	·  	
              purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;

            

    

     

    
      	·  	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            

    

     

    
      	·  	
              privately
                negotiated transactions;

            

    

     

    
      	·  	
              short
                sales;

            

    

     

    
      	·  	
              sales
                pursuant to Rule 144;

            

    

     

    
      	·  	
              broker-dealers
                may agree with the selling securityholders to sell a specified number
                of
                such shares at a stipulated price per
                share;

            

    

     

    
      	·  	
              a
                combination of any such methods of sale;
                and

            

    

     

    
      	·  	
              any
                other method permitted pursuant to applicable
                law.

            

    

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    If
      the
      selling shareholders effect such transactions by selling shares of Common Stock
      to or through underwriters, broker-dealers or agents, such underwriters,
      broker-dealers or agents may receive commissions in the form of discounts,
      concessions or commissions from the selling shareholders or commissions from
      purchasers of the shares of Common Stock for whom they may act as agent or
      to
      whom they may sell as principal (which discounts, concessions or commissions
      as
      to particular underwriters, broker-dealers or agents may be in excess of those
      customary in the types of transactions involved). In connection with sales
      of
      the shares of Common Stock or otherwise, the selling shareholders may enter
      into
      hedging transactions with broker-dealers, which may in turn engage in short
      sales of the shares of Common Stock in the course of hedging in positions they
      assume. The selling shareholders may also sell shares of Common Stock short
      and
      deliver shares of Common Stock covered by this prospectus to close out short
      positions and to return borrowed shares in connection with such short sales.
      The
      selling shareholders may also loan or pledge shares of Common Stock to
      broker-dealers that in turn may sell such shares.

    

    The
      selling shareholders may pledge or grant a security interest in some or all
      of
      the warrants, or shares of Common Stock owned by them and, if they default
      in
      the performance of their secured obligations, the pledgees or secured parties
      may offer and sell the shares of Common Stock from time to time pursuant to
      this
      prospectus or any amendment to this prospectus under Rule 424(b)(3) or other
      applicable provision of the Securities Act of 1933, as amended, amending, if
      necessary, the list of selling shareholders to include the pledgee, transferee
      or other successors in interest as selling shareholders under this prospectus.
      The selling shareholders also may transfer and donate the shares of Common
      Stock
      in other circumstances in which case the transferees, donees, pledgees or other
      successors in interest will be the selling beneficial owners for purposes of
      this prospectus.

    

    The
      selling shareholders and any broker-dealer participating in the distribution
      of
      the shares of Common Stock may be deemed to be "underwriters" within the meaning
      of the Securities Act, and any commission paid, or any discounts or concessions
      allowed to, any such broker-dealer may be deemed to be underwriting commissions
      or discounts under the Securities Act. At the time a particular offering of
      the
      shares of Common Stock is made, a prospectus supplement, if required, will
      be
      distributed which will set forth the aggregate amount of shares of Common Stock
      being offered and the terms of the offering, including the name or names of
      any
      broker-dealers or agents, any discounts, commissions and other terms
      constituting compensation from the selling shareholders and any discounts,
      commissions or concessions allowed or reallowed or paid to
      broker-dealers.

    

    Under
      the
      securities laws of some states, the shares of Common Stock may be sold in such
      states only through registered or licensed brokers or dealers. In addition,
      in
      some states the shares of Common Stock may not be sold unless such shares have
      been registered or qualified for sale in such state or an exemption from
      registration or qualification is available and is complied with.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    There
      can
      be no assurance that any selling shareholder will sell any or all of the shares
      of Common Stock registered pursuant to the shelf registration statement, of
      which this prospectus forms a part.

    

    The
      selling shareholders and any other person participating in such distribution
      will be subject to applicable provisions of the Securities Exchange Act of
      1934,
      as amended, and the rules and regulations thereunder, including, without
      limitation, Regulation M of the Exchange Act, which may limit the timing of
      purchases and sales of any of the shares of Common Stock by the selling
      shareholders and any other participating person. Regulation M may also restrict
      the ability of any person engaged in the distribution of the shares of Common
      Stock to engage in market-making activities with respect to the shares of Common
      Stock. All of the foregoing may affect the marketability of the shares of Common
      Stock and the ability of any person or entity to engage in market-making
      activities with respect to the shares of Common Stock.

    

    We
      will
      pay all expenses of the registration of the shares of Common Stock pursuant
      to
      the registration rights agreement, estimated to be $15,000 in total, including,
      without limitation, Securities and Exchange Commission filing fees and expenses
      of compliance with state securities or "blue sky" laws; provided, however,
      that
      a selling shareholder will pay all underwriting discounts and selling
      commissions, if any. We will indemnify the selling shareholders against
      liabilities, including some liabilities under the Securities Act, in accordance
      with the registration rights agreements, or the selling shareholders will be
      entitled to contribution. We may be indemnified by the selling shareholders
      against civil liabilities, including liabilities under the Securities Act,
      that
      may arise from any written information furnished to us by the selling
      shareholder specifically for use in this prospectus, in accordance with the
      related registration rights agreements, or we may be entitled to
      contribution.

    

    Once
      sold
      under the shelf registration statement, of which this prospectus forms a part,
      the shares of Common Stock will be freely tradable in the hands of persons
      other
      than our affiliates.

    

    
      
        
        

      

      
        20Unassociated Document

    Robin
      F.
      Risser, Chief Financial Officer and Director

    Steven
      Williamson, Chief Technology Officer

    Advanced
      Photonix, Inc.

    2925
      Boardwalk

    Ann
      Arbor, MI 48104

    

    

    

    BY
      HAND

    Advanced
      Photonix, Inc. 

    2925
      Boardwalk

    Ann
      Arbor, MI 48104

    Attn:
      Richard D. Kurtz, CEO and President

    

    

    August
      31, 2007

    

    

    Advanced
      Photonix, Inc. Private Placement of

    Class
      A
      Common Stock and 2007 Series Warrants

    Insider
      Side Letter re: Warrant Exercise
      Price        

    

    Dear
      Mr.
      Kurtz:

    

    We
      the
      undersigned officers and/or directors of Advanced Photonix, Inc. (the “Company”)
      have subscribed to participate in the Company’s offering (the “Offering”) of
      units (each a “Unit” consisting of four (4) shares of the Company’s Class A
      Common Stock (each a “Share”) and one (1) warrant exercisable for one (1) Share)
      to a limited number of accredited investors. In connection with such
      participation, we have executed and delivered to the Company Subscription
      Agreements of even date herewith. All capitalized terms not otherwise defined
      herein shall have the meanings ascribed to them in the Subscription Agreement.
      

    

    As
      described above, in connection with the offering we received 2007 Series
      Warrants having an exercise price of $1.85 per warrant. The 2007 Series Warrants
      also provide for anti-dilution protection in connection with future issuances
      of
      securities by the Company. The American Stock Exchange (the “Exchange”) rules
      require that a listed company may not sell securities to its insiders at a
      price
      below the fair market value of the Company’s Common Stock (as determined on the
      closing date) without obtaining prior stockholder approval. Accordingly, the
      undersigned agree that the exercise price of our 2007 Series Warrants shall
      not
      be adjusted pursuant to Section 2(a) of the 2007 Series Warrant to be less
      than
      $1.83 (the fair market value of the Company’s Common Stock at Closing of the
      offering), as adjusted for any stock dividend, stock split, stock combination,
      reclassification or similar transaction.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Advanced
      Photonix, Inc.

    Page
      2

     

    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.

     

    
      	 	 	 	Very truly yours,
	 	 	 	 
	 	 	 	 
	 	 	 	/s/
              Robin F.
              Risser 
	
            	 	 	
              
Robin
              F. Risser 
	 	 	 	 

      	 	 	 	 
	 	 	 	 
	 	 	 	/s/
              Steven
              Williamson
	
            	 	 	
              
Steven
              Williamson

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