ADVANCED PHOTONIX INC
SEPARATION AGREEMENT & GENERAL RULE RELEASE
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>k05958exv10w1.txt
<DESCRIPTION>SEPARATION AGREEMENT & GENERAL RULE RELEASE
<TEXT>
<PAGE>



                    SEPARATION AGREEMENT AND GENERAL RELEASE


                  This SEPARATION AGREEMENT AND GENERAL RELEASE ("Agreement") is
made and entered into by and between Paul Ludwig ("Ludwig"), on the one hand,
and Advanced Photonix Inc. ("API") on the other.

                                    RECITALS:

                  A.       Ludwig has been employed by API since August 2002,
and the parties wish to terminate his employment with API effective as of August
31, 2006 (the "Separation Date").

                  B.       The parties desire amicably to resolve fully and
finally all issues and claims that Ludwig may have with API and others released
herein, including, but not limited to, any matters or claims arising out of or
related to Ludwig's employment with API, Ludwig's membership on API's Board of
Directors, or any other relationship with API or any other API Releasee, and the
termination of those relationships.

                  NOW, THEREFORE, in consideration of the premises and promises
contained in this Agreement, the parties agree as follows:

                  SECTION 1 -- NON-ADMISSION OF LIABILITY OR WRONGDOING.


                  The parties acknowledge that this Agreement reflects their
desire to terminate all aspects of their relationship (except as otherwise
provided in this Agreement) in an orderly and amicable fashion. The parties in
no way acknowledge any fault or liability to the other party or any other person
or entity, and this Agreement shall not be construed as an admission by either
party or any other person or entity of any fault or liability to any party or
any other person or entity.

                  SECTION 2 -- CESSATION OF EMPLOYMENT AND OTHER RELATIONSHIPS.


                  Ludwig hereby resigns, and API hereby accepts Ludwig's
resignation, as a director, officer and employee of API and of all subsidiaries
of API effective as of the opening of business on the Separation Date. API will
not contest any claim initiated by Ludwig for unemployment insurance benefits
and will characterize his departure from API as a separation from employment.

                  SECTION 3 -- BENEFITS TO LUDWIG.


                  Between the date hereof and the Separation Date, Ludwig will
continue to be employed by API on the same terms and conditions as he is
currently employed by API and in such capacity shall continue to receive
compensation at the same rate as he is currently paid and shall continue to be
eligible to participate in all benefit plans of API on the same terms as he now
participates therein. Following the Separation Date, API will,


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as set forth below, pay Ludwig the following amounts, less required deductions
and withholdings, all of which will be reported on the appropriate tax forms as
determined by API:

                  (a)               $10,160.88 representing approximately 8
months of API subsidy for the group health insurance Ludwig was enrolled in as
of the date hereof. This payment will be mailed to Ludwig within 5 days after
the Separation Date.

                  (b)               $123,344 representing approximately 8
months of Ludwig's base salary, payable in eight substantially equal
installments of $15,418 each. The first $15,418 installment will be mailed to
Ludwig on or about October 3, 2006. An additional installment will be mailed to
Ludwig on or about the third day of each of the next 7 months with the last
installment to be mailed on or about May 2, 2007.


                  (c)               The full amount, if any, of any accrued but
unpaid vacation and any accrued and unpaid compensation owing to Ludwig as at
the Separation Date which will be payable to Ludwig not later than 5 days after
the Separation Date.

                  In addition, API will pay for Ludwig to receive, from and
after the date hereof, outplacement assistance services selected by API from Lee
Hecht Harrison, Right Associates, or another mutually agreeable company, at a
cost not to exceed $20,000.00.

                  Ludwig acknowledges that the benefits to be received by him
under the provisions of this Section 3 are in addition to any benefits to which
he would otherwise be entitled to receive in connection with his employment or
the termination thereof.

                  SECTION 4 -- RESPONSIBILITY FOR TAXES.


                  Ludwig agrees that he solely is responsible for all of his tax
obligations, including, but not limited to, all payment obligations, which may
arise as a consequence of this Agreement, and all payments made to Ludwig
hereunder shall be subject to tax withholding as required by law.

                  SECTION 5 -- COMPLETE RELEASE BY LUDWIG.


                  As a material inducement to API to enter into this Agreement,
Ludwig irrevocably and unconditionally releases and forever discharges API, all
of API's current and former parents, subsidiaries, related companies,
partnerships, joint ventures, or other affiliates, and, with respect to each of
them, their predecessors and successors; and, with respect to each and all of
the foregoing entities, all of their respective past, present, and future
employees, officers, directors, stockholders, owners, representatives, assigns,
attorneys, agents, insurers, employee benefit programs (and the trustees,
administrators, fiduciaries, and insurers of such programs), and any other
persons acting by, through, under or in concert with any of the persons or
entities listed in this subsection, and their


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successors (collectively along with API, the "API Releasees"), from any and all
"Claims."

                  The term "Claims" includes all charges, claims, complaints,
liabilities, obligations, promises, agreements, controversies, damages, actions,
causes of action, suits, rights, demands, costs, losses, debts, and expenses
(including attorneys' fees and costs actually incurred) or similar rights of any
nature whatsoever, known or unknown, which Ludwig now has or claims to have, or
which Ludwig at any time heretofore had or claimed to have, or which Ludwig at
any time hereafter may have or claim to have against each or any of the API
Releasees, arising out of or related to any act, omission, event, fact or other
thing which existed or occurred (i) on or prior to the date Ludwig signs this
Agreement or (ii) in the event but only in the event that Ludwig accepts any
payment made to him pursuant to Section 3 hereof, on or prior to the Separation
Date. This includes but is not limited to a release of all rights and claims
Ludwig may have under:

a)    Anti-Discrimination Statutes, such as the Wisconsin Fair Employment Act
      (prohibiting discrimination in employment based on race, creed, color,
      national origin, ancestry, disability, sexual orientation, marital status,
      sex or age); the Age Discrimination in Employment Act (prohibiting age
      discrimination); Title VII of the Civil Rights Act of 1964 (prohibiting
      discrimination in employment based on race, color, national origin,
      religion, sex or pregnancy); the Civil Rights Act of 1991 (prohibiting
      discrimination); 42 U.S.C. Sec. 1982 (prohibiting discrimination);
      Executive Order 11246 (prohibiting race, color, religion, sex and national
      origin discrimination); Executive Order 11141 (prohibiting age
      discrimination); the Rehabilitation Act of 1973 (prohibiting handicap
      discrimination); the Equal Pay Act (prohibiting paying males and females
      different amounts for equal work); and the Americans With Disabilities Act
      (prohibiting discrimination based on disability).

b)    Federal and State Employment Statutes, such as the Fair Labor Standards
      Act (regulating wage and hour matters); the Employee Retirement Income
      Security Act of 1974 (protecting employee benefits); the National Labor
      Relations Act (protecting the right to engage in union activity); the
      Family and Medical Leave Act (providing for leaves of absence); the
      Michigan Family Rights Act (providing for leaves of absence); and the
      Michigan Labor Code (regulating wages, hours, and other terms and
      conditions of employment);

c)    Other Laws, such as federal or local laws, or regulations or common law
      prohibiting discrimination in employment or otherwise, enforcing express
      or implied contracts, requiring employers to deal fairly or in good faith,
      or restricting an employer's right to terminate employees. Ludwig also
      releases any and all other claims, known and unknown, which he may have
      for breach of contract, express or implied; breach of the covenant of good
      faith and fair dealing; and retaliation, defamation, conspiracy,


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       infliction of emotional distress, invasion of privacy, misrepresentation,
       or any other tort; and

d)    Benefit Plans. Ludwig acknowledges that he will cease to be eligible to
      participate in any stock option, bonus, incentive compensation,
      commission, medical, dental, life insurance, retirement, and other
      compensation or benefit plans of API or any other party released herein as
      of his Separation Date. Ludwig releases all rights under any such plan,
      except he will retain any right he has to COBRA continuation coverage as
      to any API-provided medical, dental, or vision plan in which he
      participated as of his Separation Date. If Ludwig desires to elect COBRA
      continuation coverage, he must timely elect it and timely pay all required
      contributions. Ludwig also will retain all vested benefits under all API
      qualified retirement plans, and all rights associated with those benefits,
      as determined under the official terms of those plans. Ludwig acknowledges
      that he will cease vesting in any stock option or similar API plan as of
      his Separation Date and any rights he may have shall be determined under
      the official terms of such plan. It is provided, however, that assuming
      that this Agreement is not revoked by Ludwig pursuant to Section 22
      below, all currently outstanding stock option grants to Ludwig will
      become fully vested and exercisable in accordance with and subject to
      their terms.

                  SECTION 6 -- UNKNOWN CLAIMS BY LUDWIG.

                  Ludwig expressly acknowledges that this Agreement is intended
to include in its effect, without limitation, all Claims that he does not know
of or suspect to exist in his favor at the time he signs this Agreement (or, of
applicable as at the Separation Date), and that this Agreement contemplates the
release of all such Claims.

                  SECTION 7 -- NO FILINGS BY LUDWIG/COVENANT NOT TO SUE.

                  Ludwig represents and agrees that he has not filed or caused
to be filed, on his own behalf, directly or indirectly, any complaints, charges,
applications, claims or grievances against any of the API Releasees with any
local state or federal agency, court, self-regulatory organization, or any other
public, quasi-public or private agency, organization, or entity, and that he
will not do so at any time, based on any act, omission, event, fact, or other
thing as to which he has given a release hereunder. Ludwig further agrees that
if any such agency, court, organization, or other entity assumes jurisdiction of
any such complaint, charge, application, claim, or grievance against any of the
API Releasees, on behalf of or with respect to Ludwig, he will request such
agency, court, organization, or other entity to withdraw from and dismiss the
matter with prejudice. This Section, however, shall not prohibit Ludwig from
filing or prosecuting a charge with any administrative agency as long as Ludwig
does not seek any damages or any other relief or remedy for himself.


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                  SECTION 8 -- COMPLETE RELEASE BY API.

                  As a material inducement to Ludwig to enter into this
Agreement, API irrevocably and unconditionally releases and forever discharges
Ludwig from any and all "API Claims."

                  The term "API Claims" includes all charges, claims,
complaints, liabilities, obligations, promises, agreements, controversies,
damages, actions, causes of action, suits, rights, demands, costs, losses,
debts, and expenses (including attorneys' fees and costs actually incurred) or
similar rights of any nature whatsoever, known or unknown, which API now has or
claims to have, or which API at any time heretofore had or claimed to have, or
which API at any time hereafter may have or claim to have against Ludwig,
arising out of or related to any act, omission, event, fact or other thing which
existed or occurred (i) on or prior to the date API signed this Agreement, or
(ii) in the event but only in the event that Ludwig accepts any payment under
Section 3 hereof, on or prior to the Separation Date.

                  SECTION 9 -- UNKNOWN CLAIMS BY API.

                  API expressly acknowledges that this Agreement is intended to
include in its effect, without limitation, all API Claims as to which it has
given a release hereunder, and that this Agreement contemplates the release of
all such API Claims.

                  SECTION 10 -- CONFIDENTIAL INFORMATION.

                  (a)               Ludwig represents and agrees that in the
course of employment with API, he acquired confidential information and trade
secrets concerning API's and the other API Releasees' operations, future plans,
customer lists or other information, their methods of doing business, financial
information, ideas, processes and formulae, trade secrets, and other privileged,
confidential, and proprietary information ("Confidential Information"). In
addition, Ludwig specifically agrees that Confidential Information includes all
information or data, in writing or otherwise, or learned by Ludwig orally, by
observation or other sensory detection, relating to any product, product design,
service, research, development, formula, process, method of distribution or
delivery, know-how, contract term, customer pricing, supplier list or price,
business strategy, compensation, plan or practice, operating records, software,
technology, sales data, information or other records, lists or documents used by
API or API Releasees in operating their businesses or otherwise.

                  (b)               Ludwig represents and agrees that disclosure
of any Confidential Information would be extremely damaging to API or other API
Releasees if disclosed to a competitor or made available to any other person or
corporation. Ludwig represents and agrees that such Confidential Information has
been divulged to Ludwig in confidence and represents and agrees that he will
keep such Confidential Information secret and


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confidential and not disclose it before it becomes publicly available through no
fault of his own.

                  (c)               Ludwig agrees that he will not, for a period
of two (2) years after his separation from API (the "Restricted Period"),
directly or indirectly solicit, induce, encourage or attempt to influence any
client, customer, salesperson or supplier of API to cease to do business with
API. Ludwig further agrees that he shall not utilize for any such purposes any
names and addresses of customers or clients of API or any data on or relating to
past, present or prospective (at the time of his separation from API) customers
or clients of API.

                  (d)               Ludwig further agrees that during the
Restricted Period he will not, directly or indirectly, solicit for employment or
other business relationship any person who is, or within the preceding 12 months
was, an API or other API Releasee officer, manager, employee, or consultant.

                  (c)               In view of the nature of Ludwig's employment
and the Confidential Information that Ludwig has received during the course of
his employment, Ludwig likewise agrees that API and the other API Releasees
would be harmed irreparably by any violation, or threatened violation, of this
Section 10 and that, therefore, API and the other API Releasees shall be
entitled to an injunction prohibiting Ludwig from any violation or threatened
violation of this Agreement. The undertakings set forth in this Section 10 shall
survive the termination of other arrangements contained in this Agreement.

                  SECTION 11 -- CONFIDENTIALITY AND NONDISPARAGEMENT BY LUDWIG.

                  (a)               Ludwig represents and agrees that he has
kept and will keep any information concerning the circumstances or allegations
giving rise to Ludwig's Claims (if any) released herein to any person or entity
other than his tax advisor and attorneys ("Ludwig Confidants"), and that he only
will disclose such information to the Ludwig Confidants if such persons or
entities are informed of and agree to be bound by this confidentiality
provision. By way of illustration, Ludwig shall not disclose any information
concerning the circumstances or allegations giving rise to his Claims released
herein to anyone including, but not limited to, any representative of any print,
radio, or television media, to any past, present, or prospective employee or
customer of, or applicant for employment with, API or any of the other API
Releasees, to any counsel for any current or former employee or customer of API
or any of the other API Releasees, or to the public at large. This subsection
does not prohibit disclosures to the extent necessary legally to enforce this
Agreement or to the extent prohibited by law, nor does it prohibit disclosures
to the extent otherwise legally required (but only if Ludwig notifies API of a
such an obligation or request within 48 hours after he learns of it and allows
API to take all steps it deems to be appropriate to prevent or limit the
required disclosure).


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                  (b)               Ludwig further agrees not to criticize,
denigrate, or disparage API or any other API Releasee.

                  (c)               In the event Ludwig is subpoenaed by a court
or other legal tribunal to testify or provide documents regarding his employment
with API, others' employment with API, API practices or procedures, or any other
subject matter involving, relating, or referring to API or any API Releasee, he
shall give notice to API within 48 hours by sending a copy of all such subpoenas
to the person at the address listed in Section 21 (or to such other person as
API may designate to Ludwig in writing) by priority overnight U.S. Postal
Service mail or UPS priority overnight delivery. To the extent permitted by law,
Ludwig agrees that he will take no action, direct or indirect, to encourage or
suggest the issuance of such subpoenas.

                  SECTION 12 -- FURTHER CONSEQUENCES OF LUDWIG'S VIOLATION OF
PROMISES.

                  Ludwig further agrees that API and the other API Releasees
would be irreparably harmed by any actual or threatened violation of Sections 10
or 11, and that to the extent not prohibited by law, API and the other API
Releasees shall be entitled to an injunction prohibiting Ludwig from committing
any such violation. Ludwig hereby consents to subject himself to personal
jurisdiction in the State of Michigan.

                  SECTION 13 -- OWNERSHIP CLAIMS BY LUDWIG.

                  Ludwig represents and agrees that he has not assigned or
transferred, or purported to assign or transfer, to any person or entity, any
Claims or any portion thereof, or interest therein.

                  SECTION 14 -- CONSULTATION WITH COUNSEL; FULL AND INDEPENDENT
KNOWLEDGE, UNDERSTANDING, AND CAPACITY.

                  Ludwig is advised to consult with an attorney of his choice
before signing this Agreement. Ludwig acknowledges and agrees that he has been
so advised; that Ludwig has fully discussed all aspects of this Agreement with
his counsel, to the full extent Ludwig so desired; that Ludwig has read
carefully and fully understands all of the provisions of this Agreement; that
Ludwig has taken as much time as he needs for full consideration of this
Agreement; that Ludwig is voluntarily entering into this Agreement; and that
Ludwig has the capacity to enter into this Agreement.

                  SECTION 15 -- NO REPRESENTATIONS.

                  Ludwig represents that in signing this Agreement, he does not
rely on nor has he relied on any representation or statement not specifically
set forth in this Agreement by any of the API Releasees or by any of the API
Releasees' agents,


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representatives, or attorneys with regard to the subject matter, basis, or
effect of this Agreement or otherwise.

                  SECTION 17 -- API PROPERTY AND CONFIDENTIAL MATERIAL.


Ludwig represents and agrees that within 5 days of the Separation Date, he will
turn over to API all originals and copies of all information, files, memoranda,
records, other documents, software, badges, keys, credit cards and any other
physical or personal property which are or were API or API Releasee property,
which Ludwig has in his possession, custody, or control. Within the
aforementioned 5 day period, Ludwig shall bring the home desktop computer
provided to him by API back to API for API's inspection and removal of all API
Confidential Information, and within 2 days thereafter such computer will be
returned to Ludwig. Existing Obligations Continue.

                  Ludwig agrees to remain bound by any API or API Releasee
agreement or policy relating to confidential information, invention,
nonsolicitation, noncompetition, or similar matters to which he is now subject.

                  SECTION 17 -- GOVERNING LAW.


                  Except to the extent preempted by federal law, this Agreement
shall in all respects be interpreted, enforced and governed under the laws of
the State of Michigan without regard to its conflict of laws provisions.

                  SECTION 18 -- SUCCESSORS.


                  This Agreement shall be binding upon Ludwig and his heirs,
administrators, representatives, executors, successors, and assigns, and shall
inure to the benefit of the API Releasees and to their respective heirs,
administrators, representatives, executors, successors, and assigns.

                  SECTION 19 -- ARBITRATION.

                  (a)               Agreement to Arbitrate: Any dispute between
the parties hereto, including, without limitation, any of the provisions of this
Agreement or any dispute about the formation, validity, interpretation, or
effect of alleged violations of this Agreement (except alleged violations of
Sections 10 or 11, which may be enjoined as well at API's option as set forth in
Section 12) (an "Arbitrable Dispute") must be submitted to final and binding
arbitration in Ann Arbor before an experienced employment arbitrator licensed to
practice law in Michigan. The parties agree to subject themselves to personal
jurisdiction in the city of Ann Arbor and Washtenaw County for such arbitration
and in any jurisdiction necessary for the enforcement of any arbitration award.
Except as provided in this Agreement the arbitration shall be in accordance with
the then-current JAMS/Endispute Arbitration Rules And Procedures for Employment
Disputes governing arbitrations administered by the Judicial Arbitration and
Mediation


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Service ("JAMS"). The arbitrator shall be selected as follows. JAMS shall give
each party a list of 11 arbitrators drawn from its panel of employment dispute
arbitrators. Each party may strike all names on the list it deems unacceptable.
If only one common name remains on the lists of both parties, that individual
shall be designated as the Arbitrator. If more than one common name remains on
the lists of both parties, the parties shall strike names alternately from the
list of common names until only one remains. The party who did not initiate the
claim shall strike first. If no common name exists on the lists of both parties,
JAMS shall furnish an additional list and the process shall be repeated. If no
arbitrator has been selected after two lists have been distributed, then the
parties shall strike alternately from a third list, with the party initiating
the claim striking first, until only one name remains. That person shall be
designated as the arbitrator. Anytime a party is permitted under this Agreement
to make an arbitrator strike, such party must make the strike and communicate it
to the other party and JAMS within ten (10) calendar days of the date of the
transmittal communication relaying the arbitrators remaining for selection. In
the event a party does not make a timely strike, the other party may select the
arbitrator from the names remaining.

                  (b)               Costs of Arbitration: Each party shall pay
the fees of their respective attorneys, the expenses of their witnesses and any
other expenses connected with the arbitration, but all other costs of this
arbitration, including the fees of the arbitrator, cost of any record or
transcript of the arbitration, administrative fees and other fees and costs,
shall be paid in equal shared by Ludwig and API. The party losing the
arbitration shall reimburse the party who prevailed for all expenses the
prevailing party paid pursuant to the preceding sentence and for all reasonable
attorneys' fees (as determined by the Arbitrator) incurred by the prevailing
party in connection with the arbitration proceeding.

                  (c)               Exclusive Remedy: Arbitration in this manner
shall be the exclusive remedy for any Arbitrable Dispute. The arbitrator's
decision or award shall be fully enforceable and subject to an entry of judgment
by a court of competent jurisdiction. Should Ludwig or API attempt to resolve an
Arbitrable Dispute by any method other than arbitration pursuant to this
Paragraph, the responding party shall be entitled to recover from the initiating
party all damages, expenses and attorneys' fees incurred as a result and the
responding party shall be entitled to the return of any payments that party made
under this Agreement.

                  SECTION 20 -- FURTHER NECESSARY ACTIONS.


                  Ludwig agrees, without further consideration, to execute or
cause to be executed, and to deliver to API, any other documents and to take any
other action as may be necessary to more effectively consummate the subject
matter of this Agreement, including but not limited to appropriate resignations
from his positions with API.


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                  SECTION 21 -- REVIEW PERIOD.

                  Ludwig acknowledges that he has been given twenty-one (21)
days, which he acknowledges is a reasonable period of time in which to consider
whether to sign this Agreement and to consult with an attorney.

                  SECTION 22 -- RIGHT TO REVOKE ACCEPTANCE OF AGREEMENT.

                  Ludwig acknowledges that he has been advised that he may
revoke his acceptance of this Agreement for a period of seven (7) calendar days
following the day he executes this Agreement. Ludwig further understands that
this Agreement is not effective until the revocation period has expired and that
any revocation, to be effective, must be in writing, and either (a) postmarked
within seven (7) days of the date he executes this Agreement and addressed or
hand delivered to, in a personal and confidential envelope, Mr. Richard Kurtz at
the address of API set out below. Notification by facsimile transmission fax
number (734) 864-5653 prior to that time will be deemed to be sufficient. Ludwig
understands that if revocation is made by mail, mailing by certified mail,
return receipt requested, is recommended to show proof of mailing.

                  SECTION 23-- NOTICE.

                  Any notice to be given hereunder shall be given in writing and
delivered personally or sent by first class mail, postage prepaid, to the
addresses set forth below, or to such other address as either party may
designate by written notice to the other.

Ludwig:           Paul Ludwig
                                5790 Verde View
                                Fitchburg, WI 53711


                  API:          Mr. Richard D. Kurtz
                                Advanced Photonix, Inc.
                                2925 Boardwalk
                                Ann Arbor, MI 48104


                  With a copy to:



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                                Landey Strongin, Esq.
                                Dornbush Mensch Mandelstam & Schaeffer, LLP
                                747 Third Avenue
                                New York, New York 10017
                                Fax (212) 753-7673


                  SECTION 24-- PROPER CONSTRUCTION.

                  (a)               The language of all parts of this Agreement
shall in all cases be construed as a whole according to its fair meaning, and
not strictly for or against any of the parties.

                  (b)               As used in this Agreement, the term "or"
shall be deemed to include the term "and/or," and the singular or plural shall
be deemed to include the other whenever the context so indicates or requires.

                  (c)               The paragraph headings used in this
Agreement are intended solely for convenience of reference and shall not in any
manner amplify, limit, modify or otherwise be used in the interpretation of any
of the provisions hereof.

                  SECTION 25-- SEVERABILITY.

                  Should any of the provisions of this Agreement be declared or
be determined by any court to be illegal, invalid, void, or unenforceable, the
validity of the remaining parts, terms or provisions shall not be affected
thereby and said provision shall be deemed not to be a part of this Agreement.

                  SECTION 26-- COUNTERPARTS.

                  This Agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, with the same effect
as if all parties had signed the same document. All such counterparts shall be
deemed an original, shall be construed together and shall constitute one and the
same instrument.

                  SECTION 27-- ENTIRE AGREEMENT.

                  This Agreement sets forth the entire agreement between the
parties hereto, and, excepting only those various Non-Qualified Stock Option
Agreements between Ludwig and API, fully supersedes any and all prior agreements
or understandings between the parties hereto pertaining to the subject matter
hereof. This Agreement may only be modified by a written document signed by all
parties hereto evidencing a specific intent to modify this Agreement.


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         PLEASE READ CAREFULLY. THIS SEPARATION AGREEMENT AND GENERAL
RELEASE INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

         Executed at ____________, Michigan, this 6th day of June,2006.

                         /s/ Paul Ludwig
                         ------------------------------------------------------
                         Paul Ludwig


         Executed at ____________, Michigan, this 2nd day of June 2006.

                          /s/ Richard D. Kurtz
                          -----------------------------------------------------
                          Richard D. Kurtz
                          Advanced Photonix Inc.



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                                 EXHIBIT INDEX



<TABLE>
Exhibit
Number          Exhibit
--------        -------
<S>             <C>
10.1            Separation Agreement and General Release dated as of June 6,
                2006 between the Company and Paul Ludwig

99.1            Advanced Photonix, Inc.'s press release dated June 6, 2006.
</TABLE>



</TEXT>
</DOCUMENT>
