Continuing Security Agreement
Exhibit
10.4
Advanced
Photonix, Inc. (the “Debtor”)
Taxpayer
ID. No.:_________________________
If
a registered organization, State Organization No.: 2164577.
State
of Organization: Delaware.
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Debtor’s Address:
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0000 Xxxxxxxxx
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Xxx Xxxxx
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Xxxxxxxx
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00000
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Street
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City
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State
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Zip Code
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(1) Grant
of Security Interest.
The
Debtor grants to The PrivateBank and Trust Company (the “Lender”), whose address
is 00 X. Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, a continuing security interest
in the Collateral, as defined below, to secure the payment and performance
of
all of the Liabilities (as defined below) of the Debtor and all Liabilities
of
________N/A ,
(the
“Borrower”).
“Liabilities,”
as used in this agreement, means all obligations, indebtedness and liabilities
of the Debtor and/or the Borrower to the Lender and/or any of the Lender’s
subsidiaries, affiliates or successors, now existing or later arising,
including, without limitation, all loans, advances, interest, costs, overdraft
indebtedness, credit card indebtedness, lease obligations, management and
services fees or obligations relating to any interest rate, currency or
commodity swap agreement, cap or collar agreement, and any other agreement
or
arrangement designated to protect against fluctuations in interest rates,
currency exchange rates or commodity prices, all monetary obligations incurred
or accrued during the pendency of any Bankruptcy, insolvency, receivership
or
other similar proceedings, regardless of whether allowed or allowable in such
proceeding, and all renewals, extensions, modifications, consolidations or
substitutions of any of the foregoing, whether the Debtor or the Borrower may
be
liable jointly with others or individually liable as a debtor, maker, co-maker,
drawer, endorser, guarantor, surety or otherwise, and whether voluntarily or
involuntarily incurred, due or not due, absolute or contingent, direct or
indirect, known or unknown, liquidated or unliquidated. Liabilities also include
all interest, costs, expenses, and reasonable attorneys’ fees accruing to, or
incurred in either collecting any of the Liabilities of the Debtor or the
Borrower or protecting, maintaining, or liquidating any collateral for any
of
the Liabilities, including the Collateral.
(2) Description
of Collateral.“Collateral,”
as used in this agreement, means all personal property of Debtor including,
without limitation, all of the property set forth in this Section 2 which Debtor
now or later owns or has an interest in, wherever located. Notwithstanding
the
foregoing, “Collateral” as used in this agreement excludes all property deemed
“Collateral” under that certain form of Patent, Trademark and Copyright
Securities Agreement attached as Exhibit A to that certain Loan Agreement (the
“Loan Agreement”), dated as of September 25, 2008, between Debtor and
Lender.
(a) all
of
the Debtor’s Accounts, Chattel Paper, Deposit Accounts, Documents, Equipment,
Farm Products, Fixtures, Goods, General Intangibles, Instruments, Inventory,
Investment Property, Letter of Credit Rights (whether or not given in support
of
Accounts), Software, as defined below (words and phrases used herein and not
otherwise specifically defined herein shall have the respective meanings
assigned to such terms as such terms are defined in the Uniform Commercial
Code
of the State of Michigan, as in effect from time to time (the “UCC”)), present
and future, including but not limited to any items listed on Schedule 1 attached
hereto, if any;
(b) all
present and future insurance claims relating to any of the above;
(c) all
Goods, Instruments (including, without limit, promissory notes), Documents
(including, without limit, negotiable Documents), policies and certificates
of
insurance, Deposit Accounts, and money or other property (except real property
which is not a fixture) which are now or later in possession of Lender, or
as to
which Lender now or later controls possession by documents or otherwise;
and
(d) all
present and future books, records, and data of the Debtor relating to any of
the
above; and
(e) all
present and future accessions, additions and attachments to, proceeds, parts,
products, replacement, substitutions, Supporting Obligations and rights arising
out of, any of the above, including but not limited to stock rights,
subscription rights, interest, distributions, dividends, stock dividends, stock
splits, or liquidating dividends, renewals, all cash and Accounts, insurance
policies and proceeds, arising from the sale, rent, lease, casualty loss or
other disposition of any of the above and cash and other property which were
proceeds of any of the above and are recovered by a bankruptcy trustee or
otherwise as a preferential transfer by Debtor.
Where
the
Collateral is in the possession of the Lender, the Debtor agrees to deliver
to
the Lender any property which represents an increase in the Collateral or
profits or proceeds of the Collateral.
(3)
Collateral
Definitions.
(a) “Accounts”
means
all
of the Debtor’s “accounts,” (including without limit “health-care insurance
receivables”) as defined in Article 9 of the UCC. Also included are (i) any
right to a refund of taxes paid at any time to any governmental entity, (ii)
contract rights, and (iii) commercial tort claims.
(b) “Chattel
Paper”
means
all of the Debtor’s “chattel paper” (including without limit “electronic chattel
paper” and “tangible chattel paper”) as such terms are defined in Article 9 of
the UCC.
(c) “Deposit
Accounts”
means
all of the Debtor’s “deposit accounts,” as defined in Article 9 of the UCC.
(d) “Documents”
means
all of the Debtor’s “documents,” “documents of title” or a “warehouse receipts,”
as such terms are defined in the UCC.
(e) “Equipment”
means
(i) all of the Debtor’s “equipment,” as defined in Article 9 of the UCC, and
(ii) any Documents issued with respect to any of Debtor’s “equipment” (as
defined in the UCC). Without limiting the security interest granted, the Debtor
represents and warrants that Debtor’s Equipment is presently located at 0000
Xxxxxxxxx, Xxx Xxxxx, Xxxxxxxx 00000 and the locations listed on the attached
Schedule of Collateral Locations.
(f) “Farm
Products”
means
all of the Debtor’s “farm products,” as defined in Article 9 of the UCC. The
Debtor will provide the Lender with a written list of the buyers, commission
merchants or selling agents to or through whom it may sell any Farm Products,
in
form acceptable to the Lender. The Debtor will keep this list current by notice
to the Lender at least seven (7) days prior to any sale. In this paragraph
the
terms “buyers,” “commission merchants,” and “selling agents” have the meanings
given to them in the Federal Food Security Act of 1985, as amended, and in
the
UCC, as applicable.
(g) “Fixtures”
means
all of the Debtor’s “fixtures,” as defined in Article 9 of the UCC.
(h) “General
Intangibles”
means
all of the Debtor’s “general intangibles,” (including without limit “payment
intangibles”) as such terms are defined in Article 9 of the UCC.
(i) “Goods”
means
all of the Debtor’s “goods,” as defined in Article 9 of the UCC.
(j) “Instruments”
means
all of the Debtor’s “instruments,” as defined in Article 9 of the
UCC
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(k) “Inventory”
means
(i)
all of the Debtor’s “inventory,” as defined in Article 9 of the UCC, and (ii)
any Documents issued with respect to any of Debtor’s “inventory” (as defined in
the UCC). Without limiting the security interest granted, Debtor represents
and
warrants that the Debtor’s Inventory is presently located at 0000 Xxxxxxxxx, Xxx
Xxxxx, Xxxxxxxx 00000 and the locations listed on the attached Schedule of
Collateral Locations.
(l) “Investment
Property”
means
all of the Debtor’s “investment property,” as defined in Article 9 of the UCC,
including, without limit, securities, securities accounts, security
entitlements, and financial assets.
(m) “Letter
of Credit Rights”
means
all of the Debtor’s “letter of credit rights,” as defined in Article 9 of the
UCC.
(n) “Software”
means
all of the Debtor’s “software,” as defined in Article 9 of the UCC.
(4)
Representations,
Warranties, and Covenants. The
Debtor represents and warrants to and covenants with the Lender that:
(a) Its
chief
executive office is at the address shown above on page 1;
(b) (i)
The
Debtor’s name as it appears in this agreement is identical to the name of the
Debtor appearing in the Debtor’s organizational documents, as amended, including
any trust documents; and (ii) both the Taxpayer I.D. No. and the State
Organization No., if any, shown above are correct;
(c) If
Debtor
is not a natural person, (i) that it is duly organized, existing and in good
standing pursuant to the laws under which it is organized; and (ii) that the
execution and delivery of this agreement and the performance of the obligations
it imposes (A) are within its powers and have been duly authorized by all
necessary action of its governing body; (B) do not contravene the terms of
its
articles of incorporation or articles of organization, its by-laws, or any
partnership agreement, operating agreement or other agreement governing its
affairs;
(d) The
execution and delivery of this agreement and the performance of the obligations
it imposes do not violate any law, conflict with any agreement by which it
is
bound, or require the consent or approval of any governmental authority or
any
third party;
(e) This
agreement is a valid and binding agreement, enforceable according to its
terms;
(f) All
balance sheets, profit and loss statement, and other financial statements
furnished to the Lender are accurate and fairly reflect the financial condition
of the organizations and persons to which they apply on their effective dates,
including contingent liabilities of every type, which financial condition has
not changed materially and adversely since those dates;
(g) It
will
pay its Liabilities to the Lender;
(h) It
is or
will become the owner of the Collateral free from any liens, encumbrances or
security interests, except for Permitted Liens (as defined in the Loan Agreement
dated September 25, 2008 between Debtor and Lender, as it may be amended or
modified from time to time), and will defend the Collateral against all claims
and demands of all persons at any time claiming any interest in it;
(i) No
person, other than Lender, has possession or control of the Collateral (as
defined in the UCC);
(j) It
will
keep the Collateral free of liens, encumbrances and other security interests
except for this security interest and Permitted Liens, maintain it in good
repair (ordinary wear and tear excepted), not use it illegally, and exhibit
it
to the Lender on demand;
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(k) It
will
protect the Collateral from loss, damage, or deterioration from any cause
(ordinary wear and tear excepted). At its own expense, the Debtor will maintain
comprehensive casualty insurance and other insurance as may be reasonably
required by Lender on the Collateral against such risks, in such amounts, with
such deductibles and with such companies as may be reasonably satisfactory
to
the Lender, and provide the Lender with proof of insurance acceptable to the
Lender. Each insurance policy shall contain a lender’s loss payable endorsement
satisfactory to the Lender and a prohibition against cancellation or amendment
of the policy or removal of the Lender as loss payee without at least 30 days
prior written notice to the Lender. In all events, the amounts of such insurance
coverages shall conform to prudent business practices and shall be in such
minimum amounts that the Debtor will not be deemed a co-insurer. If Debtor
fails
to maintain such insurance, Lender has the option (but not the obligation)
to do
so and Debtor agrees to repay all amounts so expended by Lender immediately
upon
demand, together with interest at the highest lawful default rate which could
be
charged by Lender on any of the Liabilities;
(l) It
will
not sell or offer to sell, lease, license or otherwise transfer the Collateral,
nor change the location of the Collateral, without the written consent of the
Lender, except for sale of Inventory in the ordinary course of business;
(m) It
will
pay promptly when due all taxes and assessments upon the Collateral, or for
its
use or operation. If Debtor fails to pay any of these taxes, assessments, or
other charges in the time provided above, Lender has the option (but not the
obligation) to do so and Debtor agrees to repay all amounts so expended by
Lender immediately upon demand, together with interest at the highest lawful
default rate which could be charged by Lender on any of the
Liabilities;
(n) No
financing statement covering all or any part of the Collateral or any proceeds
is on file in any public office, unless in connection with Permitted Liens
or
the Lender has approved that filing. Debtor irrevocably authorizes Lender to
file one or more financing statements in form reasonably satisfactory to the
Debtor and Lender and will pay the cost of filing them in all public offices
where filing is deemed by the Lender to be necessary or desirable. In addition,
the Debtor shall execute and deliver, or cause to be executed and delivered,
such other documents as the Lender may from time to time reasonably request
to
perfect or to further evidence the security interest created in the Collateral
by this agreement, including, without limitation: (i) any certificates of title
to the Collateral with the security interest of the Lender noted thereon or
executed applications for such certificates of title in form satisfactory to
the
Lender; (ii) any assignments of claims under government contracts which are
included as part of the Collateral, together with any notices and related
documents as the Lender may from time to time request; (iii) any assignment
of
any specific account receivable as the Lender may from time to time request;
(iv) a notice of security interest and a control agreement with respect to
any
Collateral, all in form and substance satisfactory to the Lender; (v) a notice
to and acknowledgment from any bailee or other person in possession of any
Collateral, all in form and substance satisfactory to the Lender; and (vi)
any
consent to the assignment of proceeds of any letter of credit, all in form
and
substance satisfactory to the Lender;
(o) Lender
has no obligation to acquire or perfect any lien on or security interest in
any
asset(s), whether real property or personal property, to secure payment of
the
Liabilities, and Debtor is not relying upon assets in which the Lender may
have
a lien or security interest for payment of the Liabilities.
(p) It
will
not, without at least fifteen (15) days prior written notice to the Lender,
change (i) the Debtor’s name, (ii) the Debtor’s business organization, (iii) the
jurisdiction under which the Debtor’s business organization is formed or
organized, or (iv) the address of the Debtor’s chief executive office or
principal residence or of any additional places of the Debtor’s business;
(q) It
will
provide any information that Lender may reasonably request, and will permit
Lender upon prior notice to inspect and copy its books and records during normal
business hours;
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(r) It
will
allow the Lender or the Lender’s representative, upon not less than three (3)
business days notice (which notice shall not be required following the
occurrence of an Event of Default) to enter and remain upon all premises where
Collateral is kept or may be located and inspect the Collateral during normal
business hours provided that Lender’s representatives shall use good faith
efforts not to interfere with the normal operations of Debtor;
(s) It
will
allow the Lender to take such actions in its own name or in Debtor’s name as
Lender, in its sole discretion, deems necessary or appropriate to establish
exclusive control (as defined in the UCC) over any Collateral of such nature
where control perfects the Lender’s security interest.
(t) The
Lender shall have the right now and at any time in the future, in its sole
and
absolute discretion and without notice to the Debtor, to (i) prepare, file,
and
sign the Debtor’s name on any proof of claim in bankruptcy or similar document
against any owner of the Collateral and (ii) prepare, file, and sign the
Debtor’s name on any notice of lien, assignment or satisfaction of lien, or
similar document in connection with the Collateral. The Debtor authorizes the
Lender to file financing statements containing any collateral description which
reasonably describes the Collateral in which a security interest is granted
under this agreement.
(5)
Accounts.
(a) Debtor
will, in the usual course of its business and at its own cost and expense,
on
the Lender’s behalf but not as the Lender’s agent, demand and receive and use
its best efforts to collect all moneys due or to become due on the Accounts.
Until an Event of Default (as defined in the Loan Agreement) and the Lender
gives notice to Debtor to the contrary, it may use the funds collected in its
business. Upon an Event of Default and upon receipt of notice from the Lender,
the Debtor agrees that all sums of money it receives on account of or in payment
or settlement of the Accounts shall be held by it as trustee for the Lender
without commingling with any of its funds, and shall immediately be delivered
to
the Lender with endorsement to the Lender’s order of any check or similar
instrument. If Lender notifies Debtor that the Liabilities are on a remittance
basis, Debtor shall notify its account debtors that all electronic payments
on
any Account shall be made directly to an account at Lender designated by and
under the exclusive control of Lender, and all other payments on the Accounts
shall be made directly to a post office box designated by and under the
exclusive control of Lender. Lender shall apply received payments against the
Liabilities in such order and manner as Lender elects, in its sole discretion.
All notices required in this paragraph will be immediately effective when sent.
Such notices need not be given prior to the Lender taking action. It is agreed
that, at any time the Lender elects after an Event of Default, it shall be
entitled, in its own name or in the name of the Debtor or otherwise, but at
the
expense and cost of the Debtor, to collect, demand, receive, xxx for or
compromise any and all Accounts, and to give good and sufficient releases,
to
endorse any checks, drafts or other orders for the payment of money payable
to
the Debtor in payment and, in its discretion, to file any claims or take any
action or proceeding which the Lender may deem necessary or advisable. It is
expressly understood and agreed, however, that the Lender shall not be required
or obligated in any manner to make any demand or to make any inquiry as to
the
nature or sufficiency of any payment received by it or to present or file any
claim or take any other action to collect or enforce the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time
or
times.
(b) Upon
an
Event of Default, the Debtor appoints the Lender or the Lender’s designee as the
Debtor’s attorney-in-fact to do all things with reference to the Collateral as
provided for in this section including without limitation (1) to receive, open
and dispose of mail addressed to the Debtor, (2) to sign the Debtor’s name on
any invoice or xxxx of lading relating to any Collateral, on assignments and
verifications of account and on notices to the Debtor’s customers, and (3) to do
all things necessary to carry out this agreement. The Debtor ratifies and
approves all acts of the Lender as attorney-in-fact.
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(c) The
Lender shall not be liable for any act or omission, nor any error of judgment
or
mistake of fact or law, for any loss or damage which Debtor may suffer as a
result of Lender’s processing of items or its exercise of any other rights or
remedies under this Agreement, other than such acts, omissions, errors or
mistakes resulting from the gross negligence or willful misconduct of Lender
or
its affiliates, subsidiaries, employees or representatives. Except as caused
by
Lenders’ or its affiliates’, subsidiaries’, employees’ or representatives’ gross
negligence or willful misconduct, Debtor agrees to indemnify and hold Lender
harmless from and against any third party claims, demands or actions, and all
related expenses or liabilities, including, without limitation, attorneys fees
and causes of action whatsoever. This power being coupled with an interest
is
irrevocable until the Liabilities have been fully satisfied.
(d) Immediately
upon the Debtor’s receipt of any Collateral consisting of Instruments, Chattel
Paper or Documents (“Special Collateral”), the Debtor shall xxxx the Special
Collateral to show that it is subject to the Lender’s security interest and
shall deliver the original to the Lender together with appropriate endorsements
and other specific evidence of assignment in form and substance satisfactory
to
the Lender.
(6)
Additional
Covenants.
(a) If
any
monies become available to the Lender that it can apply to any Liabilities
(such
Liabilities being referred to in this paragraph as the “Debt”), the Lender may
apply them to Debt not secured by this agreement.
(b) Without
notice to or the consent of the Debtor, the Lender may (i) take any action
it
chooses against any Borrower, against any collateral for the Debt, or against
any other person liable for the Debt; (ii) release any Borrower or any other
person liable for the Debt, release any collateral for the Debt, and neglect
to
perfect any interest in any such collateral; (iii) forbear or agree to forbear
from exercising any rights or remedies, including any right of setoff, that
it
has against the Borrower, any other person liable for the Debt, or any other
collateral for the Debt; (iv) extend to any Borrower additional Debt to be
secured by this agreement; or (v) renew, extend, modify or amend any Debt,
and
deal with any Borrower or any other person liable for the Debt as it chooses.
(c) None
of
the Debtor’s obligations under this agreement shall be affected by (i) any act
or omission of the Lender; (ii) the voluntary or involuntary liquidation, sale
or other disposition of all or substantially all of the assets of any Borrower,
(iii) any receivership, insolvency, bankruptcy, reorganization or other similar
proceedings affecting any Borrower or any of its assets; or (iv) any change
in
the composition or structure of any Borrower or any Debtor, including a merger
or consolidation with any other entity.
(d) The
Lender’s rights under this section and this agreement are unconditional and
absolute, regardless of the unenforceability of any provision of any agreement
between any Borrower and the Lender, or the existence of any defense, setoff
or
counterclaim that any Borrower may be able to assert against the Lender.
(e) Debtor
waives all rights of subrogation, contribution, reimbursement, indemnity,
exoneration, implied contract, recourse to security, setoff and any other claim
(as that term is defined in the federal Bankruptcy Code, as amended from time
to
time) that it may have or acquire in the future against any Borrower, any other
person liable for the Debt, or any collateral for the Debt, because of the
existence of this agreement, the Debtor’s performance under this agreement, or
the Lender’s availing itself of any rights or remedies under this
agreement.
(f) If
any
payment to the Lender on any Debt is wholly or partially invalidated, set aside,
declared fraudulent or required to be repaid under any bankruptcy or insolvency
act or code, under any state or federal law, or under common law or equitable
principles, then this agreement shall remain in full force and effect or be
reinstated, as the case may be, until payment in full to the Lender of the
repaid amounts, and of the Debt. If this agreement must be reinstated, the
Debtor agrees to execute and deliver to the Lender new agreements and financing
statements, if necessary, in form and substance acceptable to the Lender,
covering the Collateral.
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(7)
Default/Remedies.
(a) If
(i)
after expiration of any applicable grace period, any of the Liabilities are
not
paid, when due, whether upon demand or at maturity, whether by acceleration
or
otherwise, (ii) any warranty, representation, covenant, financial statement,
or
other information made, given or furnished to Lender by or on behalf of
Borrower, Debtor, or any guarantor of any of the Liabilities (“Guarantor”) shall
be, or shall prove to have been, false or materially misleading when made,
given, or furnished; (iii) any substantial loss, theft, damage or destruction
to
or of any Collateral, or the issuance or filing of any attachment, levy,
garnishment or the commencement of any proceeding in connection with any
Collateral or of any other judicial process of, upon or in respect of Borrower,
Debtor, any Guarantor, or any Collateral, (iv) unless otherwise expressly
permitted under the Loan Agreement, there shall occur any sale or other
disposition by Borrower, Debtor, or any Guarantor of any substantial portion
of
its assets or property or voluntary suspension of the transaction of business
by
Borrower, Debtor, or any Guarantor, or death, dissolution, termination of
existence, merger, consolidation, insolvency, business failure, or assignment
for the benefit of creditors of or by Borrower, Debtor, or any Guarantor; or
commencement of any proceedings under any state or federal bankruptcy or
insolvency laws or laws for the relief of debtors by or against Borrower,
Debtor, or any Guarantor; or the appointment of a receiver, trustee, court
appointee, sequestrator or otherwise, for all or any part of the property of
Borrower, Debtor, or any Guarantor, (v) Lender deems the margin of Collateral
insufficient or itself insecure, in good faith believing that the prospect
of
payment of the Indebtedness or performance of this Agreement is impaired or
shall fear deterioration, removal, or waste of Collateral; or (vi) if an Event
of Default occurs under the Loan Agreement or a default (after giving effect
to
any applicable grace period) by anyone occurs under the terms of any agreement
related to any of the Liabilities, then the Lender shall have the rights and
remedies provided by law or this agreement, including but not limited to, the
right to require the Debtor to assemble the Collateral and make it available
to
the Lender at a place to be designated by the Lender which is reasonably
convenient to both parties, the right to take possession of the Collateral
with
or without demand and with or without process of law, the right to sell and
dispose of it, with or without process of law, and distribute the proceeds
according to law and any other rights and remedies available to secured parties
under the UCC and other applicable laws. Should an Event of Default occur,
the
Debtor will pay to the Lender all costs reasonably incurred by the Lender for
the purpose of enforcing its rights hereunder, to the extent not prohibited
by
law, including, without limitation: costs of foreclosure; costs of obtaining
money damages; and a reasonable fee for the services of internal and outside
attorneys employed or engaged by the Lender for any purpose related to this
agreement (but without duplication of cost for the same services), including,
without limitation, consultation, drafting documents, sending notices or
instituting, prosecuting or defending litigation or any proceeding, all such
costs shall bear interest at the highest per annum rate applicable to any of
the
Liabilities, but not in excess of the maximum rate permitted by
law.
(b) Debtor
agrees that upon an Event of Default the Lender may dispose of any of the
Collateral in its then present condition, that the Lender has no duty to repair
or clean the Collateral prior to sale, and that the disposal of the Collateral
in its present condition or without repair or clean-up shall not affect the
commercial reasonableness of such sale or disposition. The Lender’s compliance
with any applicable state or federal law requirements in connection with the
disposition of the Collateral will not adversely affect the commercial
reasonableness of any sale of the Collateral. The Lender may disclaim warranties
of title, possession, quiet enjoyment, and the like, and Debtor agrees that
any
such action shall not affect the commercial reasonableness of the sale. In
connection with the right of the Lender to take possession of the Collateral,
the Lender may take possession of any other items of property in or on the
Collateral at the time of taking possession, and hold them for the Debtor
without liability on the part of the Lender. Debtor expressly agrees that Lender
may enter upon the premises where the Collateral is believed to be located
without any obligation of payment to the Debtor, and that the Lender may,
without cost, use any and all of Debtor’s “equipment” (as defined in the UCC) in
the manufacturing or processing of any “inventory” (as defined in the UCC) or in
growing, raising, cultivating, caring for, harvesting, loading and
transportation of any of the Collateral that constitutes “farm products” (as
defined in the UCC). If there is any statutory requirement for notice, that
requirement shall be met if the Lender sends notice to the Debtor at least
ten
(10) days prior to the date of sale, disposition, or other event giving rise
to
the required notice, and such notice shall be deemed commercially reasonable.
The Debtor is liable for any deficiency remaining after disposition of the
Collateral.
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(c) The
proceeds of any sale or other disposition of Collateral authorized by this
agreement shall be applied by Lender first upon all expenses authorized by
the
UCC and all reasonable attorneys fees and legal expenses incurred by Lender;
then the balance of the proceeds of the sale or other disposition shall be
applied to the payment of interest on the Liabilities, then to the payment
of
principal on Liabilities, then any remaining proceeds shall be paid over to
Debtor or to such other person(s) as may be entitled to it under applicable
law.
Debtor shall remain liable for any deficiency, which shall be due to Lender
immediately upon demand. Debtor agrees that Lender shall be under no obligation
to accept any noncash proceeds in connection with any sale or disposition of
Collateral unless failure to do so would be commercially unreasonable. If Lender
agrees in its sole discretion to accept noncash proceeds (unless the failure
to
do so would be commercially unreasonable), Lender may ascribe any commercially
reasonable value to such proceeds. Without limiting the foregoing, Lender may
also apply any discount factor in determining the present value of proceeds
to
be received in the future or may elect to apply proceeds to be received in
the
future only as and when such proceeds are actually received in cash by
Lender.
(8)
Miscellaneous.
(a) Where
the
Collateral is located at, used in or attached to a facility not owned by the
Debtor, the Debtor will use commercially reasonable efforts (which shall not
be
deemed to require Debtor to pay the applicable lessor or other applicable party
to obtain the applicable subordination other than reimbursement of such parties’
out of pocket expenses) to obtain from the lessor, or other appropriate party,
a
consent to the granting of this security interest and a subordination of the
lessor’s interest in any of the Collateral, in form acceptable to the Lender.
(b) At
its
option the Lender may, but shall be under no duty or obligation to, discharge
taxes, liens, security interests or other encumbrances at any time levied or
placed on the Collateral, pay for insurance on the Collateral, and pay for
the
maintenance and preservation of the Collateral, and the Debtor agrees to
reimburse the Lender on demand for any payment made or expense incurred by
the
Lender, with interest at the maximum legal rate.
(c) No
delay
on the part of Lender in the exercise of any right or remedy shall operate
as a
waiver, no single or partial exercise by the Lender of any right or remedy
shall
preclude any other exercise of it or the exercise of any other right or remedy,
and no waiver or indulgence by the Lender of any default shall be effective
unless in writing and signed by an authorized officer of the Lender, nor shall
a
waiver on one occasion be construed as a waiver of that right on any future
occasion or a waiver of any other right.
(d) The
Lender shall not be required to marshal any present or future collateral
security (including this agreement and the Collateral) for the Liabilities
or
any of them or to resort to such collateral security or other assurances of
payment in any particular order. To the extent that it lawfully may, the Debtor
hereby agrees that it will not invoke any law relating to the marshaling of
collateral which might cause delay in or impede the enforcement of the Lender's
rights under this agreement or under any other instrument creating or evidencing
any of the Liabilities or under which any of the Liabilities is outstanding
or
by which any of the Liabilities is secured or payment thereof is otherwise
assured, and, to the extent allowed by applicable law, the Debtor irrevocably
waives the benefits of all such laws.
(e) If
any
provision of this agreement is invalid, it shall be ineffective only to the
extent of its invalidity, and the remaining provisions shall be valid and
effective.
(f) Notice
from one party to another relating to this agreement shall be deemed effective
if made in writing (including telecommunications) and delivered to the
recipient’s address, telex number or telecopier number set forth above by any of
the following means: (i) hand delivery, (ii) registered or certified mail,
postage prepaid, with return receipt requested, (iii) first class or express
mail, postage prepaid, (iv) Federal Express or like overnight courier service
or
(v) telecopy, telex or other wire transmission with request for assurance of
receipt in a manner typical with respect to communications of that type. Notice
made in accordance with this section shall be deemed delivered on receipt if
delivered by hand or wire transmission, on the third business day after mailing
if mailed by first class, registered or certified mail, or on the next business
day after mailing or deposit with an overnight courier service if delivered
by
express mail or overnight courier.
8
(g) To
the
extent that any of the Liabilities is payable upon demand, nothing contained
in
this agreement shall modify the terms and conditions of those Liabilities nor
shall anything stated in this agreement prevent Lender from making demand,
with
or without notice and with or without reason, and whether or not a default
has
occurred, for immediate payment of any or all of those Liabilities at any
time.
(h) All
rights of the Lender shall inure to the benefit of the Lender’s successors and
assigns; and all obligations of the Debtor shall bind the Debtor’s heirs,
executors, administrators, successors and assigns. If there is more than one
Debtor, their obligations are joint and several.
(i) The
Debtor shall pay or reimburse the Lender for all reasonable costs, fees and
expenses incurred by the Lender or for which the Lender becomes obligated in
connection with the enforcement of this agreement, including reasonable
attorneys' fees of counsel to the Lender, which shall also include attorneys'
fees and time charges of attorneys who may be employees of the Lender of any
of
it subsidiaries or affiliates, plus costs and expenses of such attorneys or
of
the Lender; search fees, costs and expenses; and all taxes payable in connection
with this agreement. The Debtor shall pay any and all stamp and other taxes,
UCC
search fees, filing fees and other costs and expenses in connection with the
execution and delivery of this agreement to be delivered hereunder, and agrees
to save and hold the Lender harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to pay such
costs and expenses. That portion of the Liabilities consisting of costs,
expenses or advances to be reimbursed by the Debtor to the Lender pursuant
to
this Agreement which are not paid on or prior to the date hereof shall be
payable by the Debtor to the Lender on demand. If at any time or times hereafter
the Lender: (i) employs counsel for advice or other representation (A) with
respect to this agreement, (B) to represent the Lender in any litigation,
contest, dispute, suit or proceeding or to commence, defend, or intervene or
to
take any other action in or with respect to any litigation, contest, dispute,
suit, or proceeding (whether instituted by the Lender, the Debtor, or any other
party) in any way or respect relating to this agreement, or (C) to enforce
any
rights of the Lender against the Debtor or any other party under of this
agreement; (ii) takes any action to protect, collect, sell, liquidate, or
otherwise dispose of any of the Collateral; and/or (iii) attempts to or enforces
any of the Lender's rights or remedies under this agreement, the reasonable
costs and expenses incurred by the Lender in any manner or way with respect
to
the foregoing, shall be part of the Liabilities, payable by the Debtor to the
Lender on demand.
(j) A
carbon,
photographic or other reproduction of this agreement is sufficient, and can
be
filed as a financing statement, The Lender is irrevocably appointed the Debtor’s
attorney-in-fact to execute any financing statement on Debtor’s behalf covering
the Collateral.
(k) The
terms
and provisions of this security agreement shall be governed by Michigan law.
(9)
Information
Sharing.
The
Lender may provide, without any limitation whatsoever, any information or
knowledge the Lender may have about the undersigned or any matter relating
to
this agreement and any related documents to any of its subsidiaries or
affiliates or their successors, or to any one or more purchasers or potential
purchasers of this agreement or any related documents, and the undersigned
waives any right to privacy the undersigned may have with respect to such
matters. The Debtor agrees that the Lender may at any time sell, assign or
transfer one or more interests or participations in all or any part of its
rights or obligations in this agreement to one or more purchasers whether or
not
related to the Lender.
(10)
WAIVER
OF JURY TRIAL. THE
LENDER AND THE DEBTOR, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT
WITH COUNSEL, KNOWINGLY AND VOLUNTARILY AND FOR THEIR MUTUAL BENEFIT WAIVE
ANY
RIGHT EITHER OF THEM HAVE TO A TRIAL BY JURY IN ANY PROCEEDING (WHETHER SOUNDING
IN CONTRACT OR TORT) WHICH IS IN ANY WAY CONNECTED WITH THIS OR ANY RELATED
AGREEMENT, OR THE RELATIONSHIP ESTABLISHED UNDER THEM. THIS PROVISION MAY ONLY
BE MODIFIED IN A WRITTEN INSTRUMENT EXECUTED BY LENDER AND THE DEBTOR.
9
|
Dated: September
25, 2008
|
Debtor:
|
|||
|
ADVANCED
PHOTONIX, INC.
|
||||
|
By:
|
/s/
Xxxxxxx X. Xxxxx
|
|||
|
SIGNATURE
OF
|
||||
|
Its:
|
CEO
and President
|
|||
|
TITLE
(If applicable)
|
||||
10
SCHEDULE
OF COLLATERAL LOCATIONS
|
1.
|
0000
Xxxxxxx Xxxxx
|
|
Xxxxxxxxx, Xxxxxxxxxx 00000
(Ventura County)
|
|
2.
|
Xxxx
Electronics
|
|
Xx.
0 Xxxxxxxxx Xxxxxxxxxx Xxxx 0
Xxxxxxxxx,
Xxxxxxx, Xxxxxx, 0000
Xxxxxxxxxxx
|
11
