Document:

Unassociated Document

    Exhibit
      10.5

     

    
      Continuing
        Guaranty

      
        

      

    

    

    Guaranty:
      To
      induce The PrivateBank and Trust Company (the “Lender”) directly or through any
      of its branches, offices, subsidiaries, or affiliates to provide or extend
      certain financial accommodations and Liabilities to Advanced Photonix, Inc.,
      a
      Delaware corporation (the “Borrower”), and because the undersigned (the
“Guarantor”) has determined that executing this Guaranty is in its interest and
      to its financial benefit, the Guarantor absolutely and unconditionally
      guaranties to the Lender the full and prompt payment of all Liabilities when
      due, whether at stated maturity, on demand, by acceleration or otherwise. The
      Guarantor’s obligations under this Guaranty shall be payable in lawful money of
      the United States of America. 

     

    Liabilities:
      The term
“Liabilities” as used in this Guaranty means (i) all obligations, indebtedness
      and liabilities of the Borrower to the Lender, and any of its subsidiaries,
      affiliates or successors, now existing or later arising, including, without
      limitation, all loans, advances, interest, costs, expenses, fees, overdraft
      indebtedness, credit card indebtedness, letter of credit indebtedness or lease
      obligations, (ii) all costs and expenses, including reasonable attorneys’ fees,
      that the Lender may pay or incur in collecting from the Borrower, the Guarantor,
      or any other guarantor of all or any of the Liabilities and for liquidating
      any
      Collateral (as defined below), (iii) 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, including reasonable attorneys’ fees, and (iv) all renewals,
      extensions, modifications, consolidations or substitutions of any of the
      foregoing, whether 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, known
      or
      unknown, due or not due, absolute or contingent, direct or indirect, liquidated
      or unliquidated. 

     

    Limitation:
      The
      Guarantor’s obligation under this Guaranty is UNLIMITED and shall include all
      costs, expenses, fees, interest, and other amounts included in the
      Liabilities.

     

    Continued
      Reliance.
      The
      Lender may continue to provide or extend Liabilities to the Borrower based
      on
      this Guaranty until it receives written notice of termination from the
      Guarantor. Such notice shall be effective upon the opening of business on the
      fifth (5th)
      day
      following written acknowledgment of delivery. If terminated, the Guarantor
      will
      continue to be liable to the Lender for any Liabilities created, assumed or
      committed to at the time the termination becomes effective, and all subsequent
      renewals, extensions, modifications and amendments of those Liabilities, until
      all of the same have been fully paid. Termination by any other guarantor shall
      not release the Guarantor from its obligations under this Guaranty.

     

    Security.
      As
      security for this Guaranty, the Guarantor pledges and grants to the Lender
      a
      continuing security interest in the following described property and all of
      its
      additions, substitutions, increments, proceeds and products, whether now owned
      or later acquired (“Collateral”): 

     

    
      	 	
              (1)

            	
              All
                securities and other property of the Guarantor in the custody, possession
                or control of the Lender (other than property held by the Lender
                solely in
                a fiduciary capacity); 

            

    

     

    
      	 	
              (2)

            	
              All
                property or securities declared or acknowledged by the Guarantor
                to
                constitute security for any past, present or future liability, direct
                or
                indirect, of the Guarantor to the Lender;

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (3)

            	
              All
                claims of any nature, whether now existing or later acquired, that
                Guarantor has against Borrower (excepting claims under a deed of
                trust or
                mortgage covering California real property), including the right
                of the
                Lender to collect and realize upon such claims;

            

    

     

    
      	 	
              (4)

            	
              All
                balances of deposit accounts of the Guarantor with the Lender (“deposit
                account” having the meaning given to it §9-102(a)(29) of the UCC (as
                defined below)); 

            

    

     

    The
      Lender shall have the right at any time to apply its own debt or liability
      to
      the Guarantor in whole or partial payment of this Guaranty or other present
      or
      future liabilities of the Guarantor, direct or indirect, without any requirement
      for mutual maturity. 

     

    If
      the
      Guarantor fails to pay any amount owing under this Guaranty, the Lender shall
      have all of the rights and remedies provided by law or under any other agreement
      to liquidate or foreclose on and sell the Collateral, including but not limited
      to the rights and remedies of a secured party under the Uniform Commercial
      Code
      of the State of Michigan, as in effect from time to time (the “UCC”). These
      rights and remedies shall be cumulative and not exclusive. If the Guarantor
      is
      entitled to notice, that requirement will be met if the Lender sends notice
      at
      least ten (10) days prior to the date of sale, disposition or other event which
      requires notice. The proceeds of any sale shall be applied first to the
      reasonable costs incurred in conducting such sale, then toward payment of the
      amount owing under this Guaranty. The Lender is authorized to cause all or
      any
      part of the Collateral to be transferred to or registered in its name or in
      the
      name of any other person, firm or corporation, with or without designation
      of
      the capacity of such nominee. 

     

    For
      purposes of the following paragraphs, “any collateral” shall include the
      Collateral and any other collateral securing the Liabilities. 

     

    Action
      Regarding Borrower.
      If any
      monies become available that the Lender can apply to the Liabilities, the Lender
      may apply them in any manner it chooses, including but not limited to applying
      them against Liabilities which are not covered by this Guaranty. The Lender
      can
      take any action against the Borrower, any collateral, or any other person liable
      for any of the Liabilities. The Lender can release the Borrower or anyone else
      from its liability for the Liabilities, either in whole or in part, or release
      any collateral, and need not perfect a security interest in any collateral.
      The
      Lender does not have to exercise any rights that it has against the Borrower
      or
      anyone else, or make any effort to realize on any collateral or right of
      set-off. If the Borrower requests more credit or any other benefit, the Lender
      may grant it and the Lender may grant renewals, extensions, modifications and
      amendments of any of the Liabilities and otherwise deal with the Borrower or
      any
      other person as the Lender sees fit and as if this Guaranty were not in effect.
      The Guarantor’s obligations under this Guaranty shall not be released or
      affected by (a) any act or omission of the Lender, (b) the voluntary or
      involuntary liquidation, sale or other disposition of all or substantially
      all
      of the assets of the Borrower, or any receivership, insolvency, bankruptcy,
      reorganization, or other similar proceedings affecting the Borrower or any
      of
      its assets, or (c) any change in the composition or structure of the Borrower
      or
      the Guarantor, including a merger or consolidation with any other person or
      entity. 

     

    Nature
      of Guaranty. This
      Guaranty is a guaranty of payment and not of collection. The Lender can insist
      that the Guarantor pay immediately, and the Lender is not required to attempt
      to
      collect first from the Borrower, any collateral, or any other person liable
      for
      any of the Liabilities. The obligation of the Guarantor shall be unconditional
      and absolute, regardless of the unenforceability of any provision of any
      agreement between the Borrower and the Lender, or the existence of any defense,
      setoff or counterclaim which the Borrower may assert. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Other
      Guarantors.
      If there
      is more than one Guarantor, their obligations under this Guaranty shall be
      joint
      and several. In addition, each Guarantor shall be jointly and severally liable
      with any other guarantor of any of the Liabilities. If the Lender elects to
      enforce its rights against less than all guarantors of the Liabilities, that
      election shall not release the Guarantor from its obligations under this
      Guaranty. The compromise or release of any of the obligations of any of the
      other guarantors or the Borrower shall not serve to waive, alter or release
      the
      Guarantor’s obligations under this Guaranty. This Guaranty is not conditioned on
      anyone else executing this or any other guaranty. 

     

    Rights
      of Subrogation.
      The
      Guarantor agrees not to enforce any rights of subrogation, contribution or
      indemnification that it has against the Borrower, any entity liable for any
      of
      the Liabilities, or any collateral, until all Liabilities are irrevocably paid
      in full, even if all of the Liabilities are not covered by this Guaranty. The
      Guarantor further agrees that if any payments to the Lender on any of the
      Liabilities are in whole or in part invalidated, declared to be fraudulent
      or
      preferential, set aside or required to be repaid to a trustee, receiver or
      any
      other party under any bankruptcy act or code, state or federal law, common
      law
      or equitable doctrine, this Guaranty and the Lender’s interest in any collateral
      remain in full force and effect (or are reinstated as the case may be) until
      payment in full of those amounts. Any payment is due on demand. 

     

    Waivers.
      The
      Guarantor waives any right it may have to receive notice of the following
      matters before the Lender enforces any of its rights: (a) the Lender’s
      acceptance of this Guaranty, (b) any credit or other Liabilities that the Lender
      extends to the Borrower, (c) the Borrower’s default, (d) any demand and (e) any
      action that the Lender takes regarding the Borrower, anyone else, any
      collateral, or any of the Liabilities, which it might be entitled to by law
      or
      under any other agreement. The Lender may waive or delay enforcing any of its
      rights without losing them. Any waiver shall affect only the specific terms
      and
      time period stated in the waiver. No modification, waiver or amendment of this
      Guaranty shall be effective unless it is in writing and signed by the party
      against whom it is being enforced. 

     

    Information.
      The
      Guarantor assumes full responsibility for keeping itself informed of the
      Borrower’s financial condition and assets, and all other circumstances bearing
      upon the risk of nonpayment of any of the Liabilities and the nature, scope
      and
      extent of the Guarantor’s risks under this Guaranty. The Guarantor has not
      relied on any representation of Lender as to Borrower’s financial condition and
      assets, and all other circumstances bearing upon the risk of nonpayment of
      any
      of the Liabilities. The Lender has no duty to advise the Guarantor of
      information known to it regarding Borrower’s financial conditions, assets,
      circumstances or risks. 

     

    Representations
      by Guarantor.
      The
      Guarantor represents: (a) that the execution and delivery of this Guaranty
      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; (b) that this Guaranty is a
      valid
      and binding agreement, enforceable according to its terms; and (c) that all
      balance sheets, profit and loss statements, and other financial statements
      furnished by it 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. Each
      Guarantor, other than a natural person, further represents: (a) that it is
      duly
      organized, existing and in good standing pursuant to the laws under which it
      is
      organized; and (b) that the execution and delivery of this Guaranty and the
      performance of the obligations it imposes (i) are within its powers and have
      been duly authorized by all necessary action of its governing body and (ii)
      do
      not contravene the terms of its articles of incorporation or organization,
      its
      by-laws, or any partnership, operating or other agreement governing its affairs.
      

     

    Lending
      Installations. The
      Liabilities may be booked at any office, branch, subsidiary or affiliate of
      the
      Lender, as selected by the Lender. All terms of this Guaranty apply to and
      may
      be enforced by or on behalf of any such office, branch, subsidiary or affiliate
      of the Lender. Without limiting the rights of the Lender under applicable law,
      the Guarantor authorizes the Lender to apply any sums outstanding to the credit
      of the Guarantor with any such office, branch, subsidiary or affiliate of the
      Lender toward the payment of the Liabilities by the Guarantor under this
      Guaranty, whether or not all or any part of the Liabilities is then due.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    Notices.
      Notice
      from one party to another relating to this Guaranty shall be deemed effective
      if
      made in writing (including telecommunications) and delivered to the recipient’s
      address or facsimile number listed below by any of the following means: (a)
      hand
      delivery, (b) registered or certified mail, postage prepaid, with return receipt
      requested, (c) first class or express mail, postage prepaid, (d) Federal Express
      or like overnight courier service or (e) facsimile, 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. Notwithstanding the foregoing, notice of termination of
      this
      Guaranty shall be deemed received only upon the receipt of actual written notice
      by the Lender in accordance with the paragraph above labeled “Continued
      Reliance.” Notice shall be delivered as follows:

     

    If
      to the
      Guarantor:

    

    c/o
      Advanced Photonix, Inc.

    2925
      Boardwalk

    Ann
      Arbor, Michigan 48104

    Attn:
      Robin F. Risser

    Phone:
      (734) 998-3474

    Fax:
      (734) 998-3474

    

    With
      a
      copy to:

    

    Dornbush
      Schaeffer Strongin & Venaglia

    747
      Third
      Avenue

    New
      York,
      New York 10017

    Attn:
      Landey Strongin, Esq.

    Phone:
      (212) 759-3300

    Fax:
      (212) 753-7673

    

    If
      to
      Lender:

    

    The
      PrivateBank and Trust Company

    70
      W.
      Madison Street

    Chicago,
      Illinois 60602

    Attention:
      __________________________

    Facsimile
      No.: _______________________

    

    With
      a
      copy to:

    

    The
      PrivateBank

    38505
      Woodward Avenue, Suite 1300

    Bloomfield
      Hills, Michigan 48304

    Attn:
      Eric Haege

    Phone:
      __________________________

    Fax:
      ____________________________

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    Law
      and Judicial Forum that Apply.
      This
      agreement is governed by Michigan law, without regard to conflict of law
      principles. The Guarantor agrees that any legal action or proceeding against
      it
      with respect to any of its obligations under this Guaranty shall be brought
      in
      any court of the State of Michigan or of the United States of America for the
      Eastern or Western District of Michigan, as the Lender in its sole discretion
      may elect. By the execution and delivery of this Guaranty, the Guarantor submits
      to and accepts, with regard to any such action or proceeding, for itself and
      in
      respect of its property, generally and unconditionally, the jurisdiction of
      those courts. The Guarantor waives any claim that the State of Michigan is
      not a
      convenient forum or the proper venue for any suit, action or proceeding.

     

    Miscellaneous.
      The
      Guarantor’s liability under this Guaranty is independent of its liability under
      any other guaranty previously or subsequently executed by the Guarantor or
      any
      one of them, singularly or together with others, as to all or any part of the
      Liabilities, and may be enforced for the full amount of this Guaranty regardless
      of the Guarantor’s liability under any other guaranty. This Guaranty is binding
      on the Guarantor’s heirs, successors and assigns, and will operate to the
      benefit of the Lender and its successors and assigns. The use of headings shall
      not limit the provisions of this Guaranty. All discussions and documents arising
      between this Guaranty and the last guaranty signed by the Guarantor as to the
      Borrower, if any, are merged into this Guaranty. In the event any one or more
      provisions of this Guaranty is deemed invalid, illegal or unenforceable in
      any
      respect, the remaining provisions of this Guaranty shall continue in full force
      and effect as if such invalid, illegal or unenforceable provision(s) was not
      a
      part of this Guaranty. 

     

    Information
      Sharing.
      The
      Lender may provide, without any limitation whatsoever, any information or
      knowledge the Lender may have about the Guarantor or any matter relating to
      this
      Guaranty 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
      the Liabilities or this Guaranty or any related documents, provided that any
      such purchaser or potential purchaser is subject to the confidentiality
      provisions of Section 8.15 of the Loan Agreement dated September 25, 2008
      between Lender and Borrower, as it may be amended or modified from time to
      time,
      and the Guarantor waives any right to privacy the Guarantor may have with
      respect to such matters. The Guarantor agrees that the Lender may without notice
      and at any time sell, negotiate, assign or transfer one or more interests or
      participations in all or any part of its rights or obligations under the
      documents evidencing the Liabilities or in this Guaranty to one or more
      purchasers whether or not related to the Lender. This Guaranty may only be
      modified or amended in a written instrument executed by the Lender and the
      Guarantor.

     

    Additional
      Terms and Conditions.
      None.

     

    Waiver
      of Jury Trial.
      Lender
      and the Guarantor acknowledge that the right to a trial by jury is a
      constitutional right that may be waived. After consulting or being given the
      opportunity to consult with legal counsel, the Lender and the Guarantor
      knowingly and voluntarily 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 Guaranty, any related agreement or the relationship
      established under them, or the Liabilities. 

     

    [remainder
      of page intentionally left blank]

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Guarantor has signed and delivered this Guaranty to the
      Lender as of this 25th day of September, 2008.

     

    
      	
              Witnesses:

            	 	
              Guarantor(s):

            
	 	 	 
	
              /s/
                Eric Haege

            	 	
              SILICON
                SENSORS, INC.

            
	
              Signature
                of

            	 	 
	
                            
                

            	 	
              By:

            	
              /s/
                Richard D. Kurtz

            
	
              Signature
                of

            	 	
              Its:

            	
              President

            
	 	 	 
	 	 	
              PICOMETRIX
                LLC

            
	 	 	 	 
	 	 	
              By:

            	
              /s/
                Richard D. Kurtz

            
	 	 	
              Its:

            	
              President

            
	 	 	
              Address:

            
	 	 	
              2925
                Boardwalk

              Ann
                Arbor, Michigan 48104

            

    

     

    
      
        
        

      

      
        6Unassociated Document

    Exhibit
      10.6

    

    PATENT,
      TRADEMARK AND COPYRIGHT SECURITY AGREEMENT

     

    PATENT,
      TRADEMARK AND COPYRIGHT SECURITY AGREEMENT, dated as of __________, 200__,
      made
      by Advanced Photonix, Inc., a Delaware corporation (the “Grantor”), in favor of
      The PrivateBank and Trust Company, an Illinois banking corporation (the
“Lender”).

     

    W
      I T N E
      S S E T H:

     

    WHEREAS,
      Grantor and Lender executed that certain Loan Agreement dated September ____,
      2008 (as amended or modified from time to time, “Credit
      Agreement”);

     

    WHEREAS,
      Grantor executed and delivered to Lender a certain promissory notes by Grantor
      payable to Lender each dated September ____, 2008 (as amended, modified, renewed
      or replaced, collectively, the “Notes”);

     

    WHEREAS,
      the Grantor owns certain Trademarks and Trademark Licenses listed on Schedule
      I
      hereto;

     

    WHEREAS,
      the Grantor owns certain Patents and Patent Licenses listed on Schedule II
      hereto; 

     

    WHEREAS,
      the Grantor owns certain Copyrights and Copyright Licenses listed on Schedule
      III hereto;

     

    WHEREAS,
      pursuant to the Credit Agreement, Grantor agreed that, within ten (10) days
      after the payment in full of its existing indebtedness to the former
      shareholders of Picometrix, Grantor would grant to Lender a first priority
      security interest in all of its intellectual property collateral pursuant to
      this Agreement, a form of which was attached to the Credit
      Agreement;

     

    NOW,
      THEREFORE, in consideration of the premises and to induce the Lender to extend
      credit to Grantor, the Grantor hereby agrees with the Lender, as
      follows:

     

    (1) Defined
      Terms.
      The
      following terms shall have the following meanings:

     

    “Agreement”:
      this
      Patent, Trademark and Copyright Security Agreement, as the same may be amended,
      supplemented, waived or otherwise modified from time to time.

     

    “Code”:
      the
      Uniform Commercial Code as from time to time in effect in the State of
      Michigan.

     

    “Collateral”:
      as
      defined in Section 2 of this Agreement.

     

    “Copyright
      Licenses”:
      all
      United States license agreements with any other person in connection with any
      of
      the Copyrights or such other person’s copyrights, whether the Grantor is a
      licensor or a licensee under any such license agreement, including, without
      limitation, the license agreements listed on Schedule III hereto and made a
      part
      hereof, subject, in each case, to the terms of such license agreements and
      the
      right to prepare for sale, sell and advertise for sale, all inventory now or
      hereafter covered by such licenses.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Copyrights”:
      all
      United States copyrights and mask works, whether or not registered, and all
      applications for registration of all copyrights and mask works, including,
      but
      not limited to all copyrights and mask works, and all applications for
      registration of all copyrights and mask works identified in Schedule III hereto
      and made a part hereof, and including without limitation (1) the right to sue
      or
      otherwise recover for any and all past, present and future infringements and
      misappropriations thereof; (2) all income, royalties, damages and other payments
      now and hereafter due and/or payable with respect thereto (including, without
      limitation, payments under all Copyright Licenses entered into in connection
      therewith, and damages and payments for past or future infringements thereof);
      and (3) all rights corresponding thereto and all modifications, adaptations,
      translations, enhancements and derivative works, renewals thereof, and all
      other
      rights of any kind whatsoever of the Grantor accruing thereunder or pertaining
      thereto (Copyrights and Copyright Licenses being, collectively, the
“Copyright
      Collateral”).

     

    “Event
      of Default”:
      shall
      have the meaning given to such term in the Credit Agreement.

     

    “General
      Intangibles”:
      as
      defined in Section 9-102 of the Code, including, without limitation, all
      Patents, Trademarks and Copyrights now or hereafter owned by the Grantor to
      the
      extent such Patents, Trademarks and Copyrights would be included in General
      Intangibles under the Code.

     

    “Lien”:
      any
      lien, security interest, pledge, encumbrance or other similar charge, whether
      voluntary or involuntary and however created.

     

    “Obligations”:
      the
      collective reference to the unpaid principal of and interest on (including,
      without limitation, interest accruing after the maturity of the Notes and
      interest accruing after the filing of any petition in bankruptcy, or the
      commencement of any insolvency, reorganization or like proceeding, relating
      to
      the Grantor whether or not a claim for post-filing or post-petition interest
      is
      allowed in such proceeding) the Note, and all other obligations and liabilities
      of the Grantor to the Lender, whether direct or indirect, absolute or
      contingent, due or to become due, or now existing or hereafter incurred,
      including, without limitation, obligations and liabilities which may arise
      under, out of, or in connection with, the Note, or any other document made,
      delivered or given in connection therewith, in each case whether on account
      of
      principal, interest, reimbursement obligations, fees, indemnities, costs,
      expenses or otherwise (including, without limitation, all reasonable fees and
      disbursements of counsel to the Lender).

     

    “Patent
      License”:
      all
      United States license agreements with any other person in connection with any
      of
      the Patents or such other person’s patents, whether the Grantor is a licensor or
      a licensee under any such license agreement, including, without limitation,
      the
      license agreements listed on Schedule II hereto and made a part hereof, subject,
      in each case, to the terms of such license agreements and the right to prepare
      for sale, sell and advertise for sale, all inventory now or hereafter covered
      by
      such licenses.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Patents”:
      all
      United States letters patents, patent applications and patentable inventions,
      including, without limitation, all patents and patent applications identified
      in
      Schedule II attached hereto and made a part hereof, and including without
      limitation (a) all inventions and improvements described and claimed therein,
      and patentable inventions, (b) the right to sue or otherwise recover for any
      and
      all past, present and future infringements and misappropriations thereof, (c)
      all income, royalties, damages and other payments now and hereafter due and/or
      payable with respect thereto (including, without limitation, payments under
      all
      licenses entered into in connection therewith, and damages and payments for
      past
      or future infringements thereof), and (d) all rights corresponding thereto
      in
      the United States and all reissues, divisions, continuations,
      continuations-in-part, substitutes, renewals, and extensions thereof, all
      improvements thereon, and all other rights of any kind whatsoever of the Grantor
      accruing thereunder or pertaining thereto (Patents and Patent Licenses being,
      collectively, the “Patent
      Collateral”).

     

    “Trademark
      License”:
      all
      United States license agreements with any other person in connection with any
      of
      the Trademarks or such other person’s names or trademarks, whether the Grantor
      is a licensor or a licensee under any such license agreement, including, without
      limitation, the license agreements listed on Schedule I hereto and made a part
      hereof, subject, in each case, to the terms of such license agreements, and
      the
      right to prepare for sale, sell and advertise for sale, all inventory now or
      hereafter covered by such licenses.

     

    “Trademarks”:
      all
      trademarks, service marks, trade names, trade dress or other indicia of trade
      origin, trademark and service mark registrations, and applications for trademark
      or service mark registrations (except for “intent to use” applications for
      trademark or service mark registrations filed pursuant to Section 1(b) of the
      Lanham Act, unless and until an Amendment to Allege Use or a Statement of Use
      under Sections 1(c) and 1(d) of said Act has been filed), and any renewals
      thereof, including, without limitation, each registration and application
      identified in Schedule I attached hereto and made a part hereof, and including
      without limitation (a) the right to sue or otherwise recover for any and all
      past, present and future infringements and misappropriations thereof, (b) all
      income, royalties, damages and other payments now and hereafter due and/or
      payable with respect thereto (including, without limitation, payments under
      all
      licenses entered into in connection therewith, and damages and payments for
      past
      or future infringements thereof) and (c) all rights corresponding thereto in
      the
      United States and all other rights of any kind whatsoever of the Grantor
      accruing thereunder or pertaining thereto, together in each case with the
      goodwill of the business connected with the use of, and symbolized by, each
      such
      trademark, service mark, trade name, trade dress or other indicia of trade
      origin (Trademarks and Trademark Licenses being, collectively, the “Trademark
      Collateral”).

     

    (b)The
      words “hereof,” “herein” and “hereunder” and words of similar import when used
      in this Agreement shall refer to this Agreement as a whole and not to any
      particular provision of this Agreement, and section and paragraph references
      are
      to this Agreement unless otherwise specified.

     

    (c) The
      meanings given to terms defined herein shall be equally applicable to both
      the
      singular and plural forms of such terms.

     

    (2) Grant
      of Security Interest.
      As
      collateral security for the prompt and complete payment and performance when
      due
      (whether at the stated maturity, by acceleration or otherwise) of the
      Obligations, the Grantor hereby assigns, pledges and grants to the Lender a
      security interest in all of the following property now owned or at any time
      hereafter acquired by the Grantor or in which the Grantor now has or at any
      time
      in the future may acquire any right, title or interest (collectively, the
“Collateral”):

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
      	 	
              (i)

            	
              all
                Trademarks;

            

    

     

    
      	 	
              (ii)

            	
              all
                Trademark Licenses;

            

    

     

    
      	 	
              (iii)

            	
              all
                Patents;

            

    

     

    
      	 	
              (iv)

            	
              all
                Patent Licenses;

            

    

     

    
      	 	
              (v)

            	
              all
                Copyrights;

            

    

     

    
      	 	
              (vi)

            	
              all
                Copyright Licenses;

            

    

     

    
      	 	
              (vii)

            	
              all
                General Intangibles connected with the use of or symbolized by the
                Trademarks, Patents and Copyrights;
                and

            

    

     

    
      	 	
              (viii)

            	
              to
                the extent not otherwise included, all proceeds and products of any
                and
                all of the foregoing;

            

    

     

    Notwithstanding
      anything herein to the contrary, “Collateral” shall not include any General
      Intangible that is the subject of a written agreement, document or instrument
      which specifically prohibits assignment thereof or grant of a security interest
      therein but only to the extent of such prohibition, or, if such agreement,
      document or instrument conditions assignment thereof or grant of a security
      interest therein upon consent of a third party, only to the extent that Grantor,
      after using commercially reasonable efforts, has not obtained such
      consent.

    

    (3) Grantor
      Remains Liable; Limitations on Lender’s Obligations.
      Anything herein to the contrary notwithstanding, (a) the Grantor shall remain
      liable under the contracts and agreements included in the Collateral to the
      extent set forth therein to perform all of its duties and obligations thereunder
      to the same extent as if this Agreement had not been executed, (b) the exercise
      by the Lender of any of the rights hereunder shall not release the Grantor
      from
      any of its duties or obligations under the contracts and agreements included
      in
      the Collateral, and (c) the Lender shall not have any obligation or liability
      under the contracts and agreements included in the Collateral by reason of
      this
      Agreement, nor shall the Lender be obligated to perform any of the obligations
      or duties of the Grantor thereunder or to take any action to collect or enforce
      any claim for payment assigned hereunder.

     

    (4) Representations
      and Warranties.
      The
      Grantor represents and warrants as follows:

     

    (a) Title;
      No Other Liens.
      Except
      for the Liens granted to the Lender, the Grantor is (or, in the case of
      after-acquired Collateral, will be) the sole, legal and beneficial owner of
      the
      entire right, title and interest in and to the Trademarks set forth on Schedule
      I hereto, the Patents set forth on Schedule II hereto and the Copyrights set
      forth on Schedule III hereto free and clear of any and all liens. No security
      agreement, financing statement or other public notice similar in effect with
      respect to all or any part of the Collateral is on file or of record in any
      public office (including, without limitation, the United States Patent and
      Trademark Office and the United States Copyright Office) except such as may
      have
      been filed in favor of the Lender pursuant to this Agreement.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (b) Perfected
      First Priority Liens.
      (i)
      This Agreement is effective to create, as collateral security for the
      Obligations, valid and enforceable Liens on the Collateral in favor of the
      Lender.

     

    (ii) Upon
      filing of the financing statements delivered to the Lender (and the recording
      of
      this Agreement in the United States Patent and Trademark Office and the United
      States Copyright Office), the Liens created pursuant to this Agreement will
      constitute valid and perfected Liens on the Collateral in favor of the Lender,
      which Liens will be prior to all other Liens on the Collateral, and which Liens
      are enforceable as such against all creditors of and purchasers (except to
      the
      extent that the recording of an assignment or other transfer of title to the
      Lender in the United States Patent and Trademark Office and the United States
      Copyright Office may be necessary for such enforceability) from the Grantor,
      except as such enforcement may be limited by bankruptcy, insolvency,
      reorganization, moratorium or similar laws affecting the enforcement of
      creditors’ rights generally and by general equitable principles (whether
      considered in a proceeding in equity or at law).

     

    (c) Consents.
      No
      consent of any party (other than such Grantor) to any Patent License, Trademark
      License, or Copyright License constituting Collateral is required, or purports
      to be required, to be obtained by or on behalf of such Grantor in connection
      with the execution, delivery and performance of this Agreement that has not
      been
      obtained. Each Patent License, Trademark License, and Copyright License
      constituting Collateral is in full force and effect and constitutes a valid
      and
      legally enforceable obligation of the Grantor and (to the knowledge of the
      Grantor) each other party thereto except as enforceability may be limited by
      bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
      the
      enforcement of creditor’s rights generally and by general equitable principles
      (whether enforcement is sought by proceedings in equity or at law). No consent
      or authorization of, filing with or other act by or in respect of any
      governmental authority is required in connection with the execution, delivery,
      performance, validity or enforceability of any of the Patent Licenses, Trademark
      Licenses, or Copyright Licenses by any party thereto other than those which
      have
      been duly obtained, made or performed and are in full force and effect. Neither
      the Grantor nor (to the knowledge of the Grantor) any other party to any Patent
      License, Trademark License, or Copyright License constituting Collateral is
      in
      default in the performance or observance of any of the terms thereof, except
      for
      such defaults as would not reasonably be expected, in the aggregate, to have
      a
      material adverse effect on the value of the Collateral. The right, title and
      interest of the Grantor in, to and under each Patent License, Trademark License,
      and Copyright License constituting Collateral are not subject to any defense,
      offset, counterclaim or claim.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (d) Schedules
      I, II and III are Complete; All Filings Have Been Made.
      Set
      forth in Schedules I, II and III is a complete and accurate list of the
      Trademarks, Patents and Copyrights owned by the Grantor of the date hereof.
      The
      Grantor has made all necessary filings and recordations to protect and maintain
      its interest in the Trademarks, Patents and Copyrights set forth in Schedules
      I,
      II and III, including, without limitation, all necessary filings and recordings,
      and payments of all maintenance fees, in the United States Patent and Trademark
      Office and the United States Copyright Office to the extent such Trademarks,
      Patents and Copyrights are material to the Grantor’s business. Set forth in
      Schedules I, II and III is a complete and accurate list of all of the material
      Patent Licenses, Trademark Licenses, and Copyright Licenses owned by the Grantor
      as of the date hereof.

     

    (e) The
      Trademarks and Trademark Licenses are Subsisting and Not Adjudged
      Invalid.
      As of
      the date hereof, each trademark registration and trademark application of the
      Grantor set forth in Schedule I is subsisting as of the date hereof and has
      not
      been adjudged invalid, unregisterable or unenforceable, in whole or in part,
      and, to the best of the Grantor’s knowledge, is valid, registerable and
      enforceable. As of the date hereof, each of the Trademark Licenses set forth
      in
      Schedule I is validly subsisting and has not been adjudged invalid or
      unenforceable, in whole or in part, and, to the best of the Grantor’s knowledge,
      is valid and enforceable. As of the date hereof, the Grantor has notified the
      Lender in writing of all uses of any item of Trademark Collateral of which
      the
      Grantor is aware which could reasonably be expected to lead to such item
      becoming invalid or unenforceable, including unauthorized uses by third parties
      and uses which were not supported by the goodwill of the business connected
      with
      such Collateral.

     

    (f) The
      Patent and Patent Licenses are Subsisting and Not Adjudged
      Invalid.
      As of
      the date hereof, each Patent and patent application of the Grantor set forth
      in
      Schedule II is subsisting and has not been adjudged invalid, unpatentable or
      unenforceable, in whole or in part, and, to the best of the Grantor’s knowledge,
      is valid, patentable and enforceable. As of the date hereof, each of the Patent
      Licenses set forth in Schedule II is validly subsisting and has not been
      adjudged invalid or unenforceable, in whole or in part, and, to the best of
      the
      Grantor’s knowledge, is valid and enforceable. As of the date hereof, the
      Grantor has notified the Lender in writing of all uses of any item of Patent
      Collateral material to the Grantor’s business of which the Grantor is aware
      which could reasonably be expected to lead to such item becoming invalid or
      unenforceable.

     

    (g) The
      Copyrights and Copyright Licenses are Subsisting and Not Adjudged
      Invalid.
      As of
      the date hereof, each Copyright registration and Copyright application of the
      Grantor set forth in Schedule III is subsisting and has not been adjudged
      invalid, unregisterable or unenforceable, in whole or in part, and, to the
      best
      of the Grantor’s knowledge, is valid, registerable and enforceable. As of the
      date hereof, each of the Copyright Licenses set forth in Schedule III is validly
      subsisting and has not been adjudged invalid or unenforceable, in whole or
      in
      part, and, to the best of the Grantor’s knowledge, is valid and enforceable. As
      of the date hereof, the Grantor has notified the Lender in writing of all uses
      of any item of Copyright Collateral material to the Grantor’s business of which
      the Grantor is aware which could reasonably be expected to lead to such item
      becoming invalid or unenforceable, including unauthorized uses by third parties
      and uses which were not supported by the goodwill of the business connected
      with
      such Collateral.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (h) No
      Previous Assignments or Releases.
      As of
      the date hereof, the Grantor has not made a previous assignment, sale, transfer
      or agreement constituting a present or future assignment, sale, transfer or
      encumbrance of any of the Collateral, except with respect to non-exclusive
      licenses granted in the ordinary course of business or as permitted by this
      Agreement or the Loan Documents. As of the date hereof, the Grantor has not
      granted any license, shop right, release, covenant not to sue, or non-assertion
      assurance to any person with respect to any part of the Collateral.

     

    (i) Proper
      Statutory Notice.
      The
      Grantor has marked its products with the trademark registration symbol,
      copyright notices, the numbers of all appropriate patents, the common law
      trademark symbol or the designation “patent pending,” as the case may be, to the
      extent that it is reasonably and commercially practicable. The Grantor has
      marked publicly-distributed copies of its computer programs with a statutory
      copyright notice set forth in the U.S. Copyright Act, 17 U.S.C. Sections
      101,401.

     

    (j) No
      Knowledge of Claims Likely to Arise.
      Except
      for the Trademark Licenses, Patent Licenses, and Copyright Licenses listed
      in
      Schedules I, II, and III hereto, the Grantor has no knowledge of the existence
      of any right or any threatened or pending claim (other than as provided by
      this
      Agreement) that will be made under or against any item of Collateral contained
      on Schedules I, II and III.

     

    (k) No
      Knowledge of Existing or Threatened Claims.
      No
      claim has been made and is continuing or, to the best of the Grantor’s
      knowledge, threatened that the use by the Grantor of any item of material
      Collateral is invalid or unenforceable or that the use by the Grantor of any
      material Collateral does or may violate the rights of any person. To the best
      of
      the Grantor’s knowledge, there is currently no infringement or unauthorized use
      of any item of material Collateral contained on Schedules I, II and
      III.

     

    (5) Covenants.
      The
      Grantor covenants and agrees with the Lender that, from and after the date
      of
      this Agreement until the payment in full of the Obligations:

     

    (a) Further
      Documentation; Pledge of Instruments and Chattel Paper.
      At any
      time and from time to time, upon the written request of the Lender or the
      Grantor, as the case may be, and at the sole expense of the Grantor, the Grantor
      or the Lender, as the case may be, will promptly and duly execute and deliver
      such further instruments and documents and take such further action as the
      Lender or the Grantor may reasonably request for the purpose of obtaining or
      preserving the full benefits of this Agreement and of the rights and powers
      herein granted, including, without limitation, the filing of any financing
      or
      continuation statements under the Uniform Commercial Code in effect in any
      jurisdiction with respect to the Liens created hereby. The Grantor also hereby
      authorizes the Lender to file any such financing or continuation statement
      without the signature of the Grantor to the extent permitted by applicable
      law.
      A carbon, photostatic or other reproduction of this Agreement shall be
      sufficient as a financing statement for filing in any jurisdiction. The Lender
      agrees to notify the Grantor and the Grantor agrees to notify the Lender of
      any
      financing or continuation statement filed by it pursuant to this Section 5(a),
      provided
      that any
      failure to give any such notice shall not affect the validity or effectiveness
      of any such filing. The Grantor agrees that it shall notify the Bank if Grantor
      submits an application for registration of a copyright and provide the Bank
      within thirty (30) days of Grantor’s receipt thereof with a copy of any
      certificate of registration of a copyright issued by the United States Copyright
      Office.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (b) Indemnification
      and Expenses.
      The
      Grantor agrees to pay, and to save the Lender harmless from, any and all
      liabilities and reasonable costs and expenses (including, without limitation,
      reasonable legal fees and expenses) (i) with respect to, or resulting from,
      any
      delay by the Grantor in complying with any material requirement of law
      applicable to any of the Collateral, or (ii) in connection with any of the
      transactions contemplated by this Agreement, provided that, in either case,
      such
      indemnity shall not be available to the extent that such liabilities, costs
      and
      expenses resulted from the gross negligence or willful misconduct of the Lender,
      its agents or employees. In any suit, proceeding or action brought by the Lender
      under any of the Collateral for any sum owing thereunder, or to enforce any
      of
      the Collateral, the Grantor will save, indemnify and keep the Lender harmless
      from and against all expense, loss or damage suffered by reason of any defense
      or counterclaim raised in any such suit, proceeding or action.

     

    (c) Maintenance
      of Records.
      The
      Grantor will keep and maintain at its own cost and expense reasonably
      satisfactory and complete records of the Collateral, and shall mark such records
      to evidence this Agreement and the Liens and the security interests created
      hereby. For the Lender’s further security, the Lender shall have a security
      interest in all of the Grantor’s books and records pertaining to the collateral,
      and the Grantor shall permit the Lender or its representatives to review such
      books and records upon reasonable advance notice during normal business hours
      at
      the location where such books and records are kept and at the reasonable request
      of the Lender.

     

    (d) Right
      of Inspection.
      Upon
      reasonable advance notice to the Grantor, the Lender and its respective
      representatives shall have access during normal business hours to all the books,
      correspondence and records of the Grantor, and the Lender and its respective
      representatives may examine the same, and to the extent reasonable take extracts
      therefrom and make photocopies thereof, and the Grantor agrees to render to
      the
      Lender, at the Grantor’s reasonable cost and expense, such clerical and other
      assistance as may be reasonably requested with regard thereto. Lender shall,
      and
      shall cause its respective representatives to, use good faith efforts not to
      interfere with the normal business operations of Grantor.

     

    (e) Compliance
      with Laws, etc.
      The
      Grantor will comply in all material respects with all requirements of law
      applicable to the Collateral or any part thereof, except to the extent that
      the
      failure to so comply would not be reasonably expected to materially adversely
      affect in the aggregate the Lender’s rights hereunder, the priority of its Liens
      on the Collateral or the value of the Collateral.

     

    (f) Further
      Identification of Collateral.
      The
      Grantor will furnish to the Lender from time to time such statements and
      schedules further identifying and describing the Collateral, and such other
      reports in connection with the Collateral, as the Lender may reasonably request,
      all in reasonable detail.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (g) Security
      Interest in Any Newly Acquired Collateral.
      The
      Grantor agrees that should it obtain an ownership interest in any Trademark,
      Patent, Trademark License, Patent License, Copyright or Copyright License which
      is not now a part of the Collateral, (i) the provisions of Section 2 shall
      automatically apply thereto, (ii) any such Trademark, Patent, Trademark License,
      Patent License, Copyright and Copyright License shall automatically become
      part
      of the Collateral, and (iii) with respect to any ownership interest in any
      Trademark, Patent, Copyright, Trademark License, Patent License, or Copyright
      License that the Grantor should obtain which the Grantor reasonably deems is
      material to its business, it shall give notice thereof to the Lender in writing,
      in reasonable detail, within 30 days after acquiring such ownership interest.
      The Grantor authorizes the Lender to modify this Agreement by amending Schedules
      I, II and III (and will cooperate with the Lender in effecting any such
      amendment) to include on Schedule I any Trademark and Trademark License and
      on
      Schedule II any Patent or Patent License and on Schedule III any Copyright
      or
      Copyright License of which it receives notice under this Section.

     

    (h) Maintenance
      of the Trademark Collateral.
      The
      Grantor agrees to take all necessary steps, including, without limitation,
      in
      the United States Patent and Trademark Office or in any court, to use
      commercially reasonable efforts to (i) defend, enforce, preserve the validity
      and ownership of, and maintain each trademark registration and each Trademark
      License identified on Schedule I hereto, and (ii) pursue each trademark
      application now or hereafter identified in Schedule I hereto, including, without
      limitation, the filing of responses to office actions issued by the United
      States Patent and Trademark Office, the filing of applications for renewal,
      the
      filing of affidavits under Sections 8 and 15 of the United States Trademark
      Act,
      and the participation in opposition, cancellation, infringement and
      misappropriation proceedings, except, in each case in which the Grantor has
      reasonably determined that any of the foregoing is not of material economic
      value to it. The Grantor agrees to use commercially reasonable efforts to take
      corresponding steps with respect to each new or acquired trademark registration,
      trademark application or any rights obtained under any Trademark License, in
      each case, which it is now or later becomes entitled, except in each case in
      which the Grantor has reasonably determined that any of the foregoing is not
      of
      material economic value to it. Any expenses incurred in connection with such
      activities shall be borne by the Grantor.

     

    (i) Maintenance
      of the Patent Collateral.
      The
      Grantor agrees to take all necessary steps, including, without limitation,
      in
      the United States Patent and Trademark Office or in any court, to use
      commercially reasonable efforts to (i) defend, enforce, preserve the validity
      and ownership of, and maintain each Patent and each Patent License identified
      on
      Schedule II hereto, and (ii) pursue each patent application, now or hereafter
      identified in Schedule II hereto, including, without limitation, the filing
      of
      divisional, continuation, continuation-in-part and substitute applications,
      the
      filing of applications for reissue, renewal or extensions, the payment of
      maintenance fees, and the participation in interference, reexamination,
      opposition, infringement and misappropriation proceedings, except in each case
      in which the Grantor has reasonably determined that any of the foregoing is
      not
      of material economic value to it. The Grantor agrees to use commercially
      reasonable efforts to take corresponding steps with respect to each new or
      acquired Patent, patent application, or any rights obtained under any Patent
      License, in each case, which it is now or later becomes entitled, except in
      each
      case in which the Grantor has reasonably determined that any of the foregoing
      is
      not of material economic value to it. Any expenses incurred in connection with
      such activities shall be borne by the Grantor.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (j) Maintenance
      of the Copyright Collateral.
      The
      Grantor agrees to take all necessary steps, including, without limitation,
      in
      the United States Copyright Office or in any court, to use commercially
      reasonable efforts to (i) defend, enforce, and preserve the validity and
      ownership of, and maintain each Copyright and Copyright License identified
      on
      Schedule III hereto, and (ii) pursue each Copyright application, now or
      hereafter identified in Schedule III hereto, including, without limitation,
      the
      filing of divisional, continuation, continuation-in-part and substitute
      applications, the filing of applications for reissue, renewal or extensions,
      the
      payment of maintenance fees, and the participation in interference,
      reexamination, opposition, infringement and misappropriation proceedings, except
      in each case in which the Grantor has reasonably determined that any of the
      foregoing is not of material economic value to it. The Grantor agrees to use
      commercially reasonable efforts to take corresponding steps with respect to
      each
      new or acquired Copyright, Copyright application, or any rights obtained under
      any Copyright License, in each case, which it is now or later becomes entitled,
      except in each case in which the Grantor has reasonably determined that any
      of
      the foregoing is not of material economic value to it. Any expenses incurred
      in
      connection with such activities shall be borne by the Grantor.

     

    (k) Grantor
      Shall Not Abandon any Collateral.
      The
      Grantor shall not abandon any trademark registration, copyright registration,
      Patent or any pending trademark or patent application, without the written
      consent of the Lender, unless the Grantor shall have previously determined
      that
      such use or the pursuit or maintenance of such trademark registration, copyright
      registration, Patent or pending trademark or patent application is not of
      material economic value to it, in which case, the Grantor will, at least
      annually, give notice of any such abandonment to the Lender in
      writing.

     

    (l) Infringement
      of Any Collateral.
      In the
      event that the Grantor becomes aware that any item of the Collateral which
      the
      Grantor has reasonably determined to be material to its business is infringed
      or
      misappropriated by a third party, the Grantor shall notify the Lender as soon
      as
      practicable and in writing, in reasonable detail, and shall take such actions
      as
      the Grantor or the Lender deems reasonably appropriate under the circumstances
      to protect such Collateral, including, without limitation, suing for
      infringement or misappropriation and for an injunction against such infringement
      or misappropriation. Any expense incurred in connection with such activities
      shall be borne by the Grantor. The Grantor will advise the Lender promptly
      and
      in writing, in reasonable detail, of any adverse determination or the
      institution of any proceeding (including, without limitation, the institution
      of
      any proceeding in the United States Patent and Trademark Office, the United
      States Copyright Office or any court) regarding any item of the
      Collateral.

     

    (m) Limitation
      on Liens on Collateral.
      The
      Grantor will not create, incur or permit to exist, will defend the Collateral
      against, and will take such other action as is reasonably necessary to remove,
      any Lien or material adverse claim on or to any of the Collateral, other than
      the Liens created by this Agreement, and will defend the right, title and
      interest of the Lender in and to any of the Collateral against the claims and
      demands of all persons whomsoever.

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (n) Limitations
      on Dispositions of Collateral.
      Without
      the prior written consent of the Lender, the Grantor will not sell, assign,
      transfer, exchange or otherwise dispose of, or grant any option with respect
      to,
      the Collateral, or attempt, offer or contract to do so.

     

    (o) Notices.
      The
      Grantor will advise the Lender promptly, in reasonable detail, (i) of any Lien
      (other than Liens created hereby) on, or material adverse claim asserted
      against, Patents, Trademarks, or Copyrights and (ii) of the occurrence of any
      other event which would reasonably be expected in the aggregate to have a
      material adverse effect on the aggregate value of the Collateral or the Liens
      created hereunder.

     

    (6) Lender’s
      Appointment as Attorney-in-Fact.

     

    (a) Powers.
      The
      Grantor hereby irrevocably constitutes and appoints the Lender, and any officer
      or agent thereof, with full power of substitution, as its true and lawful
      attorney-in-fact with full irrevocable power and authority in the place and
      stead of the Grantor and in the name of the Grantor or in its own name, from
      time to time in the Lender’s discretion, for the purpose of carrying out the
      terms of this Agreement, to take any and all appropriate action and to execute
      any and all documents and instruments which may be necessary or desirable to
      accomplish the purposes of this Agreement, and, without limiting the generality
      of the foregoing, the Grantor hereby gives the Lender the power and right,
      on
      behalf of the Grantor, without notice to or assent by the Grantor, to do the
      following at any time, and to the extent permitted by law; provided, however,
      in
      each case Lender may only take action pursuant to this power of attorney
      following the occurrence of an Event of Default:

     

    (i)
      to
      execute and deliver any and all agreements, instruments, documents, and papers
      as the Lender may reasonably request to evidence the Lender’s security interest
      in any of the Collateral;

     

    (ii)
      in
      the name of the Grantor or its own name, or otherwise, to take possession of
      and
      indorse and collect any checks, drafts, notes, acceptances or other instruments
      for the payment of moneys due under any General Intangible (to the extent that
      any of the foregoing constitute Collateral) or with respect to any other
      Collateral and to file any claim or to take any other action or institute any
      proceeding in any court of law or equity or otherwise deemed appropriate by
      the
      Lender for the purpose of collecting any and all such moneys due under any
      such
      General Intangible or with respect to any such other Collateral whenever
      payable;

     

    (iii)
      to
      pay or discharge Liens placed on the Collateral, other than Liens permitted
      under this Agreement; and

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (iv)
      to
      direct any party liable for any payment under any of the Collateral to make
      payment of any and all moneys due or to become due thereunder directly to the
      Lender or as the Lender shall direct; (B) to ask for, or demand, collect,
      receive payment of and receipt for, any and all moneys, claims and other amounts
      due or to become due at any time in respect of or arising out of any of the
      Collateral; (C) to sign and indorse any invoices, freight or express bills,
      bills of lading, storage or warehouse receipts, drafts against debtors,
      assignments, verifications, notices and other documents in connection with
      any
      of the Collateral; (D) to commence and prosecute any suits, actions or
      proceedings at law or in equity in any court of competent jurisdiction to
      collect the Collateral or any thereof and to enforce any other right in respect
      of any Collateral; (E) to defend any suit, action or proceeding brought against
      the Grantor with respect to any of the Collateral; (F) to settle, compromise
      or
      adjust any suit, action or proceeding described in clause (E) above and, in
      connection therewith, to give such discharges or releases as the Lender may
      deem
      appropriate; (G) subject to any pre-existing rights or licenses, to assign
      any
      Patent, Trademark, or Copyright constituting Collateral (along with the goodwill
      of the business to which any such Patent, Trademark, or Copyright pertains),
      for
      such term or terms, on such conditions, and in such manner, as the Lender shall
      in its sole discretion determine; and (H) generally, to sell, transfer, pledge
      and make any agreement with respect to or otherwise deal with any of the
      Collateral as fully and completely as though the Lender were the absolute owner
      thereof for all purposes, and to do, at the Lender’s option and the Grantor’s
      expense, at any time, or from time to time, all acts and things which the Lender
      deems necessary to protect, preserve or realize upon the Collateral and the
      Lender’s Liens thereon and to effect the intent of this Agreement, all as fully
      and effectively as the Grantor might do.

     

    The
      Grantor hereby ratifies all that said attorneys shall lawfully do or cause
      to be
      done by virtue hereof. This power of attorney is a power coupled with an
      interest and shall be irrevocable until payment in full of the
      Obligations.

     

    (b) Other
      Powers.
      The
      Grantor also authorizes the Lender, from time to time if an Event of Default
      shall have occurred and be continuing, to execute, in connection with any sale
      provided for in Section 8 hereof, any endorsements, assignments or other
      instruments of conveyance or transfer with respect to the
      Collateral.

     

    (c) No
      Duty on the Part of Lender.
      The
      powers conferred on the Lender hereunder are solely to protect the Lender’s
      interests in the Collateral and shall not impose any duty upon the Lender to
      exercise any such powers. The Lender shall be accountable only for amounts
      that
      it actually receives as a result of the exercise of such powers, and neither
      it
      nor any of its officers, directors, employees or agents shall be responsible
      to
      the Grantor for any act or failure to act hereunder, except for their own gross
      negligence or willful misconduct.

     

    (7) Performance
      by Lender of Grantor’s Obligations.
      If the
      Grantor fails to perform or comply with any of its agreements contained herein
      and the Lender, as provided for by the terms of this Agreement, shall itself
      perform or comply, or otherwise cause performance or compliance, with such
      agreement, the reasonable expenses of the Lender incurred in connection with
      such performance or compliance, together with interest thereon at the rate
      provided in the Credit Agreement, shall be payable by the Grantor to the Lender
      on demand and shall constitute Obligations secured hereby.

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (8) Proceeds.
      It is
      agreed that if an Event of Default shall occur and be continuing, (a) all
      proceeds of any Collateral received by the Grantor consisting of cash, checks
      and other near-cash items shall be held by the Grantor in trust for the Lender,
      segregated from other funds of the Grantor, and at the request of the Lender
      shall, forthwith upon receipt by the Grantor, be turned over to the Lender
      in
      the exact form received by the Grantor (duly indorsed by the Grantor to the
      Lender, if required by the Lender) and (b) any and all such proceeds received
      by
      the Lender (whether from the Grantor or otherwise) may, in the sole discretion
      of the Lender, be held by the Lender as collateral security for the Obligations
      (whether matured or unmatured) and/or then or at any time thereafter may be
      applied by the Lender against, the Obligations then due and owing. Any balance
      of such proceeds remaining after the payment in full of the Obligations shall
      be
      paid over to the Grantor or to whomsoever may be lawfully entitled to receive
      the same.

     

    (9) Remedies.
      If an
      Event of Default shall occur and be continuing, the Lender may exercise all
      rights and remedies of a secured party under the Code, and, to the extent
      permitted by law, all other rights and remedies granted to it in this Agreement
      and in any other instrument or agreement securing, evidencing or relating to
      the
      Obligations. Without limiting the generality of the foregoing, the Lender,
      without demand of performance or other demand, presentment, protest,
      advertisement or notice of any kind (except any notice required by law referred
      to below) to or upon the Grantor or any other person (all and each of which
      demands, defenses, advertisements and notices are hereby waived) may in such
      circumstances, to the extent permitted by law, forthwith collect, receive,
      appropriate and realize upon the Collateral, or any part thereof, and/or may
      forthwith sell, lease, assign, give option or options to purchase, or otherwise
      dispose of and deliver the Collateral or any part thereof (or contract to do
      any
      of the foregoing) in one or more parcels at public or private sale or sales,
      at
      any exchange, broker’s board or office of the Lender or elsewhere upon such
      terms and conditions as it may deem advisable and at such prices as it may
      deem
      best, for cash or on credit or for future delivery without assumption of any
      credit risk. The Lender shall have the right, to the extent permitted by law,
      upon any such sale or sales, to purchase the whole or any part of the Collateral
      so sold, free of any right or equity of redemption in the Grantor, which right
      or equity is hereby waived or released. The Grantor further agrees, at the
      Lender’s request, upon the occurrence and during the continuance of an Event of
      Default, to assemble the Collateral and make it available to the Lender at
      places which the Lender shall reasonably select, whether at the Grantor’s
      premises or elsewhere. In the event of any sale, assignment, or other
      disposition of any of the Collateral, the goodwill of the business connected
      with and symbolized by any Trademark Collateral subject to such disposition
      shall be included, and the Grantor shall supply to the Lender or its designee
      the Grantor’s know-how and expertise relating to the Collateral subject to such
      disposition, and the Grantor’s notebooks, studies, reports, records, documents
      and things embodying the same or relating to the inventions, processes or ideas
      covered by, and to the manufacture of any products under or in connection with,
      the Collateral subject to such disposition, and the Grantor’s customer’s lists,
      studies and surveys and other records and documents relating to the
      distribution, marketing, advertising and sale of products relating to the
      Collateral subject to such disposition. The Lender shall apply the net proceeds
      of any such collection, recovery, receipt, appropriation, realization or sale,
      after deducting all reasonable costs and expenses of every kind incurred therein
      or incidental to the care or safekeeping of any of the Collateral or in any
      way
      relating to the Collateral or the rights of the Lender, including, without
      limitation, reasonable attorneys’ fees and disbursements, to the payment in
      whole or in part of the Obligations then due and owing, and only after such
      application and after the payment by the Lender of any other amount required
      by
      any provision of law, including, without limitation, Section 9-610 or 9-615
      of
      the Code, need the Lender account for the surplus, if any, to the Grantor.
      To
      the extent permitted by applicable law, the Grantor waives all claims, damages
      and demands it may acquire against the Lender arising out of the repossession,
      retention or sale of the Collateral, other than any such claims, damages and
      demands that may arise from the gross negligence or willful misconduct of the
      Lender, its affiliates or their respective employees or representatives. If
      any
      notice of a proposed sale or other disposition of Collateral shall be required
      by law, such notice shall be deemed reasonable and proper if given at least
      10
      days before such sale or other disposition. The Grantor shall remain liable
      for
      any deficiency if the proceeds of any sale or other disposition of the
      Collateral are insufficient to pay the then outstanding Obligations, including
      the reasonable fees and disbursements of any attorneys employed by the Lender
      to
      collect such deficiency.

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (10) Limitation
      on Duties Regarding Preservation of Collateral.
      The
      Lender’s sole duty with respect to the custody, safekeeping and physical
      preservation of the Collateral in its possession, under Section 9-207 of the
      Code or otherwise, shall be to deal with it in the same manner as the Lender
      deals with similar property for its own account. Neither the Lender nor any
      of
      its directors, officers, employees or agents shall be liable for failure to
      demand, collect or realize upon all or any part of the Collateral or for any
      delay in doing so or shall be under any obligation to sell or otherwise dispose
      of any Collateral upon the request of the Grantor or any other
      person.

     

    (11) Powers
      Coupled with an Interest.
      All
      authorizations and agencies herein contained with respect to the Collateral
      are
      powers coupled with an interest and are irrevocable until payment in full of
      the
      Obligations.

     

    (12) Severability.
      Any
      provision of this Agreement which is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof, and any such prohibition or unenforceability in any
      jurisdiction shall not invalidate or render unenforceable such provision in
      any
      other jurisdiction.

     

    (13) Section
      Headings.
      The
      Section headings used in this Agreement are for convenience of reference only
      and are not to affect the construction hereof or be taken into consideration
      in
      the interpretation hereof.

     

    (14) No
      Waiver; Cumulative Remedies.
      The
      Lender shall not by any act (except by a written instrument pursuant to Section
      15 hereof), delay, indulgence, omission or otherwise be deemed to have waived
      any right or remedy hereunder or to have acquiesced in any Event of Default
      or
      in any breach of any of the terms and conditions hereof. No failure to exercise,
      nor any delay in exercising, on the part of the Lender, any right, power or
      privilege hereunder shall operate as a waiver thereof. No single or partial
      exercise of any right, power or privilege hereunder shall preclude any other
      or
      further exercise thereof or the exercise of any other right, power or privilege.
      A waiver by the Lender of any right or remedy hereunder on any one occasion
      shall not be construed as a bar to any right or remedy which the Lender would
      otherwise have on any future occasion. The rights and remedies herein provided
      are cumulative, may be exercised singly or concurrently and are not exclusive
      of
      any rights or remedies provided by law.

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    (15) Waivers
      and Amendments; Successors and Assigns.
      None of
      the terms or provisions of this Agreement may be waived, amended, supplemented
      or otherwise modified except by a written instrument executed by the Grantor
      and
      the Lender. This Agreement shall be binding upon the successors and assigns
      of
      the Grantor and shall inure to the benefit of the Lender and its successors
      and
      assigns, except that the Grantor may not assign, transfer or delegate any of
      its
      rights or obligations under this Agreement without the prior written consent
      of
      the Lender.

     

    (16) Notices.
      All
      notices, requests and demands to or upon the respective parties hereto shall
      be
      made in accordance with the notice terms provided in the loan documents between
      the Grantor and the Lender.

     

    (17) Release
      of Collateral and Termination.
      At such
      time as the payment in full of the Obligations, the Collateral shall be released
      from the Liens created hereby, and this Agreement and all obligations (other
      than those expressly stated to survive such termination) of the Lender hereunder
      shall terminate, all without delivery of any instrument or performance of any
      act by any party, and all rights to the Collateral shall revert to the
      Grantor.

     

    (18) GOVERNING
      LAW.
      THIS
      AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
      WITH, THE LAWS OF THE STATE OF MICHIGAN WITHOUT REGARD TO THE PRINCIPLES OF
      CONFLICT OF LAWS THEREOF, AND ISSUES OF COPYRIGHT, PATENT AND TRADEMARK SHALL
      BE
      GOVERNED BY THE U.S. COPYRIGHT ACT, THE U.S. PATENT ACT AND THE U.S. TRADEMARK
      ACT, RESPECTIVELY.

     

    (19) WAIVER
      OF JURY TRIAL.
      THE
      GRANTOR AND THE LENDER HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN THE EVENT
      OF
      LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED
      TO, THIS AGREEMENT.

     

    IN
      WITNESS WHEREOF, the Grantor has caused this Agreement to be duly executed
      and
      delivered as of the date first above written.

     

    
      	 	
              ADVANCED
                PHOTONIX, INC.

            
	 	 
	 	 
	 	
              By: 

            	 
	 	 	 
	 	
              Its: 

            	 
	 	 
	 	
              Address:   2925
                Boardwalk Ann

              Arbor,
                Michigan 48104

            

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    Schedule
      I

     

    TRADEMARKS
      AND TRADEMARK LICENSES

     

    
      	
              i)

            	
              Existing
                Trademarks

            

    

     

    
      	
              Trademark

            	 	
              Registration No.

            	 	
              Registration Date

            
	 	 	 	 	 
	 	 	 	 	 

    

    

    
      	
              ii)

            	
              Trademarks
                in the Application Process

            

    

    

    
      	
              Trademark

            	 	
              Serial No.

            	 	
              Application Date

            
	 	 	 	 	 
	 	 	 	 	 

    

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    Schedule
      II

     

    PATENTS
      AND PATENT LICENSES

     

    PATENTS

     

    
      	
              Patent Number

            	 	
              Issue Date

            	 	
              Title

            
	 	 	 	 	 
	 	 	 	 	 

    

    

    
      	
              iii)

            	
              PATENTS
                IN THE APPLICATION PROCESS

            

    

    

    
      	
              Title

            	 	
              Application Date

            	 	
              Application No.

            
	 	 	 	 	 
	 	 	 	 	 

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    Schedule
      III

     

    COPYRIGHTS

    

    
      	
              Title of Work

            	 	
              Registration Number

            

    

    
      
        
        

      

      
        18

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