Document:

ex10_19.htm

    
      

    

    Exhibit
      10.19

    

    PROMISSORY
      NOTE

     

    

    
      	
              $500,000

            	
              June
                28, 2007

            

    

    

    FOR
      VALUE RECEIVED, Photonics
      International, Inc., a Minnesota corporation (“Maker”), hereby promises to pay
      to the order of APA Enterprises, Inc., a Minnesota corporation, and successors
      and assigns (“Holder”) at 5480 Nathan Lane, Plymouth, MN  55442, or
      such other place as Holder may appoint, the principal sum of Five Hundred
      Thousand and 00/100 U.S. Dollars ($500,000), in the following
      manner:

    

    The
      principal of $500,000, together
      with interest at the rate of seven percent (7%) per annum, accruing from and
      after November 1, 2007, shall be due and payable in monthly installments of
      $5,805.42 each, commencing December 1, 2007 and on the first day of each
      calendar month thereafter through November 1, 2012, when the entire remaining
      balance of principal and accrued interest shall be due and payable in full,
      subject to acceleration in the manner provided below.

    

    Payments
      shall be applied first to
      accrued interest and the remainder to principal reduction.

    

    All
      or any part of the indebtedness
      hereunder may be prepaid at any time without penalty.  If this Note is
      prepaid in full prior to December 28, 2007, Maker shall be credited $25,000
      against the amount due.

     

    This
      Note shall be immediately due and
      payable (i) in full, 15 days after sale of all or substantially all of the
      business or assets of APA Optronics (India) Private Limited and (ii) in the
      amount of $385,000 in principal, plus accrued interest thereon, 180 days after
      sale of any building and/or related equipment owned by APA Optronics (India)
      Private Limited.

     

    This
      Note is given to evidence Maker's
      obligation with respect to the purchase price payable by Maker to Holder under
      that certain Stock Purchase Agreement between Maker and Holder dated June 28,
      2007 (the "Stock Purchase Agreement").  All rights of Holder hereunder
      are expressly subject to the terms and provisions of the Stock Purchase
      Agreement.

     

    Upon
      payment in full of this Note and
      all costs of collection and enforcement, in accordance with its terms, (i)
      the
      Stock Pledge Agreement (referred to below) shall terminate and all securities
      pledged thereunder shall be returned to the pledgor; and (ii) the Separation
      Payments Pledge Agreement, the Guaranty by A.K. Jain, the Separation Payments
      Pledge Agreement, and the Agreement to Provide Additional Collateral (referred
      to below) shall terminate.

     

    Upon
      default in payment on this Note
      when due, upon default in any agreement securing repayment of this Note
      (including without limitation the Stock Pledge Agreement, Separation Payments
      Pledge Agreement, Agreement to Provide Additional Collateral, and Guaranty
      by A.
      Jain, all of even date herewith), or upon breach of the Non-Compete Agreement
      of
      even date herewith, the entire sum then remaining unpaid, together with accrued
      interest, shall at the option of Holder become immediately due and payable,
      upon
      notice to Maker.  If upon default, it is necessary for Holder to place
      this instrument in the hands of an attorney for collection, Maker shall pay,
      in
      addition, reasonable attorneys’ fees incurred and costs of
      collection.  Holder’s extension of the time for payment or failure to
      exercise any rights shall not waiver, prejudice, or impair Holder’s rights upon
      subsequent defaults.

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    No
      delay or omission of the Holder to
      exercise any right hereunder shall impair any such right or operate as a waiver
      thereof, nor shall any single or partial exercise thereof preclude any other
      or
      further exercise thereof, or the exercise of any other right.

    

    Maker
      hereby waives demand of payments,
      presentment, notice of dishonor, protest, and notice of protest, and all other
      notices and demands in connection with delivery, acceptance, performance,
      default, or endorsement of this instrument, except notice of
      acceleration.

    

    This
      Note may not be modified or
      discharged orally, but only in writing duly executed by Maker and
      Holder.

    

    This
      instrument, and all obligations
      with respect to the underlying indebtedness, are made and delivered in the
      State
      of Minnesota and shall be construed in accordance with Minnesota law, without
      giving effect to choice of law principles thereof.  Any proceedings
      with respect to this instrument shall be conducted in the District Court of
      Hennepin County, Minnesota.

    

    

    
      	 	
              PHOTONICS
                INTERNATIONAL, INC.

            
	 	 	 
	 	 	 
	 	
              By:

            	
              /s/
                Anil K. Jain

            
	 	 	 
	 	
              Its:

            	
              President

            

    

     

     

    -2-ex10_20.htm

    
      

    

    Exhibit
      10.20

     

    UNCONDITIONAL
      AND CONTINUING GUARANTY

     

    WHEREAS,
      the undersigned Anil K. Jain
      (the "Guarantor") seeks to induce APA Enterprises, a Minnesota corporation
      ("APA"), to extend or continue to extend credit to Photonics International,
      Inc., a Minnesota corporation (the "Borrower") by acceptance of Borrower's
      promissory note of even date herewith (the "Note") in payment of the purchase
      price under that certain Stock Purchase Agreement of even date herewith whereby
      Borrower will acquire all of APA's interest in APA Optronics (India) Private
      Limited;

     

    WHEREAS,
      the execution and delivery by
      Guarantor of this Guaranty is a condition precedent to acceptance of the Note
      by
      APA; and

     

    WHEREAS,
      Guarantor will derive
      substantial benefits from the credit extended or continued to and/or obligations
      purchased or acquired of Borrower;

     

    NOW
      THEREFORE, in consideration of the
      premises and other good and valuable consideration, the receipt of which is
      hereby acknowledged, Guarantor hereby represents and agrees as
      follows:

     

    1.
Guaranty.
      Guarantor hereby
      absolutely, irrevocably and unconditionally guarantees to APA the punctual
      and
      full payment when due, whether at the stated date or dates for such payment,
      by
      acceleration or otherwise, of all indebtedness, liabilities and obligations
      of
      Borrower to APA of every name and nature whatsoever, whether absolute or
      contingent, now existing or hereafter arising, secured or unsecured, created
      directly or acquired indirectly by assignment or otherwise and whether on open
      account, or evidenced by a promissory note, check, draft, continuing credit
      agreement, continuing agreement for letters of credit, continuing agreement
      for
      bankers' acceptances or any other instrument or document, and whether created
      as
      maker, debtor, surety, endorser, guarantor, pledgor, account party or otherwise,
      and including, without limitation, all principal, interest, premiums, fees,
      costs and expenses reimbursements, letter of credit reimbursement obligations,
      acceptance fees and commissions and all other obligations assumed under the
      documentation of such indebtedness, liabilities and obligations, all of which
      are referred to herein as the "Obligations."

     

    2.
Payment
      by
      Guarantor.  In the event of a default by any Borrower under any of
      the Obligations and/or the failure of a Borrower punctually to pay any of the
      Obligations when due, Guarantor hereby agrees to make such payment punctually
      when and as the same shall become due and payable, whether at maturity, by
      acceleration or otherwise.  Each such payment shall be made at the
      address of APA set forth in Section 12(A), below (or at such other office as
      APA
      shall specify by written notice to Guarantor), in immediately available
      funds.

     

    While
      this Guaranty is in effect, all
      property of Guarantor in the hands of APA is hereby and shall continue to be
      and
      stand pledged and impressed with a lien as collateral security for all
      Obligations.

     

    3.
Obligations
      of Guarantor
      Unconditional.  Guarantor hereby agrees that:

     

    (A)
      Guarantor's liability hereunder is
      unconditional, irrespective of:

     

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (1)           the
      legality, validity or enforceability of the Obligations;

     

    (2)           the
      legality, validity or enforceability of any security interest, mortgage or
      pledge granted by Borrower as collateral for the Obligations, any guaranty,
      suretyship, letter of credit or reimbursement agreement issued by any person
      secondarily or otherwise liable for any of the Obligations, any security
      interest, mortgage, or pledge granted by any person secondarily or otherwise
      liable for any of the Obligations, any right of set-off against any account
      or
      credit on APA's books in favor of Borrower or any other person secondarily
      or
      otherwise liable for any of the Obligations, or any other device providing
      collateral security for payment of the Obligations, all of the hereinabove
      referenced devices being referred to herein as the "Collateral
      Security";

     

    (3)           the
      absence of any action or effort by APA to either resort to, enforce or exhaust
      its remedies under or against the Obligations and/or the Collateral
      Security;

     

    (4)           the
      waiver or consent by APA with respect to any provision in the documentation
      of
      the Obligations or the Collateral Security; and

     

    (5)           the
      recovery of any judgment against Borrower or any action to enforce such judgment
      or any other circumstance which might, absent the unconditional nature of this
      Guaranty, constitute a legal or equitable discharge or defense of a
      Guarantor.

     

    (B)
      APA may at any time, or from time
      to time, in APA's sole discretion:

     

    (1)           change,
      alter, renew, continue, extend and/or accelerate the time of payment of, all
      or
      any of the Obligations, or any part or parts thereof or any renewal or renewals
      thereof;

     

    (2)           replace
      any existing Obligation and the documentation therefor with an amended and
      restated Obligation and the documentation therefor;

     

    (3)           sell,
      exchange, release, compromise and/or surrender all or any of the property which
      is the subject of the Collateral Security, or any part or parts thereof, with
      respect to which APA may now or hereafter have an interest (the
      "Collateral");

     

    (4)           sell
      and/or purchase any or all of the Collateral at public or private sale, or
      at
      any broker's board, and after deducting all costs and expenses of every kind
      for
      collection, sale and/or delivery, apply the proceeds of any such sale or sales
      against any of the Obligations; and

     

    (5)           settle
      or compromise any or all of the Obligations with Borrower, and/or any other
      person or persons liable thereon, and/or subordinate the payment of same or
      any
      part thereof to the payment of any other debts or claims which may at any time
      be due or owing to APA and/or other person, all in such manner and upon such
      terms as APA may see fit and without notice to or the consent from Guarantor,
      who hereby agrees to be and remain bound upon this Guaranty, irrespective of
      the
      effect upon the existence or status of the Obligations or the Collateral
      Security and notwithstanding any such change, alteration, renewal, continuance,
      extension, acceleration, sale, exchange, release, compromise, surrender,
      application, settlement, subordination or other action hereinabove
      mentioned.

     

    
      
        
        

        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    (C)
      The
      liability of Guarantor will not be discharged except by complete and final
      performance of the Obligations.

     

    (D)
      The
      liability of Guarantor under this Guaranty shall be reinstated with respect
      to
      any amount paid to APA by Borrower or any other guarantor of the Obligations
      which is hereafter required to be returned to Borrower or such other guarantor
      or any trustee, receiver or other representative of or for Borrower or such
      other guarantor, upon or by reason of the bankruptcy, insolvency,
      reorganization, or dissolution of Borrower or such other guarantor, or for
      any
      other reason, all as though such amount had never been paid to APA.

     

    (E)
      This is a guaranty of payment and
      not merely of collection.

     

    4.
No
      Subrogation.  No
      payment by Guarantor pursuant to any provision of this Guaranty or other
      satisfaction of Guarantor's liabilities hereunder shall entitle Guarantor,
      by
      subrogation to the rights of APA or otherwise, to any payment from Borrower,
      from the proceeds of the property of Borrower or from any Collateral
      Security.

     

    5.
Waivers.  Guarantor
      hereby expressly waives:

     

    (A)          notice
      of the acceptance of this Guaranty;

     

    (B)           notice
      of extensions of credit by APA to Borrower and of any change in the rate at
      which any of the Obligations are accruing interest;

     

    (C)           diligence,
      presentment and demand for payment of any of the Obligations;

     

    (D)           protest,
      notice of protest, notice of dishonor and notice of nonpayment or default to
      Guarantor or to any other person with respect to the Obligations;

     

    (E)           filings
      of claims or proofs of claim with a court in the event of any bankruptcy or
      insolvency proceedings as to which Borrower or any person secondarily or
      otherwise liable for any of the Obligations is subject;

     

    (F)           any
      right to require a proceeding first against Borrower or any other
      person;

     

    (G)           any
      demand for payment under this Guaranty;

     

    (H)           any
      defenses available to a surety under law; and

     

    (I) 
                 all other
      legally waivable notices to which Guarantor might otherwise be
      entitled.

     

    6.
Insolvency
      of
      Borrower.  If a Borrower becomes subject of an order for relief
      under the Federal Bankruptcy Code, as now or hereafter in effect, or any
      proceeding is commenced by or against Borrower under any insolvency or other
      debtor relief laws, as now or hereafter in effect, or for the appointment of
      a
      receiver for Borrower or any of its property, or if Borrower shall make an
      assignment for the benefit of creditors or shall discontinue business or become
      unable to pay or admit in writing its inability to pay its debts as they come
      due, all Obligations of Borrower shall, for the purpose of this Guaranty, become
      immediately due and payable.

     

    
      
        
        

        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    7.
Covenants
      and Financial
      Condition. Guarantor covenants and agrees with APA that during such time as
      this Guaranty is in effect, there will be no material adverse change in
      Guarantor's financial status, Guarantor will perform and comply with all of
      its
      duties, responsibilities and obligations articulated in the terms, provisions
      and agreements contained in this Guaranty, and Guarantor will not sell,
      mortgage, pledge or otherwise convey or transfer any substantial or material
      portion of its real or personal property without having first obtained APA's
      written consent therefor.  In the event of any breach of said
      covenants and agreements, each of the Obligations, regardless of its terms,
      shall, at APA's election, be deemed for the purposes of this Guaranty to have
      matured, and at APA's election, Guarantor shall promptly pay to APA all of
      said
      outstanding Obligations and Lender may take any action it deems necessary or
      advisable to enforce this Guaranty.

     

    8.
Subordination.
      Assignment and
      Transfer.  Guarantor further agrees with APA:

     

    (A)           that
      all of the present and future indebtedness of Borrower to Guarantor shall be
      and
      hereby is subordinated to, assigned and transferred to APA and pledged and
      made
      security for the payment of all Obligations;

     

    (B)           that
      Guarantor contemporaneously herewith and from time to time hereafter shall
      on
      request execute such further endorsements, assignments or other proper transfers
      as APA may request further to evidence the assignment hereby agreed to and
      made;
      and

     

    (C)           that
      Guarantor hereby appoints APA and each of its executive officers as Guarantor's
      attorney in its or their name to demand and enforce payment of said
      indebtedness, to prove all claims, receive all dividends and take all other
      action on said indebtedness in any liquidation or any proceedings whatsoever
      affecting Borrower or its property under any bankruptcy or other laws now or
      hereafter in effect for the relief of debtors and in general to do any act
      or
      take any action in regard to said indebtedness which Guarantor might otherwise
      do.

     

    9.
Termination
      of
      Guaranty.  This Guaranty is a continuing Guaranty and shall remain
      in full force and effect irrespective of any interruptions in the business
      relations of Borrower with APA; provided, however, that Guarantor may, by notice
      in writing actually received and acknowledged by an executive officer of APA,
      terminate this Guaranty with respect to all new Obligations incurred or
      contracted by Borrower or acquired by APA at noon on the sixtieth day after
      the
      date on which such notice is so received and acknowledged, but this Guaranty
      shall remain in full force and effect as to all Obligations existing at the
      sixtieth day after receipt and acknowledgment of such notice and as to all
      renewals and extensions thereof until the full payment and satisfaction thereof
      and the expiration of any and all applicable preference periods during which
      the
      payments credited to the satisfaction of the Obligations may be required to
      be
      returned to the payor thereof or such person's trustee, receiver or other
      representative.

     

    10.
Representations
      and
      Warranties.  See Exhibit A, if any, attached hereto for a list of
      Representations and Warranties.   None.

     

    
      
        
        

        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    11.
Covenants.  See
      Exhibit B, if any, attached hereto for a list of additional
      Covenants.  None.

     

    12.
Miscellaneous.

     

    (A)           Notices.  All
      notices, requests, demands or other communication (including telecommunications)
      or upon APA or Guarantor shall be in writing and shall be deemed to have been
      duly given or made: (1) if to Lender, when actually received by an executive
      officer of APA at APACN, 5840 Nathan Lane, Suite 120, Plymouth, MN 55442, or
      at
      such other address as APA may hereafter specify to Guarantor in writing; or
      (2)
      if to Guarantor, the earlier of Grantor's receipt thereof or three business
      days
      after being deposited in the United States mail, postage prepaid and addressed
      to Guarantor at the address appearing on the books and records of Lender as
      that
      of Guarantor.

     

    (B)           Expenses.  Guarantor
      agrees that, with or without notice to or demand upon Borrower or Guarantor,
      Guarantor will pay or reimburse APA (to the extent reimbursement has not already
      been made by Borrower) for all expenses, including reasonable fees and expenses
      of its legal counsel, incurred by APA in connection with any of the Obligations
      or the collection thereof and the enforcement of any provisions of this
      Guaranty.

     

    (C)           Continuing
      Guaranty.  This Guaranty shall be and remain binding upon
      Guarantor and its heirs, executors, administrators, legal representatives,
      successors and assigns until termination in conformity with the paragraph hereof
      designed "Termination of Guaranty."  In the event of the death of any
      individual person designed as a Guarantor hereunder, an amount equal to the
      outstanding Obligations guaranteed hereby shall become immediately due and
      payable by the estate or personal representative of the decedent Guarantor's
      interest, irrespective of whether the underlying Obligations shall otherwise
      be
      due and payable.

     

    (D)   Assignments.  APA
      may assign its rights and powers under this Guaranty with all or any of the
      Obligations, the payment thereof is hereby guaranteed, and, in the event of
      such
      assignment, the assignee of such rights and powers, to the extent of such
      assignment, shall have the same rights and remedies as if originally named
      herein in the place of its assignor.

     

    (E)    Waiver
      of
      Rights.  No delay on the part of APA in exercising any rights
      hereunder or failure to exercise the same shall operate as a waiver of such
      rights; no notice of or demand on Guarantor shall be deemed to be a waiver
      of
      the obligation of Guarantor or of the right of APA to take other or further
      action without notice or demand as provided herein.  In any event, no
      modification or waiver of the provisions hereof shall be effective unless in
      writing nor shall any waiver be applicable except with respect to the specific
      person to whom and in the specific instance or matter for which
      given.

     

    (F)    Cumulative
      Remedies.  The Obligations of Guarantor hereunder are in addition
      to and not in substitution for any other obligations or security interests
      now
      or hereafter held by APA and shall not operate as a merger of any contract
      or
      debt or suspend the fulfillment of, or affect the rights, remedies or powers
      of
      APA in respect of, any obligation or other security interest held by it for
      the
      fulfillment thereof.  The rights and remedies provided herein and in
      any other instrument are cumulative and not exclusive of any other rights or
      remedies provided by law.

     

    
      
        
        

        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    (G)    Governing
      Law;
      Jurisdiction; Venue; Service of Process.  This Guaranty is and
      shall be deemed to be a contract entered into and made pursuant to the laws
      of
      the State of Minnesota, USA, and shall in all respects be governed, construed,
      applied and enforced in accordance with the laws of said State, without
      reference to conflict of laws principles.  If APA brings any action
      hereunder in any court of Minnesota or of the United States located in
      Minnesota, Guarantor consents to and acknowledges personal jurisdiction over
      Guarantor by such court or courts, waives any objection to the placement of
      venue in such courts and agrees that service of process may be made upon
      Guarantor by mailing a copy of the summons to Guarantor in the manner set forth
      in the subparagraph hereof designed "Notices."

     

    (H)   Severability.  If
      any part of this Guaranty is contrary to, prohibited by or deemed invalid under
      the applicable law or regulations of any jurisdiction, such provision shall,
      as
      to such jurisdiction, be inapplicable and deemed omitted to the extent so
      contrary, prohibited or invalid, but the remainder hereof shall not be
      invalidated thereby and shall be given full force and effect so far as possible,
      and any such prohibition or invalidity in any jurisdiction shall not invalidate
      or render unenforceable such provision in any other jurisdiction.

     

    (I)
    References
      to
      Lender.  Each reference herein to APA shall be deemed to include
      its successors and assigns.

     

    (J)    References
      to
      Guarantor.  The term "Guarantor" as used herein shall, if this
      instrument is signed by more than one party, mean the "Guarantor and each of
      them" and each and every undertaking shall be their joint and several
      undertaking; provided, however, that in the subparagraph hereof designed "Waiver
      of Rights" the term "Guarantor" shall mean the "Guarantor or any of
      them."  If any party hereto shall be a partnership or limited
      liability company, the agreements and obligations on the part of such party
      herein contained shall remain in force and applicable notwithstanding any
      changes in the individuals composing the partnership or limited liability
      company, and the terms "Guarantor" and "Borrower" shall include any altered
      or
      successive partnerships or limited liability companies, but predecessor
      partnerships or limited liability companies and their partners or members shall
      not thereby be released from any obligation or liability.  Each
      reference to Guarantor and any pronouns referring thereto as used herein shall
      be construed in the masculine, feminine, neuter, singular, or plural as the
      context may require and shall be deemed to include the heirs, executors,
      administrators, legal representatives, successors and assigns of Guarantor,
      all
      of whom shall be bound by the provisions hereof.

     

    (K)    Complete
      Agreement; No Reliance by Guarantor.  This Guaranty, together with
      any security instruments securing this Guaranty, constitutes the entire
      agreement between Guarantor and APA relating to the subject matter hereof and
      supersedes all prior proposals, negotiations, agreements and understandings
      relating to such subject matter.  In entering into this Guaranty,
      Guarantor acknowledges that it is relying on no statement, representation,
      warranty, covenant or agreement of any kind made by APA or any employees or
      agents of APA, except as set forth herein.

     

    (L)    Waiver
      of Claims,
      Defenses and Damages.  Guarantor absolutely, irrevocably
      and unconditionally waives any and all right to assert any defense, set-off,
      counterclaim or cross-claim of any nature with respect to this Guaranty, any
      agreement or instrument securing this Guaranty, any obligations of any other
      person or party (including Borrower) relating hereto, in any action, suit or
      proceeding APA may bring to collect any of the Obligations or to enforce any
      of
      Guarantor's obligations hereunder.  In any litigation involving APA
      and any Guarantor, the Guarantor waives any right it may have to recover any
      special, exemplary, punitive or consequential damages or any damages other
      than
      actual damages.

     

    
      
        
        

        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    (M)           Waiver
      of Right to Trial by Jury.  Guarantor absolutely,
      irrevocably and unconditionally waives any right to trail by jury in any action,
      suit, counterclaim or cross-claim arising in connection with, out of. or
      otherwise relating to this Guaranty, any agreement or instrument securing this
      Guaranty, any collateral security or any transaction arising therefrom or
      related thereto.

     

    IN
      WITNESS WHEREOF Guarantor has
      executed and delivered this Guaranty as of the 28th  day of June
      2007.

     

     

    
      	
              Witness:    

            
	 	 	 	 	 
	
              /s/
                Roben D. Hunter  

            	 	
              /s/
                Anil K. Jain

            
	 	 	 	 	
              Anil
                K. Jain

            
	 	 	 	 	 
	 	 	 	 	 
	
              ACCEPTED
                BY APA ENTERPRISES, INC.  

            
	 	 	 	 	 
	
              By

            	
              /s/
                Ronald G. Roth

            	 	 
	 	
              Its

            	
              Chairman         
                

            	 	 
	 	 	 	 	 
	 	 	 	 	 
	
              Dated:

            	
              6/28/07

            	 	 

    

     

     

    -7-

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