Document:

Form of investor notes

 Exhibit 10.21 
 THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR ANY STATE SECURITIES LAWS OR THE SECURITIES LAWS OF ANY JURISDICTION. THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT TO A PERSON THAT IS NOT A U.S. PERSON WHO AGREES TO RESTRICTIONS ON RESALE THAT ARE CONSISTENT WITH THE REQUIREMENTS OF REGULATION S UNDER THE U.S. SECURITIES ACT,
(C) FOLLOWING THE DISTRIBUTION COMPLIANCE PERIOD REQUIRED UNDER RULE 903 OF REGULATION S UNDER THE SECURITIES ACT, IN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON OR PERSONS IN THE UNITED STATES PURSUANT TO AN
AVAILABLE EXEMPTION UNDER THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS IN A TRANSACTION THAT IS EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR OTHER REGULATIONS
GOVERNING THE OFFER AND SALE OF SECURITIES, OR (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, AND THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE COMPANY AN OPINION OF COUNSEL, OF RECOGNIZED STANDING, OR OTHER EVIDENCE OF EXEMPTION,
IN EITHER CASE, REASONABLY SATISFACTORY TO THE COMPANY. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U. S. SECURITIES ACT. 
  

					
		  	API NANOTRONICS CORP.	  	NOTE     

 SECURED CONVERTIBLE PROMISSORY NOTE 
  

			
	USD $             	  	June 23, 2009

 FOR VALUE RECEIVED, the undersigned, API NANOTRONICS CORP. (the “Company”), a Delaware
corporation, hereby promises to pay to the order of              or registered assigns (“Holder”), the principal sum of
             dollars ($            ) (or such lesser amounts as may be outstanding from time to time under this Note) on the
Maturity Date, as defined in Section 1 below. Unless otherwise set forth herein, all references to $ means United States dollars. 
 This Note is one of a series of Secured Convertible Promissory Notes made of even date herewith or that may be made after the date hereof in each case by the Company to evidence the Company’s indebtedness in connection with a
transaction relating to the purchase of the assets or a note made by Cryptek Technologies Inc. (“Cryptek”) by the Company (this Note, together with all 

 
such other Secured Convertible Promissory Notes as may be outstanding from time to time, the “Notes”). 
 1. Maturity. This Note shall be due and payable upon the earlier to occur of the following events (the “Maturity Date”):
(i) June 23, 2012; (ii) within ten (10) days in the event the Company does not purchase by August 15, 2009 either (A) all of the right, title and interest of Wachovia Bank National Association (“Wachovia”) in
that certain loan secured by the assets of Cryptek Technologies Inc. (the “Cryptek Loan”) or (B) substantially all of the assets of Cryptek Technologies Inc. (“Cryptek”) from Cryptek or (iii) in the event that the
Company purchases the Cryptek Loan, but does not acquire the assets of Cryptek through a foreclosure or similar proceeding, then within thirty (30) days of the date that all amounts due under the Cryptek Loan are repaid in full or the Cryptek
Loan is otherwise fully satisfied and retired. 
 2. Interest. Interest shall accrue on the unpaid principal balance hereof and on any
interest payment that is not made when due at the rate of twelve percent (12%) per annum (the “Base Rate”) until the principal amount of this Note is paid in full. Accrued interest shall be due and payable quarterly, on the last day
of each calendar quarter, March 31, June 30, September 30 and December 31, of each year, with a final payment of accrued and unpaid interest due and payable on the Maturity Date. In the Event of Default (as defined
herein) interest shall accrue on all unpaid amounts due hereunder, including without limitation interest, at the rate of the Base Rate plus three percent (3%). If a judgment is entered against Lender on this Note, the amount of the judgment so
entered shall bear interest at the highest rate authorized by law as of the date of the entry of the judgment. In addition, in the event that the Company purchases the rights, title and interest of Wachovia in the Cryptek Loan but does not acquire
the assets of Cryptek through a foreclosure or similar proceeding and subsequently all amounts due under the Cryptek Loan are repaid in full or the Cryptek Loan is otherwise fully satisfied and retired, the holder of this Note shall receive a pro
rata portion of one-third of the net gain realized by the Company on the Cryptek Loan. The holder’s pro rata portion shall be determined by a percentage equal to 100 times a fraction the numerator of which is the principal amount of this Note
and the denominator of which is the sum of the principal amount of all Notes issued by API in connection with the purchase of the Cryptek Loan and the amount of funds contributed by API to the purchase of the Cryptek Loan. Net gain shall be the
difference between the total amount paid to the Company in satisfaction of the Cryptek Loan and all expenses and costs, including, without limitation, legal fees and expenses, travel, due diligence costs and accounting fees and expenses, incurred by
the Company in connection with the negotiations for and purchase of the Cryptek Loan and the assets of Cryptek. 
 3. Payments.
Payments of both principal and interest shall be made at the principal executive office of the Company, or such other place as the holder hereof shall designate to the Company in writing, in lawful money of the United States of America, provided,
that Holder, in its sole discretion, may require that payments be made in Canadian funds, based on an exchange rate for the Canadian dollar as reported in the Wall Street Journal on the date of this Note. The Company shall notify Holder prior to any
payment, and Holder shall instruct the Company as to whether such payment shall be made in United 

  

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States or Canadian funds. Payments shall be made pro rata among all holders of Notes in accordance with the outstanding principal balances of their Notes.

 So long as no Event of Default has occurred in this Note, all payments hereunder shall first be applied to interest, then to principal.
Upon the occurrence of an Event of Default in this Note, all payments hereunder shall first be applied to costs pursuant to Section 12.4, then to interest and the remainder to principal. 
 4. Registration, Transfer and Exchange of Notes. The Company will keep at its principal office a register in which it will provide for the
registration of and transfer of this Note, at its own expense (excluding transfer taxes). If this Note is surrendered at said office or at the place of payment named in this Note for registration of transfer or exchange (accompanied in the case of
registration of transfer or exchange by a written instrument of transfer in form satisfactory to the Company duly executed by or on behalf of the holder), the Company, at its expense, will deliver in exchange one or more new notes in denominations
of $10,000 or larger multiples of $1,000, as requested by the holder for the aggregate unpaid principal amount. Any note or notes issued in a transfer or exchange shall carry the same rights to increase notes surrendered. The Holder agrees that
prior to making any sale, transfer, pledge, assignment, hypothecation, or other disposition (each, a “Transfer”) of this Note, the Holder shall give written notice to the Company describing the manner in which any such proposed Transfer is
to be made and providing such additional information and documentation regarding the Transfer as the Company reasonably requests. If the Company so requests, the Holder shall at his expense provide the Company with an opinion of counsel (which
counsel must be reasonably satisfactory to the Company), in form and substance satisfactory to the Company, that the proposed Transfer complies with applicable federal and state securities laws. The Company shall have no obligation to Transfer this
Note unless the Holder thereof has complied with the foregoing provisions, and any such attempted Transfer shall be null and void. 
 5.
Registered Owner. Prior to due presentation for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner and holder of such Note for the purpose of receiving payment of principal of, and
interest on, such Note and for all other purposes. 
 6. Conversion. 
 Holder shall have the following conversion rights: 
 (a) Subject to the terms and conditions of this Note, Holder shall have the right, at Holder’s option, at anytime after the date on which the Company purchases substantially all of the assets of Cryptek through the foreclosure of the
Cryptek Loan to convert the outstanding principal amount of this Note and/or accrued and unpaid interest or any portion thereof into shares of common stock, $.001 par value (the “Common Stock”), of the Company, at a price per share
equal to the greater of (i) $.75 per share or (ii) the variable weighted average price of the common stock of the Company as reported by the OTC Bulletin Board during the three (3) consecutive trading days ending on the date the
Company purchases the Cryptek Loan from Wachovia, or in case an adjustment in such price has taken place pursuant to the provisions of 

  

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this Note, then at the price as last adjusted (such price or adjusted price being referred to herein as the “Conversion Price”). Such rights
of conversion shall be exercised by Holder by giving written notice that Holder elects to convert the stated portion of the principal amount of and/or accrued and unpaid interest on this Note into Common Stock and by surrender of this Note
accompanied by a written instrument of transfer duly executed by Holder to the Company, at the Company’s principal office (or such other office or agency of the Company as the Company may designate by notice in writing to Holder) at any time
during its usual business hours. For convenience, the conversion of any portion of the principal of or accrued interest on this Note into Common Stock is hereinafter sometimes referred to as the “conversion” of this Note. Holder may
exercise this conversion right at any time and from time to time on and after the date of its receipt of this Note. The exchange rate for conversion shall be determined using the noon buying rate of the Federal Reserve Bank of New York as of the
date immediately preceding the date of conversion, or if not available, as listed in the Wall Street Journal for the day immediately preceding the date of conversion or, if determining the exchange rate using such other method is appropriate or
required under Securities and Exchange Commission laws, rules or regulations or the laws, rules and regulations of any applicable securities exchange national quotation system, then such method shall be used. 
 (b) Promptly after the receipt of the written notice referred to above and surrender of this Note for conversion, the Company shall issue and deliver, or
cause to be issued and delivered, a certificate or certificates for the number of whole shares of Common Stock issuable upon the conversion. Such conversion shall be deemed to have been effected and the Conversion Price shall be the Conversion Price
as of the close of business on the date on which such written notice shall have been received by the Company and this Note shall have been surrendered for conversion as aforesaid, and at such time the person or persons in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become at such time the holder or holders of record of the shares represented thereby. In the event that only a portion of this
Note is converted, the Company shall execute and deliver to Holder, at the expense of the Company, a new Note, in the same form as this Note, in principal amount and accrued interest equal to the unconverted portion of this Note. 
 (c) No fractional shares shall be issued upon conversion into Common Stock and no payment or adjustment shall be made upon any conversion on account of
any cash dividends (having a record date prior to the effective date of conversion) on the Common Stock issued upon such conversion. If any fractional share of Common Stock would, except for the provisions of the first sentence of this paragraph
(c), be delivered upon such conversion, the Company, in lieu of delivering such fractional share, shall pay to Holder an amount in cash equal to the fraction represented by such share multiplied by the closing price of the Common Stock on the
conversion date. 
 (d) Whenever the Company shall (i) declare or pay a dividend or make a distribution on shares of Common Stock in
shares of Common Stock or in any other shares of capital stock of the Company or in other securities of the Company (ii) subdivide, split or reclassify the outstanding shares of Common Stock into a greater number of shares of Common Stock or
(iii) combine or reclassify the outstanding shares of Common Stock into a smaller number of shares of Common Stock, the Conversion Price in effect at the time of the record date for such 

  

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dividend or distribution or on the effective date of such subdivision, split, combination or reclassification, shall be proportionately adjusted so that
Holder shall upon conversion into shares of Common Stock after such time, be entitled to receive the number of shares of Common Stock or other securities of the Company which Holder would have been entitled to receive immediately after such time had
this Note been converted into shares of Common Stock immediately prior to such time. Such adjustment shall be made successively each time any event described in this paragraph (d) shall occur. 
 (e) In case of any reclassification, capital reorganization or change by the Company of the outstanding shares of Common Stock (other than a change in
par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision, combination or reclassification of the outstanding shares of Common Stock into a greater or lesser number of shares of Common Stock
(which is treated in paragraph (d) above), but including any change of such shares into one or more other classes or series of shares of capital stock), or in case of any consolidation of the Company with, or merger of the Company with or into,
another person (other than a consolidation or merger in which the Company is the continuing entity and which does not result in any reclassification or change of the Company’ outstanding shares), or in case of any sale or other conveyance to
another person of the property of the Company as an entirety or substantially as an entirety, the Company or such successor or purchasing person shall provide, as a condition to such transaction, that Holder shall acquire, upon conversion of, or in
exchange for, this Note the kind and amount of shares and other securities and property (including cash and evidences of indebtedness) which would have been received by Holder upon such reclassification, reorganization, change, consolidation,
merger, or sale or conveyance of assets if Holder had converted this Note into shares of Common Stock immediately prior thereto. Such other person, which shall thereafter be deemed to be the Company for purposes of this paragraph (e), shall provide
for similar future adjustments as nearly equivalent as may be practicable to the adjustments provided herein. Such adjustment shall be made successively each time any event described above in this paragraph (e) shall occur. 
 (f) In the event the Company at any time after the date of the original issuance of this Note shall distribute shares of stock or other securities of
other persons, evidences of indebtedness issued by the Company or other property (other than cash) to the holders of its Common Stock by way of dividend or otherwise, in either case other than in connection with a capital reorganization,
consolidation, merger or sale or other conveyance of all or substantially all of the Company’s assets (each of which transactions is provided for in paragraph (e) above), then, in each such case, Holder, upon conversion of this Note into
shares of Common Stock as provided hereby, shall be entitled to receive, and the Company shall reserve for issuance to Holder upon such conversion, the shares of stock or other securities, evidences of indebtedness, or other property which it would
have been entitled to receive if it had so converted and become the holder of record of the shares of Common Stock issued upon such conversion immediately prior to the record date fixed for the determination of the stockholders entitled to receive
such dividend or distribution. The foregoing adjustments shall be made successively whenever any event listed above in this paragraph (f) shall occur. 
 (g) Upon the occurrence of any event requiring an adjustment of the Conversion Price, then and in each such case the Company shall give prompt written notice thereof to 

  

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Holder, which notice shall state the Conversion Price resulting from such adjustment, setting forth in reasonable detail the method upon which such
calculation is based and stating that such adjustment calculation has been reviewed and approved by the Company’s independent certified public accountants. 
 (h) In case at any time: 
 (i) the Company shall declare any dividend upon its Common Stock
payable in cash, stock, property or any security (whether of the Company or otherwise) or make any other distribution to the holders of its Common Stock; 
 (ii) the Company shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or other rights; 
 (iii) there shall be any capital reorganization or reclassification of the capital stock of the Company, or a consolidation or merger of
the Company with or into, or a sale of all or substantially all its assets to, another entity or entities; or 
 (iv) there
shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; 
 then, in any one or more of said cases, the Company shall give
(A) at least 10 days prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up and (B) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, or at
least 10 days prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause (A) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which
the holders of Common Stock shall be entitled thereto and such notice in accordance with the foregoing clause (B) shall also specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities
or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. 
 (i) The Company shall at all times reserve and keep available out of its authorized and unissued Common Stock solely for the purpose of issuance upon the conversion of this Note, as provided in this Note, free from
any pre-emptive rights (if any), such number of shares of Common Stock as shall then be issuable upon the conversion of this Note. The Company covenants that all shares of Common Stock which shall be so issued shall be duly and validly issued and
fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof, and, without limiting the generality of the foregoing, the Company covenants that it shall from time to time take all such action as may be
requisite to assure that the par value per share of the Common Stock is at all times equal to or less than the Conversion Price in effect at the time. The Company shall not take any action which results in any adjustment of the Conversion Price if
the total number of shares of Common Stock which have been issued at or 

  

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prior to the time such action was taken and those which are issuable after such action upon conversion of this Note and exercise of all options and
conversion of all convertible securities of the Company would exceed the total number of shares of Common Stock authorized by the Company’ Certificate of Incorporation. 
 (j) The issuance to the Holder of certificates for shares of Common Stock upon conversion of this Note shall be made without charge to the holder for any
issuance, stock transfer or documentary stamp tax in respect thereof. All such certificates shall bear a legend stating that the shares represented by such certificates have not been registered under the U.S. Securities Act of 1933, as amended, or
applicable state or provincial law and such other legends as are customary for unregistered securities. 
 (k) No adjustment in the
Conversion Price shall be required unless such adjustment would require an increase or decrease of at least one percent in such price; provided, however, that any such adjustment which is not required to be made shall be carried forward and taken
into account in any subsequent adjustment. 
 7. Prepayment. 
 7.1 Optional Prepayment. The Company, at its option and without any premium, may prepay in whole or in part the principal amount of
this Note at 100% of the face value of this Note at any time; provided, however that the Company shall give Holder not less than 10 days written notice prior to any pre-payment of this Note (the “Prepayment Notice”). The Prepayment Notice
shall specify the date upon (“Prepayment Date”) and the place at which, payment may be obtained and shall call upon the Holder to surrender this Note to the Company in the manner and at the place designated. On the Prepayment Date, the
Holder shall surrender this Note to the Company in the manner and at the place designated in the Prepayment Notice, and thereupon prepayment shall be made to Holder and this Note shall be cancelled. In the event that less than all the principal
amount of this Note is prepaid, upon surrender of this Note to the Company, the Company shall execute and deliver to Holder a new note or notes in principal amount equal to the unpaid principal amount of this Note. The Company shall, at the time of
any such prepayment, pay to the holder of this Note all interest accrued and unpaid to the Prepayment Date. The parties acknowledge that Holder may effect Holder’s conversion rights under Section 6 prior to any such Prepayment Date,
notwithstanding receipt of a Prepayment Notice. 
 7.2 Cessation of Rights. From and after the Prepayment Date, unless
there has been a default under the Prepayment Notice, all interest on the redeemed principal amount shall cease to accrue and all rights of Holder as a Holder of this Note shall cease with respect to the principal amount prepaid and, with respect to
such amount, this Note thereafter shall not be deemed to be outstanding for any purpose whatsoever. By acceptance of this Note, Holder agrees to execute and deliver such documents as may be reasonably requested from time to time by the Company in
order to implement the foregoing provisions of this Section. 
  

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 8. Covenants of the Company. The Company covenants and agrees that it shall not, without the prior
written approval of the Holder: 
 8.1 Obtain or incur any indebtedness or other monetary obligations that are senior to or on
parity with the Note. 
 8.2 Allow, suffer or cause to exist any lien, claim, security interest or encumbrance on the
Company’s property or assets, other than purchase money indebtedness incurred in the ordinary course of business. 
 9. Events of
Default. 
 9.1 Occurrences of Events of Default. Each of the following events shall constitute an “Event of
Default” for purposes of this Note: 
 (a) if the Company fails to pay any amount payable under this Note and such
default is not cured within ten (10) days of written notice from the Holder; 
 (b) if the Company breaches any of its
representations, warranties or covenants set forth in this Note and such breach is not cured within thirty (30) days of notice of such breach; 
 (c) the commencement of an involuntary case against the Company or any of its subsidiaries under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or the appointing of a receiver,
liquidator, assignee, custodian, trustee or similar official of the Company or for any substantial part of the Company or one of its subsidiary’s property, or ordering the winding-up or liquidation of the Company or one of its subsidiary’s
affairs; 
 (d) if the Company or any of its subsidiaries shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian or similar official of the Company or its subsidiary or for any substantial part of the Company or one of its subsidiary’s property, or shall make any general assignment for the benefit of creditors, or shall take
any corporate action in furtherance of any of the foregoing; or 
 (e) if the Company’s business shall fail, as
determined in good faith by the Holder and evidenced by the Company’s inability to pay its ongoing debts as such debts become due. 
 9.2 Acceleration Upon Event of Default. If any Event of Default shall have occurred and be continuing, for any reason whatsoever (and whether such occurrence 

  

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shall be voluntary or involuntary or come about or be effected by operation of law or otherwise), the unpaid principal amount of, and the accrued interest
on, this Note shall automatically become immediately due and payable, without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by the Company. 
 10. Investment Representations of the Holder. With respect to the purchase of this Note, the Holder hereby represents and warrants to the Company
as follows: 
 10.1 Experience. The Holder has substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. 
 10.2 Not a U.S. Person. The Holder is not a U.S. Person as defined in Rule 902 of Regulation S under the Securities Act of 1933
(the “Act”) and was not formed for the purpose of investing in securities not registered under the Act; 
 10.3
Own Account. The Holder is not acquiring the Note for the account or benefit of a U.S. Person; 
 10.4 Offer
Location. The offer to purchase the Note of the Company was made to the Holder outside of the United States; 
 10.5
Regulation S. All subsequent offers and sales of the Note and the common stock issuable upon conversion of the Notes shall be made in compliance with the resale provisions of Regulation S under the Act, pursuant to Rule 144 promulgated
thereunder, pursuant to another applicable exemption from registration under the Act, or pursuant to an effective registration statement (however, no registration rights are granted hereby); and in each case, in accordance with any applicable state
securities laws. In any case, neither the Note nor the common stock issuance upon conversation of the Notes will be resold or transferred to a U.S. person(s) or for the account or benefit of a U.S. person or within the United States until the end of
the six month period distribution compliance commencing on the later of (i) the date of this subscription agreement and (ii) the date the undersigned’s subscription funds have been received by the Company and thereafter cannot be sold
to a U.S. person, for the account or benefit of a U.S. person or within the United States, unless the Shares are registered under the Act or are exempt from the registration requirements of the Act; 
 10.6 Registration Exemption. The Holder understands that the Note is being offered and sold to it in reliance on the exemption from
the registration requirements of United States federal and state securities laws; 
 10.7 Representations True. The
Holder understands that the Company is relying upon the truth and accuracy of the representations, warranties, agreement and understandings of the undersigned set forth herein in order to determine the applicability of such exemption and the
suitability of the undersigned to acquire the Note. 
  

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 10.8 Access to Data. The Holder has had an opportunity to discuss the
Company’s business, management and financial affairs with the Company’s management and has also had an opportunity to ask questions of the Company’s officers, which questions were answered to its satisfaction. 
 11. Security. This Promissory Note is secured by a Security Agreement (the “Security Agreement”) dated the date hereof among Holder and
the Company and the Subsidiaries. This Promissory Note, the Security Agreement and any and all other agreements presently existing or hereafter entered into which evidence and/or secure any indebtedness from the Company to Holder shall hereinafter
be collectively referred to as the “Loan Documents.” The terms, covenants, conditions, provisions, stipulations and agreements of the Loan Documents are hereby made a part of this Note, to the same extent and with the same effect as if
they were fully set forth herein. The Company does hereby covenant to abide by and comply with each and every term, covenant, condition, provision, stipulation and agreement set forth in the Loan Documents. 
 12. Miscellaneous. 
 12.1 Invalidity of Any Provision. If any provision or part of any provision of this Note shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Note and this Note shall be construed as if such invalid, illegal or unenforceable provisions or part hereof had never been contained herein, but only to the extent of its invalidity, illegality or unenforceability.

 12.2 Governing Law. The Note shall be governed in all respects by the laws of the State of Delaware, excluding its
conflict of laws. 
 12.3 Notices. Any notice or other communication required or permitted hereunder shall be in
writing and shall be deemed to have been duly given (i) on the date of delivery if delivered personally, (ii) one (1) business day after transmission by facsimile transmission with a written confirmation copy sent by first class mail,
or (iii) five (5) days after mailing if mailed by first class mail, to the following addresses: 
  

			
	If to the Company:	  	API Nanotronics Corp.
		  	229 Colonnade Road
		  	Ottawa, Ontario
		  	K2E 7K3 Canada
		  	Attention: Chief Financial Officer

 And if to the Holder, to the address or facsimile number of Holder as set forth on
the Company’s records, or such other address as the Holder has provided to the Company by notice duly given. 
  

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 12.4 Collection. If the indebtedness represented by this Note or any part thereof
is collected at law or in equity or in bankruptcy, receivership or other judicial proceedings or if this Note is placed in the hands of attorneys for collection after the occurrence of an Event of Default, the Company agrees to pay, in addition to
the outstanding principal and accrued interest payable hereon, reasonable attorneys’ fees and costs incurred by the Holder, or on behalf of the Holder by a representative of the Holder. 
 12.5 Successors and Assigns. The rights and obligations of the Company and the Holder shall be binding upon and benefit the
successors, assigns, heirs, administrators and transferees of the parties. 
 12.6 Waivers. The Company and any
endorsers, sureties, guarantors, and all others who are, or may become liable for the payment hereof severally: (a) waive presentment for payment, demand, notice of demand, notice of nonpayment or dishonor, protest and notice of protest of this
Note, and all other notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this Note, (b) consent to all extensions of time, renewals, postponements of time of payment of this Note or other
modifications hereof from time to time prior to or after the maturity date hereof, whether by acceleration or in due course, without notice, consent or consideration to any of the foregoing, (c) agree to any substitution, exchange, addition, or
release of any of the security for the indebtedness evidenced by this Note or the addition or release of any party or person primarily or secondarily liable hereon, (d) agree that Holder shall not be required first to institute any suit, or to
exhaust its remedies against the Company or any other person or party to become liable hereunder or against the security in order to enforce the payment of this Note and (e) agree that, notwithstanding the occurrence of any of the foregoing
(except by the express written release by Holder of any such person), the Company shall be and remain, directly and primarily liable for all sums due under this Note. 
 12.7 Time. Time is of the essence in this Note. 
 12.8 Captions. The captions of sections of this Note are for convenient reference only, and shall not affect the construction or
interpretation of any of the terms and provisions set forth in this Note. 
 12.9 Number and Gender. Whenever used in
this Note, the singular number shall include the plural, and the masculine shall include the feminine and the neuter, and vice versa. 
 12.10 Remedies. All remedies of the Holder shall be cumulative and concurrent and may be pursued singly, successively, or together at the sole discretion of the Holder and may be exercised as often as occasion
therefor shall arise. No act of omission or commission of the Holder, including specifically any failure to exercise any right, remedy or recourse shall be effective unless it is set forth in a written document executed by the Holder and then only
to the extent specifically recited therein. A waiver or release with reference to one event shall not be construed as 

  

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continuing as a bar to or as a waiver or release of any subsequent right, remedy, or recourse as to any subsequent event. 
 12.11 No Waiver by Holder. The acceptance by Holder of any payment under this Note which is less than the amount then due or the
acceptance of any amount after the due date thereof, shall not be deemed a waiver of any right or remedy available to Holder nor nullify the prior exercise of any such right or remedy by Holder. None of the terms or provisions of this Note may be
waived, altered, modified or amended except by a written document executed by Holder and then only to the extent specifically recited therein. No course of dealing or conduct shall be effective waive, alter, modify or amend any of the terms or
provisions hereof. The failure or delay to exercise any right or remedy available to Holder shall not constitute a waiver of the right of the Holder to exercise the same or any other right or remedy available to Holder at that time or at any
subsequent time. 
 12.12 Submission to Jurisdiction. BORROWER, AND ANY ENDORSERS, SURETIES, GUARANTORS AND ALL OTHERS
WHO ARE, OR WHO MAY BECOME, LIABLE FOR THE PAYMENT HEREOF SEVERALLY, IRREVOCABLY AND UNCONDITIONALLY (A) AGREE THAT ANY SUIT, ACTION, OR OTHER LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OTHER AGREEMENT, DOCUMENT OR
INSTRUMENT DELIVERED PURSUANT TO, OR IN CONNECTION WITH THIS NOTE SHALL BE BROUGHT AND MAINTAINED IN THE COURTS IN AND FOR SUFFOLK COUNTY, NEW YORK, OR IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK; (B) CONSENT TO THE
EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING; AND (C) WAIVE ANY OBJECTION WHICH IT OR THEY MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION, OR PROCEEDING IN ANY OF SUCH COURTS. 
 12.13 Waiver of Trial by Jury. HOLDER AND BORROWER HEREBY KNOWINGLY, IRREVOCABLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT
EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM BASED ON THIS NOTE, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION THEREWITH, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR HOLDER TO MAKE THE LOAN EVIDENCED BY THIS NOTE. 
 [signature page follows] 
  

 12 

			
	API NANOTRONICS CORP.,
	a Delaware corporation
		
	By:	 	 /s/ Stephen Pudles

		 	Stephen Pudles
		 	Chief Executive Officer

  

			
	 HOLDER

	
	  

		
	By:	 	  

	Signature:	 	  

	Title:	 	  

  

 13Security Agreement

 Exhibit 10.22 
 SECURITY AGREEMENT 
 THIS SECURITY AGREEMENT (the
“Agreement”) is made as of this 23rd day of June, 2009, by API
Nanotronics Corp. (“Debtor”) and the subsidiaries party hereto (the Debtor and such subsidiaries, including any subsidiaries becoming parties hereto pursuant to Section 3(k), collectively, the “Pledging
Parties”) for the benefit of Icarus Investment Corporation, as Collateral Agent (“Collateral Agent”). 
 R
E C I T A L S : 
 WHEREAS, several persons (the “Lenders” and each a “Lender”) have agreed to make a
loan (the “Loan”) to Debtor in an aggregate principal amount of $5,100,000; and 
 WHEREAS, the Loan is evidenced by several
Secured Convertible Promissory Notes in an aggregate principal amount of $5,100,000 (the “Notes”) of even date herewith from Debtor to the Lenders; and 
 WHEREAS, Collateral Agent requires, and the Pledging Parties are willing to grant, as security for the Loan, a security interest in all their right, title and interest in and to the “Collateral” (as
such term is defined in Paragraph 17(b) hereof), to secure the payment and performance by Debtor of the Liabilities (as defined below in Section 2), subject to the terms and conditions hereinafter set forth. 
 NOW, THEREFORE, to secure the payment and performance of the Liabilities, each of the Pledged Parties hereby agrees with Collateral Agent as follows:

 1. Grant; Collateral. Each Pledging Party hereby assigns and pledges to Collateral Agent, as agent for the Lenders, for collateral
purposes, and grants to Collateral Agent a security interest in, all its right, title and interest in and to the Collateral (as defined in Section 17 hereof), subject to and in accordance with the terms and conditions set forth in this
Agreement and the Notes. Capitalized terms used, but not defined herein, shall have the meanings ascribed to them in the Notes. 
 2. Liabilities. This Agreement, and the security interest herein granted to Collateral Agent, is given to secure all the following (the same being herein sometimes collectively referred to as the “Liabilities”): 
  

	 	(a)	the principal, interest and all other sums owed under the Notes; 

  

	 	(b)	all amounts owed Collateral Agent and Lenders under this Agreement including without limitation all advances, costs or expenses paid or incurred by the Collateral Agent or the
Lenders, to protect any or all of the Collateral, perform any obligation of the Pledging Parties hereunder, or to sell the Collateral; 

  

 1 

	 	(c)	any and all costs of enforcement and collection of the Notes and the enforcement of this Agreement, including without limitations reasonable attorneys’ fees; and

  

	 	(d)	interest on all of the foregoing at the rate specified in the Note. 

 The parties agree that Liabilities do not include (i) any amounts under the Notes that are converted to common stock under the Notes, and (ii) any equity or equity-related rights (including obligations
pertaining to any conversion rights) arising under the Note. 
 3. Representations and Warranties. Each Pledging Party hereby
represents and warrants to, and covenants with, Collateral Agent that: 
  

	 	(a)	Each Pledging Party is the absolute and exclusive owner of its respective Collateral existing as of the date hereof other than leased Collateral, and except for the Permitted Liens,
has not made and shall not make any sale, assignment, pledge, hypothecation or other transfer of the Collateral, or any portion thereof other than in the ordinary course of business, and shall forever warrant and defend Collateral Agent’s title
and interest in and to the Collateral against the claims and demands of all persons whomsoever, subject to the claims of those holding Permitted Liens; 

  

	 	(b)	Except for Permitted Liens, the Collateral is free and clear of all liens, charges, claims, encumbrances and security interests as of the date hereof; 

  

	 	(c)	The Pledging Parties will keep the Collateral, to the extent applicable, in good order, repair and condition and free and clear of all levies, attachments, liens, charges, claims,
encumbrances, security interests of every kind and nature, except for Permitted Liens; 

  

	 	(d)	No instruments of assignment and transfer or financing statements covering the Collateral, or any part thereof, have been executed by the Pledging Parties or are on file in any
public office, except for those in favor of Collateral Agent and those evidencing any other applicable Permitted Liens or as are permitted under this Agreement, and the Pledging Parties will not execute, or file or cause to be filed in any public
office, any instruments of assignment and transfer or any financing statement or statements, affecting the Collateral, or any part thereof, except in favor of Collateral Agent or to the extent constituting a Permitted Lien or as otherwise permitted
under this Agreement; 

  

	 	(e)	 Each Pledging Party will, at the request of Collateral Agent, execute or join with Collateral Agent in executing and, at Pledging Parties’ expense, file and
refile under the Uniform Commercial Code of the State in which such Pledging Party is organized or incorporated (the “Code”), such financing statements and amendments thereto, continuation statements and 

  

 2 

	 	 
other documents in such states and in such offices as Collateral Agent may deem necessary or appropriate and wherever required or permitted by law in order
to perfect and preserve Collateral Agent’s security interest in the Collateral, and each Pledging Party hereby authorizes Collateral Agent to file any and all such financing statements, amendments thereto and continuation statements and other
documents relative to all or any part of the Collateral without the signature of such Pledging Party where permitted by law; 

  

	 	(f)	No Pledging Party shall use or permit the Collateral to be used in violation of any applicable law, ordinance, rule, regulation or requirement of governmental authorities, now or
hereafter in effect, or any policy or contract of insurance; 

  

	 	(g)	Each Pledging Party shall perform and comply with all policies of insurance, and the rules and requirements of underwriters’ and fire prevention agencies, and all laws,
ordinances, rules and regulations relating to, and shall promptly pay when due all license fees, registration fees, taxes, assessments and other charges which may be levied upon or assessed against, the ownership, operation, possession, maintenance,
use or method of use of the Collateral; 

  

	 	(h)	Collateral Agent or its representatives shall have the right to inspect, at each Pledging Party’s place of business, the Collateral, at any time and from time to time, at
reasonable times during normal business hours and upon reasonable notice to such Pledging Party; 

  

	 	(i)	Each Pledging Party shall, at such time or times as Collateral Agent may request and at such Pledging Party’s cost and expense, prepare list(s), in such form as shall be
reasonably satisfactory to Collateral Agent, certified by such Pledging Party describing in reasonable detail all Collateral of such Pledging Party subject to this Agreement; and 

  

	 	(j)	Each Pledging Party shall promptly give written notice to Collateral Agent of any damage to or destruction of any material portion of its Collateral by fire or other casualty, or by
condemnation or taking. No Pledging Party shall make, accept or consent to any settlement or agreement in respect of insurance or condemnation proceeds except as agreed in writing by Collateral Agent. 

  

	 	(k)	Each Pledging Party shall cause any United States subsidiary acquired or formed after the date hereof for the purpose of holding the stock or assets of Cryptek Technologies, Inc. to
enter into a joinder agreement with the Collateral Agent in form and substance reasonably satisfactory to the Collateral Agent by which such subsidiary shall become a Pledging Party under this Agreement. 

  

 3 

 4. Events of Default. Each Pledging Party hereby agrees that the occurrence or existence of any
one of the following events or conditions, as well as those events or conditions as defined in the Notes as Events of Default shall constitute an Event of Default herein (referred to herein singularly as “Event of Default” and
collectively as “Events of Default”): 
  

	 	(a)	any representation or warranty made by Debtor in the Notes or by a Pledging Party in this Agreement shall be breached or violated, or prove to be false, misleading or inaccurate, in
each case, in any material respect, which is not cured within 10 days following notice from Collateral Agent or any Lender; 

  

	 	(b)	any attachment, seizure or levy, other than a Permitted Lien, shall be made upon the Collateral, in whole or in part which is not cured within 10 days following notice from
Collateral Agent or any Lender; 

  

	 	(c)	a Pledging Party shall sell, assign or otherwise transfer, voluntarily or involuntarily, all or any part of the Collateral, except as expressly permitted herein which is not cured
within 10 days following notice from Collateral Agent or any Lender; 

  

	 	(d)	Debtor shall fail to pay, perform and discharge the Liabilities, when and as due in accordance with each of the Notes, and such failure shall continue uncured or uncorrected past
the applicable curative periods, if any; 

  

	 	(e)	except for the security interest granted to Collateral Agent herein, any security interest, lien, charge or encumbrance against the Collateral other than valid leases of property to
a Pledging Party and any other Permitted Liens, shall accrue which is not cured within 10 days following notice from Collateral Agent; 

  

	 	(f)	the failure by a Pledging Party to perform an obligation under, or the occurrence of any other default with respect to any provision of this Agreement other than as specifically
described in any other clause of this Section 4, and the continuation of such default for a period of ten (10) days after written notice thereof; 

  

	 	(g)	breach by a Pledging Party of any of the covenants, representations, warranties or other obligations hereunder which is not cured within 10 days following notice from Collateral
Agent; or 

  

	 	(h)	 the failure by Debtor to perform any obligation under, or the occurrence of any other default or event of default with respect to any provision of any Note (other
than as specifically described in any other clause of this Section 4), which is not cured within the time period provided therefor, if any. For purposes of the foregoing definition, with respect to any event or occurrence which constitutes an
Event of Default hereunder solely by 

  

 4 

	 	 
reason of its constituting a default under another document or instrument, to the extent (if any) that such other document or instrument provides a grace or
cure period with respect to such default, the same grace or cure period, and only such period, shall apply with respect thereto under this Agreement. 

 5. Remedies. Upon the occurrence or existence of any of the Events of Default, then at the option of Collateral Agent and without demand or notice to any Pledging Party (demand and notice as to any such Events
of Default being hereby expressly waived by each Pledging Party except as expressly provided in Paragraph 4 hereof), Collateral Agent shall, to the fullest extent permitted by law, be entitled, subject to the terms hereof, to: 
 (a) appropriate and apply on the payment of the Liabilities (whether or not due), any and all accounts or monies held in possession of
Collateral Agent for the benefit of a Pledging Party; 
 (b) enter upon a Pledging Party’s premises and take possession
of the Collateral; 
 (c) exercise in respect to the Collateral all the rights, powers and remedies available to Collateral
Agent upon default under the Code then in effect, including the right to sell, publicly or privately, the Collateral, or any part thereof; and 
 (d) exercise any and all other rights, powers and remedies as may be provided in the Note and such other rights and remedies as may be provided at law or in equity. 
 If any notification of intended disposition of the Collateral is required by law, such notification, if mailed shall be deemed reasonably and properly
given if mailed at least ten (10) days before such disposition, full postage prepaid, sent by certified mail return receipt requested, addressed to a Pledging Party, at the address appearing on the records of Collateral Agent. Upon any sale of
all, or any part of, the Collateral by Collateral Agent hereunder (whether by virtue of the power of sale herein granted, pursuant to judicial process or otherwise), the receipt of Collateral Agent or the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold, and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to Collateral Agent or such officer or be
answerable in any way for the misapplication or non-application thereof. 
 6. Application of Proceeds. All proceeds of sale of any of
the Collateral by Collateral Agent as herein provided shall be applied in the order set forth in Section 3 of the Intercreditor and Collateral Agency Agreement, dated as of the date hereof, by and among the Collateral Agent and the Lenders.

 7. Incorporation of Note. It is expressly understood and agreed that all the terms, covenants, conditions, agreements,
representations, warranties, obligations and provisions contained in the Notes are, by this reference, adopted and incorporated in this Agreement to the same full extent and with the same binding force and effect as if all such 

  

 5 

 
terms, covenants, conditions, representations, warranties, obligations and provisions thereof were herein stated in full, it being the express intent that
the Notes complement and supplement this Agreement to the extent necessary or required to protect, preserve and confirm the rights, powers and remedies of Collateral Agent in respect of the Liabilities. 
 8. Collateral Agent’s Right to Cure. If a Pledging Party shall fail to do any act or thing which such Pledging Party has covenanted to do
hereunder, or any covenant, representation or warranty by a Pledging Party shall be breached or violated, Collateral Agent may, but shall not be obligated to, after the expiration of the applicable curative or grace period, if any, except in the
case of an emergency, do the same or cause it to be done, or remedy such breach or violation, and if, in connection therewith, Collateral Agent shall make any advances or expenditures of money for the account of such Pledging Party, then there shall
be added to the Liabilities the reasonable costs or expenses so paid or incurred by Collateral Agent, and any and all amounts paid or incurred by Collateral Agent in taking any such action shall be repaid to Collateral Agent upon demand being made
to such Pledging Party therefor and shall bear interest at the Default Rate, as defined in the Notes, from the date advanced or expended, to and including the date of repayment. 
 9. Waiver of Liability. Nothing herein contained shall be construed as constituting Collateral Agent a trustee or mortgagee in-possession. In the
exercise of the powers herein granted and assigned to Collateral Agent, no liability shall be asserted or enforced against Collateral Agent, all such liability being expressly waived and released by each Pledging Party and any person or persons
claiming by, through or under a Pledging Party. 
 10. Indemnity. Each Pledging Party shall and does hereby agree to indemnify,
protect, save and hold forever harmless Collateral Agent, the Lenders and each of their respective agents (collectively, the “Indemnitees”) from and against any and all liability, loss and damage, including court costs and
reasonable attorneys’ fees and expenses, which the Indemnitees, or any of them, may or might incur, suffer or sustain under or by reason of this Agreement and from and against any and all claims and demands whatsoever which may be asserted
against the Indemnitees, or any of them, by reason of any alleged or actual obligations or undertakings on Collateral Agent’s or any Lender’s part to perform or discharge any of the terms, covenants and agreements contained in this
Agreement. If any of the Indemnitees shall incur any such liability, loss or damage or by reason of this Agreement, or in the defense of any claims or demands, or otherwise, the amount thereof, including court costs, and reasonable attorneys’
fees and expenses, shall be secured hereby, and the Pledging Parties, jointly and severally, shall, upon demand, immediately reimburse the Indemnitees therefor, together with interest thereon at the Base Rate, from the date of demand until
reimbursement is made. 
 11. Inaction of Collateral Agent. Collateral Agent shall not, in any way, be responsible to any Pledging
Party for failure to do any or all of the things for which rights, interests, power or authority are herein granted and assigned to Collateral Agent, nor shall Collateral Agent be required to make an accounting for the benefit of the Pledging
Parties, except for monies actually received by Collateral Agent in accordance with the terms hereof, 

  

 6 

 
each Pledging Party hereby expressly waiving, and releasing Collateral Agent from any and all such responsibility, liability and requirements. 
 12. Parity of Security. In the event of a default by a Pledging Party under the Notes or this Agreement, Collateral Agent may realize upon the
security given under the this Agreement singly, successively or cumulatively, at such time and in such order as Collateral Agent may, in its sole discretion, elect. 
 13. Foreclosure or Other Judgments. No judgment or decree which may be entered on any Liabilities shall operate to abrogate or lessen the effect of this Agreement, but this Agreement shall continue in full
force and effect until the full and final payment and discharge of any and all Liabilities, in whatever form the Liabilities may be, and of any and all costs and expenses incurred and sustained by virtue of the authority herein contained have been
fully paid from the proceeds of the Collateral, or until such time as this Agreement may be voluntarily released. This Agreement shall also remain in full force and effect during the pendency of any foreclosure proceedings, both before and after
sale, until the issuance of a deed pursuant to a foreclosure decree, unless the Liabilities are fully and finally paid and discharged. 
 14.
No Waiver. No failure on the part of Collateral Agent to exercise, and no delay in exercising, any rights, powers, privileges, interests or remedies hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any
such rights, powers, privileges, interests or remedies by Collateral Agent preclude any other or further exercise thereof or the exercise of any other rights, powers, privileges, interests or remedies. All rights, powers and remedies hereunder are
cumulative and not exclusive of any other rights, powers or remedies provided in the Note, this Agreement, or any of the Loan Documents, or at law or in equity, and each and all such rights, powers and remedies provided in the Note or this
Agreement, or at law or in equity, and each and all such rights, powers and remedies may be pursued or exercised single, successively or cumulatively, at such time or times and in such order as Collateral Agent may, in its sole discretion, elect.

 15. Release and Discharge. At the time when all Liabilities and all obligations of Debtor hereunder have been fully and finally
paid and performed, this Agreement shall terminate and be of no further force and effect. After such termination, if requested by a Pledging Party, Collateral Agent shall execute and deliver to such Pledging Party for filing in each office in which
any financing statement relative to its Collateral, or any part thereof, shall be filed, a termination statement under the Code and shall also execute and deliver to such Pledging Party a release of any and all of the Collateral for the purpose of
releasing Collateral Agent’s interest in the Collateral, all without recourse to or representation, warranty and covenant by Collateral Agent and at the cost and expense of such Pledging Party. 
 16. Further Assurances. Each Pledging Party agrees to perform such further acts and things and to execute and deliver to Collateral Agent such
additional assignments, agreements, assurances, certificates, opinions and other documents and instruments as Collateral Agent may reasonably require or deem advisable to carry into effect the purposes of this Agreement (collectively with this
Agreement, the “Collateral Documents”), or to better assure, perfect, protect, preserve and confirm unto Collateral Agent its rights, powers, 

  

 7 

 
privileges, interest and remedies under this Agreement provided such additional assignments, agreements, assurances, certificates, opinions or other
documents or instruments are consistent with the terms hereof and of the Notes and do not impose additional liabilities or obligations on the Pledging Parties. 
 17. Definitions. For purposes of this Section 18, capitalized terms used but not specifically defined in this Agreement shall have the meanings ascribed to them in the Code. As used herein, the following
terms shall have the meanings set forth below: 
  

	 	(a)	“Accounts” shall mean and include: (i) any and all rights to the payment of money or other forms of consideration of any kind now or hereafter owing or to be
owing to the Debtor (whether classified under the UCC as Accounts, Chattel Paper, Electronic Chattel Paper, General Intangibles, or otherwise) including, but not limited to, accounts receivable, letters of credit and the right to receive payment
thereunder, chattel paper, tax refunds, insurance proceeds, contract rights, notes, drafts, instruments, documents, acceptances, and any other debts, obligations and liabilities in whatever form now or hereafter owing to the Debtor, all guarantees,
security and liens which secure payment of any of the foregoing, all the Debtor’s rights to goods, now owned or hereafter acquired by the Debtor, sold (delivered, undelivered, in transit or returned) which may be represented thereby; and
(ii) all proceeds of any of the foregoing. 

  

	 	(b)	“Collateral” shall mean all of each Pledging Party’s personal property, whether now owned or hereafter acquired including, without limitation, Accounts,
Instruments, Documents, contract rights, General Intangibles, Chattel Paper, Inventory, Instruments, Equipment, Goods, Fixtures, Commercial Tort Claims, Investment Property, Letter-of-Credit Rights, Letters of Credit, leasehold improvements,
accounts receivable, documents of title, policies and certificates of insurance, all insurance proceeds, securities, cash, money, Deposit Accounts, Payment Intangibles, trademarks, trade names, patents, copyrights, applications for trademarks,
patents and copyrights, and other intellectual property rights, and all other tangible and intangible property owned by the Debtor, and books and records relating to the foregoing and all the products and proceeds of the foregoing; provided that to
the extent that any Pledging Party owns stock or other equity interests in a direct or indirect subsidiary of the Company which is not organized or incorporated in the United States, the Collateral shall include only 65% of such stock or equity
interests. 

  

	 	(c)	 “Permitted Liens” means the liens granted to Collateral Agent hereunder together with (i) any liens on the Collateral existing as of the date
hereof including the lien in favor of The Chase Manhattan Bank, N.A. granted by National Hybrid, Inc., the lien in favor of Great America Leasing Corporation granted by National Hybrid, Inc., and, in each case, any replacement liens thereof,
(ii) any liens arising in the ordinary course of business or by operation of law including mechanics’, carriers’ landlord’s, materialmen’s and other 

  

 8 

	 	 
similar liens, (iii) liens for taxes, fees, assessments or other governmental charges which are not delinquent or remain payable without penalty or
which are being duly contested by a Pledging Party, (iv) liens consisting of pledges or deposits required in the ordinary course of business in connection with workers’ compensation, unemployment insurance, social security benefits and
other analogous legislation, (v) liens to secure the performance of tenders, statutory obligations, surety, governmental contracts, bids, leases, indemnity or other similar obligations or to secure liability to insurance carriers,
(vi) liens in respect of judgments or judicial attachments, (vii) liens securing capital lease obligations or liens on property arising to secure the indebtedness incurred or assumed to purchase such property, (viii) liens arising
from precautionary UCC filings, (ix) liens on accounts receivable for which attempts at collection have been undertaken by an authorized third party, (x) the rights of collecting banks or other financial institutions having a right of
setoff, revocation or chargeback with respect to money or instruments in the possession of such financial institution, (xi) imperfections of title, covenants, restrictions, easements and other encumbrances on real property that do not interfere
with the utility, operation, value or marketability of the real property on which such lien is imposed, and (xii) leases or subleases granted to others not interfering in any material respect with the business of a Pledging Party or any
interest or title of a lessor under any lease. 

 18. Notices. Any and all notices given in connection with this
Agreement shall be deemed adequately given only if given as set forth in the Note. 
 19. Miscellaneous. It is further understood and
agreed that: 
  

	 	(a)	Time is of the essence with respect to each and every covenant, agreement and obligation of the Pledging Parties under this Agreement; 

  

	 	(b)	This Agreement, and all the terms, covenants agreements and conditions hereof, shall extend to, be binding upon and enforceable against each Pledging Party and its successors and
assigns, but the privileges and benefits herein accruing to each Pledging Party shall extend and inure only to such of its successors and assigns as may be permitted pursuant to this Agreement. All liabilities and obligations of Pledging Parties
hereunder are, and shall be, at all times, joint and several; 

  

	 	(c)	This Agreement, and all the terms, covenants, agreements and conditions hereof, shall extend to and inure to the benefit of Collateral Agent, its successors and assigns;

  

	 	(d)	The representations, warranties and covenants made by Pledging Parties under this Agreement are, and shall be deemed to be, of continuing force and effect until all the Liabilities
have been fully and finally paid and performed; 

  

 9 

	 	(e)	Each Pledging Party agrees jointly and severally to pay, on demand of Collateral Agent, all reasonable costs and expenses paid, sustained or incurred by Collateral Agent, including
without limitation, court costs and reasonable attorneys’ fees and expenses, in connection with the enforcement of this Agreement; 

  

	 	(f)	The singular shall include the plural, and the plural the singular, and pronouns of any gender shall include the other gender, wherever required by the context hereof;

  

	 	(g)	Except as otherwise specifically provided herein, Collateral Agent has the right, whenever its consent or approval is required hereunder, to withhold, or to refuse to grant, such
consent or approval, which right is exercisable by Collateral Agent in its absolute discretion; 

  

	 	(h)	The paragraph headings of this Agreement are for convenience only and are not intended to alter, limit or enlarge in any way the scope or meaning of the language hereof; and

  

	 	(i)	EACH PLEDGING PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY. DEBTOR HEREBY EXPRESSLY ACKNOWLEDGES THIS WAIVER IS A MATERIAL, INDUCEMENT FOR SECURED PARTY TO ACCEPT THIS AGREEMENT AND TO MAKE THE LOAN
SECURED HEREBY AND BY THE OTHER LOAN DOCUMENTS. 

  

 10 

 IN WITNESS WHEREOF, the Debtor and each other Pledging Party has hereto set its hand and seal to this Agreement as
of the date first above written, pursuant to proper authority duly granted. 
  

							
	PLEDGING PARTIES:	 		 	API NANOTRONICS CORP.
				
		 		 	By:	 	 /s/ Stephen Pudles

		 		 	Name:	 	Stephen Pudles
		 		 	Title:	 	CEO
			
		 		 	API CRYPTEK, INC.
				
		 		 	By:	 	 /s/ Stephen Pudles

		 		 	Name:	 	Stephen Pudles
		 		 	Title:	 	CEO
			
		 		 	NATIONAL HYBRID, INC.
				
		 		 	By:	 	 /s/ Stephen Pudles

		 		 	Name:	 	Stephen Pudles
		 		 	Title:	 	CEO
			
		 		 	KEYTRONICS, INC.
				
		 		 	By:	 	 /s/ Stephen Pudles

		 		 	Name:	 	Stephen Pudles
		 		 	Title:	 	CEO
			
		 		 	FILTRAN INC.
				
		 		 	By:	 	 /s/ Stephen Pudles

		 		 	Name:	 	Stephen Pudles
		 		 	Title:	 	CEO
			
		 		 	PACE TECHNOLOGY, INC.
				
		 		 	By:	 	 /s/ Stephen Pudles

		 		 	Name:	 	Stephen Pudles
		 		 	Title:	 	CEO

					
		 	API NANOFABRICATION AND RESEARCH CORPORATION
			
		 	By:	 	 /s/ Stephen Pudles

		 	Name:	 	Stephen Pudles
		 	Title:	 	Vice President
		
		 	API ELECTRONICS INC.
			
		 	By:	 	 /s/ Stephen Pudles

		 	Name:	 	Stephen Pudles
		 	Title:	 	CEO
		
		 	TM SYSTEMS II, INC.
			
		 	By:	 	 /s/ Stephen Pudles

		 	Name:	 	Stephen Pudles
		 	Title:	 	CEO
		
	COLLATERAL AGENT:	 	ICARUS INVESTMENT CORPORATION
			
		 	By:	 	 /s/ Phillip DeZwirek

		 	Name:	 	Phillip DeZwirek
		 	Title:	 	President

  

 12

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