50883
7
Exhibit 4.1(b)
REDI Loan Number 95-13-A
STATE OF SOUTH DAKOTA
BOARD OF ECONOMIC DEVELOPMENT
SECURITY AGREEMENT
The undersigned Debtor (s) hereby grants to
SOUTH DAKOTA BOARD OF ECONOMIC DEVELOPMENT
711 Wells Avenue, Pierre, S.D. 57501
"Lender", a Security Interest in the following described property
"Collateral":
All machinery and equipment of Debtor described on
Exhibit A attached hereto together with all
accessions thereto and all substitutions and
replacements thereof and parts therefor.
All proceeds and products of all of the foregoing,
to secure payment to the Lender at the address stated
above of all notes of Debtor concurrently delivered
herewith, or heretofore or hereafter delivered to or
purchased or otherwise acquired by the Lender and all
other liabilities and indebtedness of Debtor to the
Lender, due or to become due, direct or indirect,
absolute or contingent, joint or several, howsoever
created, arising or evidenced, now existing or
hereafter at any time created, arising or incurred
(hereinafter called "Secured Obligations").
INFORMATIONAL (Check one or more).
The address of the Debtor, X Such address is
below, is his residence. Debtor's chief
place of business
Such address is where the X Debtor is a
Collateral is kept non-resident of
South Dakota
USE OF PROPERTY: Debtor warrants, covenants and
agrees that: The property is or is to be used by
Debtor primarily (check applicable):
1. In business: X equipment inventory
2. For personal, family, or household use ___
3. In farming operations: ___ equipment ___ farm
products
PURPOSE: (check if applicable) The security
interest herein is given on this collateral for a
purchase money loan: ___
Debtor warrants, represents and agrees that:
1. The Collateral is or will be kept at Aberdeen, SD
and will not be removed from such location or locations
unless, prior to any such removal, Debtor has given written
notice to the Lender of the location or locations to which
Debtor desires to remove the Collateral and the Lender has
given written consent to such removal.
2. Debtor has or will acquire title to and will at all
times keep the Collateral free of all liens and
encumbrances, except the Security Interest created hereby
and liens held by other lenders providing financing for the
SD project, and has full power and authority to execute this
Security Agreement, to perform Debtor's obligations
hereunder and to subject the Collateral to the Security
Interest created hereby. No financing statement covering
all or any part of the Collateral, except any which may have
been filed by the Lender and other permitted lienholders, is
on file at any public office.
3. Debtor will at any time or times hereafter execute such
financing statements and other instruments and perform such
acts as the Lender may request to establish and maintain a
valid Security Interest in the Collateral, and will pay all
costs of filing and recording.
4. Debtor will keep the Collateral and all lands, plants,
buildings, machinery, equipment and other property now or
hereafter at any time owned or used by Borrower in
connection with the manufacture, processing, production,
storage, sale or lease of the Collateral, in good condition
and insured against such risks and in such amounts as the
Lender may request, and with an insurance company or
companies satisfactory to the Lender, the policies to
protect the Lender as his interest may appear and to be
delivered to the Lender upon request.
5. Upon default by Debtor in any of the preceding
agreements, the Lender at his option may
(i) effect such insurance and repairs and pay the
premiums therefor and the costs thereof and
(ii) pay and discharge any taxes, liens, and
encumbrances on the Collateral. All sums so
advanced or paid by the Lender shall be payable by
the Debtor on demand with interest at the highest
rate allowed by law and shall be part of the
Secured Obligations.
6. Debtor will not sell, lease or otherwise dispose of the
Collateral other than in the ordinary course of business at
prices constituting the then fair market value thereof, and
will at all times during the term hereof maintain the
inventory at such value as Lender may from time to time
demand.
7. Lender shall have the authority, but shall not be
obligated to:
(a) place on any Chattel Paper received as
Proceeds a notation or legend showing the Lender's
Security Interest;
(b) in the name of the Debtor or otherwise, to
demand, collect, receive and receipt for,
compound, compromise, settle and give acquittance
for, and prosecute and discontinue any suits or
proceedings in respect of any or all of the
Collateral;
(c) take any action which the Lender may deem
necessary or desirable in order to realize on the
Collateral, including, without limitation, the
power to perform any contract, to endorse in the
name of Debtor any checks, drafts, note or other
instruments or documents received in payment for
or on account of the Collateral;
(d) after any default, to enter upon and into and
take possession of all or such part or parts of
the properties of Debtor, including lands, plants,
buildings, machinery, equipment and other property
as may be necessary or appropriate in the judgment
of the Lender to permit or enable the Lender to
manufacture, produce, process, store or sell or
complete the manufacture, production, processing,
storing or sale of all or any part of the
Collateral, as the Lender may elect, and to use
and operate said properties for said purposes and
for such length of time as the Lender may deem
necessary or appropriate for said purposes without
the payment of any compensation to Debtor
therefor.
8. Debtor will keep accurate books, records and accounts
with respect to the Collateral, and with respect to the
general business of Debtor, and will make the same available
to the Lender at its request for examination and inspection;
and will make and render to the Lender such reports,
accountings and statements as the Lender from time to time
may request with respect to the Collateral; and will permit
any authorized representative of the Lender to examine and
inspect, during normal business hours, any and all premises
where the Collateral is or may be kept or located.
9. The occurrence of any of the following events shall
constitute a Default:
(a) failure of Debtor, or of any co-maker,
endorser, surety or guarantor to pay when due any
amount payable under any of the Secured
Obligations;
(b) failure to perform any agreement or covenant
of Debtor contained herein;
(c) any statement, representation or warranty of
Debtor made herein or at any time furnished to the
Lender is untrue in any respect as of the date
made;
(d) entry of any judgment against Debtor in excess of
$50,000, unless such judgment is by a federal or
state governmental entity;
(e) appointment of a receiver due to, loss,
substantial damage to, destruction, theft, or
encumbrance to or of any portion of the
Collateral, or the making of any levy, seizure, or
attachment thereof;
(f) Debtor becomes insolvent or unable to pay his
debts as they mature, or makes an assignment for
the benefit of his Creditors or any proceeding is
commenced by or against Debtor alleging that he is
insolvent or unable to pay his debts as they
mature:
(g) death of any Debtor who is a natural person
or of any partner of any Debtor which is a
partnership;
(h) dissolution, consolidation, or merger, or
transfer of a substantial part of the property of
any Debtor which is a partnership;
(i) such a material change in the condition or affairs
(financial or otherwise) of Debtor or any
co-maker, endorser, surety or guarantor of any of
the Secured Obligations as in the opinion of the
Lender impairs the Lender's security or increases
his risks; or
10. Whenever a Default shall exist, the Lender may, at its
option and without demand or notice, declare all or any part
of the Secured Obligations immediately due and payable, and
the Lender may exercise, in addition to the rights and
remedies granted hereby, all rights and remedies of a
secured party under the Uniform Commercial Code or any other
applicable law.
11. Debtor agrees, in the event of Default, to make the
Collateral available to the Lender at a place or places
acceptable to the Lender, and to pay all costs of the Lender
in the collection of any of the Secured Obligations and the
enforcement of any of the Lender's rights. If any
notification of intended disposition of any of the
Collateral is required by law, such notification shall be
deemed reasonably and properly given if mailed at least ten
(10) days before such disposition, postage prepaid,
addressed to the Debtor at the address shown below.
12. No delay or failure by the Lender in the exercise of
any right or remedy shall constitute a waiver thereof, and
no single or partial exercise by the Lender of any right or
remedy shall preclude other or further exercise thereof or
the exercise of any other right or remedy.
13. If more than one party shall sign this Agreement, the
term "Debtor" shall mean all such parties, and each of them
and all such parties shall be jointly and severally
obligated hereunder.
14. All parties agree the terms of the within instrument
shall be construed according to the laws of the state of
South Dakota and all actions or proceedings brought
hereunder shall be heard in a court of competent
jurisdiction within the state of South Dakota .
Executed and delivered at Blaine, Minnesota,
this 28th day of May, 1996.
ADDRESS: APA OPTICS, INC.
2950 North East 84th Lane
Blaine, MN 55449
BY: /s/ Anil K. Jain
(Seal) ITS: President
_________________________________________________________
NOTE: Corporate applicants must execute Security Agreement,
in corporate name, by duly authorized officer, and seal must
be affixed and duly witnessed; partnership applicants must
execute Security Agreement in firm name, together with
signature of an authorized general partner.