BUSINESS LOAN
AGREEMENT
Principal Loan Maturity Loan No Call/Coll Account Officer Initials
Date
$449,345.58 01-05-06 01-05-16 20001325834 1E/002 NEW ***
References in the area above are for Lender's use only and do not
limit the applicability of this document to any particular loan
or item. Any item above containing "***" has been omitted due to
test length limitations.
Borrower: Dynasil Corporation of
America a/k/a Dynasil Lender: Susquehanna Patriot Bank
Corporation of America
a New Jersey Corporation Marlton
385 Cooper Road 8000 Sagemore Drive
West Berlin, NJ 08091 Marlton, NJ 08053
Principal Amount: $449,345.58 Date of Note: January 5, 2006
THIS BUSINESS LOAN AGREEMENT dated January 5, 2006, is made and
executed between Dynasil Corporation of America A/K/A Dynasil
Corporation of America a New Jersey Corporation("Borrower") and
Susquehanna Patriot Bank ("Lender") on the following terms and
conditions. Borrower has received prior commercial loans from
Lender or has applied to Lender for a commercial loan or loans or
other financial accommodations, including those which may be
described on any exhibit or schedule attached to this Agreement
("Loan"). Borrower understands and agrees that: (A) in granting,
renewing, or extending any Loan, Lender is relying upon
Borrower's representations, warranties, and agreements as set
forth in this Agreement; (B) the granting, renewing, or extending
of any Loan by Lender at all times shall be subject to Lender's
sole judgment and discretion; and (C) all such Loans shall be and
remain subject to the terms and conditions of this Agreement,
TERM: This Agreement shall be effective as of January 5, 2006,
and shall continue in full force and effect until such time as
all of Borrower's Loans in favor of Lender have been paid in
full, including principal, interest, costs, expenses, attorneys'
fees, and other fees and charges, or until such time as the
parties may agree in writing to terminate this Agreement.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make
the initial Advance and each subsequent Advance under this
Agreement shall be subject to the fulfillment to Lender's
satisfaction of all of the conditions set forth in this Agreement
and in the Related Documents.
Loan Documents. Borrower shall provide to Lender the
following documents for the Loan: (1) the Note; (2) Security
Agreements granting to Lender security interests in the
Collateral; (3) financing statements and all other documents
perfecting Lender's Security Interests; (4) evidence of insurance
as required below; (5) together with all such Related Documents
as Lender may require for the Loan; all in form and substance
satisfactory to Lender and Lender's counsel.
Borrower's Authorization. Borrower shall have provided in
form and substance satisfactory to Lender properly certified
resolutions, duly authorizing the execution and delivery of this
Agreement, the Note and the Related Documents. In addition,
Borrower shall have provided such other resolutions,
authorizations, documents and instruments as Lender or its
counsel, may require.
Payment of Fees and Expenses. Borrower shall have paid to
Lender all fees, charges, and other expenses which are then due
and payable as specified in this Agreement or any Related
Document.
Representations and Warranties. The representations and
warranties set forth in this Agreement, in the Related Documents,
and in any document or certificate delivered to Lender under this
Agreement are true and correct.
No Event of Default. There shall not exist at the time of
any Advance a condition which would constitute an Event of
Default under this Agreement or under any Related Document:
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants
to Lender, as of the date of this Agreement, as of the date of
each disbursement of loan proceeds, as of the date of any
renewal, extension or modification of any Loan, and at all times
any Indebtedness exists;
Organization. Borrower is a corporation for profit which is,
and at all times shall be, duly organized, validly existing, and
in good standing under and by virtue of the laws of the State of
New Jersey. Borrower is duly authorized to transact business in
all other states in which Borrower is doing business, having
obtained all necessary filings, governmental licenses and
approvals for each state in which Borrower is doing business.
Specifically, Borrower is, and at all times shall be, duly
qualified as a foreign corporation in all states in which the
failure to so qualify would have a material adverse effect on its
business or financial condition. Borrower has the full power and
authority to own its properties and to transact the business in
which it is presently engaged or presently proposes to engage.
Borrower maintains an office at 385 Cooper Road, West Berlin, NJ
08091. Unless Borrower has designated otherwise in writing, the
principal office is the office at which Borrower keeps its books
and records including its records concerning the Collateral.
Borrower will notify Lender prior to any change in the location
of Borrower's state of organization or any change in Borrower's
name. Borrower shall do all things necessary to preserve and to
keep in full force and effect its existence, rights and
privileges, and shall comply with all regulations, rules,
ordinances, statutes, orders and decrees of any governmental or
quasi-governmental authority or court applicable to Borrower and
Borrower's business activities.
Assumed Business Names. Borrower has filed or recorded all
documents or filings required by law relating to all assumed
business names used by Borrower; Excluding the name of Borrower,
the following is a complete list of all assumed business names
under which Borrower does business: None.
Authorization. Borrower's execution, delivery, and
performance of this Agreement and all the Related Documents have
been duly authorized by all necessary action by Borrower and do
not conflict with, result in a violation of, or constitute a
default under (1) any provision of (a) Borrower's articles of
incorporation or organization, or bylaws, or (b) any agreement or
other instrument binding upon Borrower or (2) any law,
governmental regulation, court decree, or order applicable to
Borrower or to Borrower's properties.
Financial Information. Each of Borrower's financial
statements supplied to Lender truly and completely disclosed
Borrower's financial condition as of the date of the statement,
and there has been no material adverse change in Borrower's
financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Borrower has no material
contingent obligations except as disclosed in such financial
statements.
Legal Effect. This Agreement constitutes, and any instrument
or agreement Borrower is required to give under this Agreement
when delivered will constitute legal, valid, and binding
obligations of Borrower enforceable against Borrower in
accordance with their respective terms.
Properties. Except as contemplated by this Agreement or as
previously disclosed in Borrower's financial statements or in
writing to Lender and as accepted by Lender, and except for
property tax liens for taxes not presently due and payable,
Borrower owns and has good title to all of Borrower's properties
free and clear of all Security Interests,. and has not executed
any security documents or financing statements relating to such
properties. All of Borrower's properties are titled in Borrower's
legal name, and Borrower has not used or filed a financing
statement under any other name for at least the last five (5)
years.
Hazardous Substances. Except as disclosed to and
acknowledged by Lender in writing, Borrower represents and
warrants that: (1) During the period of Borrower's ownership of
the Collateral, there has been no use, generation, manufacture,
storage, treatment, disposal, release or threatened release of
any Hazardous Substance by any person on, under, about or from
any of the Collateral. (2) Borrower has no knowledge of, or
reason to believe that there has been (a) any breach or violation
of any Environmental Laws; (b) any use, generation, manufacture,
storage, treatment, disposal, release or threatened release of
any Hazardous Substance on, under, about or from the Collateral
by any prior owners or occupants of any of the Collateral; or (c)
any actual or threatened litigation or claims of any kind by any
person relating to such matters. (3) Neither Borrower nor any
tenant, contractor, agent or other authorized user of any of the
Collateral shall use, generate, manufacture, store, treat,
dispose of or release any Hazardous Substance on, under, about or
from any of the Collateral; and any such activity shall be
conducted in compliance with all applicable federal, state, and
local laws, regulations, and ordinances, including without
limitation all Environmental Laws. Borrower authorizes Lender and
its agents to enter upon the Collateral to make such inspections
and tests as Lender may deem appropriate to determine compliance
of the Collateral with this section of the Agreement. Any
inspection's or tests made by Lender shall be at Borrower's
expense and for Lender's purposes only and shall not be construed
to create any responsibility or liability on the part of Lender
to Borrower or to any other person. The representations and
warranties contained herein are based on Borrower's due diligence
in investigating the Collateral for hazardous waste and Hazardous
Substances. Borrower hereby (1) releases and waives any future
claims against Lender for indemnity or contribution in the event
Borrower becomes liable for cleanup or other costs under any such
laws, and (2) agrees to indemnify and hold harmless Lender
against any and all claims, losses, liabilities, damages,
penalties, and expenses which Lender may directly or indirectly
sustain or suffer resulting from a breach of this section of the
Agreement or as a consequence of any use, generation,
manufacture, storage, disposal, release or threatened release of
a hazardous waste or substance on the Collateral. The provisions
of this section of the Agreement, including the obligation to
indemnify, shall survive the payment of the Indebtedness and the
termination, expiration or satisfaction of this Agreement and
shall not be affected by Lender's acquisition of any interest in
any of the Collateral, whether by foreclosure or otherwise.
Litigation and Claims. No litigation, claim; investigation,
administrative proceeding or similar action (including those for
unpaid taxes) against Borrower is pending or threatened, and no
other event has occurred which may materially adversely affect
Borrower's financial condition or properties, other than
litigation, claims, or other events, if any, that have been
disclosed to and acknowledged by Lender in writing.
Taxes. To the best of Borrower's knowledge, all of
Borrower's tax returns and reports that are or were required to
be filed, have been filed, and all taxes, assessments and other
governmental charges have been paid in full, except those
presently being or to be contested by Borrower in good faith in
the ordinary course of business and for which adequate reserves
have been provided.
BUSINESS LOAN AGREEMENT
Loan No: 20001325834 (Continued) Page 2
Lien Priority. Unless otherwise previously disclosed to Lender in
writing, Borrower has not entered into or granted any Security
Agreements, or permitted the filing or attachment of any Security
Interests on or affecting any of the Collateral directly or
indirectly securing repayment of Borrower's Loan and Note, that
would be prior or that may in any way be superior to Lender's
Security Interests and rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements
(if any), and all Related Documents are binding upon the signers
thereof, as well as upon their successors, representatives and
assigns, and are legally enforceable in accordance with their
respective terms.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with
Lender that, so long as this Agreement remains in effect,
Borrower will:
Notices of Claims and Litigation. Promptly inform Lender in
writing of (1) all material adverse changes in Borrower's
financial condition, and (2) all existing and all threatened
litigation, claims, investigations, administrative proceedings or
similar actions affecting Borrower or any Guarantor which could
materially affect the financial condition of Borrower or the
financial condition of any Guarantor.
Financial Records. Maintain its books and records in accordance
with GAAP, applied on a consistent basis, and permit Lender to
examine and audit Borrower's books and records at all reasonable
times.
Financial Statements. Furnish Lender with the following;
Annual Statements. As soon as available, but in no event later
than forty-five (45) days after the end of each fiscal year,
Borrower's balance sheet and income statement for the year ended,
compiled by a certified public accountant satisfactory to Lender.
Interim Statements. As soon as available, but in no event later
than thirty (30) days after the end of each fiscal quarter,
Borrower's balance sheet and profit and loss statement for the
period ended, prepared by Borrower.
Tax Returns. As soon as available, but in no event later than
thirty (30) days after the applicable filing date for the tax
reporting period ended, Federal and other governmental tax
returns, prepared by a tax professional satisfactory to Lender.
All financial reports required to be provided under this
Agreement shall be prepared in accordance with GAAP, applied on a
consistent basis, and certified by Borrower as being true and
correct.
Additional Information. Furnish such additional information and
statements, as Lender may request from time to time.
Financial Covenants and Ratios. Comply with the following
covenants and ratios:
Minimum Income and Cash flow Requirements. Other Cash Flow
requirements are as follows: Maintain a minimum ratio of Cash
Flow/Current Maturity (LTD) in excess of 1.300 to 1.000. The
ratio "Cash Flow / Current Maturity" means Borrower's Net Income
plus Deprecation plus Amortization plus Interest Expense minus
Distributions / Borrower's prior period Current Portion of Long
Term Indebtedness plus Interest Expense. This coverage will be
evaluated as of year-end.
Tangible Net Worth Requirements. Borrower shall comply with the
following net worth ratio requirements:
Debt / Worth Ratio. Maintain a ratio of Debt / Worth not
in excess of 3.000 to 1.000. The ratio "Debt / Worth means
Borrower's Total Liabilities divided by Borrower's Tangible Net
Worth. This leverage ratio will be evaluated as of year-end.
Except as provided above, all computations made to determine
compliance with the requirements contained in this paragraph
shall be made in accordance with generally accepted accounting
principles, applied on a consistent basis, and certified by
Borrower as being true and correct.
Insurance. Maintain fire and other risk insurance, public
liability insurance, and such other insurance as Lender may
require with respect to Borrower's properties and operations, in
form, amounts, coverages and with insurance companies acceptable
to Lender. Borrower, upon request of Lender, will deliver to
Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations
that coverages will not be cancelled or diminished without at
least fifteen (15) days prior written notice to Lender. Each
insurance policy also shall include an endorsement providing that
coverage in favor of Lender will not be impaired in any way by
any act, omission or default of Borrower or any other person. In
connection with all policies covering assets in which Lender
holds or is offered a security interest for the Loans, Borrower
will provide Lender with such lender's loss payable or other
endorsements as Lender may require.
Insurance Reports. Furnish to Lender, upon request of Lender,
reports on each existing insurance policy showing such
information as Lender may reasonably request, including without
limitation the following: (1) the name of the insurer; (2) the
risks insured; (3) the amount of the policy; (4) the properties
insured; (5) the then current property values on the basis of
which insurance has been obtained, and the manner of determining
those values; and (6) the expiration date of the policy. In
addition, upon request of Lender (however not more often than
annually), Borrower will have an independent appraiser
satisfactory to Lender determine, as applicable, the actual cash
value or replacement cost of any Collateral. The cost of such
appraisal shall be paid by Borrower.
Other Agreements. Comply with all terms and conditions of all
other agreements, whether now or hereafter existing, between
Borrower and any other party and notify Lender immediately in
writing of any default in connection with any other such
agreements.
Loan Proceeds. Use all Loan proceeds solely for Borrower's
business operations, unless specifically consented to the
contrary by Lender in writing.
Taxes, Charges and Liens. Pay and discharge when due all of its
indebtedness and obligations, including without limitation a11
assessments, taxes, governmental charges, levies and liens, of
every kind and nature, imposed upon Borrower or its properties,
income, or profits, prior to the date on which penalties would
attach, and all lawful claims that, if unpaid, might become a
lien or charge upon any of Borrower's properties, income, or
profits.
Performance. Perform and comply, in a timely manner, with all
terms, conditions, and provisions set forth in this
Agreement, in the Related Documents, and in all other
instruments and agreements between Borrower and Lender.
Borrower shall notify Lender immediately in writing of any
default in connection with any agreement.
Operations- Maintain executive and management personnel with
substantially the same qualifications and experience as the
present executive and management personnel; provide written
notice to Lender of any change in executive and management
personnel; conduct its business affairs in a reasonable and
prudent manner.
Environmental Studies. Promptly conduct and complete, at
Borrower's expense, all such investigations, studies, samplings
and testings as may be requested by Lender or any governmental
authority relative to any substance, or any waste or by-product
of any substance defined as toxic or a hazardous substance under
applicable federal, state, or local law, rule, regulation, order
or directive, at or affecting any property or any facility owned,
leased or used by Borrower.
Compliance with Governmental Requirements. Comply with all laws,
ordinances, and regulations, now or hereafter in effect, of all
governmental authorities applicable to the conduct of Borrower's
properties, businesses and operations; and to the use or
occupancy of the Collateral, including without limitation, the
Americans With Disabilities Act. Borrower may contest in good
faith any such law, ordinance, or regulation and withhold
compliance during any proceeding, including appropriate appeals,
so long as Borrower has notified Lender in writing prior to doing
so and so long as, in Lender's sole opinion, Lender's interests
in the Collateral are not jeopardized. Lender may require
Borrower to post adequate security or a surety bond, reasonably
satisfactory to Lender, to protect Lender's interest.
Inspection. Permit employees or agents of Lender at any
reasonable time to inspect any and all Collateral for the Loan or
Loans and Borrower's other properties and to examine or audit
Borrower's books, accounts, and records and to make copies and
memoranda of Borrower's books, accounts, and records. If Borrower
now or at any time hereafter maintains any records (including
without limitation computer generated records and computer
software programs for the generation of such records) in the
possession of a third party, Borrower, upon request of Lender,
shall notify such party to permit Lender free access to such
records at all reasonable times and to provide Lender with copies
of any records it may request, all at Borrower's expense.
Compliance Certificates. Unless waived in writing by Lender,
provide Lender at least annually, with a certificate executed by
Borrower's chief financial officer, or other officer or person
acceptable to Lender, certifying that the representations and
warranties set forth in this Agreement are true and correct as of
the date of the certificate and further certifying that, as of
the date of the certificate, no Event of Default exists under
this Agreement.
Environmental Compliance and Reports. Borrower shall comply in
all respects with any and all Environmental Laws; not cause or
permit to exist, as a result of an intentional or unintentional
action or omission on Borrower's part or on the part of any third
party, on property owned and/or occupied by Borrower, any
environmental activity where damage may result to the
environment, unless such environmental activity is pursuant to
and in compliance with the conditions of a permit issued by the
appropriate federal, state or local governmental authorities;
shall furnish to Lender promptly and in any event within thirty
(30) days after receipt thereof a copy of any notice, summons,
lien, citation, directive, letter or other communication from any
governmental agency or instrumentality concerning any intentional
or unintentional action or omission on Borrower's part in
connection with any environmental activity whether or not there
is damage to the environment and/or other natural resources.
Additional Assurances. Make, execute and deliver to Lender such
promissory notes, mortgages, deeds of trust, security agreements,
assignments, financing statements, instruments, documents and
other agreements as Lender or its attorneys may reasonably
request to evidence and secure the Loans and to perfect all
Security Interests.
LENDER'S EXPENDITURES. If any action or proceeding is commenced
that would materially affect Lender's interest in the Collateral
or if Borrower fails to comply with any provision of this
Agreement or any Related Documents, including but not limited to
Borrower's failure to discharge or pay when due any amounts
Borrower is required to discharge or pay under this Agreement or
any Related Documents, Lender on Borrower's behalf may (but shall
not be obligated to) take any action that Lender deems
appropriate, including but not limited to discharging or paying
all taxes, liens, security interests, encumbrances and other
claims, at any time levied or placed on any Collateral and paying
all costs for insuring, maintaining and preserving any
Collateral. All such expenditures incurred or paid by Lender for
such purposes will then bear interest at the rate charged under
the Note from the date incurred or paid by Lender to the date of
repayment by Borrower. All such expenses will become a part of
the Indebtedness and, at Lender's option, will (A) be payable on
demand; (B) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to
become due during either (1) the term of any applicable insurance
policy; or (2) the remaining term of the Note; or (C) be treated
as a balloon payment which will be due and payable at the Note's
maturity.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender
that while this Agreement is in effect, Borrower shall not,
without the prior written consent of Lender;
BUSINESS LOAN AGREEMENT
Loan No: 20001325834 (Continued) Page 3
Indebtedness and Liens. (1) Except for trade debt incurred in the
normal course of business and indebtedness to Lender contemplated
by this Agreement, create, incur or assume indebtedness for
borrowed money, including capital leases, (2) sell, transfer,
mortgage, assign, pledge, lease, grant a security interest in, or
encumber any of Borrower's assets (except as allowed as Permitted
Liens), or (3) sell with recourse any of Borrower's accounts,
except to Lender.
Continuity of Operations. (1) Engage in any business activities
substantially different than those in which Borrower is presently
engaged, (2) cease operations, liquidate, merge, transfer,
acquire or consolidate with any other entity, change its name,
dissolve or transfer or sell Collateral out of the ordinary
course of business, or (3) pay any dividends on Borrower's stock
(other than dividends payable in its stock), provided, however
that notwithstanding the foregoing, but only so long as no Event
of Default has occurred and is continuing or would result from
the payment of dividends, if Borrower is a "Subchapter S
Corporation" (as defined in the Internal Revenue Code of 1986, as
amended), Borrower may pay cash dividends on its stock to its
shareholders from time to time in amounts necessary to enable the
shareholders to pay income taxes and make estimated income tax
payments to satisfy their liabilities under federal and state law
which arise solely from their status as Shareholders of a
Subchapter S Corporation because of their ownership of shares of
Borrower's stock, or purchase or retire any of Borrower's
outstanding shares or alter or amend Borrower's capital
structure.
Loans, Acquisitions and Guaranties. (1) Loan, invest in or
advance money or assets to any other person, enterprise or
entity, (2) purchase, create or acquire any interest in any other
enterprise or entity, or (3) incur any obligation as surety or
guarantor other than in the ordinary course of business.
Agreements. Borrower will not enter into any agreement containing
any provisions which would be violated or breached by the
performance of Borrower's obligations under this Agreement or in
connection herewith.
CESSATION OF ADVANCES. If Lender has made any commitment to make
any Loan to Borrower, whether under this Agreement or under any
other agreement, Lender shall have no obligation to make Loan
Advances or to disburse Loan proceeds if: (A) Borrower or any
Guarantor is in default under the terms of this Agreement or any
of the Related Documents or any other agreement that Borrower or
any Guarantor has with Lender; (B) Borrower or any Guarantor
dies, becomes incompetent or becomes insolvent, files a petition
in bankruptcy or similar proceedings, or is adjudged a bankrupt;
(C) there occurs a material adverse change in Borrower's
financial condition, in the financial condition of any Guarantor,
or in the value of any Collateral securing any Loan; or (D) any
Guarantor seeks, claims or otherwise attempts to limit, modify or
revoke such Guarantor's guaranty of the Loan or any other loan
with Lender; or (E) Lender in good faith deems itself insecure,
even though no Event of Default shall have occurred.
RIGHT OF SETOFF. To the extent permitted by applicable law,
Lender reserves a right of setoff in all Borrower's accounts with
Lender (whether checking, savings, or some other account). This
includes all accounts Borrower holds jointly with someone else
and all accounts Borrower may open in the future. However, this
does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes
Lender, to the extent permitted by applicable law, to charge or
setoff all sums owing on the Indebtedness against any and all
such accounts, and, at Lender's option, to administratively
freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided in this paragraph.
DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:
Payment Default. Borrower fails to make any payment when due
under the Loan.
Other Defaults. Borrower fails to comply with or to perform any
other term, obligation, covenant or condition contained in this
Agreement or in any of the Related Documents or to comply with or
to perform any term, obligation, covenant or condition contained
in any other agreement between Lender and Borrower.
Default in Favor of Third Parties. Borrower or any Grantor
defaults under any loan, extension of credit, security agreement,
purchase or sales agreement, or any other agreement, in favor of
any other creditor or person that may materially affect any of
Borrower's or any Grantor's property or Borrower's or any
Grantor's ability to repay the Loans or perform their respective
obligations under this Agreement or any of the Related Documents.
False Statements. Any warranty, representation or statement made
or furnished to Lender by Borrower or on Borrower's behalf under
this Agreement or the Related Documents is false or misleading in
any material respect, either now or at the time made or furnished
or becomes false or misleading at any time thereafter.
Insolvency. The dissolution or termination of Borrower's
existence as a going business, the insolvency of Borrower, the
appointment of a receiver for any part of Borrower's property,
any assignment for the benefit of creditors, any type of
creditor workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Borrower.
Defective Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect (including
failure of any collateral document to create a valid and
perfected security interest or lien) at any time and for any
reason.
Creditor or Forfeiture Proceedings. Commencement of foreclosure
or forfeiture proceedings, whether by judicial proceeding, self-
help, repossession or any other method, by any creditor of
Borrower or by any governmental agency against any collateral
securing the Loan. This includes a garnishment of any of
Borrower's accounts, including deposit accounts, with Lender.
However, this Event of Default shall not apply if there is a good
faith dispute by Borrower as to the validity or reasonableness of
the claim which is the basis of the creditor or forfeiture
proceeding and if Borrower gives Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies
or a surety bond for the creditor or forfeiture proceeding, in an
amount determined by Lender, in its sole discretion, as being an
adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs
with respect to any Guarantor of any of the Indebtedness or any
Guarantor dies or becomes incompetent, or revokes or disputes the
validity of, or liability under, any Guaranty of the
Indebtedness. In the event of a death, Lender, at its option,
may, but shall not be required to, permit the Guarantor's estate
to assume unconditionally the obligations arising under the
guaranty in a manner satisfactory to Lender, and, in doing so,
cure any Event of Default.
Change in Ownership. Any change in ownership of twenty-five
percent (25%) or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment
or performance of the Loan is impaired,
Insecurity. Lender in good faith believes itself insecure.
Right to Cure. If any default, other than a default on
Indebtedness, is curable and if Borrower or Grantor, as the case
may be, has not been given a notice of a similar default within
the preceding twelve (12) months, it may be cured if Borrower or
Grantor, as the case may be, after receiving written notice from
Lender demanding cure of such default: (1) cure the default
within fifteen (15) days; or (2) if the cure requires more than
fifteen (15) days, immediately initiate steps which Lender deems
in Lender's sole discretion to be sufficient to cure the default
and thereafter continue and complete all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably
practical.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall
occur, except where otherwise provided in this Agreement or the
Related Documents, all commitments and obligations of Lender
under this Agreement or the Related Documents or any other
agreement immediately will terminate (including any obligation to
make further Loan Advances or disbursements), and, at Lender's
option, all Indebtedness immediately will become due and payable,
all without notice of any kind to Borrower, except that in the
case of an Event of Default of the type described in the
"Insolvency" subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all
the rights and remedies provided in the Related Documents or
available at law, in equity, or otherwise. Except as may be
prohibited by applicable law, all of Lender's rights and remedies
shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not
exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of
Borrower or of any Grantor shall not affect Lender's right to
declare a default and to exercise its rights and remedies.
SHARING OF ACCOUNT INFORMATION : The Lender and the companies in
the Susquehanna Bancshare, Inc. family offer a full range of
valuable financial services. We can better serve your needs by
sharing your account information within our corporate family.
The Borrower authorizes the Lender and the companies that
comprise the Susquehanna Bancshares, Inc. corporate family to
disclose to any of Susquehanna Bancshares, Inc. existing or
future subsidiaries, affiliates, and assigns, and to any
potential assignee or transferee, any information (including
information received from third persons) in or relating to (i)
the Borrower, (ii) this loan, (iii) any other loans you have
previously obtained or may from time to time obtain from us or
any of the Susquehanna Bancshares, Inc family of companies in the
future, and (iv) any other accounts of any type or nature and
other relationship the Borrower has previously established or may
from time to time establish with any of the Susquehanna
Bancshares, Inc. family of companies in the future.
DEPOSIT RELATIONSHIP. Borrower shall establish and maintain
their primary New Jersey deposit account with Lender during the
life of the loan.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions
are a part of this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties
as to the matters set forth in this Agreement. No alteration of
or amendment to this Agreement shall be effective unless given in
writing and signed by the party or parties sought to be charged
or bound by the alteration or amendment.
Attorneys' Fees; Expenses, Borrower agrees to pay upon demand all
of Lender's costs and expenses, including Lender's attorneys'
fees and Lender's legal expenses, incurred in connection with the
enforcement of this Agreement. Lender may hire or pay someone
else to help enforce this Agreement, and Borrower shall pay the
costs and expenses of such enforcement. Costs and expenses
include Lender's attorneys' fees and legal expenses whether or
not there is a lawsuit, including attorneys' fees and legal
expenses for bankruptcy proceedings (including efforts to modify
or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Borrower also
shall pay all court costs and such additional fees as may be
directed by the court.
Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or
define the provisions of this Agreement.
Consent to Loan Participation. Borrower agrees and consents to
Lender's sale or transfer, whether now or later, of one or more
participation interests in the Loan to one or more purchasers,
whether related or unrelated to Lender. Lender may provide,
without any limitation whatsoever, to any one or more purchasers,
or potential purchasers, any information or knowledge Lender may
have about Borrower or about any other matter relating to the
Loan, and Borrower hereby waives any rights to privacy Borrower
may have with respect to such matters. Borrower additionally
waives any and all notices of sale of participation interests, as
well as all notices of any repurchase of such participation
interests. Borrower also agrees that the purchasers of any such
participation interests will be considered as the absolute owners
of such interests in the Loan and will have all the rights
granted under the participation agreement or agreements governing
the sale of such participation interests. Borrower further waives
all rights of offset or counterclaim that it may have now or
later against Lender or against any purchaser of such a
participation interest and unconditionally agrees that either
Lender or such purchaser may enforce Borrower's obligation under
the Loan irrespective of the failure or insolvency of any holder
of any interest in the Loan. Borrower further agrees that the
purchaser of any such participation interests may enforce its
interests irrespective of any personal claims or defenses that
Borrower may have against Lender.
Governing Law. This Agreement will be governed by federal law
applicable to the Lender and, to the extent not preempted by
federal law, the laws of the State of New Jersey without regard
to its conflicts of law provisions. This Agreement has been
accepted by Lender in the State of New Jersey.
Choice of Venue. If there is a lawsuit, Borrower agrees upon
Lender's request to submit to the jurisdiction of the courts of
Burlington County, State of New Jersey.
No Waiver by Lender. Lender shall not be deemed to have waived
any rights under this Agreement unless such waiver is given in
writing and signed by Lender. No delay or omission on the part of
Lender in exercising any right shall operate as a waiver of such
right or any other right. A waiver by Lender of a provision of
this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior
waiver by Lender, nor any course of dealing between Lender and
Borrower, or between Lender and any Grantor, shall constitute a
waiver of any of Lender's rights or of any of Borrower's or any
Grantor's obligations as to any future transactions. Whenever the
consent of Lender is required under this Agreement, the granting
of such consent by Lender in any instance shall not constitute
continuing consent to subsequent instances where such consent is
required and in all cases such consent may be granted or withheld
in the sole discretion of Lender.
Notices. Any notice required to be given under this Agreement
shall be given in writing, and shall be effective when actually
delivered, when actually received by telefacsimile (unless
otherwise required by law), when deposited with a nationally
recognized overnight courier, or, if mailed, when deposited in
the United States mail, as first class, certified or registered
mail postage prepaid, directed to the addresses shown near the
beginning of this Agreement. Any party may change its address for
notices under this Agreement by giving formal written notice to
the other parties, specifying that the purpose of the notice is
to change the party's address. For notice purposes, Borrower
agrees to keep Lender informed at all times of Borrower's current
address. Unless otherwise provided or required by law, if there
is more than one Borrower, any notice given by Lender to any
Borrower is deemed to be notice given to all Borrowers.
No Joint Venture or Partnership. The relationship of Borrower
and Lender created by this Agreement is strictly that of debtor-
creditor, and nothing contained in this Agreement or in any of
the Related Documents shall be deemed or construed to create a
partnership or joint venture between Borrower and Lender.
Severability. If a court of competent jurisdiction finds any
provision of this Agreement to be illegal, invalid, or
unenforceable as to any circumstance, that finding shall not make
the offending provision illegal, invalid, or unenforceable as to
any other circumstance. If feasible, the offending provision
shall be considered modified so that it becomes legal, valid and
enforceable. If the offending provision cannot be so modified, it
shall be considered deleted from this Agreement. Unless otherwise
required by law, the illegality, invalidity, or unenforceability
of any provision of this Agreement shall not affect the legality,
validity or enforceability of any other provision of this
Agreement.
Subsidiaries and Affiliates of Borrower. To the extent the
context of any provisions of this Agreement makes it appropriate,
including without limitation any representation, warranty or
covenant, the word "Borrower" as used in this Agreement shall
include all of Borrower's subsidiaries and affiliates.
Notwithstanding the foregoing however, under no circumstances
shall this Agreement be construed to require Lender to make any
Loan or other financial accommodation to any of Borrower's
subsidiaries or affiliates.
Successors and Assigns. All covenants and agreements by or on
behalf of Borrower contained in this Agreement or any Related
Documents shall bind Borrower's successors and assigns and shall
inure to the benefit of Lender and its successors and assigns.
Borrower shall not, however, have the right to assign Borrower's
rights under this Agreement or any interest therein, without the
prior written consent of Lender.
Survival of Representations and Warranties. Borrower understands
and agrees that in making the Loan, Lender is relying on all
representations, warranties, and covenants made by Borrower in
this Agreement or in any certificate or other instrument
delivered by Borrower to Lender under this Agreement or the
Related Documents. Borrower further agrees that regardless of any
investigation made by Lender, all such representations,
warranties and covenants will survive the making of the Loan and
delivery to Lender of the Related Documents, shall be continuing
in nature, and shall remain in full force and effect until such
time as Borrower's Indebtedness shall be paid in full, or until
this Agreement shall be terminated in the manner provided above,
whichever is the last to occur.
Time is of the Essence. Time is of the essence in the
performance of this Agreement.
DEFINITIONS. The following capitalized words and terms shall have
the following meanings when used in this Agreement. Unless
specifically stated to the contrary, all references to dollar
amounts shall mean amounts in lawful money of the United States
of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the
context may require. Words and terms not otherwise defined in
this Agreement shall have the meanings attributed to such terms
in the Uniform Commercial Code. Accounting words and terms not
otherwise defined in this Agreement shall have the meanings
assigned to them in accordance with generally accepted accounting
principles as in effect on the date of this Agreement:
Advance. The word "Advance" means a disbursement of Loan funds
made, or to be made, to Borrower or on Borrower's behalf on a
line of credit or multiple advance basis under the terms and
conditions of this Agreement.
Agreement. The word "Agreement" means this Business Loan
Agreement, as this Business Loan Agreement may be amended or
modified from time to time, together with all exhibits and
schedules attached to this Business Loan Agreement from time to
time.
Borrower. The word "Borrower" means Dynasil Corporation of
America A/K/A Dynasil Corporation of America a NJ Corporation
and includes all co-signers and co-makers signing the Note and
all their successors and assigns.
Collateral. The word "Collateral" means all property and assets
granted as collateral security for a Loan, whether real or
personal property, whether granted directly or indirectly,
whether granted now or in the future; and whether granted in the
form of a security interest, mortgage, collateral mortgage, deed
of trust, assignment, pledge; crop pledge, chattel mortgage,
collateral chattel mortgage, chattel trust, factor's lien,
equipment trust, conditional sale, trust receipt, lien, charge,
lien or title retention contract, lease or consignment intended
as a security device, or any other security or lien interest
whatsoever, whether created by law, contract, or otherwise.
Environmental Laws. The words "Environmental Laws" mean any and
all state, federal and local statutes, regulations and ordinances
relating to the protection of human health or the environment,
including without limitation the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. Section 9601, et seq. ( "CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499
("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901, et seq., the New Jersey Industrial
Site Recovery Act, NJSA Section 13:1K-6 ("IRSA"), the New Jersey
Spill Compensation and Control Act, NJSA 58:10-23.11, et seq. or
other applicable state or federal laws, rules, or regulations
adopted pursuant thereto.
Event of Default. The words "Event of Default" mean any of the
events of default set forth in this Agreement in the default
section of this Agreement.
GAAP. The word "GAAP" means generally accepted accounting
principles:
Grantor. The word "Grantor" means each and all of the persons or
entities granting a Security Interest in any Collateral for the
Loan, including without limitation all Borrowers granting such a
Security Interest.
Guarantor. The word "Guarantor" means any guarantor, surety, or
accommodation party of any or all of the Loan.
Guaranty. The word "Guaranty" means the guaranty from Guarantor
to Lender, including without limitation a guaranty of all or part
of the Note.
Hazardous Substances. The words "Hazardous Substances" mean
materials that, because of their quantity, concentration or
physical, chemical or infectious characteristics, may cause or
pose a present or potential hazard to human health or the
environment when improperly used, treated, stored, disposed of,
generated, manufactured, transported or otherwise handled. The
words "Hazardous Substances" are used in their very broadest
sense and include without limitation any and all hazardous or
toxic substances, materials or waste as defined by or listed
under the Environmental Laws. The term "Hazardous Substances"
also includes, without limitation, petroleum and petroleum by-
products or any fraction thereof and asbestos.
Indebtedness. The word "Indebtedness" means the indebtedness
evidenced by the Note or Related Documents, including all
principal and interest together with all other indebtedness and
costs and expenses for which Borrower is responsible under this
Agreement or under any of the Related Documents.
Lender. The word "Lender" means Susquehanna Patriot Bank, its
successors and assigns.
Loan. The word "Loan" means any and all loans and financial
accommodations from Lender to Borrower whether now or hereafter
existing, and however evidenced, including without limitation
those loans and financial accommodations described herein or
described on any exhibit or schedule attached to this Agreement
from time to time.
Note. The word "Note" means the Note executed by Dynasil
Corporation of America A/K/A Dynasil Corporation of America a New
Jersey Corporation in the principal amount of $449,345.58 dated
January 5, 2006, together with all renewals of, extensions of,
modifications of, refinancings of, consolidations of, and
substitutions for the note or credit agreement.
Permitted Liens. The words "Permitted Liens" mean (1) liens and
security interests securing Indebtedness owed by Borrower to
Lender; (2) liens for taxes, assessments, or similar charges
either not yet due or being contested in good faith; (3) liens of
materialmen, mechanics, warehousemen, or carriers, or other like
liens arising in the ordinary course of business and securing
obligations which are not yet delinquent; (4) purchase money
liens or purchase money security interests upon or in any
property acquired or held by Borrower in the ordinary course of
business to secure indebtedness outstanding on the date of this
Agreement or permitted to be incurred under the paragraph of this
Agreement titled "Indebtedness and Liens"; (5) liens and security
interests which, as of the date of this Agreement, have been
disclosed to and approved by the Lender in writing; and (6) those
liens and security interests which in the aggregate constitute an
immaterial and insignificant monetary amount with respect to the
net value of Borrower's assets.
Related Documents. The words "Related Documents" mean all
promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements,
mortgages, deeds of trust, security deeds, collateral mortgages,
and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Loan.
Security Agreement. The words "Security Agreement" mean and
include without limitation any agreements, promises, covenants,
arrangements, understandings or other agreements, whether created
by law, contract, or otherwise, evidencing, governing,
representing, or creating a Security Interest.
Security Interest, The words "Security Interest" mean, without
limitation, any and all types of collateral security, present and
future, whether in the form of a lien, charge, encumbrance,
mortgage, deed of trust, security deed, assignment, pledge, crop
pledge, chattel mortgage, collateral chattel mortgage, chattel
trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien or title retention contract, lease or consignment
intended as a security device, or any other security or lien
interest whatsoever whether created by law, contract, or
otherwise.
Tangible Net Worth. The words "Tangible Net Worth" mean
Borrower's total assets excluding all intangible assets (i.e.,
goodwill, trademarks, patents, copyrights, organizational
expenses, and similar intangible items, but including leaseholds
and leasehold improvements) less total debt.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS
BUSINESS LOAN AGREEMENT IS DATED JANUARY 5, 2006.
Borrower:
DYNASIL CORPORATION OF AMERICA A/K/A DYNASIL CORPORATION OF
AMERICA A NEW JERSEY CORPORATION
/s/ Craig T. Dunham /s/ Patricia Johnson
Craig T. Dunham, President of Patricia Johnson, Secretary of
Dynasil Corporation Dynasil Corporation
of America. a/k/a/ Dynasil Of America. a/k/a/ Dynasil
Corporation of America a Corporation of America a
New Jersey Corporation New Jersey Corporation
Lender:
SUSQUEHANNA PATRIOT BANK
By: /s/ David Slobotkin
/s/ Authorized Signer