PROMISSORY NOTE
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
PROMISE TO PAY. Dynasil Corporation of America a/k/a Dynasil
Corporation of America a New Jersey Corporation ("Borrower")
promises to pay to Susquehanna Patriot Bank ("Lender"), or order,
in lawful money of the United States of America, the principal
amount of Four Hundred Forty-nine Thousand Three Hundred Forty-
Five & 58/100 Dollars ($449,345.58), together with interest on
the unpaid principal balance from January 5, 2006, until paid in
full together with all applicable fees and expenses.
PAYMENT. Subject to any payment changes resulting from changes in
the Index, Borrower will pay this loan in accordance with the
following payment schedule: 60 monthly consecutive principal and
interest payments in the initial amount of $3,579.75 each,
beginning February 5, 2006, with interest calculated on the
unpaid principal balances at an interest rate of 7.250% per
annum; 59 monthly consecutive principal and interest payments in
the initial amount of $3,630.72 each, beginning February 5, 2011,
with interest calculated on the unpaid principal balances at an
interest rate based on the weekly average yield on United States
Treasury Securities adjusted to a constant maturity of five (5)
years, effective the first business day following the release
date, as made available by the Federal Reserve Board (currently
4.330%), plus a margin of 3.000 percentage points, resulting in
an initial interest rate of 7.330%; and one principal and
interest payment of $305,180.97 on January 5, 2016, with interest
calculated on the unpaid principal balances at an interest rate
based on the weekly average yield on United States Treasury
Securities adjusted to a constant maturity of five (5) years,
effective the first business day following the release date, as
made available by the Federal Reserve Board (currently 4.330%),
plus a margin of 3.000 percentage points, resulting in an initial
interest rate of 7.330%. This estimated final payment is based on
the assumption that all payments will be made exactly as
scheduled and that the Index does not change; the actual final
payment will be for all principal and accrued interest not yet
paid, together with any other unpaid amounts under this Note.
Unless otherwise agreed or required by applicable law, payments
will be applied first to any accrued unpaid interest; then to
principal; then to any unpaid collection costs; and then to any
late charges. The annual interest rate for this Note is computed
on a 365/360 basis; that is, by applying the ratio of the annual
interest rate over a year of 360 days, multiplied by the
outstanding principal balance, multiplied by the actual number of
days the principal balance is outstanding. Borrower will pay
Lender at Lender's address shown above or at such other place as
Lender may designate in writing.
VARIABLE INTEREST RATE. The interest rate on this Note is subject
to change from time to time based on changes in an independent
index which is the weekly average yield on United States Treasury
Securities adjusted to a constant maturity of five (5) years,
effective the first business day following the release date, as
made available by the Federal Reserve Board (the "Index"). The
Index is not necessarily the lowest rate charged by Lender on its
loans. If the Index becomes unavailable during the term of this
loan, Lender may designate a substitute index after notice to
Borrower. Lender will tell Borrower the current Index rate upon
Borrower's request. The interest rate change will not occur more
often than each 60 months. Borrower understands that Lender may
make loans based on other rates as well. The Index currently is
4.330% per annum. The interest rate or rates to be applied to
the unpaid principal balance of this Note will be the rate or
rates set forth herein in the "Payment" section. Notwithstanding
any other provision of this Note, after the first payment stream,
the interest rate for each subsequent payment stream will be
effective as of the last payment date of the just-ending payment
stream. NOTICE: Under no circumstances will the interest rate
on this Note be more than the maximum rate allowed by applicable
law. Whenever increases occur in the interest rate, Lender, at
its option, may do one or more of the following: (A) increase
Borrower's payments to ensure Borrower's loan will pay off by its
original final maturity date, (B) increase Borrower's payments
to cover accruing interest, (C) increase the number of
Borrower's payments, and (D) continue Borrower's payments at
the same amount and increase Borrower's final payment. '
PREPAYMENT; MINIMUM INTEREST CHARGE. In any event, even upon
full prepayment of this Note, Borrower understands that Lender is
entitled to a minimum interest charge of $25.00. Other than
Borrower's obligation to pay any minimum interest charge,
Borrower may pay without penalty all or a portion of the amount
owed earlier
PROMISSORY NOTE
Loan No 20001325834 (Continued)Page 2
than it is due. Early, payments will not, unless agreed to by
Lender in writing, relieve Borrower of Borrower's obligation to
continue to make payments under the payment schedule. Rather,
early payments will reduce the principal balance due and may
result in Borrower's making fewer payments. Borrower agrees not
to send Lender payments marked "paid in full", "without
recourse", or similar language. If Borrower sends such a payment,
Lender may accept it without losing any of Lender's rights under
this Note, and Borrower will remain obligated to pay any further
amount owed to Lender. All written communications concerning
disputed amounts, including any check or other payment instrument
that indicates that the payment constitutes "payment in full" of
the amount owed or that is tendered with other conditions or
limitations or as full satisfaction of a disputed amount must be
mailed or delivered to: Susquehanna Patriot Bank, c/o Loan
Operations, P.O. Box 2000 Lititz, PA 17543-7030.
LATE CHARGE. If a payment is 10 days or more late, Borrower will
be charged 10.000% of the regularly scheduled payment or $20.00,
whichever is greater. This late charge shall be paid to Lender
by Borrower for the purpose of defraying the expense incident to
the handling of the delinquent payment.
INTEREST AFTER DEFAULT, Upon default, including failure to pay
upon final maturity, Lender, at its option, may, if permitted
under applicable law, increase the variable interest rate on this
Note by 4.000 percentage points. The interest rate will not
exceed the maximum rate permitted by applicable law
DEFAULT. Each of the following shall constitute an event of
default ("Event of Default") under this Note:
Payment Default. Borrower fails to make any payment when due
under this Note.
Other Defaults. Borrower fails to comply with or to perform
any other term, obligation, covenant or condition contained in
this Note 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 property or Borrower's ability to repay this Note or
perform Borrower's obligations under this Note 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 Note 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.
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, endorser, surety, or accommodation
party of any of the indebtedness or any guarantor, endorser,
surety, or accommodation party dies or becomes incompetent, or
revokes or disputes the validity of, or liability under, any
guaranty of the indebtedness evidenced by this Note. 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 this Note is impaired.
Insecurity. Lender in good faith believes itself insecure.
Cure Provisions. If any - default, other than a default in
payment is curable and if Borrower has not been given a notice of
a breach of the same provision of this Note within the preceding
twelve (12) months, it may be cured if Borrower, after receiving
written notice from Lender demanding cure of such default: (1)
cures the default within fifteen (15) days; or (2) if the cure
requires more than fifteen (15) days, immediately initiates steps
which Lender deems in Lender's sole discretion to be sufficient
to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance
as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire
unpaid principal balance on this Note and all accrued unpaid
interest immediately due, and then Borrower will pay that amount.
PROMISSORY NOTE
Loan No 20001325834 (Continued)Page 3
ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to
help collect this Note if Borrower does not pay. Borrower will
pay Lender that amount. This includes, subject to any limits
under applicable law, Lender's attorneys' fees and Lender's legal
expenses, whether or not there is a lawsuit, including attorneys'
fees, expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), and appeals.
If not prohibited by applicable law, Borrower also will pay any
court costs, in addition to all other sums provided by law.
GOVERNING LAW. This Note will be governed by federal law 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 Note ahs 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.
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.
COLLATERAL. Borrower acknowledges this Note is secured by the
following collateral described in the security instruments listed
herein:
(A) a Mortgage dated January 5, 2006, to Lender on real
property located in Camden County, State of New Jersey
(B) an Assignment of Leases and Rents to Lender on real
property located in Camden County, State of New Jersey.
(C) collateral described in a Commercial Security Agreement
dated January 5, 2006.
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon
Borrower, and upon Borrower's heirs, personal representatives,
successors and assigns, and shall inure to the benefit of Lender
and its successors and assigns.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of
its rights or remedies under this Note without losing them.
Borrower and any other person who signs, guarantees or endorses
this Note, to the extent allowed by law, waive presentment,
demand for payment, and notice of dishonor. Upon any change in
the terms of this Note, and unless otherwise expressly stated in
writing, no party who signs this Note, whether as maker,
guarantor, accommodation maker or endorser, shall be released
from liability. All such parties agree that Lender may renew or
extend (repeatedly and for any length of time) this loan or
release any party or guarantor or collateral; or impair, fail to
realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lender
without the consent of or notice to anyone. All such parties also
agree that Lender may modify this loan without the consent of or
notice to anyone other than the party with whom the modification
is made. The obligations under this Note are joint and several.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE
PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE
PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS
PROMISSORY NOTE.
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