PROMISSORY NOTE
Principal Loan Maturity Loan No Call/Coll Account Officer Initials
Date
$200,000.00 01-05-06 20001325842 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: $200,000.00 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 Two Hundred Thousand 00/100 Dollars ($200,000.00) or so
much as may be outstanding, together with interest on the unpaid
outstanding principal balance of each advance. Interest shall be
calculated from the date of each advance until repayment of each
advance. Borrower also promises to pay all applicable fees and
expenses.
PAYMENT. Borrower will pay this loan in full immediately upon
Lender's demand. If no demand is made, Borrower will pay this
loan in one payment of all outstanding principal plus all accrued
unpaid interest on January 5, 2007. In addition, Borrower will
pay regular monthly payments of all accrued unpaid interest due
as of each payment date, beginning February 5, 2006, with all
subsequent interest payments to be due on the same day of each
month after that. 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 Prime Rate as published in the Money Rates
Section of the Wall Street Journal. When a range of rates has
been published, the higher rate will be used (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 day. Borrower understands that Lender may make
loans based on other rates as well. The Index currently is
7.250% per annum. The interest rate to be applied to the unpaid
principal balance of this Note will be at a rate of 0.500
percentage points over the Index, resulting in an initial rate of
7.750% per annum. NOTICE: Under no circumstances will the
interest rate on this Note be more than the maximum rate allowed
by applicable law. '
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 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 of accrued unpaid
interest. Rather, early payments will reduce the principal
balance due. 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 4.500 percentage points over the Index. 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.
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 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.
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.
PROMISSORY NOTE
(Continued) Page 2
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.
LINE OF CREDIT. This Note evidences a revolving line of credit.
Advances under this Note may be requested either orally or in
writing by Borrower or as provided in this paragraph. Lender
may, but need not, require that all oral requests be confirmed in
writing. All communications, instructions, or directions by
telephone or otherwise to Lender are to be directed to Lender's
office shown above. The following person currently is authorized
to request advances and authorize payments under the line of
credit until Lender receives from Borrower, at Lender's address
shown above written revocation of his or her authority: Craig T.
Dunham, President of Dynasil Corporation of America, a/k/a
Dynasil Corporation of America a New Jersey Corporation.
Borrower agrees to be liable for all sums either: (A) advanced
in accordance with the instructions of an authorized person or
(B) credited to any of Borrower's accounts with Lender. The
unpaid principal balance owing on this Note at any time may be
evidenced by endorsements on this Note or by Lender's internal
records, including daily computer print-outs. Lender will have
no obligation to advance funds under this Note if: (A) Borrower
or any guarantor is in default under the terms of this Note or
any agreement that Borrower or any guarantor has with Lender,
including any agreement made in connection with the signing of
this Note; (B) Borrower or any guarantor ceases doing business
or is insolvent; (C) any guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such guarantor's guarantee of
the Note or any other loan with Lender; (D) Borrower has
applied funds provided pursuant to this Note for purposes other
than those authorized by Lender; or (E) Lender in good faith
believes itself insecure.
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. This note is payable on demand. The
inclusion of specific default provisions or rights of Lender
shall not preclude Lender's right to declare payment of this Note
on its demand. 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