EXHIBIT 10.02
LOAN AGREEMENT AND ASSOCIATED DOCUMENTS DATED JULY 10, 1998
WITH PREMIER BANK, FOR A $1,300,000 LINE OF CREDIT
This instrument was prepared by:
Premier Bank
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(Name)
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ PREMIER BANK (LOGO)
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(Address)
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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to whom the recorded copy of this instrument is to be returned.
MORTGAGE
THIS MORTGAGE MADE THIS 10th day of July, 1998, is between,
DYNASIL CORPORATION OF AMERICA, INC. AND SUBSIDIARY, with an address of ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ (each jointly and severally, if more than one
person, and hereinafter referred to as "Mortgagor") and Premier Bank, the
Mortgagee ("Bank"), with a mailing address of ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇.
In consideration for and to secure payment and performance to Bank of all of the
Obligations, as that term is defined in subparagraphs (a) through (d) below,
Mortgagor has granted, bargained, sold, conveyed, released, assigned,
transferred, pledged, mortgaged and confirmed, and by these presents does hereby
grant, bargain, sell, convey, release, assign, transfer, pledge, mortgage and
confirm unto Bank, its successors and assigns, forever: ALL THAT CERTAIN real
estate situated in the County of Camden, State of New Jersey, known and
designated as ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, conveyed to Mortgagor by
Deed dated 04/18, 1966, duly recorded in the office for recording of deeds in
said County on 04/21, 1966 at Deed Book 2884, Page 54, as the Premises are
therein described and, if necessary, as more particularly described on Exhibit
"A" attached hereto and made a part hereof (hereinafter the "Premises");
Lot & Block 3, 4 & 1910.
THE PREMISES SHALL include all right, title and interest of Mortgagor in and to
all present and future structures, buildings and improvements located thereon,
together with all common areas, streets, lanes, alleys, passageways, passages,
ways, water courses, strips and gores of land, easements, estates, rights,
titles, interests, liberties, privileges, tenements, hereditaments and
appurtenances, whatsoever therunto belonging to or in any way made appurtenant
thereto; all leases and subleases of all or any part of the Premises and rights
of payment thereunder; the air space above and right to use the air space above,
and the drainage, crops, timber, agricultural, horticultural, mineral, water,
oil and gas rights with respect to the Premises, at law or in equity, all
machinery, apparatus, equipment, furniture, fixtures, including without
limitations, trade fixtures, goods, appliances and other property of every kind,
nature and description whatsoever, now or hereafter located in, on or about, or
attached to or used in connection with, the Premises, together with any and all
replacements and substitutions thereof and all accessories, parts or accessions
thereto now or hereafter owned by the Mortgagor or in which Mortgagor has or may
obtain any interest, and all awards, damages, payments and/or claims arising out
of any eminent domain or condemnation proceeding, damage or injury to any part
of the Premises and/or any buildings, structures, or improvements thereon (the
Premises, together with all of the foregoing, is hereinafter referred to as the
"Mortgaged Property");
TO HAVE AND TO HOLD the Mortgaged Property hereby conveyed or mentioned and
intended so to be, unto Bank, to its own use, forever.
PROVIDED, ALWAYS, that this instrument is upon the express condition that, if
Mortgagor promptly satisfied all of the Obligations, as hereinafter defined, in
accordance with the provisions of the Loan Documents, as hereinafter defined,
and this Mortgage, at the times and in the manner specified, without deduction,
fraud or delay, and if all the agreements, conditions, covenants, provisions and
stipulations contained therein and in this Mortgage and in the Loan Documents
are fully performed and complied with, then this Mortgage and the estate hereby
granted shall cease, determine and become void.
As used in this Mortgage, "Obligations" means any or all of the following:
(a) The indebtedness, liabilities and obligations of Mortgagor to
Bank, including all present and future advances, arising under a
certain Note dated ______________, 19____, in the original
principal amount of ONE MILLION THREE HUNDRED THOUSAND AND 00/100
Dollars ($1,300,000.00), plus interest, costs and charges thereon,
and/or any amendment, modification, refinancing, renewal,
substitution or extension of the Note (hereinafter the "Note"),
and all other liabilities of Mortgagor to Bank described in any
agreements, documents and instruments executed in connection
therewith (hereinafter collectively referred to as the "Loan
Documents");
(b) All other existing and future indebtedness, liabilities and
obligations of Mortgagor to Bank whether sole, joint or several,
matured or unmatured, direct or indirect, absolute or contingent,
or any nature whatsoever, and out of whatever transactions
arising, including, without limitation, any debt, liability or
obligation owing from Mortgagor to others which Bank may obtain by
assignment or otherwise, excepting only any indebtedness
constituting "Consumer Credit" as that term is defined in
Regulation Z, 12 C.F.R. Section 226.1 et seq.;
(c) The costs of curing any Event of Default set forth in this
Mortgage or in the Loan Documents which the Bank elects to cure;
and
(d) The reasonable costs and expenses, including attorneys' fees
incurred by Bank in enforcing any
of the obligations of Mortgagor specified in (a), (b) and (c)
above.
MORTGAGOR REPRESENTS, COVENANTS AND WARRANTS to and with Bank that, until the
Obligations secured hereby are fully paid and performed:
1. Payment and Performance. Mortgagor shall pay to Bank in accordance
with the terms of the Note, this Mortgage and the other Loan
Documents, the principal, interest and other sums therein and herein
set forth and shall perform and comply with all the agreements,
conditions, covenants, provisions and stipulations of the Note, this
Mortgage and the Loan Documents.
2. Warranty of Title. Mortgagor warrants that Mortgagor possesses good
and marketable fee simple title to the Premises, and has all power and
authority to mortgage the Mortgaged Property to Bank and to grant a
security interest therein in the manner set forth herein.
3. Maintenance of Mortgaged Property. Mortgagor shall keep and maintain
or cause to be kept and maintained the Mortgaged Property, including
all buildings and improvements now or at any time hereafter erected on
the Premises and the sidewalks and curbs abutting them, in good order
and condition and repair and shall abstain from and shall not permit
the commission of waste of, in or about the Mortgaged Property.
4. Insurance. Mortgagor shall keep the Mortgaged Property continuously
insured against fire and such other hazards in such amounts as may be
required by Bank from time to time. All policies and insurance shall
be issued by companies acceptable to Bank, and shall contain a
standard mortgagee clause, in favor of Bank, and shall provide for at
least thirty (30) days prior written notice of cancellation or
reduction in coverage to Bank, all of which policies are hereby
assigned to Bank as additional security for the Obligations. If Bank
shall become the owner of the Mortgaged Property or any part thereof
by foreclosure or otherwise, such policies, including all right, title
and interest of Mortgagor thereunder, shall become the property of
Bank. At least thirty (30) days prior to the expiration date of any
insurance policy, Mortgagor shall deliver to Bank satisfactory
evidence of the renewal of such insurance and the payment of all
premiums therefor. In the event of any loss, Mortgagor will give
immediate notice thereof to Bank and Bank may make proof of loss on
behalf of Mortgagor. Each insurance company concerned is hereby
authorized and directed to make payments under any such policies
directly to Bank, instead of Bank and Mortgagor jointly, and Mortgagor
hereby irrevocably appoints Bank as Mortgagor's attorney-in-fact to
endorse in Mortgagor's name any checks or drafts issued thereon. Bank
shall have the right to retain and apply the proceeds of any such
insurance, at its reasonable election, to reduction of the
Obligations, or to restoration and repair of the property damaged.
5. Taxes and Other Charges. Mortgagor shall pay when due and before
interest or penalties shall accrue thereon, all taxes, charges,
assessments and other governmental charges of any kind whatsoever
including electricity, water and sewer rents, levied or assessed
against the Mortgaged Property and will deliver receipts therefore to
Bank upon request, and shall pay when due all amounts secured by any
prior lien on the Mortgaged Property.
6. Inspection. Bank and any persons authorized by Bank shall have the
right at any time, upon reasonable notice to Mortgagor, to enter the
Premises at a reasonable hour to inspect and photograph its condition
and state of repair.
7. Declaration of No Set-Off. Within one (1) week after request to do so
by Bank, Mortgagor shall certify to Bank or to any assignee or
proposed assignee of this Mortgage, in writing duly acknowledged, the
amount of principal, interest and other charges then owing on the
Obligations and on any obligations secured by prior liens upon the
Mortgaged Property, if any, and whether there are any set-offs or
defenses against them.
8. Required Notices. Mortgagor shall notify Bank promptly of the
occurrence of any of the following:
(a) a fire or other casualty causing damage to all or any part of the
Mortgaged Property;
(b) receipt of notice of eminent domain proceedings or condemnation
of all or any part of the Mortgaged Property and Mortgagor hereby
grants Bank an irrevocable power of attorney to appear and act
for and on behalf of Mortgagor in any and all such proceedings;
(c) receipt of notice from any governmental authority relating to the
structure, use or occupancy of the Mortgaged Property or any real
property adjacent to the Mortgaged Property;
(d) a change in the occupancy of the Mortgaged Property;
(e) receipt of any notice from the holder of any lien or security
interest in all or any part of the Mortgaged Property; or
(f) commencement of any litigation affecting the Mortgaged Property.
9. Mortgage and Liens. Without the prior written consent of Bank,
Mortgagor will not create or permit to be created or filed against the
Mortgaged Property, any mortgage lien or other lien or security
interest superior or inferior to the lien of this Mortgage.
10. No Transfer. Without the prior written consent of Bank, Mortgagor will
not cause nor permit any transfer of legal or equitable title to,
beneficial interest in, or any estate or interest in the Mortgaged
Property, or any part thereof, voluntarily or by operation of law,
whether by sale, exchange, lease, conveyance, merger, consolidation,
the granting of any lien or security interest or otherwise, or any
agreement to do any of the foregoing.
11. Events of default. Any one or more of the following events shall
constitute an Event of Default hereunder:
(a) Failure of Mortgagor to make any payment of principal or interest
or any other sum promptly when due on any of the Obligations;
(b) Mortgagor's nonperformance of or noncompliance in any material
respect with any other agree-
ments, conditions, covenants, provisions or stipulations
contained in the Note, ???? Mortgage or any of the Loan
Documents;
(c) Any signature, statement, representation or warranty made in the
Note, the Loan Documents or this Mortgage, or in any financial
statement, certificate, application, request or other document
furnished to Bank by Mortgagor at any time prior to, now or
hereafter, is not true and correct in any material respect when
made or delivered;
(d) The occurrence of any default under the Note or any of the Loan
Documents;
(e) The commencement by or against any Mortgagor of any proceeding
under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, the making by any Mortgagor of any
general assignment for the benefit of creditors, the failure of
any Mortgagor generally to pay debts as such debts become due, or
the taking of action by any Mortgagor in furtherance of any of
the foregoing; or
(f) The transfer or sale of any part of the Mortgaged Property or any
interest therein, without the Bank's prior written consent.
12. Remedies of Bank.
(a) Upon the occurrence of any Event of Default, the entire unpaid
balance of the Obligations, including interest as has accrued and
as may thereafter accrue thereon, and all other sums secured by
this Mortgage, shall become immediately due and payable, at the
option of Bank, without notice to or demand upon Mortgagor or any
other person; and thereupon, in addition to all other rights or
remedies available under the Note or any of the Loan Documents,
or at law or in equity, bank may:
(i) forthwith bring an action of mortgage foreclosure hereon,
and may proceed to judgment and execution to recover the
balance due on the Obligations and any other sums that may
be due thereunder, including attorney's fees, costs of suit
and costs of sale to the extent, if any, provided in the
Obligations and permitted by law; and
(ii) enter into possession of the Premises, with or without legal
action, lease the same, collect all rents and profits
therefrom and, after deducting all costs of collection and
administrative expenses, apply the net rents and profits to
the payment of taxes and other necessary maintenance and
operational costs (including agents' fees and attorneys'
fees) or on account of the Obligations, in such order and in
such amounts as Bank in its sole discretion may elect, and
Bank shall be liable to account only for rents and profits
actually received by Bank; and
(b) Any real estate sold hereunder or on any other judicial
proceedings, may be sold in one or more parcels, in such order
and manner as Bank, in its sole discretion, may elect.
13. Rights and Remedies Cumulative. The rights and remedies of Bank as
provided in the Note, in this Mortgage and the Loan Documents shall
be cumulative and concurrent ? may be pursued separately, successively
or together against Mortgagor, against the Mortgaged Property, or any
other person liable hereunder or thereunder, at the sole discretion of
Bank, and may be exercised as often as occasion therefor shall arise.
The failure of Bank to exercise any right or remedy on any one or more
occasions shall in no event be construed as a waiver or release
thereof.
14. Mortgagor's Waivers. Mortgagor hereby waives and releases to the
extent permitted by law:
(a) All errors, defects and imperfections in any proceeding
instituted by Bank under the Note or this Mortgage, and/or the
Loan Documents;
(b) All benefits that might accrue to Mortgagor by virtue of any
present or future law exempting the Mortgaged Property, or any
part of the proceeds arising from any sale thereof, from
attachment, levy or sale on execution, on providing for any stay
of execution, exemption from civil process or extension of time
for payment; and
(c) Unless specifically required herein, all notices of Mortgagor's
default or of Bank's election to exercise, or Bank's actual
exercise of any option under the Note or this Mortgage.
15. Future Advances. Without limiting any other provisions of this
Mortgage, this Mortgage shal also secure additional loans or advances
hereafter made by Bank to or on behalf of Mortgagor. Nothing contained
herein shall impose any obligation on the part of bank to make any
such additional loan(s) to Mortgagor.
16. Communications. All communications required or permitted to be given
under this Mortgage, to be effective, shall be in writing, and shall
be hand delivered or sent by registered mail, postage prepaid, return
receipt requested, addressed to the addresses set forth above or at
such other address as the addressee may hereafter designate in writing
in the manner herein provided.
17. Severability. If for any reason whatsoever any part of this Mortgage
shall be declared void or invalid, by operation of law or otherwise,
in any jurisdiction, then as to such jurisdiction only, such part
shall be void and the remaining provisions of this Mortgage shall
remain in all other respects valid and enforceable, and such
invalidity shall not invalidate or render unenforceable such
provision in any other jurisdiction.
18. Binding Effect--Amendment. This Mortgage is binding upon and shall
inure to the benefit of Mortgagor and Bank, and their respective
successors and assigns. This Mortgage may not be changed or amended
except by agreement in writing signed by the party against whom
enforcement of the change or amendment is sought.
19. Applicable Law. The validity, construction, meaning and effect of the
provisions of this Mortgage shall be governed and determined by and
under the laws of the State of New Jersey.
IN WITNESS WHEREOF, the Mortgagor has hereunto set his hand and seal the day and
year first above written. This instrument is intended to constitute an
instrument under seal.
(INDIVIDUALS SIGN BELOW) (CORPORATIONS OR PARTNERSHIPS SIGN BELOW)
Dynasil Corporation of America, Inc. and
Subsidiary
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Name Name of Corp. or Partnership
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
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Name ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., President
By: /s/ ▇▇▇▇ ▇▇▇▇
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Name ▇▇▇▇ ▇▇▇▇, CFO
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Name Title
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ATTEST/WITNESS Affix Corp. Seal
The undersigned, being authorized to do so, hereby certifies that the precise
address of the within name Mortgagee is ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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S.M.H.
The undersigned hereby acknowledges receipt without cost of a true and correct
copy of the within instrument on behalf of Mortgagor.
By: /s/ ▇▇▇▇ ▇▇▇▇
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J.K.
ACKNOWLEDGMENT
STATE OF NEW JERSEY :
: SS
COUNTY OF :
On _______________________, 19______, before me, the undersigned, personally
appeared _______________________________________________________________________
known to me or satisfactorily proven to me to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged:
/ / that he/she/they executed the same for the purposes therein contained and
desire that it be recorded as such; or
/ / that they are the President/Vice President and the Treasurer/Assistant
Treasurer or Secretary/Assistant Secretary or General Partner of the
corporation/partnership named in the foregoing instrument and that, in such
capacities, being authorized so to do, executed the same for the purposes
therein contained by signing the name and affixing the seal of the said
corporation/partnership by themselves as such officers and desire that it
be recorded as such.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
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Notary Public
My Commission Expires:
Premier Bank
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: Direct Checking Charge
With reference to my/our commercial term loan in the amount of $1,300,000.00,
please follow the ensuing instructions, which will remain in full force until
revoked by the undersigned.
This letter is your authorization to charge my/our checking account number 6619
at Premier Bank, Doylestown Branch, titled: Dynasil Corporation on a monthly
basis for principal and/or interest due. This procedure is to commence on August
- Interest Only / September -. P+I.
Please send the detailed advice regarding said charge to me/us at the following
address:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Very truly yours,
/s/ ▇▇▇▇ ▇▇▇▇
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▇▇▇▇ ▇▇▇▇, CFO
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Dynasil Corporation of America, Inc.
and Subsidiary
TERMS AND CONDITIONS:
BORROWER agrees to provide Bank with annual audited financial statements and tax
returns, as well as quarterly compiled financial statements.
BORROWER also agrees to provide Bank with monthly agings of receivables and
payables as well as an inventory break-down including raw materials work in
progress and finished goods.
BORROWER agrees to provide evidence of payment in full of the note receivable
from ▇▇▇▇▇▇▇▇ Pacific of $175,000.00 prior to disbursement of bank funds.
IN THE EVENT Dynasil Corporation extends a Rights Offering, the first
$200,000.00 is to be applied directly to the principal outstanding term debt
with Premier Bank.
ADDITIONALLY, any use of proceeds of the Rights Offering in excess of $50,000
per three month period is to be approved by Bank in advance.
FINALLY, BORROWER is to submit to Bank to be approved by Bank, any projected use
of funds for capital improvements.
PREMIER BANK
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vice President
DYNASIL CORPORATION OF AMERICA,
INC., AND SUBSIDIARIES
/s/ ▇▇▇▇ ▇▇▇▇
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▇▇▇▇ ▇▇▇▇, CFO
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., President
Premier Bank (LOGO)
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LOAN AGREEMENT
THIS AGREEMENT is made this 10th day of July, 1998, by PREMIER BANK, (the
"Bank"), and the undersigned, DYNASIL CORPORATION OF AMERICA, INC. AND
SUBSIDIARY ("Borrower"), with its principal office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇.
A. Credit Accommodations. Subject to the terms and conditions hereinafter set
forth, Bank agrees to extend to Borrower the following credit
accommodation(s) ("Credit Accommodations(s)"), which shall be evidenced by
promissory note(s) ("Note(s)"):
1. A Line of Credit, expiring on N/A, 19____, under which the Bank, in its
discretion, will make advances to Borrower from time to time and Borrower
may borrow, repay and reborrow from Bank subject to the following terms:
a. Maximum outstanding principal amount of advances - $ N/A.
b. Interest on the outstanding principal balance at the following
rate:
i. Bank's base rate of interest plus N/A %.
ii. Interest payable (monthly/quarterly) commencing N/A, 19____.
iii. Borrower shall reduce the amount of the outstanding principal
under the Line of Credit to zero for one consecutive 30-day
period during each year after the date hereof while the Line
of Credit is in effect.
c. BORROWER ACKNOWLEDGES THAT THE LINE OF CREDIT AND ANY ADVANCE
THEREUNDER IS PROVIDED SOLELY AT BANK'S DISCRETION AND THE LINE OF
CREDIT MAY BE TERMINATED AT ANY TIME AND FOR ANY REASON WHATSOEVER.
2. A Term Loan subject to the following terms:
a. Principal amount - $1,300,000.00.
b. Interest on the outstanding principal balance at the following
rate:
i. Bank's base rate of interest plus 0%.
ii. Other rate terms - _____________________________________
c. Payment terms:
i. Interest payable monthly commencing August 1, 1998.
ii. Principal payable in 83 consecutive monthly installments in
the amount of $7,222.22* each, or in the following amounts,
commencing, September 1, 1998, with a final installment in the
amount of the unpaid balance on August 1, 2005.
* Principal payment based on 15 year amortization.
3. Borrower shall pay the following fees to Bank for the Credit
Accommodations: 1% on new money - $7,000.00
4. When interest hereunder is based on Bank's base rate, it shall be based
upon the rate of interest publicly announced from time to time by Bank in
Doylestown, Pennsylvania as its "Base Rate." The Bank's Base Rate is
defined as the then-published Wall Street Journal Prime Rate of Interest in
effect from time to time plus one percent. The applicable rate will change
when and as Bank changes its base rate.
5. Interest and any fees shall be calculated on the basis of a 360-day year
and the actual number of days elapsed.
6. A late fee will be charged on the portion of any payment made more than
twenty (20) days after it is due equal to five (5%) percent of the unpaid
amount or twenty-five ($25.00) dollars, whichever is greater.
B. Representations and Warranties. Borrower represents and warrants and, at
the request of Bank will provide a legal opinion (stating that subparagraph
1 of this Section is correct and that subparagraphs 2, 3, 4, and 5 are
correct to the best of counsel's knowledge), that:
1. Borrower is a corporation duly organized, validly existing and in good
standing under the laws of the state of its organization, and has the
necessary power and authority to enter into and perform this Agreement, the
Note(s) and all other documents required by Bank in connection herewith;
the execution and performance thereof have been duly authorized by all
necessary proceedings, and upon their execution and delivery, they will be
valid, binding and enforceable in accordance with their terms; Borrower's
execution and performance of this Agreement will not violate any laws or
regulations applicable to Borrower, any organizational documents of
Borrower or any agreements (including any provisions of subordinated debt)
to which Borrower is a party or by which Borrower or any of its properties
is bound; and any consents or approval required in connection with this
Agreement have been obtained.
2. The proceeds of the Credit Accommodation(s) will be used only in
connection with Borrower's business, for the following purposes: Payoff
existing Term Loan with Premier and Line of Credit and Term with First
Union.
3. All financial statements, statements as to ownership of Borrower and its
assets, and other statements and information delivered to Bank were
prepared in accordance with generally accepted accounting principles
consistently applied, are true and correct, disclose all presently
outstanding indebtedness or obligations of Borrower, including contingent
obligations and obligations under leases of property from others, and all
liens and encumbrances against its properties and assets; and there have
been no adverse changes in Borrower's financial condition or business since
the date of such statements.
4. There are no actions, suits, proceedings or claims pending or threatened
against Borrower or its property; and Borrower's business is in compliance
with all applicable laws and regulations.
5. Any debt of Borrower is not now and at closing hereunder will not be in
default under any provision thereof.
C. Conditions. The obligation of Bank to make the first advance under the
Credit Accommodation(s) shall be subject to Bank's receipt of the following
collateral security and/or duly executed documents, each in form and
substance satisfactory to Bank:
1. The Note(s) executed by Borrower.
2. A certificate as to Borrower's actions authorizing the Credit
Accommodation(s) (i.e., certified Board of Directors resolutions if
Borrower is a corporation; certified copy of partnership agreement if
Borrower is a partnership).
3. The following collateral security, subordination and guaranty documents
including any documents and actions required to perfect any collateral
security: 1st Lien on A/R, inventory, machinery, equipment and leasehold
improvements and 1st mortgage on ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
4. Bank shall have no obligation to make loans hereunder if any Event of
Default described in paragraph G hereof has occurred.
D. Affirmative Covenants. Borrower covenants and agrees that so long as there
is outstanding indebtedness of Borrower to Bank under the Credit
Accommodation(s) or otherwise, Borrower shall:
1. Maintain current assets in excess of current liabilities by at least
$------; maintain current assets of at least -----% of current liabilities;
maintain total liabilities in an amount not in excess of -----% of tangible
net worth; and maintain the following additional financial ratios: -----
---- such foregoing financial terms to be defined in accordance with
generally accepted accounting principles consistently applied.
2. Maintain free balances in demand deposit accounts at Bank in average
amounts calculated as follows: -----------------
3. Deliver to Bank financial statements, including a balance sheet and
income statement and such other financial statements and reports as
requested by Bank, within ninety (90) days of the end of each fiscal year
and within forty-five (45) days of the end of each fiscal quarter; and
permit representatives of Bank to examine and audit Borrower's (and its
subsidiaries) books and records and to inspect Borrower's facilities and
properties. All such reports shall be prepared in accordance with generally
accepted accounting principles consistently applied, certified by a public
accountant satisfactory to Bank. Upon written request of Bank, Borrower
will provide this information in consolidating as well as consolidated
form.
4. Notify Bank of any litigation, proceedings or events involving Borrower
which might have a material adverse effect on Borrower's financial
condition or business or the payment of its indebtedness under the Credit
Accommodation(s).
5. Keep and maintain (and require subsidiaries to keep and maintain) all of
its property and assets in good order and repair and maintain fire, public
liability and other insurance in coverages and amounts customary for
Borrower's business or as Bank from time to time may require and deliver to
Bank certificates of all such insurance in effect; and cause all such
policies covering property given as security for the Credit
Accommodation(s) to have loss payee endorsements in favor of Bank and not
to be subject to cancellation unless thirty (30) days prior written notice
thereof shall have been received by Bank.
6. Pay (and require subsidiaries to pay) and discharge when due all taxes,
assessments or other governmental charges imposed on it or any of its
properties, unless the same are currently being contested in good faith by
appropriate proceedings and adequate reserves are maintained therefor.
E. Negative Covenants. So long as there is outstanding indebtedness of
Borrower to Bank under the Credit Accommodation(s) or otherwise, Borrower
and subsidiaries shall not, without the prior written consent of Bank:
1. Incur any indebtedness, including obligations under capitalized leases,
except indebtedness owing to Bank, existing indebtedness or trade
indebtedness arising in the ordinary course of business; guarantee or
otherwise become liable, directly or indirectly, for the indebtedness or
obligations of another party; make any loans or advances to others; or
create, permit or suffer the creation of any liens, security interests or
any other encumbrances on any of its property, real or personal, except
liens, security interests or encumbrances in favor of Bank or existing on
the date hereof and reported to Bank.
2. Convey, lease, sell, transfer or assign any assets except in the
ordinary course of business for value received; liquidate or discontinue
its normal operations with intention to liquidate; enter into any merger or
consolidation; or acquire assets or stock or other equity interest of
another entity except in the ordinary course of business.
3. Pay any dividends or make any for or withdrawal from capital, or make
any other distributions on, or repurchase, redeem or otherwise acquire, any
of its outstanding stock, partnership interests or other equity interests.
4. Sell, assign, transfer or dispose of any of its accounts or notes
receivable, with or without recourse, except to Bank.
5. Make loans or advances to others.
6. Become a guarantor, surety or otherwise liable for the debts or
obligations of others, except to Bank, and except as an endorser of checks
or drafts negotiated in the ordinary course of business.
7. Incur, create or assume any commitment to make any lease payments except
- - - - - - - - - -
__________________________________________________________________________.
Lease payments are defined as any direct or indirect payment or payments
whether as rent or otherwise, including fees, service or finance charges,
under any lease, rental or other arrangement for the use of property of any
other person and whether or not there is an option to purchase.
8. Enter into any sale-leaseback transactions.
9. Prepay any amounts not required or cause to be accelerated any amounts
on any outstanding indebtedness now existing or hereafter arising, except
to Bank.
10. Pay salaries, withdrawals or compensation to officers or partners of
Borrower in an amount exceeding $ - - - - - - - - - -
__________________________________________
in the aggregate per year.
11. Expend for fixed assets during any one fiscal year an amount in excess
of- - - - - - - - - -
___________________________________________.____________________________
________________________ DOLLARS ($ - - - - - - - - - -
______________________________) other
than any fixed assets purchased with the proceeds of loans by Bank to
Borrower.
12. If Borrower is a corporation, sell, issue, or agree to sell or issue,
any shares (voting, non-voting, preferred or common of any class) of
Borrower, or purchase such shares except under such circumstances as will
in the opinion of Bank not result in a material adverse change in the
financial or business condition of Borrower or the value of any security
held by Bank.
F. Additional Collateral. As additional collateral security for the payment of
Borrower's indebtedness and obligations to Bank under the Credit
Accommodation(s) or otherwise, Borrower hereby grants to Bank a security
interest in and lien upon all funds, balances or other property of any kind
of Borrower, or in which Borrower has an interest, now or hereafter in the
possession, custody or control of Bank.
G. Default. Upon the occurrence of any of the following events of default,
Bank may declare the entire unpaid balance, principal and interest, of all
indebtedness of Borrower to Bank under the Credit Accommodation(s) or
otherwise to be immediately due and may exercise all available rights and
remedies under applicable law and agreements:
1. Failure to pay when due any principal or interest or any other sum
payable to Bank under the Credit Accommodation(s) or otherwise.
2. If any representation or warranty made herein or in connection herewith
or in any statement, certificate or other document furnished hereunder
proves to be or becomes false or untrue.
3. Default under any other provision contained herein or in any other
agreement or document executed or delivered in connection herewith and the
continuation of such default, unless cured to Bank's satisfaction, for
twenty (20) days.
4. Default by Borrower in the payment or performance of any material
obligation or indebtedness to another, whether now or hereafter incurred.
5. Any default by Borrower or by any guarantor or surety for Borrower under
the provisions of any note, security agreement, mortgage or other
instrument or agreement incorporated by reference into or executed in
connection with the Agreement or in connection with any other obligation of
Borrower or any guarantor or surety for Borrower to Bank.
6. The determination by an officer of Bank, in such officer's sole and
absolute discretion, that a material, adverse change in the business or
financial condition of Borrower, or of any guarantor or surety for
Borrower, has occurred.
7. If bankruptcy, insolvency, reorganization, receivership, arrangement or
other similar proceedings are commenced or filed by or against Borrower
under state or federal law; or if Borrower shall (i) become insolvent
(which term is defined for purposes thereof as failure to meet its
obligations as the same fall due); (ii) make an assignment for the benefit
of creditor; (iii) apply for, consent to or suffer the appointment of a
custodian, receiver or trustee for any part of property or assets; or (iv)
fail to satisfy or appeal any material judgment or attachment within thirty
(30) days from the date of entry.
H. Miscellaneous. No consent or waiver under this Agreement shall be effective
unless in writing signed by the party granting the consent or waiver. No
waiver of any default shall be deemed a waiver of any default thereafter
occurring. This Agreement and all documents executed hereunder shall be
binding upon and shall inure to the benefit of all parties hereto and their
respective heirs, personal representatives, successors and assigns, may
only be modified or amended by a written document executed by the parties,
and shall be governed by Pennsylvania law. Borrower shall pay all fees and
costs incurred by Bank (including fees and costs of its legal counsel) in
connection with the creation and perfection of any collateral security
required hereunder or the collection or enforcement of the indebtedness and
collateral security hereunder. Bank is hereby irrevocably appointed
Borrower's attorney-in-fact to do all acts and things which Bank may
determine are necessary to perfect and continue perfected the security
interests created pursuant to this Agreement and to protect and facilitate
the collection of amounts due on any accounts receivable assigned to Bank
and any other property constituting security. Borrower will pay any stamp
taxes or any taxes in the nature thereof which may be payable in connection
with the execution and delivery of the promissory notes and other
documents. Borrower hereby forever indemnifies and saves Bank harmless
against any and all liability which Bank may incur or which may be assessed
against Bank with respect to such tax. The terms of any notes, security
agreements or other instruments executed pursuant to this Agreement are
expressly incorporated herein and made a part hereof; provided, however,
that in any case where a term or condition contained in such note, security
agreement, or other instrument cannot be construed (despite every effort to
do so) as consistent with the terms of this Agreement, this Agreement shall
govern. If any term of this Agreement shall be held to be invalid, illegal
or unenforceable, the validity of all other terms hereof shall in no way
be affected thereby. This Agreement shall be in full force and effect for a
term commencing on the date hereof and terminating at such time as Borrower
shall have satisfied in full or been released from all of Borrower's
liabilities and obligations to Bank hereunder.
I. Additional Terms. Borrower hereby agrees to the following additional terms
attached hereto and forming a part hereof:
[1. Additional Terms Scheduled] See attached Term & Conditions.
IN WITNESS WHEREOF, the undersigned have executed this Agreement the day and
year first above written.
Attest or Witness: Dynasil Corporation of America, Inc. and Subsidiary
------------------------------------------------------
[Name of Borrower]
By ▇▇▇▇ ▇▇▇▇ By ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
---------------------- ---------------------------------------------------
Title: ▇▇▇▇ ▇▇▇▇, CFO Title: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., President
PREMIER BANK
By ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------------------
Title: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vice President
[LOGO]
PROMISSORY NOTE
(JUDGMENT)
Doylestown, Pennsylvania
$1,300,000.00 July 10, 1998
FOR VALUE RECEIVED, each of the undersigned unconditionally promises to pay
to PREMIER BANK (the "Bank"), or order, at its office at ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇, or at any other office of the Bank, the principal sum of
ONE MILLION THREE HUNDRED THOUSAND DOLLARS AND ---------------------▇▇/▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ Dollars ($1,300,000.00), together with interest in arrears on the
unpaid principal balance from time to time outstanding from the date hereof
until the entire principal amount due hereunder is paid in full at the rates
hereinafter provided.
Principal shall be payable as follows:
[_] If this box is checked, principal shall be payable on demand.
[_] It this box is checked, principal shall be payable in a single payment
on _____________________, ___________.
[X] It this box is checked, principal shall be payable in
[X] monthly [_] quarterly [_] annual consecutive installments
commencing September 1, 1998 and on the same ▇▇▇▇ of each installment
period thereafter, in the following amounts:
$7,222.22 Principal Plus Interest
______________________________________________________________________
______________________________________________________________________
except that the last installment, payable on August 1, 2005, shall be
in an amount equal to the principal balance then remaining
outstanding.
Interest shall be payable as follows until this Note is paid in full:
[X] If this box is checked, monthly on the first day of each month
commencing August 1, 1998.
[_] If this box is checked, quarterly on the first day of each quarter
commencing ________________________________.
[_] If this box is checked, semi-annually on the first day of each six
months commencing__________________________.
Interest shall be calculated on the basis of the actual number of days
elapsed over a year of 360 days and shall be payable, before and after maturity
or judgment or entering of a verdict, at the following rate:
[_] If this box is checked, the interest rate shall be ___________ percent
(_____%) per annum.
[_] If this box is checked, the interest rate shall be the Prime Rate (as
defined below) plus zero percent (+0%) per annum.
Prime Rate means the floating rate of interest publicly announced from time
to time by the Bank In Doylestown, Pennsylvania as its "prime rate", with the
rate charged hereunder changing on the same day on which any change in the Prime
Rate is effective. The obligors under this Note hereby acknowledge that the
Prime Rate is not tied by the Bank to any external rate of interest or index and
does not necessarily reflect the lowest rate of interest actually charged by the
Bank to any particular class or category of customer.
This Note may be prepaid in whole or in part at any time; provided that (a)
any prepayment shall include accrued interest to the date of prepayment on the
amount prepaid, and (b) if principal hereunder is payable in installments, any
principal prepaid shall be applied to installments in their inverse order of
maturity.
The Bank is hereby granted a continuing security interest in all property
of the undersigned now or hereafter in the possession of the Bank or any of its
affiliates in any capacity whatsoever, including, but not limited to, any
balance or share of any deposit, trust or agency account, as security for the
payment of this Note and any other liabilities of the undersigned to the Bank,
which security interest shall be enforceable and subject to all the provisions
of this Note, as if such property were specifically pledged hereunder and the
proceeds of such property may be applied at any time and without notice to any
of the undersigned's liabilities. Each of the undersigned hereby authorizes the
Bank to debit any deposit account maintained by any of the undersigned with the
Bank for accrued interest and principal, as and when due. Such authorization
shall not affect the undersigned's obligations to pay when due all amounts
payable hereunder whether or not there are sufficient funds therefor in any such
accounts. The foregoing shall be in addition to, and not in limitation of, any
rights of set-off the Bank may have.
The occurrence of any of the following events shall constitute an Event of
Default under this Note: (i) the failure to make any payments, whether
principal, interest or other payment, under any of the undersigned's liabilities
when the same is due, (ii) death of (if an individual), dissolution (if a
corporation or partnership), suspension of business for any reason or insolvency
(however such insolvency may be evidenced) of any obligor hereunder, (iii)
bankruptcy, insolvency, reorganization, receivership, arrangement or other
similar proceedings are commenced or filed by or against any obligor under state
or federal law; or any obligor shall (a) become insolvent (which term is defined
for purposes hereof as failure to meet its obligations as the same fall due);
(b) make an assignment for the benefit of creditors; or (c) apply for, consent
to or suffer the appointment of a custodian, receiver or trustee for any part of
its property or assets; (iv) the sale, lease, transfer or other disposition,
whether voluntary or involuntary, of all or a substantial part of any obligor's
assets or property, (v) the issuance of a writ, warrant, distraint or order of
attachment or garnishment against any obligor's property or assets, (vi) the
commencement of foreclosure proceedings or any proceedings for the enforcement
of money judgments against any obligor, (vii) the occurrence of an event of
default as described and defined in any instrument securing the obligations
hereunder or any agreement under which this Note may be issued or any instrument
evidencing any indebtedness of any of the undersigned to the Bank and the
expiration of any period provided in such instrument to cure such default;
(viii) any of the undersigned shall fail to pay any indebtedness due to third
parties beyond any applicable grace period or (ix) any change shall occur in any
obligor's financial or business condition which, in the Bank's sole judgment, is
materially adverse. Upon the happening of any Event of Default, or upon demand,
if applicable, the holder hereof may declare the entire unpaid principal balance
under this Note and under any and all other liabilities of the undersigned to
the holder hereof immediately due and payable without notice, demand or
presentment and may exercise, without notice, demand or presentment, any of its
rights under any instruments securing the obligations hereunder. In the event
that the Bank or any subsequent holder of this Note shall exercise or endeavor
to exercise any of its remedies hereunder or under any instruments securing the
obligations hereunder, the undersigned shall pay on demand all reasonable costs
and expenses incurred in connection therewith, including, without limitation,
attorney's fees (which attorneys may be employees of the Bank), and the bank may
take judgment for all such amounts in addition to all other sums due hereunder.
Irrespective of the exercise or non-exercise of any of the aforesaid rights, if
any payment of principal or interest hereunder is not paid in full when the same
is due, the undersigned shall pay to the holder a fee on such unpaid amount
equal to five percent (5%) of such late payment.
Each of the undersigned waives presentment for payment, protest and demand,
and notice of protest, demand and/or dishonor and nonpayment of this Note,
notice of any event of default under any instrument securing the obligations
hereunder, except as specifically provided therein, and all other notices or
demand otherwise required by law that the undersigned may lawfully waive. Each
obligor expressly agrees that this Note, or any payment hereunder, may be
extended from time to time, without in any way affecting the liability of any
obligor. No unilateral consent or waiver by the Bank with respect to any action
or failure to act which, without consent, would constitute a breach of any
provision of this Note shall be valid and binding unless in writing and signed
by the Bank.
The rights and obligations of the undersigned and all provisions hereof
shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania.
Each of the undersigned hereby authorizes the Bank to date this Note as of
the date when the initial advance hereunder is made and to complete this Note in
any other particulars according to the terms of the Bank's understanding with
the undersigned. Any consent, agreement, instruction or request pertaining to
any matter under or in connection with this Note signed by any one of the
undersigned shall be binding upon all of them.
THE FOLLOWING SETS FORTH A WARRANT OF AUTHORITY FOR ANY ATTORNEY TO CONFESS
JUDGMENT AGAINST THE UNDERSIGNED. IN GRANTING THIS WARRANT OF ATTORNEY TO
CONFESS JUDGMENT AGAINST THE UNDERSIGNED, THE UNDERSIGNED, FOLLOWING
CONSULTATION WITH (OR DECISION NOT TO CONSULT) SEPARATE COUNSEL FOR THE
UNDERSIGNED AND WITH KNOWLEDGE OF THE LEGAL EFFECT HEREOF, HEREBY WAIVES ANY AND
ALL RIGHTS THE UNDERSIGNED HAS OR MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY
FOR HEARING UNDER THE CONSTITUTIONS AND LAWS OF THE UNITED STATES AND THE
COMMONWEALTH OF PENNSYLVANIA. IT IS SPECIFICALLY ACKNOWLEDGED THAT THE BANK HAS
RELIED ON THIS WARRANT OF ATTORNEY IN GRANTING THE FINANCIAL ACCOMMODATIONS
DESCRIBED HEREIN.
EACH OF THE UNDERSIGNED HEREBY EMPOWERS ANY PROTHONOTARY, CLERK OF COURT OR
ATTORNEY OF ANY COURT OF RECORD TO APPEAR FOR ANY OF THE UNDERSIGNED IN ANY AND
ALL ACTIONS WHICH MAY BE BROUGHT HEREUNDER, AND CONFESS JUDGMENT AGAINST ANY OF
THE UNDERSIGNED FOR ALL OR ANY PART OF THE UNPAID PRINCIPAL BALANCE HEREUNDER
AND ACCRUED INTEREST, TOGETHER WITH OTHER EXPENSES INCURRED IN CONNECTION
THEREWITH AND ATTORNEYS' FEES OF 5% OF THE TOTAL OF THE FOREGOING SUMS, BUT IN
NO EVENT LESS THAN $3,000, AND FOR SUCH PURPOSE THE ORIGINAL OR ANY PHOTOCOPY OF
THIS NOTE SHALL BE A GOOD AND SUFFICIENT WARRANT OF ATTORNEY. SUCH AUTHORIZATION
SHALL NOT BE EXHAUSTED BY ONE EXERCISE THEREOF, BUT JUDGMENT MAY BE CONFESSED AS
AFORESAID FROM TIME TO TIME. EACH OF THE UNDERSIGNED HEREBY WAIVES ALL ERRORS
AND RIGHTS OF APPEAL AS WELL AS RIGHTS TO STAY OF EXECUTION AND EXEMPTION OF
PROPERTY IN ANY ACTION TO ENFORCE ITS LIABILITY HEREON. EACH OF THE UNDERSIGNED
CONSENTS TO THE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF PENNSYLVANIA
AND AGREES TO BUCKS COUNTY AS APPROPRIATE VENUE IN ANY SUIT OR ACTION HEREON.
If this Note Is signed by more than one maker, the liability of each shall
be joint and several. EACH OF THE UNDERSIGNED HEREBY WAIVES TRIAL BY JURY AND
THE RIGHT TO INTERPOSE ANY COUNTERCLAIM OR OFFSET OF ANY NATURE OR DESCRIPTION
IN ANY LITIGATION RELATING TO THIS NOTE OR ANY LIABILITY HEREUNDER OR
ENFORCEMENT OF REMEDIES HEREUNDER. Any provision of this Note which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
As used herein, the terms, "the undersigned" shall mean the undersigned or
any one or more of them; "liabilities" shall mean any and all debts and
obligations of the undersigned owed to the Bank whether such shall be primary,
direct, contingent, sale, joint or several, due or to become due, or that have
or may hereafter be contracted or incurred; and "obligor" shall mean each of the
undersigned and any co-signer, endorser, guarantor or surety of or for the
undersigned's liabilities.
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ Dynasil Corporation of America, Inc. and
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Subsidiary
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., President
/s/ ▇▇▇▇ ▇▇▇▇
----------------------------------------
▇▇▇▇ ▇▇▇▇, CFO
[LOGO]
Dynasil Corporation of America Inc.
and Subsidiary
7-10-98
--------------------------------------------- -----------------------
Name of Borrower Date
Certificate of Reliance
I, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, a Vice President
--------------------- --------------------
(Loan Officer) (Title of Officer)
hereby certify that in underwriting the loan granted on to
----------------------
the above Borrower in the amount of $300,000.00, PREMIER BANK has secured the
commitment or loan with a mortgage on real estate as an abundance of caution,
and for repayment of the loan, the Bank is relying primarily on:
(A) [X] the general credit of the borrower
(as evidenced by current financial statement)
(B) [X] the following other collateral:
1st Lien on A/R, inventory, machinery, equipment, leasehold
improvements.
1st mortgage on ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇
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(C) [_] the endorsement, guaranty or purchase commitment of
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(D) [_] other facts as follows:
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/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, VP
-------------------------
Signature and Title