U.S. SMALL BUSINESS ADMINISTRATION PAYCHECK PROTECTION PROGRAM
 

NOTE
 
 
SBA Loan #:
66687171-01
SBA Loan Name:
Paycheck Protection Program
Loan Date:
4/14/2020
Loan Amount:
$563,700.00
Interest Rate:
1.00%
Maturity Date:
4/17/2022
Borrower:
SCIENTIFIC INDUSTRIES INC
Lender:
First National Bank of Pennsylvania

 
 
 
This Note represents the Loan (as defined below) made by Lender pursuant to the
Paycheck Protection Program (the “PPP”). Borrower confirms and agrees that the
Loan is subject in all respects to the Coronavirus Aid, Relief, and Economic
Security Act and the requirements, rules, regulations, procedures and guidance
concerning the PPP as from time to time promulgated by the U.S. Department of
Treasury and/or SBA (collectively, the “PPP Regulations”), including, without
limitation, all PPP Regulations applicable to permitted uses of loan proceeds
and loan forgiveness.
 
1. PROMISE TO PAY
 
In return for the Loan, Borrower promises to pay to the order of Lender the
amount of $563,700.00, interest on the unpaid principal balance, and all other
amounts required by this Note.
 
2. DEFINITIONS
 
“Loan” means the loan evidenced by this Note.
 
    “Loan Documents” means the documents related to this Loan signed by
Borrower, including the Borrower Application Form for the Paycheck Protection
Program and the Use of Proceeds Certificate and Borrower Certificate executed
and delivered by Borrower in connection with this Note.
 
“SBA” means the Small Business Administration, an Agency of the United States of
America.
  

3. PAYMENT TERMS
 
Borrower must make all payments at the place and in the method Lender
designates. The payment terms for this Note are:
 
Initial Deferment Period: No payments are due on this Loan for 6 months from the
date of first disbursement of this Loan. Interest will continue to accrue during
the deferment period. After the Initial Deferment Period, to the extent not
prohibited by the PPP
 
                  Regulations or the loan authorization applicable to the Loan
(in each case as determined by Lender in its sole discretion) interest that
accrued during the Initial Deferment Period but that is not subject to loan
forgiveness shall be due and payable on the date that is 7 months from the date
of first disbursement.
 
        Loan Forgiveness: Borrower may apply to Lender for forgiveness of the
amount due on this Loan in an amount equal to the sum of the following costs
incurred by Borrower during the 8-week period beginning on the date of first
disbursement of this Loan:
 
            a. Payroll costs
            b. Any payment of interest on a covered mortgage obligation (which
shall not include any prepayment of or payment of principal on a covered
mortgage obligation)
            c. Any payment on a covered rent obligation d. Any covered utility
payment
    

The amount of Loan forgiveness shall be calculated (and may be reduced) in
accordance with the requirements of the PPP, including the provisions of Section
1106 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (P.L.
116-136). Not more than 25% of the amount forgiven can be attributable to
non-payroll costs. If             Borrower  has received an EIDL advance, then
that amount shall be subtracted from the loan forgiveness amount.
 
        Maturity: This Note will mature two years from date of first
disbursement of this Loan.
 
        Repayment Terms:
 
Interest Rate: The interest rate on this Note is one percent per year. The
interest rate is fixed and will not be changed during the life of the Loan.
 
Installment Payments Following Deferment Period: Borrower must pay monthly
principal and interest payments in 18 equal installments on the outstanding
principal balance on the Loan amortized over the term of the Loan, unless
otherwise forgiven in whole or in part in accordance with the PPP Regulations,
beginning 7 months from the date of this Note until the maturity date. Payments
of principal and interest must be made on such date as designated by Lender in
the months during which they are due.
 
Application of Installment Payments: Lender will apply each installment payment
first to pay interest accrued to the day Lender received the payment, then to
bring principal current, and will apply any remaining balance to reduce
principal.
 
Payment at Maturity: All remaining principal and accrued interest is due and
payable two years from the date of first disbursement of this Loan.
 
        Loan Prepayment: Notwithstanding any provision in this Note to the
contrary:
 
Borrower may prepay this Note at any time without penalty. Borrower may prepay
20 percent or less of the unpaid principal balance at any time without notice.
IfBorrower prepays more than 20 percent and the Loan has been sold on the
secondary market, Borrower must:
 
a. Give Lender written notice;
b. Pay all accrued interest; and
c. If the prepayment is received less than 21 days from the date Lender received
the notice, pay an amount equal to 21 days interest from the date lender
received the notice, less any interest accrued during the 21 days and paid under
b. of this paragraph.
 
                    If  Borrower does not prepay within 30 days from the date
Lender received the notice, Borrower must give Lender a new notice.
 
Non-Recourse: Lender and SBA shall have no recourse against any individual
shareholder, member or partner of Borrower for non-payment of the Loan, except
to the extent that such shareholder, member or partner uses the Loan proceeds
for an unauthorized purpose.
 

Late Fees: Following the Initial Deferment Period, to the extent not prohibited
by the PPP Regulations or the loan authorization applicable to the Loan (in each
case as determined by Lender in its sole discretion), if the Lender has not
received the full amount of any monthly payment by the end of fifteen (15)
calendar days after the date it is due, Borrower agrees to pay a late charge to
the Lender. The amount of the charge will be 4.0% of Borrower’s overdue payment
of principal and interest.
 
4. DEFAULT
 
Borrower is in default under this Note if Borrower does not make a payment when
due under this Note, or if Borrower:
 

A. Fails to do anything required by this Note and other Loan Documents;
 
B. Defaults on any other loan with Lender;
 
           C. Does not disclose, or anyone acting on its behalf does not
disclose, any material fact to Lender or SBA;
 
D. Makes, or anyone acting on its behalf makes, (i) a materially false or
misleading representation to Lender or SBA or (ii) a false or incorrect
statement or certification in any certificate, attestation or agreement included
in any Loan Documents;
 
E. Defaults on any loan or agreement with another creditor, if Lender believes
the default may materially affect Borrower’s ability to pay this Note;
 
F. Fails to pay any taxes when due;
 
G. Becomes the subject of a proceeding under any bankruptcy or insolvency law;
 

H. Has a receiver or liquidator appointed for any part of their business or
property; I. Makes an assignment for the benefit of creditors;
 
 J.  Has any adverse change in financial condition or business operation that
Lender believes may materially affect Borrower’s ability to pay this Note;
 
K. Reorganizes, merges, consolidates, or otherwise changes ownership or business
structure without Lender’s prior written consent; or
 
L. Becomes the subject of a civil or criminal action that Lender believes may
materially affect Borrower’s ability to pay this Note.
 

5. LENDER’S RIGHTS IF THERE IS A DEFAULT
 
Without notice or demand and without giving up any of its rights, Lender may:
 
A. Require immediate payment of all amounts owing under this Note;
  

B. Collect all amounts owing from Borrower; or
 
C. File suit and obtain judgment.

 
6. LENDER’S GENERAL POWERS
 
Without notice and without Borrower’s consent, Lender may:
 
A. Incur expenses to collect amounts due under this Note, enforce the terms of
this Note or any other Loan Document. Among other things, the expenses may
include payments for property taxes, prior liens, insurance, appraisals,
environmental remediation costs, and reasonable attorney’s fees and costs. If
Lender incurs such expenses, it may
demand immediate repayment from Borrower or add the expenses to the principal
balance; and
 
B. Release anyone obligated to pay this Note.
 
7. WHEN FEDERAL LAW APPLIES; GOVERNING LAW AND VENUE
 
When SBA is the holder, this Note will be interpreted and enforced under federal
law, including SBA regulations. As to this Note, Borrower may not claim or
assert against SBA any local or state law to deny any obligation, defeat any
claim of SBA, or preempt federal law.
 
When the SBA is not the holder, this Note will be interpreted and enforced under
the laws of the Commonwealth of Pennsylvania (the “Lender’s State”). All
judicial proceedings arising in or under or related to the Loan, this Note or
any of the other Loan Documents may be brought in any state or federal court
located in the Lender’s State. By execution and delivery of this Note, Borrower
generally and unconditionally: (a) consents to nonexclusive personal
jurisdiction in the Lender’s State; (b) waives any objection as to jurisdiction
or venue in the Lender’s State; (c) agrees not to assert any defense based on
lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocably
agrees to be bound by any judgment rendered thereby in connection with the Loan,
this Loan or the other Loan Documents.
 
8. SUCCESSORS AND ASSIGNS
 
Under this Note, Borrower includes its successors, and Lender includes its
successors and assigns. Lender may at any time assign to one or more assignees
all or a portion of its rights and obligations under this Note.
 
9. GENERAL PROVISIONS
 
A. All individuals and entities signing this Note as a Borrower are jointly and
severally liable.
 

B. Borrower waives all suretyship defenses.
 
C. Borrower must sign all documents necessary at any time to comply with the
Loan Documents.
 
D. Lender may exercise any of its rights separately or together, as many times
and in any order it chooses. Lender may delay or forgo enforcing any of its
rights without giving up any of them.
 
E. Borrower may not use an oral statement of Lender or SBA to contradict or
alter the written terms of this Note.
 
F. If any part of this Note is unenforceable, all other parts remain in effect.
 
G. To the extent allowed by law, Borrower waives all demands and notices in
connection with this Note, including presentment, demand, protest, and notice of
dishonor. Borrower also waives any defenses based upon any claim that Lender did
not obtain any guarantee.
 
H. Borrower’s execution, delivery and performance of this Note and all other
Loan Documents have been duly authorized by all necessary corporate action of
Borrower. The individual or individuals executing this Note and all other Loan
Documents are duly authorized to do so.
 
10. FURTHER ASSURANCES
 
The Loan and this Note are subject in all respects to the PPP Regulations,
including any PPP Regulations promulgated after the date of this Note. If, after
the date of this Note, any further PPP Regulations are promulgated or if the PPP
Regulations mandate a form of or the terms of the note, loan authorization or
other loan documents for PPP loans, Borrower agrees to execute any further
instruments and documents and to take such further actions as Lender requests,
including exchanging this Note for a new note, executing an amendment to this
Note, or executing any other loan documents that Lender requests. In the event
of any exchange of or amendment to this Note, the disbursement date applicable
to the Loan (and all related time periods under the PPP Regulations and the
maturity date applicable to this Loan) shall be the same as set forth in this
Note.
 
11. BORROWER ’S NAME AND SIGNATURE
 
By signing below, each individual or entity executing this Note as “Borrower”
becomes obligated under this Note as Borrower.
 
BORROWER:
 
SCIENTIFIC INDUSTRIES INC
 
By:

 
 
 
s Maria H. Santos
MARIA SANTOS, PRESIDENT

 

 
 
 
 
                                                                               
                                                                               
        USE OF PROCEEDS CERTIFICATE
 
This Use of Proceeds Certificate is dated as of the date set forth below and is
delivered to First National Bank of Pennsylvania (“Lender”) in connection with
the loan (the “Loan”) to be made by Lender to the undersigned borrower
(“Borrower”) pursuant to the Paycheck Protection Program (the “PPP”) and
guaranteed by the Small Business Administration (the “SBA”).
 
 

The undersigned, on his, her or its own behalf or as a duly elected, qualified
and acting officer of Borrower, certifies to Lender that Borrower will use the
Loan proceeds for the purposes specified below:
 
$563,700.00 
for Payroll Costs and Payments on Mortgage Interest, Rent, Utilities and
Interest on Other Debt Obligations (at least 75% of this amount shall be used
for Payroll Costs)
 
IN WITNESS WHEREOF, the undersigned has executed this Use of Proceeds
Certificate on his, her or its own behalf or as a duly elected, qualified and
acting officer of Borrower, as of the date set forth below.
 
BORROWER:
 
 
SCIENTIFIC INDUSTRIES INC
 
By:

 
 
 
s Maria Santos
MARIA SANTOS PRESIDENT

 

 
 
 
 
BORROWER CERTIFICATE
 
This Borrower Certificate is dated as of the date set forth below and is
delivered to First National Bank of Pennsylvania (“Lender”) in connection with
the loan (the “Loan”) to be made by Lender to the undersigned borrower
(“Borrower”) pursuant to the Paycheck Protection Program (the “PPP”) and
guaranteed by the Small Business Administration (the “SBA”).
 
 
 
The undersigned, on his, her or its own behalf or as a duly elected, qualified
and acting officer of
Borrower, certifies to Lender as follows:
 
1. Borrower acknowledges that if Borrower defaults on the Loan, SBA may be
required to pay Lender under the SBA guarantee, and SBA may then seek recovery
on the Loan (to the extent any balance remains after loan forgiveness).
 
2. Borrower will keep books and records in a manner satisfactory to Lender,
furnish financial statements as requested by Lender, and allow Lender and SBA to
inspect and audit books, records and papers relating to Borrower’s financial or
business condition.
 
3. Borrower will not, without Lender’s consent, change its ownership structure,
make any distribution of company assets that would adversely affect its
financial condition, or transfer (including pledging) or dispose of any assets,
except in the ordinary course of business.
 
4. All of the certifications made by Borrower in the Paycheck Protection Program
Borrower Application Form exclusively prepared and executed by Borrower, and
delivered to Lender, are true and correct in all respects as of the date of this
Borrower Certificate.
 
5. The resolutions attached to this Borrower Certificate as Exhibit A are a
full, true and correct copy of the resolutions adopted by the Borrower’s board
of directors or other applicable governing body, and said resolutions have not
been in any way modified, repealed, rescinded, amended or revoked.
 
IN WITNESS WHEREOF, the undersigned has executed this Borrower Certificate on
his, her or its own behalf or as a duly elected, qualified and acting officer of
Borrower, as of the date set forth below.
 
BORROWER:
 
SCIENTIFIC INDUSTRIES INC
 
By:

 
 
 
s Maria Santos
MARIA SANTOS PRESIDENT

 

 
 
Exhibit A
 
 
to
Borrower Certificate
 
 
RESOLVED, that SCIENTIFIC INDUSTRIES INC (“Borrower”) be, and hereby is,
authorized to borrow from FIRST NATIONAL BANK OF PENNSYLVANIA (“Lender”)
$563,700.00 pursuant to a loan made by Lender pursuant to the Paycheck
Protection Program.
 
 
RESOLVED FURTHER, that any officer of Borrower be, and he or she is hereby
authorized, directed and empowered, in the name of Borrower, to execute and
deliver to Lender all applications, notes, and other documents and instruments
providing for such loan and evidencing such loan, with interest thereon, and
said officers are authorized from time to time to execute renewals, extensions
and/or amendments of said applications, notes and other documents and
instruments, all in such form as said officers may approve, and the execution
thereof by said authorized officers shall be conclusive evidence of such
approval.
 
 
RESOLVED FURTHER, that any and all acts authorized pursuant to these resolutions
and performed prior to the passage of these resolutions are hereby ratified and
approved, and that Lender may conclusively rely upon a certified copy of these
resolutions as to the officers of Borrower and continue to conclusively rely on
such certified copy of these resolutions for all past, present and future
transactions until written notice of any change hereto or thereto is given to
Lender by Borrower by certified mail, return receipt requested.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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