Exhibit 10.3


 


PROMISSORY
NOTE


 


	
  Principal
  Amount:   $1,700,000

  	
  June
  30, 2003

  



 


FOR VALUE RECEIVED, INRAD, INC., a New Jersey
corporation (hereinafter called “Issuer”), hereby promises to pay to the order
of CLAREX, LTD. and its successors and assigns (hereinafter called the
“Holder”), at such address as the Holder may designate in writing to Issuer,
the principal sum of ONE MILLION SEVEN HUNDRED THOUSAND DOLLARS ($1,700,000)
plus all accrued interest owing hereunder in lawful money of the United States
of America on or before the Maturity Date (as defined below).  For purposes of this Note, “Maturity Date”
shall mean January 31, 2005.


 


Interest. 
Interest shall accrue on the unpaid principal amount of this Note at the
rate of six and one-half percent (6.0%) per annum and shall be due and payable
on the Maturity Date.  Interest shall be
computed on the basis of a 360 day year for the actual number of days elapsed.


 


Optional Prepayment; Order of Payments.  Issuer may prepay this Note at any time, in
whole or in part, without premium or penalty; provided, however, Issuer shall
provide to the Holder written notice at least ten (10) business days prior to
such prepayment.  All payments made on
account of this Note shall be applied first to the payment of any costs of
enforcement then due hereunder, second to the payment of accrued and unpaid
interest then due hereunder, and the remainder, if any, shall be applied to the
unpaid principal balance of this Note.


 


Event of Default Defined; Acceleration of Maturity.  If one or more of the following events
(“Events of Default”) shall have occurred:


 


a default in the payment
of all or any part of the principal or interest due under this Note as and when
the same shall become due and payable, at maturity, by declaration as permitted
hereunder, upon acceleration or otherwise;


 


Issuer shall merge or
consolidate with or into any other person or entity, sell, transfer, lease or
otherwise dispose of all or any substantial portion of its assets or adopt a
plan of liquidation or dissolution; provided, however, that Issuer shall
have the right to merge with any other entity without creating an Event of
Default so long as Issuer shall be the surviving entity in any such merger;


 


Issuer shall have
applied for or consented to the appointment of a custodian, receiver, trustee
or liquidator, or other court-appointed fiduciary of all or a substantial part
of its properties; or a custodian, receiver, trustee or liquidator or other
court appointed fiduciary shall have been appointed with the consent of Issuer;
or Issuer is generally not paying its debts as they become due or is insolvent,
or has made a general assignment for the benefits of its creditors; or Issuer
files a voluntary petition in bankruptcy, or a petition or an answer seeking
reorganization or an arrangement with its creditors or seeking to take
advantage of any insolvency law, or an answer admitting the material
allegations of a petition in any bankruptcy, reorganization or


 

















 


insolvency
proceeding or has taken action for the purpose of effecting any of the
foregoing; or if, within sixty (60) days after the commencement of any
proceeding against Issuer seeking any reorganization, rehabilitation,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under the Federal bankruptcy code or similar order under future similar
legislation, the appointment of any trustee, receiver, custodian, liquidator,
or other court-appointed fiduciary of Issuer or of all or any substantial part
of its properties, such order or appointment shall not have been vacated or
stayed on appeal or if, within sixty (60) days after the expiration of any such
stay, such order or appointment shall not have been vacated (all such events,
collectively “Insolvency Events”);


 


Then Holder, by notice
in writing to Issuer (the “Acceleration Notice”), may declare the principal
amount of this Note and all accrued but unpaid interest to be due and payable
immediately, and upon any such declaration the same shall become immediately
due and payable; provided that if an Insolvency Event occurs, the principal
amount of this Note and all accrued but unpaid interest shall become and be
immediately due and payable without any declaration or other act on the part of
the Holder.


 


Security. 
Payment of this Note is secured pursuant to the terms of a separate
Security Agreement dated the date of this Note.


 


Miscellaneous.


 


5.1           Binding Effect;
Assignability.  This Note shall be binding upon Issuer, its
successors and its assigns, and shall inure to the benefit of Holder, its
successors and its assigns.  This Note
is transferable or assignable by the Holder or any transferee of the Holder
only to an Affiliate or a partner, or an heir, administrator, executor or
successor of the Holder.


 


5.2           Governing
Law; Jurisdiction; Venue. 
This Note has been executed in and shall be governed by the laws of the
State of New Jersey.  Issuer irrevocably
submits to the exclusive jurisdiction of the courts of the State of New Jersey
which will be the exclusive jurisdiction for disputes arising under the Note
and the United States District Court for the District of New Jersey for the
purpose of any suit, action, proceeding or judgment relating to or arising out
of this Note.


 


IN WITNESS
WHEREOF, Issuer has caused this Note to be signed in its name by its duly
authorized officer and its corporate seal to be affixed hereto.


 


	
   

  	
   

  	
  INRAD, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/William
  S. Miraglia