8-K

                             UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C.  20549

                               Form 8-K

                            Current Report
     Pursuant to Section 13 or 15(d) of the Securities Act of 1934

Date of Report (Date of earliest event reported)     January 5, 2006
                  --------------------------

                 Dynasil Corporation of America
   ------------------------------------------------------------
  (Exact name of registrant as specified in its charter)

     New Jersey                   000-27503         22-1734088
- ---------------------------       ----------        -----------
(State or other                   (Commission     (IRSEmployer
jurisdiction of incorporation)    File Number)  Identification No.)


            385 Cooper Road, West Berlin, New Jersey 08091
    ------------------------------------------------------------
         (Address of principal executive offices)   (ZIP
Code)

Registrant's telephone number, including area code:  (856) 767-4600

                           Not Applicable
  ------------------------------------------------------------
     (Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions (see
General Instructions A.2. below):

[ ] Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))



Section 1 - Registrant's Business and Operations

Item 1.01. Entry into a Material Definitive Agreement

      On January 5, 2006, Dynasil Corporation of America
("Registrant" or "Dynasil"), entered into two Business Loan
Agreements with Susquehanna Patriot Bank ("Susquehanna")
pursuant to which Dynasil (a) entered into a $449,345.58
principal amount term loan (the "term loan") and (b) a
$200,000.00 principal amount line of credit facility (the
"line of credit"). Proceeds of the term loan were used to
repay and refinance Dynasil's previous mortgage loan with
Premier Bank and proceeds of the line of credit will be used
for general corporate purposes. The two Business Loan
Agreements were entered into at arms-length between Dynasil
and Susquehanna on terms and conditions, including without
limitation, acceleration rights, events of default,
Susquehanna's rights and remedies and similar provisions
that Dynasil believes are customary for loans of this sort.
In connection with the execution and delivery of the
Business Loan Agreements, Dynasil also executed and
delivered to Susquehanna customary forms of promissory
notes, mortgages, security agreements and similar related
documents.

      The term loan provides for repayment over a 10 year
period at a fixed annual interest rate of 7.25% for the
first 5 years, reset to a fixed annual interest rate of 300
basis points over the rate of United States Treasury
Securities at the time of reset, with principal amortization
over a 20 year period. The term loan is secured by (a) a
first mortgage on Dynasil's New Jersey real estate and (b) a
first lien on Dynasil's New Jersey operating assets.

      The line of credit is repayable on demand and carries
an annual interest rate of one-half percent over the
reported prime commercial rate of interest. It is secured by
a second mortgage on Dynasil's New Jersey real estate and a
third lien on Dynasil's New Jersey operating assets.

      Citizens Bank of Massachusetts ("Citizens") has lent
funds to Dynasil's wholly-owned subsidiary, Optometrics
Corporation ("Optometrics"). Dynasil has guaranteed those
loans and the guarantees are collateralized, in part, by the
stock of Optometrics and a second lien position on Dynasil's
New Jersey operating assets. Citizens has agreed to
subordinate its second lien position to permit the
Susquehanna loan facilities to be put into place.
Susquehanna has agreed to modify the standard terms and
conditions of its Business Loan Agreement form to take
account of and not conflict with the terms and provisions of
the Citizens loans to Optometrics, Dynasil's guarantees of
those loans and the dividend payment requirements of
Dynasil's outstanding shares of preferred stock.

Item 1.02 Termination of a Material Definitive Agreement

      The information set forth under Item 1.01 is
incorporated herein. By virtue of the transactions described
under Item 1.01, Dynasil's mortgage loan with Premier Bank
has been repaid and thereby terminated.

                           -2-



Section 2 - Financial Information

Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant

      The information set forth under Item 1.01 is
incorporated herein.

Section 9 - Financial Statements and Exhibits

Item 9.01. Financial Statements And Exhibits.

EXHIBIT INDEX

(c)  Exhibits

   10.10 Business Loan Agreement dated January 5, 2006
between Dynasil Corporation of America and Susquehanna
Patriot Bank relating to $449,345.58 first mortgage loan.
   10.11 Business Loan Agreement dated January 5, 2006
between Dynasil Corporation of America and Susquehanna
Patriot Bank relating to $200,000 line of credit.
   10.12 Promissory Note dated January 5, 2006 between
Dynasil Corporation of America and Susquehanna Patriot Bank
relating to $449,345.58 first mortgage loan.
   10.13 Promissory Note dated January 5, 2006 between
Dynasil Corporation of America and Susquehanna Patriot Bank
relating to $200,000 line of credit.
   10.14 Letter dated January 6, 2006 between Dynasil
Corporation of America and Susquehanna Patriot Bank amending
the Business Loan Agreements to the extent necessary to take
account of certain other facts and circumstances.

                           -3-



                         SIGNATURES

     Pursuant to the requirements of the Securities Exchange
Act  of 1934, the registrant has duly caused this report  to
be  signed  on  its behalf by the undersigned hereunto  duly
authorized.

                         DYNASIL CORPORATION OF AMERICA
                                   (Registrant)

Date:                         By   /s/
                               Craig T. Dunham
                               President

                           -4-

EX-10

                          BUSINESS LOAN
                            AGREEMENT

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

THIS  BUSINESS LOAN AGREEMENT dated January 5, 2006, is made  and
executed  between  Dynasil Corporation of America  A/K/A  Dynasil
Corporation  of America a New Jersey Corporation("Borrower")  and
Susquehanna Patriot  Bank ("Lender") on the following  terms  and
conditions.  Borrower  has received prior commercial  loans  from
Lender or has applied to Lender for a commercial loan or loans or
other  financial  accommodations, including those  which  may  be
described  on any exhibit or schedule attached to this  Agreement
("Loan").  Borrower understands and agrees that: (A) in granting,
renewing,   or  extending  any  Loan,  Lender  is  relying   upon
Borrower's  representations, warranties, and  agreements  as  set
forth in this Agreement; (B) the granting, renewing, or extending
of  any  Loan by Lender at all times shall be subject to Lender's
sole judgment and discretion; and (C) all such Loans shall be and
remain subject to the terms and conditions of this Agreement,

TERM:  This Agreement shall be effective as of January  5,  2006,
and  shall continue in full force and effect until such  time  as
all  of  Borrower's Loans in favor of Lender have  been  paid  in
full,  including principal, interest, costs, expenses, attorneys'
fees,  and  other  fees and charges, or until such  time  as  the
parties may agree in writing to terminate this Agreement.

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make
the  initial  Advance  and  each subsequent  Advance  under  this
Agreement  shall  be  subject  to  the  fulfillment  to  Lender's
satisfaction of all of the conditions set forth in this Agreement
and in the Related Documents.

     Loan  Documents.  Borrower  shall  provide  to  Lender   the
following  documents  for the Loan: (1) the  Note;  (2)  Security
Agreements   granting  to  Lender  security  interests   in   the
Collateral;  (3)  financing statements and  all  other  documents
perfecting Lender's Security Interests; (4) evidence of insurance
as  required below; (5) together with all such Related  Documents
as  Lender  may  require for the Loan; all in form and  substance
satisfactory to Lender and Lender's counsel.

     Borrower's  Authorization. Borrower shall have  provided  in
form  and  substance  satisfactory to Lender  properly  certified
resolutions, duly authorizing the execution and delivery of  this
Agreement,  the  Note  and  the Related Documents.  In  addition,
Borrower    shall   have   provided   such   other   resolutions,
authorizations,  documents  and  instruments  as  Lender  or  its
counsel, may require.

     Payment of Fees and Expenses. Borrower shall have paid to
Lender all fees, charges, and other expenses which are then due
and payable as specified in this Agreement or any Related
Document.

     Representations and Warranties. The representations and
warranties set forth in this Agreement, in the Related Documents,
and in any document or certificate delivered to Lender under this
Agreement are true and correct.

     No Event of Default. There shall not exist at the time of
any Advance a condition which would constitute an Event of
Default under this Agreement or under any Related Document:

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants
to Lender, as of the date of this Agreement, as of the date of
each disbursement of loan proceeds, as of the date of any
renewal, extension or modification of any Loan, and at all times
any Indebtedness exists;

     Organization. Borrower is a corporation for profit which is,
and  at all times shall be, duly organized, validly existing, and
in  good standing under and by virtue of the laws of the State of
New  Jersey. Borrower is duly authorized to transact business  in
all  other  states  in which Borrower is doing  business,  having
obtained   all  necessary  filings,  governmental  licenses   and
approvals  for  each state in which Borrower is  doing  business.
Specifically,  Borrower  is, and at  all  times  shall  be,  duly
qualified  as  a foreign corporation in all states in  which  the
failure to so qualify would have a material adverse effect on its
business or financial condition. Borrower has the full power  and
authority  to own its properties and to transact the business  in
which  it  is presently engaged or presently proposes to  engage.
Borrower maintains an office at 385 Cooper Road, West Berlin,  NJ
08091.  Unless Borrower has designated otherwise in writing,  the
principal office is the office at which Borrower keeps its  books
and  records  including  its records concerning  the  Collateral.
Borrower  will notify Lender prior to any change in the  location
of  Borrower's state of organization or any change in  Borrower's
name.  Borrower shall do all things necessary to preserve and  to
keep  in  full  force  and  effect  its  existence,  rights   and
privileges,  and  shall  comply  with  all  regulations,   rules,
ordinances,  statutes, orders and decrees of any governmental  or
quasi-governmental authority or court applicable to Borrower  and
Borrower's business activities.

     Assumed  Business Names. Borrower has filed or recorded  all
documents  or  filings required by law relating  to  all  assumed
business  names used by Borrower; Excluding the name of Borrower,
the  following  is a complete list of all assumed business  names
under which Borrower does business: None.

     Authorization.   Borrower's   execution,    delivery,    and
performance of this Agreement and all the Related Documents  have
been  duly authorized by all necessary action by Borrower and  do
not  conflict  with, result in a violation of,  or  constitute  a
default  under  (1) any provision of (a) Borrower's  articles  of
incorporation or organization, or bylaws, or (b) any agreement or
other   instrument  binding  upon  Borrower  or  (2)   any   law,
governmental  regulation, court decree, or  order  applicable  to
Borrower or to Borrower's properties.

     Financial   Information.   Each  of   Borrower's   financial
statements  supplied  to  Lender truly and  completely  disclosed
Borrower's  financial condition as of the date of the  statement,
and  there  has  been  no material adverse change  in  Borrower's
financial  condition subsequent to the date of  the  most  recent
financial statement supplied to Lender. Borrower has no  material
contingent  obligations  except as disclosed  in  such  financial
statements.

     Legal Effect. This Agreement constitutes, and any instrument
or  agreement  Borrower is required to give under this  Agreement
when   delivered  will  constitute  legal,  valid,  and   binding
obligations   of   Borrower  enforceable  against   Borrower   in
accordance with their respective terms.

     Properties. Except as contemplated by this Agreement  or  as
previously  disclosed in Borrower's financial  statements  or  in
writing  to  Lender  and as accepted by Lender,  and  except  for
property  tax  liens  for taxes not presently  due  and  payable,
Borrower  owns and has good title to all of Borrower's properties
free  and  clear of all Security Interests,. and has not executed
any  security documents or financing statements relating to  such
properties. All of Borrower's properties are titled in Borrower's
legal  name,  and  Borrower has not used  or  filed  a  financing
statement  under any other name for at least the  last  five  (5)
years.

     Hazardous   Substances.   Except   as   disclosed   to   and
acknowledged  by  Lender  in  writing,  Borrower  represents  and
warrants  that: (1) During the period of Borrower's ownership  of
the  Collateral, there has been no use, generation,  manufacture,
storage,  treatment, disposal, release or threatened  release  of
any  Hazardous Substance by any person on, under, about  or  from
any  of  the  Collateral. (2) Borrower has no  knowledge  of,  or
reason to believe that there has been (a) any breach or violation
of  any Environmental Laws; (b) any use, generation, manufacture,
storage,  treatment, disposal, release or threatened  release  of
any  Hazardous Substance on, under, about or from the  Collateral
by any prior owners or occupants of any of the Collateral; or (c)
any  actual or threatened litigation or claims of any kind by any
person  relating  to such matters. (3) Neither Borrower  nor  any
tenant, contractor, agent or other authorized user of any of  the
Collateral  shall  use,  generate,  manufacture,  store,   treat,
dispose of or release any Hazardous Substance on, under, about or
from  any  of  the  Collateral; and any such  activity  shall  be
conducted  in compliance with all applicable federal, state,  and
local   laws,  regulations,  and  ordinances,  including  without
limitation all Environmental Laws. Borrower authorizes Lender and
its  agents to enter upon the Collateral to make such inspections
and  tests as Lender may deem appropriate to determine compliance
of  the  Collateral  with  this section  of  the  Agreement.  Any
inspection's  or  tests  made by Lender shall  be  at  Borrower's
expense and for Lender's purposes only and shall not be construed
to  create any responsibility or liability on the part of  Lender
to  Borrower  or  to  any other person. The  representations  and
warranties contained herein are based on Borrower's due diligence
in investigating the Collateral for hazardous waste and Hazardous
Substances.  Borrower hereby (1) releases and waives  any  future
claims against Lender for indemnity or contribution in the  event
Borrower becomes liable for cleanup or other costs under any such
laws,  and  (2)  agrees  to indemnify and  hold  harmless  Lender
against   any  and  all  claims,  losses,  liabilities,  damages,
penalties,  and expenses which Lender may directly or  indirectly
sustain or suffer resulting from a breach of this section of  the
Agreement   or   as   a  consequence  of  any  use,   generation,
manufacture, storage, disposal, release or threatened release  of
a  hazardous waste or substance on the Collateral. The provisions
of  this  section of the Agreement, including the  obligation  to
indemnify, shall survive the payment of the Indebtedness and  the
termination,  expiration or satisfaction of  this  Agreement  and
shall not be affected by Lender's acquisition of any interest  in
any of the Collateral, whether by foreclosure or otherwise.

     Litigation  and Claims. No litigation, claim; investigation,
administrative proceeding or similar action (including those  for
unpaid  taxes) against Borrower is pending or threatened, and  no
other  event  has occurred which may materially adversely  affect
Borrower's   financial  condition  or  properties,   other   than
litigation,  claims,  or other events, if  any,  that  have  been
disclosed to and acknowledged by Lender in writing.

     Taxes.   To  the  best  of  Borrower's  knowledge,  all   of
Borrower's  tax returns and reports that are or were required  to
be  filed, have been filed, and all taxes, assessments and  other
governmental  charges  have  been  paid  in  full,  except  those
presently being or to be contested by Borrower in good  faith  in
the  ordinary course of business and for which adequate  reserves
have been provided.


                     BUSINESS LOAN AGREEMENT

   Loan No: 20001325834             (Continued)   Page 2

Lien Priority. Unless otherwise previously disclosed to Lender in
writing,  Borrower has not entered into or granted  any  Security
Agreements, or permitted the filing or attachment of any Security
Interests  on  or  affecting any of the  Collateral  directly  or
indirectly  securing repayment of Borrower's Loan and Note,  that
would  be  prior or that may in any way be superior  to  Lender's
Security Interests and rights in and to such Collateral.

Binding Effect. This Agreement, the Note, all Security Agreements
(if  any), and all Related Documents are binding upon the signers
thereof,  as  well as upon their successors, representatives  and
assigns,  and  are legally enforceable in accordance  with  their
respective terms.

    AFFIRMATIVE COVENANTS. Borrower covenants and agrees with
    Lender that, so long as this Agreement remains in effect,
                         Borrower will:

Notices  of  Claims  and Litigation. Promptly  inform  Lender  in
writing  of  (1)  all  material  adverse  changes  in  Borrower's
financial  condition,  and (2) all existing  and  all  threatened
litigation, claims, investigations, administrative proceedings or
similar  actions affecting Borrower or any Guarantor which  could
materially  affect  the financial condition of  Borrower  or  the
financial condition of any Guarantor.

 Financial Records. Maintain its books and records in accordance
with GAAP, applied on a consistent basis, and permit Lender to
examine and audit Borrower's books and records at all reasonable
times.

 Financial Statements. Furnish Lender with the following;
Annual Statements. As soon as available, but in no event later
than forty-five (45) days after the end of each fiscal year,
Borrower's balance sheet and income statement for the year ended,
compiled by a certified public accountant satisfactory to Lender.
Interim Statements.  As soon as available, but in no event later
than thirty (30) days after the end of each fiscal quarter,
Borrower's balance sheet and profit and loss statement for the
period ended, prepared by Borrower.

Tax Returns. As soon as available, but in no event later than
thirty (30) days after the applicable filing date for the tax
reporting period ended, Federal and other governmental tax
returns, prepared by a tax professional satisfactory to Lender.
All financial reports required to be provided under this
Agreement shall be prepared in accordance with GAAP, applied on a
consistent basis, and certified by Borrower as being true and
correct.

Additional Information. Furnish such additional information and
statements, as Lender may request from time to time.

Financial Covenants and Ratios.  Comply with the following
covenants and ratios:

     Minimum Income and Cash flow Requirements.  Other Cash Flow
requirements are as follows:  Maintain a minimum ratio of Cash
Flow/Current Maturity (LTD) in excess of 1.300 to 1.000.  The
ratio "Cash Flow / Current Maturity" means Borrower's Net Income
plus Deprecation plus Amortization plus Interest Expense minus
Distributions / Borrower's prior period Current Portion of Long
Term Indebtedness plus Interest Expense.  This coverage will be
evaluated as of year-end.

Tangible Net Worth Requirements.  Borrower shall comply with the
following net worth ratio requirements:

      Debt / Worth Ratio.  Maintain a ratio of Debt / Worth not
in excess of 3.000 to 1.000.  The ratio "Debt / Worth means
Borrower's Total Liabilities divided by Borrower's Tangible Net
Worth.  This leverage ratio will be evaluated as of year-end.

Except as provided above, all computations made to determine
compliance with the requirements contained in this paragraph
shall be made in accordance with generally accepted accounting
principles, applied on a consistent basis, and certified by
Borrower as being true and correct.

Insurance.  Maintain  fire  and  other  risk  insurance,   public
liability  insurance,  and such other  insurance  as  Lender  may
require with respect to Borrower's properties and operations,  in
form,  amounts, coverages and with insurance companies acceptable
to  Lender.  Borrower, upon request of Lender,  will  deliver  to
Lender  from  time  to  time  the  policies  or  certificates  of
insurance  in form satisfactory to Lender, including stipulations
that  coverages  will not be cancelled or diminished  without  at
least  fifteen  (15) days prior written notice  to  Lender.  Each
insurance policy also shall include an endorsement providing that
coverage  in favor of Lender will not be impaired in any  way  by
any act, omission or default of Borrower or any other person.  In
connection  with  all policies covering assets  in  which  Lender
holds  or  is offered a security interest for the Loans, Borrower
will  provide  Lender with such lender's loss  payable  or  other
endorsements as Lender may require.

Insurance  Reports.  Furnish to Lender, upon request  of  Lender,
reports   on   each  existing  insurance  policy   showing   such
information  as Lender may reasonably request, including  without
limitation  the following: (1) the name of the insurer;  (2)  the
risks  insured; (3) the amount of the policy; (4) the  properties
insured;  (5)  the then current property values on the  basis  of
which  insurance has been obtained, and the manner of determining
those  values;  and  (6) the expiration date of  the  policy.  In
addition,  upon  request of Lender (however not more  often  than
annually),   Borrower   will   have  an   independent   appraiser
satisfactory to Lender determine, as applicable, the actual  cash
value  or  replacement cost of any Collateral. The cost  of  such
appraisal shall be paid by Borrower.

Other Agreements. Comply with all terms and conditions of all
other agreements, whether now or hereafter existing, between
Borrower and any other party and notify Lender immediately in
writing of any default in connection with any other such
agreements.

Loan Proceeds. Use all Loan proceeds solely for Borrower's
business operations, unless specifically consented to the
contrary by Lender in writing.

Taxes,  Charges and Liens. Pay and discharge when due all of  its
indebtedness  and obligations, including without  limitation  a11
assessments,  taxes, governmental charges, levies and  liens,  of
every  kind  and nature, imposed upon Borrower or its properties,
income,  or  profits, prior to the date on which penalties  would
attach,  and  all lawful claims that, if unpaid, might  become  a
lien  or  charge  upon any of Borrower's properties,  income,  or
profits.

    Performance. Perform and comply, in a timely manner, with all
    terms,   conditions,  and  provisions  set  forth   in   this
    Agreement,  in  the  Related  Documents,  and  in  all  other
    instruments  and  agreements  between  Borrower  and  Lender.
    Borrower  shall notify Lender immediately in writing  of  any
    default in connection with any agreement.

Operations-  Maintain  executive and  management  personnel  with
substantially  the  same qualifications  and  experience  as  the
present  executive  and  management  personnel;  provide  written
notice  to  Lender  of  any  change in executive  and  management
personnel;  conduct  its business affairs  in  a  reasonable  and
prudent manner.

Environmental   Studies.  Promptly  conduct  and   complete,   at
Borrower's  expense, all such investigations, studies,  samplings
and  testings  as may be requested by Lender or any  governmental
authority  relative to any substance, or any waste or  by-product
of  any substance defined as toxic or a hazardous substance under
applicable federal, state, or local law, rule, regulation,  order
or directive, at or affecting any property or any facility owned,
leased or used by Borrower.

Compliance with Governmental Requirements. Comply with all  laws,
ordinances, and regulations, now or hereafter in effect,  of  all
governmental authorities applicable to the conduct of  Borrower's
properties,  businesses  and  operations;  and  to  the  use   or
occupancy  of  the Collateral, including without limitation,  the
Americans  With  Disabilities Act. Borrower may contest  in  good
faith  any  such  law,  ordinance,  or  regulation  and  withhold
compliance during any proceeding, including appropriate  appeals,
so long as Borrower has notified Lender in writing prior to doing
so  and  so long as, in Lender's sole opinion, Lender's interests
in  the  Collateral  are  not  jeopardized.  Lender  may  require
Borrower  to post adequate security or a surety bond,  reasonably
satisfactory to Lender, to protect Lender's interest.

Inspection.  Permit  employees  or  agents  of  Lender   at   any
reasonable time to inspect any and all Collateral for the Loan or
Loans  and  Borrower's other properties and to examine  or  audit
Borrower's  books, accounts, and records and to make  copies  and
memoranda of Borrower's books, accounts, and records. If Borrower
now  or  at  any time hereafter maintains any records  (including
without   limitation  computer  generated  records  and  computer
software  programs  for the generation of such  records)  in  the
possession  of a third party, Borrower, upon request  of  Lender,
shall  notify  such party to permit Lender free  access  to  such
records at all reasonable times and to provide Lender with copies
of any records it may request, all at Borrower's expense.
Compliance  Certificates. Unless waived  in  writing  by  Lender,
provide Lender at least annually, with a certificate executed  by
Borrower's  chief financial officer, or other officer  or  person
acceptable  to  Lender, certifying that the  representations  and
warranties set forth in this Agreement are true and correct as of
the  date of the certificate and further certifying that,  as  of
the  date  of  the certificate, no Event of Default exists  under
this Agreement.

Environmental  Compliance and Reports. Borrower shall  comply  in
all  respects with any and all Environmental Laws; not  cause  or
permit  to  exist, as a result of an intentional or unintentional
action or omission on Borrower's part or on the part of any third
party,  on  property  owned  and/or  occupied  by  Borrower,  any
environmental   activity  where  damage   may   result   to   the
environment,  unless such environmental activity is  pursuant  to
and  in compliance with the conditions of a permit issued by  the
appropriate  federal,  state or local  governmental  authorities;
shall  furnish to Lender promptly and in any event within  thirty
(30)  days  after receipt thereof a copy of any notice,  summons,
lien, citation, directive, letter or other communication from any
governmental agency or instrumentality concerning any intentional
or  unintentional  action  or  omission  on  Borrower's  part  in
connection with any environmental activity whether or  not  there
is damage to the environment and/or other natural resources.
Additional  Assurances. Make, execute and deliver to Lender  such
promissory notes, mortgages, deeds of trust, security agreements,
assignments,  financing  statements, instruments,  documents  and
other  agreements  as  Lender  or its  attorneys  may  reasonably
request  to  evidence and secure the Loans  and  to  perfect  all
Security Interests.

LENDER'S  EXPENDITURES. If any action or proceeding is  commenced
that  would materially affect Lender's interest in the Collateral
or  if  Borrower  fails  to comply with  any  provision  of  this
Agreement or any Related Documents, including but not limited  to
Borrower's  failure  to discharge or pay  when  due  any  amounts
Borrower is required to discharge or pay under this Agreement  or
any Related Documents, Lender on Borrower's behalf may (but shall
not   be  obligated  to)  take  any  action  that  Lender   deems
appropriate, including but not limited to discharging  or  paying
all  taxes,  liens,  security interests, encumbrances  and  other
claims, at any time levied or placed on any Collateral and paying
all   costs   for   insuring,  maintaining  and  preserving   any
Collateral. All such expenditures incurred or paid by Lender  for
such  purposes will then bear interest at the rate charged  under
the Note from the date incurred or paid by Lender to the date  of
repayment  by Borrower. All such expenses will become a  part  of
the Indebtedness and, at Lender's option, will (A) be payable  on
demand;  (B)  be  added  to  the  balance  of  the  Note  and  be
apportioned among and be payable with any installment payments to
become due during either (1) the term of any applicable insurance
policy;  or (2) the remaining term of the Note; or (C) be treated
as  a balloon payment which will be due and payable at the Note's
maturity.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender
that while this Agreement is in effect, Borrower shall not,
without the prior written consent of Lender;


                     BUSINESS LOAN AGREEMENT

   Loan No: 20001325834             (Continued)   Page 3


Indebtedness and Liens. (1) Except for trade debt incurred in the
normal course of business and indebtedness to Lender contemplated
by  this  Agreement,  create, incur or  assume  indebtedness  for
borrowed  money,  including capital leases, (2)  sell,  transfer,
mortgage, assign, pledge, lease, grant a security interest in, or
encumber any of Borrower's assets (except as allowed as Permitted
Liens),  or  (3)  sell with recourse any of Borrower's  accounts,
except to Lender.

Continuity  of Operations. (1) Engage in any business  activities
substantially different than those in which Borrower is presently
engaged,   (2)  cease  operations,  liquidate,  merge,  transfer,
acquire  or consolidate with any other entity, change  its  name,
dissolve  or  transfer or sell Collateral  out  of  the  ordinary
course of business, or (3) pay any dividends on Borrower's  stock
(other  than  dividends payable in its stock), provided,  however
that  notwithstanding the foregoing, but only so long as no Event
of  Default  has occurred and is continuing or would result  from
the  payment  of  dividends,  if  Borrower  is  a  "Subchapter  S
Corporation" (as defined in the Internal Revenue Code of 1986, as
amended),  Borrower may pay cash dividends on its  stock  to  its
shareholders from time to time in amounts necessary to enable the
shareholders  to pay income taxes and make estimated  income  tax
payments to satisfy their liabilities under federal and state law
which  arise  solely  from  their status  as  Shareholders  of  a
Subchapter S Corporation because of their ownership of shares  of
Borrower's  stock,  or  purchase  or  retire  any  of  Borrower's
outstanding   shares   or  alter  or  amend  Borrower's   capital
structure.

Loans,  Acquisitions  and Guaranties.  (1)  Loan,  invest  in  or
advance  money  or  assets  to any other  person,  enterprise  or
entity, (2) purchase, create or acquire any interest in any other
enterprise  or entity, or (3) incur any obligation as  surety  or
guarantor other than in the ordinary course of business.
Agreements. Borrower will not enter into any agreement containing
any provisions which would be violated or breached by the
performance of Borrower's obligations under this Agreement or in
connection herewith.

CESSATION OF ADVANCES. If Lender has made any commitment to  make
any  Loan to Borrower, whether under this Agreement or under  any
other  agreement, Lender shall have no obligation  to  make  Loan
Advances  or  to disburse Loan proceeds if: (A) Borrower  or  any
Guarantor is in default under the terms of this Agreement or  any
of  the Related Documents or any other agreement that Borrower or
any  Guarantor  has with Lender; (B) Borrower  or  any  Guarantor
dies,  becomes incompetent or becomes insolvent, files a petition
in  bankruptcy or similar proceedings, or is adjudged a bankrupt;
(C)   there  occurs  a  material  adverse  change  in  Borrower's
financial condition, in the financial condition of any Guarantor,
or  in the value of any Collateral securing any Loan; or (D)  any
Guarantor seeks, claims or otherwise attempts to limit, modify or
revoke  such Guarantor's guaranty of the Loan or any  other  loan
with  Lender; or (E) Lender in good faith deems itself  insecure,
even though no Event of Default shall have occurred.

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.

DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:

Payment Default. Borrower fails to make any payment when due
under the Loan.

Other  Defaults. Borrower fails to comply with or to perform  any
other  term, obligation, covenant or condition contained in  this
Agreement 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  or  any  Grantor's  property  or  Borrower's  or  any
Grantor's  ability to repay the Loans or perform their respective
obligations under this Agreement 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 Agreement 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.

Defective Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect (including
failure of any collateral document to create a valid and
perfected security interest or lien) at any time and for any
reason.

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 of any of the Indebtedness or  any
Guarantor dies or becomes incompetent, or revokes or disputes the
validity   of,   or   liability  under,  any  Guaranty   of   the
Indebtedness.  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 the Loan is impaired,

Insecurity. Lender in good faith believes itself insecure.

Right  to  Cure.  If  any  default,  other  than  a  default   on
Indebtedness, is curable and if Borrower or Grantor, as the  case
may  be, has not been given a notice of a similar default  within
the preceding twelve (12) months, it may be cured if Borrower  or
Grantor, as the case may be, after receiving written notice  from
Lender  demanding  cure of such default:  (1)  cure  the  default
within  fifteen (15) days; or (2) if the cure requires more  than
fifteen (15) days, immediately initiate steps which Lender  deems
in  Lender's sole discretion to be sufficient to cure the default
and thereafter continue and complete all reasonable and necessary
steps  sufficient  to produce compliance as  soon  as  reasonably
practical.

EFFECT  OF  AN  EVENT OF DEFAULT. If any Event of  Default  shall
occur,  except where otherwise provided in this Agreement or  the
Related  Documents,  all commitments and  obligations  of  Lender
under  this  Agreement  or the Related  Documents  or  any  other
agreement immediately will terminate (including any obligation to
make  further Loan Advances or disbursements), and,  at  Lender's
option, all Indebtedness immediately will become due and payable,
all  without notice of any kind to Borrower, except that  in  the
case  of  an  Event  of  Default of the  type  described  in  the
"Insolvency"  subsection  above,  such  acceleration   shall   be
automatic  and not optional. In addition, Lender shall  have  all
the  rights  and  remedies provided in the Related  Documents  or
available  at  law, in equity, or otherwise.  Except  as  may  be
prohibited by applicable law, all of Lender's rights and remedies
shall   be   cumulative  and  may  be  exercised  singularly   or
concurrently. Election by Lender to pursue any remedy  shall  not
exclude  pursuit  of any other remedy, and an  election  to  make
expenditures  or  to  take  action to perform  an  obligation  of
Borrower  or  of any Grantor shall not affect Lender's  right  to
declare a default and to exercise its rights and remedies.

SHARING OF ACCOUNT INFORMATION :  The Lender and the companies in
the Susquehanna Bancshare, Inc.  family offer a full range of
valuable financial services.  We can better serve your needs by
sharing your account information within our corporate family.
The Borrower authorizes the Lender and the companies that
comprise the Susquehanna Bancshares, Inc. corporate family to
disclose to any of Susquehanna Bancshares, Inc. existing or
future subsidiaries, affiliates, and assigns, and to any
potential assignee or transferee, any information (including
information received from third persons) in or relating to (i)
the Borrower, (ii) this loan, (iii) any other loans you have
previously obtained or may from time to time obtain from us or
any of the Susquehanna Bancshares, Inc family of companies in the
future, and (iv) any other accounts of any type or nature and
other relationship the Borrower has previously established or may
from time to time establish with any of the Susquehanna
Bancshares, Inc. family of companies in the future.

DEPOSIT RELATIONSHIP.  Borrower shall establish and maintain
their primary New Jersey deposit account with Lender during the
life of the loan.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions
are a part of this Agreement:

Amendments. This Agreement, together with any Related  Documents,
constitutes the entire understanding and agreement of the parties
as  to the matters set forth in this Agreement. No alteration  of
or amendment to this Agreement shall be effective unless given in
writing  and signed by the party or parties sought to be  charged
or bound by the alteration or amendment.

Attorneys' Fees; Expenses, Borrower agrees to pay upon demand all
of  Lender's  costs  and expenses, including Lender's  attorneys'
fees and Lender's legal expenses, incurred in connection with the
enforcement  of  this Agreement. Lender may hire or  pay  someone
else  to help enforce this Agreement, and Borrower shall pay  the
costs  and  expenses  of  such enforcement.  Costs  and  expenses
include  Lender's attorneys' fees and legal expenses  whether  or
not  there  is  a  lawsuit, including attorneys' fees  and  legal
expenses for bankruptcy proceedings (including efforts to  modify
or  vacate  any automatic stay or injunction), appeals,  and  any
anticipated  post-judgment  collection  services.  Borrower  also
shall  pay  all court costs and such additional fees  as  may  be
directed by the court.

Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or
define the provisions of this Agreement.

Consent  to  Loan Participation. Borrower agrees and consents  to
Lender's sale or transfer, whether now or later, of one  or  more
participation  interests in the Loan to one or  more  purchasers,
whether  related  or  unrelated to Lender.  Lender  may  provide,
without any limitation whatsoever, to any one or more purchasers,
or  potential purchasers, any information or knowledge Lender may
have  about  Borrower or about any other matter relating  to  the
Loan,  and Borrower hereby waives any rights to privacy  Borrower
may  have  with  respect  to such matters. Borrower  additionally
waives any and all notices of sale of participation interests, as
well  as  all  notices  of any repurchase of  such  participation
interests. Borrower also agrees that the purchasers of  any  such
participation interests will be considered as the absolute owners
of  such  interests  in the Loan and will  have  all  the  rights
granted under the participation agreement or agreements governing
the sale of such participation interests. Borrower further waives
all  rights  of offset or counterclaim that it may  have  now  or
later  against  Lender  or  against  any  purchaser  of  such   a
participation  interest and unconditionally  agrees  that  either
Lender or such purchaser may enforce Borrower's obligation  under
the  Loan irrespective of the failure or insolvency of any holder
of  any  interest in the Loan. Borrower further agrees  that  the
purchaser  of  any such participation interests may  enforce  its
interests  irrespective of any personal claims or  defenses  that
Borrower may have against Lender.

Governing Law. This Agreement will be governed by federal law
applicable to the Lender 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 Agreement 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.

No  Waiver  by Lender. Lender shall not be deemed to have  waived
any  rights under this Agreement unless such waiver is  given  in
writing and signed by Lender. No delay or omission on the part of
Lender in exercising any right shall operate as a waiver of  such
right  or  any other right. A waiver by Lender of a provision  of
this  Agreement  shall not prejudice or constitute  a  waiver  of
Lender's  right otherwise to demand strict compliance  with  that
provision  or  any  other provision of this Agreement.  No  prior
waiver  by  Lender, nor any course of dealing between Lender  and
Borrower,  or between Lender and any Grantor, shall constitute  a
waiver  of any of Lender's rights or of any of Borrower's or  any
Grantor's obligations as to any future transactions. Whenever the
consent  of Lender is required under this Agreement, the granting
of  such  consent by Lender in any instance shall not  constitute
continuing consent to subsequent instances where such consent  is
required and in all cases such consent may be granted or withheld
in the sole discretion of Lender.

Notices.  Any  notice required to be given under  this  Agreement
shall  be  given in writing, and shall be effective when actually
delivered,  when  actually  received  by  telefacsimile   (unless
otherwise  required  by law), when deposited  with  a  nationally
recognized  overnight courier, or, if mailed, when  deposited  in
the  United  States mail, as first class, certified or registered
mail  postage prepaid, directed to the addresses shown  near  the
beginning of this Agreement. Any party may change its address for
notices  under this Agreement by giving formal written notice  to
the  other parties, specifying that the purpose of the notice  is
to  change  the  party's address. For notice  purposes,  Borrower
agrees to keep Lender informed at all times of Borrower's current
address.  Unless otherwise provided or required by law, if  there
is  more  than  one Borrower, any notice given by Lender  to  any
Borrower is deemed to be notice given to all Borrowers.

No  Joint  Venture or Partnership.  The relationship of  Borrower
and  Lender created by this Agreement is strictly that of debtor-
creditor,  and nothing contained in this Agreement or in  any  of
the  Related Documents shall be deemed or construed to  create  a
partnership or joint venture between Borrower and Lender.
Severability.  If  a  court of competent jurisdiction  finds  any
provision   of  this  Agreement  to  be  illegal,   invalid,   or
unenforceable as to any circumstance, that finding shall not make
the offending provision illegal, invalid, or unenforceable as  to
any  other  circumstance.  If feasible, the  offending  provision
shall be considered modified so that it becomes legal, valid  and
enforceable. If the offending provision cannot be so modified, it
shall be considered deleted from this Agreement. Unless otherwise
required  by law, the illegality, invalidity, or unenforceability
of any provision of this Agreement shall not affect the legality,
validity  or  enforceability  of  any  other  provision  of  this
Agreement.

Subsidiaries  and  Affiliates  of Borrower.  To  the  extent  the
context of any provisions of this Agreement makes it appropriate,
including  without  limitation any  representation,  warranty  or
covenant,  the  word "Borrower" as used in this  Agreement  shall
include   all   of   Borrower's  subsidiaries   and   affiliates.
Notwithstanding  the  foregoing however, under  no  circumstances
shall  this Agreement be construed to require Lender to make  any
Loan  or  other  financial accommodation  to  any  of  Borrower's
subsidiaries or affiliates.

Successors  and Assigns. All covenants and agreements  by  or  on
behalf  of  Borrower contained in this Agreement or  any  Related
Documents shall bind Borrower's successors and assigns and  shall
inure  to  the benefit of Lender and its successors and  assigns.
Borrower  shall not, however, have the right to assign Borrower's
rights under this Agreement or any interest therein, without  the
prior written consent of Lender.

Survival  of Representations and Warranties. Borrower understands
and  agrees  that in making the Loan, Lender is  relying  on  all
representations, warranties, and covenants made  by  Borrower  in
this   Agreement  or  in  any  certificate  or  other  instrument
delivered  by  Borrower  to Lender under this  Agreement  or  the
Related Documents. Borrower further agrees that regardless of any
investigation   made   by   Lender,  all  such   representations,
warranties and covenants will survive the making of the Loan  and
delivery  to Lender of the Related Documents, shall be continuing
in  nature, and shall remain in full force and effect until  such
time  as Borrower's Indebtedness shall be paid in full, or  until
this  Agreement shall be terminated in the manner provided above,
whichever is the last to occur.

  Time is of the Essence. Time is of the essence in the
  performance of this Agreement.

DEFINITIONS. The following capitalized words and terms shall have
the  following  meanings  when used  in  this  Agreement.  Unless
specifically  stated  to the contrary, all references  to  dollar
amounts  shall mean amounts in lawful money of the United  States
of  America.  Words and terms used in the singular shall  include
the  plural,  and the plural shall include the singular,  as  the
context  may  require. Words and terms not otherwise  defined  in
this  Agreement shall have the meanings attributed to such  terms
in  the  Uniform Commercial Code. Accounting words and terms  not
otherwise  defined  in  this Agreement shall  have  the  meanings
assigned to them in accordance with generally accepted accounting
principles as in effect on the date of this Agreement:

Advance. The word "Advance" means a disbursement of Loan funds
made, or to be made, to Borrower or on Borrower's behalf on a
line of credit or multiple advance basis under the terms and
conditions of this Agreement.

Agreement. The word "Agreement" means this Business Loan
Agreement, as this Business Loan Agreement may be amended or
modified from time to time, together with all exhibits and
schedules attached to this Business Loan Agreement from time to
time.

Borrower. The word "Borrower" means Dynasil Corporation of
America A/K/A  Dynasil Corporation of America a NJ Corporation
and includes all co-signers and co-makers signing the Note and
all their successors and assigns.

Collateral. The word "Collateral" means all property  and  assets
granted  as  collateral  security for a  Loan,  whether  real  or
personal   property,  whether  granted  directly  or  indirectly,
whether granted now or in the future; and whether granted in  the
form  of a security interest, mortgage, collateral mortgage, deed
of  trust,  assignment,  pledge; crop pledge,  chattel  mortgage,
collateral  chattel  mortgage,  chattel  trust,  factor's   lien,
equipment  trust, conditional sale, trust receipt, lien,  charge,
lien  or  title retention contract, lease or consignment intended
as  a  security  device, or any other security or  lien  interest
whatsoever, whether created by law, contract, or otherwise.

Environmental Laws. The words "Environmental Laws" mean  any  and
all state, federal and local statutes, regulations and ordinances
relating  to  the protection of human health or the  environment,
including  without  limitation  the  Comprehensive  Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C.   Section  9601,  et  seq.  (  "CERCLA"),  the   Superfund
Amendments  and Reauthorization Act of 1986, Pub. L.  No.  99-499
("SARA"),  the Hazardous Materials Transportation Act, 49  U.S.C.
Section  1801,  et seq., the Resource Conservation  and  Recovery
Act,  42  U.S.C. Section 6901, et seq., the New Jersey Industrial
Site  Recovery Act, NJSA Section 13:1K-6 ("IRSA"), the New Jersey
Spill Compensation and Control Act, NJSA 58:10-23.11, et seq.  or
other  applicable  state or federal laws, rules,  or  regulations
adopted pursuant thereto.

Event of Default. The words "Event of Default" mean any of the
events of default set forth in this Agreement in the default
section of this Agreement.

GAAP. The word "GAAP" means generally accepted accounting
principles:

Grantor. The word "Grantor" means each and all of the persons or
entities granting a Security Interest in any Collateral for the
Loan, including without limitation all Borrowers granting such a
Security Interest.
Guarantor. The word "Guarantor" means any guarantor, surety, or
accommodation party of any or all of the Loan.

Guaranty. The word "Guaranty" means the guaranty from Guarantor
to Lender, including without limitation a guaranty of all or part
of the Note.

Hazardous  Substances.  The  words  "Hazardous  Substances"  mean
materials  that,  because  of  their quantity,  concentration  or
physical,  chemical or infectious characteristics, may  cause  or
pose  a  present  or  potential hazard to  human  health  or  the
environment  when improperly used, treated, stored, disposed  of,
generated,  manufactured, transported or otherwise  handled.  The
words  "Hazardous  Substances" are used in  their  very  broadest
sense  and  include without limitation any and all  hazardous  or
toxic  substances,  materials or waste as defined  by  or  listed
under  the  Environmental Laws. The term  "Hazardous  Substances"
also  includes, without limitation, petroleum and  petroleum  by-
products or any fraction thereof and asbestos.

Indebtedness.  The  word  "Indebtedness" means  the  indebtedness
evidenced  by  the  Note  or  Related  Documents,  including  all
principal  and interest together with all other indebtedness  and
costs  and expenses for which Borrower is responsible under  this
Agreement or under any of the Related Documents.
Lender. The word "Lender" means Susquehanna Patriot Bank, its
successors and assigns.

Loan.  The  word  "Loan" means any and all  loans  and  financial
accommodations from Lender to Borrower whether now  or  hereafter
existing,  and  however evidenced, including  without  limitation
those  loans  and  financial accommodations described  herein  or
described  on any exhibit or schedule attached to this  Agreement
from time to time.

Note.  The  word  "Note"  means  the  Note  executed  by  Dynasil
Corporation of America A/K/A Dynasil Corporation of America a New
Jersey  Corporation in the principal amount of $449,345.58  dated
January  5,  2006, together with all renewals of, extensions  of,
modifications  of,  refinancings  of,  consolidations   of,   and
substitutions for the note or credit agreement.

Permitted  Liens. The words "Permitted Liens" mean (1) liens  and
security  interests  securing Indebtedness owed  by  Borrower  to
Lender;  (2)  liens  for taxes, assessments, or  similar  charges
either not yet due or being contested in good faith; (3) liens of
materialmen, mechanics, warehousemen, or carriers, or other  like
liens  arising  in the ordinary course of business  and  securing
obligations  which  are not yet delinquent;  (4)  purchase  money
liens  or  purchase  money  security interests  upon  or  in  any
property  acquired or held by Borrower in the ordinary course  of
business to secure indebtedness outstanding on the date  of  this
Agreement or permitted to be incurred under the paragraph of this
Agreement titled "Indebtedness and Liens"; (5) liens and security
interests  which,  as  of the date of this Agreement,  have  been
disclosed to and approved by the Lender in writing; and (6) those
liens and security interests which in the aggregate constitute an
immaterial and insignificant monetary amount with respect to  the
net value of Borrower's assets.

Related  Documents.  The  words  "Related  Documents"  mean   all
promissory    notes,   credit   agreements,   loan    agreements,
environmental   agreements,  guaranties,   security   agreements,
mortgages,  deeds of trust, security deeds, collateral mortgages,
and  all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Loan.

Security  Agreement.  The  words "Security  Agreement"  mean  and
include  without limitation any agreements, promises,  covenants,
arrangements, understandings or other agreements, whether created
by   law,   contract,   or   otherwise,  evidencing,   governing,
representing, or creating a Security Interest.

Security  Interest, The words "Security Interest"  mean,  without
limitation, any and all types of collateral security, present and
future,  whether  in  the  form of a lien,  charge,  encumbrance,
mortgage, deed of trust, security deed, assignment, pledge,  crop
pledge,  chattel  mortgage, collateral chattel mortgage,  chattel
trust,  factor's lien, equipment trust, conditional  sale,  trust
receipt,  lien or title retention contract, lease or  consignment
intended  as  a  security device, or any other security  or  lien
interest   whatsoever  whether  created  by  law,  contract,   or
otherwise.

Tangible  Net  Worth.   The  words  "Tangible  Net  Worth"   mean
Borrower's  total assets excluding all intangible  assets  (i.e.,
goodwill,   trademarks,   patents,   copyrights,   organizational
expenses,  and similar intangible items, but including leaseholds
and leasehold improvements) less total debt.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS
BUSINESS LOAN AGREEMENT IS DATED JANUARY 5, 2006.


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


Lender:

SUSQUEHANNA PATRIOT BANK

By:  /s/ David Slobotkin
/s/  Authorized Signer

EX-10

                          BUSINESS LOAN
                            AGREEMENT

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


THIS  BUSINESS LOAN AGREEMENT dated January 5, 2006, is made  and
executed  between  Dynasil Corporation of America  A/K/A  Dynasil
Corporation  of America a New Jersey Corporation("Borrower")  and
Susquehanna Patriot  Bank ("Lender") on the following  terms  and
conditions.  Borrower  has received prior commercial  loans  from
Lender or has applied to Lender for a commercial loan or loans or
other  financial  accommodations, including those  which  may  be
described  on any exhibit or schedule attached to this  Agreement
("Loan").  Borrower understands and agrees that: (A) in granting,
renewing,   or  extending  any  Loan,  Lender  is  relying   upon
Borrower's  representations, warranties, and  agreements  as  set
forth in this Agreement; (B) the granting, renewing, or extending
of  any  Loan by Lender at all times shall be subject to Lender's
sole judgment and discretion; and (C) all such Loans shall be and
remain subject to the terms and conditions of this Agreement,

TERM:  This Agreement shall be effective as of January  5,  2006,
and  shall continue in full force and effect until such  time  as
all  of  Borrower's Loans in favor of Lender have  been  paid  in
full,  including principal, interest, costs, expenses, attorneys'
fees,  and  other  fees and charges, or until such  time  as  the
parties may agree in writing to terminate this Agreement.

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make
the  initial  Advance  and  each subsequent  Advance  under  this
Agreement  shall  be  subject  to  the  fulfillment  to  Lender's
satisfaction of all of the conditions set forth in this Agreement
and in the Related Documents.

     Loan  Documents.  Borrower  shall  provide  to  Lender   the
following  documents  for the Loan: (1) the  Note;  (2)  Security
Agreements   granting  to  Lender  security  interests   in   the
Collateral;  (3)  financing statements and  all  other  documents
perfecting Lender's Security Interests; (4) evidence of insurance
as  required below; (5) together with all such Related  Documents
as  Lender  may  require for the Loan; all in form and  substance
satisfactory to Lender and Lender's counsel.

     Borrower's  Authorization. Borrower shall have  provided  in
form  and  substance  satisfactory to Lender  properly  certified
resolutions, duly authorizing the execution and delivery of  this
Agreement,  the  Note  and  the Related Documents.  In  addition,
Borrower    shall   have   provided   such   other   resolutions,
authorizations,  documents  and  instruments  as  Lender  or  its
counsel, may require.

     Payment of Fees and Expenses. Borrower shall have paid to
Lender all fees, charges, and other expenses which are then due
and payable as specified in this Agreement or any Related
Document.

     Representations and Warranties. The representations and
warranties set forth in this Agreement, in the Related Documents,
and in any document or certificate delivered to Lender under this
Agreement are true and correct.

     No Event of Default. There shall not exist at the time of
any Advance a condition which would constitute an Event of
Default under this Agreement or under any Related Document:

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants
to Lender, as of the date of this Agreement, as of the date of
each disbursement of loan proceeds, as of the date of any
renewal, extension or modification of any Loan, and at all times
any Indebtedness exists;

     Organization. Borrower is a corporation for profit which is,
and  at all times shall be, duly organized, validly existing, and
in  good standing under and by virtue of the laws of the State of
New  Jersey. Borrower is duly authorized to transact business  in
all  other  states  in which Borrower is doing  business,  having
obtained   all  necessary  filings,  governmental  licenses   and
approvals  for  each state in which Borrower is  doing  business.
Specifically,  Borrower  is, and at  all  times  shall  be,  duly
qualified  as  a foreign corporation in all states in  which  the
failure to so qualify would have a material adverse effect on its
business or financial condition. Borrower has the full power  and
authority  to own its properties and to transact the business  in
which  it  is presently engaged or presently proposes to  engage.
Borrower maintains an office at 385 Cooper Road, West Berlin,  NJ
08091.  Unless Borrower has designated otherwise in writing,  the
principal office is the office at which Borrower keeps its  books
and  records  including  its records concerning  the  Collateral.
Borrower  will notify Lender prior to any change in the  location
of  Borrower's state of organization or any change in  Borrower's
name.  Borrower shall do all things necessary to preserve and  to
keep  in  full  force  and  effect  its  existence,  rights   and
privileges,  and  shall  comply  with  all  regulations,   rules,
ordinances,  statutes, orders and decrees of any governmental  or
quasi-governmental authority or court applicable to Borrower  and
Borrower's business activities.

     Assumed  Business Names. Borrower has filed or recorded  all
documents  or  filings required by law relating  to  all  assumed
business  names used by Borrower; Excluding the name of Borrower,
the  following  is a complete list of all assumed business  names
under which Borrower does business: None.

     Authorization.   Borrower's   execution,    delivery,    and
performance of this Agreement and all the Related Documents  have
been  duly authorized by all necessary action by Borrower and  do
not  conflict  with, result in a violation of,  or  constitute  a
default  under  (1) any provision of (a) Borrower's  articles  of
incorporation or organization, or bylaws, or (b) any agreement or
other   instrument  binding  upon  Borrower  or  (2)   any   law,
governmental  regulation, court decree, or  order  applicable  to
Borrower or to Borrower's properties.

     Financial   Information.   Each  of   Borrower's   financial
statements  supplied  to  Lender truly and  completely  disclosed
Borrower's  financial condition as of the date of the  statement,
and  there  has  been  no material adverse change  in  Borrower's
financial  condition subsequent to the date of  the  most  recent
financial statement supplied to Lender. Borrower has no  material
contingent  obligations  except as disclosed  in  such  financial
statements.

     Legal Effect. This Agreement constitutes, and any instrument
or  agreement  Borrower is required to give under this  Agreement
when   delivered  will  constitute  legal,  valid,  and   binding
obligations   of   Borrower  enforceable  against   Borrower   in
accordance with their respective terms.

     Properties. Except as contemplated by this Agreement  or  as
previously  disclosed in Borrower's financial  statements  or  in
writing  to  Lender  and as accepted by Lender,  and  except  for
property  tax  liens  for taxes not presently  due  and  payable,
Borrower  owns and has good title to all of Borrower's properties
free  and  clear of all Security Interests,. and has not executed
any  security documents or financing statements relating to  such
properties. All of Borrower's properties are titled in Borrower's
legal  name,  and  Borrower has not used  or  filed  a  financing
statement  under any other name for at least the  last  five  (5)
years.

     Hazardous   Substances.   Except   as   disclosed   to   and
acknowledged  by  Lender  in  writing,  Borrower  represents  and
warrants  that: (1) During the period of Borrower's ownership  of
the  Collateral, there has been no use, generation,  manufacture,
storage,  treatment, disposal, release or threatened  release  of
any  Hazardous Substance by any person on, under, about  or  from
any  of  the  Collateral. (2) Borrower has no  knowledge  of,  or
reason to believe that there has been (a) any breach or violation
of  any Environmental Laws; (b) any use, generation, manufacture,
storage,  treatment, disposal, release or threatened  release  of
any  Hazardous Substance on, under, about or from the  Collateral
by any prior owners or occupants of any of the Collateral; or (c)
any  actual or threatened litigation or claims of any kind by any
person  relating  to such matters. (3) Neither Borrower  nor  any
tenant, contractor, agent or other authorized user of any of  the
Collateral  shall  use,  generate,  manufacture,  store,   treat,
dispose of or release any Hazardous Substance on, under, about or
from  any  of  the  Collateral; and any such  activity  shall  be
conducted  in compliance with all applicable federal, state,  and
local   laws,  regulations,  and  ordinances,  including  without
limitation all Environmental Laws. Borrower authorizes Lender and
its  agents to enter upon the Collateral to make such inspections
and  tests as Lender may deem appropriate to determine compliance
of  the  Collateral  with  this section  of  the  Agreement.  Any
inspection's  or  tests  made by Lender shall  be  at  Borrower's
expense and for Lender's purposes only and shall not be construed
to  create any responsibility or liability on the part of  Lender
to  Borrower  or  to  any other person. The  representations  and
warranties contained herein are based on Borrower's due diligence
in investigating the Collateral for hazardous waste and Hazardous
Substances.  Borrower hereby (1) releases and waives  any  future
claims against Lender for indemnity or contribution in the  event
Borrower becomes liable for cleanup or other costs under any such
laws,  and  (2)  agrees  to indemnify and  hold  harmless  Lender
against   any  and  all  claims,  losses,  liabilities,  damages,
penalties,  and expenses which Lender may directly or  indirectly
sustain or suffer resulting from a breach of this section of  the
Agreement   or   as   a  consequence  of  any  use,   generation,
manufacture, storage, disposal, release or threatened release  of
a  hazardous waste or substance on the Collateral. The provisions
of  this  section of the Agreement, including the  obligation  to
indemnify, shall survive the payment of the Indebtedness and  the
termination,  expiration or satisfaction of  this  Agreement  and
shall not be affected by Lender's acquisition of any interest  in
any of the Collateral, whether by foreclosure or otherwise.

     Litigation  and Claims. No litigation, claim; investigation,
administrative proceeding or similar action (including those  for
unpaid  taxes) against Borrower is pending or threatened, and  no
other  event  has occurred which may materially adversely  affect
Borrower's   financial  condition  or  properties,   other   than
litigation,  claims,  or other events, if  any,  that  have  been
disclosed to and acknowledged by Lender in writing.

     Taxes.   To  the  best  of  Borrower's  knowledge,  all   of
Borrower's  tax returns and reports that are or were required  to
be  filed, have been filed, and all taxes, assessments and  other
governmental  charges  have  been  paid  in  full,  except  those
presently being or to be contested by Borrower in good  faith  in
the  ordinary course of business and for which adequate  reserves
have been provided.

     Lien  Priority.  Unless  otherwise previously  disclosed  to
Lender  in writing, Borrower has not entered into or granted  any
Security Agreements, or permitted the filing or attachment of any
Security Interests on or affecting any of the Collateral directly
or  indirectly  securing repayment of Borrower's Loan  and  Note,
that  would  be  prior  or that may in any  way  be  superior  to
Lender's Security Interests and rights in and to such Collateral.

     Binding  Effect.  This  Agreement, the  Note,  all  Security
Agreements  (if any), and all Related Documents are binding  upon
the   signers   thereof,  as  well  as  upon  their   successors,
representatives  and  assigns, and  are  legally  enforceable  in
accordance with their respective terms.

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with
Lender that, so long as this Agreement remains in effect,
Borrower will:

   Notices  of Claims and Litigation. Promptly inform  Lender  in
writing  of  (1)  all  material  adverse  changes  in  Borrower's
financial  condition,  and (2) all existing  and  all  threatened
litigation, claims, investigations, administrative proceedings or
similar  actions affecting Borrower or any Guarantor which  could
materially  affect  the financial condition of  Borrower  or  the
financial condition of any Guarantor.

 Financial Records. Maintain its books and records in accordance
with GAAP, applied on a consistent basis, and permit Lender to
examine and audit Borrower's books and records at all reasonable
times.

 Financial Statements. Furnish Lender with the following;
Annual Statements. As soon as available, but in no event later
than forty-five (45) days after the end of each fiscal year,
Borrower's balance sheet and income statement for the year ended,
compiled by a certified public accountant satisfactory to Lender.
Interim Statements.  As soon as available, but in no event later
than thirty (30) days after the end of each fiscal quarter,
Borrower's balance sheet and profit and loss statement for the
period ended, prepared by Borrower.

Tax Returns. As soon as available, but in no event later than
thirty (30) days after the applicable filing date for the tax
reporting period ended, Federal and other governmental tax
returns, prepared by a tax professional satisfactory to Lender.

   All financial reports required to be provided under this
   Agreement shall be prepared in accordance with GAAP, applied
   on a consistent basis, and certified by Borrower as being
   true and correct.

    Additional Information. Furnish such additional information
    and statements, as Lender may request from time to time.

    Financial Covenants and Ratios.  Comply with the following
    covenants and ratios:

         Minimum Income and Cash flow Requirements.  Other Cash
    Flow requirements are as follows:  Maintain a minimum ratio
    of Cash Flow/Current Maturity (LTD) in excess of 1.300 to
    1.000.  The ratio "Cash Flow / Current Maturity" means
    Borrower's Net Income plus Deprecation plus Amortization plus
    Interest Expense minus Distributions / Borrower's prior
    period Current Portion of Long Term Indebtedness plus
    Interest Expense.  This coverage will be evaluated as of year-
    end.

    Tangible Net Worth Requirements.  Borrower shall comply with
    the following net worth ratio requirements:

      Debt / Worth Ratio.  Maintain a ratio of Debt / Worth not
    in excess of 3.000 to 1.000.  The ratio "Debt / Worth means
    Borrower's Total Liabilities divided by Borrower's Tangible
    Net Worth.  This leverage ratio will be evaluated as of year-
    end.

    Except as provided above, all computations made to determine
    compliance with the requirements contained in this paragraph
    shall be made in accordance with generally accepted
    accounting principles, applied on a consistent basis, and
    certified by Borrower as being true and correct.

    Insurance.  Maintain  fire and other risk  insurance,  public
    liability  insurance, and such other insurance as Lender  may
    require with respect to Borrower's properties and operations,
    in  form,  amounts,  coverages and with  insurance  companies
    acceptable to Lender. Borrower, upon request of Lender,  will
    deliver  to  Lender  from  time  to  time  the  policies   or
    certificates  of  insurance in form satisfactory  to  Lender,
    including  stipulations that coverages will not be  cancelled
    or  diminished  without  at least  fifteen  (15)  days  prior
    written  notice to Lender. Each insurance policy  also  shall
    include  an endorsement providing that coverage in  favor  of
    Lender  will not be impaired in any way by any act,  omission
    or  default  of  Borrower or any other person. In  connection
    with all policies covering assets in which Lender holds or is
    offered  a  security  interest for the Loans,  Borrower  will
    provide  Lender  with  such lender's loss  payable  or  other
    endorsements as Lender may require.

    Insurance Reports. Furnish to Lender, upon request of Lender,
    reports  on  each  existing  insurance  policy  showing  such
    information  as  Lender  may  reasonably  request,  including
    without  limitation  the  following:  (1)  the  name  of  the
    insurer; (2) the risks insured; (3) the amount of the policy;
    (4)  the  properties insured; (5) the then  current  property
    values on the basis of which insurance has been obtained, and
    the   manner  of  determining  those  values;  and  (6)   the
    expiration  date of the policy. In addition, upon request  of
    Lender (however not more often than annually), Borrower  will
    have   an   independent  appraiser  satisfactory  to   Lender
    determine,   as   applicable,  the  actual  cash   value   or
    replacement  cost  of  any  Collateral.  The  cost  of   such
    appraisal shall be paid by Borrower.

    Other Agreements. Comply with all terms and conditions of all
    other agreements, whether now or hereafter existing, between
    Borrower and any other party and notify Lender immediately in
    writing of any default in connection with any other such
    agreements.

    Loan Proceeds. Use all Loan proceeds solely for Borrower's
    business operations, unless specifically consented to the
    contrary by Lender in writing.

    Taxes,  Charges and Liens. Pay and discharge when due all  of
    its   indebtedness   and   obligations,   including   without
    limitation  a11  assessments,  taxes,  governmental  charges,
    levies  and  liens,  of every kind and nature,  imposed  upon
    Borrower or its properties, income, or profits, prior to  the
    date  on which penalties would attach, and all lawful  claims
    that,  if unpaid, might become a lien or charge upon  any  of
    Borrower's properties, income, or profits.

    Performance. Perform and comply, in a timely manner, with all
    terms,   conditions,  and  provisions  set  forth   in   this
    Agreement,  in  the  Related  Documents,  and  in  all  other
    instruments  and  agreements  between  Borrower  and  Lender.
    Borrower  shall notify Lender immediately in writing  of  any
    default in connection with any agreement.

Operations-  Maintain  executive and  management  personnel  with
substantially  the  same qualifications  and  experience  as  the
present  executive  and  management  personnel;  provide  written
notice  to  Lender  of  any  change in executive  and  management
personnel;  conduct  its business affairs  in  a  reasonable  and
prudent manner.

Environmental   Studies.  Promptly  conduct  and   complete,   at
Borrower's  expense, all such investigations, studies,  samplings
and  testings  as may be requested by Lender or any  governmental
authority  relative to any substance, or any waste or  by-product
of  any substance defined as toxic or a hazardous substance under
applicable federal, state, or local law, rule, regulation,  order
or directive, at or affecting any property or any facility owned,
leased or used by Borrower.

Compliance with Governmental Requirements. Comply with all  laws,
ordinances, and regulations, now or hereafter in effect,  of  all
governmental authorities applicable to the conduct of  Borrower's
properties,  businesses  and  operations;  and  to  the  use   or
occupancy  of  the Collateral, including without limitation,  the
Americans  With  Disabilities Act. Borrower may contest  in  good
faith  any  such  law,  ordinance,  or  regulation  and  withhold
compliance during any proceeding, including appropriate  appeals,
so long as Borrower has notified Lender in writing prior to doing
so  and  so long as, in Lender's sole opinion, Lender's interests
in  the  Collateral  are  not  jeopardized.  Lender  may  require
Borrower  to post adequate security or a surety bond,  reasonably
satisfactory to Lender, to protect Lender's interest.

Inspection.  Permit  employees  or  agents  of  Lender   at   any
reasonable time to inspect any and all Collateral for the Loan or
Loans  and  Borrower's other properties and to examine  or  audit
Borrower's  books, accounts, and records and to make  copies  and
memoranda of Borrower's books, accounts, and records. If Borrower
now  or  at  any time hereafter maintains any records  (including
without   limitation  computer  generated  records  and  computer
software  programs  for the generation of such  records)  in  the
possession  of a third party, Borrower, upon request  of  Lender,
shall  notify  such party to permit Lender free  access  to  such
records at all reasonable times and to provide Lender with copies
of any records it may request, all at Borrower's expense.

Compliance  Certificates. Unless waived  in  writing  by  Lender,
provide Lender at least annually, with a certificate executed  by
Borrower's  chief financial officer, or other officer  or  person
acceptable  to  Lender, certifying that the  representations  and
warranties set forth in this Agreement are true and correct as of
the  date of the certificate and further certifying that,  as  of
the  date  of  the certificate, no Event of Default exists  under
this Agreement.

Environmental  Compliance and Reports. Borrower shall  comply  in
all  respects with any and all Environmental Laws; not  cause  or
permit  to  exist, as a result of an intentional or unintentional
action or omission on Borrower's part or on the part of any third
party,  on  property  owned  and/or  occupied  by  Borrower,  any
environmental   activity  where  damage   may   result   to   the
environment,  unless such environmental activity is  pursuant  to
and  in compliance with the conditions of a permit issued by  the
appropriate  federal,  state or local  governmental  authorities;
shall  furnish to Lender promptly and in any event within  thirty
(30)  days  after receipt thereof a copy of any notice,  summons,
lien, citation, directive, letter or other communication from any
governmental agency or instrumentality concerning any intentional
or  unintentional  action  or  omission  on  Borrower's  part  in
connection with any environmental activity whether or  not  there
is damage to the environment and/or other natural resources.

Additional  Assurances. Make, execute and deliver to Lender  such
promissory notes, mortgages, deeds of trust, security agreements,
assignments,  financing  statements, instruments,  documents  and
other  agreements  as  Lender  or its  attorneys  may  reasonably
request  to  evidence and secure the Loans  and  to  perfect  all
Security Interests.

LENDER'S  EXPENDITURES. If any action or proceeding is  commenced
that  would materially affect Lender's interest in the Collateral
or  if  Borrower  fails  to comply with  any  provision  of  this
Agreement or any Related Documents, including but not limited  to
Borrower's  failure  to discharge or pay  when  due  any  amounts
Borrower is required to discharge or pay under this Agreement  or
any Related Documents, Lender on Borrower's behalf may (but shall
not   be  obligated  to)  take  any  action  that  Lender   deems
appropriate, including but not limited to discharging  or  paying
all  taxes,  liens,  security interests, encumbrances  and  other
claims, at any time levied or placed on any Collateral and paying
all   costs   for   insuring,  maintaining  and  preserving   any
Collateral. All such expenditures incurred or paid by Lender  for
such  purposes will then bear interest at the rate charged  under
the Note from the date incurred or paid by Lender to the date  of
repayment  by Borrower. All such expenses will become a  part  of
the Indebtedness and, at Lender's option, will (A) be payable  on
demand;  (B)  be  added  to  the  balance  of  the  Note  and  be
apportioned among and be payable with any installment payments to
become due during either (1) the term of any applicable insurance
policy;  or (2) the remaining term of the Note; or (C) be treated
as  a balloon payment which will be due and payable at the Note's
maturity.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender
that while this Agreement is in effect, Borrower shall not,
without the prior written consent of Lender;

Indebtedness and Liens. (1) Except for trade debt incurred in the
normal course of business and indebtedness to Lender contemplated
by  this  Agreement,  create, incur or  assume  indebtedness  for
borrowed  money,  including capital leases, (2)  sell,  transfer,
mortgage, assign, pledge, lease, grant a security interest in, or
encumber any of Borrower's assets (except as allowed as Permitted
Liens),  or  (3)  sell with recourse any of Borrower's  accounts,
except to Lender.

Continuity  of Operations. (1) Engage in any business  activities
substantially different than those in which Borrower is presently
engaged,   (2)  cease  operations,  liquidate,  merge,  transfer,
acquire  or consolidate with any other entity, change  its  name,
dissolve  or  transfer or sell Collateral  out  of  the  ordinary
course of business, or (3) pay any dividends on Borrower's  stock
(other  than  dividends payable in its stock), provided,  however
that  notwithstanding the foregoing, but only so long as no Event
of  Default  has occurred and is continuing or would result  from
the  payment  of  dividends,  if  Borrower  is  a  "Subchapter  S
Corporation" (as defined in the Internal Revenue Code of 1986, as
amended),  Borrower may pay cash dividends on its  stock  to  its
shareholders from time to time in amounts necessary to enable the
shareholders  to pay income taxes and make estimated  income  tax
payments to satisfy their liabilities under federal and state law
which  arise  solely  from  their status  as  Shareholders  of  a
Subchapter S Corporation because of their ownership of shares  of
Borrower's  stock,  or  purchase  or  retire  any  of  Borrower's
outstanding   shares   or  alter  or  amend  Borrower's   capital
structure.

Loans,  Acquisitions  and Guaranties.  (1)  Loan,  invest  in  or
advance  money  or  assets  to any other  person,  enterprise  or
entity, (2) purchase, create or acquire any interest in any other
enterprise  or entity, or (3) incur any obligation as  surety  or
guarantor other than in the ordinary course of business.

Agreements. Borrower will not enter into any agreement containing
any provisions which would be violated or breached by the
performance of Borrower's obligations under this Agreement or in
connection herewith.

CESSATION OF ADVANCES. If Lender has made any commitment to  make
any  Loan to Borrower, whether under this Agreement or under  any
other  agreement, Lender shall have no obligation  to  make  Loan
Advances  or  to disburse Loan proceeds if: (A) Borrower  or  any
Guarantor is in default under the terms of this Agreement or  any
of  the Related Documents or any other agreement that Borrower or
any  Guarantor  has with Lender; (B) Borrower  or  any  Guarantor
dies,  becomes incompetent or becomes insolvent, files a petition
in  bankruptcy or similar proceedings, or is adjudged a bankrupt;
(C)   there  occurs  a  material  adverse  change  in  Borrower's
financial condition, in the financial condition of any Guarantor,
or  in the value of any Collateral securing any Loan; or (D)  any
Guarantor seeks, claims or otherwise attempts to limit, modify or
revoke  such Guarantor's guaranty of the Loan or any  other  loan
with  Lender; or (E) Lender in good faith deems itself  insecure,
even though no Event of Default shall have occurred.

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.

DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:

Payment Default. Borrower fails to make any payment when due
under the Loan.

Other  Defaults. Borrower fails to comply with or to perform  any
other  term, obligation, covenant or condition contained in  this
Agreement 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  or  any  Grantor's  property  or  Borrower's  or  any
Grantor's  ability to repay the Loans or perform their respective
obligations under this Agreement 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 Agreement 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.

Defective Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect (including
failure of any collateral document to create a valid and
perfected security interest or lien) at any time and for any
reason.

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 of any of the Indebtedness or  any
Guarantor dies or becomes incompetent, or revokes or disputes the
validity   of,   or   liability  under,  any  Guaranty   of   the
Indebtedness.  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 the Loan is impaired.

Insecurity. Lender in good faith believes itself insecure.

Right  to  Cure.  If  any  default,  other  than  a  default   on
Indebtedness, is curable and if Borrower or Grantor, as the  case
may  be, has not been given a notice of a similar default  within
the preceding twelve (12) months, it may be cured if Borrower  or
Grantor, as the case may be, after receiving written notice  from
Lender  demanding  cure of such default:  (1)  cure  the  default
within  fifteen (15) days; or (2) if the cure requires more  than
fifteen (15) days, immediately initiate steps which Lender  deems
in  Lender's sole discretion to be sufficient to cure the default
and thereafter continue and complete all reasonable and necessary
steps  sufficient  to produce compliance as  soon  as  reasonably
practical.

EFFECT  OF  AN  EVENT OF DEFAULT. If any Event of  Default  shall
occur,  except where otherwise provided in this Agreement or  the
Related  Documents,  all commitments and  obligations  of  Lender
under  this  Agreement  or the Related  Documents  or  any  other
agreement immediately will terminate (including any obligation to
make  further Loan Advances or disbursements), and,  at  Lender's
option, all Indebtedness immediately will become due and payable,
all  without notice of any kind to Borrower, except that  in  the
case  of  an  Event  of  Default of the  type  described  in  the
"Insolvency"  subsection  above,  such  acceleration   shall   be
automatic  and not optional. In addition, Lender shall  have  all
the  rights  and  remedies provided in the Related  Documents  or
available  at  law, in equity, or otherwise.  Except  as  may  be
prohibited by applicable law, all of Lender's rights and remedies
shall   be   cumulative  and  may  be  exercised  singularly   or
concurrently. Election by Lender to pursue any remedy  shall  not
exclude  pursuit  of any other remedy, and an  election  to  make
expenditures  or  to  take  action to perform  an  obligation  of
Borrower  or  of any Grantor shall not affect Lender's  right  to
declare a default and to exercise its rights and remedies.

SHARING OF ACCOUNT INFORMATION :  The Lender and the companies in
the Susquehanna Bancshare, Inc.  family offer a full range of
valuable financial services.  We can better serve your needs by
sharing your account information within our corporate family.
The Borrower authorizes the Lender and the companies that
comprise the Susquehanna Bancshares, Inc. corporate family to
disclose to any of Susquehanna Bancshares, Inc. existing or
future subsidiaries, affiliates, and assigns, and to any
potential assignee or transferee, any information (including
information received from third persons) in or relating to (i)
the Borrower, (ii) this loan, (iii) any other loans you have
previously obtained or may from time to time obtain from us or
any of the Susquehanna Bancshares, Inc family of companies in the
future, and (iv) any other accounts of any type or nature and
other relationship the Borrower has previously established or may
from time to time establish with any of the Susquehanna
Bancshares, Inc. family of companies in the future.

DEPOSIT RELATIONSHIP.  Borrower shall establish and maintain
their primary New Jersey deposit account with Lender during the
life of the loan.

REST PERIOD.  Borrower shall reduce the principal balance of this
line of credit to a zero balance for at least thirty (30)
consecutive days each year.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions
are a part of this Agreement:

Amendments. This Agreement, together with any Related  Documents,
constitutes the entire understanding and agreement of the parties
as  to the matters set forth in this Agreement. No alteration  of
or amendment to this Agreement shall be effective unless given in
writing  and signed by the party or parties sought to be  charged
or bound by the alteration or amendment.

Attorneys' Fees; Expenses, Borrower agrees to pay upon demand all
of  Lender's  costs  and expenses, including Lender's  attorneys'
fees and Lender's legal expenses, incurred in connection with the
enforcement  of  this Agreement. Lender may hire or  pay  someone
else  to help enforce this Agreement, and Borrower shall pay  the
costs  and  expenses  of  such enforcement.  Costs  and  expenses
include  Lender's attorneys' fees and legal expenses  whether  or
not  there  is  a  lawsuit, including attorneys' fees  and  legal
expenses for bankruptcy proceedings (including efforts to  modify
or  vacate  any automatic stay or injunction), appeals,  and  any
anticipated  post-judgment  collection  services.  Borrower  also
shall  pay  all court costs and such additional fees  as  may  be
directed by the court.

Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or
define the provisions of this Agreement.

Consent  to  Loan Participation. Borrower agrees and consents  to
Lender's sale or transfer, whether now or later, of one  or  more
participation  interests in the Loan to one or  more  purchasers,
whether  related  or  unrelated to Lender.  Lender  may  provide,
without any limitation whatsoever, to any one or more purchasers,
or  potential purchasers, any information or knowledge Lender may
have  about  Borrower or about any other matter relating  to  the
Loan,  and Borrower hereby waives any rights to privacy  Borrower
may  have  with  respect  to such matters. Borrower  additionally
waives any and all notices of sale of participation interests, as
well  as  all  notices  of any repurchase of  such  participation
interests. Borrower also agrees that the purchasers of  any  such
participation interests will be considered as the absolute owners
of  such  interests  in the Loan and will  have  all  the  rights
granted under the participation agreement or agreements governing
the sale of such participation interests. Borrower further waives
all  rights  of offset or counterclaim that it may  have  now  or
later  against  Lender  or  against  any  purchaser  of  such   a
participation  interest and unconditionally  agrees  that  either
Lender or such purchaser may enforce Borrower's obligation  under
the  Loan irrespective of the failure or insolvency of any holder
of  any  interest in the Loan. Borrower further agrees  that  the
purchaser  of  any such participation interests may  enforce  its
interests  irrespective of any personal claims or  defenses  that
Borrower may have against Lender.

 Governing Law. This Agreement will be governed by federal law
 applicable to the Lender 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 Agreement 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.

No  Waiver  by Lender. Lender shall not be deemed to have  waived
any  rights under this Agreement unless such waiver is  given  in
writing and signed by Lender. No delay or omission on the part of
Lender in exercising any right shall operate as a waiver of  such
right  or  any other right. A waiver by Lender of a provision  of
this  Agreement  shall not prejudice or constitute  a  waiver  of
Lender's  right otherwise to demand strict compliance  with  that
provision  or  any  other provision of this Agreement.  No  prior
waiver  by  Lender, nor any course of dealing between Lender  and
Borrower,  or between Lender and any Grantor, shall constitute  a
waiver  of any of Lender's rights or of any of Borrower's or  any
Grantor's obligations as to any future transactions. Whenever the
consent  of Lender is required under this Agreement, the granting
of  such  consent by Lender in any instance shall not  constitute
continuing consent to subsequent instances where such consent  is
required and in all cases such consent may be granted or withheld
in the sole discretion of Lender.

Notices.  Any  notice required to be,given under  this  Agreement
shall  be  given in writing, and shall be effective when actually
delivered,  when  actually  received  by  telefacsimile   (unless
otherwise  required  by law), when deposited  with  a  nationally
recognized  overnight courier, or, if mailed, when  deposited  in
the  United  States mail, as first class, certified or registered
mail  postage prepaid, directed to the addresses shown  near  the
beginning of this Agreement. Any party may change its address for
notices  under this Agreement by giving formal written notice  to
the  other parties, specifying that the purpose of the notice  is
to  change  the  party's address. For notice  purposes,  Borrower
agrees to keep Lender informed at all times of Borrower's current
address.  Unless otherwise provided or required by law, if  there
is  more  than  one Borrower, any notice given by Lender  to  any
Borrower is deemed to be notice given to all Borrowers.

No  Joint  Venture or Partnership.  The relationship of  Borrower
and  Lender created by this Agreement is strictly that of debtor-
creditor,  and nothing contained in this Agreement or in  any  of
the  Related Documents shall be deemed or construed to  create  a
partnership or joint venture between Borrower and Lender.
Severability.  If  a  court of competent jurisdiction  finds  any
provision   of  this  Agreement  to  be  illegal,   invalid,   or
unenforceable as to any circumstance, that finding shall not make
the offending provision illegal, invalid, or unenforceable as  to
any  other  circumstance.  If feasible, the  offending  provision
shall be considered modified so that it becomes legal, valid  and
enforceable. If the offending provision cannot be so modified, it
shall be considered deleted from this Agreement. Unless otherwise
required  by law, the illegality, invalidity, or unenforceability
of any provision of this Agreement shall not affect the legality,
validity  or  enforceability  of  any  other  provision  of  this
Agreement.

Subsidiaries  and  Affiliates  of Borrower.  To  the  extent  the
context of any provisions of this Agreement makes it appropriate,
including  without  limitation any  representation,  warranty  or
covenant,  the  word "Borrower" as used in this  Agreement  shall
include   all   of   Borrower's  subsidiaries   and   affiliates.
Notwithstanding  the  foregoing however, under  no  circumstances
shall  this Agreement be construed to require Lender to make  any
Loan  or  other  financial accommodation  to  any  of  Borrower's
subsidiaries or affiliates.

Successors  and Assigns. All covenants and agreements  by  or  on
behalf  of  Borrower contained in this Agreement or  any  Related
Documents shall bind Borrower's successors and assigns and  shall
inure  to  the benefit of Lender and its successors and  assigns.
Borrower  shall not, however, have the right to assign Borrower's
rights under this Agreement or any interest therein, without  the
prior written consent of Lender.

Survival  of Representations and Warranties. Borrower understands
and  agrees  that in making the Loan, Lender is  relying  on  all
representations, warranties, and covenants made  by  Borrower  in
this   Agreement  or  in  any  certificate  or  other  instrument
delivered  by  Borrower  to Lender under this  Agreement  or  the
Related Documents. Borrower further agrees that regardless of any
investigation   made   by   Lender,  all  such   representations,
warranties  and  covenants will survive  the  extension  of  Loan
Advances  and delivery to Lender of the Related Documents,  shall
be  continuing  in nature, shall be deemed made  and  redated  by
Borrower at the time each Loan Advance is made, and shall  remain
in   full   force  and  effect  until  such  time  as  Borrower's
Indebtedness shall be paid in full, or until this Agreement shall
be terminated in the manner provided above, whichever is the last
to occur.

  Time is of the Essence. Time is of the essence in the
  performance of this Agreement.

DEFINITIONS. The following capitalized words and terms shall have
the  following  meanings  when used  in  this  Agreement.  Unless
specifically  stated  to the contrary, all references  to  dollar
amounts  shall mean amounts in lawful money of the United  States
of  America.  Words and terms used in the singular shall  include
the  plural,  and the plural shall include the singular,  as  the
context  may  require. Words and terms not otherwise  defined  in
this  Agreement shall have the meanings attributed to such  terms
in  the  Uniform Commercial Code. Accounting words and terms  not
otherwise  defined  in  this Agreement shall  have  the  meanings
assigned to them in accordance with generally accepted accounting
principles as in effect on the date of this Agreement:

Advance. The word "Advance" means a disbursement of Loan funds
made, or to be made, to Borrower or on Borrower's behalf on a
line of credit or multiple advance basis under the terms and
conditions of this Agreement.

Agreement. The word "Agreement" means this Business Loan
Agreement, as this Business Loan Agreement may be amended or
modified from time to time, together with all exhibits and
schedules attached to this Business Loan Agreement from time to
time.

Borrower. The word "Borrower" means Dynasil -Corporation of
America A/K/A  Dynasil Corporation of America a NJ Corporation
and includes all co-signers and co-makers signing the Note and
all their successors and assigns.

Collateral. The word "Collateral" means all property  and  assets
granted  as  collateral  security for a  Loan,  whether  real  or
personal   property,  whether  granted  directly  or  indirectly,
whether granted now or in the future; and whether granted in  the
form  of a security interest, mortgage, collateral mortgage, deed
of  trust,  assignment,  pledge; crop pledge,  chattel  mortgage,
collateral  chattel  mortgage,  chattel  trust,  factor's   lien,
equipment  trust, conditional sale, trust receipt, lien,  charge,
lien  or  title retention contract, lease or consignment intended
as  a  security  device, or any other security or  lien  interest
whatsoever, whether created by law, contract, or otherwise.

Environmental Laws. The words "Environmental Laws" mean  any  and
all state, federal and local statutes, regulations and ordinances
relating  to  the protection of human health or the  environment,
including  without  limitation  the  Comprehensive  Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C.   Section  9601,  et  seq.  (  "CERCLA"),  the   Superfund
Amendments  and Reauthorization Act of 1986, Pub. L.  No.  99-499
("SARA"),  the Hazardous Materials Transportation Act, 49  U.S.C.
Section  1801,  et seq., the Resource Conservation  and  Recovery
Act,  42  U.S.C. Section 6901, et seq., the New Jersey Industrial
Site  Recovery Act, NJSA Section 13:1K-6 ("IRSA"), the New Jersey
Spill Compensation and Control Act, NJSA 58:10-23.11, et seq.  or
other  applicable  state or federal laws, rules,  or  regulations
adopted pursuant thereto.

Event of Default. The words "Event of Default" mean any of the
events of default set forth in this Agreement in the default
section of this Agreement.

GAAP. The word "GAAP" means generally accepted accounting
principles:

Grantor. The word "Grantor" means each and all of the persons or
entities granting a Security Interest in any Collateral for the
Loan, including without limitation all Borrowers granting such a
Security Interest.
Guarantor. The word "Guarantor" means any guarantor, surety, or
accommodation party of any or all of the Loan.

Guaranty. The word "Guaranty" means the guaranty from Guarantor
to Lender, including without limitation a guaranty of all or part
of the Note.

Hazardous  Substances.  The  words  "Hazardous  Substances"  mean
materials  that,  because  of  their quantity,  concentration  or
physical,  chemical or infectious characteristics, may  cause  or
pose  a  present  or  potential hazard to  human  health  or  the
environment  when improperly used, treated, stored, disposed  of,
generated,  manufactured, transported or otherwise  handled.  The
words  "Hazardous  Substances" are used in  their  very  broadest
sense  and  include without limitation any and all  hazardous  or
toxic  substances,  materials or waste as defined  by  or  listed
under  the  Environmental Laws. The term  "Hazardous  Substances"
also  includes, without limitation, petroleum and  petroleum  by-
products or any fraction thereof and asbestos.

Indebtedness.  The  word  "Indebtedness" means  the  indebtedness
evidenced  by  the  Note  or  Related  Documents,  including  all
principal  and interest together with all other indebtedness  and
costs  and expenses for which Borrower is responsible under  this
Agreement or under any of the Related Documents.
Lender. The word "Lender" means Susquehanna Patriot Bank, its
successors and assigns.

Loan.  The  word  "Loan" means any and all  loans  and  financial
accommodations from Lender to Borrower whether now  or  hereafter
existing,  and  however evidenced, including  without  limitation
those  loans  and  financial accommodations described  herein  or
described  on any exhibit or schedule attached to this  Agreement
from time to time.

Note.  The  word  "Note"  means  the  Note  executed  by  Dynasil
Corporation of America A/K/A Dynasil Corporation of America a New
Jersey  Corporation in the principal amount of $200,000.00  dated
January  5,  2006, together with all renewals of, extensions  of,
modifications  of,  refinancings  of,  consolidations   of,   and
substitutions for the note or credit agreement.

Permitted  Liens. The words "Permitted Liens" mean (1) liens  and
security  interests  securing Indebtedness owed  by  Borrower  to
Lender;  (2)  liens  for taxes, assessments, or  similar  charges
either not yet due or being contested in good faith; (3) liens of
materialmen, mechanics, warehousemen, or carriers, or other  like
liens  arising  in the ordinary course of business  and  securing
obligations  which  are not yet delinquent;  (4)  purchase  money
liens  or  purchase  money  security interests  upon  or  in  any
property  acquired or held by Borrower in the ordinary course  of
business to secure indebtedness outstanding on the date  of  this
Agreement or permitted to be incurred under the paragraph of this
Agreement titled "Indebtedness and Liens"; (5) liens and security
interests  which,  as  of the date of this Agreement,  have  been
disclosed to and approved by the Lender in writing; and (6) those
liens and security interests which in the aggregate constitute an
immaterial and insignificant monetary amount with respect to  the
net value of Borrower's assets.

Related  Documents.  The  words  "Related  Documents"  mean   all
promissory    notes,   credit   agreements,   loan    agreements,
environmental   agreements,  guaranties,   security   agreements,
mortgages,  deeds of trust, security deeds, collateral mortgages,
and  all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Loan.

Security  Agreement.  The  words "Security  Agreement"  mean  and
include  without limitation any agreements, promises,  covenants,
arrangements, understandings or other agreements, whether created
by   law,   contract,   or   otherwise,  evidencing,   governing,
representing, or creating a Security Interest.

Security  Interest, The words "Security Interest"  mean,  without
limitation, any and all types of collateral security, present and
future,  whether  in  the  form of a lien,  charge,  encumbrance,
mortgage, deed of trust, security deed, assignment, pledge,  crop
pledge,  chattel  mortgage, collateral chattel mortgage,  chattel
trust,  factor's lien, equipment trust, conditional  sale,  trust
receipt,  lien or title retention contract, lease or  consignment
intended  as  a  security device, or any other security  or  lien
interest   whatsoever  whether  created  by  law,  contract,   or
otherwise.

Tangible  Net  Worth.   The  words  "Tangible  Net  Worth"   mean
Borrower's  total assets excluding all intangible  assets  (i.e.,
goodwill,   trademarks,   patents,   copyrights,   organizational
expenses,  and similar intangible items, but including leaseholds
and leasehold improvements) less total debt.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS
BUSINESS LOAN AGREEMENT IS DATED JANUARY 5, 2006.


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


Lender:

SUSQUEHANNA PATRIOT BANK

By:  /s/ David Slobotkin
Authorized Signer

EX-10

                         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

EX-10

                         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

EX-10

January 9, 2006


Mr. David Slobotkin
Loan Officer
Susquehanna Patriot Bank
8000 Sagemore Drive, Suite 8101
Marlton, NJ 08053-3941

Dear David:

Thanks  for  providing the draft loan documents. I  appreciate  the
extra  effort that went into getting the drafts together  over  the
holidays.  However,  as  we  have  discussed  and  as  I  know  you
understand, the fact that they are form documents means  that  some
of  the  terms and conditions just don't fit for our situation  and
several  are inconsistent with the commitment letter. Consequently,
here  is  a  list  of  disclosures, clarifications,  and  up  front
agreements  that would become an attachment to the loan  documents.
Please  note that I have provided references to document  locations
to  make  it  easy to review this letter but the same changes  will
apply  to  any  similar  provisions located  other  places  in  the
documents.  If  you  and your colleagues are  comfortable  with  an
amenable  to what is set forth in this letter, please sign  in  the
place  indicated below, whereupon this letter will  constitute  and
amendment  to the loan documents. This letter applies to  the  loan
agreements dated 1-5-06 for the $462,378.40 principal amount  first
mortgage loan and the $200,000 line of credit.

  -     In  view  of  the  existing loan made by Citizens  Bank  of
     Massachusetts ("Citizens") to Optometrics Corporation, which is a
     wholly-owned subsidiary of Dynasil, the statements made in the
     first sentence under the heading "Miscellaneous Provisions  --
     Subsidiaries and Affiliates of Borrower" cannot be applied (see
     page 4 of the Business Loan Agreement). For all purposes,  the
     Borrower (or the Grantor) under the loan documents must refer only
     to Dynasil. In the same vein, the pledge of "all assets" of the
     Borrower as collateral cannot be deemed to include the stock of
     Optometrics. As per the commitment letter, the collateral for these
     loans only includes the operating assets used in Dynasil's New
     Jersey operations at its operation in West Berlin, NJ.

  -     Similarly, and as you are aware, Citizens currently  has  a
     second lien position on the New Jersey operating assets excluding
     the real estate. Although Citizens has agreed to subordinate that
     lien position to your first position in the collateral securing the
     mortgage loan, as per the commitment letter, Susquehanna Patriot
     will have a first and third position in those assets, with Citizens
     keeping its second position.  The Citizens loans also include a
     guarantee by Dynasil Corporation.

- -    Clearly, as to the mortgage loan, the Loan Proceeds will be
     used to repay the existing Premier Bank mortgage loan.
- -    As to the items listed under "Affirmative Covenants --
     Performance", we will comply to the extent that they are material
     (See Business Loan agreement page 2)
- -    We plan to comply with the covenant under "Affirmative
     Covenants -- Operations" by furnishing you with copies of documents
     or reports we file with the Securities and Exchange Commission
     (quarterly 10-QSB reports, annual 10-KSB reports, and any special
     filings that would be relevant to this provision).  (See Business
     Loan Agreement page 2).
- -    Dynasil has a corporate seal and will bring it to the closing
     to place a seal on the "Corporate Resolution to Borrow/ Grant
     Collateral" documents.
- -    As per the broad definition of "hazardous substances" in these
     documents, Dynasil has in the past and currently uses "hazardous
     substances" in its processes so we are unable to represent that we
     have never used "hazardous substances" as stated in statement 1 of
     the Hazardous Substances paragraph at the bottom of page 1 of the
     Business Loan Agreements, on page 2 of the Mortgage Agreement, and
     anywhere else where this disclosure may apply.  In addition, please
     reference the Phase 1 Environmental Site Assessment prepared for
     Susquehanna Patriot Bank dated 10/14/05 for a summary of
     disclosures of Dynasil's history and status regarding environmental
     matters regarding environmental language in all loan documents.



  Page 2                                     January 9, 2006

- -    In regard to the Litigation and Claims representation at the
     top of page two on the Business Loan Agreements, Dynasil was named
     in a California lawsuit along with approximately 20 other companies
     and we do not believe that an adverse outcome on this matter will
     have any material adverse effect on the company.  Please see item
     3, page 3 of Dynasil's 10-KSB report for fiscal year 2005 for more
     details.  The entire contents of that 10-KSB should be considered
     disclosures for the purpose of this letter.
- -    On page 2 of the Business Loan Agreements, it requires that
     annual statements be sent to the lender within 45 days and
     quarterly statements within 30 days.  Our current requirements with
     the SEC are to file reports within 90 days and 45 days
     respectively.  We will provide the statements as soon as they are
     available which should be within the SEC timing requirement but may
     not meet the timing in the Business Loan Agreement.
  -    Under "Negative Covenants -- Continuity of Operations" in the
     Business Loan Agreements, by this letter you are giving Dynasil
     approval to continue to pay dividends (since we currently have
     Preferred Stock where we are paying dividends) as long as the two
     financial covenants are being met.  Also under negative covenants,
     it requires your approval for acquisitions and other activities
     that are part of Dynasil's strategy to expand our company.  We
     recognize  that these activities will require the approval  of
     Susquehanna Patriot Bank and we are agreeing that approval would
     not be unreasonably withheld.

- -    Please provide us a copy of the full amortization schedule for
     the mortgage.

- -    In the Commercial Security Agreements, under "Grantor's
     Representations and Warranties With Respect to the Collateral --
     Notices to Lender", we propose to provide copies of our documents
     filed with the SEC. Further, and as you know, under that same
     heading, the provisions under "Transactions Involving Collateral"
     and "Title" are inconsistent with the Citizens loan to Optometrics.
- -    Both loan packages include Assignment of Leases and Rents
     documents and the Promissory Notes list Assignment of Leases and
     Rents as collateral.  We are disclosing here that there are no
     leases and rents in New Jersey. This also relates to some
     provisions in the Mortgages.


Sincerely,




/s/Craig T. Dunham
President and CEO


Susquehanna  Patriot  Bank acknowledges and agrees  that  the  loan
documents  referred to above will be deemed amended to  the  extent
inconsistent  with the foregoing letter and also  acknowledges  the
disclosures and clarifications in this letter.


/s/   David  Slobotkin                  January 5, 2006
David Slobotkin, Loan Officer             Date