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) July 7,
2010
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Dynasil Corporation of America
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(Exact name of registrant as specified in its charter)
Delaware 22-1734088
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(State or other (IRS Employer
jurisdiction of incorporation) Identification No.)
385 Cooper Road, West Berlin, New Jersey, 08091
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(Address of principal executive offices)
(856)-767-4600
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(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last
report)
Item 1.02 Termination of a Material Definitive Agreement.
The information set forth in Item 2.03 regarding Dynasil's
repayment of borrowings under and the termination of: the
Tompkins Trust Bank Note, the Susquehanna Bank Note, and the
RMD Instruments LLC Note, are incorporated herein by
reference.
Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
On July 9, 2010, Dynasil Corporation of America ("Dynasil"),
completed bank financing with Sovereign Bank (the "Bank")
(the "Sovereign Credit Facility") which refinanced all
outstanding debt and increased Dynasil's line of credit from
$1.2 million to $8 million by entering into a Loan and
Security Agreement with the Bank dated as of July 7, 2010
(the "Bank Loan Agreement"). Dynasil, as Borrower, and all
of Dynasil's wholly owned active subsidiaries including:
Evaporated Metal Films Corp. ("EMF"), Optometrics
Corporation ("Optometrics"), RMD Instruments Corp. ("RMD
Instruments") and Radiation Monitoring Devices, Inc. ("RMD
Research"), as Guarantors, executed and delivered various
supporting agreements dated July 7, 2010 in favor of the
Bank. Under the Bank Loan Agreement, the Bank provided
Dynasil with three borrowing facilities: a five-year $9
million term loan (the "Term Loan") at an interest rate of
5.58%; a $3 million working capital line of credit (the
"Working Capital Line of Credit") at an interest rate of
Prime or one month LIBOR plus 2.75% and a monthly fee
calculated at the rate of 0.25% per annum of the unused
Working Capital Line of Credit; and a $5 million acquisition
line of credit (the "Acquisition Line of Credit") at an
interest rate of one month LIBOR plus 3.5% and a monthly fee
calculated at the rate of 0.25% per annum of the unused
Acquisition Line of Credit.
The $9 million proceeds of the Term Loan were used to pay
off all of Dynasil's indebtedness with Susquehanna Bank (the
"Susquehanna Bank Note"), Tompkins Trust Company (the
"Tompkins Trust Bank Note"), and RMD Instruments LLC (the
"RMD Instruments LLC Note"), in an aggregate amount of
$8,373,315. The remaining $626,685 was used to pay
transaction expenses and to increase available working
capital. The RMD Instruments LLC Note was a note payable to
the former owners of RMD Instruments LLC, where a current
officer of Dynasil has a financial interest. The Term Loan
is to be repaid with equal principal payments of $107,142.85
per month plus interest and matures on July 7, 2015.
Interest on advances under the Working Capital Line of
Credit is payable monthly and such advances are repayable in
full on July 7, 2012, unless the Working Capital Line of
Credit is renewed by the Bank. The Acquisition Line of
Credit is available to Dynasil for future acquisitions under
the terms specified in the Bank Loan Agreement. Advances
under the Acquisition Line of Credit are repayable monthly
based on a 7-year straight line amortization plus interest,
with a balloon payment due on July 7, 2015.
The Bank Loan Agreement limits Dynasil and its subsidiaries'
ability to, among other things: dispose of assets, engage in
a new line of business materially different than its current
business, have a change in control, acquire another
business, incur additional indebtedness, incur liens, pay
dividends and make other distributions, make investments and
redeem (subject to exceptions) any of its equity securities.
The Bank Loan Agreement also contains other terms,
conditions and provisions that are customary for commercial
lending transactions of this sort. The Bank Loan Agreement
requires Dynasil to maintain at all times and measured at
the end of each fiscal quarter a Consolidated Maximum
Leverage Ratio (Total Funded Debt to EBITDA, as defined in
the Bank Loan Agreement) not to exceed 3 to 1 and a Fixed
Charge Coverage Ratio of at least 1.2 to 1. The Fixed
Charge Coverage Ratio is defined as EBITDA (as defined in
the Bank Loan Agreement) for the applicable period divided
by the sum of (a) Dynasil's consolidated interest expense
for such period, plus (b) the aggregate principal amount of
scheduled payments on Dynasil's indebtedness made during
such period, plus (c) the sum of all cash dividends and
other cash distributions to Dynasil's shareholders during
such period, plus (d) the sum of all taxes paid in cash by
Dynasil during such period, plus (e) all unfunded capital
expenditures during such period. The Bank Loan Agreement
also provides for events of default customary for credit
facilities of this type, including, but not limited to,
non-payment, breach of covenants, insolvency and defaults on
other debt. Upon an event of default and during its
continuance, the interest rate will automatically increase
5.0% above the otherwise applicable interest rate. In
addition, upon an event of default, the Bank may elect a
number of remedies including, but not limited to, stopping
the advance of money to Dynasil and declaring all
obligations (including principal, interest and expenses)
immediately due and payable, which shall occur automatically
if Dynasil becomes insolvent.
Dynasil's obligations under the Bank Loan Agreement are
guaranteed by EMF, Optometrics, RMD Instruments, RMD
Research and Dynasil and each of such subsidiaries have
granted the bank a security interest in substantially all
its personal property. In addition, EMF has granted a
mortgage in the Bank's favor as to EMF's leasehold property
in Ithaca, New York.
The foregoing description is only a summary of the
provisions of the Bank Loan Agreement and is qualified in
its entirety by the terms of the Bank Loan Agreement, a copy
of which is filed herewith as Exhibit 10.1 and incorporated
herein by reference.
Item 8.01 Other Events.
On July 13, 2010, Dynasil issued a press release announcing
that it had entered into the Bank Loan Agreement. A copy of
the press release is filed herewith as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
10.1 Loan and Security Agreement, dated as of July 7, 2010,
by and between Sovereign Bank, as Lender, and Dynasil
Corporation of America, as Borrower.
99.1 Dynasil Corporation of America press release dated July
13, 2010.
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
Date: July 12, 2010 By: /s/ Craig Dunham
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President and Chief Executive Officer
EXHIBIT INDEX
10.1 Loan and Security Agreement, dated as of July 7, 2010,
by and between Sovereign Bank, as Lender, and Dynasil
Corporation of America, as Borrower.
99.1 Dynasil Corporation of America press release dated July
12, 2010.