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 Exchange
Act of 1934
Date of Report (Date of earliest event reported) July 31, 2012
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Dynasil Corporation of America
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(Exact name of registrant as specified in its charter)
Delaware 000-27503 22-1734088
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(State or other Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
44 Hunt Street, Watertown, MA 02472
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(Address of principal executive offices)
(617)-668-6855
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(Registrant's telephone number, including area code)
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:
[ ] 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))
Item 1.02 Termination of a Material Definitive Agreement.
The information set forth in Item 2.03 regarding the
repayment of the Entine Indebtedness is 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.
Note Purchase Agreement
As disclosed in the Dynasil Corporation of America (the
"Company" or "Dynasil") Form 8-K filed on July 5, 2012, on
June 29, 2012, the Company entered into a letter agreement
(the "Waiver Letter") with Sovereign Bank, N.A. (the
"Lender") as well as Amendment No. 3 (the "Amendment") to
the Loan and Security Agreement with the Lender, dated July
7, 2010, as amended on April 1, 2011 and April 12, 2012 (the
"Original Loan Agreement"). Under the Waiver Letter, the
Lender agreed to waive non-compliance by the Company with
certain financial covenants under the Original Loan
Agreement as of June 30, 2012, subject to the Company's
compliance with the terms of the Amendment, including
completing a financing raising at least $2 million in gross
proceeds on or before September 30, 2012 and applying the
proceeds as described below.
On July 31, 2012, the Company entered into a Note Purchase
Agreement (the "Agreement") with Massachusetts Capital
Resource Company (the "Purchaser"). Pursuant to the terms of
the Agreement, the Company issued and sold to the Purchaser
a $3,000,000 subordinated note (the "Subordinated Note") for
a purchase price of $3,000,000. The Company has used a
portion of the proceeds from the sale of the Subordinated
Note to repay the indebtedness incurred in favor of certain
entities affiliated with Dr. Gerald Entine (together,
"Entine") in the aggregate principal amount of $1,857,546
(the "Entine Indebtedness") and has agreed to use the
balance of the proceeds for working capital. As disclosed in
the Company's Form 8-K filed on June 8, 2012, the Company
incurred the Entine Indebtedness in satisfaction of its
obligation to repurchase certain shares of Dynasil common
stock from Entine pursuant to a put right exercised by Dr.
Entine on February 12, 2012.
The Subordinated Note matures on July 31, 2017, unless
accelerated pursuant to an event of default, as described
below. The Subordinated Note bears interest at the rate of
ten percent (10%) per annum, with interest to be payable
monthly on the last day of each calendar month in each year,
the first such payment to be due and payable on August 31,
2012. Under the terms of the Agreement, beginning on and
with September 30, 2015, and on the last day of each
calendar month thereafter through and including July 31,
2017, the Company will redeem, without premium, $130,434.00
in principal amount of the Subordinated Note together with
all accrued and unpaid interest then due on the amount
redeemed.
The Company's obligations under the Agreement are guaranteed
by the following domestic subsidiaries: Evaporated Metal
Films Corp, RMD Instruments Corp., Radiation Monitoring
Devices, Inc., and Dynasil Biomedical Corp. and Optometrics
Corporation (together, the "Guarantor Subsidiaries").
Further, the Company's obligations and the Guarantor
Subsidiaries' obligations are secured by the grant of a
security interest (subordinate in priority to the Lender's
security interest) in substantially all of the property and
assets of the Company and the Guarantor Subsidiaries in
favor of the Purchaser.
Under the terms of the Agreement and a Subordination
Agreement dated July 31, 2012, among the Company, the
Guarantor Subsidiaries, the Lender and the Purchaser, the
Purchaser and any successor holder of the Subordinated Note
have agreed that the payment of the principal of and
interest on the Subordinated Note shall be subordinated in
right of payment, to the prior payment in full of all
indebtedness of the Company for money borrowed from banks or
other institutional lenders at any time outstanding,
including money borrowed from the Lender under the Original
Loan Agreement.
The Agreement contains customary representations, warranties
and covenants, including covenants by the Company limiting
additional indebtedness, liens, guaranties, mergers and
consolidations, substantial asset sales, investments and
loans, sale and leasebacks, transactions with affiliates and
fundamental changes. In addition, the Agreement contains
financial covenants by the Company (as further defined in
the Agreement) that (i) impose a Consolidated Maximum
Leverage Ratio (consolidated total funded debt to
consolidated EBITDA) equal to or less than (a) 5.0 to 1.00
for each of the rolling four quarter periods ending on
September 30, 2012 and December 31, 2012, and (b) 4.5 to
1.00 for each rolling four quarter period ending on or after
March 31, 2013, and (ii) require a Consolidated Fixed Charge
Coverage Ratio (consolidated EBITDA to consolidated fixed
charges) of not less than (a) .75 to 1.00 for each of the
rolling four quarter periods ending on September 30, 2012
and December 31, 2012, (b) .80 to 1.00 for each of the
rolling four quarter period ending on March 31, 2013 and
June 30, 2013, and (c) .95 to 1.00 for each rolling four
quarter period ending on or after September 30, 2013.
The Agreement also provides for events of default customary
for agreements of this type, including, but not limited to,
non-payment, breach of covenants, insolvency and defaults on
other debt. Upon an event of default, the Purchaser may
elect to declare all obligations (including principal,
interest and all others amounts payable) immediately due
and payable, which shall occur automatically if the Company
becomes insolvent.
As the result of the completion of the Agreement and the
payment of the Entine Indebtedness, the Company has been
able to re-classify $7,555,446 of the debt owed to the
Lender to long-term debt.
The foregoing description is only a summary of the
provisions of the Agreement and is qualified in its entirety
by the terms of the Agreement, a copy of which is filed
herewith as Exhibit 10.1 and incorporated herein by
reference.
On August 2, 2012, the Company issued a press release
announcing that it had entered into the Agreement. A copy
of the press release is furnished herewith as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Description
Number
10.1 Note Purchase Agreement, dated as of July 31, 2012,
by and between Massachusetts Capital Resource Company
and Dynasil Corporation of America.
99.1 Press release, dated August 2, 2012, issued by
Dynasil Corporation of America.
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: August 6, 2012 By: /s/ Richard Johnson
Name: Richard Johnson
Title: Chief Financial Officer
Exhibit Index
Exhibit Description
Number
10.1 Note Purchase Agreement, dated as of July 31, 2012,
by and between Massachusetts Capital Resource Company
and Dynasil Corporation of America.
99.1 Press release, dated August 2, 2012, issued by
Dynasil Corporation of America.