Attached files
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) May 1, 2014
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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 1.01 - Entry into a Material Definitive Agreement
The information set forth in Item 2.03 regarding Dynasil's entry into,
and borrowings under, the Bank Loan Agreement is incorporated herein by
reference.
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 termination of the Santander Loan Agreement, 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 May 1, 2014, Dynasil Corporation of America ("Dynasil"), entered into
a loan and security agreement (the "Bank Loan Agreement") and line of
credit note (the "Note") with Middlesex Savings Bank (the "Bank")
pursuant to which the Bank agreed to provide up to $4 million, subject
to the availability restrictions described below, under a revolving line
of credit loan to Dynasil for general corporate purposes. The Bank Loan
Agreement provides that the loan expires on May 1, 2017, at which time
all outstanding principal and unpaid interest shall become due and
payable. The Bank Loan Agreement and the Note are secured by (i) a
security interest in substantially all of the Company's personal
property and (ii) a sixty-five percent (65%) of the Dynasil's equity
interests in its UK subsidiary, Hilger Crystals, Ltd. Advances are
available under the Note based on a borrowing base determined monthly
based on eligible billed and unbilled accounts receivable and eligible
inventory. The interest rate under the Note is equal the Prime Rate,
but in no event less than 3.25%.
Dynasil, as Borrower, and all of Dynasil's wholly owned active U.S.
subsidiaries including: Evaporated Metal Films Corp., Optometrics
Corporation, Radiation Monitoring Devices, Inc. and Dynasil Biomedical
Corporation, as Guarantors, executed and delivered various supporting
agreements dated May 1, 2014 in favor of the Bank. Such Guarantors also
secured their obligations by granting security interests in
substantially all of their respective personal property.
Upon the closing of the Bank Loan Agreement on May 1, 2014, Dynasil used
the proceeds to repay in full the approximately $1.8 million of
principal and accrued interest and fees owed to Santander Bank under the
Company's existing Loan and Security Agreement dated as of July 7, 2010,
as amended (the "Santander Loan Agreement"), by and between the Company
and Santander Bank, N.A. (formerly known as Sovereign Bank, N.A.). The
Santander Loan Agreement was terminated on May 1, 2014. In addition,
Dynasil used the proceeds from the Bank Loan Agreement to repay $600,000
of accrued interest due to Massachusetts Capital Resource Company
("MCRC"). Dynasil, MCRC and the Bank entered into a subordination
agreement pursuant to which MCRC agreed that the payment of the
principal of and interest due on the pre-existing note to MCRC shall be
subordinated to indebtedness under the Bank Loan Agreement. As a result,
as of May 1, 2014, the Company has total indebtedness outstanding
consisting of $2.4 million newly drawn senior debt owed to Middelsex
Savings Bank and approximately $3 million of exiting subordinated debt
owed to Massachusetts Capital Resource Company due July 2017.
The Bank Loan Agreement contains customary representations, warranties
and covenants. The Bank Loan Agreement limits Dynasil and its
subsidiaries' ability to, among other things: be a party to a merger,
incur additional indebtedness, incur liens and make investments, without
the prior written consent of the Bank. So long as Dynasil will, after
payment, be in compliance with the financial covenant referenced below,
the Bank Loan Agreement permits Dynasil to pay dividends and make other
distributions. In other circumstances, Dynasil may pay dividends and
make other distributions with the prior written consent of the Bank.
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, at the close of each fiscal
quarter, Dynasil to maintain a Debt Service Coverage ratio, as defined,
of at least 1.20 to 1.00 on a trailing four quarter basis.
The Bank Loan Agreement provides for events of default customary for
credit facilities of this type, including but not limited to non-
payment, defaults on other debt, misrepresentation, breach of covenants,
representations and warranties, insolvency and bankruptcy and the
occurrence of a material adverse change, as defined. Upon an event of
default, the amounts outstanding under the Bank Loan Agreement may be
declared by the Bank to be immediately due and payable and the Bank's
agreement to make advances under the Note may be terminated. In
addition, upon the occurrence of a Change of Management, as defined, the
amounts outstanding under the Bank Loan Agreement may be declared by the
Bank to be immediately due and payable and the Bank's agreement to make
advances under the Note may be terminated.
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 May 2, 2014, 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 May 1, 2014, by and
between Middlesex Savings Bank, as Lender, and Dynasil Corporation of
America, as Borrower.
10.2 Revolving Line of Credit, dated as of May 1, 2014, by and between
Middlesex Savings Bank, as Lender, and Dynasil Corporation of America,
as Borrower.
99.1 Dynasil Corporation of America press release dated May 2, 2014.
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: May 2, 2014 By: /s/ Peter Sulick
Peter Sulick
Interim President and Interim CEO
EXHIBIT INDEX
Exhibit
No. Description
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10.1 Loan and Security Agreement, dated as of May 1, 2014, by and
between Middlesex Savings Bank, as Lender, and Dynasil
Corporation of America, as Borrower.
10.2 Revolving Line of Credit, dated as of May 1, 2014, by and
between Middlesex Savings Bank, as Lender, and Dynasil
Corporation of America, as Borrower.
99.1 Dynasil Corporation of America press release dated May 2, 2014.