AMENDMENT NO. 2 TO
LOAN AND SECURITY AGREEMENT
Amendment No. 2 (the "Amendment"), dated as of April 12,
2012 and effective as of March 31, 2012 (the "Effective Date"),
to a certain Loan and Security Agreement by and between SOVEREIGN
BANK, N.A. (f/k/a Sovereign Bank), a national banking association
("Lender"), with an address at 0 Xxxxx Xxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxxxxx 00000, and DYNASIL CORPORATION OF AMERICA, a
Delaware corporation ("Borrower").
BACKGROUND
WHEREAS, the Lender and the Borrower made, executed and
delivered a Loan and Security Agreement, dated July 7, 2010, as
amended by a certain Amendment No. 1 to Loan and Security
Agreement dated as of April 1, 2011 (the "Original Loan
Agreement"); and
WHEREAS, the Borrower has requested that the Lender amend
certain terms and provisions of the Original Loan Agreement, and
the Lender is willing to consent to such modifications upon the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises
herein contained, and each intending to be legally bound hereby,
the parties hereto hereby agree as follows:
1. Except as expressly defined herein, all terms used herein
shall have the meanings ascribed to them in the Original Loan
Agreement. This Amendment is intended to amend the Original Loan
Agreement and the Original Loan Agreement shall be so amended
from and as of the Effective Date.
2. The definition of "Scheduled Termination Date" set forth in
the Original Loan Agreement is hereby amended and restated to
read in its entirety as follows:
"Scheduled Termination Date" shall mean July
7, 2013 or such other later date as may be
agreed to in writing by Lender.
3. Section 13 of the Original Loan Agreement is hereby amended
and restated to read in its entirety as follows:
13. FINANCIAL COVENANTS.
Borrower shall maintain and keep in full
force and effect each of the financial
covenants set forth below:
(a) Consolidated Maximum Leverage
Ratio. Borrower shall maintain at all times
a Consolidated Maximum Leverage Ratio which
is equal to or less than (i) 3.00 to 1.00 for
any period ended on or before December 31,
2011 or on or after December 31, 2012, (ii)
3.75 to 1.00 for the rolling four quarter
period ending on Xxxxx 00, 0000, (xxx) 3.25
to 1.00 for the rolling four quarter period
ending on June 30, 2012, and (iv) 3.25 to
1.00 for the rolling four quarter period
ending on September 30, 2012. Borrower's
compliance with this covenant shall be tested
on a rolling four (4) quarters basis as of
the last day of each quarter of each Fiscal
Year of Borrower; provided, however, for the
purposes of determining the Consolidated
Maximum Leverage Ratio at any time during the
Ramp-up Period, the denominator of such ratio
(for the avoidance of doubt, such denominator
includes all items set forth in clause (ii)
of the definition of "Consolidated Maximum
Leverage Ratio") shall be determined as
follows: (x) at September 30, 2010, on the
basis of the fiscal quarter then ended, times
4; (y) at December 31, 2010, on the basis of
the six (6) months then ended, times 2; and
(z) at March 31, 2011, on the basis of the
nine months then ended, times 4/3. Borrower
and Lender hereby agree that, for purposes of
calculating Consolidated Maximum Leverage
Ratio hereunder during the Ramp-up Period,
the amounts set forth in clauses (b), (c),
(d) and (i) of the definition of
"Consolidated EBITDA" shall not be annualized
for any period.
(b) Consolidated Fixed Charge Coverage
Ratio. Borrower shall maintain at all times
a Consolidated Fixed Charge Coverage Ratio of
not less than (i) 1.20 to 1.00 for any period
ended on or before December 31, 2011 or on or
after December 31, 2012, (ii) 0.90 to 1.00
for the rolling four quarter period ending on
Xxxxx 00, 0000, (xxx) 1.05 to 1.00 for the
rolling four quarter period ending on June
30, 2012, and (iv) 1.10 to 1.00 for the
rolling four quarter period ending on
September 30, 2012. Compliance with this
covenant shall be tested on a rolling four
(4) quarters basis as of the last day of each
quarter of each Fiscal Year of Borrower;
provided, however, for the purposes of
determining the Consolidated Fixed Charge
Ratio at any time prior to June 30, 2011 (the
SRamp-up Period"), the numerator (for the
avoidance of doubt, such numerator includes
all items set forth in clause (x) of the
definition of "Consolidated Fixed Charge
Coverage Ratio") and the denominator of such
ratio (for the avoidance of doubt, such
denominator includes all items set forth in
clause (ii) of the definition of
"Consolidated Fixed Charge Coverage Ratio")
shall be determined as follows: (i) at
September 30, 2010, on the basis of the
fiscal quarter then ended, times 4; (y) at
December 31, 2010, on the basis of the six
(6) months then ended, times 2; and (z) at
March 31, 2011, on the basis of the nine
months then ended, times 4/3. Borrower and
Lender hereby agree that, for purposes of
calculating Consolidated Fixed Charge Ratio
hereunder during the Ramp-up Period, the
amounts set forth in clauses (b), (c), (d)
and (i) of the definition of "Consolidated
EBITDA" shall not be annualized for any
period.
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(c) Unfunded Capital Expenditures.
During the Fiscal Year of the Borrower ending
on September 30, 2011, Borrower shall not
incur Unfunded Capital Expenditures in excess
of $2,000,000.00 in the aggregate (tested as
of the last day of each fiscal quarter of
such Fiscal Year on a year-to-date basis).
During each Fiscal Year of the Borrower
ending after September 30, 2011 but on or
before September 30, 2012, Borrower shall not
incur Unfunded Capital Expenditures in excess
of $3,250,000.00 in the aggregate (tested as
of the last day of each fiscal quarter ended
after September 30, 2011 on a year-to-date
basis). During each Fiscal Year of the
Borrower ending after September 30, 2012,
Borrower shall not incur Unfunded Capital
Expenditures in excess of $2,000,000.00 in
the aggregate (tested as of the last day of
each fiscal quarter ended after September 30,
2012 on a year-to-date basis).
(d) Minimum Liquidity. At all times,
Borrower shall maintain aggregate minimum
cash balances of not less than $1,000,000.00
in accounts maintained by the Borrower with
the Bank (to be verified in writing by
Borrower as of the last day of each fiscal
quarter of each Fiscal Year)."
4. All representations, warranties and covenants of the
Borrower contained in the Original Loan Agreement are hereby
ratified and confirmed by the Borrower without condition as if
made anew upon the execution of this Amendment and are hereby
incorporated by reference. All representations, warranties and
covenants of the Borrower, whether hereunder, or contained in the
Original Loan Agreement or in any Other Agreement shall remain in
full force and effect until all amounts due under the Original
Loan Agreement, as amended herein, the Notes, and each Other
Agreement are satisfied in full.
5. Except as modified by the terms hereof, all terms,
provisions and conditions of the Original Loan Agreement are in
full force and effect and are hereby incorporated by reference as
if set forth herein. This Amendment and the Original Loan
Agreement shall be deemed as complementing and not restricting
the Lender's rights hereunder or thereunder. If there is any
conflict or discrepancy between the provisions of this Amendment
and any provision of the Original Loan Agreement, the terms and
provisions of this Amendment shall control and prevail.
6. The Borrower hereby represents, warrants and certifies to
the Lender that no Default or Event of Default has occurred and
is presently existing under the Loan Documents.
7. The Borrower hereby further represents, warrants and
certifies to the Lender that Schedule A attached hereto is a
true, correct and complete list of all fictitious or alternate
names and trade names utilized by the Borrower or any Guarantor
in connection with the conduct of their present business
operations and neither the Borrower nor any Guarantor has
registered, or applied to register, any such name with the United
States Patent and Trademark Office.
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8. Pursuant to the terms of the Original Loan Agreement, as
amended herein, the Borrower has provided to the Lender, as
security for the payment of all Loans now or in the future made
by the Lender to the Borrower and for the payment or other
satisfaction of all other Liabilities, a first priority,
perfected security interest in the Collateral. The Borrower
hereby ratifies and confirms the liens and security interests
granted under the Original Loan Agreement and the Other
Agreements; and further ratifies and confirms, without condition,
that the perfected status and priority of such liens and security
interests shall not be affected in any way by the amendments to
the Original Loan Agreement as set forth herein.
9. In order to induce the Lender to enter into this Amendment,
the Borrower shall first satisfy the following conditions
precedent:
(a) The Borrower shall have executed (and/or caused to
be executed), and delivered to the Lender the following:
(i) this Amendment;
(ii) a Confirmation of Guarantee duly
executed by each of Optometrics Corporation, Evaporated
Metal Films Corp., Radiation Monitoring Devices, Inc.,
RMD Instruments Corp. and Dynasil Biomedical Corp.
(collectively, the "Guarantors"), in form and substance
satisfactory to the Lender in its sole discretion (the
"Confirmation of Guarantee"); and
(iii) such other documents and instruments as
the Lender may reasonably request.
(b) The Borrower shall also deliver to the Lender, or
the Lender shall have obtained in the case of the items
listed in clauses (iii), (iv) and (v) below, the following:
(i) copies of the resolutions of the Board of
Directors of the Borrower authorizing the execution and
delivery of this Amendment and any other documents to
be executed by the Borrower in connection herewith;
(ii) copies of the resolutions of the Board of
Directors of each Guarantor authorizing the execution
and delivery of the Confirmation of Guarantee and any
other documents to be executed by such Guarantor in
connection herewith;
(iii) a certificate of the Secretary of State
of the state of incorporation of the Borrower as to its
good standing;
(iv) a certificate of the Secretary of State of
the state of incorporation of each Guarantor as to its
good standing;
(v) such Uniform Commercial Code searches for the
Borrower as are reasonably determined necessary by the
Lender;
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(vi) an updated secretary's certificate for
the Borrower and each Guarantor;
(vii) an updated incumbency certificate for
the Borrower and each Guarantor; and
(viii) any and all other documents, agreements
and certificates reasonably requested by the Lender to
carry out the intentions of this Amendment.
10. This Amendment (a) shall be construed and enforced in
accordance with the laws of the State of New Jersey; (b) shall
inure to the benefit of, and be binding upon, the parties hereto
and their respective successors and assigns; (c) may be executed
in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument; and (d) may only be amended or modified pursuant
to a writing signed by the parties hereto.
11. The Borrower hereby agrees that it will pay or cause to be
paid, or reimburse the Lender for, all of the costs and expenses
incurred by the Lender in connection with negotiation,
preparation and enforcement of this Amendment and the
transactions contemplated herein, including without limitation
the fees and out-of-pocket expenses of the Lender's legal
counsel.
12. The Borrower hereby waives any and all rights which it may
have to a jury trial in connection with any litigation commenced
or against the Lender with respect to the right and obligations
of the parties hereto.
IN WITNESS WHEREOF, the undersigned have caused this
Amendment to be executed and delivered by their respective
officers thereunto duly authorized.
DYNASIL CORPORATION OF AMERICA
By:___________________________________
_
Name: Xxxxxxx Xxxxxxx
Title: Chief Financial Officer
SOVEREIGN BANK, N.A.
By:___________________________________
_
Name: Xxxxxx Xxxxx
Title: Senior Vice President
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SCHEDULE A
LIST OF FICTITIOUS OR ALTERNATE NAMES AND TRADE NAMES
1. RMD Instruments Corp. - utilizes the name Dynasil Products
2. Dynasil Corporation of America - utilizes the name Dynasil
Fused Silica
