LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT ("Agreement") is made this 1st day of
May, 2014 by and between MIDDLESEX SAVINGS BANK ("Lender"), a Massachusetts
banking corporation with a principal place of business at 0 Xxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, and DYNASIL CORPORATION OF AMERICA ("Borrower"),
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware with a principal place of business located at 00
Xxxx Xxxxxx, Xxxxxxxxx, XX 00000.
In order to induce the Lender to make a certain loan to and otherwise
extend credit to Borrower, all as particularly described in this Agreement,
and in consideration of the mutual covenants, agreements, representations and
warranties herein contained and the faithful performance of said covenants and
agreements, the Lender and Borrower covenant, agree, represent and warrant as
follows:
SECTION 1
TERMS AND CONDITIONS OF LOAN
1.1 Loan and Note. The Lender agrees to extend to Borrower the
following loan evidenced by the note described herein:
1.1.2 Revolving Line of Credit Loan. A Revolving Line of Credit
Loan, evidenced by a Revolving Line of Credit Note allowing advances
aggregating not more than Four Million and 00/100 ($4,000,000.00) Dollars (the
"Line of Credit Note"). The availability of Advances under the Revolving
Line of Credit Loan shall expire on May 1, 2017, unless renewed by the Lender
in writing. Such date, as it may be so extended, is referred to as the
"Advance Period Termination Date" upon which date all outstanding principal
and unpaid interest shall become due and payable.
Such loan is referred to as the "Loan" and such Line of Credit
Note is referred to as the "Note" as such Note may be modified, extended,
and/or amended from time to time.
The Borrower agrees to repay to the Lender all advances (each, an
"Advance"), whether pursuant to the Note or otherwise, all of which, together
with all other indebtedness, liabilities and commitments which the Borrower
owes to the Lender, whether (a) arising under this Agreement or otherwise, (b)
now existing or hereafter arising, or (c) direct or indirect, absolute or
contingent, joint or several, due or not due, are referred to as the
"Obligation(s)."
The Loan is being made upon the terms contained in this Agreement,
the Note, and any other Security Instrument (as defined herein), the terms of
which are incorporated herein.
1.2 Use of Proceeds. The proceeds of the loan will be used to pay off
or pay down existing debt and for general corporate purposes.
1.3 Security. As security for Borrower's repayment of the
Obligations, Borrower hereby grants to Lender a continuing first priority
security interest in all of Borrower's personal property, now owned or
hereafter acquired, including but not limited to: (i) all equipment,
inventory, farm products, fixtures and all other goods; and (ii) all accounts,
chattel paper, deposit accounts, documents, investment property, letter of
credit rights, letters of credit, money, contract rights, documents,
instruments, proceeds of insurance, and all other general intangibles; and
(iii) any substitutions, replacements, accessions and all proceeds and
products of the foregoing (the "Collateral") as such types of collateral are
defined in the Uniform Commercial Code as enacted in the Commonwealth of
Massachusetts.
Borrower acknowledges that the Collateral and the collateral provided by
the Guarantors to secure their Guaranties includes all of Borrower's and
Guarantors' intellectual property, including but not limited to all existing
and future patents, copyrights and trademarks. Set forth on Schedule 1.3
attached hereto is a full and complete list of all currently existing patents
held by Borrower, Guarantors and any other subsidiaries of Borrower. Borrower
agrees to update Schedule 1.3 annually at the time that it furnishes annual
financial statements to Lender pursuant to Section 4.2.2.
Upon Lender's request Borrower shall execute such supplemental security
agreements and notices of security agreements with respect to such
intellectual property as Lender may require and co-operate with Lender in
filing such security agreements and or notices of security interests with the
United States Patent and Trademark Office and or the United States Copyright
Office, as applicable. In addition, if and to the extent that any of the
equipment which constitutes a part of the Collateral is subject to the
Certificate of Title requirements of G.L. c.90D, or any similar requirements
of any other jurisdiction where said equipment may be kept (except for
Borrower's 1982 truck, VIN 3-1FDYW8OUXCVA34064) the Borrower shall execute and
deliver to Lender any and all documents necessary to duly record Lender's lien
on the applicable Certificate of Title.
The Borrower authorizes the Lender to authenticate any financing
statement, continuation statement or any other document, certificate or record
to evidence or perfect Lender's lien on and security interest in the
Collateral. For so long as Borrower has any outstanding obligations to
Lender, Borrower shall not file any termination statement of any financing
statement filed by Lender.
1.4 Advances.
Borrower may elect in writing to draw Advances under the Revolving Line
of Credit Note in accordance with the Advance Rate, which, as defined herein,
shall include eighty (80%) percent of Eligible Accounts Receivable. "Eligible
Accounts Receivable" means accounts receivable of the Borrower and the
Guarantors which (i) arise from the sale of goods which have been shipped or
the performance of services which have been performed; (ii) are not
outstanding for more than 90 days after the date of the invoice for such goods
nor more than sixty (60) days from the due date thereof; (iii) are not
represented by a note or other negotiable instrument; (iv) the account debtor
is credit worthy; (v) the account debtor is not subject to any insolvency
proceeding; (vi) are not due from a subsidiary or an affiliate; (vii) are due
from an account debtor located in the United States, or an account debtor in
another location where payment of the receivable is insured or supported by a
letter of credit acceptable to Lender; and (viii) have not been deemed
unsatisfactory by prior notice given by Lender to the Borrower, which notice
shall be effective to exclude any such Account Receivable from Eligible
Accounts Receivable as of the next following due date for a Borrowing Base
Certificate. Notwithstanding the immediately preceding sentence, if, at the
time of any requested Advance, more than twenty percent (20%) of Borrower's or
a Guarantor's accounts receivable with any one customer are outstanding for
more than ninety (90) days from the date of invoice, such customer's accounts
receivable shall not be classified as Eligible Accounts Receivable. For
purposes hereof and in connection with the Borrowing Base Certificate, any
account receivable other than an Eligible Account Receivable shall be an
Ineligible Account Receivable.
The Advance Rate shall also include fifty (50%) percent of Eligible
Unbilled Receivables of the Borrowers and the Guarantors, which for the
purposes hereof and in connection with the Borrowing Base Certificate, shall
be defined as receivables that have not yet been billed, excluding those which
remain unbilled for forty-five (45) or more days after completion of the goods
or services to which such unbilled receivables relate.
The Advance Rate shall also include fifty (50%) percent of Eligible
Inventory, which for purposes hereof, and in connection with the Borrowing
Base Certificate, shall be defined as inventory that: (i) the Borrower or a
Guarantor owns free and clear of all liens and encumbrances; (ii) consists
only of raw materials or finished goods (as opposed to work in process,
packing materials or other unfinished goods); (iii) is located at a specific
location; (iv) is current inventory (i.e., not out of date or out of style);
(v) is not damaged; (vi) is not in the hands of third parties other than
warehouses that have issued receipts therefor in the name of Lender; and (vii)
is otherwise acceptable to Lender;
In calculating the Borrowing Base, the Borrower shall deduct from
Eligible Accounts Receivable and Eligible Unbilled Receivables the amount of
any (i) deposit or payment which an account debtor may have paid with respect
to the goods or services to which such account receivable relates, (ii)
potential set off, (iii) dispute, (iv) any advertising or other allowance
(except an allowance for prompt payment) that will be deducted from the
receivable in the ordinary course of collection, and (v) accounts receivable
in which Lender does not have a valid, perfected and enforceable security
interest.
The Borrower shall furnish to Lender a computation of the Borrowing Base
on the form attached as Schedule 1.4 hereto (the "Borrowing Base Certificate")
together with supporting accounts receivable and payable schedules and
together with an inventory summary, all at the time of the initial request for
an Advance and thereafter, monthly within twenty (20) days of the end of each
month. Each such Borrowing Base Certificate shall be prepared as of the close
of business on the last business day of the subject month and be signed by the
Borrower's Chief Financial Officer or President. Lender shall be under no
obligation to make any Advance if the Borrower fails to furnish a current
Borrowing Base Certificate.
Any advance, extension, or loan of funds pursuant to the Note will be
made only if there then exists no Event of Default under the Note, this
Agreement, or any other document executed or delivered in connection herewith,
including but not limited to (i) a Stock Pledge Agreement regarding Xxxxxx
Xxxxxxx, Ltd., and (ii) Entity Guaranties of Optometrics Corporation,
Evaporated Metal Films Corporation, Radiation Monitoring Devices, Inc.,
Dynasil Biomedical Corp. and RMD Instruments Corporation (the "Guarantors" and
each a "Guarantor"), or any other instrument delivered or to be delivered by
Borrower or Guarantors in connection with any other obligation of the Borrower
to the Lender; such documents, together with various other instruments
securing the Obligations, including those instruments executed and delivered
as of even date herewith in connection with the Loans, and as the same may be
hereafter amended (the terms and provisions of all of which are incorporated
herein by reference) are hereinafter referred to as the "Security
Instruments".
Whether or not the entire face amount of the Note shall have been
advanced to or for the benefit of Borrower, the Lender shall, at all times, be
entitled to make additional Advances (a) to discharge encumbrances at any time
levied or placed upon the Collateral, pay premiums on insurance on the
Collateral, and/or pay expenses for maintenance and preservation of the
Collateral; (b) to pay all of the Lender's reasonable attorneys' fees and all
other costs and expenses incurred by the Lender in connection with the
preparation of this Agreement and related documentation and the protection or
enforcement of the Lender's rights pursuant to this Agreement; and (c) to pay
the Lender's usual and customary charges for services rendered by it to
Borrower; and each such additional advance shall be a part of the Obligations
and shall at all times be subject to the terms and conditions of this
Agreement.
1.5 Balances to be Maintained with Lender. Borrower shall maintain
its main operating account relationship with Lender. Monthly payments due
under any Obligation shall be deducted from the Borrower's operating account
when due.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF BORROWER
The Borrower represents and warrants to the Lender that:
2.1 Organization and Authority.
2.1.1 Borrower was formed in the State of Delaware on February 11,
2008, and has a principal place of business at 00 Xxxx Xxxxxx, Xxxxxxxxx, XX
00000. Other than Borrower's principal place of business, 0 Xxxxx Xxx, Xxxx,
XX 00000, 000 Xxxxxxx Xxxxxx, Xxxxx 00, Xxxxxxxxx, XX 00000, 000 Xxxxxx
Xxxxxx, Xxxxxx, XX 00000, 000 Xxxxxx Xxxx, Xxxx Xxxxxx, XX 00000, and 00
Xxxx Xxxxxx, Xxxxxxxxx, XX 00000, there are no other locations at which
assets or records concerning the business of Borrower are kept. Borrower (a)
is in good standing as a domestic corporation under the laws of the State of
Delaware, (b) has adequate power and authority to own its properties and
assets and to carry on its business as and where now conducted and (c) has the
power and authority to execute, deliver and perform this Agreement and the
Security Instruments in accordance with the terms thereof.
2.1.2 All action required of Borrower for the lawful execution and
delivery to the Lender of, and performance of this Agreement and the Security
Instruments has been taken, and this Agreement and the Security Instruments
contain legal, valid and binding obligations, each of which is enforceable in
accordance with its respective terms. Neither the execution and delivery of
this Agreement or the Security Instruments, nor compliance with their terms,
conditions and provisions, will conflict with or result in a breach of any of
the terms, conditions or provisions of the Certificate of Organization or By-
laws, or other organizational documents or any material agreements of Borrower
or of any material restriction, agreement or instrument to which Borrower is
now a party or by which it is bound, nor will such actions constitute a
default under any of the foregoing, or result in the creation or imposition of
any lien, encumbrance or charge of any nature whatsoever upon the Property or
any assets of Borrower.
2.2 Financial Statements. Borrower will deliver to Lender all
financial statements required hereunder within the designated time period (the
"Financials"), and will deliver to Lender all other statements, data and
projections requested by Lender in connection with its request for credit.
Such Financials shall fairly represent the financial condition of Borrower as
of the date thereof, and shall be prepared in accordance with generally
accepted accounting principles. Upon delivery of any Financials, Borrower
shall certify to Lender that it has no knowledge of any liabilities of
Borrower, contingent or otherwise, not reflected in said Financials that would
be required to be reflected therein in accordance with generally accepted
accounting principles.
2.3 Contingent Obligations; Tax Payments; No Adverse Change.
Borrower: (a) has no knowledge of any contingent obligations or liabilities
of Borrower for taxes or long-term commitments which are not shown in the
balance sheets included in the Financials referred to in Section 2.2 or noted
therein; (b) has not failed to file all required information tax returns or
failed to pay all applicable federal, state and local taxes shown to be due
(other than taxes which may hereafter be paid without penalty) and neither has
any knowledge of any deficiency or additional assessment in connection
therewith for which no provision has been made on the books of such Borrower;
and (c) has no knowledge of any material adverse change in the business,
properties or condition (financial or otherwise) of such Borrower.
2.4 Pending Litigation. There are no actions, suits or proceedings
pending, or to the knowledge of Borrower, threatened against or affecting
Borrower or its properties or assets, in any court or before or by any
federal, state, municipal or other governmental body, and Borrower is not in
default with respect to any order or other process of any court or federal,
state, municipal or other governmental body.
2.5 Title to Assets. As of the date hereof, Borrower has good and
clear record and marketable title to all of its assets, to all property and
assets reflected in its most recent financial statements submitted to Lender,
and to property and assets since acquired, except property and assets
subsequently disposed of in the ordinary course of business, and except for
security interests granted to (i) Massachusetts Capital Resource Company on
July 31, 2012, and (ii) Hewlett-Packard Financial Services Company on November
19, 2012.
2.6 Corporate Matters. Set forth on Schedule 2.6 attached hereto are
(a) the name and address of each stockholder of Borrower holding more than 5%
ownership interest in Borrower and the percentage of ownership held by each;
(b) the name and title of each officer and director of Borrower; (c)
designation of the Chief Executive and Financial Officers of the Borrower; and
(d) the names, addresses and percentage of ownership of all corporate
subsidiaries of Borrower. Borrower agrees promptly to notify the Lender in
writing within thirty (30) days of any changes in or additions to the
information contained on Schedule 2.6.
SECTION 3
NEGATIVE COVENANTS OF BORROWER
Without the prior written consent of the Lender, so long as this
Agreement is in effect, Borrower covenants that it will not:
3.1 Merger or Consolidation; be a party to a merger, consolidation or
other change in its organizational structure, except where Borrower remains
the surviving and controlling business entity, and, in any event, only with
the prior written consent of the Lender following prior written notice from
Borrower, which shall not be unreasonably withheld.
3.2 Other Indebtedness; incur, create, issue, assume, guarantee or
permit to exist any indebtedness for borrowed money or for the purchase of
property or assets, other than (i) trade credit extended to Borrower on
customary terms in the ordinary course of business;
(ii) indebtedness in connection with purchase money security interests or in
connection with capital leases, provided that the sum of such indebtedness
does not exceed $500,000; (iii) unsecured intercompany indebtedness; and (iv)
existing loan obligations previously disclosed to Lender, including the
unadvanced portion of the existing loans granted by the Town of Ayer and by
MBDC.
3.3 Liens, Security Interests, Etc.; pledge, mortgage or otherwise
encumber or subject to, or permit to exist upon or be subject to, any lien,
encumbrance, security interest, or charge on, the property or assets of any
kind or character at any time owned by Borrower or any Guarantor, or acquire
or agree to acquire any property or assets of any character subject to any
lien, security interest, conditional sales agreement, lease or other title
retention device (other than in favor of the Lender) except (a) liens in
connection with workers' compensation or unemployment insurance, taxes, other
statutory obligations or similar charges all arising in the ordinary course of
business and not overdue, or, if overdue, being contested in good faith with
adequate reserves established for payment thereof; (b) liens of carriers,
warehousemen, mechanics and materialmen, incurred in the ordinary course of
business and not overdue, or, if overdue, being contested in good faith with
adequate reserves established for payment thereof; (c) purchase money security
interests or liens incurred in connection with the acquisition or capital
lease of equipment or other fixed assets provided that such security interests
are limited to the property so acquired and provided that the total
outstanding indebtedness therefore does not exceed $500,000; (d) liens created
by any of the Security Instruments; (e) liens for taxes not yet delinquent or
which are being contested in good faith by appropriate proceedings (and for
the payment of which adequate reserves are provided); (f) liens in existence
on the date of this Agreement; (g) zoning restrictions, easements and
restrictions of the use of real property and minor irregularities related
thereto, which do not materially impair the use of such property; (h)
licenses, sublicenses, leases or subleases granted to third parties by
Borrower or any Guarantor in the ordinary course of its business; (i)
purported liens evidenced by filing of precautionary UCC financing statements
relating solely to operating leases of personal property entered into in the
ordinary course of business; and (j) customary rights of setoff, revocation,
refund or chargeback under deposit agreements or under the UCC of banks or
other financial institutions where the Borrower or any of the Guarantors
maintain deposits in the ordinary course of business.
3.4 Loans and Investments; make any loan or advance (other than in the
ordinary course of business and other than inter-company loans made to a
Guarantor) or declare any dividends or make any distributions to any
individual or entity or make any investment in or with any individual or
entity, except Borrower may pay dividends, provided that after such payments,
Borrower is in compliance with the financial covenant set forth in Section 4.9
of this Agreement.
SECTION 4
AFFIRMATIVE COVENANTS OF BORROWER
So long as this Agreement is in effect, Borrower covenants that
it will:
4.1 Performance of Obligations; duly and punctually (a) make or cause
to be made all payments due the Lender pursuant to this Agreement, the Notes
and the Security Instruments; (b) perform or cause to be performed all other
obligations to the Lender provided in this Agreement and in the Security
Instruments; (c) perform or cause to be performed all obligations of Borrower
pursuant to the terms of: (i) any other indebtedness of Borrower for money
borrowed; and (ii) all leases under which it is lessee or lessor;
4.2 Financial Information; provide to the Lender, upon reasonable
request, financial information concerning Borrower; and maintain its books and
records in an accurate, up-to-date and standardized fashion. Without limiting
the generality of the foregoing, Borrower shall:
4.2.1 as soon as available and in any event within forty-five (45)
days following the close of each fiscal quarter, provide Lender with copies of
internally prepared financial statements consisting of a balance sheet and
statements of earnings, in each case prepared in reasonable detail and in
accordance with generally accepted accounting principles, applied on a
consistent basis, and prepared on a comparative basis to the comparable period
of the previous fiscal year, and certified as accurate and complete to the
best of his or her knowledge and belief by an officer of Borrower; and
4.2.2 as soon as available and in any event within one hundred
twenty (120) days following the close of each fiscal year, provide the Lender
with copies of financial statements consisting of a balance sheet and
statements of changes in financial position and of earnings, in each case
prepared in reasonable detail and in accordance with generally accepted
accounting principles, applied on a consistent basis, and prepared on a
comparative basis to the previous fiscal year, all upon audit and prepared by
independent certified public accountants satisfactory to the Lender, and
certified as accurate and complete to the best of his knowledge and belief by
an officer of Borrower; and
4.2.3 within thirty (30) days of each fiscal year end, submit to
Lender a projected budget for the forthcoming fiscal year; and
4.2.4 a representative of Lender may, at Lender's option and at
any time, but in the absence of any Event of Default not more frequently than
once per fiscal year, perform an examination (each, an "Exam") of Borrower's
books and records, to be paid for by Borrower.
4.3 Maintenance of Existence; Operation of Business; Etc.; (a) keep in
full force and effect, to the extent required, its legal existence, rights and
franchises; (b) continue to conduct and operate its business substantially as
now conducted actively and in good faith; (c) preserve, maintain and protect
its rights and keep its properties and assets in good repair, working order
and condition and make (or cause to be made) all needful and proper repairs,
renewals, replacements, additions and improvements thereto, reasonable wear
and tear and damage by insured casualty only, excepted; (d) pay all taxes,
assessments, governmental charges and levies other than those contested in
good faith for which reasonable reserves are maintained and (e) comply with
all applicable and material laws and regulations wherever its business is
conducted.
4.4 Insurance on Properties; keep or cause to be kept insured all its
insurable properties (specifically including leased properties and assets in
which Borrower has an insurable interest) against such risks as are usually
insured against by entities engaged in the same or similar business and
maintain such other insurance as may be required by law or as may be
reasonably requested by the Lender.
4.5 Further Assurances; from time to time, execute and deliver and
furnish to the Lender such further agreements, documents or statements, and do
such other acts as the Lender may reasonably request, to confirm to the Lender
all rights specified by this Agreement and, without limiting the generality of
the foregoing, together with each delivery of financial statements required
pursuant to this Agreement, furnish to Lender a certificate executed on behalf
of Borrower by an officer stating that (a) the signer has reviewed the
relevant terms of documentation executed and delivered in connection with this
Agreement and is familiar with the operations and financial condition of
Borrower during the accounting period in question; (b) there is no existence
of any Event of Default under this Agreement or the Security Instruments or
event which, with the giving of notice or lapse of time, would become an Event
of Default, or (c) if there is such a condition or Event of Default, the
nature and period thereof and what action has been taken, is being taken or is
proposed with respect thereto, provided that no such notice, action or
proposed action shall affect Lender's rights hereunder with respect to an
Event of Default.
4.6 Debt Between the Corporation and Its Officers, Directors and
Shareholders; subordinate all debt between or among Borrower and any of its
stockholders, officers and directors, to that of Lender.
4.7 Attorneys' Fees; pay upon demand all reasonable counsel fees and
expenses incurred by the Lender in connection with the preparation of this
Agreement or the completion of the financing transactions contemplated hereby
and pay all reasonable attorneys' fees and expenses which the Lender may incur
in protecting or enforcing its rights under this Agreement. The Lender is
hereby authorized to pay all such fees and expenses and to charge the same to
Borrower's loan account. Lender shall provide Borrower with an itemized
statement of any such fees prior to payment by Borrower.
4.8 Notice of Certain Events; immediately, upon either Borrower's
becoming aware of the existence of any Event of Default or of any condition or
event which would, upon notice or lapse of time or both constitute an Event of
Default, or of the commencement of any suits or proceedings which, if
adversely determined as to Borrower, would have a material adverse effect on
the financial condition, business or properties of Borrower, or of any other
event or condition which could have a material adverse effect on the financial
condition, business or properties of Borrower, give written notice to Lender
specifying the nature and duration thereof and the action proposed to be taken
with respect thereto. The giving of such notice by Borrower shall not affect
Lender's rights hereunder with respect thereto.
4.9 Debt Service Coverage. At the close of each fiscal quarter of the
Borrower, maintain a Debt Service Coverage ratio of at least 1.20 to 1.00 on a
trailing four quarter basis. "Debt Service Coverage" shall be determined for
the relevant period, and shall mean (i) Adjusted EBITDA as defined below, less
dividends and distributions, less unfinanced capital expenditures (excluding
the one-time cash expenditures for acquisitions approved by Lender and capital
expenditures associated with discontinued operations), less cash taxes paid
for on-going operations (excluding cash taxes paid for discontinued
operations) plus cash tax refunds, less cash investment in joint ventures and
non-controlling interests, divided by (ii) scheduled payments of all principal
and cash interest paid on all debt, including Subordinated Debt, in such
period. The testing of compliance herewith shall be based, when applicable,
on the Borrower's normalized operating results for fiscal year 2013 and for
fiscal year 2014 to date, as reported to and approved by Lender.
For the purposes of this Section 4.9 Adjusted EBITDA shall mean
net income of Borrower on a consolidated basis, calculated in accordance with
generally accepted accounting principles, adjusted for loss or gain from joint
ventures and non-controlling interests, and adjusted for loss or gain from
asset sales, and adjusted for loss or gain from discontinued/divested
operations, and adjusted for foreign exchange loss or gain; plus interest
expense, tax provision, amortization, depreciation, non-cash stock
compensation expense, one-time bonus payments paid in 2014, non-recurring
items or expenses associated with discontinued/divested operations not
included in the foregoing adjustment for such items, and other non-cash
expense items.
4.10 Time of Testing. Borrower's compliance with the financial
covenant set forth in Sections 4.9 above shall be tested at the time of
Borrower's furnishing of financial statements to the Lender as required by
Section 4.2.1, at which time the Borrower shall also furnish the Lender with
completed Covenant Compliance Certificates in the form attached hereto as
Schedule 4.10.
SECTION 5
MANAGEMENT
5.1 Change of Management; Definition. If, at any time while this
Agreement is in effect Borrower shall not employ its current Chief Executive
Officer (the "CEO") or its current Chief Financial Officer ("CFO") actively
serving in such capacities (except for temporary disability not exceeding
ninety consecutive (90) days), for purposes of this Section, a Change of
Management shall be deemed to have occurred. See Schedule 2.6 for current
incumbencies and designation of CEO and CFO of Borrower.
5.2 Change of Management: Lender's Option to Declare Indebtedness Due.
No earlier than one hundred fifty (150) days after a Change of Management, if
Lender has not approved a duly appointed successor or successors, Lender may
declare all indebtedness (including all then outstanding principal pursuant to
the Note, together with all accrued unpaid interest to the date fixed for
payment by such declaration) immediately due and payable.
SECTION 6
DEFAULT AND REMEDIES
6.1 Default. The occurrence of any one of the events hereinafter
described shall be an "Event of Default":
6.1.1 Borrower shall fail to make any payment of principal,
interest or any other charge, cost or expense pursuant to the Notes or any of
the Security Instruments as and when due and payable.
6.1.2 any written statement, certificate, report, financial
statement, representation or warranty made or furnished by Borrower in
connection with the execution and delivery of this Agreement, or in compliance
with the provisions of this Agreement shall prove to have been false or
erroneous in any material respect.
6.1.3 default shall be made in the performance or observance of
any other of the covenants, agreements or conditions contained in this
Agreement or in the Security Instruments, which default shall not have been
cured within thirty (30) days of the date of notice from Lender of such
default; or, if any such default is curable within a reasonable time but
cannot be cured within thirty (30) days for reasons beyond Borrower's control,
Borrower shall have failed to commence a course of action within thirty (30)
days after the occurrence of such default or thereafter failed to pursue such
course of action with due diligence, all to cause such default to be cured.
6.1.4 Borrower or any Guarantor shall default under any other of
the Obligations, or under any obligation under the terms of any lease with
third parties, or any indebtedness for money borrowed from third parties in
excess of $100,000, all heretofore or hereafter incurred or assumed by
Borrower, and any such default or defaults shall have continued for a period
sufficient to cause the acceleration, in the aggregate, of payments due
pursuant to such lease(s) and/or indebtedness, provided that any such default
by a Guarantor in regard to third party obligations shall be material.
6.1.5 Borrower
(a) files a voluntary petition in bankruptcy, or
(b) is adjudicated as a bankrupt or insolvent, or
(c) files any petition or answer seeking or acquiescing in
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief for itself under any law relating to bankruptcy,
insolvency or other relief for debtors, or;
(d) seeks or consents to or acquiesces in the appointment of
any trustee, receiver, master or liquidator of itself or of all or any
substantial part of its property, or
(e) makes any general assignment for the benefit of
creditors, or
(f) admits in writing its general inability to pay its debts
as they become due, or
(g) changes its name, merges, consolidates, reorganizes,
recapitalizes, reclassifies its capital stock, enters into a joint venture,
combines or in any manner changes its current governance or organizational
form or structure or effects a Change in Management (as defined herein),
without prior written approval of the Lender, or
(h) acquires or agrees to acquire any stock in, or all or
substantially all of the assets of, any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, or joint
venture.
6.1.6 Any person or entity acquires in the aggregate more than
forty (40%) percent of the issued and outstanding capital stock of the
Borrower.
6.1.7 the entry of an order for relief or similar order with
respect to Borrower in any proceeding pursuant to the Bankruptcy Code or any
other federal bankruptcy law; the filing of any complaint, application, or
petition by or against Borrower initiating any matter in which Borrower is or
may be granted any relief from the debts of Borrower pursuant to the
Bankruptcy Code or any other insolvency statute or procedure.
6.1.8 Borrower's assets or any portion thereof shall be damaged
by fire or other casualty, which damage exceeds, in the aggregate, the amount
of insurance proceeds readily available to compensate adequately for any such
damage unless Borrower demonstrates to Lender's reasonable satisfaction that
Borrower has adequate cash reserves to compensate for any such damage; or,
6.1.9 Borrower or any affiliate, subsidiary or related entity
of either, defaults under any interstate, intrastate or international banking
services, lending programs or extensions of credit by Lender, including, but
not limited to, any On-line Banking Service Agreement, Corporate Wire Transfer
Agreement or Corporate Automated Clearinghouse Agreement between Lender and
Borrower, Guarantor, or any of their respective affiliates, subsidiaries or
related entities.
6.1.10 Borrower shall suffer any Material Adverse Change. For the
purposes of this provision, "Material Adverse Change" means any event, fact,
circumstance, change in, or effect on, the business of the Borrower which,
individually or in the aggregate, on a cumulative basis with any other
circumstances, changes in, or effect on the Borrower or its assets which:
(a) is, or would be reasonably expected to be, materially adverse to
the business, operations, assets or liabilities (including, without
limitation, contingent liabilities), employee relationships,
customer or supplier relationships, results of operations or the
condition (financial or otherwise) of the Borrower;
(b) would be reasonably expected to materially adversely affect the
ability of the Borrower to operate or conduct business in all
material respects in the manner in which they are currently
operated or conducted by the Borrower or to perform its obligations
under the Loan Documents; or
(c) would be reasonably expected to have a material adverse effect or
result in an adverse change in value, enforceability,
collectability or the nature of its assets.
6.2 Remedies. Upon the occurrence of an Event of Default, whether or
not the indebtedness evidenced by the Security Instruments shall be due and
payable or Lender shall have instituted any foreclosure or other action for
the enforcement of the Security Instruments, the Lender may, in addition to
any other remedies which Lender may have hereunder or under the Security
Instruments, and not in limitation thereof, and in Lender's sole and absolute
discretion, elect to take any one or more of the following actions:
(a) decline to honor the credit of Borrower;
(b) declare and cause all or any portion of any indebtedness due
the Lender to be immediately due and payable;
(c) treat this Agreement as being in default;
(d) exercise any right or remedy available to the Lender under
this Agreement, the Security Instruments or by applicable law in order to
collect the indebtedness due the Lender and otherwise enforce its rights under
this Agreement or the Security Instruments;
(e) elect to set off, without notice to Borrower, any and all
deposits or other sums at any time credited by or due from Borrower to Lender,
whether in a special account or other account or represented by a certificate
of deposit (whether or not matured);
(f) Terminate or otherwise bar access of Borrower, Guarantor, or
any affiliate, subsidiary or related entity of either, to any interstate,
intrastate or international services, lending programs or extensions of credit
of Lender, including, without limitation, Lender's On-line Banking Service,
Corporate Wire Transfer Agreement or Corporate Automated Clearinghouse
Agreement;
6.3 Possession of Collateral. Upon the occurrence of an Event of
Default, the Lender shall be entitled to immediate possession of the
Collateral and may enter upon Borrower's premises to take possession thereof
and/or may require Borrower to assemble the Collateral and make it available
to the Lender at a place to be designated by the Lender which is reasonably
convenient to both parties.
6.4 Lender Rights and Remedies. The Lender shall have the rights and
remedies of a secured party under the UCC and other applicable laws, in
addition to any rights and remedies described herein, the choice and the
manner of exercise of any right or remedy being in the Lender's sole
discretion, and the Lender may, at all times, proceed directly against
Borrower or any Person now or hereafter liable for any of the Obligations, and
the Lender shall not be required to take any action to preserve, collect or
protect the rights of either the Lender or Borrower in the Collateral.
6.5 Remedies Not Exclusive. The enumeration of rights and remedies in
this Agreement is not intended to be exclusive, and shall be in addition to
such others as the Lender may have under the Uniform Commercial Code and other
applicable law. The Lender shall, in its discretion, determine its choice of
rights and remedies and the order in which they shall be exercised and which
collateral, if any, is to be proceeded against and in which order. The
exercise of any right or remedy shall not preclude the exercise of others, all
of which shall be cumulative. No act, failure or delay by the Lender shall
constitute a waiver of any of its rights and remedies. No single or partial
waiver by the Lender of any provision of this Agreement, or breach or default
there under, or of any right or remedy which the Lender may have shall operate
as a waiver of any other provision, breach, default, right or remedy or of the
same one on a future occasion.
SECTION 7
ADDITIONAL PROVISIONS
7.1 Amendment. The Lender's rights and Borrower's obligations under
this Agreement may be modified only by an agreement in writing.
7.2 Survival of Representations and Warranties. All agreements,
representations and warranties made by Borrower in this Agreement or in any
certificate or other documents delivered to the Lender in connection therewith
shall survive the execution and delivery of this Agreement. All the terms,
representations, warranties and provisions of this Agreement shall be binding
upon and inure to and be enforceable by and against the respective successors
and assigns of the parties hereto whether so expressed or not.
7.3 Notices. All notices or demands under this Agreement and the Security
Instruments shall be in writing and shall be deemed to have been given when
actually received, or when mailed by registered or certified mail, return
receipt requested, first-class postage prepaid, and addressed in each case as
follows:
7.3.1 if to Borrower: Xxxxxx X. Xxxxxxx
Dynasil Corporation of America
00 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
7.3.2 if to the Lender: Middlesex Savings Bank
000 Xxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Attn. Xxxx Xxxxx, Vice President
With a copy to: Xxxxxx X. Xxxxxxxxx
Xxxxxx & Xxxxxx, P.C.
000 Xxxxx Xxxx
Xxxxx, XX 00000
The address of a party to which any such notices shall be sent may
be changed by that party by notice to the other party.
7.4 Counterparts. This Agreement may be executed in two or more
counterparts and each executed copy shall constitute but one and the same
instrument.
7.5 Partial Invalidity. If any provision of this Agreement or portion
of such provision, or the application thereof to any person or circumstance,
shall to any extent be held invalid or unenforceable, the remainder of this
Agreement or the remainder of such provision and the application thereof to
other persons or circumstances (other than those as to which it is held
invalid or unenforceable) shall not be affected thereby, and each term and
provision of this Agreement shall be valid and enforced to the fullest extent
permitted by law.
7.6 Governing Law. This Agreement shall be deemed to be a contract
made under the laws of the Commonwealth of Massachusetts wherein it is
executed and delivered and for all purposes shall be construed in accordance
with the laws of said Commonwealth of Massachusetts.
7.7 Headings. The headings of the sections of this Agreement have
been inserted for convenience and shall not modify, define, limit or expand
the express provisions of this Agreement.
7.8 Exhibits and Schedules. All Exhibits and Schedules to this
Agreement are a part hereof and incorporated herein.
7.9 Entire Agreement. This Agreement constitutes the entire Agreement
between the parties, supersedes all prior agreements and understandings
whether written or oral, and may be modified only by an agreement in writing,
executed by the party to be charged. A carbon, photographic or other
reproduction of this Agreement or of a financing statement executed to perfect
the security interest created herein may be filed as a financing statement.
7.10 Jury Trial Waiver. Borrower and Lender mutually hereby knowingly,
voluntarily and intentionally waive the right to a trial by jury in respect of
any litigation based on this Loan and Security Agreement, arising out of,
under or in connection with any other Security Instruments contemplated to be
executed in connection herewith, or any course of conduct, course of dealings,
statements (whether verbal or written) or actions of any party. This waiver
constitutes a material inducement for Borrower and Lender to enter into the
transactions contemplated hereby.
7.11 Power of Attorney. The Borrower hereby appoints the Lender as its
attorney-in-fact and grants the Lender full power to do all things and acts
necessary to implement and execute any powers or rights granted to the Lender
under this Agreement including, without limitation the execution of UCC-1
financing statements, continuation statements and amendments, and the Borrower
releases the Lender, its officers, employees agents and attorneys, from any
liability arising from any act or acts hereunder or in furtherance hereof.
IN WITNESS WHEREOF, Borrower and the Lender have caused this Agreement
to be executed as an instrument under seal as of the day and year first above
written.
MIDDLESEX SAVINGS BANK Dynasil Corporation of America
By: /s/ Xxxx Xxxxx By: /s/ Xxxxxx Xxxxxxx
Xxxx Xxxxx, Vice President Name: Xxxxxx X. Xxxxxxx
Title: Treasurer, duly authorized
SCHEDULE 1.4
BORROWING BASE CERTIFICATE
As of [___________, 20__]
To: Middlesex Savings Bank
Pursuant to the Loan and Security Agreement (the "Agreement") between
the undersigned ("Borrower") and Middlesex Savings Bank ("Lender") dated April
_____, 2014, the Borrower hereby confirms to Lender its first security
interest in all of the Borrower's Accounts Receivable and Inventory, and in
all other collateral described in the Agreement, regardless of when such
security interest arose or when such collateral was acquired by Borrower, and
further certifies to Lender as follows:
I. Value of Accounts Receivable on ______________________
A. All Eligible Accounts Receivable [as to which rights have been
earned by
Performance]- $ _____________________
B. All Ineligible Accounts Receivable- $ _____________________
C. Item IA minus Item IB - $ _____________________
D. 80% of Item IC- $ _____________________
II. Value of Unbilled Receivable on ______________________
A. All Eligible Unbilled Receivable [as to which rights have been
earned by
Performance]- $ _____________________
B. 50% of Item IIC- $ _____________________
III. Value of Inventory on ________________________________
A. Total Eligible Inventory- $ ______________________
B. Ineligible Inventory- $ ______________________
C. Item IIIA minus IIIB- $ ______________________
D. 50% of Item IIC- $ ______________________
IV. Borrowing Base
A. Items ID plus II B plus III D $ ______________________
B. Letters of Credit Outstanding $ ______________________
C. Availability; IVA minus IVB $ ______________________
Terms used but not defined shall have the meanings ascribed to them in
the Agreement.
Executed as an instrument under seal this ______ day of
_________________, 20____.
Dynasil Corporation of America
By: _____________________________
Name:
Title:
SCHEDULE 2.6
OFFICERS, DIRECTORS AND SUBSIDIARIES
(names and addresses)
President: Xxxxx Xxxxxx
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Chief Executive Officer (CEO): Xxxxx Xxxxxx
Treasurer (CFO): Xxxxxx X. Xxxxxxx
00 Xxx Xxxxxx
Xxxxxxxxxx, XX 00000
Secretary: Xxxxxxxx Xxxx
000 00xx Xxxxxx
Xxxxxxx Xxxx, XX 00000
Directors: Xxxxx Xxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxxxxx Xxx
000 Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Xxxxxxx Xxxxx
000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xxxxxxx Xxxxxx
000 Xxxxxxx Xxxx XX
Xxxxxxxxx, XX 00000
Xxxxx Xxxxxxxx
000 X. Xxxxxxxx Xxx., XX 00
Xxxxxxx, XX 00000
Xxxx Xxxxxx
000 Xxxxx Xxxx Xxxx
Xxxxx, XX 00000
Shareholders: Xxxxxx Xxxxxx 3,434,325 shares
(More than 5% 000 Xxxxxxxxx Xx., #000
of the Stock) Xxxxxx, XX 00000
Xxxxx Xxxxxx 1,960,715 shares
Xxxxx Xxxxxx 1,501,660 shares
Subsidiaries: Percent owned by Borrower
1. Evaporated Metal Films Corp. 100%
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
2. Optometrics Corporation 100%
0 Xxxxx Xxx
Xxxx, XX 00000
3. RMD Instruments Corp. 100%
00 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
4. Radiation Monitoring Devices, Inc. 100%
00 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
5. Dynasil Biomedical Corp. 100%
00 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
6. Xxxxxx Crystals, Ltd. 100%
United Kingdom
SCHEDULE 4.14
Covenant Compliance Certificate
For Period Ending:
Middlesex Savings Bank
Dynasil Corporation of America
[INSERT SPREADSHEET]
The undersigned hereby certifies that (i) the foregoing covenant
compliance information is true, accurate and complete according to the current
financial statements and reports of the Borrower; (ii) since the date of the
last financial statement or certification furnished to the Bank there have
been no material adverse changes to Borrower's financial circumstances; (iii)
there is no litigation or proceeding, threatened or pending, which may cause a
material adverse change in the financial condition or operation of the
Borrower; and (iv) no Event of Default has occurred under any of the Security
Instruments.
Authorized Xxxxxx:_________________________________ Date: _____________________
