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| DYSL.OB > SEC Filings for DYSL.OB > Form 8-K on 7-Jul-2008 | All Recent SEC Filings |
7-Jul-2008
Entry into a Material Definitive Agreement, Completion of Acquisition or
On July 1, 2008, Dynasil Corporation of America, a Delaware corporation ("Dynasil"), completed the acquisition of certain assets of RMD Instruments, LLC and acquired the stock of Radiation Monitoring Devices, Inc. on terms, conditions and provisions that are consistent with, but that replaced and superseded, a Letter of Intent dated December 18, 2007 (the "Letter of Intent"). In order to provide financing for this acquisition, Dynasil completed a bank financing with Susquehanna Bank DV and sold shares of Series C 10% Cumulative Convertible Preferred Stock. In addition, Dynasil entered into former owner work continuation agreements with two former owners of the acquired businesses and entered into five year leases for the space currently occupied by the businesses being acquired. Dynasil entered into the following material definitive agreements:
1. An Asset Purchase Agreement dated July 1, 2008 (the "Asset Purchase Agreement") by and among Dynasil, RMD Instruments Corp., a Delaware corporation that is a wholly-owned subsidiary of Dynasil ("RMD Instruments"), RMD Instruments LLC, a Massachusetts limited liability company that manufactures and sells photonics related instruments and components (the "Seller"), the Gerald Entine 1988 Family Trust (the "Entine Trust"), Fritz Wald and Doris Wald (together, the "Walds") and Jacob H. Paster ("Paster");
2. An Agreement and Plan of Merger dated July 1, 2008 (the "Merger Agreement") by and among Dynasil, RMD Acquisition Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Dynasil ("RMD Acquisition"), Radiation Monitoring Devices, Inc., a Massachusetts corporation that performs research under government contracts such as SBIRs ("RMD"), the Entine Trust, the Walds and Paster;
3. a Former Owner Work Continuation Agreement dated July 1, 2008 (the "Entine Former Owner Work Continuation Agreement") by and between Dynasil and Gerald Entine ("Entine");
4. a Former Owner Work Continuation Agreement dated July 1, 2008 (the "Paster Former Owner Work Continuation Agreement") by and between Dynasil and Paster;
5. a Standard Form Commercial Lease RMD-I dated July 1, 2008 by and between Charles River Realty, d/b/a Bachrach, Inc. (the "Lessor"), and RMD Instruments (the "RMD Instruments Lease");
6. a Standard Form Commercial Lease RMD-S dated July 1, 2008 by and between the "Lessor" and RMD (the "RMD Lease"); and
7. a Term Loan and Line of Credit Agreement along with supporting agreements dated July 1, 2008 (the "Bank Loan Agreement") by and among Susquehanna Bank DV (the "Bank"), Dynasil, Evaporated Metal Films Corporation, a New York corporation and a wholly-owned subsidiary of Dynasil ("EMF"), Optometrics Corporation, a Delaware corporation and a wholly-owned subsidiary of Dynasil ("Optometrics"), RMD Instruments and RMD Acquisition.
Dynasil and its subsidiaries had no previous relationship with the Seller, RMD, the Entine Trust, Entine, the Walds or Paster.
Pursuant to the Asset Purchase Agreement, Dynasil, acting through RMD Instruments, acquired key business assets used by the Seller in its business of manufacturing and selling photonics related instruments and components for a purchase price comprised of $12,500,000 in cash and 1,000,000 shares of Dynasil's common stock (the "acquisition stock"). The assets acquired from the Seller included its inventory, equipment, proprietary assets, contracts, goodwill, miscellaneous property, licenses, prepaid expenses, rights under unfilled customer orders and certain accounts receivable. The assets acquired were acquired subject to the following liabilities: accrued vacation, accrued bonus, and sales tax accrual, in each case limited to the amounts indicated on the Seller's June . . .
The transactions contemplated by the agreements described under Item 1.01 were consummated on July 1, 2008. In connection with the consummation of those transactions, indebtedness previously owed to Citizens Bank of Massachusetts by Optometrics and guaranteed by Dynasil of $468,620 was repaid and the liens associated with that indebtedness were released. In connection with the consummation of those transactions, indebtedness previously owed to the Bank in the amount of $425,460 also was repaid. In recognition of the time that Mr. James Saltzman spent above and beyond normal Director expectations to support the RMD transaction, Dynasil's Board authorized a total payment of $60,000 for consulting services which Mr. Saltzman has elected to receive 50% in cash and the other 50% in options to acquire 144,648 shares with a exercise price of $4.00 per share over a three year term. The information set forth under Items1.01 and 3.02 of this Report is incorporated herein by reference.
The information set forth under Items1.01 and 2.01 of this Report is incorporated herein by reference.
On July 1, 2008, Dynasil issued and sold an aggregate of 4,582,000 shares of its common stock pursuant to and in connection with the transactions described under Items 1.01 and 2.01 of this Report. These shares were sold in transactions exempt from the registration requirements of the Securities Act of 1933 (the "Act") pursuant to section 4(2) thereof. As a result of those transactions, Dynasil believes that Entine, including shares held in his family trust and trusts held in his children's names, owns beneficially or of record approximately 4,363,098 shares of Dynasil's common stock, which represents approximately 40% of its outstanding shares of common stock at the date of this Report.
On July 1, 2008, Dynasil sold approximately 5,000,000 shares of a Series C 10% Cumulative Convertible Preferred Stock (the "Series C Preferred Stock"). The shares of Series C Preferred Stock were sold at a price of $1.00 per share. No underwriting discounts or commissions were paid in connection with the sales. The securities were offered and sold only to accredited investors within the meaning of Rule 501(a) under the Securities Act of 1933, as amended (the "Act"), in a transaction conducted pursuant to section 4(2) of the Act and Regulation D thereunder. Each share of Series C Preferred Stock carries a 10% per annum dividend and is convertible to 0.4 share of Dynasil common stock, which translates into a conversion price of $2.50 per share, at any time by the holders, subject to adjustment for certain subsequent sales of common stock or securities convertible into or exchangeable for common stock, and is callable after two years by Dynasil at a redemption price of $1.05 per share. After two years, Dynasil can force conversion of the Series C Preferred Stock if the closing price of Dynasil common stock is $4.00 per share or higher. Dynasil will offer Series C Preferred Stock holders the option to receive dividends in cash or in common stock at $2.50 per share subject to a maximum of 480,000 shares to be issued under this arrangement. Dynasil estimates that the net proceeds to it of the offering of the Series C Preferred Stock sold to the date of this Report are approximately $5 million. Dynasil also intends to continue to offer shares of the Series C Preferred Stock for sale for the foreseeable future in order to sell a total amount in the $6 to $7 million range. As set forth under Items 1.01 and 2.01 above, the net proceeds of the sale of shares of the Series C Preferred Stock to date were used to consummate the transactions described under Items 1.01 and 2.01 of this Report.
Information relating to previous sales of unregistered securities described in Dynasil's Reports on Form 8-K dated March 14, 2005 and October 6, 2006 are incorporated herein by reference.
The information set forth under Item 1.01 of this Report is incorporated herein by reference. The requirements under the Bank Loan Agreement that Dynasil maintain a debt service coverage ratio of at least 1.20 to 1 and apply 20% of its earnings after taxes during its fiscal years ending September 30, 2009 and September 30, 2010 to mandatory prepayments of up to $300,000 in fiscal 2009 and $500,000 in fiscal 2010 may constitute material modifications of the rights of holders of shares of its common stock. Although Dynasil has no current plan or intention to pay dividends on shares of its common stock for the foreseeable future, the existence of that restriction under the Bank Loan Agreement, as well as the requirement that dividends on shares of the Series B and C Preferred Stock must be declared and paid prior to the declaration and payment of dividends on the shares of common stock, may as practical matters restrict or eliminate the possibility that dividends will be paid on shares of Dynasil's common stock.
The information set forth under Item 1.01, 2.01 and 3.02 of this Report is incorporated herein by reference.
As a consequence of receipt of an aggregate of 4,363,098 shares of Dynasil's common stock in connection with the transactions described under Items 1.01 and 2.01 of this Report, which represents approximately 40% of Dynasil's outstanding shares of common stock at the date of this Report, Entine and his family trust and trusts held in his children's names trusts now together constitute Dynasil's largest stockholders. Although Dynasil believes that by virtue of that stock ownership, a change of control of Dynasil has not occurred, the holding of such a large percentage of Dynsil's common stock may permit Entine and/or such trusts to exert a significant influence on Dynasil's management and policies.
(c) Exhibits
10.1 Form of Asset Purchase Agreement dated July 1, 2008 (the "Asset Purchase Agreement") by and among Dynasil, RMD Instruments Corp., a Delaware corporation ("RMD Instruments"), RMD Instruments LLC, a Massachusetts limited liability company (the "Seller"), the Gerald Entine 1988 Family Trust (the "Entine Trust"), Fritz Wald and Doris Wald (together, the "Walds") and Jacob H. Paster ("Paster");
10.2. Form of Agreement and Plan of Merger dated July 1, 2008 (the "Merger Agreement") by and among Dynasil, RMD Acquisition Sub, Inc., a Delaware corporation ("RMD Acquisition"), Radiation Monitoring Devices, Inc., a Massachusetts corporation ("RMD"), the Entine Trust, the Walds and Paster;
10.3. Form of Former Owner Work Continuation Agreement dated July 1, 2008 by and between Dynasil and Gerald Entine ("Entine");
10.4. Form of Former Owner Work Continuation Agreement dated July 1, 2008 by and between Dynasil and Paster;
10.5. Form of Standard Form Commercial Lease RMD-I dated July 1, 2008 by and between Charles River Realty, d/b/a Bachrach, Inc. (the "Lessor"), and RMD Instruments;
10.6. Form of Standard Form Commercial Lease RMD-S dated July 1, 2008 by and between the Lessor and RMD;
10.7 Form of Term Loan and Line of Credit Agreement dated July 1, 2008 by and among Susquehanna Bank DV (the "Bank"), Dynasil, Evaporated Metal Films Corporation, a New York corporation ("EMF"), Optometrics Corporation, a Delaware corporation ("Optometrics"), RMD Instruments and RMD Acquisition.
99.1 Dynasil Corporation of America press release dated July 2, 2008.
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