Exhibit 10.04

 

LOAN DOCUMENT MODIFICATION AGREEMENT

 

This Loan Document Modification Agreement (this “Agreement”) is made as of this
29th day of September, 2015 by and between MIDDLESEX SAVINGS BANK, a Banking
Corporation organized and existing under the laws of Massachusetts, of 6 Main
Street, Natick, Massachusetts 01760 "Lender"), and Dynasil Corporation of
America of 44 Hunt Street, Watertown, MA 02472 (the "Borrower"); and Optometrics
Corporation of 8 Nemco Way, Ayer, MA 01432, Radiation Monitoring Devices, Inc.
of 44 Hunt Street, Watertown, MA 02472, RMD Instruments Corp. of 44 Hunt Street,
Watertown, MA 02472, Evaporated Metal Films Corp. of 239 Cherry Street, Ithaca,
NY 14850 and Dynasil Biomedical Corp. of 44 Hunt Street, Watertown, MA 02472
(the "Guarantors").

 

Whereas, on May 1, 2014 Lender made a loan (the “Loan”) to Borrower evidenced by
a Revolving Line of Credit Note dated May 1, 2014 from Borrower to Lender in the
original principal amount of $4,000,000 (the "LOC Note"); and

 

Whereas, as security for the payment and performance of Borrower's obligations
under the LOC Note, Borrower and Guarantors executed and delivered to Lender,
(i) a Loan and Security Agreement dated May 1, 2014 between Borrower and Lender,
(the “Loan Agreement”); and (ii) UCC-1 Financing Statements covering the
Collateral described in the Loan Agreement and filed with the Secretary of State
of the Commonwealth of Massachusetts, State of New York and State of Delaware
(the "UCC-1 Financing Statements"); and (iii) Guaranties dated May 1, 2014 from
the Guarantors to the Lender (the "Guaranties"); and (iv) a Stock Pledge
Agreement by Borrower dated May 1, 2014 (the “Stock Pledge”); and (v) a
Subordination Agreement dated as of May 1, 2014 given by Massachusetts Capital
Resource Company (“MCRC”) to Lender (the “MCRC Subordination”) by which all debt
of Borrower to MCRC (the “Junior Debt”) is subordinated to the Original Note.
Collectively the Loan Agreement, the UCC-1 Financing Statements, the Guaranties,
the Stock Pledge, and the MCRC Subordination are referred to, together with
various other documents referred to therein, as the “Security Instruments”; and

 

Whereas, Borrower and Lender have agreed to amend the terms of the Loan by
adding or modifying certain financial covenants; by Lender granting to Borrower
consent to pay-down or pay-off a certain amount of the Junior Debt, and by
adding an option on the part of Borrower to term out a certain amount of
Advances made to Borrower under the LOC Note in accordance with Section 2 of
this Agreement; and

 

Now, therefore, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, it is hereby agreed as follows:

  

1.Anything contained in Sections 2 and 3 of the MCRC Subordination to the
contrary notwithstanding, Lender hereby consents to the Borrower paying-down or
paying off up to $3,000,000 of the Junior Debt, utilizing up to $2,000,000 of
Advances under the LOC Note, subject to compliance with all of the terms and
conditions of the Loan, including but not limited to the Borrowing Base set
forth in Section 1.4 of the Loan Agreement.

 

 1 

 

 

2.At Borrower’s option, if, as and when Borrower achieves Adjusted EBITDA, as
defined in new Section 4.9A of the Loan agreement as inserted below, of
$2,850,000, and on the condition that Borrower is not in default of any of the
terms and conditions of the Loan, including but not limited to the revised
financial covenants set forth below, Borrower may convert up to $2,000,000 of
outstanding Advances under the LOC Note to a new five year term note, in
Lender’s standard form, bearing interest at the annual rate of (i) 4.5% fixed,
if said option is exercised within sixty (60) days of the date of this
Agreement; or otherwise (ii) the then applicable Federal Home Loan Bank Classic
Advance Regular Rate for a five (5) year term plus three (3%) percent, to be
rounded to the nearest one-eighth of one percentage point (0.125%). Upon such
conversion, the terms of the Loan Agreement shall be deemed to have been
modified and amended by renumbering Section 1.1.2 to 1.1.1 (and deleting the
third, fourth and fifth paragraphs thereof) and inserting a new Section 1.1.2 as
follows:

 

1.1.2 Term Loan. A Term Loan, evidenced by a Term Note in the original principal
amount of Two Million and 00/100 ($2,000,000.00) Dollars (the "Term Note").

 

Such loan or loans together are referred to as the “Loan” or “Loans”, and such
Line of Credit Note and the Term Note together are referred to as the "Notes",
as such Notes 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 Notes 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 Loans are being made upon the terms contained in this Agreement, the Notes,
and any other Security Instrument (as defined herein), the terms of which are
incorporated herein.

 

3.The terms of the Loan Agreement are further modified and amended:

 

A.By deleting Section 3.4 in its entirety and inserting in lieu thereof the
following:

 

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, and provided
that, in any case, there shall be no intercompany advances, loans, or investment
from the Borrower or from the Guarantors to Xcede. Intercompany advances, loans
or investments from the Borrower or from the Guarantors to Biomedical will be
limited to no more than $50,000 annually for the purpose of preserving
Biomedical’s patents and other Intellectual Property.

 

 2 

 

 

B.By deleting Section 4.9 in its entirety and inserting in lieu thereof the
following:

 

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) EBITDA excluding non-cash and/or non-recurring
expenditures or gains as permitted and the operating income or loss of the Xcede
joint venture that is consolidated into Borrower’s financial results, minus
un-financed (cash) capital expenditures, minus dividends and distributions,
minus cash taxes paid for ongoing operations, divided by (ii) scheduled interest
and principal payments made on all debt.

 

C.By inserting new Section 4.9A as follows:

 

4.9A Maximum Leverage. At the close of each fiscal quarter of the Borrower, and
on a trailing four quarter basis maintain Maximum Leverage of 3.00 to 1.00 with
Leverage equal to (i) Senior Secured Debt plus Subordinated Debt; divided by
(ii) Adjusted EBITDA, defined as EBITDA excluding non-cash and/or recurring
expenditures (expenses) or gains as permitted and the operating income or loss
of the Xcede joint venture that is consolidated into Borrower’s financial
results.

 

D.By deleting Section 4.10 in its entirety and inserting in lieu thereof the
following:

 

4.10 Time of Testing. Borrower’s compliance with the financial covenants set
forth in Sections 4.9 through 4.9A above shall be tested at the time of
Borrower’s furnishing of financial statements to the Lender as required by
Section 4.2.1 herein, at which time the Borrower shall also furnish the Lender
with completed Covenant Compliance Certificates in the form attached hereto as
Schedule 4.14.

 

4. Borrower and Guarantors confirm that the Security Instruments, as amended by
or added to in connection with this Agreement, constitute the valid and
enforceable obligations of Borrower and Guarantors, and that neither Borrower
nor Guarantors has any existing claims, defenses or rights of setoff with
respect thereto.

 

5. Borrower and Guarantor hereby warrant and represent that the statements set
forth in the recitals above are true and correct, and that all representations
and warranties made by Borrower and Guarantor in the Security Instruments
continue to be true and correct in all material respects.

 

 3 

 

 

6. It is further agreed that this Agreement shall not, in any manner, release,
relinquish, or otherwise affect the liens, security interests, and rights
created by or arising under the Security Instruments or its priority over other
liens, charges, or encumbrances affecting the Collateral referred to therein
(except by extending such lien to secure, inter alia, any and all new
obligations created hereby and pursuant to any New Note and/or Amended and
Restated Note executed in connection herewith) or Borrower’s or Guarantors’
liability there under; and all other terms, conditions and covenants therein
contained which are not hereby amended, are hereby ratified and confirmed as
previously written.

 

7. Borrower and Guarantors acknowledge that there are and were no oral or
written representations, warranties, understandings, stipulations, agreements or
promises made by any party or by any agent, employee or other representative of
any party, pertaining to the subject matter of this Agreement which have not
been incorporated herein. No express or implied consent to any further
modifications involving any of the matters set forth in the Security Instruments
or herein shall be inferred or implied by Lender's execution of this Agreement.
Any further modification of the Loan shall require the express written approval
of Lender. No provision hereof shall be modified or limited except by a written
instrument signed by the parties hereto, expressly referring hereto and to the
provision so modified or limited.

 

8. Except as expressly amended and modified by this Agreement, all of the terms
and conditions of the Security Instruments shall remain in full force and
effect, and shall apply to any advances made pursuant to the Original Note (but
only if it is not superseded by an Amended and Restated Note hereunder) and any
New Note and/or Amended and Restated Note executed herewith.

  

 

 

 

 

[The remainder of this page 4 is intentionally blank]

 

 4 

 

 

Executed under seal this 29th day of September, 2015.

 

  Dynasil Corporation of America     Optometrics Corporation           By: /s/
Thomas C. Leonard   By: /s/ Thomas C. Leonard   Thomas C. Leonard, Treasurer    
Thomas C. Leonard, Treasurer                       Middlesex Savings Bank    
Radiation Monitoring Devices, Inc.           By: /s/ Tony Zhang   By /s/ Thomas
C. Leonard   Tony Zhang, Vice President     Thomas C. Leonard, Treasurer        
                    RMD Instruments Corp.                 By: /s/ Thomas C.
Leonard         Thomas C. Leonard, Treasurer                            
Evaporated Metal Films Corp.                 By: /s/ Thomas C. Leonard        
Thomas C. Leonard, Treasurer                             Dynasil Biomedial Corp.
                By: /s/ Thomas C. Leonard         Thomas C. Leonard, Treasurer

 5