[LOGO] SOVEREIGN - SANTANDER
June 29, 2012
Dynasil Corporation of America
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Chief Financial Officer.
Re: Loan and Security Agreement, dated July 7, 2010,
between
Sovereign Bank, N.A. and Dynasil Corporation of
America
Dear ▇▇▇▇▇▇▇:
Sovereign Bank, N.A., a national banking association (the
"Lender"), and Dynasil Corporation of America, a Delaware
corporation (the "Borrower"), made, executed and delivered a Loan
and Security Agreement, dated July 7, 2010 (as amended, modified
or supplemented prior to the date hereof, the "Loan Agreement").
All capitalized terms utilized herein and not otherwise defined
herein shall have the meanings ascribed to such terms in the Loan
Agreement.
The Borrower has informed the Lender that the Borrower has,
in violation of Section 12(b) of the Loan Agreement, incurred
certain indebtedness which is evidenced by certain promissory
notes dated as of June 7, 2012, in the original principal amounts
totaling $1,857,546.00, executed by the Borrower in favor of
certain entities affiliated with ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ (the "Entine
Indebtedness"). In addition, the Borrower has informed the
Lender that the Borrower will not be in compliance, for the
fiscal quarter of the Borrower ending on June 30, 2012, with the
requirements of the Consolidated Maximum Leverage Ratio covenant
set forth in Section 13(a) of the Loan Agreement or with the
requirements of the Consolidated Fixed Charge Coverage Ratio
covenant set forth in Section 13(b) of the Loan Agreement.
Subject to execution and delivery by the Borrower of an
Amendment No. 3 to Loan and Security Agreement in the form
attached hereto as Exhibit A (the "Required Amendment") and
compliance by the Borrower with the terms thereof, the Lender
hereby agrees to waive (i) the Event of Default caused by the
Borrower's breach of Section 12(b) of the Loan Agreement
resulting from the incurrence by the Borrower of the Entine
Indebtedness, (ii) compliance by the Borrower with the
requirements of the Consolidated Maximum Leverage Ratio covenant
set forth in Section 13(a) of the Loan Agreement for the fiscal
quarter of the Borrower ending on June 30, 2012, and (ii)
compliance by the Borrower with the requirements of the
Consolidated Fixed Charge Coverage Ratio covenant set forth in
Section 13(b) of the Loan Agreement for the fiscal quarter of the
Borrower ending on June 30, 2012. The waiver by the Lender of
compliance by the Borrower with the provisions of Section 12(b)
of the Loan Agreement shall be specific with respect to the
incurrence of the Entine Indebtedness, as set forth herein. The
waiver by the Lender of compliance by the Borrower with the
Consolidated Maximum Leverage Ratio covenant and the Consolidated
Fixed Charge Coverage Ratio covenant shall be specific for the
fiscal quarter of the Borrower ending on June 30, 2012 only.
Such waivers shall not be construed to be, or operate as, a
waiver of any other right of the Lender arising under the Loan
Agreement or any other Other Agreement, nor shall they preclude
any other present or future exercise of the rights granted to the
Lender under the Loan Agreement or any other Other Agreement upon
the failure of the Borrower to comply with any other term,
covenant or condition contained in the Loan Agreement or in any
other Other Agreement or the occurrence of any other Event of
Default, including without limitation any Event of Default
arising as a result of the Borrower's failure to comply with the
Consolidated Maximum Leverage Ratio covenant or the Consolidated
Fixed Charge Coverage Ratio covenant for any fiscal period other
than the fiscal quarter ending on June 30, 2012.
This will also confirm that the Borrower has agreed to be
responsible for paying or reimbursing the Lender, immediately
upon demand, for all fees and expenses incurred by the Lender in
connection with the requested waivers granted herein, including
without limitation fees of legal counsel.
If you have any questions concerning the foregoing, please
contact me immediately. Unless I hear from you to the contrary,
I will assume that the foregoing accurately reflects the
understanding which has been reached between the Lender and the
Borrower with respect to the subject matter hereof. Please note
that the waivers set forth herein shall automatically expire and
be deemed to be of no force and effect if the Borrower fails to
return to the Lender, on or before June 30, 2012, a countersigned
copy of this letter and a fully executed copy of the Required
Amendment.
Sincerely,
SOVEREIGN BANK, N.A.
By: ___________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
Accepted and agreed to this
____ day of June, 2012.
DYNASIL CORPORATION OF AMERICA
By: __________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
EXHIBIT A
FORM OF AMENDMENT NO. 3 TO
LOAN AND SECURITY AGREEMENT
See attached.
8602631v2