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Obligation to Repurchase Stock
6 Months Ended
Mar. 31, 2012
Equity [Abstract]  
Treasury Stock [Text Block]

Note 11 – Obligation to Repurchase Stock

 

The former owners of RMD Instruments, LLC, which the Company acquired in 2008 for a combination of cash and shares of Dynasil common stock, have the right to require the Company to repurchase up to 1,000,000 shares of Dynasil common stock issued to them as partial consideration for the transaction at a repurchase price of $2.00 per share (the "Put Right"). As previously disclosed, on February 27, 2012, Dr. Gerald Entine, a former owner of RMD Instruments, LLC, exercised this Put Right to require the repurchase of a total of 928,773 shares of Dynasil common stock held by Dr. Entine and certain affiliates (“Entine”). By no later than May 29, 2012, the Company must pay Entine an aggregate purchase price of $1,857,546 for these shares. To the extent that the Company does not pay cash for these shares, it must issue to Entine a promissory note in payment of the remaining purchase price not paid in cash. According to the terms of the Put Right, any amount of purchase price evidenced by a promissory note would be amortized over a 3-year period to maturity and shall bear interest at the greater of (x) 10% or (y) the prime interest rate published by the Wall Street Journal on the closing date, plus 5%. In addition, any such promissory note shall be secured by the shares purchased with the promissory note.

 

Dr. Entine was previously a member of the Company’s board of directors until his retirement from the board effective as of the Company’s 2012 Annual Meeting of Stockholders.


There are an additional 71,227 shares of common stock outstanding that are subject to the Put Right, which could require additional payments by the Company if exercised, at the same $2 per share purchase price. The Put Right with respect to these additional shares will expire on July 1, 2012.