Item 1.01 Entry into a Material Definitive Agreement.
Loan Purchase and Sale Agreement
As previously disclosed, TechPrecision Corporation (the "Company") entered into
a stock purchase agreement (the "SPA") with Stadco New Acquisition, LLC, a
wholly owned subsidiary of the Company ("Acquisition Sub"), Stadco, Stadco
Acquisition, LLC ("Holdco") and each stockholder of Holdco. The SPA provides for
the Company, through Acquisition Sub, to acquire all of the issued and
outstanding capital stock of Stadco from Holdco (the "Acquisition"). The
consummation of the Acquisition and the related transactions contemplated by the
SPA is subject to, among other things, agreements being reached with certain
stockholders and lenders of Stadco, in each case relating to the satisfaction of
the debts and obligations owed to such persons. In connection therewith, on
January 29, 2021, Acquisition Sub entered into a Loan Purchase and Sale
Agreement (the "Loan Purchase Agreement"), effective January 26, 2021, with
Sunflower Bank, N.A. ("Sunflower Bank"), and agreed to by Stadco, Holdco, and
Stadco Mexico, Inc. Under the terms of the Loan Purchase Agreement, Acquisition
Sub agreed to purchase certain indebtedness obligations of Stadco consisting of
long-term indebtedness and revolving credit line indebtedness owed to Sunflower
Bank. The current amount outstanding under these indebtedness obligations is
approximately $9.8 million. In exchange, Acquisition Sub agreed to pay $2
million less than the aggregate amount of the indebtedness that is then
outstanding on the date of the closing of the transactions contemplated under
the Loan Purchase Agreement. The closing of the indebtedness purchase is
subject to the closing of the Acquisition and will take place on or about
February 15, 2021, with an optional grace period of up to an additional 15
days. In connection with the closing, Acquisition Sub will also guaranty
repayment by Stadco to Sunflower Bank of any of the original approximately $1.5
million in principal indebtedness under Stadco's Paycheck Protection Program
Loan that is not forgiven under the terms of the Coronavirus Aid, Relief, and
Economic Security Act. The Loan Purchase Agreement contains customary
representations and warranties of each party, as well as mutual indemnification
provisions.
There is no material relationship between Acquisition Sub or the Company, on the
one hand, and Sunflower Bank, on the other hand. The description of the Loan
Purchase Agreement is qualified in its entirety by reference to the full text of
the Loan Purchase Agreement, a copy of which is attached hereto as Exhibit 10.1
and is incorporated by reference herein.
Securities Purchase Agreement Amendment
On February 2, 2021, the Company entered into an amendment (the "Amendment")
effective as of December 15, 2020, to the previously disclosed stock purchase
agreement (the "SPA") providing for the Acquisition with Acquisition Sub,
Stadco, Holdco and each stockholder of Holdco. Under the terms of SPA, if the
Acquisition was not closed by December 31, 2020, either the Company or Stadco
could have terminated the SPA. The Amendment effected a change to this provision
by extending until February 28, 2021 the date after which the parties may
terminate if the Acquisition has not closed. The Amendment also effected certain
other minor changes to the SPA.
Other than in respect of the SPA and the related agreements, there is no
material relationship between the Company and Acquisition Sub, on the one hand,
and Stadco, Holdco and Stadco's stockholders, on the other hand. The description
of the Amendment is qualified in its entirety by reference to the full text of
the Amendment, a copy of which is attached hereto as Exhibit 10.2 and is
incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Description
Number
10.1 Loan Purchase and Sale Agreement, dated as of January 26, 2020,
between Stadco New Acquisition, LLC and Sunflower Bank, N.A.
10.2 Amendment to Stock Purchase Agreement, dated as of December 15, 2020,
between TechPrecision Corporation, Stadco New Acquisition, LLC, Stadco,
Stadco Acquisition, LLC and Douglas A. Paletz
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