Item 1.01 Entry into a Material Definitive Agreement.
On October 16, 2020, 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 ("Target") and each stockholder of Target. The SPA provides for the Company,
through Acquisition Sub, to acquire all of the issued and outstanding capital
stock of Stadco from Target (the "Acquistion"). Stadco, the operating subsidiary
of Target, is a California corporation in the business of manufacturing
high-precision parts, assemblies and tooling for aerospace, defense, research
and commercial customers. As consideration for the Acquisition of all of
Target's common stock, the Company, on behalf of Acquisition Sub, will issue
1,000,000 shares of the Company's common stock to Target. The Company, Stadco
and Target are also working, through negotiation with creditors of Stadco and
Target, to substantially reduce the approximately $14 million of STADCO
liabilities that would otherwise be added to the consolidated balance of the
combined company after closing of the Acquisition. Reaching agreements with
these creditors to the satisfaction of the Company is required for the closing
of the deal to occur. The Company expects that a percentage of these liabilities
will be satisfied in part or full through the issuance of additional shares of
the Company's common stock.
The SPA contains customary representations and warranties of Stadco, Target, the
Company and Acquisition Sub, and Stadco and Target have agreed to customary
covenants relating to the conduct of their business during the interim period
between the execution of the SPA and the closing of the Acquisition. The
consummation of the Acquisition and the related transactions contemplated by the
SPA is subject to customary conditions, including (among others):
· the accuracy of the parties' representations and warranties (subject to
customary materiality qualifiers) and performance by the parties of their
respective covenants, obligations and agreements;
· the absence of any material adverse effect;
· the receipt of any required consents and waivers;
· the redemption or acquisition by Target of certain of its preferred stock;
· agreements being reached with certain stockholders and lenders of Target, in
each case relating to the satisfaction of the debts and obligations owed to
· the completion of certain due diligence activities to the satisfaction of the
· the entry into new employment agreements for certain principals of Stadco; and
· certain other customary matters.
The SPA also provides that the parties may terminate the SPA under certain
circumstances, including: (i) by mutual written consent of the Acquisition Sub
and the representative of the Target stockholders; (ii) by either of such
parties if the consummation of the Acquisition becomes illegal or otherwise
prohibited by any governmental body; (iii) by either of such parties if the
closing of the Acquisition has not occurred by December 31, 2020; or (iv) by
either of such parties for certain material breaches of the SPA that are not
cured. The SPA also provides that Target and each stockholder of Target are
obligated, from and after the closing, and subject to certain limitations
(including, as applicable, a basket amount, maximum dollar amounts and limited
time periods), to indemnify the Company, Acquisition Sub and certain related
persons against liabilities arising out of a breach of Target's or Target's
stockholders' representations, warranties, covenants or obligations set forth in
the SPA. The SPA provides that Acquisition Sub is obligated, from and after the
closing, to indemnify Target, its stockholders and certain related persons
against liabilities arising out of a breach of the Acquisition Sub's
representations, warranties, covenants or obligations set forth in the SPA.
The foregoing description of the SPA does not purport to be complete and is
qualified in its entirety by reference to the full text of the SPA, which is
filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated by
reference into this report.
The SPA has been included to provide investors with information regarding its
terms. It is not intended to provide any other factual information about the
Company, Acquisition Sub, Stadco, Target or any of their respective subsidiaries
or affiliates. The representations, warranties and covenants contained in the
SPA (i) were made by the parties thereto only for purposes of that agreement and
as of specific dates; (ii) were made solely for the benefit of the parties to
the SPA; (iii) may be subject to limitations agreed upon by the contracting
parties, including being qualified by confidential disclosures exchanged between
the parties in connection with the execution of the SPA; (iv) may have been made
for the purposes of allocating contractual risk between the parties to the SPA
instead of establishing these matters as facts; and (v) may be subject to
standards of materiality applicable to the contracting parties that differ from
those applicable to investors. Investors should not rely on the representations,
warranties and covenants or any descriptions thereof as characterizations of the
actual state of facts or condition of the Company, Acquisition Sub, Stadco,
Target or any of their respective subsidiaries or affiliates. Additionally, the
representations, warranties, covenants, conditions and other terms of the SPA
may be subject to subsequent waiver or modification. Moreover, information
concerning the subject matter of the representations, warranties and covenants
may change after the date of the SPA, which subsequent information may or may
not be fully reflected in the Company's public disclosures.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 hereof is incorporated by reference into
this Item 3.02. In accordance with the SPA, a portion of the consideration
consists of shares of common stock of the Company. These shares of common stock
will be issued pursuant to exemption from registration provided by Section
4(a)(2) of the Securities Act of 1933, as amended.
Item 8.01 Other Events.
On October 20, 2020, the Company issued a press release announcing entry into
the SPA. A copy of the press release is attached hereto as Exhibit 99.1 and is
incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
2.1* Stock Purchase Agreement among TechPrecision Corporation, Stadco
New Acquisition, LLC, Stadco, Stadco Acquisition, LLC and the
stockholders of Stadco, dated as of October 16, 2020
99.1 Press Release dated October 20, 2020
* Pursuant to Item 601(a)(5) of Regulation S-K, certain schedules have been
omitted. A copy of any omitted schedule will be furnished supplementally to the
Securities and Exchange Commission upon request.
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