Item 1.01. Entry into a Material Definitive Agreement.
On May 8, 2020, TechPrecision Corporation (the "Company"), through its wholly
owned subsidiary Ranor, Inc. ("Ranor"), issued a promissory note (the "Note")
evidencing an unsecured loan in the amount of $1,317,100 made to Ranor under the
Paycheck Protection Program (the "PPP"). The PPP was established under the
Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") and is
administered by the U.S. Small Business Administration (the "SBA"). The loan to
Ranor was made through Berkshire Bank.
The Note provides for an interest rate of 1.00% per year and matures two years
after the issuance date. Principal and accrued interest are payable monthly in
equal installments commencing on the date that is six months after the date
funds are first disbursed on the loan and continuing through the maturity date,
unless the Note is forgiven as described below. To be available for loan
forgiveness, the Note may only be used for payroll costs, costs related to
certain group health care benefits and insurance premiums, rent payments,
utility payments, mortgage interest payments and interest payments on any other
debt obligation that were incurred before February 15, 2020. The Note may be
prepaid at any time prior to maturity with no prepayment penalties and contains
events of default and other conditions customary for a Note of this type. For
example, the Note contains events of default relating to, among other things,
payment defaults, making materially false and misleading representations to the
SBA or Berkshire Bank, or breaching the terms of the loan documents. The
occurrence of an event of default may result in the repayment of all amounts
outstanding, collection of all amounts owing from the Company, or the SBA or
Berkshire Bank filing suit and obtaining judgment against the Company and/or
Under the terms of the CARES Act, PPP loan recipients can apply for and be
granted forgiveness for all or a portion of loan granted under the PPP, with
such forgiveness to be determined, subject to limitations, based on the use of
the loan proceeds for payment of payroll costs and any payments of mortgage
interest, rent, and utilities. The terms of any forgiveness may also be subject
to further requirements in any regulations and guidelines the SBA may adopt.
While the Company currently believes that its use of the Note proceeds will meet
the conditions for forgiveness under the PPP, no assurance is provided that the
Company will obtain forgiveness of the Note in whole or in part.
The Company and Ranor have a preexisting relationship with Berkshire Bank under
that certain (i) Loan Agreement between Ranor and Berkshire Bank dated December
20, 2016, as amended by the First Modification to Loan Agreement dated June 6,
2018, the Second Modification to Loan Agreement and First Modification and
Allonge to Promissory Note dated December 19, 2018 and the Third Modification to
Loan Agreement dated December 23, 2019 and (ii) Amended and Restated Promissory
Note, dated as of December 23, 2019, made by Ranor and payable to Berkshire
Bank, each of which has been previously disclosed.
The description of the Note is qualified in its entirety by reference to the
full text of the Note, a copy of which is attached hereto as Exhibit 10.1 and is
incorporated by reference herein.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 hereof is incorporated by reference into
this Item 2.03.
Item 9.01. Financial Statements and Exhibits.
10.1 Promissory Note, dated May 8, 2020, made by Ranor, Inc.
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