Document:

ex10-1.htm

 

 

 

 

ELEVENTH AMENDMENT TO LOAN AGREEMENT

 

THIS ELEVENTH AMENDMENT TO LOAN AGREEMENT is made as of the 6th day of July, 2012 (the "Agreement"), by and among RANOR, INC., a corporation organized under the State of Delaware with its chief executive office, principal place of business and mailing address at One Bella Drive, Westminster, Massachusetts 01473 (the "Borrower") and SOVEREIGN BANK, N.A., a national banking association (formerly known as Sovereign Bank) with a place of business at 115 Asylum Street, Hartford, Connecticut 06103 (the "Lender").

 

WITNESSETH:

 

WHEREAS, Lender and Borrower entered into a certain loan transaction in the amount of up to $9,000,000.00 as evidenced by a Loan and Security Agreement dated February 24, 2006, as amended from time to time (the "Loan Agreement"); and

 

WHEREAS, the obligations of the Borrower under the Loan Agreement are evidenced by a certain Amended and Restated Revolving Promissory Note in the amount of $2,000,000 (the "Revolving Note") from Borrower to the order of Lender dated as of August 1, 2011, a certain $3,000,000 CapEx Promissory Note dated December 19, 2008 (the "CapEx Note"), a certain $1,900,000 Staged Advance Note dated as of March 29, 2010 from Borrower to Lender (collectively, the "Note"): and

 

WHEREAS, Borrower has requested and Lender has agreed to make certain other modifications to the Loan Agreement as set forth herein.

 

NOW THEREFORE, in consideration of the foregoing, and in consideration of $1.00 and other valuable consideration received to the full satisfaction of the Borrower, the Borrower and the Lender hereby agree as follows:

 

1. The Maturity Date of the Revolving Note is hereby amended and revised to January 31, 2013. All references to the term "Maturity Date" for the Revolving Note in the Loan Agreement shall be deemed to be January 31, 2013.

 

2. Lender hereby waives Borrower's failure to comply with the Fixed Charge Coverage Ratio and the Interest Coverage Ratio covenants at March 31, 2012. The foregoing waiver is on a one-time only basis.

 

3. Lender hereby waives Borrower's covenant to comply with the Interest Coverage Ratio and the Fixed Charge Coverage Ratio for the end of fiscal quarter June 30, 2012. The foregoing is a one-time only basis.

 

4. Lender hereby waives Borrower's covenant to comply with the Interest Coverage Ratio and the Fixed Charge Coverage Ratio for the end of fiscal quarter September 30, 2012. The foregoing is a one-time only basis.

 

 

 

 

 

 

 

 

  

  

  

 

 

 

 

5. Section 5.10 of the Loan Agreement is hereby amended and restated as follows:

 

"5.10.  Financial Covenants. The Borrower hereby covenants that it shall not:

 

(a) Fixed Charge Coverage Ratio. Permit Earnings Available for Fixed Charges to be less than 125% of Fixed Charges. This calculation shall be (i) be measured against the consolidated financial performance with Borrower and its parent, Techprecision Corporation ("Parent"), as set forth in the financial statements required to be delivered to the Lender pursuant to Section 6.5 hereof, which statements shall be prepared on a consolidated basis with the Parent; and (ii) tested on a trailing 6-month basis for the fiscal quarter ended 12/31/2012; a trailing 9-month basis for the fiscal quarter ended 3/31/2013; and quarterly on a trailing 12-month basis at 6/30/2013 and each quarter thereafter.

 

(b)Interest Coverage. Permit the Interest Coverage Ratio to be less than 2:1 as at the end of each fiscal quarter. This calculation shall be (i) be measured against the consolidated financial performance with Borrower and its parent, Techprecision Corporation (-Parent-), as set forth in the financial statements required to be delivered to the Lender pursuant to Section 6.5 hereof, which statements shall be prepared on a consolidated basis with the Parent; and (ii) tested on a trailing 6-month basis for the fiscal quarter ended 12/31/2012; a trailing 9-month basis for the fiscal quarter ended 3/31/2013; and quarterly on a trailing 12-month basis at 6/30/2013 and each quarter thereafter.

 

(c) Leverage Ratio. Borrower will not permit its Leverage Ratio to be greater than 2.0 to 1.0, at any time, tested quarterly.

 

(d) EBIT. Borrower will not permit its EBIT to fall below $1.00 during the standalone fiscal quarter ending September 30, 2012.

 

For the purpose of this Section 5.10, (i) the following definitions shall apply (terms not otherwise defined herein shall have the meaning ascribed to them under GAAP), and (ii) references to the Borrower shall also include the Parent to the extent consolidated with the Parent on the financial statements:

 

"Capital Expenditures" - for any period, the sum of (i) all expenditures that, in accordance with GAAP, are required to be included in land, property, plant or equipment or similar fixed asset account (whether involving real or personal property) and (ii) Capital Lease Obligations incurred during such period (excluding renewals of Capital Leases).

 

"Capital Lease" - any lease of property by Borrower, as lessee, that, in accordance with GAAP, would be capitalized on a balance sheet.

 

"Capital Lease Obligations" - the aggregate capitalized amount of the obligations of Borrower under all Capital Leases.

 

 

 

 

 

 

  

  

  

 

 

 

"Earnings Available for Fixed Charges" - for any period, EBIT plus all amounts deducted in computing net income in respect of depreciation and amortization, less dividends and distributions less non-financed Capital Expenditures less cash taxes paid.

 

"EBIT" means the total of (i) net earnings of Borrower plus (ii) all amounts deducted in computing such net income in respect of (a) interest expense on indebtedness and (b) taxes based upon or measured by income, as each such item is determined in accordance with GAAP.

 

"Fixed Charges-- for any period, the aggregate amount of the Borrower's total interest expense for the period in question, plus scheduled and required payments of principal on long term indebtedness paid or payable for such period, including but not limited to, amounts paid during such period under capital lease and subordinated debt.

 

"GAAP" - means generally accepted accounting principles in the United States of America, as in effect on the date of the preparation and delivery of the financial statements described in Section 6 and consistently followed, without giving effect to any subsequent changes other than changes consented to in writing by the Lender.

 

"Intangible Assets" - means assets that in accordance with GAAP are properly classifiable as intangible assets, including, but not limited to goodwill, franchises, licenses, patents, trademarks, trade names and copyrights.

 

"Interest Coverage Ratio" means for any period, the ratio of EBIT to Borrower's current interest payments due during such period on Indebtedness for borrowed money.

 

"Leverage Ratio" means the ratio of (a) the total liabilities that would be shown on the balance sheet of the Borrower as of any date, to (b) the Borrower's Tangible Net Worth at such date.

 

"Net Worth" means at any date, all amounts that would, in conformity with GAAP be included as shareholders' equity on a balance sheet.

 

6. As inducement for Lender to enter into this Agreement, on the date hereof, Borrower shall pay to Lender a fee equal to $10,000 and the Borrower shall deposit with Lender $840,000 and pledge this account ("$840,000 Cash Collateral Account-) to Lender to secure the Borrower's Obligations. Provided the Borrower satisfies the Financial Covenants at December 31, 2012, and no other default exists under the Loan Documents then the Lender shall release the $840,000 Cash Collateral Account.

 

7. Except as modified herein, the Loan Agreement shall remain in full force and effect.

 

 

[SIGNATURE PAGE FOLLOWS]

 

 

 

 

 

 

 

 

 

  

  

  

 

 

 

IN WITNESS WHEREOF, the Borrower and the Lender have caused this Agreement to be executed as of the date first set forth above.

 

 

 

 

 

 

	 	LENDER:
	 	 
	 	SOVEREIGN BANK, N.A.
	 	 
	 	 
	 	By:  /s/ Todd Mandella 
	 	Todd Mandella
	 	 Its Vice President
	 	 Duly Authorized
	 	 
	 	 
	 	BORROWER:
	 	 
	 	RANOR, INC.
	 	 
	 	 
	 	By:  /s/ Robert Francis
	 	Robert Francis,
	 	Its President and General Manager
	 	Duly Authorized
	 	 

The foregoing has been read and consented to by the following Guarantor:

 

	 	
TECHPRECISION CORPORATION 

f/k/a LOUNSBERRY HOLDINGS II, 

INC.

	 	 
	 	 
	 	By:  /s/ Richard Fitzgerald 
	 	Richard Fitzgerald
	 	Its Chief Financial Officer
	 	Duly Authorizedex106.htm

EXHIBIT 10.6

 

MANAGEMENT AGREEMENT

 

THE MANAGEMENT AGREEMENT (the “Agreement”), dated as of August 1, 2011, is by and between Orient Financial Services, a company organized in the British Virgin Islands and registered as a foreign corporation in California (“Manager”), and Borneo Resource Investments Ltd., a Nevada corporation (the “Company”).

 

WHEREAS, the Company, located at 19125 North Creek Parkway, Suite 120, Bothell, WA  98011, is involved in mining operations in Indonesia;

 

WHEREAS, the Manager, located at 1801 Avenue of the Stars, Suite 1100, Los Angeles, CA 90067, provides management services and investment advisory services; and

 

WHEREAS, the Company desires to retain the services of the Manager to assist the Company in planning, managing, and conducting its business operations and the Manager desires to provide such services upon the terms and conditions set forth herein.

 

NOW THEREFORE, in consideration of the foregoing and mutual agreements and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

	
1. 

	
GENERAL

 

	
1.1

	
Appointment

 

During the period from the date of this Agreement unitl July 31, 2013 (the “Management Period”), the Manager shall devote appropriate time, attention, efforts, abilities and energy to the business of the Company for the benefit of the Company. The Manager agrees to perform its duties hereunder faithfully and loyally and to the best of its abilities, and shall use commercially reasonable efforts to promote the business of the Company.  The Manager agrees that he will not knowingly commit any act that might reasonably be expected to injure the business of the Company or affiliates of the Company.

 

	
1.2

	
Authority and Control.

 

The Manager acknowledges that ultimate control of the business and operations of the Company shall remain with Company, and that Company, by entering into this Agreement, is not relinquishing any of the powers, duties and responsibilities vested in it by law.

	
2.

	
TERM

 

This Agreement shall continue in force and effect for an initial period from the date hereof until the end of the Management Period, unless otherwise terminated earlier in writing by either party with 30 days advance notice, or until termination by mutual consent of both the Manager and the Company.

 

	
3.

	
SERVICES

 

	
3.1 

	
General Services

 

The Manager shall render all services, direction advice, supervision and assistance necessary to assure the Company operates efficiently. These services include, but are not limited to, acting as general agent on behalf of the Company and those services specifically enumerated in this Section 3.

 

  

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3.2

	
Investor Relations

 

The Manager shall deal directly with bankers, investors, and other third parties on behalf of the Company as necessary, to arrange any financing or refinancing for the Company. Further, the Manager shall supervise all investor relations for the Company.

	
3.3

	
Public Relations

 

Commencing with the execution of this Agreement and continuing through the Management Period, the Manager shall supervise the design of and implement a marketing program including preparation of marketing materials such as brochures and press releases. Further, the Manager shall supervise all public relations for the Company.

 

	
3.4 

	
Other Services

 

The Manager may retain legal counsel and other professional services on behalf of the Company as reasonably necessary for the proper organization and management of the Company. Any expenses of such third parties related to such services shall be paid by the Company.

 

	
4.

	
COMPENSATION

 

	
4.1

	
Management Fee

 

The Company shall pay Manager for the services rendered under Sections 3 hereof, a monthly fee equal to $5,000.  The monthly fee shall be paid no later than on the 1st day of each month following the month earned.

 

	
4.2

	
Reimbursement of Expenses.

 

The Company shall reimburse the Manager on a monthly basis for all reasonable, direct, out-of-pocket expenses incurred in connection with the services provided pursuant to this Agreement. The Manager shall prepare an itemization of such expenses on a monthly basis to be submitted to the Company by the 15th day of the subsequent month. The Company shall reimburse the Manager for such properly documented expenses within ten days after receipt of such itemization.

 

	
4.3

	
License of the Company’s and the Company’s Name and Logo.

 

The Company hereby grants to the Manager the nonexclusive right, license, and privilege to use the Company’s and Company’s name and logo alone or with the corporate name of the Manager during the Management Period and subject to the terms and conditions of this Agreement. The Manager may include its name and the name of the Company and/or the Company on any letterhead, business cards, professional announcements and the like relating to the Company.

 

  

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5.

	
MISCELLANEOUS

 

	
5.1 

	
Entire Agreement

 

This agreement represents the entire agreement between the parties hereto and all prior understandings and agreements are hereby merged into this Agreement. This Agreement may not be modified except by an instrument in witting signed by the parties hereto.

 

	
5.2 

	
Binding Effect and Severability

 

This Agreement shall inure to the benefit of and is binding upon the parties hereto and their respected heirs, representatives, successors and permitted assigns.

If any of the provisions of this Agreement shall be constructed to be illegal or invalid, such construction shall not affect the legality or validity of any of the other provisions hereof and the illegal or invalid provisions hereof shall be deemed stricken and deleted herefrom to the same extent as if never herein but all other provisions hereof shall remain in full force and effect to the maximum extent permitted by law.

 

	
5.3 

	
Assignability

 

This Agreement may not be assigned by either party hereto without the prior written consent of the other party.

 

	
5.4 

	
Governing Law

 

This Agreement shall be governed in all respects by the laws of the State of Washington, without regard to conflicts of laws principles thereof.

 

	
5.5 

	
Counterparts

 

This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together, shall constitute one instrument.

(Remainder of Page Intentionally Left Blank — Signature Page Follows)

  

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In WITNESS WHEREOF, the parties have caused this instrument to be executed on the day and year first written above.

 

	 	
ORIENT FINANCIAL SERVICES

	 
	 	  	 
	 	
By:

	
/s/ George F. Matin

	 
	 	  	
Name: George F. Matin

	 
	 	  	
Title:  Managing Director

	 

 

	 	
BORNEO RESOURCE INVESTMENTS LTD.

 

	 
	 	
By:

	
/s/ Ronald Scott Chaykin

	 
	 	  	
Name: R. Scott Chaykin

	 
	 	  	
Title:  Chief Financial Officer

	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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