Document:

ex10-1.htm

 

 

 

Exhibit 10.1

 

TWELFTH AMENDMENT TO LOAN AGREEMENT

 

THIS TWELFTH AMENDMENT TO LOAN AGREEMENT is made as of the 14th day of February, 2013 (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 July 31, 2013. All references to the term "Maturity Date" for the Revolving Note in the Loan Agreement shall be deemed to be July 31, 2013.

 

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

 

3. 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 3-month basis for the fiscal quarter ended March 31, 2013; a trailing 6-month basis for the fiscal quarter ended June 30, 2013; a trailing 9-month basis for the fiscal quarter ended September 30, 2013; and quarterly on a trailing 12-month basis at December 31, 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 3-month basis for the fiscal quarter ended March 31, 2013; a trailing 6-month basis for the fiscal quarter ended June 30, 2013; a trailing 9-month basis for the fiscal quarter ended September 30, 2013; and quarterly on a trailing 12-month basis at December 31, 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.

 

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 plus rent.

 

"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 $7,500 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 June 30, 2013, 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 AuthorizedExhibit 10.1

 

MEMORIALIZATION OF CANCELLATION OF
DEBT

AND EXCHANGE AGREEMENT

 

       

 

       This Memorialization
of Cancellation of Debt and Exchange Agreement (this “Agreement”) is entered into as of October 15, 2012 by
and among Hedgebrook (f/k/a ecoSolutions Intl.), a Nevada corporation (the “Company”), William
C. Patridge ("Patridge"), Patridge & Company of Nevada, LLC, a Nevada limited liability company ("Patridge
LLC”) and Main & Second Street, LLC, a Nevada limited liability company, (“Main LLC” and together with
Patridge and Patridge LLC, collectively, the "Patridge Parties"), with reference to the following facts:

 

 

 

WHEREAS, Patridge is the President of the
Company, and the managing member of Patridge LLC and Main LLC; and

 

WHEREAS, on December 31, 2010, the Company
and the Patridge Parties collectively held securities of the Company in the form of promissory notes and securities convertible
into or exchangeable or exercisable for shares of common stock of the Company, par value $0.001 per share (“Common Stock”),
as set forth on Exhibit A hereto (the “Patridge Securities”); and

 

WHEREAS, on December 31, 2010, the Company
was otherwise indebted to the Patridge Parties in the amounts set forth on Exhibit B hereto (the “Old Indebtedness”);
and

 

WHEREAS, the Company is also indebted to
the Patridge Parties for obligations accrued since December 31, 2010 in the amounts set forth in Exhibit C (the “New
Indebtedness”); and

 

WHEREAS, the Company has recently issued
and sold to an accredited investor 49% of the outstanding shares of Common Stock of the Company (the
"Investor Shares"); and

 

WHEREAS, in order to induce the accredited
investor to purchase the Investor Shares and in anticipation of a potential acquisition of one or more operating companies, the
Company represented to the accredited investor that the Patridge Securities had been cancelled and that the Old Indebtedness had
been written off except as provided herein; and

 

WHEREAS, the Company and the Patridge Parties
had written off the Old Indebtedness except for $48,008.04 in long-term notes owing to Patridge and $89,203.75 in rents payable
owing to Main LLC, which amounts totaling $137,211.79 in the aggregate will be exchanged for Common Stock of the Company as provided
herein, and had cancelled the Patridge Securities as of December 31, 2010 because at that time the Company was insolvent with no
assets, business or operations; and

 

WHEREAS, the Company and the Patridge Parties
now desire to formally reconfirm their intention to write-off the Old Indebtedness except for $48,008.04 in long-term notes payable
and $89,203.75 in rents payable and to cancel the Patridge Securities as of December 31, 2010; and

 

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WHEREAS, the Company and Patridge and the
Patridge Parties now desire to write off the New Indebtedness except for $9,651.50 of accrued rent owing to Main LLC which will
be exchanged for shares of Common Stock of the Company as provided herein; and

 

WHEREAS, the Company and the Patridge Parties
desire to confirm that no interest has accrued with respect to any notes payable by the Company to any of the Patridge Parties
as to any period following December 31, 2010; and

 

NOW THEREFORE, for and in consideration
of the premises, covenants and obligations contained herein, and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Company and the Patridge Parties hereby agree as follows:

 

1.       Confirmation
of Cancellation.  The Company and the Patridge Parties hereby confirm that the Patridge Securities were cancelled and
the Old Indebtedness except for $48,008.04 in long-term notes owing to Patridge and $89,203.75 in rents payable owing to Main LLC
was written off as of December 31, 2010.

 

2.       Confirmation
of Stopped Accrued Interest. The Company and the Patridge Parties hereby confirm that interest stopped accruing on notes payable
by the Company to the Patridge Parties as of December 31, 2010.

 

3.       Cancellation
of New Indebtedness.  The parties hereby agree that the New Indebtedness excluding $9,651.50 in accrued rent owing to
Main LLC, is hereby written off.

 

4.       Cancellation
of Indebtedness Owing by Patridge LLC to the Company. The Company hereby cancels the indebtedness of Patridge LLC in the amount
of $32,520.45 for management services provided by the Company to Patridge LLC.

 

5.       Exchange.
Main LLC hereby cancels the accrued rent owing to it by the Company in the amount of $98,855.25 in exchange for the issuance to
Patridge of 5,914,883 shares of Common Stock of the Company. The Company hereby cancels the note payable to Patridge in the amount
of $48,008.04 in exchange for the issuance to Patridge of 2,872,502 shares of Common Stock of the Company (The shares issued in
both of such exchanges are referred to collectively herein as the “Exchange Shares”).

 

6.       Representations
and Warranties.

 

       The
Patridge Parties represent and warrant that:

 

(a)       Patridge
is acquiring the Exchange Shares for his own account for investment only and not with a view towards, or for resale in connection
with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the Securities Act of 1933,
as amended.

 

(b)       Patridge
understands and agrees that the certificate(s) evidencing the Exchange Shares shall bear a restrictive legend in form satisfactory
to the Company setting forth the restrictions on transfer under applicable securities laws.

 

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(c)       Patridge
understands that no United States federal or state agency or any other government or governmental agency has passed on or made
any recommendation or endorsement of the Exchange Shares or the fairness or suitability of an investment in the Exchange Shares,
nor have such authorities passed upon or endorsed the merits of this transaction.

 

(d)       As
of the date hereof, the Patridge Parties are the record and beneficial owners of the Patridge Securities, as applicable, free and
clear of any liens or encumbrances, and the Patridge Parties have not transferred or assigned the Patridge Securities to any person
or entity.

 

(e)       The
Patridge Securities comprise all securities convertible into or exchangeable or exercisable for shares of Common Stock which are
beneficially held by the Patridge Parties.

 

(f)       After
giving effect to the Exchange, Patridge will hold in his name 10,013,000 shares of Common Stock of the Company.

 

(g)       No
other affiliate of Patridge holds of record or beneficially other shares of Common Stock of the Company.

 

(h)       Patridge
and the Company agree that all other indebtedness of any kind of the Company to Patridge is hereby cancelled and written off and
is of no further force and effect.

 

7.       Miscellaneous.

 

(a)       Further
Assurances. At any time, and from time to time, each party will execute such additional instruments and take such action as
may be reasonably requested by the other party to confirm the exchange of securities hereunder or otherwise to carry out the intent
and purposes of this Agreement.

 

(b)       Counterparts.
This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. The exchange of copies of this Agreement and of signature pages by
facsimile transmission or .pdf delivered via email will constitute effective execution and delivery of this Agreement as to the
parties and may be used in lieu of the original Agreement for all purposes.

 

(c)       Binding
Effect. This Agreement shall be binding upon the parties hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors and assigns.

 

(d)       Entire
Agreement. This Agreement is the entire agreement of the parties covering everything agreed upon or understood in the transaction.
There are no oral promises, conditions, representations, understandings, interpretations or terms of any kind as conditions or
inducements to the execution hereof.

 

(e)       Applicable
Law. This Agreement shall be construed and governed by the laws of the State of California

 

(Signature page follows)

 

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IN WITNESS WHEREOF, the parties hereto
have caused this Memorialization of Cancellation of Debt and Exchange Agreement to be duly executed effective as of the date first
written above.

	 	
        THE COMPANY 

        HEDGEBROOK

         

         

        By:     /s/ Brady Brim-DeForest

        Name:   Brady Brim-DeForest

        Its:    Chairman

 

 

 

	 	THE
PATRIDGE PARTIES  

                                                           

                                                           

/s/ William C. Patridge

William C. Patridge

	 	 
	 	
         

        Patridge & Company
        of Nevada, LLC

         

        By:     /s/ William C.
        Patridge

        Name:    William C. Patridge

        Its:        Manager

	 	 
	 	 
	 	
         

        main & second street,
        llc

         

        By:     /s/ William C.
        Patridge

        Name:    William C. Patridge

        Its:        Manager

	 	 
	 	 

 

	 	 

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EXHIBIT A

Patridge Securities

 

	·		Convertible Promissory Note, dated as of August 18, 2009, in the amount of 3,608,457.38,
which continued to accrue interest through December 31, 2010

plus any notes representing additional cash loans to the Company by Patridge, which were assigned by Patridge to Patridge LLC
on July 20, 2012.

	·		Stock options to purchase 1,000,000 shares of Company Common Stock.

	·		Rents payable owed to Main LLC for office rents.

 

 

 

 

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EXHIBIT B

(“Old Indebtedness”)

 

	·		Short-term note payable to Patridge ($493,377.44)

	·		Long-term note payable to Patridge ($2,605,618.75)

	·		Short-term interest liability to Patridge ($8,728.60)

	·		Long-term interest liability to Patridge ($1,010,684.26)

	·		Rents payable to Main LLC ($89,203.75)

 

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EXHIBIT C

(New Indebtedness)

 

	·		Rent payable to Main LLC ($9,651.50)

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