-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PWH7gdQ5+hpWhEM8mo10IevjPUHuOtNizfRxh3p8eePCQpY0OLF9sysJadV3Gv3Y /iL3xcmgwntBhCEY4g2AAA== 0001144204-07-008978.txt : 20070220 0001144204-07-008978.hdr.sgml : 20070219 20070220112020 ACCESSION NUMBER: 0001144204-07-008978 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070213 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070220 DATE AS OF CHANGE: 20070220 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TECHPRECISION CORP CENTRAL INDEX KEY: 0001328792 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 000000000 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-51378 FILM NUMBER: 07634228 BUSINESS ADDRESS: STREET 1: ONE BELLA DRIVE CITY: WESTMINSTER STATE: MA ZIP: 01473 BUSINESS PHONE: 978-874-0591 MAIL ADDRESS: STREET 1: ONE BELLA DRIVE CITY: WESTMINSTER STATE: MA ZIP: 01473 FORMER COMPANY: FORMER CONFORMED NAME: Techprecision CORP DATE OF NAME CHANGE: 20060309 FORMER COMPANY: FORMER CONFORMED NAME: LOUNSBERRY HOLDINGS II INC DATE OF NAME CHANGE: 20050531 8-K 1 v066327_8k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): February 13, 2007 Techprecision Corporation (Exact name of registrant as specified in its charter) Delaware 0-51378 51-0539828 - ------------------------------------------------------------------------------- (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification No.) Bella Drive, Westminster, Massachusetts 01473 - -------------------------------------------------------------------------------- Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (978) 874-0591 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01 Entry into a Material Definitive Agreement. On or about February 13, 2007, the Company entered into an agreement with Sovereign Bank dated January 29, 2007 which (i) reduced the interest rate on its revolving credit line from prime plus 1 1/2% to prime plus 1% and (ii) provided for the Company to borrow up to $500,000 at prime plus 1% in order to financing capital expenditures. Under this capital expenditures facility, the Company may borrow up to $500,000 until the February 1, 2008, with interest only payable through February 1, 2008 and the principal to be amortized over a five-year term commencing March 1, 2008. As of this date of this report, the Company had not borrowed any money under either the revolving credit line or the capital expenditures facility. Item 8.01 Other Events. Pursuant to the stock purchase agreement dated August 17, 2005, by which the Company acquired the stock of Ranor, Inc., the Company placed $925,000 of the purchase price payable to Ranor's two principal stockholders (the "sellers") in an escrow account to secure the sellers' liabilities for any breach of their representations and warranties under the stock purchase agreement. In January 2007, the Company made a claim under the escrow agreement for damages resulting from breaches of the sellers' representations and warranties under the stock purchase agreement. On February 13, 2007, the Company entered into a settlement agreement with the sellers pursuant to which $500,000 of the escrow account was paid to the Company, the balance of the escrow account was paid to the sellers, and the Company and the sellers exchanged general releases. Item 9.01 Financial Statements and Exhibits. Exhibits 99.1 First amendment dated January 29, 2007 to loan and security agreement dated February 24, 2006, between Ranor, Inc. and Sovereign Bank and forms of notes. 99.2 Settlement agreement and general release dated February 13, 2007, among the Company, Green Mountain Partners III, L.P. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TECHPRECISION CORPORATION (Registrant) Date: February 7, 2007 /s/ James G. Reindl --------------------------------------- James G. Reindl, Chairman EX-99.1 2 v066327_ex99-1.txt Exhibit 99.1 FIRST AMENDMENT TO LOAN AGREEMENT --------------------------------- THIS AMENDMENT TO LOAN AGREEMENT is made as of the 29th day of January 2007 (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, a federal savings bank with a usual place of business at 1010 Farmington Avenue, West Hartford, Connecticut 06107 (the "Lender"). W I T N E S S E T H: WHEREAS, Lender and Borrower entered into a certain loan transaction in the amount of $5,000,000.00 as evidenced by a Loan and Security Agreement dated February 24, 2006 (the "Loan Agreement"); and WHEREAS, the obligations of the Borrower under the Loan Agreement are evidenced by a certain Revolving Promissory Note in the amount of $1,000,000 (the "Revolving Note") and a certain Term Promissory Note in the amount of $4,000,000 (the "Term Note") from Borrower to the order of Lender, each dated February 24, 2006 (collectively, the "Note"); and WHEREAS, Lender and Borrower have agreed to increase the amount of the loan and 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. Section 1.19 of the Loan Agreement is amended to read in its entirety as follows: "1.19 Note. - means, collectively, the Revolving Note, the Term Promissory Note and the CapEx Note as defined in Section 2 below." 2. Effective as of the date of this Agreement, the first sentence of Section 2.15, Conditions Precedent to Advances, of the Loan Agreement is amended to read in its entirety as follows: "The obligation of the Lender to make the initial advance under the Revolving Loan and the CapEx Loan to the Borrower is subject to the conditions precedent that the events or documents required to take place or be executed and delivered to the Lender have taken place or have been executed and delivered to Lender, as the case may be, in form and substance satisfactory to the Lender and its counsel." 3. Section 2 of the Loan Agreement is amended to include the following: "2.16 CapEx Loan. The Lender may loan to the Borrower, and the Borrower may borrow from the Lender, from the date hereof through January 31, 2008, up to Five Hundred Thousand Dollars ($500,000.00) (the "CapEx Loan") for the purpose of acquiring capital assets and equipment. Assets to be acquired hereunder shall be free of all liens other than the Lender's. Each advance shall not exceed 80% of the actual purchase price of the asset. At the time of each request for an advance hereunder, Borrower shall provide to Lender copies of purchase orders, invoices, and any other documentation reasonably required by Lender to evidence the purchase of such asset and its purchase price. All advances hereunder shall be evidenced by a promissory note of even date herewith (the "CapEx Note") which shall provide for the payment of interest only monthly through February 1, 2008, and thereafter no further borrowings shall be permitted under the CapEx Line. The CapEx Note shall further provide that commencing March 1, 2008 and on the first Banking Day of each month thereafter Borrower shall pay principal and interest on the CapEx Loan in an amount sufficient to amortize the outstanding balance thereunder on a five (5) year schedule. Each advance shall be recorded in an account on the Lender's books in which shall also be recorded accrued interest on advances, payments on such advances, and other appropriate debits and credits as herein provided, and such account shall constitute prima facie evidence of the information contained therein." 4. All references to the Revolving Note in the Loan Agreement shall hereafter mean the Amended and Restated Revolving Promissory Note of even date herewith by Borrower in favor of Lender. 5. Except as modified herein, the Loan Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the Borrower and the Lender have caused this Agreement to be executed as of the date first set forth above. SOVEREIGN BANK By: /s/ Christopher T. Phelan ------------------------------------ Christopher T. Phelan Its Senior Vice President Duly Authorized BORROWER RANOR, INC. By: /s/ James G. Reindl ------------------------------------ James G. Reindl Its Chairman 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/ James G. Reinld ------------------------------------ James G. Reindl Its Chairman and CEO Duly Authorized AMENDED AND RESTATED REVOLVING PROMISSORY NOTE ---------------------------------------------- FOR VALUE RECEIVED, RANOR, INC., a Delaware corporation, with its chief executive office and principal place of business at One Bella Drive, Westminster, MA 01473 (hereinafter called "Borrower") promises to pay to the order of SOVEREIGN BANK, (hereinafter called "Lender") at its offices at 1010 Farmington Avenue, West Hartford, CT 06107 or at such other place as the holder of this note may from time to time designate in writing, the principal sum of ONE MILLION DOLLARS ($1,000,000.00), or the aggregate unpaid principal amount of all advances made by the Lender to the Borrower under terms hereinafter set forth, whichever is less (the "Commitment Amount"), in lawful money of the United States, to pay interest on each advance at the rate set forth below, and to pay all taxes levied or assessed upon said principal sum against any holder of this Note and all costs, including reasonable attorneys' fees incurred in the collection, defense, preservation, enforcement or protection of this Note or any guaranty hereof, in the foreclosure of any mortgage or security interest now or hereafter securing the same or in any proceedings to otherwise enforce or protect this Note or any guaranty hereof or any security therefor. Interest on this Note shall be computed on the basis of a year of three hundred sixty (360) days and actual days elapsed. All advances shall be due and payable as set forth herein, but if not sooner paid, this note and all amounts due hereunder shall be due and payable on June 30, 2007 (the "Termination Date"). (1) ADVANCES, NOTICE OF BORROWING. When the Borrower desires to borrow hereunder, it shall give the Lender one (1) days' written notice specifying the date of the proposed borrowing (which shall be a Banking Day (hereafter defined)), and the amount to be borrowed. Any such notice shall be irrevocable and shall be subject to Section 2(c) hereof. If any advance is made, the Lender shall record on the books and records of the Lender an appropriate notation evidencing such advance, each repayment on account of the principal thereof and the amount of interest paid; and the Borrower authorizes the Lender to maintain such records or make such notations and agrees that the amount shown on the books and records as outstanding from time to time shall constitute the amount owing to the Lender pursuant to this Note, absent manifest error. Each Variable Rate Advance shall be due and payable on the Termination Date. Unless an Event of Default has occurred the Borrower may borrow, repay and reborrow; and provided, further, that all outstanding principal plus accrued and unpaid interest shall be paid in full on the Termination Date. (2) INTEREST RATE/PAYMENTS. (a) Interest Rates, Payment of Interest. So long as no Event of Default (hereafter defined) has occurred and subject to the terms hereof, each advance hereunder shall bear interest at a rate per annum (the "Variable Rate") equal to the Prime Rate (as hereafter defined) plus one (1.0%) percent (herein a "Variable Rate Advance"). Interest on all Variable Rate Advances shall be payable monthly beginning on the first Banking Day of the month following the date of this Note, and continuing thereafter on the first Banking Day of each succeeding month until the principal balance shall be paid in full. (b) Automatic Payments. Borrower hereby authorizes Lender to automatically deduct from Borrower's account numbered [_______________] the amount of any loan payment ("Automatic Payments"). If the funds in the account are insufficient to cover any payment, Lender shall not be obligated to advance funds to cover the payment. At any time and for any reason, Borrower or Lender may voluntarily terminate Automatic Payments. If any advance is made, the Lender shall record on the books and records of the Lender an appropriate notation evidencing any advance, each repayment on account of the principal thereof and the amount of interest paid; and the Borrower authorizes the Lender to maintain such records or make such notations and agrees that the amount shown on the books and records as outstanding from time to time shall constitute the amount owing to the Lender pursuant to this Note, absent manifest error. (3) DEFAULT RATE. To the extent allowed by applicable law, after the occurrence of any Event of Default, after maturity or after judgement has been rendered on this Note, Borrower's right to select pricing options shall cease (if applicable) and all outstanding principal and unpaid interest shall bear, until paid, interest at a rate per annum equal to two (2%) percentage points greater than that which would otherwise be applicable (the "Default Rate"). Where Borrower would, but for the application of the preceding sentence, have had the right to elect among interest rate options, the "Default Rate" shall mean the Variable Rate plus two (2%) percentage points. (4) LATE CHARGE. If a regularly scheduled payment is fifteen (15) days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment or $10.00, whichever is greater. (5) EXPENSES. Borrower further promises to pay to the Lender, as incurred, and as an additional part of the unpaid principal balance, all costs, expenses and reasonable attorneys' fees incurred (i) in the protection, modification, collection, defense or enforcement of all or part of this Note or any guaranty hereof as provided in the Loan Agreement, or (ii) in the foreclosure or enforcement of any mortgage or security interest which may now or hereafter secure either the debt hereunder or any guaranty thereof, or (iii) with respect to any action taken to protect, defend, modify or sustain the lien of any such mortgage or security agreement, or (iv) with respect to any litigation or controversy arising from or connected with this Note or any mortgage or security agreement or collateral which may now or hereafter secure this Note, or (v) as a consequence of any default by Borrower to complete a borrowing or (vi) with respect to any act to protect defend, modify, enforce or release any of its rights or remedies with regard to, or otherwise effect collection of, any collateral which may now or in the future secure this Note or with regard to or against Borrower or any endorser, guarantor or surety of this Note. (6) DEFINITIONS. (a) "Banking Day" shall mean with respect to Variable Rate Advances, any day other than a day on which commercial lenders in the Governing State are required or permitted by law to close. (b) "Governing State" shall mean the state where Lender's offices are located as set forth in the first paragraph of this Note. (c) "Loan Documents" shall mean any and all agreements, instruments, documents, security agreements, mortgages, financing statements, and supplements thereto and relating to the Loan, or entered into between the Borrower or Guarantor (hereafter defined) in favor of, or with, the Lender, at any time, for any purpose. (d) "Obligations" shall mean all loans, advances, debts, liabilities, obligations, covenants and duties owing by the Borrower to the Lender of every kind and description (whether or not evidenced by any note or other instrument and whether or not for the payment of money), direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, whether or not such obligations are related to the transaction described in this Loan Agreement, by class, or kind, or whether or not contemplated by the parties at the time of the granting of this security interest, including without limitation, all interest, fees, charges, expenses and attorneys' fees chargeable to the Borrower or incurred by the Lender in connection with the Borrower's account whether provided for herein or in any Loan Document. (e) The term "Prime Rate" means the variable per annum rate of interest so designated from time to time by the Lender as its prime rate. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate being charged to any customer. The rate of interest hereunder shall change simultaneously and automatically, without further notice, upon the Lender's determination and designation from time to time of the Prime Rate. The Lender's determination and designation from time to time of the Prime Rate shall not in any way preclude the Lender from making loans to other borrowers at rates that are higher or lower than or different from the referenced rate. (f) "Variable Rate Advance" shall have the meaning set forth in paragraph 2(a) hereof. (9) PREPAYMENT. The Borrower shall be required to prepay ON DEMAND all advances made under this Note to the extent the aggregate of all such advances exceeds the amounts permitted hereunder. In addition the Borrower shall pay, if applicable, charges incurred pursuant to the terms hereof. All payments will be applied first to the payment of late charges, then to accrued and unpaid interest due and owing and the balance on account of the unpaid principal of this Note. Borrower may terminate the Revolving Loan evidenced by this Note at any time provided the applicable Prepayment Consideration (as defined below) is tendered at termination. The "Prepayment Consideration" shall be (a) during the first year of this loan, three (3%) percent of Commitment Amount; and (b) during the second year of this loan, two (2%) percent of the Commitment Amount. (10) DEFAULT. The happening of any of the following events or conditions shall constitute an "Event of Default" under this Note: 1. Failure to make any payment of principal or interest or any sum due under this Note within fifteen (15) days of the date when the same shall be due and payable; or 2. Default by the Borrower in the payment or performance of any obligation on its part to be paid or performed, or breached by the Borrower of any representation, warranty, term, covenant or condition of or under any agreements between the Lender and the Borrower including, without limitation, any default or Event of Default under that certain Loan and Security Agreement dated of even date herewith, as the same may be amended, modified, extended or restated or in any documents or instruments referred to in said agreements, and without limitation any default or Event of Default under that certain Term Promissory Note given by Borrower to Lender of even date herewith as the same may be amended, modified extended or restated. 3. Termination of this loan and line of credit for any reason prior to the Termination Date. Upon and after an Event of Default, the availability of advances hereunder shall, at the option of the Lender, be deemed to be automatically terminated and, at its option, the whole of said indebtedness, both principal and interest, and including any other sums which may become due under this Note, shall, at the option of the holder of this Note, immediately become due and payable without presentment, demand, protest, notice of protest, or other notice of dishonor of any kind, all of which are hereby expressly waived by the Borrower. (12) WAIVERS, CONSENT TO JURISDICTION. The Borrower agrees that no delay or failure on the part of the holder in exercising any power, privilege, remedy, option or right hereunder shall operate as a waiver thereof or of any other power, privilege, remedy or right; nor shall any single or partial exercise of any power, privilege, remedy, option or right hereunder preclude any other or future exercise thereof or the exercise of any other power, privilege, remedy, option or right. The rights and remedies expressed herein are cumulative, and may be enforced successively, alternately, or concurrently and are not exclusive of any rights or remedies which holder may or would otherwise have under the provisions of all applicable laws, and under the provisions of all agreements between the Borrower and the Lender. The Borrower hereby waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note. The Borrower hereby assents to any extension or postponement of the time of payment or any other indulgence, to the addition or release of any party or person primarily or secondarily liable, and to the addition, release and/or substitution of all or any portion of any collateral now or hereafter securing this Note. Borrower shall not be obligated to pay and Lender shall not collect interest at a rate higher than the maximum permitted by law or the maximum that will not subject Lender to any civil or criminal penalties. If, because of the acceleration of maturity the payment of interest in advance or any other reason, Borrower is required, under the provisions of any Loan Document or otherwise, to pay interest at a rate in excess of such maximum rate, the rate of interest under such provisions shall immediately and automatically be reduced to such maximum rate and any payment made in excess of such maximum rate shall be applied to principal outstanding hereunder or, if required by applicable law, shall be returned to Borrower. Upon receipt of an affidavit of an officer of Lender as to the loss, theft, destruction or mutilation of the Note or any other security document(s) which is not of public record and, in the case of any such loss, theft, destruction or mutilation, upon surrender and cancellation of such Note or other document(s), the Borrower will issue, in lieu thereof, a replacement Note or other document(s) in the same principal amount thereof and otherwise of like tenor. This Note is subject to and secured by the collateral set forth in the Loan Agreement dated February 24, 2006, as amended by the First Amendment of even date herewith, which, inter alia, contains waivers and consents of the Borrower including, without limitation, waivers of jury trial, setoff rights and Lender's right to sell all or portions of the loan evidenced hereby. This Note amends and restates a certain Revolving Promissory Note dated February 24, 2006. This Note shall be governed by and construed in accordance with the laws of the Governing State. Dated: January __, 2007. RANOR, INC. By: /s/ James G Reindl ------------------------------------ Its Chairman Duly Authorized CAPEX PROMISSORY NOTE --------------------- FOR VALUE RECEIVED, RANOR, INC., having an address at One Bella Drive, Westminster, Massachusetts 01473 ("Borrower") promises to pay to the order of SOVEREIGN BANK, a federal savings bank having an address and principal office at 1010 Farmington Avenue, West Hartford, CT 06107 ("Lender"), the principal sum of FIVE HUNDRED THOUSAND ($500,000.00) DOLLARS, or so much thereof as may be advanced, with interest thereon, or on the amount thereof from time to time outstanding, to be computed, as hereinafter provided, on each advance from the date of its disbursement until such principal sum shall be fully paid. Interest and principal shall be payable as set forth in Section 1 below. The total principal sum, or the amount thereof outstanding, together with any accrued but unpaid interest, shall be due and payable in full on February 1, 2013 (the "Maturity Date") in accordance with the Loan Agreement (hereafter defined) pursuant to which this Note has been issued. This Note is issued pursuant to the terms, provisions and conditions of an agreement captioned "Loan and Security Agreement" dated February 24, 2006, as amended by an agreement captioned "First Amendment to Loan Agreement" as of the date hereof between Borrower and Lender (collectively, the "Loan Agreement") and evidences the Capex Loan and Loan Advances made pursuant to Section 2.16 thereto. Capitalized terms used herein which are not otherwise specifically defined shall have the same meaning herein as in the Loan Agreement. (1) INTEREST RATE/PAYMENTS. (a) Interest Rates, Payment of Interest. So long as no Event of Default (hereafter defined) has occurred and subject to the terms hereof, principal outstanding hereunder shall bear interest at a variable rate (the "Variable Rate") equal to the Prime Rate (hereinafter defined) plus one percent (1.0%) per annum through and including January 31, 2008, and thereafter at either the Variable Rate or the COF Rate (as hereinafter defined) as selected by the Borrower; provided that Borrower notifies Lender in writing of its selection of interest rate on or before January 15, 2008. If Borrower fails to so notify Lender of its selection of interest rate, principal outstanding hereunder after January 31, 2008 shall bear interest at the Variable Rate. All interest shall be payable in arrears commencing February 1, 2007 and on the first day of each month thereafter until the principal together with all interest and other charges payable with respect to the Loan shall be fully paid, and calculated on the basis of a 360 day year and the actual number of days elapsed. Each change in the Prime Rate shall simultaneously change the Variable Rate payable under this Note. Each change in the Cost of Funds Rate shall simultaneously change the COF Rate. From the period hereof through February 1, 2008 (the "Conversion Date"), the Borrower shall pay payments of interest only. Commencing March 1, 2008 and on the first Banking Day of each month thereafter, Borrower shall pay monthly payments of principal in an amount sufficient to amortize the amount outstanding hereunder on the Conversion Date over a five (5) year schedule. The entire principal balance shall be due and payable in full on the Maturity Date. (b) Automatic Payments. Borrower hereby authorizes Lender to automatically deduct from Borrower's operating account the amount of any loan payment ("Automatic Payments"). If the funds in the account are insufficient to cover any payment, Lender shall not be obligated to advance funds to cover the payment. At any time and for any reason, Borrower or Lender may voluntarily terminate Automatic Payments. The Lender shall record on the books and records of the Lender an appropriate notation evidencing each repayment on account of the principal hereof and the amount of interest paid; and the Borrower authorizes the Lender to maintain such records or make such notations and agrees that the amount shown on the books and records as outstanding from time to time shall constitute the amount owing to the Lender pursuant to this Note, absent manifest error. (2) DEFAULT RATE. To the extent allowed by applicable law, after the occurrence of any Event of Default, after maturity or after judgment has been rendered on this Note, all outstanding principal and unpaid interest shall bear, until paid, interest at a rate per annum equal to two (2%) percentage points greater than that which would otherwise be applicable (the "Default Rate"). (3) LATE CHARGE. If a regularly scheduled payment is fifteen (15) days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment or $10.00, whichever is greater. (4) EXPENSES. Borrower further promises to pay to the Lender, as incurred, and as an additional part of the unpaid principal balance, all costs, expenses and reasonable attorneys' fees incurred (i) in the protection, modification, collection, defense or enforcement of all or part of this Note or any guaranty hereof, or (ii) in the foreclosure or enforcement of any mortgage or security interest which may now or hereafter secure either the debt hereunder or any guaranty thereof, or (iii) with respect to any action taken to protect, defend, modify or sustain the lien of any such mortgage or security agreement, or (iv) with respect to any litigation or controversy arising from or connected with this Note or any mortgage or security agreement or collateral which may now or hereafter secure this Note, or (v) with respect to any act to protect defend, modify, enforce or release any of its rights or remedies with regard to, or otherwise effect collection of, any collateral which may now or in the future secure this Note or with regard to or against Borrower or any endorser, guarantor or surety of this Note. (5) DEFINITIONS. (a) "Banking Day" shall mean any day other than a day on which commercial lenders in the Governing State are required or permitted by law to close. (b) "COF Rate" means the Cost of Funds Rate plus 300 basis points. (c) "Conversion Date" means February 1, 2008. (d) "Cost of Funds Rate" means the per annum rate of interest selected by the Borrower which Lender is presumed to pay or is offering to pay, for wholesale liabilities, adjusted for reserve requirements and such other requirements as may be imposed by federal, state or local government and regulatory agencies as determined by Sovereign Treasury Group, or its successors. (e) "Governing State" shall mean the state where Lender's offices are located as set forth in the first paragraph of this Note. (f) "Loan Documents" shall mean any and all agreements, instruments, documents, security agreements, mortgages, financing statements, and supplements thereto and relating to the Loan, or entered into between the Borrower or Guarantor (hereafter defined) in favor of, or with, the Lender, at any time, for any purpose. (g) "Maturity Date" shall have the meaning set forth in the first paragraph of this Note. (h) "Obligations" shall mean all loans, advances, debts, liabilities, obligations, covenants and duties owing by the Borrower to the Lender of every kind and description (whether or not evidenced by any note or other instrument and whether or not for the payment of money), direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, whether or not such obligations are related to the transaction described in this Loan Agreement, by class, or kind, or whether or not contemplated by the parties at the time of the granting of this security interest, including without limitation, all interest, fees, charges, expenses and attorneys' fees chargeable to the Borrower or incurred by the Lender in connection with the Borrower's account whether provided for herein or in any Loan Document. (i) The term "Prime Rate" means the variable per annum rate of interest so designated from time to time by the Lender as its prime rate. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate being charged to any customer. The rate of interest hereunder shall change simultaneously and automatically, without further notice, upon the Lender's determination and designation from time to time of the Prime Rate. The Lender's determination and designation from time to time of the Prime Rate shall not in any way preclude the Lender from making loans to other borrowers at rates that are higher or lower than or different from the referenced rate. (j) "Variable Rate" shall have the meaning set forth in paragraph 1(a) hereof. (6) OPTIONAL PREPAYMENT. Borrower may prepay the outstanding indebtedness due hereunder in whole, or in part, without penalty or premium. All such prepayment amounts shall be applied first to fees and expenses then due hereunder, then to interest on the unpaid principal balance accrued to the date of prepayment and last to the principal balance then due hereunder. (7) DEFAULT. The happening of any of the following events or conditions shall constitute an "Event of Default" under this Note: 1. Failure to make any payment of principal or interest or any sum due under this Note within fifteen (15) days of the date when the same shall be due and payable; or 2. Default by the Borrower in the payment or performance of any obligation on its part to be paid or performed, or breached by the Borrower of any representation, warranty, term, covenant or condition of or under any agreements between the Lender and the Borrower including, without limitation, any default or Event of Default under the Loan Agreement, as the same may be amended, modified, extended or restated or in any documents or instruments referred to in said agreements. Upon and after an Event of Default, the availability of advances hereunder shall, at the option of the Lender, be deemed to be automatically terminated and, at its option, the whole of said indebtedness, both principal and interest, and including any other sums which may become due under this Note, shall, at the option of the holder of this Note, immediately become due and payable without presentment, demand, protest, notice of protest, or other notice of dishonor of any kind, all of which are hereby expressly waived by the Borrower. (8) WAIVERS, CONSENT TO JURISDICTION. The Borrower agrees that no delay or failure on the part of the holder in exercising any power, privilege, remedy, option or right hereunder shall operate as a waiver thereof or of any other power, privilege, remedy or right; nor shall any single or partial exercise of any power, privilege, remedy, option or right hereunder preclude any other or future exercise thereof or the exercise of any other power, privilege, remedy, option or right. The rights and remedies expressed herein are cumulative, and may be enforced successively, alternately, or concurrently and are not exclusive of any rights or remedies which holder may or would otherwise have under the provisions of all applicable laws, and under the provisions of all agreements between the Borrower and the Lender. The Borrower hereby waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note. The Borrower hereby assents to any extension or postponement of the time of payment or any other indulgence, to the addition or release of any party or person primarily or secondarily liable, and to the addition, release and/or substitution of all or any portion of any collateral now or hereafter securing this Note. Borrower shall not be obligated to pay and Lender shall not collect interest at a rate higher than the maximum permitted by law or the maximum that will not subject Lender to any civil or criminal penalties. If, because of the acceleration of maturity the payment of interest in advance or any other reason, Borrower is required, under the provisions of any Loan Document or otherwise, to pay interest at a rate in excess of such maximum rate, the rate of interest under such provisions shall immediately and automatically be reduced to such maximum rate and any payment made in excess of such maximum rate shall be applied to principal outstanding hereunder or, if required by applicable law, shall be returned to Borrower. This Note is subject to and secured by the collateral set forth in the Loan Agreement which, inter alia, contains waivers and consents of the Borrower including, without limitation, waivers of jury trial, setoff rights and Lender's right to sell all or portions of the loan evidenced hereby. This Note shall be governed by and construed in accordance with the laws of the Governing State. Dated: January __, 2007. RANOR, INC. By: /s/ James G. Reindl ------------------------------------ James G. Reindl Its Chairman Duly Authorized EX-99.2 3 v066327_ex99-2.txt Exhibit 99.2 SETTLEMENT AGREEMENT AND GENERAL RELEASE ---------------------------------------- This Settlement Agreement and General Release ("Agreement") is made and executed by and between TechPrecision Corporation, a Delaware corporation (formerly known as Lounsberry Holdings II, Inc.,"TechPrecision"), and Green Mountain Partners III, L.P., a Delaware limited partnership ("Green Mountain"), in its capacity as Sellers' Representative ("Sellers' Representative") under the Stock Purchase Agreement (defined below) on behalf of all of the Sellers (defined below). WHEREAS, on August 17, 2005, Ranor Acquisition LLC ("Ranor Acquisition"), as Purchaser, and Green Mountain, Phoenix Life Insurance Company ("Phoenix"), Ann Gray, Daniel Justicz, Jeffrey Lippincott, William Rose and Stanley Youtt, as Sellers (herein, the "Sellers") entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") whereby Ranor Acquisition agreed to purchase and each of the Sellers agreed to sell all of the outstanding stock of Ranor, Inc., a Delaware corporation ("Ranor"); WHEREAS, prior to the closing of the Stock Purchase Agreement, Ranor Acquisition assigned all of its rights and obligations under the Stock Purchase Agreement to TechPrecision: WHEREAS, simultaneous with the closing of the Stock Purchase Agreement, TechPrecision and the Sellers' Representative entered into an escrow agreement with Wells Fargo Bank, National Association as the escrow agent ("Escrow Agent"), dated February 24, 2006 ("Escrow Agreement"), for the purpose of escrowing funds to satisfy, among other things, future indemnification claims brought by TechPrecision and the Sellers arising out of or related to the Stock Purchase Agreement; WHEREAS, on January 17, 2007, counsel for TechPrecision sent a letter to the Escrow Agent providing notice of certain indemnification claims and requesting distribution from the Escrow Agent to satisfy such claims; and WHEREAS, the Parties desire to settle the aforementioned dispute and resolve all matters in respect of the Stock Purchase Agreement; and NOW, THEREFORE, in consideration of these premises and the mutual promises contained herein, the Parties hereto, intending to be legally bound, hereby agree as follows: 1. Mutual Release. In consideration of the mutual promises set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, TechPrecision, for its own account and for the account of all of its present and former shareholders, members, affiliates, subsidiaries, divisions, directors, officers, employees, representatives, agents, managers, counsel, advisors and insurers and all of their respective heirs, representatives, trustees, executors, administrators, employees, officers, directors, members, managers, agents, counsel, predecessors, successors and assigns, on the one hand, and the Sellers' Representative, for its own account and for the account of each of the Sellers and all of their present and former shareholders, members, affiliates, subsidiaries, divisions, directors, officers, employees, representatives, agents, managers, counsel, advisors and insurers and all of their respective heirs, representatives, trustees, executors, administrators, employees, officers, directors, members, managers, agents, counsel, predecessors, successors and assigns of each of them, on the other hand, hereby each remise, release and forever discharge each other of and from any and all manner of, suits, debts, losses, damages, accounts, bonds, sums of money, costs, expenses, warranties, representations, covenants, contracts, agreements, promises, judgments, executions, claims, demands, liabilities, obligations, actions, causes and causes of action of any nature whatsoever, at law or in equity, direct or indirect, known or unknown, matured or unmatured, liquidated or unliquidated, choate or inchoate that arise out of the Stock Purchase Agreement ("Claims"). This mutual release is intended to be a full resolution of all claims that were asserted or could have been asserted by TechPrecision or any of the Sellers against each other arising out of the Stock Purchase Agreement, the Escrow Agreement or any agreement entered into in connection therewith. 2. Distribution By the Escrow Agent. Simultaneous with the execution of this Agreement, TechPrecision and the Sellers' Representative shall execute a form of joint written direction in a form substantially similar to the form attached hereto as Exhibit A ("Joint Written Direction"). The Joint Written Direction shall be presented by TechPrecision and the Sellers' Representative to the Escrow Agent for distribution of the escrowed funds. 3. Admissions. The entry of this Agreement does not constitute an admission by TechPrecision, any of the Sellers or the Sellers' Representative of the merit or lack of merit of any Claims that could have been brought or defenses that were, or could have been, raised by any of such Persons. The TechPrecision and the Sellers' Representative, on behalf of itself and the Sellers, are entering this Agreement without making any admissions, and are doing so in compromise of all Claims and to avoid the expense that would be involved in proceeding any further with the dispute. 4. Fees and Costs. The parties agree to bear their own attorneys' fees and costs incurred in this dispute, including, without limitation, any thereof attributable to this Agreement. 5. Authorization. The persons executing this Agreement hereby represent and warrant that they have carefully read this Agreement, and they have the full right, power, and authority to sign this Agreement. 6. Assignment. TechPrecision and the Sellers' Representative, on behalf of the Sellers, represent and warrant that they have not assigned any part of any of the Claims, and no person that is not bound by this Agreement owns any interest in the Claims. 7. Advice of Counsel. This Agreement has resulted from negotiation by the parties represented by counsel, and in the event of ambiguity or otherwise, it shall not be construed against, or in favor of, any party on the grounds that counsel for such party was the draftsman of the Agreement or any particular part of it. The parties represent that the terms of this Agreement have been completely read by them, and that those terms are fully understood and voluntarily accepted by them. 8. Entire Agreement. This instrument embodies the entire agreement between the parties as to the subjects covered herein, supersedes all prior agreements and understandings, if any, relating to the subject matter hereof. 9. Modification. This Agreement shall not be modified except by a writing executed by TechPrecision and the Sellers' Representative. 10. Choice of Law. The terms of this Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to conflicts of law principles. 11. Counterparts. This Agreement may be executed 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. 12. Headings. The headings to various clauses of this Agreement have been inserted for convenience only and shall not be used to interpret or construe the meaning of the terms and provisions hereof. 13. Non-Enforceability. If any provision of this Agreement or the application thereof is adjudicated to be void, invalid or unenforceable, such action shall not make the entire agreement void, but rather only such provision. All remaining provisions shall remain in full force and effect. IN WITNESS WHEREOF, TechPrecision on the one hand, and Sellers' Representative on the other, expressly intending to be legally bound hereby, and acknowledging that they have consulted with and have received the advice of counsel with respect hereto, and having given full and careful consideration to all respects hereof, have executed this Settlement [Signature Page Follows] Agreement and General Release as of February __, 2007. TECHPRECISION CORPORATION GREEN MOUNTAIN PARTNERS III, L.P. By: Green Mountain Investors III, LLC, its general partner By: /s/ James G. Reindl By: /s/ Dulany H. Gibson -------------------------------- ----------------------------------- Name: James G. Reindl Name: Dulany H. Gibson Title: Chief Executive Officer Title: Vice President Date: February 13, 2007 Date: 2/13/07 EXHIBIT A --------- JOINT FORM OF WRITTEN DIRECTION ATTACHED JOINT WRITTEN DIRECTION ----------------------- February 13, 2007 Wells Fargo Bank, National Association MAC P6101-114 1300 SW Fifth Avenue Portland, Oregon 97201 Attention: Corporate Trust Services Re: Escrow Agreement dated February 24, 2006 by and between Lounsberry Holdings II, Inc. (now known as TechPrecision Corporation) ("TechPrecision") and Green Mountain Partners III, L.P. ("Green Mountain"). Ladies and Gentlemen: This Joint Written Direction is provided pursuant to Section 6(b) of the Escrow Agreement. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Escrow Agreement. Please be advised that TechPrecision and Green Mountain have agreed on the distribution of the Escrow Amount as set forth herein. Accordingly, TechPrecision and Green Mountain hereby jointly direct the Escrow Agent to distribute the Escrow Amount as follows: (a) $500,000 shall be wired to TechPrecision at TechPrecision's Bank designated on Exhibit A attached hereto and (b) the remainder of the Escrow Amount held in the account totaling $465,546.94 ($425,000 plus accrued interest of $40,546.94), shall be wired to Green Mountain, Phoenix and Bingham McCutchen LLP at their respective Banks and in the respective amounts designated on Exhibit A attached hereto. When accrued interest is credited on or about March 1, 2007 it should be distributed to Green Mountain and Phoenix at their respective Banks, to be distributed 80% to Green Mountain Partners and 20% to Phoenix. Very truly yours, TECHPRECISION CORPORATION By: /s/ James G. Reindl ------------------------------------ Name: James G. Reindl Title: Chief Executive Officer GREEN MOUNTAIN PARTNERS III, L.P. By: Green Mountain Investors III, LLC By: /s/ Dulany H. Gibson ------------------------- Name: Dulany H. Gibson Title: Vice President Exhibit 99.2 EXHIBIT A --------- TECHPRECISION WIRING INFORMATION Sovereign Bank of New England 90 State House Square Hartford, CT 06103 ABA No.: 011075150 Acct. No.: 75860014093 Acct. Name: TechPrecision Inc. Attn: Mary Desmond $500,000.00 GREEN MOUNTAIN WIRING INFORMATION Chittenden Trust Company Two Burlington Square Burlington, VT 05402 ABA # 011600062 Attn: Institution Trust A/C #: 1-91-0031-6 Attn: Mike Monahan FBO: Green Mtn Ptns III 72C179016 Re: RBRAN ACQUISITION, INC. $369,637.55 PHOENIX LIFE INSURANCE COMPANY WIRING INFORMATION Chase Manhattan Bank, N.A. New York, NY ABA No.: 021 000 021 Acct. No.: 900 9000 200 Acct. Name: Income Processing Reference: G05520, Phoenix Life Insurance, RBRAN ACQUISITION, INC. $92,409.39 BINGHAM MCCUTCHEN WIRING INFORMATION Sovereign Bank of New England 90 State House Square Hartford, CT 06103 ABA No.: 011-075-150 (DOMESTIC) Acct. No.: 502 000 13097 Acct. Name: Bingham McCutchen LLP Re: Ranor (TFO). $3,500.00 -----END PRIVACY-ENHANCED MESSAGE-----