Item 1.01 Entry into a Material Definitive Agreement
Private Placement of Securities
Unique Fabricating, Inc. (the “Company”) issued 1,954,000 shares of common stock (the “Shares”) at a price of $2.25 per share for gross proceeds of $4,396,500 in an offering (the “Offering”) exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). The Company received net proceeds of $4,044,780 after payment of selling commissions equal to 8% of the gross proceeds and expenses of $44,000 to Taglich Brothers, Inc., the placement agent for the Offering. Taglich also received warrants to purchase 156,320 shares of common stock, exercisable for five years, at a price per share of $3.12 (the “Warrants”).
The Company intends to utilize the net proceeds for general corporate purposes and initially to reduce borrowings under its revolving credit facility, which subject to availability and compliance with the terms of the revolving line of credit, as amended, including by the Forbearance Agreement, may be reborrowed by the Company.
The issuance and sale of the Shares is pursuant to a Securities Purchase Agreement (the “Purchase Agreement”), dated September 21, 2021, among the Company and the certain purchasers named therein. The Purchase Agreement, among other things, contains representations and warranties and agreements of the Company and the Purchasers and indemnification by the Company of the Purchasers. Pursuant to the terms of the Purchase Agreement, the Company has agreed to certain restrictions on the issuance and sale of its Common Stock or Common Stock Equivalents (as defined in the Purchase Agreement), including during the 30-day period after the closing and until the one year anniversary of the closing in a Variable Rate Transaction, as defined.
The Shares, Warrants and the shares of our Common Stock issuable upon the exercise of the Warrants are not being registered under the Securities Act of 1933, as amended (the “Securities Act”), and were offered pursuant to the exemption provided in Rule 506(b) under Regulation D promulgated under the Securities Act and Section 4(a)(2) of the Securities Act.
Pursuant to the terms of a registration rights agreement dated September 21, 2021 by and among the Company and each of the Purchasers (the “Registration Rights Agreement”), the Company, among other things, agreed to prepare a registration statement (the “Resale Registration Statement”) on Form S-3, or such other form appropriate for the transaction, providing for the resale by holders of the Shares issued pursuant to the Purchase Agreement and file it within 30 days of the date of the Purchase Agreement and become effective within 60 days following the date of the Purchase Agreement, unless the registration statement is subject to a “full” review. The Company will be required to pay liquidated damages if it does not timely file or obtain the effectiveness of the Registration Statement. The shares of Common Stock issuable upon exercise of the Warrants also will be registered.
The foregoing summaries of the Purchase Agreement, Registration Rights Agreement and the Warrants do not purport to be complete and are subject to, and qualified in their entirety by, such documents attached as Exhibits 10.1, 10.2 and 4.1, respectively, to this Current Report on Form 8-K, which are incorporated herein by reference.
On September 21, 2021, the Company issued a press release in connection with the Offering, which is attached as Exhibit 99.1 hereto and incorporated by reference herein.
Second Amendment to Forbearance Agreement
On September 21, 2021, Unique Fabricating NA, Inc. (the “US Borrower”) and Unique-Intasco Canada, Inc. (the “CA Borrower” and together with the US Borrower, the “Borrowers” or the “Company”) and certain of their subsidiaries entered into a Second Amendment to Forbearance Agreement with respect to the Amended and Restated Credit Agreement, as amended, among the Borrowers, certain of their subsidiaries, with the financial institutions signatory thereto (the “Lenders”) and Citizens Bank, National Association, a national banking association, as Administrative Agent for the lenders (the “Agent”). The Second Amendment to the Forbearance Agreement, among other things, makes changes to the calculations of financial covenants, contains revised requirements for Minimum Liquidity and Minimum Consolidated EBITDA, as defined, for the monthly periods through and including February 28, 2022, and revises the Revolving Credit Aggregate Commitment from $30 million to $27 million.
This summary of the Second Amendment to Forbearance Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Second Amendment to Forbearance Agreement as Exhibit 10.3 to this Current Report on Form 8-K and incorporated herein by reference.