FIRST AMENDMENT AND WAIVER TO
AMENDED AND RESTATED CREDIT AGREEMENT

FIRST AMENDMENT AND WAIVER (the “Amendment”) entered into as of August 6, 2014
by and between CPI AEROSTRUCTURES, INC. (the “Borrower”), and SANTANDER BANK,
N.A., formerly known as Sovereign Bank, N.A. , a national banking association,
as Sole Arranger, Agent, a Lender and Swap Provider, VALLEY NATIONAL BANK, a
national bank, as a Lender, and the other financial institutions from time to
time parties thereto as lenders (collectively, the “Lender”), SANTANDER BANK,
N.A., formerly known as Sovereign Bank, N.A, a national banking association, as
administrative agent and collateral agent for the Lender thereunder (in such
capacities, the “Administrative Agent” and the “Collateral Agent,” respectively
and each an “Agent”).

WHEREAS, the Borrower, the Agent and the Lender are parties to that Amended and
Restated Credit Agreement dated as of December 5, 2012, as same may be hereafter
amended and modified (the “Agreement”); and

WHEREAS, the Borrower has requested that the Agent and the Lender (i) amend
certain provisions of the Agreement, and (ii) waive certain covenant
non-compliance under the Agreement; and

WHEREAS, the Agent and the Lender is willing to accede to such request to (i)
amend certain terms of the Agreement, and (ii) waive certain covenant
non-compliance under the Agreement, in each case subject to the terms and
conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and the agreements hereinafter
set forth and for other good and valuable consideration, the parties hereto
hereby agree as follows:

1. All capitalized terms used herein, unless otherwise defined herein, have the
same meanings provided therefor in the Agreement.

2. Subject to the terms and conditions hereof, the Agreement is hereby amended
as follows:

(A) The Agreement is amended by adding the following definition of “A-10
Contract Reimbursement Payment” thereto as follows:

“A-10 Contract Reimbursement Payment”: shall mean any modification, contract
reduction, contract reimbursement, penalty, refund or damage payments or other
similar fees, damages, refunds or other amounts payable in connection with the
foregoing, including (without limitation) any related income tax refund in
connection therewith, in each case with respect to or derived from the
modification and adjustment of the 2008 contract with The Boeing Company with
respect to the Boeing A-10 Wing Replacement Program.”

(B)           The definitions of “Contract Termination Payment” and “EBITDA” are
amended by deleting same and substituting the following therefor:

““Contract Termination Payment”: shall mean any termination, cancellation,
rejection or similar fee or amount received by Borrower upon any early
termination, cancellation, rejection, expiration or inability to agree with
respect to any Designated Contract or any damages or other amounts received by
Borrower for the foregoing.  A A-10 Contract Reimbursement Payment shall be
deemed to not constitute a Contract Termination Payment.”

““EBITDA”:  means, at any date of determination, an amount equal to Net Income
of the Borrower and its Subsidiaries on a consolidated basis for the most
recently completed measurement period plus (a) the following to the extent
deducted in calculating such Net Income: (i) Interest Expense, (ii) the
provision for Federal, state, local and foreign income taxes payable, (iii)
depreciation and amortization expense and (iv) other non-recurring expenses
reducing such Net Income which do not represent a cash item in such period or
any future period (in each case of or by the Borrower and its Subsidiaries for
such measurement period) and minus (b) the following to the extent included in
calculating such Net Income: (i) Federal, state, local and foreign income tax
credits, (ii) all non-cash items increasing Net Income (in each case of or by
the Borrower and its Subsidiaries for such measurement period), and (iii) the
sum of all A-10 Contract Reimbursement Payments and Contract Termination
Payments.”

(C)           Section 2.3 of the Agreement is amended by deleting same and
substituting the following therefor:

“2.3  Repayment of Revolving Credit Loans.  The Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of each Revolving
Lender the then unpaid principal amount of each Revolving Credit Loan of such
Lender (whether made before or after the termination or expiration of the
Revolving Credit Commitments) on the Revolving Credit Termination Date and on
such other dates and in such other amounts as may be required from time to time
pursuant to this Agreement, including, without limitation Section (g) of Section
3.1.  The Borrower hereby further agrees to pay interest on the unpaid principal
amount of the Revolving Credit Loans from time to time outstanding until payment
thereof in full at the rates per annum, and on the dates, set forth in Section
3.1.  Notwithstanding the foregoing, within one (1) Business Day of Borrower’s
receipt of each A-10 Contract Reimbursement Payment (if any), Borrower shall
then prepay the Revolving Credit Loans in the principal amount equal to one
hundred (100%) percent of the net proceeds (less any amounts due to
subcontractors related to the Boeing A-10 Wing Replacement Program) of each A-10
Contract Reimbursement Payment plus all accrued and unpaid interest through the
date of prepayment.  Each Revolving Lender shall receive its Revolving Credit
Commitment Percentage of each installment of principal paid under the Revolving
Credit Loans.”
 
(D)           Section 3.4(h) of the Agreement is amended by deleting same and
substituting the following therefor:

“(h) Upon Borrower’s receipt of (i) each Contract Termination Payment (if any),
Borrower shall comply with the prepayment or cash security provisions of Section
2.7; and (ii) each A-10 Contract Reimbursement Payment (if any), Borrower shall
comply with the prepayment provisions of Section 2.3.”

(E)           Except as amended herein, all other provisions of the Agreement
and the Loan Documents shall remain in full force and effect, and are hereby
ratified.

 
 

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3.           The Lender and the Borrower agree that as of August 4, 2014, the
aggregate outstanding principal amount of:   (i) the Revolving Credit Loans as
evidenced by each Revolving Credit Note is $28,850,000.00, (ii) the First Term
Loan as evidenced by each First Term Loan Note is $2,400,000.00.

4.           The Borrower hereby represents and warrants to the Lender that:

(a)           Each and every of the representations and warranties set forth in
the Agreement is true as of the date hereof and with the same effect as though
made on the date hereof, and is hereby incorporated herein in full by reference
as if fully restated herein in its entirety; provided, however, that the
September 30, 2012 date in Sections 4.1 and 4.2 shall be deemed to be June 30,
2014.

(b)           No Default or Event of Default and no event or condition which,
with the giving of notice or lapse of time or both, would constitute such a
Default or Event of Default, now exists or would exist after giving effect
hereto.

(c)           There are no defenses or offsets to the Borrower’s obligations
under the Agreement, the Notes or the Loan Documents or any of the other
agreements in favor of the Lender referred to in the Agreement.

(d)           The WHEREAS clauses set forth hereinabove are true and correct.

5.           Non-compliance by the Borrower with the following covenant, for the
following fiscal period(s) ended on the date(s) set forth below, is hereby
waived by the Agent and the Lender, solely to the extent and subject to the
facts and terms and for the period(s) set forth below:

(a) Section 7.1 (c) of the Agreement, Minimum Net Income, which should have been
at least $1 as of the end of the fiscal quarter ended on June 30, 2014, but was
actually a loss of $(29,691,952.00) as of the end of such fiscal quarter.

6.           It is expressly understood and agreed that all collateral security
for the Loans and other extensions of credit set forth in the Agreement prior to
the amendment provided for herein is and shall continue to be collateral
security for the Loans and other extensions of credit provided in the Agreement
as herein amended, including (without limitation) Borrower’s obligations under
the Master Agreement.  Without limiting the generality of the foregoing, the
Borrower hereby absolutely and unconditionally confirms that each Loan Document,
document and instrument executed by the Borrower pursuant to the Agreement
continues in full force and effect, is ratified and confirmed and is and shall
continue to be applicable to the Agreement (as herein amended).

7.           The amendments and waivers set forth herein are limited precisely
as written, based on the facts disclosed in writing to the Lender, for the
periods stated and shall not be deemed to (a) be a consent to or a waiver of, or
future waiver of any further violation or non-compliance with any of the
indicated covenants or any other term or condition of the Agreement or any of
the documents referred to therein, or (b) prejudice any right or rights which
the Lender may now have or may have in the future under or in connection with
the Agreement or any documents referred to therein.  Whenever the Agreement is
referred to in the Amendment or any of the instruments, agreements or other
documents or papers executed and delivered in connection therewith, it shall be
deemed to mean the Agreement as modified by this Amendment.

8.           The Borrower agrees to pay on demand, and the Agent may charge any
deposit or loan account(s) of the Borrower, all expenses (including reasonable
attorney’s fees) incurred by the Lender in connection with the negotiation and
preparation of the Agreement as amended hereby.

9.           This Amendment shall become effective on such date as all of the
following conditions shall be satisfied retroactive to the date hereof:

(a) The Agent shall have received four (4) executed, original counterparts of
this Amendment.

(b) The Agent shall have received executed counterparts of any action (in form
and substance satisfactory to the Agent and its counsel) taken by the Borrower
to authorize the execution, delivery and performance of this Amendment and such
other documents as the Lender or its counsel may require.

(c) Payment by the Borrower of Lender’s Amendment and Waiver fee in the amount
of $18,700.00, together with all out of pocket costs, expenses and reasonable
attorneys’ fees incurred by the Agent in connection with this Amendment and the
related documents.

10.           This Amendment is dated as of the date set forth in the first
paragraph hereof and shall be effective (after satisfaction of the conditions
set forth in paragraph 9 above) on the date of execution by the Agent and the
Lender, retroactive to such date.

11.           This Amendment may be executed in counterparts, each of which
shall constitute an original, and each of which taken together shall constitute
one and the same agreement.

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their respective duly authorized officers as of the
date first above written.

CPI AEROSTRUCTURES, INC.,
as Borrower

By: /s/ Vincent Palazzolo
      Vincent Palazzolo
      Chief Financial Officer

SANTANDER BANK, N.A.,
as Arranger, Agent, Lender and Swap Provider

By: /s/ Christine Gerula
                                                                                                                    
Christine Gerula
     Senior Vice President

VALLEY NATIONAL BANK,
as Lender

By: /s/ Steven Levi
                                                                                                                    
 Name: Steven Levi
     Title: Vice President

 
 
 
 
 
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