CPI AEROSTRUCTURES, INC. 8-K 


 


Exhibit 10.1


 





WAIVER AND EIGHTH AMENDMENT


TO AMENDED AND RESTATED CREDIT AGREEMENT


WAIVER AND EIGHTH AMENDMENT TO AMENDED AND
RESTATED CREDIT AGREEMENT (this “Amendment”) entered into as of October 28, 2021 by and among CPI AEROSTRUCTURES,
INC. (the “Borrower”), BANKUNITED, N.A., a national banking association, as Sole Arranger, Agent and a Lender, DIME
COMMUNITY BANK, a New York banking corporation, as a Lender, and the other financial institutions from time to time parties thereto as
lenders (collectively, the “Lender” and each a “Lender”), and BANKUNITED, 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
each Lender are parties to that Amended and Restated Credit Agreement dated as of March 24, 2016, as amended by that First Amendment and
Waiver to Amended and Restated Credit Agreement dated as of May 9, 2016, as further amended by that Second Amendment to Amended and Restated
Credit Agreement dated as of July 13, 2017, as further amended by that Third Amendment and Waiver to Amended and Restated Credit Agreement
dated as of August 15, 2018, as further amended by that Fourth Amendment dated as of December 20, 2018, as further amended by that Fifth
Amendment to Amended and Restated Credit Agreement dated as of June 25, 2019, as further amended by that Sixth Amendment and Waiver to
Amended and Restated Credit Agreement dated as of August 24, 2020 (the “Sixth Amendment”), and as further amended by
that Consent, Waiver and Seventh Amendment to Amended and Restated Credit Agreement dated as of May 11, 2021 (collectively, the “Agreement”);


WHEREAS, the Borrower has requested that
the Agent and each Lender (i) amend certain provisions of the Agreement including an extension of the maturity date of the Loans, (ii)
waive temporarily the Borrower’s failure to furnish timely to each Lender the audited consolidated financial statements of the Borrower
and its Subsidiaries for the fiscal year ended December 31, 2020 together with a related compliance certificate, (iii) waive temporarily
the Borrower’s failure to furnish timely to each Lender the consolidated financial statements of the Borrower and its Subsidiaries
for the fiscal quarters ended March 31, 2021, June 30, 2021 and September 30, 2021, each together with a related compliance certificate
and (iv) waive certain covenant non-compliance under the Agreement; and


WHEREAS, the Agent and each Lender are
willing to accede to such request to (i) amend certain provisions of the Agreement and (ii) grant the requested waivers, 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.
This Amendment constitutes a Loan Document.




    	 



    	 



    

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


(a)              
Section 1.1 of the Agreement (Defined Terms) is amended by deleting the following definitions and substituting the following therefor:


“Aggregate Revolving Credit Maximum
Amount”: shall mean the principal amount of up to $21,000,000.00.


“Revolving Credit Termination
Date”: December 31, 2022.


“Term Loan Maturity Date”:
December 31, 2022.


(b)              
Section 2.7 of the Agreement (Repayment of Term Loan) is amended by deleting same and substituting the following therefor:


“2.7 Repayment of Term Loan.
The principal balance of the Term Loan shall be payable to the Administrative Agent for the account of each Term Lender (in accordance
with each Term Lender’s respective Term Loan Percentage) (i) in consecutive monthly installments of principal, in the principal
amounts set forth on the table below, such payments commencing on May 1, 2016 with each succeeding installment being due on the first
Business Day of each month thereafter until December 1, 2022, (ii) in the amount of $750,000 in three installments of $250,000 on the
last Business Day of each of November 2021, December 2021 and March 2022, and (iii) as a final payment on the Term Loan Maturity Date
in an amount equal to the then outstanding principal balance of the Term Loan. Notwithstanding the foregoing, upon Borrower’s receipt
of a Contract Termination Payment (if any), a A-10 2015 REA Payment or Net Offering Proceeds, Borrower shall then either (1) prepay the
Term Loan (which in the case of Eurodollar Term Loans shall be on the last day of the current Interest Period) in the principal amount
equal to the applicable Designated Amount plus all accrued and unpaid interest through the date of prepayment, or (2) at Borrower’s
request (subject to Agent’s approval), deposit into a bank account held by and pledged (as additional collateral for the Loans and
any related interest rate swap obligations, if applicable) to the Agent on behalf of the Term Lenders, on terms and documentation satisfactory
to the Agent and its counsel, an amount equal to the applicable Designated Amount. Each Term Lender shall receive its Term Loan Percentage
of each installment of principal paid under the Term Loan.


	First Business Day

Month and Year	Principal Amortization

Amount per Month
	May 2016 – April 2017	$41,667.67
	May 2017 – April 2018	$125,000.00
	May 2018 – August 2018	$166,666.67
	September 2018 – June 2021	$175,000.00
	July 2021 – December 2022	$200,000.00”
	 	 






    	 



    	 



    

(c)              
Section 7.1(a) of the Agreement (Minimum Debt Service Coverage Ratio) is amended by deleting same and substituting the following
therefor:


“(a)Minimum Debt Service
Coverage Ratio. Permit the Debt Service Coverage Ratio of the Borrower at the end of each fiscal quarter for the DSCR Period (defined
below) then ended to be less than the corresponding ratio set forth below. “Debt Service Coverage Ratio” shall mean
(i) the sum of EBITDA plus amortization of stock compensation expense, minus Restricted Payments minus unfinanced Capital Expenditures,
divided by (ii) the sum of scheduled principal and Financing Lease payments plus Interest Expense; in each case as determined in
accordance with GAAP consistently applied. “DSCR Period” shall mean (y) for the fiscal periods ended 9/30/20 and 12/31/20,
the fiscal quarter then ended; and (z) for all other fiscal periods, the trailing four quarter period then ended.


	Quarter End	Minimum DSCR
	Closing – 12/31/17	1.5 to 1.0
	3/31/18 – 6/30/20	waived
	9/30/20 – 12/31/20	1.5 to 1.0
	3/31/21 	waived
	6/30/21 and thereafter	1.5 to 1.0”
	 	 


(e)              
Section 7.1(b) of the Agreement (Maximum Leverage Ratio) is amended by deleting same and substituting the following therefor:


“(b)Maximum Leverage Ratio.
Permit the Leverage Ratio of the Borrower at the end of each fiscal quarter determined for the trailing four-quarter period then ended
(or in the case of the fiscal quarter ended March 31, 2021, determined on an annualized basis for the three-quarter period then ended)
to be more than the corresponding ratio set forth below (subject to adjustment pursuant to Section 3.4(i)); “Leverage
Ratio” shall mean Funded Debt, divided by EBITDA:


	Fiscal Quarter End	Maximum Leverage Ratio
	6/30/16 and 9/30/16	3.5 to 1.0
	12/31/16 – 12/31/17	3.0 to 1.0
	3/31/18 – 12/31/20	waived
	3/31/21 	5.0 to 1.0
	6/30/21	4.75 to 1.0
	9/30/21 	4.25 to 1.0
	12/31/21 and thereafter	4.0 to 1.0”


 


(f)               
Section 7.1(e) of the Agreement (Minimum Liquidity) is hereby deleted.


(g)              
Schedule I of the Agreement is hereby amended by deleting same and substituting the attached Schedule I therefor.


(h)              
Schedule 4.18 of the Agreement is hereby amended by deleting the same and substituting the attached Schedule 4.18
therefor.


(i)                
Schedule 7.2 of the Agreement is hereby amended by deleting the same and substituting the attached Schedule 7.2 therefor.




    	 



    	 



    

(j)                
Schedule 7.3 of the Agreement is hereby amended by deleting the same and substituting the attached Schedule 7.3
therefor.


(k)              
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 and confirmed.


3.                 
Each Lender and the Borrower agree that as of October 28, 2021 and prior to the Effective Date (defined below), the aggregate outstanding
principal amount of: (a) the Revolving Credit Loans as evidenced by Revolving Credit Notes is $21,000,000.00, and (b) the Term Loan as
evidenced by the corresponding Term Notes is $5,383,333.32.


4.                 
The Borrower hereby represents and warrants to each Lender after giving effect to this Amendment 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.


(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 covenants is hereby waived by the Agent and each Lender, solely, in the case
of subsection (a) and (b), for the period set forth therein:


(a)              
Section 6.1(a) of the Credit Agreement: The Borrower’s late submission to each Lender of the audited consolidated
financial statements of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2020 together with a related compliance
certificate is waived until November 30, 2021.


(b)              
Section 6.1(b) of the Credit Agreement: The Borrower’s late submission to each Lender of the quarterly consolidated
financial statements of the Borrower and its Subsidiaries (i) for the fiscal quarter ended March 31, 2021 together with a related compliance
certificate is waived until December 31, 2021, (ii) for the fiscal quarter ended June 30, 2021 together with a related compliance certificate
is waived until January 31, 2022, and (iii) for the fiscal quarter ended September 30, 2021 together with a related compliance certificate
is waived until March 31, 2022.


(c)              
Section 7.1(a) of the Credit Agreement: The Borrower’s non-compliance with this Section is waived for the fiscal quarters
ended December 31, 2020 and March 31, 2021.


(d)              
Section 7.1(d) of the Credit Agreement: The Borrower’s non-compliance with this Section is waived for the fiscal
quarter ended December 31, 2020.




    	 



    	 



    

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, obligations and other
extensions of credit provided in the Agreement (as herein amended) and the Loan Documents.


7.                 
The amendments and waivers set forth herein are limited precisely as written, based on the facts specified, 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, the Loan Documents 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,
the Loan Documents or any documents referred to therein. Whenever the Agreement is referred to in this Amendment, the Loan Documents 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 this Amendment and all
instruments, agreements and other documents executed or delivered in connection herewith.


9.                 
In consideration for the Lenders entering into this Amendment, the Borrower hereby agrees to pay to the Administrative Agent, for
the ratable benefit of the Lenders, a fee equal to $250,000, which fee shall be deemed fully earned and nonrefundable as of the Effective
Date if, and only if, the Borrower (a) does not repay the Obligations in full and terminate the Commitments, or (b) is not ready, willing
and able to repay the Obligations in full and terminate the Commitments, on or prior to December 31, 2021. If earned, such fee will be
payable in cash on December 31, 2021; provided, however, that, at the Borrower’s option, if earned, such fee may be
paid in kind and accrued and capitalized on December 31, 2021 rather than paid in cash. For the avoidance of doubt, the Borrower will
be deemed ready, willing and able to repay the Obligations in full and terminate the Commitments if (x) it has the immediate ability and
intent to close a transaction providing for the payment of all Obligations payable to the Administrative Agent and the Lenders pursuant
to the Agreement and for the termination of the Commitments on or prior to December 31, 2021 and (y) any failure to close such transaction
by December 31, 2021 results solely from delay caused by the Administrative Agent or the Lenders (or their respective representatives).



    	 



    	 



    




10.              In
consideration of the accommodations provided by the Agent and the Lender under this Amendment, the Borrower and the Guarantors (by
virtue of their undersigned consent), on behalf of themselves and for each of their direct and indirect Affiliates, successors,
predecessors and assigns, and their present and former legal representatives, employees, agents, and attorneys, and their trustees,
successors and assigns (collectively, the “Releasors”), hereby knowingly, voluntarily, intentionally,
unconditionally and irrevocably waive, release and forever discharge (the “Release”) the Agent and the Lender and
the Agent and the Lender’s Affiliates and subsidiaries (collectively, the “Lender Parties”) from and
against any and all rights, claims, counterclaims, demands, suits, actions or causes of action against the Agent or the Lender or
the other Lender Parties, whether known or unknown, contingent or absolute, liquidated or unliquidated or otherwise, arising out of
the Agent or the Lender’s or the other Lender Parties’ actions or inactions in connection with the Loans prior to the
execution and delivery of this Amendment prior to the execution and delivery of this Amendment, as well as any and all rights of
setoff, defenses, claims, counterclaims, demands, suits, actions, and causes of action, in each case in connection with the Loans
prior to the execution and delivery of this Amendment, and any other bar to the enforcement of the Agreement, the Notes or any of
the other Loan Documents which shall have accrued prior to the execution and delivery of this Amendment. In any litigation arising
from or related to an alleged breach of the Release, the Release may be pleaded as a defense, counterclaim or cross claim and shall
be admissible into evidence without foundation testimony whatsoever. The Releasors expressly covenant and agree that the Release
shall be binding in all respects upon their respective successors, assigns and transferees including, without limitation, any
trustee in bankruptcy, and shall inure to the benefit of the successors and assigns of the Agent, the Lender and the other Lender
Parties.


11.             
If any of the Borrower or the Guarantors shall (a) file with any bankruptcy or similar court or be the subject of any petition
under any Debtor Relief Law; (b) be the subject of an order for relief under any Debtor Relief Law; (c) file or be the subject of a petition
seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future
Debtor Relief Law; (d) seek, consent to or acquiesce in the appointment of a trustee, receiver, conservator or liquidator; or (e) be the
subject of an order, judgment or decree entered by a court of competent jurisdiction approving a petition filed against any of the Borrower
or the Guarantors for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any
present or future Debtor Relief Law, then the Agent shall thereupon be entitled to relief from any automatic stay imposed by Section 362
of the United States Bankruptcy Code or from any other stay or suspension of remedies of the rights and remedies otherwise available to
the Agent under the Agreement or any other Loan Documents, and each of the Borrower and the Guarantors specifically acknowledges that
“cause” exists for such relief within the meaning of Section 362(d) of the United States Bankruptcy Code and agrees not to
oppose any motion by the Agent for relief from the automatic stay imposed by Section 362.


12.             
This Amendment shall become effective on such date as all of the following conditions shall be satisfied retroactive to the date
set forth in the first paragraph hereof (the “Effective Date”):


(a)              
Loan Documents. The Administrative Agent shall have received four (4) original counterparts of this Amendment (inclusive
of all exhibits, and attachments), executed and delivered by a duly authorized officer of the Borrower and the Guarantors, with a counterpart
or a conformed copy for each Lender, together with an executed original of a Second Amended and Restated Revolving Credit Note in favor
of each Lender.


(b)               Secretary’s
Certificate of the Borrower. The Administrative Agent shall have received, with a counterpart for each Lender, a certificate,
dated as of the Effective Date, executed by the Secretary or any Assistant Secretary of the Borrower certifying (a) a copy of the
resolutions, in form and substance satisfactory to the Administrative Agent, of the Board of Directors of the Borrower authorizing
the execution, delivery and performance of this Amendment and (b) the incumbency and signature of the officers of the Borrower
executing this Amendment and any other Loan Document, which certificate shall be in form and substance satisfactory to the
Administrative Agent and shall state that the resolutions thereby certified have not been amended, modified, revoked or
rescinded.



    	 



    	 



    

(c)              
Secretary’s Certificates of the Guarantors. The Administrative Agent shall have received, with a counterpart for each
Lender, a certificate, dated as of the Effective Date, executed by the Secretary or any Assistant Secretary of each Guarantor certifying
(a) a copy of the resolutions, in form and substance satisfactory to the Administrative Agent, of the Board of Directors of such Guarantor
authorizing the execution, delivery and performance of this Amendment and (b) the incumbency and signature of the officers of such Guarantor
executing this Amendment and any other Loan Document, which certificate shall be in form and substance satisfactory to the Administrative
Agent and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded.


(d)              
Consents, Licenses and Approvals. All governmental and material third party approvals necessary in connection with the execution,
delivery and performance of the Loan Documents shall have been obtained and be in full force and effect or shall continue to be in full
force and effect.


(e)              
Litigation. Except as set forth on Schedule 4.6 of the Agreement, there shall be no litigation or administrative
proceeding or proposed or pending regulatory changes in law or regulations applicable to the Borrower or its Subsidiaries, which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect or a material adverse effect on the ability of the parties
to consummate the execution, delivery and performance of the Loan Documents and the Borrowings hereunder.


(f)               
Indebtedness. As of the Effective Date, the Borrower and its Subsidiaries shall not have outstanding Indebtedness for borrowed
money or preferred stock other than (i) Indebtedness under the Loan Documents, (ii) Indebtedness permitted under the Agreement, and (iii)
Indebtedness as set forth on Schedule 7.2 of the Agreement.


(g)              
Documentation. The Lenders have received such other documents and other instruments or certificates as they may reasonably
request.


(h)              
Material Adverse Effect. Since June 30, 2020, there has been no development or event which has had or would reasonably be
expected to have a Material Adverse Effect, except (i) the Restatement (as defined in the Sixth Amendment) and (ii) the Borrower’s
required restatement of its financial statements as of the end of each fiscal quarter for the fiscal year ended 2020 and for fiscal year
ended 2020 due to certain incorrect inventory values resulting from inventory costing errors, adjustments to inventory reserves and provisions
for loss contracts.


(i)                
Execution by Lenders. This Amendment shall have been executed and delivered by each Lender hereunder.




    	 



    	 



    

13.             
 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 12 above) on the date of execution by the Agent and the Lenders, retroactive to such date.


14.             
This Amendment shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York.


15.             
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.


[Signature Page to Follow]


 




    	 



    	 



    

SIGNATURE PAGE


 


Waiver and Eighth Amendment to Amended and Restated
Credit Agreement


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/ Andrew Davis
	 	 	Name: Andrew Davis
	 	 	Title: CFO
	 	 	 
	 	 	 
	 	BANKUNITED, N.A.,
	 	as Arranger, Agent and a Lender
	 	 	 
	 	 	 
	 	By:	/s/ Brian McGahee
	 	 	Name: Brian McGahee
	 	 	Title: SVP
	 	 	 
	 	 	 
	 	BANKUNITED, N.A.,
	 	as Administrative Agent and Collateral Agent
	 	 	 
	 	 	 
	 	By:	/s/ Brian McGahee
	 	 	Name: Brian McGahee
	 	 	Title: SVP
	 	 	 
	 	 	 
	 	DIME COMMUNITY BANK,
	 	as a Lender
	 	 	 
	 	By:	/s/ JoAnn
Bello
	 	 	Name: JoAnn
Bello
	 	 	Title: Senior Vice President





    	 



    	 



    

Each of the Guarantors indicated below hereby
consent to this Amendment and acknowledge its continuing liability under its respective Guaranty with respect to the Agreement, as amended
hereby, including (without limitation) the Loan Documents executed in connection with the Obligations and all other documents, instruments
and agreements executed pursuant thereto or in connection therewith, without offset, defense of counterclaim, any such offset, defense
or counterclaim as may exist being hereby irrevocably waived by each Guarantor.





	 	GUARANTORS:
	 	 
	 	 
	 	WELDING METALLURGY, INC.
	 	 	 
	 	 	 
	 	By:	/s/ Andrew Davis
	 	 	Name: Andrew Davis
	 	 	Title: 
	 	 	 
	 	 	 
	 	COMPAC DEVELOPMENT
	 	CORPORATION
	 	 	 
	 	 	 
	 	By:	/s/ Andrew Davis
	 	 	Name: Andrew Davis
	 	 	Title: CFO


 





    	 



    	 



    

SCHEDULE I


Commitments


[omitted pursuant to Item
601(a)(5) of Regulation S-K]


 




    	 



    	 



    

SCHEDULE 4.18


Insurance


 


 


[omitted pursuant to Item
601(a)(5) of Regulation S-K]


 




    	 



    	 



    


SCHEDULE 7.2


Existing Indebtedness and Subordinated Debt


[omitted pursuant to Item 601(a)(5) of Regulation S-K]


 


 


 


 




    	 



    	 



    

SCHEDULE 7.3


Existing Liens


[omitted pursuant to Item 601(a)(5) of Regulation
S-K]