Document:

CPI AEROSTRUCTURES, INC. 8-K

 

Exhibit 10.3

 

COMMERCIAL GUARANTY

 

 

	Borrower: 	CPI Aerostructures, Inc.	 	Agent:         BankUnited,
N.A., as 

Administrative Agent and Collateral 

Agent for the Lenders 

Commercial Lending 

14817 Oak Lane 

Miami Lakes, Florida 33016

	 	91 Heartland Blvd.	 
	 	Edgewood, New York 11717	 
	 	 	 
	Guarantor: 	Welding Metallurgy, Inc. and	 
	 	Compac Development Corp.	 
	 	c/o CPI Aerostructures, Inc.	 
	 	91 Heartland Blvd.	 
	 	Edgewood, New York 11717	 

 

 

CONTINUING GUARANTEE OF PAYMENT AND PERFORMANCE.
For good and valuable consideration, each Guarantor, jointly and severally, absolutely and unconditionally, guarantees, as primary
obligor and not merely as surety, the full and punctual payment and satisfaction of the Indebtedness (defined below) of Borrower
to BANKUNITED, N.A., as Administrative Agent and Collateral Agent for the benefit of the Lenders as defined in and party to that
certain Credit Agreement, defined below (“Agent”), and the prompt performance and discharge of all Borrower’s
obligations under the Credit Agreement and the Related Documents. This is a guaranty of payment and performance and not of collection,
so Agent can enforce this Guaranty against Guarantor even when Agent has not exhausted Agent’s remedies against anyone else
obligated to pay the Indebtedness or any portion thereof or against any collateral securing the Indebtedness, this Guaranty or
any other guaranty of the Indebtedness or any portion thereof. Guarantor will make any payments to Agent or its order, on demand,
in legal tender of the United States of America, in same-day funds, without set-off or deduction or counterclaim or defense, and
will otherwise perform Borrower’s obligations under the Credit Agreement and Related Documents. Under this Guaranty, Guarantor’s
liability is unlimited and Guarantor’s obligations are continuing. For purposes hereof, each person executing below shall
be defined collectively as “Guarantor” herein. If more than one Guarantor executes below, the obligations hereunder
shall be joint and several.

 

INDEBTEDNESS. The word “Indebtedness”
as used in this Guaranty means all Obligations under the Credit Agreement together with all of the principal amount outstanding
from time to time and at any one or more times, accrued unpaid interest thereon and all collection costs and legal expenses related
thereto permitted by law, reasonable attorneys’ fees, arising from any and all debts, liabilities and obligations of every
nature or form, now existing or hereafter arising or acquired, that Borrower individually or collectively or interchangeably with
others, owes or will owe Agent for the benefit of the Lenders in accordance with the Credit Agreement. “Indebtedness”
includes, without limitation, loans, advances, debts, overdraft indebtedness, credit card indebtedness, lease obligations, other
obligations, and liabilities of Borrower, and any present or future judgments against Borrower, future advances, loans or transactions
that renew, increase, extend, modify, refinance, consolidate or substitute these debts, liabilities and obligations whether: voluntarily
or involuntarily incurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated;
determined or undetermined; direct or indirect; primary or secondary in nature or arising from a guaranty or surety; secured or

 

    	 

    	 

    

unsecured; joint or several or joint and several;
evidenced by a negotiable or non-negotiable instrument or writing; originated by Agent or another or others; barred or unenforceable
against Borrower for any reason whatsoever; for any transactions that may be voidable for any reason (such as infancy, insanity,
ultra vires or otherwise); and originated then reduced or extinguished and then afterwards increased or reinstated. Indebtedness
also includes, to the extent applicable, without limitation, all obligations of Borrower arising under any interest rate, credit,
commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency rate swap, currency
option, securities puts, calls, collars, options or forwards or any combination of, or option with respect to, these or similar
transactions now or hereafter entered into between Borrower and Agent for the benefit of Lenders. Without limiting the generality
of the foregoing, Guarantor’s liability shall extend to all Indebtedness that would be owed by any other obligor on the
Indebtedness but for the fact that they are unenforceable or not allowable due to the existence of an insolvency, bankruptcy or
liquidation proceeding involving such other obligor.

 

If Agent presently holds one or more guaranties,
or hereafter receives additional guaranties from Guarantor, Agent’s rights under all guaranties shall be cumulative. This
Guaranty shall not (unless specifically provided below to the contrary) affect or invalidate any such other guaranties. Guarantor’s
liability will be Guarantor’s aggregate liability under the terms of this Guaranty and any such other unterminated guaranties.

 

CONTINUING GUARANTY. THIS IS A “CONTINUING
GUARANTY” UNDER WHICH GUARANTOR AGREES TO GUARANTEE THE FULL AND PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE
INDEBTEDNESS OF BORROWER TO AGENT FOR THE BENEFIT OF LENDERS, NOW EXISTING OR HEREAFTER ARISING OR ACQUIRED, ON AN OPEN AND CONTINUING
BASIS. ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTOR’S OBLIGATIONS AND LIABILITY
UNDER THIS GUARANTY FOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE
A ZERO BALANCE FROM TIME TO TIME.

 

DURATION OF GUARANTY. This Guaranty
will take effect when received by Agent without the necessity of any acceptance by Agent, or any notice to Guarantor or to Borrower,
and will continue in full force until all the Indebtedness incurred or contracted before receipt by Agent of any notice of revocation
shall have been fully and finally paid and satisfied and all of Guarantor’s other obligations under this Guaranty shall
have been performed in full. If Guarantor elects to revoke this Guaranty, Guarantor may only do so in writing. Guarantor’s
written notice of revocation must be mailed to Agent, by certified mail, at Agent’s address listed above or such other place
as Agent may designate in writing. Written revocation of this Guaranty will apply only to advances or new Indebtedness created
after actual receipt by Agent of Guarantor’s written revocation. For this purpose and without limitation, the term “new
Indebtedness” does not include the Indebtedness which at the time of notice of revocation is contingent, unliquidated,
undetermined or not due and which later becomes absolute, liquidated, determined or due. This Guaranty will continue to bind Guarantor
for all the Indebtedness incurred by Borrower or committed by Agent on behalf of Lenders prior to receipt of Guarantor’s
written notice of revocation, including any extensions, renewals, substitutions or modifications of the

 

    	 

    	 

    

Indebtedness. All renewals, extensions, substitutions,
and modifications of the Indebtedness granted after Guarantor’s revocation, are contemplated under this Guaranty and, specifically
will not be considered to be new Indebtedness. Release of any other guarantor or termination of any other guaranty of the Indebtedness
or any portion thereof shall not affect the liability of Guarantor under this Guaranty. A revocation Agent receives from any one
or more Guarantors shall not affect the liability of any remaining Guarantors under this Guaranty. It is anticipated that fluctuations
may occur in the aggregate amount of the Indebtedness covered by this Guaranty, and Guarantor specifically acknowledges and agrees
that reductions in the amount of the Indebtedness, even to zero dollars ($0.00), prior to Guarantor’s written revocation
of this Guaranty shall not constitute a termination of this Guaranty. This Guaranty is binding upon Guarantor and Guarantor’s
heirs, successors and assigns so long as any of the Indebtedness remains unpaid and even though the Indebtedness may from time
to time be zero dollars ($0.00).

 

GUARANTOR’S AUTHORIZATION TO AGENT.
Guarantor authorizes Agent, either before or after any revocation hereof, without notice or demand and without lessening Guarantor’s
liability under this Guaranty, from time to time: (A) prior to revocation as set forth above, to make one or more additional secured
or unsecured loans to Borrower, to lease equipment or other goods to Borrower, or otherwise to extend additional credit to Borrower;
(B) to alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms
of the Indebtedness or any part of the Indebtedness, including increases and decreases of the rate of interest on the Indebtedness;
extensions may be repeated and may be for longer than the original loan term; (C) to take and hold security for the payment of
this Guaranty or the Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any such
security with or without the substitution of new collateral; (D) to release, substitute, agree not to sue, or deal with any one
or more of Borrower’s sureties, endorsers, or other guarantors on any terms or in any manner Agent may choose; (E) to determine
how, when and what application of payments and credits shall be made on the Indebtedness; (F) to apply such security and direct
the order or manner of sale thereof, including without limitation, any non-judicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Agent in its discretion may determine; (G) to sell, transfer, assign or grant participations
in all or any part of the Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part.

 

GUARANTOR’S REPRESENTATIONS AND WARRANTIES.
Guarantor represents and warrants to Agent that (A) no representations or agreements of any kind have been made to Guarantor which
would limit or qualify in any way the terms of this Guaranty; (B) this Guaranty is executed at Borrower’s request and not
at the request of Agent; (C) Guarantor has full power, right and authority to enter into this Guaranty; (D) the provisions of
this Guaranty do not conflict with or result in a default under any agreement or other instrument binding upon Guarantor and do
not result in a violation of any law, regulation, court decree or order applicable to Guarantor; (E) Guarantor has not and will
not, without the prior written consent of Agent, sell, lease, assign, encumber, hypothecate, transfer, or otherwise· dispose
of all or substantially all of Guarantor’s assets, or any interest therein; (F) upon Agent’s request, Guarantor will
provide to Agent financial and credit information in form acceptable to Agent, and all such financial information which currently
has been, and all future financial information which will be provided to Agent is and will be true and correct in all material
respects and fairly present Guarantor’s financial

 

    	 

    	 

    

condition as of the dates the financial information
is provided; (G) no material adverse change has occurred in Guarantor’s financial condition since the date of the most recent
financial statements provided to Agent, no event has occurred which may materially adversely affect Guarantor’s financial
condition and entry into this guaranty and performance of the obligations hereunder would not render it insolvent.; (H) no litigation,
claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Guarantor is pending
or threatened, other than any litigation, claim, investigation, administrative proceeding or similar action that could not reasonably
be expected to result in a material adverse change to the Guarantor’s financial condition; (I) Agent has made no representation
to Guarantor as to the creditworthiness of Borrower; (J) Guarantor has established adequate means of obtaining from Borrower on
a continuing basis information regarding Borrower’s financial condition. Guarantor agrees to keep adequately informed from
such means of any facts, events, or circumstances which might in any way affect Guarantor’s risks under this Guaranty, and
Guarantor further agrees that, absent a request for information, Agent shall have no obligation to disclose to Guarantor any information
or documents acquired by Agent in the course of its relationship with Borrower; and (K) Guarantor is a subsidiary of Borrower
and has determined that the execution of this Guaranty will be in its best interests, to its direct benefit, incidental to its
powers, and in furtherance of its duly acknowledged purposes and objectives.

 

GUARANTOR’S FINANCIAL STATEMENTS.
Each Guarantor agrees to furnish Agent with the financial information set forth in the Credit Agreement on or before the due date
set forth therein.

 

GUARANTOR’S COVENANTS.  Each
Guarantor shall maintain and/or comply with the applicable covenants set forth in the Credit Agreement.

 

GUARANTOR’S WAIVERS. Except as
prohibited by applicable law, Guarantor waives any right to require Agent (A) to continue lending money or to extend other credit
to Borrower; (B) to make any presentment, protest, demand, or notice of any kind, including notice of any nonpayment of the Indebtedness
or of any nonpayment related to any collateral, or notice of any action or non-action on the part of Borrower, Agent, any surety,
endorser, or other guarantor in connection with the Indebtedness or in connection with the creation of new or additional loans
or obligations; (C) to resort for payment or to proceed directly or at once against any person, including Borrower or any other
guarantor; (D) to proceed directly against or exhaust any collateral held by Agent for the benefit of Lenders from Borrower, any
other guarantor, or any other person; (E) to pursue any other remedy within Agent’s power; or (F) to commit any act or omission
of any kind, or at any time, with respect to any matter whatsoever.

 

Guarantor also waives any and all rights or
defenses based on suretyship or impairment of collateral including, but not limited to, any rights or defenses arising by reason
of (A) any “one action” or “anti-deficiency” law or any other law which may prevent Agent from bringing
any action, including a claim for deficiency, against Guarantor, before or after Agent’s commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; (B) any election of remedies by Agent which destroys
or otherwise adversely affects Guarantor’s subrogation rights or Guarantor’s rights to proceed against Borrower for·
reimbursement, including without limitation, any loss of rights Guarantor may suffer by reason

 

    	 

    	 

    

of any law limiting, qualifying, or discharging
the Indebtedness; (C) any disability or other defense of Borrower, of any other guarantor, or of any other person, or by reason
of the cessation of Borrower’s liability from any cause whatsoever, other than payment in full in legal tender, of the Indebtedness;
(D) any right to claim discharge of the Indebtedness on the basis of unjustified impairment of any collateral for the Indebtedness;
(E) any statute of limitations, if at any time any action or suit brought by Agent on behalf of Lenders against Guarantor is commenced,
there is outstanding Indebtedness which is not barred by any applicable statute of limitations; or (F) any defenses given to guarantors
at law or in equity other than actual payment and performance of the Indebtedness. If payment is made by Borrower, whether voluntarily
or otherwise, or by any third party, on the Indebtedness and thereafter Agent is forced to remit the amount of that payment to
Borrower’s trustee in bankruptcy or to any similar person under any federal or state bankruptcy law or law for the relief
of debtors, the Indebtedness shall be considered unpaid for the purpose of the enforcement of this Guaranty.

 

Without limiting the generality
of the foregoing, Guarantor agrees that its obligations hereunder, and any security interest in respect thereof, shall not be
affected by, and shall remain in full force and effect without regard to, and hereby waives all, rights, claims or defenses that
it might otherwise have (now or in the future) with respect to each of the following (whether or not Guarantor has knowledge thereof):

 

(i)                

the validity or enforceability of Credit Agreement or any other Loan Document, any of the Indebtedness or any guaranty or right
of offset with respect thereto at any time or from time to time held by Agent;

 

(ii)             

the insolvency, bankruptcy, arrangement, adjustment, composition, liquidation, disability, dissolution or lack of power of Borrower,
any Guarantor or any other party at any time liable for the payment of all or part of the Indebtedness; or any dissolution of
Borrower or any Guarantor or any sale, lease or transfer of any or all of the assets of Borrower or any Guarantor or any changes
in the shareholders, partners or members of Borrower or any Guarantor; or any reorganization of Borrower or any Guarantor;

 

(iii)           

any renewal, extension or acceleration of, or any increase in the amount of the Indebtedness, or any amendment, supplement, modification
or waiver of, or any consent to departure from, the Loan Documents;

 

(iv)            

any failure, omission or delay in enforcement (by agreement or otherwise), or the stay or enjoining (by court order, operation
of law or otherwise) of the exercise of enforcement, of any claim or demand or any right, power or remedy (whether arising under
any Loan Documents, at law, in equity or otherwise) with respect to the Indebtedness or any guaranty, agreement, Collateral or
other security relating thereto;

 

(v)              

any change, reorganization or termination of the company or corporate structure or existence of Borrower or any Guarantor or any
of their Subsidiaries and any corresponding restructuring of the Indebtedness;

 

    	 

    	 

    

 

(vi)            

any settlement, compromise, release, subordination or discharge of, or acceptance or refusal of any offer of payment or performance
with respect to, or any substitutions for, the Indebtedness or any obligor thereof;

 

(vii)         

the validity, perfection, non-perfection or lapse in perfection, priority or avoidance of any security interest or lien, the release
of any or all collateral securing, or purporting to secure, the Indebtedness, any other impairment of such collateral or the taking
or accepting of any other or additional security, collateral or guaranty for the Indebtedness or any part thereof;

 

(viii)       

any exercise of remedies with respect to the Collateral or any other security for the Indebtedness at such time and in such order
and in such manner as Agent may decide, whether or not such action constitutes an election of remedies and even if such action
operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy that the Guarantor would otherwise
have and, without limiting the generality of the foregoing or any other provisions hereof, the Guarantor hereby expressly waives
any and all benefits which might otherwise be available to Guarantor under applicable law; and

 

(ix)            

any other circumstance whatsoever which may or might in any manner or to any extent vary the risk of Guarantor as an obligor in
respect of the Indebtedness or which constitutes, or might be construed to constitute, an equitable or legal discharge of the
Borrower, the Guarantor or any other guarantor for the Indebtedness, or of the Guarantor under this Guaranty or of any security
interest granted by Guarantor or any other guarantor, whether in an insolvency, bankruptcy or liquidation proceeding or in any
other instance.

 

Guarantor further waives and agrees not to
assert or claim at any time any deductions to the amount guaranteed under this Guaranty for any claim of setoff, counterclaim,
counter demand, recoupment or similar right, whether such claim, demand or right may be asserted by the Borrower, the Guarantor,
or both.

 

GUARANTOR’S UNDERSTANDING WITH RESPECT
TO WAIVERS. Guarantor warrants and agrees that each of the waivers set forth above is made with Guarantor’s full knowledge
of its significance and consequences and that, under the circumstances, the waivers are reasonable and not contrary to public
policy or law. If any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective
only to the extent permitted by law or public policy.

 

RIGHT OF SETOFF. To the extent permitted
by applicable law, Agent reserves a right of setoff in all Guarantor’s accounts with Agent (whether checking, savings, or
some other account and whether evidenced by a certificate of deposit). This includes all accounts Guarantor holds jointly with
someone else and all accounts Guarantor may open in the future. However, this does not include any IRA or Keogh accounts, or any
trust accounts for which setoff would be prohibited by law. Guarantor authorizes Agent, to the extent permitted by applicable
law, to hold

 

    	 

    	 

    

these funds if there is a default, and Agent
may apply the funds in these accounts to pay what Guarantor owes under the terms of this Guaranty.

 

SUBORDINATION OF BORROWER’S DEBTS
TO GUARANTOR. Guarantor agrees that the Indebtedness, whether now existing or hereafter created, shall be superior to any
claim that Guarantor may now have or hereafter acquire against Borrower, whether or not Borrower becomes insolvent. Guarantor
hereby expressly subordinates any claim Guarantor may have against Borrower, upon any account whatsoever, to any claim that Agent
on behalf of Lenders may now or hereafter have against Borrower. In the event of insolvency and consequent liquidation of the
assets of Borrower, through bankruptcy, by an assignment for the benefit of creditors, by voluntary liquidation, or otherwise,
the assets of Borrower applicable to the payment of the claims of both Agent and Guarantor shall be paid to Agent and shall be
first applied by Agent for the benefit of the Lenders to the Indebtedness. Guarantor does hereby assign to Agent all claims which
it may have or acquire against Borrower or against any assignee or trustee in bankruptcy of Borrower; provided however, that such
assignment shall be effective only for the purpose of assuring to Agent full payment in legal tender of the Indebtedness. If Agent
so requests, any notes or credit agreements now or hereafter evidencing any debts or obligations of Borrower to Guarantor shall
be marked with a legend that the same are subject to this Guaranty and shall be delivered to Agent. Guarantor agrees, and Agent
is hereby authorized, in the name of Guarantor, from time to time to file financing statements and continuation statements and
to execute documents and to take such other actions as Agent deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.

 

MISCELLANEOUS PROVISIONS. The following
miscellaneous provisions are a part of this Guaranty:

 

Amendments. This Guaranty, together
with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this
Guaranty. No alteration of or amendment to this Guaranty shall be effective unless given in writing and signed by the party or
parties sought to be charged or bound by the alteration or amendment.

 

Attorneys’ Fees; Expenses. Guarantor
agrees to pay upon demand all of Agent’s costs and expenses, including Agent’s reasonable attorneys’ fees and
Agent’s legal expenses, incurred in connection with the enforcement of this Guaranty. Agent may hire or pay someone else
to help enforce this Guaranty, and Guarantor shall pay the costs and expenses of such enforcement. Costs and expenses include
Agent’s reasonable attorneys’ fees and legal expenses whether or not there is a lawsuit, including reasonable attorneys’
fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals,
and any anticipated post-judgment collection services. Guarantor also shall pay all court costs and such additional fees as may
be directed by the court.

 

Caption Headings. Caption headings
in this Guaranty are for convenience purposes only and are not to be used to interpret or define the provisions of this Guaranty.

 

Governing Law. This Guaranty will be governed
by federal law applicable to Agent and, to the extent not preempted by federal law, the laws of the State of New York without
regard

 

    	 

    	 

    

to its conflicts of law provisions. This
Guaranty has been accepted by Agent in the State of New York.

 

Integration. Guarantor further agrees
that Guarantor has read and fully understands the terms of this Guaranty; Guarantor has had the opportunity to be advised by Guarantor’s
attorney with respect to this Guaranty; the Guaranty fully reflects Guarantor’s intentions and parol evidence is not required
to interpret the terms of this Guaranty. Guarantor hereby indemnifies and holds Agent harmless from all losses, claims, damages,
and costs (including Agent’s attorneys’ fees) suffered or incurred by Agent as a result of any breach by Guarantor
of the warranties, representations and agreements of this paragraph.

 

Interpretation. In all cases where
there is more than one Borrower or Guarantor, then all words used in this Guaranty in the singular shall be deemed to have been
used in the plural where the context and construction so require; and where there is more than one Borrower named in this Guaranty
or when this Guaranty is executed by more than one Guarantor, the words “Borrower” and “Guarantor” respectively
shall mean all and any one or more of them. The words “Guarantor,” “Borrower,” and “Agent”
include the heirs, successors, assigns, and transferees of each of them. If a court finds that any provision of this Guaranty
is not valid or should not be enforced, that fact by itself will not mean that the rest of this Guaranty will not be valid or
enforced. Therefore, a court will enforce the rest of the provisions of this Guaranty even if a provision of this Guaranty may
be found to be invalid or unenforceable. If any one or more of Borrower or Guarantor are corporations, partnerships, limited liability
companies, or similar entities, it is not necessary for Agent to inquire into the powers of Borrower or Guarantor or of the officers,
directors, partners, managers, or other agents acting or purporting to act on their behalf, and any indebtedness made or created
in reliance upon the professed exercise of such powers shall be guaranteed under this Guaranty.

 

Notices. Any notice required to be
given under this Guaranty shall be given in writing, and, except for revocation notices by Guarantor, shall be effective when
actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally
recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered
mail postage prepaid directed to the addresses shown near the beginning of this Guaranty. All revocation notices by Guarantor
shall be in writing and shall be effective upon delivery to Agent as provided in the section of this Guaranty entitled “DURATION
OF GUARANTY.” Any party may change its address for notices under this Guaranty by giving formal written notice to the other
parties, specifying that the purpose of the notice is to change the party’s address. For notice purposes, Guarantor agrees
to keep Agent informed at all times of Guarantor’s current address. Unless otherwise provided or required by law, if there
is more than one Guarantor, any notice given by Agent to any Guarantor is deemed to be notice given to all Guarantors.

 

No Waiver by Agent. Agent shall not
be deemed to have waived any rights under this Guaranty unless such waiver is given in writing and signed by Agent. No delay or
omission on the part of Agent in exercising any right shall operate as a waiver of such right or any other right. A waiver by
Agent of a provision of this Guaranty shall not prejudice or constitute a waiver of Agent’s right otherwise to demand strict
compliance with that provision or any other provision of this

 

    	 

    	 

    

Guaranty. No prior waiver by Agent, nor any
course of dealing between Agent and Guarantor, shall constitute a waiver of any of Agent’s rights or of any of Guarantor’s
obligations as to any future transactions. Whenever the consent of Agent is required under this Guaranty, the granting of such
consent by Agent in any instance shall not constitute continuing consent to subsequent instances where such consent is required
and in all cases such consent may be granted or withheld in the sole discretion of Agent.

 

Successors and Assigns. Subject to
any limitations stated in this Guaranty on transfer of Guarantor’s interest, this Guaranty shall be binding upon and inure
to the benefit of the parties, their successors and assigns.

 

Survival of Representations and Warranties.
All representations and warranties made hereunder and in any document, certificate or statement delivered pursuant hereto
or in connection herewith shall survive the execution and delivery of this Guaranty and the Related Documents.

 

Waive Jury. Agent and Guarantor hereby
waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Agent or Borrower against the other.

 

ERRORS AND OMISSIONS. In consideration
of the loan made by Agent on behalf of Lenders to the Borrower, the undersigned does hereby represent the promise as follows:
Upon request made by the Agent, its successors or assigns, the undersigned will execute such documents as are reasonable to provide
assurance to Agent (1) that the obligations undertaken by the undersigned in connection with said Indebtedness will be faithfully
performed; (2) that any and all documents and installments signed by the undersigned in connection with said Indebtedness are
accurate statements as to the truth of the matters set forth in them and constitute binding obligations upon the undersigned according
to their tenor; or (3) as to the amount of said Indebtedness outstanding from time to time, and the date and amount of payments
made in respect to said Indebtedness. Upon request made by the Agent, its successors or assigns, the undersigned will re-execute
any document or instrument signed in connection with said Indebtedness or execute any document or instrument that ought to have
been signed at or before closing of said Indebtedness, or which was incorrectly drafted and signed, to facilitate full execution
of the appropriate documents. All such requests shall receive the full cooperation and compliance by the undersigned within seven
(7) days of the making of the request set forth above. The failure of the undersigned to comply with their obligations hereunder
shall constitute a default under the Related Documents and shall entitle Agent or its successors and assigns, to the remedies
available for default under the Related Documents executed by the undersigned.

 

DEFINITIONS. The following capitalized
words and terms shall have the following meanings when used in this Guaranty. Capitalized terms not defined herein shall have
the meanings set forth in the Credit Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall
mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and
the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Guaranty or the
Credit Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code:

 

    	 

    	 

    

Agent. The word “Agent”
shall have the meaning set forth in the first paragraph of this Guaranty.

 

Borrower. The word “Borrower”
means CPI Aerostructures, Inc. and includes all co-signers and co-makers signing the Credit Agreement and all their successors
and assigns.

 

Credit Agreement. The Amended and Restated
Credit Agreement between the Borrower, the Lenders named therein and BankUnited, N.A., as Agent, Administrative Agent, Collateral
Agent and Swap Provider, dated as of March 24, 2016, as same has been or may be amended from time to time.

 

GAAP. The word “GAAP”
means generally accepted accounting principles.

 

Guarantor. The word “Guarantor”
means, collectively, each person and/or entity signing this Guaranty and any other Guaranty of the Indebtedness, and in each case,
any signer’s successors and assigns.

 

Guaranty. The word “Guaranty”
means this guaranty from Guarantor to Agent for the benefit of Lenders.

 

Indebtedness. The word “Indebtedness”
means Borrower’s indebtedness and obligations to Agent on behalf of Lenders as more particularly described in this Guaranty.

 

Lenders. The word “Lenders”
shall have the meaning set forth in the Credit Agreement.

 

Note. The word “Note”
means and includes without limitation all of Borrower’s promissory notes and/or credit agreements evidencing Borrower’s
loan obligations in favor of Agent on behalf of Lenders, together with all renewals of, extensions of, modifications of, refinancings
of, consolidations of and substitutions for promissory notes or credit agreements.

 

Obligations. The word “Obligations”
shall have the meaning set forth in the Credit Agreement.

 

Related Documents. The words “Related
Documents” mean the Credit Agreement, the Loan Documents defined in the Credit Agreement and all promissory notes, credit
agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds,
collateral mortgages, interest rate swap documents (including, without limitation, any Swap Contract between Borrower and Agent)
and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness.

 

 

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EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES
HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT THIS GUARANTY
IS EFFECTIVE UPON GUARANTOR’S EXECUTION AND DELIVERY OF THIS GUARANTY TO AGENT AND THAT THE GUARANTY WILL CONTINUE UNTIL
TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED “DURATION OF GUARANTY”. NO FORMAL ACCEPTANCE BY AGENT IS
NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY IS DATED DECEMBER 20, 2018.

 

 

	GUARANTORS:	 
	 	 
	WELDING METALLURGY, INC.	 
	 	 
	By: 	 /s/ Vincent Palazzolo	 
	Name: Vincent Palazzolo	 
	Title: CFO	 
	 	 
	 	 
	COMPAC DEVELOPMENT CORP.	 
	 	 
	By: 	/s/ Vincent Palazzolo	 
	Name: Vincent Palazzolo	 
	Title: CFOCPI AEROSTRUCTURES, INC. 8-K

 

Exhibit 10.4

 

 

CONTINUING GENERAL SECURITY AGREEMENT

 

 

	Grantor: 	Welding Metallurgy, Inc. and	 	Agent: 	BankUnited, N.A., as Administrative
	 	Compac Development Corp.	 	 	Agent and Collateral Agent
	 	c/o CPI Aerostructures, Inc.	 	 	Commercial Lending
	 	91 Heartland Blvd.	 	 	14817 Oak Lane
	 	Edgewood, New York 11717	 	 	Miami Lakes, Florida 33016

 

 

GRANT OF SECURITY INTEREST. For valuable
consideration, the undersigned, WELDING METALLURGY, INC. and COMPAC DEVELOPMENT CORP. (collectively, the “Grantor”)
each hereby pledges and grants to BANKUNITED, N.A., as Administrative Agent and Collateral Agent for the benefit of the Lenders
(the “Agent”), as defined in and party to that certain Amended and Restated Credit Agreement among CPI Aerostructures,
Inc. and the Lenders dated as of March 24, 2016 (as amended from time to time, the “Credit Agreement”), a security
interest in the Collateral to secure the Indebtedness (inclusive of obligations arising under any Swap Contract as defined in
the Credit Agreement) and agrees that Agent shall have the rights stated in this Agreement and the Credit Agreement with respect
to the Collateral, in addition to all other rights which Agent may have by law.

 

COLLATERAL DESCRIPTION. The word “Collateral”
as used in this Agreement means all of Grantor’s right, title and interest in the following described property, whether
now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located, in which Grantor is giving to
Agent a security interest for the payment of the Indebtedness and performance of and other obligations under the documents evidencing
the Indebtedness and this Agreement:

 

All Assets, including (without limitation),
all Inventory, Chattel Paper, Accounts, Equipment, General Intangibles, Deposit Accounts, Commercial Tort Claims, As Extracted
Collateral, Deposit Accounts, Commingled Goods, Consumer Goods, Documents of Title, Fixtures, Instruments, Investment Property,
Payment Intangibles, Contract Rights, Letter of Credit Rights, Software, Money, Supporting Obligations and all other Personal
Property.

 

In addition, the word “Collateral”
also includes all the following, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever
located:

 

(A)       

All
accessions, attachments, accessories, tools, parts, supplies, replacements of and additions to any of the collateral described
herein, whether added now or later.

 

(B)       

All
products and produce and supporting obligations of any of the property described in this “Collateral Description”
section.

 

(C)       

All
accounts, general intangibles, instruments, rents, monies, payments, and all other rights, arising out of a sale, lease, consignment
or other disposition of any of the property described in this “Collateral Description” section.

 

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(D)       

All
proceeds (including insurance proceeds) from the sale, destruction, loss, or other disposition of any of the property described
in this “Collateral Description” section, and sums due from a third party who has damaged or destroyed the Collateral
or from that party's insurer, whether due to judgment, settlement or other process.

 

(E)       

All
records and data relating to any of the property described in this “Collateral Description” section, whether in the
form of a writing, photograph, microfilm, microfiche, or electronic media, together with all of Grantor's right, title, and interest
in and to all computer software required to utilize, create, maintain, and process any such records or data on electronic media.

 

(F)       

All
right, title and interest of the Grantor, whether now owned or hereafter acquired, in any Swap Contract (as defined in the Credit
Agreement), any amendment or replacement thereof and any transaction thereunder including, without limitation, all amounts payable
or deliverable thereunder inclusive of any termination payment.

 

CROSS-COLLATERALlZATION. In addition
to the Indebtedness, this Agreement secures all obligations, debts and liabilities, plus interest thereon, of Grantor to Agent,
or any one or more of them, as well as all claims by Agent against Grantor or any one or more of them, whether now existing or
hereafter arising, whether related or unrelated to the purpose of the Credit Agreement, whether voluntary or otherwise, whether
due or not due, direct or indirect, determined or undetermined, absolute or contingent, liquidated or unliquidated, whether Grantor
may be liable individually or jointly with others, whether obligated as guarantor, surety, accommodation party or otherwise, and
whether recovery upon such amounts may be or hereafter may become barred by any statute of limitations, and whether the obligation
to repay such amounts may be or hereafter may become otherwise unenforceable.

 

FUTURE ADVANCES. In addition to the
Indebtedness, this Agreement secures all future advances made by the Agent on behalf of the Lenders to Grantor in accordance with
the provisions of the Credit Agreement, regardless of whether the advances are made a) pursuant to a commitment or b) for the
same purposes.

 

GRANTOR’S WAIVERS AND RESPONSIBILITIES.
Except as otherwise required under this Agreement or by applicable law, (A) Grantor agrees that Agent need not tell Grantor about
any action or inaction Agent takes in connection with this Agreement; (B) Grantor assumes the responsibility for being and keeping
informed about the Collateral; and (C) Grantor waives any defenses that may arise because of any action or inaction of Agent,
including without limitation any failure of Agent to realize upon the Collateral or any delay by Agent in realizing upon the Collateral;
and Grantor agrees to remain liable hereunder no matter what action Agent takes or fails to take under this Agreement.

 

GRANTOR’S REPRESENTATIONS AND WARRANTIES.
Grantor warrants that: (A) this Agreement is executed at Grantor’s request and not at the request of Agent; and (B) Grantor
has the full right, power and authority to enter into this Agreement and to pledge the Collateral to Agent.

 

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GRANTOR’S ADDITIONAL WAIVERS.
Grantor waives all requirements of presentment, protest, demand, and notice of dishonor or non-payment to Grantor or any other
party to the Indebtedness or the Collateral. Agent may do any of the following with respect to any obligation of Grantor without
first obtaining the consent of Grantor: (A) grant any extension of time for any payment, (B) grant any renewal, (C) permit any
modification of payment terms or other terms, provided such modification is not adverse to Grantor, or (D) exchange or release
any Collateral or other security. No such act or failure to act shall affect Agent's rights against Grantor or the Collateral.

 

RIGHT OF SETOFF. To the extent permitted
by applicable law, Agent reserves a right of setoff in all Grantor's accounts with Agent (whether checking, savings, or some other
account and whether evidenced by a certificate of deposit). This includes all accounts Grantor holds jointly with someone else
and all accounts Grantor may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Grantor authorizes Agent, to the extent permitted by applicable law, to charge or
setoff all sums owing on the Indebtedness against any and all such accounts, and, at Agent's option, upon an Event of Default,
to administratively freeze all such accounts to allow Agent to protect Agent's charge and setoff rights provided in this paragraph.

 

GRANTOR'S REPRESENTATIONS AND WARRANTIES
WITH RESPECT TO THE COLLATERAL. With respect to the Collateral, Grantor represents and promises to Agent that:

 

Perfection of Security Interest.
Grantor agrees to take whatever actions are requested by Agent to perfect and continue Agent's security interest in the Collateral.
Upon request of Agent, Grantor will deliver to Agent any and all of the documents evidencing or constituting the Collateral, and
Grantor will note Agent’s interest upon any and all chattel paper and instruments if not delivered to Agent for possession
by Agent.

 

Notices to Agent. Grantor
will promptly notify Agent in writing at Agent's address shown above (or such other addresses as Agent may designate from time
to time) prior to any (1) change in Grantor's name; (2) change in Grantor's assumed business name(s); (3) change in the management
of any entity Grantor; (4) change in the authorized signer(s); (5) change in Grantor's principal office address; (6) change in
Grantor's state of organization; (7) conversion of Grantor to a new or different type of business entity; or (8) change in any
other aspect of Grantor that directly or indirectly relates to any agreements between Grantor and Agent. No change in Grantor's
name or state of organization will take effect until after Agent has received notice.

 

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No Violation. The execution
and delivery of this Agreement will not violate any law or agreement governing Grantor or to which Grantor is a party, and its
certificate or articles of incorporation and bylaws do not prohibit any term or condition of this Agreement.

 

Enforceability of Collateral.
To the extent the Collateral consists of accounts, chattel paper, or general intangibles, as defined by the Uniform Commercial
Code, the Collateral is enforceable in accordance with its terms, is genuine, and fully complies with all applicable laws and
regulations concerning form, content and manner of preparation and execution, and all persons appearing to be obligated on the
Collateral have authority and capacity to contract and are in fact obligated as they appear to be on the Collateral. At the time
any account becomes subject to a security interest in favor of Agent for the benefit of the Lenders in accordance with the terms
hereof, the account shall be a good and valid account representing an undisputed, bona fide indebtedness incurred by the account
debtor, for merchandise held subject to delivery instructions or previously shipped or delivered pursuant to a contract of sale,
or for services previously performed by Grantor with or for the account debtor. So long as this Agreement remains in effect, Grantor
shall not, without Agent's prior written consent, compromise, settle, adjust, or extend payment under or with regard to any such
Accounts. There shall be no setoffs or counterclaims against any of the Collateral, and no agreement shall have been made under
which any deductions or discounts may be claimed concerning the Collateral except those disclosed to Agent in writing.

 

Location of the Collateral.
Except in the ordinary course of Grantor's business, Grantor agrees to keep the Collateral (or to the extent the Collateral consists
of intangible property such as accounts or general intangibles, the records concerning the Collateral) at Grantor's address shown
above or at such other locations as are acceptable to Agent. Upon Agent's request, Grantor will deliver to Agent in form satisfactory
to Agent a schedule of real properties and Collateral locations relating to Grantor's operations, including without limitation
the following: (1) all real property Grantor owns or is purchasing; (2) all real property Grantor is renting or leasing; (3) all
storage facilities Grantor owns, rents, leases, or uses; and (4) all other properties where Collateral is or may be located.

 

Removal of the Collateral.
Except for transactions permitted in the “Transactions Involving Collateral” section below, Grantor shall not remove
the Collateral from its existing location without Agent's prior written consent. To the extent that the Collateral consists of
vehicles, or other titled property, Grantor shall not take or permit any action which would require application for certificates
of title for the vehicles outside the State of New York, without Agent’s prior written consent. Grantor shall, whenever
requested, advise Agent of the exact location of the Collateral.

 

Transactions Involving Collateral.
Except for inventory sold or accounts collected in the ordinary course of Grantor's business, and as otherwise provided for in
this Agreement or the Credit Agreement (“Permitted Sales”), Grantor shall not sell, offer to sell, or otherwise
transfer or dispose of the Collateral. While no Event of Default is continuing under this Agreement, Grantor may sell inventory,
but only in the ordinary course of its business and only to buyers who qualify as a buyer in the ordinary course of business.
A sale in the ordinary course of Grantor's business does not include a transfer in partial or total satisfaction of a debt or
any bulk sale. Except for Liens (as defined in the Credit Agreement) permitted by Section 7.3 of the Credit Agreement, Grantor
shall not pledge, mortgage, encumber or otherwise permit the Collateral to be subject to any lien, security interest, encumbrance,
or charge, other than the security interest provided for in this Agreement, without the prior written consent of Agent. This includes
security interests even if junior in right to the security interests granted under this Agreement. Except with respect to Permitted
Sales, unless waived by Agent, all proceeds from any disposition of the Collateral (for whatever reason) shall be held in trust
for Agent for the benefit of the Lenders and shall not be commingled with any other funds; provided however, this requirement
shall not constitute consent by Agent to any sale or other disposition. Upon receipt, Grantor shall immediately deliver any such
proceeds held in trust to Agent. If any of the Collateral shall be sold, transferred or otherwise disposed of by any Grantor in
a Permitted Sale, then the security interest created pursuant to this Agreement in such Collateral shall be released, and the
term “Collateral” shall cease to include the assets or property so released, provided that Grantor is in compliance
with the provisions hereof.

 

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Title. Grantor represents
and warrants to Agent that Grantor holds good and marketable title to the Collateral, free and clear of all liens and encumbrances
except for the lien of this Agreement and Liens permitted by Section 7.3 of the Credit Agreement. No financing statement covering
any of the Collateral is on file in any public office other than those which reflect the security interest created by this Agreement
or to which Agent has specifically consented. Grantor shall defend Agent's rights in the Collateral against the claims and demands
of all other persons.

 

Repairs and Maintenance.
Grantor agrees to keep and maintain, and to cause others to keep and maintain, the Collateral in good order, repair and condition
at all times while this Agreement remains in effect. Grantor further agrees to pay when due all claims for work done on, or services
rendered or material furnished in connection with the Collateral so that no lien or encumbrance may ever attach to or be filed
against the Collateral.

 

Inspection of Collateral.
Agent and Agent's designated representatives and agents shall have the right at all reasonable times to examine and inspect the
Collateral wherever located.

 

Taxes, Assessments and Liens.
Grantor will pay when due all taxes, assessments and liens upon the Collateral, its use or operation, upon this Agreement, upon
any promissory note or notes evidencing the Indebtedness, or upon any of the other Related Documents. Grantor may withhold any
such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the
obligation to pay and so long as Agent's interest in the Collateral for the benefit of the Lenders is not jeopardized in Agent's
sole opinion. If the Collateral is subjected to a lien which is not discharged within fifteen (15) days, Grantor shall deposit
with Agent cash, a sufficient corporate surety bond or other security satisfactory to Agent in an amount adequate to provide for
the discharge of the lien plus any interest, costs, reasonable attorneys' fees or other charges that could accrue as a result
of foreclosure or sale of the Collateral. In any contest Grantor shall defend itself and Agent and shall satisfy any final adverse
judgment before enforcement against the Collateral. Grantor shall name Agent as an additional obligee under any surety bond furnished
in the contest proceedings. Grantor further agrees to furnish Agent with evidence that such taxes, assessments, and governmental
and other charges have been paid in full and in a timely manner. Grantor may withhold any such payment or may elect to contest
any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Agent's
interest in the Collateral is not jeopardized.

 

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Compliance with Governmental
Requirements. Grantor shall comply promptly in all material respects with all laws, ordinances, rules and regulations of all
governmental authorities, now or hereafter in effect, applicable to the ownership, production, disposition, or use of the Collateral,
including all laws or regulations relating to the undue erosion of highly-erodible land or relating to the conversion of wetlands
for the production of an agricultural product or commodity. Grantor may contest in good faith any such law, ordinance or regulation
and withhold compliance during any proceeding, including appropriate appeals, so long as Agent's interest in the Collateral for
the benefit of the Lenders, in Agent's opinion, is not jeopardized.

 

Hazardous Substances. Grantor
represents and warrants that, except as could not reasonably be expected to result in a Material Adverse Effect (as defined in
the Credit Agreement), the Collateral never has been, and never will be so long as this Agreement remains a lien on the Collateral,
used in violation of any Environmental Laws or for the generation, manufacture, storage, transportation, treatment, disposal,
release or threatened release of any Hazardous Substance in violation of any Environmental Laws. The representations and warranties
contained herein are based on Grantor's due diligence in investigation of the Collateral for Hazardous Substances. Grantor hereby
(1) releases and waives any future claims against Agent for indemnity or contribution in the event Grantor becomes liable for
cleanup or other costs under any Environmental Laws, and (2) agrees to indemnify and hold harmless Agent against any and all claims
and losses resulting from a breach of this provision of this Agreement. This obligation to indemnify shall survive the payment
of the Indebtedness and the satisfaction of this Agreement.

 

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Maintenance of Casualty Insurance.
Grantor shall procure and maintain all risks insurance, including without limitation fire, theft and liability coverage together
with such other insurance as Agent may require with respect to the Collateral, in form, amounts, coverages and basis reasonably
acceptable to Agent and issued by a company or companies reasonably acceptable to Agent. Grantor, upon request of Agent, will
deliver to Agent from time to time the policies or certificates of insurance in form satisfactory to Agent, including stipulations
that coverages will not be cancelled or diminished without at least thirty (30) days prior written notice to Agent and not including
any disclaimer of the insurer's liability for failure to give such a notice. Each insurance policy also shall include an endorsement
providing that coverage in favor of Agent will not be impaired in any way by any act, omission or default of Grantor or any other
person. In connection with all policies covering assets in which Agent holds or is offered a security interest for the benefit
of the Lenders, Grantor will provide Agent with such loss payable or other endorsements as Agent may require. If Grantor at any
time fails to obtain or maintain any insurance as required under this Agreement, Agent may (but shall not be obligated to) obtain
such insurance as Agent deems appropriate, including if Agent so chooses “single interest insurance,” which will cover
only Agent’s interest in the Collateral for the benefit of the Lenders.

 

Application of Insurance Proceeds.
Grantor shall promptly notify Agent of any loss or damage to the Collateral, whether or not such casualty or loss is covered by
insurance. Agent may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty. All proceeds of any
insurance on the Collateral, including accrued proceeds thereon, shall be held by Agent as part of the Collateral. If Agent consents
to repair or replacement of the damaged or destroyed Collateral, Agent shall, upon satisfactory proof of expenditure, pay or reimburse
Grantor from the proceeds for the reasonable cost of repair or restoration. If Agent does not consent to repair or replacement
of the Collateral, Agent shall retain a sufficient amount of the proceeds to pay all of the Indebtedness, and shall pay the balance
to Grantor. Any proceeds which have not been disbursed within six (6) months after their receipt and which Grantor has not committed
to the repair or restoration of the Collateral shall be used to prepay the Indebtedness. Grantor hereby appoints Agent as its
attorney-in-fact with full power and authority to endorse in Grantor's name any check or draft representing the proceeds of any
insurance on the Collateral and to settle or compromise in Grantor's name any claims with respect to such insurance.

 

Insurance Reserves. Agent
may require Grantor to maintain with Agent reserves for payment of insurance premiums, which reserves shall be created by monthly
payments from Grantor of a sum estimated by Agent to be sufficient to produce, at least fifteen (15) days before the premium due
date, amounts at least equal to the insurance premiums to be paid. If fifteen (15) days before payment is due, the reserve funds
are insufficient, Grantor shall upon demand pay any deficiency to Agent. The reserve funds shall be held by Agent as a general
deposit and shall constitute a non-interest-bearing account which Agent may satisfy by payment of the insurance premiums required
to be paid by Grantor as they become due. Agent does not hold the reserve funds in trust for Grantor, and Agent is not the agent
of Grantor for payment of the insurance premiums required to be paid by Grantor. The responsibility for the payment of premiums
shall remain Grantor's sole responsibility.

 

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Insurance Reports. Grantor,
upon request of Agent, shall furnish to Agent reports on each existing policy of insurance showing such information as Agent may
reasonably request including the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy;
(4) the property insured; (5) the then current value on the basis of which insurance has been obtained and the manner of determining
that value; and (6) the expiration date of the policy. In addition, Grantor shall upon request by Agent (however not more often
than annually) have an independent appraiser satisfactory to Agent determine, as applicable, the cash value or replacement cost
of the Collateral.

 

Financing Statements. Grantor
authorizes Agent to file a UCC financing statement to perfect Agent's security interest for the benefit of the Lenders. At Agent's
request, Grantor additionally agrees to sign all other documents that are necessary to perfect, protect, and continue Agent's
security interest in the Property for the benefit of the Lenders. Grantor will pay all filing fees, title transfer fees, and other
fees and costs involved unless prohibited by law or unless Agent is required by law to pay such fees and costs. Grantor irrevocably
appoints Agent to execute documents necessary to transfer title if there is an Event of Default. Agent may file a copy of this
Agreement as a financing statement. If Grantor changes Grantor's name or address, or the name or address of any person granting
a security interest under this Agreement changes, Grantor will promptly notify the Agent of such change.

 

GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT
ACCOUNTS. Until an Event of Default exists, and except as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the Collateral and may use it in any lawful manner not
inconsistent with this Agreement or the Related Documents, provided that Grantor's right to possession and beneficial use shall
not apply to any Collateral where possession of the Collateral by Agent is required by law to perfect Agent's security interest
in such Collateral for the benefit of the Lenders. Until otherwise notified by Agent, Grantor may collect any of the Collateral
consisting of accounts. At any time and even though no Event of Default exists, Agent may exercise its rights to collect the accounts
and to notify account debtors to make payments directly to Agent for application to the Indebtedness. If Agent at any time has
possession of any Collateral, whether before or after an Event of Default, Agent shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral if Agent takes such action for that purpose as Grantor shall request or
as Agent, in Agent's sole discretion, shall deem appropriate under the circumstances, but failure to honor any request by Grantor
shall not of itself be deemed to be a failure to exercise reasonable care. Agent shall not be required to take any steps necessary
to preserve any rights in the Collateral against prior parties, nor to protect, preserve or maintain any security interest given
to secure the Indebtedness.

 

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AGENT'S EXPENDITURES. If any action
or proceeding is commenced that would materially affect Agent's interest in the Collateral or if Grantor fails to comply with
any provision of this Agreement or any Related Documents, including but not limited to Grantor's failure to discharge or pay when
due any amounts Grantor is required to discharge or pay under this Agreement or any Related Documents, Agent on Grantor's behalf
may (but shall not be obligated to) take any action that Agent deems appropriate, including but not limited to discharging or
paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Collateral and
paying all costs for insuring, maintaining and preserving the Collateral. All such expenditures incurred or paid by Agent for
such purposes, with the exception of insurance premiums paid by Agent with respect to motor vehicles, but including the payment
of attorneys' fees and expenses, will then bear interest at the rate charged under the Revolving Credit Note (as defined in the
Credit Agreement) from the date incurred or paid by Agent to the date of repayment by Grantor. All such expenses will become a
part of the Indebtedness and, at Agent’s option, will (A) be payable on demand; (B) be added to the balance of the Indebtedness
and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable
insurance policy; or (2) the remaining term of the Credit Agreement; or (C) be treated as a balloon payment which will be due
and payable at the Note's maturity. The Agreement also will secure payment of these amounts. Such right shall be in addition to
all other rights and remedies to which Agent may be entitled upon an Event of Default.

 

DEFAULT. The occurrence and continuance
of an Event of Default under (and as defined in) the Credit Agreement, as same may be amended from time to time shall constitute
an Event of Default hereunder.

 

RIGHTS AND REMEDIES ON DEFAULT. If
an Event of Default occurs under the Credit Agreement, at any time thereafter, Agent shall have all the rights of a secured party
under the New York Uniform Commercial Code. In addition, and without limitation, Agent may exercise any one or more of the following
rights and remedies:

 

Accelerate Indebtedness.
Agent may declare the entire Indebtedness, including any prepayment penalty which Grantor would be required to pay, immediately
due and payable, without notice of any kind to Grantor.

 

Assemble Collateral. Agent
may require Grantor to deliver to Agent all or any portion of the Collateral and any and all certificates of title and other documents
relating to the Collateral. Agent may require Grantor to assemble the Collateral and make it available to Agent at a place to
be designated by Agent. Agent also shall have full power to enter upon the property of Grantor to take possession of and remove
the Collateral. If the Collateral contains other goods not covered by this Agreement at the time of repossession, Grantor agrees Agent
may take such other goods, provided that Agent makes reasonable efforts to return them to Grantor after repossession.

 

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Sell the Collateral. Agent
shall have full power to sell, lease, transfer, or otherwise deal with the Collateral or proceeds thereof in Agent's own name
or that of Grantor. Agent may sell the Collateral at public auction or private sale. Unless the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market, Agent will give Grantor, and other persons as required
by law, reasonable notice of the time and place of any public sale, or the time after which any private sale or any other disposition
of the Collateral is to be made. However, no notice need be provided to any person who, after Event of Default occurs, enters
into and authenticates an agreement waiving that person's right to notification of sale. The requirements of reasonable notice
shall be met if such notice is given at least ten (10) days before the time of the sale or disposition. All expenses relating
to the disposition of the Collateral, including without limitation the expenses of retaking, holding, insuring, preparing for
sale and selling the Collateral (including legal fees and costs), shall become a part of the Indebtedness secured by this Agreement
and payable from the proceeds of the disposition of the Collateral, and shall be payable on demand, with interest at the rate
applicable to the Revolving Credit Note (as defined in the Credit Agreement) from date of expenditure until repaid.

 

Appoint Receiver. Agent shall
have the right to have a receiver appointed to take possession of all or any part of the Collateral, with the power to protect
and preserve the Collateral, to operate the Collateral proceeding foreclosure or sale, and to collect the Rents from the Collateral
and apply the proceeds, over and above the cost of the receivership, against the Indebtedness. Agent's right to the appointment
of a receiver shall exist whether or not the apparent value of the Collateral exceeds the Indebtedness by a substantial amount.
The right to a receiver shall be given to Agent regardless of the solvency of Grantor without any requirement to give prior notice
to Grantor.

 

Collect Revenues, Apply Accounts.
Agent, either itself or through a receiver, may collect the payments, rents, income, and revenues from the Collateral. Agent may
at any time in Agent's discretion transfer any Collateral into Agent's own name or that of Agent's nominee and receive the payments,
rents, income, and revenues therefrom and hold the same as security for the Indebtedness or apply it to payment of the Indebtedness
in such order of preference as Agent may determine. Insofar as the Collateral consists of accounts, general intangibles, insurance
policies, instruments, chattel paper, choses in action, or similar property, Agent may demand, collect, receipt for, settle, compromise,
adjust, sue for, foreclose, or realize on the Collateral as Agent may determine, whether or not Indebtedness or Collateral is
then due. For these purposes, Agent may, on behalf of and in the name of Grantor, receive, open and dispose of mail addressed
to Grantor; change any address to which mail and payments are to be sent; and endorse notes, checks, drafts, money orders, documents
of title, instruments and items pertaining to payment, shipment, or storage of any Collateral. To facilitate collection, Agent
may notify account debtors and obligors on any Collateral to make payments directly to Agent.

 

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Obtain Deficiency. If Agent
chooses to sell any or all of the Collateral, Agent may obtain a judgment against Grantor for any deficiency remaining on the
Indebtedness due to Agent for the benefit of Lenders after application of all amounts received from the exercise of the rights
provided in this Agreement. Grantor shall be liable for a deficiency even if the transaction described in this subsection is a
sale of accounts or chattel paper.

 

Other Rights and Remedies.
Agent shall have all the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, as may
be amended from time to time. In addition, Agent shall have and may exercise any or all other rights and remedies it may have
available at law, in equity, or otherwise.

 

Election of Remedies. Except
as may be prohibited by applicable law, all of Agent's rights and remedies, whether evidenced by this Agreement, the Related Documents,
or by any other writing, shall be cumulative and may be exercised singularly or concurrently. Election by Agent to pursue any
remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation
of Grantor under this Agreement, after Grantor's failure to perform, shall not affect Agent's right to declare an Event of Default
and exercise its remedies.

 

MISCELLANEOUS PROVISIONS. The following
miscellaneous provisions are a part of this Agreement:

 

Amendments. This Agreement,
together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth
in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or amendment.

 

Attorneys' Fees; Expenses.
Grantor agrees to pay upon demand all of Agent’s costs and expenses, including Agent's reasonable attorneys' fees and Agent’s
legal expenses, incurred in connection with the enforcement of this Agreement. Agent may hire or pay someone else to help enforce
this Agreement, and Grantor shall pay the costs and expenses of such enforcement. Costs and expenses include Agent's reasonable
attorneys' fees and legal expenses whether or not there is a lawsuit, including reasonable attorneys' fees and legal expenses
for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Grantor also shall pay all court costs and such additional fees as may be directed by the court.

 

    	- 11 -

    	 	CONTINUING GENERAL SECURITY AGREEMENT	 
	 	(continued)	 Page - 12 -

    
 

Caption Headings. Caption
headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this
Agreement.

 

Governing Law. This Agreement
will be governed by federal law applicable to Agent and, to the extent not preempted by federal law, the laws of the State of
New York without regard to its conflicts of law provisions. This Agreement has been accepted by Agent in the State of New York.

 

Joint and Several Liability.
If there is more than one party executing as Grantor below, then all obligations of Grantor under this Agreement shall be joint
and several, and all references to Grantor shall mean each and every Grantor. This means that each Grantor signing below is responsible
for all obligations in this Agreement. Where any one or more of the parties is a corporation, partnership, limited liability company
or similar entity, it is not necessary for Agent to inquire into the powers of any of the officers, directors, partners, members,
or other agents acting or purporting to act on the entity's behalf, and any obligations made or created in reliance upon the professed
exercise of such powers shall be guaranteed under this Agreement.

 

No Waiver by Agent.  Agent
shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Agent.
No delay or omission on the part of Agent in exercising any right shall operate as a waiver of such right or any other right.
A waiver by Agent of a provision of this Agreement shall not prejudice or constitute a waiver of Agent's right otherwise to demand
strict compliance with that provision or any other provision of this Agreement. No prior waiver by Agent, nor any course of dealing
between Agent and Grantor, shall constitute a waiver of any of Agent's rights or of any of Grantor's obligations as to any future
transactions. Whenever the consent of Agent is required under this Agreement, the granting of such consent by Agent in any instance
shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may
be granted or withheld in the sole discretion of Agent.

 

Notices. Any notice required
to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received
by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed,
when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses
shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal
written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes,
Grantor agrees to keep Agent informed at all times of Grantor's current address. Unless otherwise provided or required by law,
if there is more than one Grantor, any notice given by Agent to any Grantor is deemed to be notice given to all Grantors.

 

    	- 12 -

    	 	CONTINUING GENERAL SECURITY AGREEMENT	 
	 	(continued)	 Page - 13 -

    
 

Power of Attorney. Grantor
hereby appoints Agent as Grantor's irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect,
amend, or to continue the security interest granted in this Agreement or to demand termination of filings of other secured parties.
Agent may at any time, and without further authorization from Grantor, file a carbon, photographic or other reproduction of any
financing statement or of this Agreement for use as a financing statement. Grantor will reimburse Agent for all expenses for the
perfection and the continuation of the perfection of Agent's security interest in the Collateral for the benefit of the Lenders.
Grantor authorizes Agent to file a financing statement covering the Collateral.

 

Severability. If a court
of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any person or circumstance,
that finding shall not make the offending provision illegal invalid, or unenforceable as to any other person or circumstance.
If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending
provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality,
invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of
any other provision of this Agreement.

 

Successors and Assigns. Subject
to any limitations stated in this Agreement or the Credit Agreement on transfer of Grantor's interest, this Agreement shall be
binding upon and inure to the benefit of the parties, their successors and assigns. If ownership of the Collateral becomes vested
in a person other than Grantor, Agent, without notice to Grantor, may deal with Grantor's successors with reference to this Agreement
and the Indebtedness by way of forbearance or extension without releasing Grantor from the obligations of this Agreement or liability
under the Indebtedness.

 

Survival of Representations and
Warranties. All representations, warranties, and agreements made by Grantor in this Agreement shall survive the execution
and delivery of this Agreement, shall be continuing in nature, and shall remain in full force and effect until such time as Grantor’s
Indebtedness shall be paid in full.

 

Time is of the Essence. Time
is of the essence in the performance of this Agreement.

 

Counterparts. This Agreement
may be executed in one or more counterparts, each of which, when taken together, shall constitute one and the same agreement.
This Agreement may, upon execution, be delivered by facsimile or electronic mail, which shall be deemed for all purposes to be
an original signature.

 

Waive Jury. All parties to this
Agreement hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by any party against any
other party.

 

    	- 13 -

    	 	CONTINUING GENERAL SECURITY AGREEMENT	 
	 	(continued)	 Page - 14 -

    
 

Agent’s Powers. BankUnited,
N.A., as Agent has been irrevocably appointed and authorized to take such actions and exercise such powers on behalf of the Lenders
as are set forth in the Credit Agreement.

 

DEFlNITIONS. The following capitalized
words and terms shall have the following meanings when used in this Agreement. Capitalized terms not defined herein shall have
the meanings set forth in the Credit Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall
mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and
the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement or
the Credit Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code:

 

Agreement. The word “Agreement”
means this Continuing General Security Agreement, as this Continuing General Security Agreement may be amended or modified from
time to time, together with all exhibits and schedules attached to this Continuing General Security Agreement from time to time.

 

Collateral. The word “Collateral”
means all of Grantor's right, title and interest in and to all the Collateral as described in the “Collateral Description”
section of this Agreement.

 

Credit Agreement. The words
“Credit Agreement” mean that certain Amended and Restated Credit Agreement dated as of March 24, 2016 (as amended)
among CPI Aerostructures, Inc., and the Lenders, as same may be hereafter amended, restated, increased or otherwise modified in
writing from time to time.

 

Environmental Laws. The words
“Environmental Laws” mean any and all state, federal and local statutes, regulations and ordinances relating to the
protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. (“CERCLA”), the Superfund Amendment and Reauthorization
Act of 1986, Pub. L. No. 99-499 (“SARA”), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules
or regulations adopted pursuant thereto.

 

Event of Default. The words
“Event of Default” mean any of the events of default set forth in this Agreement in the “Default” section
of this Agreement.

 

Grantor. The word “Grantor”
means Welding Metallurgy, Inc. and Compac Development Corp., and all their successors and assigns.

 

Hazardous Substances. The
words “Hazardous Substances” mean materials that, because of their quantity, concentration or physical, chemical or
infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly
used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words “Hazardous Substances”
are used in their very broadest sense and include, without limitation, any and all hazardous or toxic substances, materials or
waste as defined by or listed under the Environmental Laws. The term “Hazardous Substances” also includes, without
limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.

 

    	- 14 -

    	 	CONTINUING GENERAL SECURITY AGREEMENT	 
	 	(continued)	 Page - 15 -

    
 

Indebtedness. The word “Indebtedness”
means all now existing or hereafter incurred, direct or contingent, indebtedness evidenced by each Note, all Obligations as defined
in the Credit Agreement and all obligations under the Related Documents, including all principal and interest together with all
other indebtedness and costs and expenses for which Grantor is responsible under this Agreement or under any of the Related Documents.
Specifically, without limitation, Indebtedness includes the future advances set forth in the Future Advances provision, together
with interest thereon and all amounts that may be indirectly secured by the Cross-Collateralization provision of this Agreement
and all obligations of the Grantor arising under any Swap Contract, as such term is defined in the Credit Agreement.

 

Lenders. The word “Lenders”
shall have the meaning set forth in the Credit Agreement.

 

Note. The word “Note”
means each note executed by the Grantor pursuant to the Credit Agreement together with all renewals of, extensions of, modifications
of, refinancings of, consolidations of, and substitutions for the note or Credit Agreement.

 

Obligations. The word “Obligations”
shall have the meaning set forth in the Credit Agreement.

 

Property. The word “Property”
means all of Grantor's right, title and interest in and to all the Property as described in the “Collateral Description”
section of this Agreement.

 

Related Documents. The words
“Related Documents” mean, collectively, the Credit Agreement, each Note, this Agreement, the other documents defined
as “Loan Documents” in the Credit Agreement and all promissory notes, credit agreements, loan agreements, environmental
agreements, guaranties, security agreements, pledge agreements, mortgages, deeds of trust, security deeds, collateral mortgages,
and all other instruments, agreements, and documents, whether now or hereafter existing, executed in connection with the Indebtedness.

 

    	- 15 -

    	 	CONTINUING GENERAL SECURITY AGREEMENT	 
	 	(continued)	 Page - 16 -

    
 

EACH GRANTOR HAS READ AND UNDERSTOOD ALL THE
PROVISIONS OF THIS CONTINUING GENERAL SECURITY AGREEMENT AND AGREES TO ITS TERMS.

 

THIS AGREEMENT IS DATED AS OF DECEMBER 20,
2018.

 

	 	GRANTOR:
	 	 
	 	WELDING METALLURGY, INC.
	 	 
	 	By: 	 /s/ Vincent Palazzolo
	 	Name: 	 Vincent Palazzolo
	 	Title:	 CFO
	 	 
	 	COMPAC DEVELOPMENT CORP.
	 	By: 	 /s/ Vincent Palazzolo
	 	Name: 	 Vincent Palazzolo
	 	Title:	CFO
	 	 
	 	AGENT:
	 	 
	 	BANKUNITED, N.A.,
	 	as Administrative Agent and Collateral
	 	Agent for the Lenders
	 	 
	 	By: 	/s/ Christine Gerula
	 	Name: 	 Christine Gerula
	 	Title:	Senior Vice President

 

 

 

    	- 16 -

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