Document:

ex10_16.htm

    
      
         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.16

        

      

    

    FIRST AMENDMENT TO CREDIT
AGREEMENT

    

    FIRST AMENDMENT (the
“Amendment”) entered into as of October 22, 2008 by and between CPI
AEROSTRUCTURES, INC. (the “Borrower”) and SOVEREIGN BANK (the
“Bank”).

    

    WHEREAS, the Borrower and the
Bank are parties to that Amended and Restated Loan Agreement dated as of August
13, 2007, as same may be hereafter amended and modified (the “Agreement”);
and

    

    WHEREAS, the Borrower has
requested that the Bank make available, and the Bank has agreed to extend to
Borrower, an additional $3,000,000.00 term loan facility, subject to the
provisions hereof; and

    

    WHEREAS, the Borrower has
requested that the Bank amend, and the Bank has agreed to amend, certain
provisions of the Agreement, subject to the terms and conditions hereinafter set
forth.

    

    NOW, THEREFORE, the parties
hereto hereby agree as follows:

    

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

    

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

    

    (A) Section
1.1 is amended by deleting the definitions of Interest Period, Libor Rate Loan,
Loan Documents, Post Default Rate, Prime Rate Loan and Termination Date
contained therein, and  substituting the following
therefor:

    

    “‘Interest
Period’ shall mean any period during which a Loan bears interest based on the
Libor Rate as elected by the Borrower in accordance with the terms of this
Agreement.

    

               (a)  If
any Interest Period would otherwise end on a day which is not a Business Day,
that Interest Period shall be extended to the next succeeding Business Day
unless the result of such extension would be to extend such Interest Period into
another calendar month, in which event such Interest Period shall end on the
immediately preceding Business Day.

    

    (b)  No Interest Period shall
extend beyond the Termination Date.”

    
      
         

      

      
         

        
          

        

      

      
         

        
          Exhibit
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    “‘Libor
Rate Loan’ shall  mean Loans hereunder (or any portion of the
outstanding principal balance thereof) that bear interest for the Interest
Period applicable thereto at a rate of interest based upon the Libor Rate plus
the applicable margin.”

    

    “‘Loan
Documents’ shall mean, collectively, this Agreement, the Revolving Credit Note,
the Term Note, the Security Agreement, the Master Agreement together with all
other documents executed in connection with the interest rate swap transaction
(if any) with respect to the Term Loan, the Additional Documents (as defined in
Section 10.14 hereof), the Replacement Documents (as defined in Section 10.15
hereof) and each document, agreement and instrument executed in connection
herewith or pursuant hereto together with each document, agreement and
instrument made by the Borrower or any Guarantor with or in favor of or owing to
the Bank.”

    

    “‘Post
Default Rate’ shall mean at any time a rate of interest equal to four (4%)
percent per annum in excess of the rate that would then be applicable to the
Loans.”

    

    “‘Prime
Rate Loan’ shall mean Loans hereunder (or any portion of the outstanding
principal balance thereof) which shall bear interest based upon the Prime
Rate.”

    

    “‘Termination
Date’ shall mean (i) with respect to Revolving Credit Loans, August 13, 2010, or
(ii) with respect to the Term Loan, the Maturity Date, or if such dates are not
a Business Day, the Business Day next succeeding such date.”

    

    (B)           Section
1.1 is amended by adding the definitions of Loan or Loans, Master Agreement,
Maturity Date, Note or Notes, Term Loan and Term Note, each to read as
follows:

    

    “‘Loan’
or ‘Loans’ shall mean a Revolving Credit Loan, a Term Loan, or any or all of
same as the context may require.”

    

    “‘Master
Agreement’ shall mean the ISDA Master Agreement dated October 22, 2008 between
the Bank and the Borrower.”

    
      
         

      

      
         

        
          

        

      

      
         

        
          Exhibit
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    “‘Maturity
Date’ shall mean November 1, 2013.”

    

    “‘Note’
or ‘Notes’ shall mean the Revolving Credit Note, the Term Note or any or all of
the same as the context may require.”

    “‘Term
Loan’ shall mean the term loan made pursuant to Section 2.1.1
hereof.”

    

    “‘Term
Note’ shall mean the term note referred to in Section 2.2.1
hereof.”

    

    (C)           The
title to Section 2 is amended by deleting the title contained therein and
substituting the following therefor:

    

    “SECTION
2.                                                      AMOUNT
AND TERMS OF REVOLVING CREDIT COMMITMENT AND TERM LOAN”

    

    (D)           Section
2.7 is amended by deleting the language contained therein and substituting the
following therefor:

    

    “2.7.  Continuation
and Conversion of Loans.  The Borrower shall have the right at
any time on prior irrevocable written or facsimile notice to the Bank as
specified in Section 2.3: (i) to continue any Loan into a subsequent Interest
Period, (ii) to convert any Loan into another type of Loan (specifying, in the
case of a Libor Rate Loan, the Interest Period to be applicable thereto), and
(iii) to convert any Prime Rate Loan into a Libor Rate Loan (specifying the
Interest Period to be applicable thereto), subject to the
following:

    

    (a)           in
the case of a conversion of less than all of the outstanding Revolving Credit
Loans, the aggregate principal amount of Revolving Credit Loans converted shall
not be less than $100,000.00 and shall be an integral multiple
thereof;

    

    (b)           no
Loan (other than a Prime Rate Loan) shall be converted at any time other than at
the end of an Interest Period applicable thereto;

    

    (c)           any
portion of a Loan maturing or required to be prepaid in less than one month may
not be converted into or continued as a Libor Rate Loan;

    
      
         

      

      
         

        
          

        

      

      
         

        
          Exhibit
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    (d)           a
Loan subject to an interest rate swap transaction pursuant to the Master
Agreement may not be converted to a Prime Rate Loan; and

    

    (e)           no
more than five (5) types of Libor Rate Loans may be outstanding at any one
time.

    In the
event that the Borrower shall not give notice to continue any Libor Rate Loan
into a subsequent Interest Period or convert any such Loan, into a Loan of
another type, on the last day of the Interest Period thereof, such Loan (unless
prepaid) shall automatically be converted into a Prime Rate Loan.  The
Interest Period applicable to any Libor Rate Loan resulting from a conversion or
continuation shall be specified by the Borrower in the irrevocable notice
delivered by the Borrower pursuant to this Section and Section 2.3; provided,
however, that, if such notice does not specify either the type of Loan or the
Interest Period to be applicable thereto, the Loan shall automatically be
converted into, or continued as, as the case may be, a Prime Rate Loan until
such required information is furnished pursuant to the terms
hereof.  Notwithstanding the foregoing, if the Term Loan is subject to
an interest rate swap transaction pursuant to the Master Agreement, the Term
Loan will be automatically continued as a Libor Rate Loan with a one month
Interest Period.  Notwithstanding anything to the contrary contained
above, if an Event of Default shall have occurred and is continuing, no Libor
Rate Loan may be continued into a subsequent Interest Period and no Prime Rate
Loan may be converted into a Libor Rate Loan.”

    

    (E)           Section
2.08(a) is amended by deleting the language contained therein and substituting
the following therefor:

    

    “(a)                      Voluntary.                                The
Borrower may prepay any Prime Rate Loan in whole or in part without premium or
penalty; provided, however, that each partial prepayment on account of any Prime
Rate Loan shall be in an amount not less than $50,000.00.  Except as
provided in Section 2.8(b) or in connection with a termination or reduction of
the Commitment pursuant to Section 2.6, the Borrower may not prepay any Libor
Rate Loan prior to the last day of the Interest Period therefor.  Any
amount prepaid on account of a Revolving Credit Loan may be reborrowed in
accordance with the provisions of Section 2.1 hereof.  Any prepayment
of the Term Loan subject to an interest rate swap

    
      
         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.16

        

      

    

    transaction
pursuant to the Master Agreement, shall be subject to the provisions of the
Master Agreement.”

    

    (F)           Section
2.9 is amended by deleting the language contained therein and substituting the
following therefore:

    

    “2.9.                      Payments.

    

    (a)           Interest
accrued on each Loan shall be payable, without duplication, on:

    

    (i)           the
Termination Date;

    

    (ii)           with
respect to any portion of any Revolving Credit Loan repaid or Loan prepaid
pursuant to this Agreement, the date of such repayment or prepayment, as the
case may be;

    

    (iii)           with
respect to that portion of the outstanding principal amount maintained as Prime
Rate Loans, the first day of each month and commencing with the first such date
following the date of the making of such Loans;

    

    (iv)           with
respect to that portion of the outstanding principal amount maintained as Libor
Rate Loans, the last day of each applicable Interest Period (and, if such
Interest Period for Revolving Credit Loans shall exceed three months, on the
last day of each three-month period occurring during such Interest Period);
and

    

    (v)           with
respect to that portion of the outstanding principal amount converted into Prime
Rate Loans or Libor Rate Loans on a day when interest would not otherwise have
been payable pursuant to Sections 2.9(a)(iii) or 2.9(a)(iv), the date of such
conversion.

    

    (b)           All
payments (including prepayments) to be made by the Borrower on account of
principal or interest with respect to any Loan or on account of fees or any
other obligations of the Borrower to the Bank hereunder shall be made to the
Bank at the office of the Bank set forth in Section 10.1 hereof or at such other
place as the Bank may from time to time designate in writing in lawful money of
the United States of America in immediately available funds.  The
Borrower hereby authorizes the Bank to deduct

    
      
         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.16

        

      

    

    from any
general deposit account of the Borrower the amount of any loan payment including
all payments of interest, principal and other sums due (“Automatic Payment”),
from time to time, under this Agreement and/or any Note; the Bank will
thereafter promptly notify the Borrower of the amount so charged.  If
the funds in the account are insufficient to cover any payment due, the Bank
shall not be obligated to advance funds to cover the payment. The failure of the
Bank so to charge any account or to give any such notice shall not affect the
obligation of the Borrower to pay interest, principal or other sums as provided
herein or in any Note, at any time and for any reason the Borrower or the Bank
may voluntarily terminate the Automatic Payment.  Termination by the
Borrower of the Automatic Payment must be made by written notice to the
Bank.  Subject to the provisions of subparagraph (a) in the definition
of Interest Period set forth in Section 1.1 hereof, if any payment to be so made
hereunder, or under any Note, becomes due and payable on a day other than a
Business Day, such payment shall be extended to the next succeeding Business Day
and, to the extent permitted by applicable law, interest thereon shall be
payable at the then applicable rate during such extension.

    

    (c)           If
all or a portion of the principal or interest of any Loan shall not be paid when
due (whether at the stated or any accelerated maturity of such Loan) or if any
fee or other amount due hereunder shall not be paid when due, or upon the
occurrence of an Event of Default, the Borrower’s right to select pricing
options shall cease and all Loans, and such interest, fee or amount due
hereunder, to the extent permitted by applicable law, shall bear interest
(payable on demand) (i) in all cases other than Libor Rate Loans at the Post
Default Rate until paid and (ii) in the case of Libor Rate Loans at the Post
Default Rate until the expiration of the Interest Period applicable to such
Loan, at which time the such Libor Rate Loan will automatically be converted
into a Prime Rate Loan and until paid shall bear interest at the Post Default
Rate.  In no event, however, shall interest payable hereunder be in
excess of the maximum rate of interest permitted under applicable
law.  The obligation to so pay interest upon any reimbursement
obligation of the Borrower to the Bank shall not be construed so as to waive the
requirement for reimbursement on the same date that payment is made by the Bank
as set forth in this Agreement.  If a regularly scheduled
payment

    
      
         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.16

        

      

    

    is
fifteen (15) days or more late, the Borrower will be charged five (5.0%) percent
of the unpaid portion of the regularly scheduled payment, or $10.00, whichever
is greater.

    

    (d)           All
payments received will be applied first to interest, then to fees, and then to
principal.

    

    (e)           The
Borrower hereby expressly authorizes the Bank to record on the schedule attached
to the Revolving Credit Note the

    amount
and date of each Revolving Credit Loan, the rate of interest thereon, the date
and amount of each payment of principal and the unpaid principal balance;
provided, however, that the failure of the Bank to make any such notation shall
not in any manner affect the obligation of the Borrower to repay any Revolving
Credit Loan in accordance with the terms hereof.  All such notations
shall be presumed to be correct.”

    

    (G)           Section
2.10 is amended by deleting the language contained therein and substituting the
following therefor:

    

    “2.10.                      Use of
Proceeds.  The proceeds of (i) Revolving Credit Loans hereunder
shall be used to finance working capital requirements of the Borrower and for
general corporate purposes and (ii) the Term Loan shall finance the initial
costs related to a long-term contract with Spirit Aero. No part of the proceeds
of any Loan will be used, whether directly or indirectly, for any purpose that
entails a violation of any of the Federal Reserve Board Regulations including
Regulations T, U and X.”

    

    (H)           Sections
2.11, 2.12, 2.13, and 2.14 are amended by deleting the words “Revolving Credit
Loans” appearing therein, and substituting the word “Loans”
therefor.

    

    (I)           Section
3.9 is amended by deleting the language contained therein and substituting the
following therefor:

    

    “3.9.                      Federal
Regulations.  The Borrower is not engaged nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of “purchasing” or “carrying” any “margin stock” within
the respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the

    
      
         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.16

        

      

    

    Federal
Reserve System as now and from time to time hereafter in effect.  No
part of the proceeds of any Loans hereunder will be used for “purchasing” or
“carrying” “margin stock” as so defined or for any purpose which violates, or
which would be inconsistent with, the provisions of the Regulations of such
Board of Governors.”

    

    (J)           The
preamble to Section 4.2 is amended by deleting the language contained therein
and substituting the following therefor:

    

    “4.2.  Conditions
to All Loans.  The obligation of the Bank to make any Loan
(including the initial Revolving Credit Loan) to be made by

    it
hereunder is subject to the satisfaction of the following conditions
precedent:”

    

    (K)           The
preamble to Section 5 is amended by deleting the language contained therein and
substituting the following therefor:

    

    “The
Borrower hereby agrees that, so long as the Commitment remains in effect, any
Note remains outstanding and unpaid, or any amount is owing to the Bank
hereunder, the Borrower will and will cause each Specified Person, as
applicable, to:”

    

    (L)           The
preamble to Section 6 is amended by deleting the language contained therein and
substituting the following therefor:

    

    “The
Borrower hereby agrees that, so long as the Commitment remains in effect, any
Note remains outstanding and unpaid, or any amount is owing to the Bank
hereunder, the Borrower will:”

    

    (M)           The
preamble to Section 7 is amended by deleting the language contained therein and
substituting the following therefor:

    

    “The
Borrower hereby agrees that, so long as the Commitment remains in effect, any
Note remains outstanding and unpaid, or any amount is owing to the Bank
hereunder it will not, nor will it permit any of its Subsidiaries or any
Specified Person to:”

    

    (N)           Section
7.1 is amended by deleting the language contained therein and substituting the
following therefor:

    

    “7.1                      Indebtedness
for Borrowed Money.  Incur, or permit to exist, any
Indebtedness for borrowed money

    
      
         

      

      
         

        
          

        

      

      
         

        
          Exhibit
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     except
(i) Indebtedness incurred pursuant to borrowings hereunder and under any other
loans made by the Bank in its discretion to the Borrower, (ii) Indebtedness
existing on the date hereof and reflected in the financial statements referred
to in Section 3.1 hereof and (iii) purchase money Indebtedness incurred in the
acquisition of fixed assets permitted under Section 7.4(iv) hereof not in excess
of $250,000.00 in the aggregate.”

    

    (O)           Section
8(a) is amended by deleting the language contained therein and substituting the
following therefor:

    

    “(a)           The
Borrower shall fail to pay any interest on or principal of any Note when due or
shall fail to pay any other amount payable

    hereunder;
or the Borrower or any Guarantor shall default beyond any applicable notice or
cure period (if any) under any other Loan Document; or”

    

    (P)           Section
8(e) is amended by deleting the language contained therein and substituting the
following therefor:

    

    “(e)           Any
Specified Person shall (i) default in any payment of any indebtedness for
borrowed money in excess of $100,000.00 (other than the Notes), individually or
in the aggregate, beyond the period of grace, if any, provided in the instrument
or agreement under which such indebtedness was created; or (ii) default in the
observance or performance of any other agreement or condition relating to any
such indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto or any other event shall occur or condition exist,
in each case the effect of which default or other event or condition is to cause
or permit the holder or holders of such indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause such indebtedness to become due prior
to its stated maturity; or”

    

    (Q)           The
last paragraph of Section 8 is amended by deleting the language contained
therein and substituting the following therefor:

    

    “then, in
any such event, any or all of the following actions may be taken:  (i)
the Bank may, at its option, declare the Commitment to be terminated forthwith,
whereupon the Commitment and all obligations to the Bank to make Revolving
Credit Loans shall immediately terminate; and

    
      
         

      

      
         

        
          

        

      

      
         

        
          Exhibit
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    (ii) the
Bank may, at its option, declare all Loans  (with accrued interest
thereon) and all other amounts owing under this Agreement and each Note to be
due and payable and the same, and all interest accrued thereon, shall forthwith
become due and payable without presentment, demand, protest or notice of any
kind (other than any notice specified herein), all of which are hereby waived,
anything contained herein or in any instrument evidencing the Loans to the
contrary notwithstanding.”

    

    (R)           Sections
9.1, 10.5 and 10.14 are amended by deleting the words “Revolving Credit Loans”
appearing therein and substituting word “Loans” therefore.

    

    (S)           Sections
10.1, 10.3, 10.6, 10.9, 10.10, 10.13 and 10.15 are amended by deleting the words
“Revolving Credit Note” appearing therein and substituting the words “each Note”
therefore

    

    (T)           The
Agreement is hereby amended to add a new Section 2.1.1 to read as
follows:

    

    “2.1.1                      Term
Loan.                                Subject
to the terms and conditions hereof, the Bank agrees to make a term loan (the
“Term Loan”) to the Borrower on the effective date of the first amendment hereto
in the amount of Three Million and 00/100 ($3,000,000.00) Dollars.”

    

    (U)           The
Agreement is hereby amended to add a new Section 2.2.1 to read as
follows:

    

    “2.2.1                      Term
Note.                                The
Term Loan shall be evidenced by the Term Note of the Borrower.  The
Term Note shall be dated the effective date of the first amendment to this
Agreement and shall mature on the Maturity Date at which time the entire
outstanding principal balance and all interest thereon shall be due and
payable.  The Term Loan shall bear interest at a rate per annum equal
to (a) 1⁄4% in excess of the Prime Rate, (b) 2.5% in excess of the Libor Rate for
an Interest Period one, two or three months, or (c) 2.5% in excess of the Libor
Rate for a one month Interest Period, the entire outstanding principal balance
of which, at the Borrower’s option (subject to availability), shall be swapped
into a fixed rate equivalent for the remainder of the term pursuant to the
Master Agreement.  Interest shall be payable pursuant to Section 2.9
hereof and continued or converted in accordance with the requirements of Section
2.7 hereof.  Prepayments shall be subject to Section
2.8

    
      
         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.16

        

      

    

    hereof.  The
Term Note shall be entitled to the benefits and subject to the provisions of
this Agreement.”

    

    (V)           The
Agreement is hereby amended to add a new Section 2.9.1 to read as
follows:

    

    “2.9.1                      Repayment
of Term Note.                                                                The
principal balance of the Term Note shall be payable in sixty (60) consecutive
monthly installments of principal, the first fifty-nine (59) of which shall be
in an amount equal to Fifty Thousand and 00/100 ($50,000.00) Dollars each,
commencing on December 1, 2008 with each succeeding installment
being

     due
on the first day of each month thereafter until October 1, 2013 with a final
payment due on the Maturity Date in an amount equal to the then outstanding
principal balance of the Term Note.”

    

    (W)           The
Agreement is hereby amended to add a new Section 4.1.1 to read as
follows:

    

    “4.1.1                      Conditions
to Term
Loan.                                                                The
obligations of the Bank to make the Term Loan to the Borrower is subject to the
satisfaction of the following conditions precedent:

    

    (a)           First Amendment to Credit
Agreement.  The Bank shall have received the First Amendment to
Credit Agreement duly executed by the Borrower, together with evidence that all
conditions thereto have been satisfied.

    

    (b)           Term
Note.                                The
Bank shall have received the Term Note conforming to the requirements hereof,
substantially in the form of Exhibit B hereto with appropriate insertions and
duly executed by the Borrower.

    

    (c)           Master
Agreement.                                           The
Bank shall have received the completed Master Agreement together with all other
documents necessary to evidence, secure, authorize and effectuate the interest
rate swap transaction duly executed by the Borrower.

    

    (d)           Officers’
Certificate.   Certificate of an officer of the Borrower
dated on or about the date of  the first amendment to this Agreement
certifying as to (w) no change to the copies of the Borrower’s certificate of
incorporation and all amendments thereto previously delivered to the Bank, (x)
no change to the copies of the

    
      
         

      

      
         

        
          

        

      

      
         

        
          Exhibit
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    bylaws of
the Borrower and all amendments thereto, previously delivered to the Bank, (y)
true and correct copies of resolutions adopted by the board of directors of the
Borrower authorizing (1) the execution, delivery and performance by the Borrower
of each of the Loan Documents to which it is a party and the performance by the
Borrower of its obligations under each of the Loan Documents to which it is a
party, (2) approving forms in substantially execution form of each of the Loan
Documents to which it is a party, and (3) authorizing officers of the Borrower
to execute and deliver each of the Loan Documents to which it is a party, and
(z) the

     incumbency
and specimen signatures of the duly authorized officers of the Borrower
executing the Loan Documents and any other documents delivered to the Bank by
the Borrower in connection herewith.

    

    (e)           UCC Searches; Good Standing
Certificate.

    The  Bank
shall have received current UCC Searches and an updated Good Standing
Certificate, each for the Borrower from the New York Secretary of State, in each
case satisfactory to the Bank.

    

    (f)           Opinion of
Counsel.                                                      The
Bank shall have received an opinion of the Borrower’s counsel with respect to
the Term Loan, satisfactory to the Bank in all respects.

    

    (g)           Other
Information.                                           The
Bank shall have received such other information and documents with respect to
the Borrower, its business or the collateral as is reasonably
requested.”

    

    (h)           Additional
Matters.  All other documents and legal matters in connection
with the transactions contemplated by this Agreement shall be reasonably
satisfactory in form and substance to the Bank and its counsel.

    

    (X)           The
Agreement is hereby amended to add a new Section 6.3 to read as
follows:

    

    “6.3                      Debt
Service Coverage Ratio.   Commencing
the fiscal quarter ending on December 31, 2009 and the end of each fiscal
quarter thereafter, for the preceding four fiscal quarters then-ended, a Debt
Service Coverage Ratio of 1.50 to 1.0.  For purposes hereof, ‘Debt
Service Coverage Ratio’

    
      
         

      

      
         

        
          

        

      

      
         

        
          Exhibit
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    shall
mean (i) The sum of Earnings before Interest, Taxes, Depreciation and
Amortization minus Dividends minus unfinanced Capital Expenditures, divided by (ii) the
sum of scheduled principal and capital lease payments plus Interest Expense; in
each case as determined by GAAP consistently applied.”

    

    (Y)           The
Agreement is hereby amended to add a new Exhibit B in the form annexed
hereto.

    

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

    

    3.           The
Bank and the Borrower agree that as of October 14, 2008, the aggregate
outstanding principal amount of:  (i) the Revolving Credit Loans as
evidenced by the Revolving Credit Note is $2,500,000.00, and interest has been
paid through October 1, 2008.

    

    
      4.           The
Borrower hereby represents and warrants to the Bank 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
Bank referred to in the Agreement.

    

    
      

    

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

    

    6.           The
amendments set forth herein are limited precisely as written and shall not be
deemed to (a) be a consent to or a waiver of any other term or condition of the
Agreement or any of the documents referred to therein, or (b) prejudice any
right or rights

    
      
         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.16

        

      

    

    which the
Bank may now have or may have in the future under or in connection with the
Agreement or any documents referred to therein.  Whenever the
Agreement is referred to in the Agreement 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.

    

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

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

    
      

    

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

    

    
      

    

    
      (b) The Bank
shall have received the documents set forth in Section 4.1.1 of the
Agreement.

    

    
      

    

    
      (c) The Bank
shall have received four (4) executed counterparts of the Secretary's
Certificate of the Borrower together with any other action (in form and
substance satisfactory to the Bank and its counsel) taken by the Borrower to
authorize the execution, delivery and performance of this Amendment and such
other documents as the Bank or its counsel may require.

    

    
      

    

    
      (d) The Bank
shall have received (i) an extension fee with respect to the Revolving Credit
Note of $2,500.00, (ii) a facility fee with respect to the Term Loan of
$7,500.00 and (iii) payment of the fees and disbursements of the Bank’s outside
counsel with respect to this Amendment .

    

    
      

    

    9.           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
8 above) on the date of execution by the Bank retroactive to such
date.

    
      

    

    
      4. 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.

    

    
      
         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.16

        

      

    

    
      

    

    
      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.

    

    
      

      

    

    
      By: /s/ Vincent
Palazzolo

            Vincent
Palazzolo

            Chief
Financial Officer

    

    
      

    

    
      SOVEREIGN
BANK

    

    
      

      

    

    
      By: /s/ Christine
Gerula

    

    
           Christine
Gerula

    

    
           Senior
Vice Presidentex10_17.htm

    
      
         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    

    ISDA®

    International
Swaps and Derivatives Association, Inc.

    

    2002
MASTER AGREEMENT

    dated as
of October  22, 2008

    

    

    Sovereign
Bank                                 and            CPI Aerostructures
Inc.

    

    

    have
entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this 2002 Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties or otherwise
effective for the purpose of confirming or evidencing those Transactions. This
2002 Master Agreement and the Schedule are together referred to as this "Master
Agreement".

    

    Accordingly,
the parties agree as follows:

    

    1.           Interpretation

    

    (a)             Definitions.  The
terms defined in Section 14 and elsewhere in this Master Agreement will have the
meanings therein specified for the purpose of this Master
Agreement.

    

    (b)             Inconsistency.  In
the event of any inconsistency between the provisions of the Schedule and the
other provisions of this Master Agreement, the Schedule will
prevail.  In the event of any inconsistency between the provisions of
any Confirmation and this Master Agreement, such Confirmation will prevail for
the purpose of the relevant Transaction.

    

    (c)             Single
Agreement.  All Transactions are entered into in reliance on
the fact that this Master Agreement and all Confirmations form a single
agreement between the parties (collectively referred to as this "Agreement"),
and the parties would not otherwise enter into any Transactions.

    

    2.             Obligations

    

    (a)             General
Conditions.

    

    
      	
              (i)

            	
              Each
      party will make each payment or delivery specified in each Confirmation to
      be made by it, subject to the other provisions of this
      Agreement.

            

    

    

    
      	
              (ii)

            	
              Payments
      under this Agreement will be made on the due date for value on that date
      in the place of the account specified in the relevant Confirmation or
      otherwise pursuant to this Agreement, in freely transferable funds and in
      the manner customary for payments in the required
      currency.  Where settlement is by delivery (that is, other than
      by payment), such delivery will be made for receipt on the due date in the
      manner customary for the relevant obligation unless otherwise specified in
      the relevant Confirmation or elsewhere in this
  Agreement.

            

    

    

    
      	
              (iii)

            	
              Each
      obligation of each party under Section 2(a)(i) is subject to (1) the
      condition precedent that no Event of Default or Potential Event of Default
      with respect to the other party has occurred and is continuing, (2) the
      condition precedent that no Early Termination Date in respect of the
      relevant Transaction

            

    

    
      
        
          1

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    
      	
               
      

            	
              has
      occurred or been effectively designated and (3) each other condition
      specified in this Agreement to be a condition precedent for the purpose of
      this Section 2(a)(iii).

            

    

    

    (b)             Change of
Account.  Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the Scheduled Settlement Date for the payment or delivery
to which such change applies unless such other party gives timely notice of a
reasonable objection to such change.

    

    (c)             Netting of
Payments.  If on any date amounts would otherwise be
payable:

    

    
      	
              (i)

            	
              in
      the same currency; and

            

    

    

    
      	
              (ii)

            	
              in
      respect of the same Transaction,

            

    

    

    by each
party to the other, then, on such date, each party's obligation to make payment
of any such amount will be automatically satisfied and discharged and, if the
aggregate amount that would otherwise have been payable by one party exceeds the
aggregate amount that would otherwise have been payable by the other party,
replaced by an obligation upon the party by which the larger aggregate amount
would have been payable to pay to the other party the excess of the larger
aggregate amount over the smaller aggregate amount.

    

    The
parties may elect in respect of two or more Transactions that a net amount and
payment obligation will be determined in respect of all amounts payable on the
same date in the same currency in respect of those Transactions, regardless of
whether such amounts are payable in respect of the same Transaction. The
election may be made in the

    Schedule
or any Confirmation by specifying that "Multiple Transaction Payment Netting"
applies to the Transactions identified as being subject to the election (in
which case clause (ii) above will not apply to such Transactions). If Multiple
Transaction Payment Netting is applicable to Transactions, it will apply to
those Transactions with effect from the starting date specified in the Schedule
or such Confirmation, or, if a starting date is not specified in the Schedule or
such Confirmation, the starting date otherwise agreed by the parties in writing.
This election may be made separately for different groups of Transactions and
will apply separately to each pairing of Offices through which the parties make
and receive payments or deliveries.

    

    (d)           Deduction or
Withholding for Tax.

    

    (i)           Gross-Up. All payments under this
Agreement will be made without any deduction or withholding for or on account of
any Tax unless such deduction or withholding is required by any applicable law,
as modified by the practice of any relevant governmental revenue authority, then
in effect. If a party is so required to deduct or withhold, then that party
("X") will:

    

    (1)           promptly
notify the other party (“Y") of such requirement;

    

    (2)           pay
to the relevant authorities the full amount required to be deducted or withheld
(including the full amount required to be deducted or withheld from any
additional amount paid by X to Y under this Section 2(d)) promptly upon the
earlier of determining that such deduction or withholding is required or
receiving notice that such amount has been assessed against Y;

    

    (3)           
promptly forward to Y an official receipt (or a certified copy), or other
documentation

    reasonably
acceptable to Y, evidencing such payment to such authorities; and

    

    (4)           if
such Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which
Y is otherwise entitled under this Agreement, such additional amount as is
necessary to ensure that the net amount actually received by Y (free and clear
of Indemnifiable Taxes, whether assessed against X or Y) will equal the full
amount Y would have received had no such deduction or withholding been required.
However, X will not be required to pay any additional amount to Y to the
extent

    
      
        
          
 

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

     that
it would not be required to be paid but for:

    

    (A)           the
failure by Y to comply with or perform any agreement contained in

    Section
4(a)(i), 4(a)(iii) or 4(d); or

    

    (B)           
the failure of a representation made by Y pursuant to Section 3(f) to be
accurate and true unless such failure would not have occurred but for (I) any
action taken by a taxing authority, or brought in a court of competent
jurisdiction, after a Transaction is entered into (regardless of whether such
action is taken or brought with respect to a party to this Agreement) or (II) a
Change in Tax Law.

    

    (ii)           Liability.
 If:

    

    (l)           X
is required by any applicable law, as modified by the practice of any relevant
governmental revenue authority, to make any deduction or withholding in respect
of which X would not be required to pay an additional amount to Y under Section
2(d)(i)(4);

    

    (2)           
X does not so deduct or withhold; and

    

    (3)           a
liability resulting from such Tax is assessed directly against X,

    

    then,
except to the extent Y has satisfied or then satisfies the liability resulting
from such Tax, Y will promptly pay to X the amount of such liability (including
any related liability for interest, but including any related liability for
penalties only if Y has failed to comply with or perform any agreement contained
in Section 4(a)(i), 4(a)(iii) or 4(d)).

    

    3.             Representations

    

    Each
party makes the representations contained in Sections 3(a), 3(b), 3(c), 3(d),
3(e) and 3(f) and, if specified in the Schedule as applying, 3(g) to the other
party (which representations will be deemed to be repeated by each party on each
date on which a Transaction is entered into and, in the case of the
representations in Section 3(f), at all times until the termination of this
Agreement). If any "Additional Representation" is specified in the Schedule or
any Confirmation as applying, the party or parties specified for such Additional
Representation will make and, if applicable, be deemed to repeat such Additional
Representation at the time or times specified for such Additional
Representation.

    

    (a)             Basic
Representations.

    

    
      	
              (i)

            	
              Status.  It
      is duly organized and validly existing under the laws of the jurisdiction
      of its organization or incorporation and, if relevant under such laws, in
      good standing;

            

    

    

    
      	
              (ii)

            	
              Powers.  It
      has the power to execute this Agreement and any other documentation
      relating to this Agreement to which it is a party, to deliver this
      Agreement and any other documentation relating to this Agreement that it
      is required by this Agreement to deliver and to perform its obligations
      under this Agreement and any obligations it has under any Credit Support
      Document to which it is a party and has taken all necessary action to
      authorize such execution, delivery and
  performance;

            

    

    

    
      	
              (iii)

            	
              No
      Violation or Conflict.  Such execution, delivery and
      performance do not violate or conflict with any law applicable to it, any
      provision of its constitutional documents, any order or judgment of any
      court or other agency of government applicable to it or any of its assets
      or any contractual restriction binding on or affecting it or any of its
      assets;

            

    

    

    
      	
              (iv)

            	
              Consents.  All
      governmental and other consents that are required to have been obtained by
      it with

            

    

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    
      	
               
      

            	
               respect
      to this Agreement or any Credit Support Document to which it is a party
      have been obtained and are in full force and effect and all conditions of
      any such consents have been complied with;
and

            

    

    

    
      	
              (v)

            	
              Obligations
      Binding.  Its obligations under this Agreement and any
      Credit Support Document to which it is a party constitute its legal, valid
      and binding obligations, enforceable in accordance with their respective
      terms (subject to applicable bankruptcy, reorganization, insolvency,
      moratorium or similar laws affecting creditors' rights generally and
      subject, as to enforceability, to equitable principles of general
      application (regardless of whether enforcement is sought in a proceeding
      in equity or at law)).

            

    

    

    (b)             Absence of
Certain Events.  No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.

    

    (c)             Absence of
Litigation.  There is not pending or, to its knowledge,
threatened against it, any of its Credit Support Providers or any of its
applicable Specified Entities any action, suit or proceeding at law or in equity
or before any court, tribunal, governmental body, agency or official or any
arbitrator that is likely to affect the legality, validity or enforceability
against it of this Agreement or any Credit Support Document to which it is a
party or its ability to perform its obligations under this Agreement or such
Credit Support Document.

    

    (d)             Accuracy of
Specified Information.  All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.

    

    (e)            Payer Tax
Representation.
Each representation specified in the Schedule as being made by it for
the

    purpose
of this Section 3(e) is accurate and true.

    

    (f)           Payee Tax
Representations.
Each representation specified in the Schedule as being made by it for
the

    purpose
of this Section 3(f) is accurate and true.

    

    (g)           No
Agency. It is
entering into this Agreement, including each Transaction, as principal and not
as agent of

    any
person or entity.

    

    4.             Agreements

    

    Each
party agrees with the other that, so long as either party has or may have any
obligation under this Agreement or under any Credit Support Document to which it
is a party:

    

    (a)           Furnish Specified
Information. It will deliver to the other party or, in certain cases
under clause (iii)

    below, to
such government or taxing authority as the other party reasonably
directs:

    

    (i)           any
forms, documents or certificates relating to taxation specified in the Schedule
or any

    Confirmation;

    

    (ii)           any
other documents specified in the Schedule or any Confirmation; and

    

     (iii)           upon
reasonable demand by such other party, any form or document that may be required
or reasonably requested in writing in order to allow such other party or its
Credit Support Provider to make a payment under this Agreement or any applicable
Credit Support Document without any deduction or withholding for or on account
of any Tax or with such deduction or withholding at a reduced rate (so long as
the completion, execution or submission of such form or document would not
materially prejudice the legal or commercial position of the party in receipt of
such demand), with any such form or document to be

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    accurate
and completed in a manner reasonably satisfactory to such other party and to be
executed and to be delivered with any reasonably required
certification,

    

    in each
case by the date specified in the Schedule or such Confirmation or, if none is
specified, as soon as reasonably

    practicable.

    

    (b)             Maintain
Authorizations.  It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other authority
that are required to be obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party and will use all reasonable
efforts to obtain any that may become necessary in the future.

    

    (c)             Comply with
Laws.  It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.

    

    (d)           Tax
Agreement. It
will give notice of any failure of a representation made by it under Section
3(f) to be

    accurate
and true promptly upon learning of such failure.

    

    (e)           Payment of Stamp
Tax. Subject to
Section 11, it will pay any Stamp Tax levied or imposed upon it or in respect of
its execution or performance of this Agreement by a jurisdiction in which it is
incorporated, organized, managed and controlled or considered to have its seat,
or where an Office through which it is acting for the purpose of this Agreement
is located ("Stamp Tax Jurisdiction"), and will indemnify the other party
against any Stamp Tax levied or imposed upon the other party or in respect of
the other party's execution or performance of this Agreement  by any
such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with
respect to the other party.

    

    5.             Events
of Default and Termination Events

    

    (a)           Events of
Default. The occurrence at any time with respect to a party or, if
applicable, any Credit Support Provider of such party or any Specified Entity of
such party of any of the following events constitutes (subject to Sections 5(c)
and 6(e)(iv) an event of default (an "Event of Default") with respect to such
party:

    

    
      	
               
      

            	
              (i)

            	
              Failure to
      Pay or Deliver.  Failure by the party to make, when due,
      any payment under this Agreement or delivery under Section 2(a)(i) or
      9(h)(i)(2) or (4) required to be made by it if such failure is not
      remedied on or before the first Local Business Day in the case of any such
      payment or the first Local Delivery Day in the case of any such delivery
      after, in each case, notice of such failure is given to the
      party;

            

    

    

    
      	
              (ii)  

            	
              Breach of
      Agreement;
      Repudiation of Agreement.

            

    

    

    (1) Failure
by the party to comply with or perform any agreement or obligation (other than
an obligation to make any payment under this Agreement or delivery under Section
2(a)(i) or 9(h)(i)(2) or (4) or to give notice of a Termination Event or any
agreement or obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied
with or performed by the party in accordance with this Agreement if such failure
is not remedied within 30 days after notice of such failure is given to the
party;

    

    (2)           the
party disaffirms, disclaims, repudiates or rejects, in whole or in part, or
challenges the validity of, this Master Agreement, any Confirmation executed and
delivered by that party or any Transaction evidenced by such a Confirmation (or
such action is taken by any person or entity appointed or empowered to operate
it or act on its behalf);

    

    (iii)           Credit Support
Default.

    

    
      	
               
      

            	
              (1)

            	
              Failure
      by the party or any Credit Support Provider of such party to comply with
      or perform

            

    

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    
      	
               
      

            	
               any
      agreement or obligation to be complied with or performed by it in
      accordance with any Credit Support Document if such failure is continuing
      after any applicable grace period has
elapsed;

            

    

    

    
      	
               
      

            	
              (2)

            	
              the
      expiration or termination of such Credit Support Document or the failing
      or ceasing of such Credit Support Document, or any security interest
      granted by such party or such Credit Support Provider to the other party
      pursuant to any such Credit Support Document,  to be in full
      force and effect for the purpose of this Agreement (in each case other
      than in accordance with its terms) prior to the satisfaction of all
      obligations of such party under each Transaction to which such Credit
      Support Document relates without the written consent of the other party;
      or

            

    

    

    
      	
               
      

            	
              (3)

            	
              the
      party or such Credit Support Provider disaffirms, disclaims, repudiates or
      rejects, in whole or in part, or challenges the validity of, such Credit
      Support Document (or such action is taken by any person or entity
      appointed or empowered to operate it or act on its
  behalf);

            

    

    

    (iv)           Misrepresentation.  A
representation (other than a representation under section 3(e) or 3(f)) made or
repeated or deemed to have been made or repeated by the party or any Credit
Support Provider of such party in this Agreement or any Credit Support Document
proves to have been incorrect or misleading in any material respect when made or
repeated or deemed to have been made or repeated;

    

    
      	
              (v)

            	
              Default
      Under Specified Transaction. The party, any Credit
      Support Provider of such party or any applicable Specified Entity of such
      party:

            

    

    

    (1)           
defaults (other than by failing to make a delivery) under a Specified
Transaction or any credit support arrangement relating to a Specified
Transaction and, after giving effect to any applicable notice requirement or
grace period, such default results in a liquidation of, an acceleration of
obligations under, or an early termination of, that Specified
Transaction;

    

    (2)           defaults,
after giving effect to any applicable notice requirement or grace period, in
making any payment due on the last payment or exchange date of, or any payment
on early termination of, a Specified Transaction (or, if there is no applicable
notice requirement or grace period, such default continues for at least one
Local Business Day);

    

    (3)           defaults
in making any delivery due under (including any delivery due on the last
delivery or exchange date of) a Specified Transaction or any credit support
arrangement relating to a Specified Transaction and, after giving effect to any
applicable notice requirement or grace period, such default results in a
liquidation of, an acceleration of obligations under, or an early termination
of, all transactions outstanding under the documentation applicable to that
Specified Transaction; or

    

    (4)           disaffirms,
disclaims, repudiates or rejects, in whole or in part, or challenges the
validity of, a Specified Transaction or any credit support arrangement relating
to a Specified Transaction that is, in either case, confirmed or evidenced by a
document or other confirming evidence executed and delivered by that party,
Credit Support Provider or Specified Entity (or such action is taken by any
person or entity appointed or empowered to operate it or act on its
behalf);

    

     (vi)           Cross-Default . If "Cross-Default" is
specified in the Schedule as applying to the party, the

    occurrence
or existence of:

    

    (1)           a
default, event of default or other similar condition or event (however
described) in respect of such party, any Credit Support Provider of such party
or any applicable Specified Entity of such party under one or more agreements or
instruments relating to Specified Indebtedness of any of them (individually or
collectively) where the aggregate principal amount of such agreements or
instruments, either alone or together with the amount, if any, referred to in
clause (2) below, is

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    not less
than the applicable Threshold Amount (as specified in the Schedule) which has
resulted in such Specified Indebtedness becoming, or becoming capable at such
time of being declared, due and payable under such agreements or instruments
before it would otherwise have been due and payable: or

    

    (2)           a
default by such party, such Credit Support Provider or such Specified Entity
(individually or collectively) in making one or more payments under such
agreements or instruments on the due date for payment (after giving effect to
any applicable notice requirement or

    grace
period) in an aggregate amount, either alone or together with the amount, if
any, referred to in clause (1) above, of not less than the applicable Threshold
Amount;

    

    (vii)           Bankruptcy. The party, any Credit
Support Provider of such party or any applicable Specified Entity of such
party:

    

    (1)           is
dissolved (other than pursuant to a consolidation, amalgamation or merger); (2)
becomes insolvent or is unable to pay its debts or fails or admits in writing
its inability generally to pay its debts as they become due; (3) makes a general
assignment, arrangement or composition with or for the benefit of its creditors;
(4)(A) institutes or has instituted against it, by a regulator, supervisor or
any similar official with primary insolvency, rehabilitative or regulatory
jurisdiction over it in the jurisdiction of its incorporation or organization or
the jurisdiction of its head or home office, a proceeding seeking a judgment of
insolvency or bankruptcy or any other relief under any bankruptcy or insolvency
law or other similar law affecting creditors' rights, or a petition is presented
for its winding-up or liquidation by it or such regulator, supervisor or similar
official, or (B) has instituted against it a proceeding seeking a judgment of
insolvency or bankruptcy or any other relief under any bankruptcy or insolvency
law or other similar law affecting creditors' rights, or a petition is presented
for its winding-up or liquidation, and such proceeding or petition is instituted
or presented by a person or entity not described in clause (A) above and either
(I) results

    in a
judgment of insolvency or bankruptcy or the entry of an order for relief or the
making of an order for its winding-up or liquidation or (II) is not dismissed,
discharged, stayed or restrained in each case within 15 days of the institution
or presentation thereof; (5) has a resolution passed for its winding-up,
official management or liquidation (other than pursuant to a consolidation,
amalgamation or merger); (6) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator, receiver, trustee, custodian
or other similar official for it or for all or substantially all its assets; (7)
has a secured party take possession of all or substantially all its assets or
has a distress, execution, attachment, sequestration or other legal process
levied, enforced or sued on or against all or substantially all its assets and
such secured party maintains possession, or any such process is not dismissed,
discharged, stayed or restrained, in each case within 15 days thereafter; (8)
causes or is subject to any event with respect to it which, under the applicable
laws of any jurisdiction, has an analogous effect to any of the events specified
in clauses (1) to (7) above (inclusive); or (9) takes any action in furtherance
of, or indicating its consent to, approval of, or  acquiescence in,
any of the foregoing acts; or

    

     (viii)           Merger Without
Assumption. The
party or any Credit Support Provider of such party consolidates or amalgamates
with, or merges with or into, or transfers all or substantially all its assets
to, or reorganizes, reincorporates or reconstitutes into or as, another entity
and, at the time of such consolidation, amalgamation, merger, transfer,
reorganization, reincorporation or reconstitution:

    

    (1)           the
resulting, surviving or transferee entity fails to assume all the obligations of
such party

    or such
Credit Support Provider under this Agreement or any Credit Support Document to
which it or its predecessor was a party; or

    

    (2)           the
benefits of any Credit Support Document fail to extend (without the consent of
the other party) to the performance by such resulting, surviving, or transferee
entity of its obligations

    
      
        
           

          

          

          

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    under
this Agreement.

    

    (b)           Termination
Events. The
occurrence at any time with respect to a party or, if applicable, any Credit
Support Provider of such party or any Specified Entity of such party of any
event specified below constitutes (subject to Section 5(c)) an Illegality if the
event is specified in clause (i) below, a Force Majeure Event if the event is
specified in clause (ii) below, a Tax Event if the event is specified in clause
(iii) below, a Tax Event Upon Merger if the event is specified in clause (iv)
below, and, if specified to be applicable, a Credit Event Upon Merger if the
event is specified pursuant to clause (v) below or an Additional Termination
Event if the event is specified pursuant to clause (vi) below:

    

    (i)            Illegality. After giving effect to any
applicable provision, disruption fallback or remedy specified in, or pursuant
to, the relevant Confirmation or elsewhere in this Agreement, due to an event or
circumstance (other than any action taken by a party or, if applicable, any
Credit Support Provider of such party) occurring after a Transaction is entered
into, it becomes unlawful under any applicable law (including without limitation
the laws of any country in which payment, delivery or compliance is required by
either party or any Credit Support Provider, as the case may be), on any day, or
it would be unlawful if the relevant payment, delivery or compliance were
required on that day (in each case, other than as a result of a breach by the
party of Section 4(b)):

    

    (1)           for
the Office through which such party (which will be the Affected Party) makes and
receives payments or deliveries with respect to such Transaction to perform any
absolute or contingent obligation to make a payment or delivery in respect of
such Transaction, to receive a payment or delivery in respect of such
Transaction or to comply with any other material provision of this Agreement
relating to such Transaction; or

    

    (2)           for
such party or any Credit Support Provider of such party (which will be the
Affected Party) to perform any absolute or contingent obligation to make a
payment or delivery which such party or Credit Support Provider has under any
Credit Support Document relating to such Transaction, to receive a payment or
delivery under such Credit Support Document or to comply with any other material
provision of such Credit Support Document;

    

    (ii)           Force Majeure
Event. After giving effect to
any applicable provision, disruption fallback or remedy specified in, or
pursuant to, the relevant Confirmation or elsewhere in this Agreement, by reason
of force majeure or act of state occurring after a Transaction is entered into,
on any day:

    

    (1)           
the Office through which such party (which will be the Affected Party) makes and
receives payments or deliveries with respect to such Transaction is prevented
from performing any absolute or contingent obligation to make a payment or
delivery in respect of such Transaction, from receiving a payment or delivery in
respect of such Transaction or from complying with any other material provision
of this Agreement relating to such Transaction (or would be so prevented if such
payment, delivery or compliance were required on that day), or it becomes
impossible or impracticable for such Office so to perform, receive or comply (or
it would be impossible or impracticable for such Office so to perform, receive
or comply if such payment, delivery or compliance were required on that day);
or

    

    (2)           such
party or any Credit Support Provider of such party (which will be the Affected
Party) is prevented from performing any absolute or contingent obligation to
make a payment or delivery which such party or Credit Support Provider has under
any Credit Support Document relating to such Transaction, from receiving a
payment or delivery under such Credit Support Document or from complying with
any other material provision of such Credit Support Document (or would be so
prevented if such payment, delivery or compliance were required on that day), or
it becomes impossible or impracticable for such party or Credit Support Provider
so to perform, receive or comply (or it would be impossible or impracticable for
such party or Credit Support

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    Provider
so to perform, receive or comply if such payment, delivery or compliance were
required on that day),

    

    so long
as the force majeure or act of state is beyond the control of such Office, such
party or such Credit

    Support
Provider, as appropriate, and such Office, party or Credit Support Provider
could not, after using all reasonable efforts (which will not require such party
or Credit Support Provider to incur a loss, other than immaterial, incidental
expenses), overcome such prevention, impossibility or
impracticability;

    

    (iii)           Tax
Event. Due
to (1) any action taken by a taxing authority, or brought in a court of
competent jurisdiction, after a Transaction is entered into (regardless of
whether such action is taken or brought with respect to a party to this
Agreement) or (2) a Change in Tax Law, the party (which will be the Affected
Party) will, or there is a substantial likelihood that it will, on the next
succeeding Scheduled Settlement Date (A) be required to pay to the other party
an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4)
(except in respect to interest under Section 9(h)) or (B) receive a payment from
which an amount is required to be deducted or withheld for or on account of a
Tax (except in respect of interest under Section 9(h)) and no additional amount
is required to be paid in respect of such Tax under Section 2(d)(i)(4) (other
than by reason of Section 2(d)(i)(4)(A) or (B));

    

    (iv)           Tax Event Upon
Merger. The party (the "Burdened Party") on the next succeeding Scheduled
Settlement Date will either (l) be required to pay an additional amount in
respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of
interest under Section 9(h)) or (2) receive a payment from which an amount has
been deducted or withheld for or on account of any Tax in respect of which the
other party is not required to pay an additional amount (other than by reason of
Section 2(d)(i)(4)(A) or (B)), in either case as a result of a party
consolidating or amalgamating with, or merging with or into, or transferring all
or substantially all its assets (or any substantial part of the assets
comprising the business conducted by it as of the date of this Master Agreement)
to, or reorganizing,  reincorporating, or reconstituting into or as,
another entity (which will be the Affected Party) where such action does not
constitute a Merger Without Assumption;

    

    (v)           Credit Event Upon
Merger. If
"Credit Event Upon Merger" is specified in the Schedule as applying to the
party, a Designated Event (as defined below) occurs with respect to such party,
any Credit Support Provider of such party or any applicable Specified Entity of
such party (in each case, "X") and such Designated Event does not constitute a
Merger Without Assumption, and the creditworthiness of X or, if applicable, the
successor, surviving or transferee entity of X, after taking into account any
applicable Credit Support Document, is materially weaker immediately after the
occurrence of such Designated Event than that of X immediately prior to the
occurrence of such Designated Event (and, in any such event, such party or its
successor, surviving or transferee entity, as appropriate, will be the Affected
Party). A "Designated Event" with respect to X means that:

    

    (1)           X
consolidates or amalgamates with, or merges with or into, or transfers all or
substantially all its assets (or any substantial part of the assets comprising
the business conducted by X as of the date of this Master Agreement) to, or
reorganizes, reincorporates or reconstitutes into or as another
entity;

    

    (2)           any
person, related group of persons or entity acquires directly or indirectly the
beneficial ownership of (A) equity securities having the power to elect a
majority of the board of directors (or its equivalent) of X or (B) any other
ownership interest enabling it to exercise control of X; or

    

    (3)           X
effects any substantial change in its capital structure by means of the
issuance, incurrence or guarantee of debt or the issuance of (A) preferred stock
or other securities convertible into or exchangeable for debt or preferred stock
or (B) in the case of entities other than corporations, any other form of
ownership interest; or

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    

    (vi)           Additional
Termination Event. If any "Additional
Termination Event" is specified in the Schedule or any Confirmation as applying,
the occurrence of such event (and, in such event, the Affected Party or Affected
Parties will be as specified for such Additional Termination Event in the
Schedule or such Confirmation).

    

    (c)           Hierarchy of
Events.

    

    (i)           An
event or circumstance that constitutes or gives rise to an Illegality or a Force
Majeure Event will not, for so long as that is the case, also constitute or give
rise to an Event of Default under Section 5(a)(i), 5(a)(ii)(l) or 5(a)(iii)(l)
insofar as such event or circumstance relates to the failure to make any payment
or delivery or a failure to comply with any other material provision of this
Agreement or a Credit Support Document, as the case may be.

    

    (ii)           Except
in circumstances contemplated by clause (i) above, if an event or circumstance
which would otherwise constitute or give rise to an Illegality or a Force
Majeure Event also constitutes an Event of Default or any other Termination
Event, it will be treated as an Event of Default or such other Termination
Event, as the case may be, and will not constitute or give rise to an Illegality
or a Force Majeure Event.

    

    (iii)           If
an event or circumstance which would otherwise constitute or give rise to a
Force Majeure Event also constitutes an Illegality, it will be treated as an
Illegality, except as described in clause (ii) above, and not a Force Majeure
Event.

    

    (d)           Deferral of
Payments and Deliveries During Waiting Period. If an Illegality or a
Force Majeure Event has occurred and is continuing with respect to a
Transaction, each payment or delivery which would otherwise be required to be
made under that Transaction will be deferred to, and will not be due
until:

    

    (i)           the
first Local Business Day or, in the case of a delivery, the first Local Delivery
Day (or the first day that would have been a Local Business Day or Local
Delivery Day, as appropriate, but for the occurrence of the event or
circumstance constituting or giving rise to that Illegality or Force Majeure
Event) following the end of any applicable Waiting Period in respect of that
Illegality or Force Majeure Event, as the case may be; or

    

    (ii)           if
earlier, the date on which the event or circumstance constituting or giving rise
to that Illegality or Force Majeure Event ceases to exist or, if such date is
not a Local Business Day or, in the case of a delivery a Local Delivery Day, the
first following day that is a Local Business Day or Local Delivery Day,
as

    appropriate.

    

    (e)           Inability of Head
or Home Office to Perform Obligations of Branch. If (i) an Illegality or
a Force Majeure Event occurs under Section 5(b)(i)(l) or 5(b)(ii)(l) and the
relevant Office is not the Affected Party's head or home office, (ii) Section
10(a) applies, (iii) the other party seeks performance of the relevant obligation
or compliance with the relevant provision by the Affected Party's head or home
office and (iv) the Affected Party's head or home office fails so to perform or
comply due to the occurrence of an event or circumstance which would, if that
head or home office were the Office through which the Affected Party makes and
receives payments and deliveries with respect to the relevant Transaction,
constitute or give rise to an Illegality or a Force Majeure Event, and such
failure would otherwise constitute an Event of Default under Section 5(a)(i) or
5(a)(iii)(1) with respect to such party, then, for so long as the relevant event
or circumstance continues to exist with respect to both the Office referred to
in Section 5(b)(i)(1) or 5(b)(ii)(1), as the case may be, and the Affected
Party's head or home office, such failure will not constitute an Event of
Default under Section 5(a)(i) or 5(a)(iii)(1).

    

    6.           Early
Termination; Close-Out Netting

    

    (a)            Right to
Terminate Following Event of Default. If at any time an Event of
Default with respect to a party

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    (the
"Defaulting Party") has occurred and is then continuing, the other party (the
"Non-defaulting Party") may, by not more than 20 days notice to the Defaulting
Party specifying the relevant Event of Default, designate a day not earlier than
the day such notice is effective as an Early Termination Date in respect of all
outstanding Transactions. If, however, "Automatic Early Termination" is
specified in the Schedule as applying to a party, then an Early Termination Date
in respect of all outstanding Transactions will occur immediately upon the
occurrence with respect to such party of an Event of Default specified in
Section 5(a)(vii)(l), (3), (5), (6) or, to the extent analogous thereto, (8),
and as of the time
immediately preceding the institution of the relevant proceeding or the
presentation of the relevant petition upon the occurrence with respect to such
party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent
analogous thereto, (8).

    

    (b)           Right to
Terminate Following Termination Event.

    

    (i)           Notice. If a Termination Event
other than a Force Majeure Event occurs, an Affected Party will, promptly upon
becoming aware of it, notify the other party, specifying the nature of that
Termination Event, and each Affected Transaction, and will also give the other
party such other information about that Termination Event as the other party may
reasonably require. If a Force Majeure Event occurs, each party will, promptly
upon becoming aware of it, use all reasonable efforts to notify the other party,
specifying the nature of that Force Majeure Event, and will also give the other
party such other information about that Force Majeure Event as the other party
may reasonably require.

    

    (ii)           Transfer to Avoid
Termination Event. If a Tax Event occurs
and there is only one Affected Party, or if a Tax Event Upon Merger occurs and
the Burdened Party is the Affected Party, the Affected Party will, as a
condition to its right to designate an Early Termination Date under Section
6(b)(iv), use all reasonable efforts (which will not require such party to incur
a loss, other than immaterial, incidental expenses) to transfer within 20 days
after it gives notice under Section 6(b)(i) all its rights and obligations under
this Agreement in respect of the Affected Transactions to another of its Offices
or Affiliates so that such Termination Event ceases to exist

    

    If the
Affected Party is not able to make such a transfer it will give notice to the
other party to that effect within such 20 day period, whereupon the other party
may effect such a transfer within 30 days after the notice is given under
Section 6(b)(i).

    

    Any such
transfer by a party under this Section 6(b)(ii) will be subject to and
conditional upon the prior written consent of the other party, which consent
will not be withheld if such other party's policies in effect at such time would
permit it to enter into transactions with the transferee on the terms
proposed.

    

    (iii)           Two Affected
Parties. If
a Tax Event occurs and there are two Affected Parties, each party will use all
reasonable efforts to reach agreement within 30 days after notice of such
occurrence is given under Section6(b)(i) to avoid that Termination
Event.

    

    (iv)           Right to
Terminate.

    

    
      	
              (1)  

            	
              If:

            

    

    

    (A)           a
transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii), as the
case may be, has not been effected with respect to all Affected Transactions
within 30 days after an Affected Party gives notice under Section6(b)(i);
or

    

    (B)           a
Credit Event Upon Merger or an Additional Termination Event occurs, or a Tax
Event Upon Merger occurs and the Burdened Party is not the Affected
Party,

    

    the
Burdened Party in the case of a Tax Event Upon Merger, any Affected Party in the
case of a Tax Event or an Additional Termination Event if there are two Affected
Parties, or the Non-

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    affected
Party in the case of a Credit Event Upon Merger or an Additional Termination
Event if there is only one Affected Party may, if the relevant Termination Event
is then continuing, by not more than 20 days notice to the other party,
designate a day not earlier than the day such notice is effective as an Early
Termination Date in respect of all Affected Transactions.

    

    
      	
               
      

            	
              (2)

            	
              If
      at any time an Illegality or a Force Majeure Event has occurred and is
      then continuing and any applicable Waiting Period has
    expired:

            

    

    

     (A)          Subject
to clause (B) below, either party may, by not more than 20 days notice to the
other party, designate (I) a day not earlier than the day on which such notice
becomes effective as an Early Termination Date in respect of all Affected
Transactions or (II) by specifying in that notice the Affected Transactions in
respect of which it is designating the relevant day as an Early Termination
Date, a day not earlier than two Local Business Days following the day on which
such notice becomes effective as an Early Termination Date in respect of less
than all Affected Transactions. Upon receipt of a notice designating an Early
Termination Date in respect of less than all Affected Transactions, the other
party may, by notice to the designating party, if such notice is effective on or
before the day so designated, designate that same day as an Early Termination
Date in respect of any or all other Affected Transactions.

    

    (B)          An
Affected Party (if the Illegality or Force Majeure Event relates to performance
by such party or any Credit Support Provider of such party of an obligation to
make any payment or delivery under, or to compliance with any other material
provision of, the relevant Credit Support Document) will only have the right to
designate an Early Termination Date under Section 6 (b)(iv)(2)(A) as a result of
an Illegality under Section 5 (b)(i)(2) or a Force Majeure Event under Section
5(b)(ii)(2) following the prior designation by the other party of an Early
Termination Date, pursuant to Section 6(b)(iv)(2)(A), in respect of less than
all Affected Transactions.

    

    (c)           Effect of
Designation.

    

    (i)           If
notice designating an Early Termination Date is given under Section 6(a) or
6(b), the Early Termination Date will occur on the date so designated, whether
or not the relevant Event of Default or Termination Event is then
continuing,

    

    (ii)           Upon
the occurrence or effective designation of an Early Termination Date, no further
payments or deliveries under Section 2(a)(i) or 9(h)(i) in respect of the
Terminated Transactions will be required to be made, but without prejudice to
the other provisions of this Agreement The amount, if any, payable in respect of
an Early Termination Date will be determined pursuant to Sections 6(e) and
9(h)(ii).

    

    (d)           Calculations;
Payment Date.

    

    (i)           Statement.
On or as soon as reasonably practicable following the occurrence of an
Early Termination Date, each party will make the calculations on its part, if
any, contemplated by Section 6(e) and will provide to the other party a
statement (1) showing, in reasonable detail, such calculations (including any
quotations, market data or information from internal sources used in making such
calculations), (2) specifying (except where there are two Affected Parties) any
Early Termination Amount payable and (3) giving details of the relevant account
to which any amount payable to it is to be paid. In the
absence of written confirmation from the source of a quotation or market data
obtained in determining a Close-out Amount, the records of the party obtaining
such quotation or market data will be conclusive evidence of the existence and
accuracy of such quotation or market data.

    

    (ii)           Payment
Date. An
Early Termination Amount due in respect of any Early Termination Date
will,

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    together
with any amount of interest payable pursuant to Section 9(h)(ii)(2), be payable
(I) on the day on which notice of the amount payable is effective in the case of
an Early Termination Date which is designated or occurs as a result of an Event
of Default and (2) on the day which is two Local Business Days after the day on
which notice of the amount payable is effective (or, if there are two Affected
Parties, after the day on which the statement provided pursuant to clause (i)
above by the second party to provide such a statement is effective) in the case
of an Early Termination Date which is designated as a result of a Termination
Event

    

    (e)           Payments On Early
Termination. If an Early Termination
Date occurs, the amount, if any, payable in respect of that Early Termination
Date (the "Early Termination Amount") will be determined pursuant to this
Section 6(e) and will be subject to Section 6(f).

    

    (i)           Events of
Default. If
the Early Termination Date results from an Event of Default, the Early
Termination Amount will be an amount equal to (1) the sum of (A) the Termination
Currency Equivalent of the Close-out Amount or Close-out Amounts (whether
positive or negative) determined by the Non-defaulting Party for each Terminated
Transaction or group of Terminated Transactions, as the case may be, and (B) the
Termination Currency Equivalent of the Unpaid Amounts owing to the
Non-defaulting Party less (2) the Termination Currency Equivalent of the Unpaid
Amounts owing to the Defaulting Party. If the Early Termination Amount is a
positive number, the Defaulting Party will pay it to the Non-defaulting Party;
if it is a negative number, the Non-defaulting Party will pay the absolute value
of the Early Termination Amount to the Defaulting Party,

    

    (ii)           Termination
Events. If
the Early Termination Date results from a Termination Event:

    

    (1)           One Affected Party. Subject
to clause (3) below, if there is one Affected Party, the Early Termination
Amount will be determined in accordance with Section 6(e)(i), except that
references to the Defaulting Party and to the Non-defaulting Party will be
deemed to be references to the Affected Party and to the Non-affected Party,
respectively.

    

    (2)           Two Affected Parties. Subject
to clause (3) below, if there are two Affected Parties, each party will
determine an amount equal to the Termination Currency Equivalent of the sum of
the Close-out Amount or Close-out Amounts (whether positive or negative) for
each Terminated Transaction or group of Terminated Transactions, as the case may
be, and the Early Termination Amount will be an amount equal to (A) the sum of
(I) one-half of the difference between the higher amount so determined (by party
"X") and the lower amount so determined (by party "Y") and (II) the Termination
Currency Equivalent of the Unpaid Amounts owing to X less (B) the Termination
Currency Equivalent of the Unpaid Amounts owing to Y.  If the Early
Termination Amount is a positive number, Y will pay it to X; if it is a negative
number. X will pay the absolute value of the Early Termination Amount to
Y.

    

     (3)           Mid-Market Events. If that
Termination Event is an Illegality or a Force Majeure Event, then the Early
Termination Amount will be determined in accordance with clause (1) or (2)
above, as appropriate, except that, for the purpose of determining a Close-out
Amount or Close-out Amounts, the Determining Party will:

    

    (A)           if
obtaining quotations from one or more third parties (or from any of the
Determining Party's Affiliates), ask each third party or Affiliate (I) not to
take account of the current credit worthiness of the Determining Party or any
existing Credit Support Document and (II) to provide mid-market quotations;
and

    

    (B)           in
any other case, use mid-market values without regard to the creditworthiness of
the Determining Party.

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    

    (iii)           Adjustment for
Bankruptcy. In circumstances where
an Early Termination Date occurs because Automatic Early Termination applies in
respect of a party, the Early Termination Amount will be subject to such
adjustments as are appropriate and permitted by applicable law to reflect any
payments or deliveries made by one party to the other under this Agreement (and
retained by such other party) during the period from the relevant Early
Termination Date to the date for payment determined under Section
6(d)(ii).

    

    (iv)           Adjustment for
Illegality or Force Majeure Event. The failure by a party
or any Credit Support Provider of such party to pay, when due, any Early
Termination Amount will not constitute an Event of Default under Section 5(a)(i)
or 5(a)(iii)(1) if such failure is due to the occurrence of an event or
circumstance which would, if it occurred with respect to payment, delivery or
compliance related to a Transaction, constitute or give rise to an Illegality or
a Force Majeure Event. Such amount will (1) accrue interest and otherwise be
treated as an Unpaid Amount owing to the other party if subsequently an Early
Termination Date results from an Event of Default, a Credit Event Upon Merger or
an Additional Termination Event in respect of which all outstanding Transactions
are Affected Transactions and (2) otherwise accrue interest in accordance with
Section 9 (h)(ii)(2).

    

    (v)           Pre-Estimate. The parties agree that
an amount recoverable under this Section 6(e) is a reasonable pre-estimate of
loss and not a penalty. Such amount is payable for the loss of bargain and the
loss of protection against future risks, and, except as otherwise provided in
this Agreement, neither party will be entitled to recover any additional damages
as a consequence of the termination of the Terminated Transactions.

    

    (f)            Set-Off. Any Early Termination
Amount payable to one party (the "Payee") by the other party (the "Payer"), in
circumstances where there is a Defaulting Party or where there is one Affected
Party in the case where either a Credit Event Upon Merger has occurred or any
other Termination Event in respect of which all outstanding Transactions are
Affected Transactions has occurred, will, at the option of the Non-defaulting
Party or the Non-affected Party, as the case may be ("X") (and without prior
notice to the Defaulting Party or the Affected Party, as the case may be), be
reduced by its set-off against any other amounts ("Other Amounts") payable by
the Payee to the Payer (whether or not arising under this Agreement, matured or
contingent and irrespective of the currency, place of payment or place of
booking of the obligation). To the extent that any Other Amounts are so set off,
those Other Amounts will be discharged promptly and in all respects. X will give
notice to the other party of any set-off effected under this Section
6(f).

    

    For this
purpose, either the Early Termination Amount or the Other Amounts (or the
relevant portion of such amounts) may be converted by X into the currency in
which the other is denominated at the rate of exchange at which such party would
be able, in good faith and using commercially reasonable procedures, to purchase
the relevant amount of such currency.

    

    If an
obligation is unascertained, X may in good faith estimate that obligation and
set off in respect of the estimate, subject to the relevant party accounting to
the other when the obligation is ascertained.

    

    Nothing
in this Section 6(f) will be effective to create a charge or other security
interest. This Section 6(f) will be without prejudice and in addition to any
right of set-off, offset, combination of accounts, lien, right of retention or
withholding or similar right or requirement to which any party is at any time
otherwise entitled or subject (whether by operation of law, contract or
otherwise).

    

    7.           Transfer

    

    Subject
to Section 6(b)(ii) and to the extent permitted by applicable law, neither this
Agreement nor any interest or obligation in or under this Agreement may be
transferred (whether by way of security or otherwise) by either party without
the prior written consent of the other party, except that:

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    

    (a)           a
party may make such a transfer of this Agreement pursuant to a consolidation or
amalgamation with, or merger with or into, or transfer of all or substantially
all its assets to, another entity (but without prejudice to any other right or
remedy under this Agreement); and

    

    (b)           a
party may make such a transfer of all or any part of its
interest in any Early Termination Amount payable to it by a Defaulting Party,
together with any amounts payable on or with respect to that interest and any
other rights associated with that interest pursuant to Sections 8, 9(h) and
11.

    

    Any
purported transfer that is not in compliance with this Section 7 will be
void.

    

    8.           Contractual
Currency

    

    (a)           Payment in the
Contractual Currency. Each payment under this
Agreement will be made in the relevant currency specified in this Agreement for
that payment (the "Contractual Currency"). To the extent permitted by applicable
law, any obligation to make payments under this Agreement in the Contractual
Currency will not be discharged or satisfied by any tender in any currency other
than the Contractual Currency except to the extent such tender results in the
actual receipt by the party to which payment is owed, acting in good faith and
using commercially reasonable procedures in converting the currency so tendered
into the Contractual Currency, of the full amount in the Contractual Currency of
all amounts payable in respect of this Agreement. If for any reason the amount
in the Contractual Currency so received falls short of the amount in the
Contractual Currency payable in respect of this Agreement, the party required to
make the payment will, to the extent permitted by applicable
law,  immediately pay such additional amount in the Contractual
Currency as may be necessary to compensate for the shortfall. If for any reason
the amount in the Contractual Currency so received exceeds the amount in the
Contractual Currency payable in respect of this Agreement, the party receiving
the payment will refund promptly the amount of such excess.

    

    (b)           Judgments. To the extent permitted
by applicable law, if any judgment or order expressed in a currency other than
the Contractual Currency is rendered (i) for the payment of any amount owing in
respect of this Agreement, (ii) for the payment of any amount relating to any
early termination in respect of this Agreement or (iii) in respect of a judgment
or order of another court for the payment of any amount described in clause (i)
or (ii) above, the party seeking recovery, after recovery in full of the
aggregate amount to which such party is entitled pursuant to the judgment or
order, will be entitled to receive immediately from the other party the amount
of any shortfall of the Contractual Currency received by such party as a
consequence of sums paid in such other currency and will refund promptly to the
other party any excess of the Contractual Currency received by such party as a
consequence of sums paid in such other currency if such shortfall or such excess
arises or results from any variation between the rate of exchange at which the
Contractual Currency is converted into the currency of the judgment or order for
the purpose of such judgment or order and the rate of exchange at which such
party is able, acting in good faith and using commercially reasonable procedures
in converting the currency received into the Contractual Currency, to purchase
the Contractual Currency with the amount of the currency of the judgment or
order actually received by such party.

    

    (c)           Separate
Indemnities. To
the extent permitted by applicable law, the indemnities in this Section 8
constitute separate and independent obligations from the other obligations in
this Agreement, will be enforceable as separate and independent causes of
action, will apply notwithstanding any indulgence granted by the party to which
any payment is owed and will not be affected by judgment being obtained or claim
or proof being made for any other sums payable in respect of this
Agreement.

    

    (d)           Evidence of
Loss. For
the purpose of this Section 8, it will be sufficient for a party to demonstrate
that it would have suffered a loss had an actual exchange or purchase been
made.

    

    9.           Miscellaneous

    

    (a)           Entire
Agreement. This
Agreement constitutes the entire agreement and understanding of the parties
with

    
      
        
           

          

          

          

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    respect
to its subject matter. Each of the parties acknowledges that in entering into
this Agreement it has not relied on any oral or written representation, warranty
or other assurance (except as provided for or referred to in this Agreement) and
waives all rights and remedies which might otherwise be available to it in
respect thereof, except that nothing in this Agreement will limit or exclude any
liability of a party for fraud.

    

    (b)           Amendments. An amendment,
modification or waiver in respect of this Agreement will only be effective if in
writing (including a writing evidenced by a facsimile transmission) and executed
by each of the parties or confirmed by an exchange of telexes or by an exchange
of electronic messages on an electronic messaging system.

    

    (c)           Survival of
Obligations. Without prejudice to
Sections 2(a)(iii) and 6(c)(ii), the obligations of the parties under this
Agreement will survive the termination of any Transaction.

    

    (d)           Remedies
Cumulative. Except as provided in
this Agreement, the rights, powers, remedies and privileges provided in this
Agreement are cumulative and not exclusive of any rights, powers, remedies and
privileges provided by law.

    

    (e)           Counterparts and
Confirmations.

    

    (i) This
Agreement (and each amendment, modification and waiver in respect of it) may be
executed and delivered in counterparts (including by facsimile transmission and
by electronic messaging system), each of which will be deemed an
original.

    

    (ii) The
parties intend that they are legally bound by the terms of each Transaction from
the moment they agree to those terms (whether orally or otherwise). A
Confirmation will be entered into as soon as practicable and may be executed and
delivered in counterparts (including by facsimile transmission) or be created by
an exchange of telexes, by an exchange of electronic messages on an electronic
messaging system or by an exchange of e-mails, which in each case will be
sufficient for all purposes to evidence a binding supplement to this Agreement.
The parties will specify therein or through another effective means that any
such counterpart, telex, electronic message or e-mail constitutes a
Confirmation.

    

    (f)           No Waiver of
Rights. A
failure or delay in exercising any right, power or privilege in respect of
this

    Agreement
will not be presumed to operate as a waiver, and a single or partial exercise of
any right, power or privilege will not be presumed to preclude any subsequent or
further exercise, of that right, power or privilege or the exercise of any other
right, power or privilege.

    

    (g)           
Headings. The headings used in
this Agreement are for convenience of reference only and are not to affect the
construction of or to be taken into consideration in interpreting this
Agreement.

    

    (h)           Interest and
Compensation.

    

    (i)           Prior to Early
Termination. Prior to the occurrence
or effective designation of an Early

    Termination
Date in respect of the relevant Transaction:

    

    (1)           Interest on Defaulted Payments.
If a party defaults in the performance of any payment obligation, it
will, to the extent permitted by applicable law and subject to Section 6(c), pay
interest (before as well as after judgment) on the overdue amount to the other
party on demand in the same currency as the overdue amount, for the period from
(and including) the original due date for payment to (but excluding) the date of
actual payment (and excluding any period in respect of which interest or
compensation in respect of the overdue amount is due pursuant to clause (3)(B)
or (C) below), at the Default Rate.

    

    (2)           Compensation for Defaulted
Deliveries. If a party defaults in the performance of any obligation
required to be settled by delivery, it will on demand (A) compensate the other
party to

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    the
extent provided for in the relevant Confirmation or elsewhere in this Agreement
and (B) unless otherwise provided in the relevant Confirmation or elsewhere in
this Agreement, to the extent permitted by applicable law and subject to Section
6(c), pay to the other party interest (before as well as after judgment) on an
amount equal to the fair market value of that which was required to be delivered
in the same currency as that amount, for the period from (and including) the
originally scheduled date for delivery to (but excluding) the date of actual
delivery (and excluding any period in respect of which interest or compensation
in respect of that amount is due pursuant to clause (4) below), at the Default
Rate. The fair market value of any obligation referred to above will be
determined as of the originally scheduled date for delivery, in good faith and
using commercially reasonable procedures, by the party that was entitled to take
delivery.

    

    (3)           
Interest on Deferred
Payments.  If:

    

    (A)           a
party does not pay any amount that, but for Section 2(a)(iii), would have been
payable, it will, to the extent permitted by applicable law and subject to
Section 6(c) and clauses (B) and (C) below, pay interest (before as well as
after judgment) on that amount to the other party on demand (after such amount
becomes payable) in the same currency as that amount, for the period from (and
including) the date the amount would, but for Section 2(a)(iii), have been
payable to (but excluding) the date the amount actually becomes payable, at the
Applicable Deferral Rate;

    

    (B)           
a payment is deferred pursuant to Section 5(d), the party which would otherwise
have been required to make that payment will, to the extent permitted by
applicable law, subject to Section 6(c) and for so long as no Event of Default
or Potential Event of Default with respect to that party has occurred and is
continuing, pay interest (before as well as after judgment) on the amount of the
deferred payment to the other party on demand (after such amount becomes
payable) in the same currency as the deferred payment, for the period from (and
including) the date the amount would, but for Section 5(d), have been payable to
(but excluding) the earlier of the date the payment is no longer deferred
pursuant to Section 5(d) and the date during the deferral period upon which an
Event of Default or Potential Event of Default with respect to that party
occurs, at the Applicable Deferral Rate; or

    

    (C)           a
party fails to make any payment due to the occurrence of an Illegality or a
Force Majeure Event (after giving effect to any deferral period contemplated by
clause (B) above), it will, to the extent permitted by applicable law, subject
to Section 6(c) and for so long as the event or circumstance giving rise to that
Illegality or Force Majeure Event continues and no Event of Default or Potential
Event of Default with respect to that party has occurred and is continuing, pay
interest (before as well as after judgment) on the overdue amount to the other
party on demand in the same currency as the overdue amount, for the period from
(and including) the date the party fails to make the payment due to the
occurrence of the relevant Illegality or Force Majeure Event (or, if later, the
date the payment is no longer deferred pursuant to Section 5(d)) to (but
excluding) the earlier of the date the event or circumstance giving rise to that
Illegality or Force Majeure Event ceases to exist and the date during the period
upon which an Event of Default or Potential Event of Default with respect to
that party occurs (and excluding any period in respect of which interest or
compensation in respect of the overdue amount is due pursuant to clause (B)
above), at the Applicable Deferral Rate.

    

    (4)           Compensation for Deferred
Deliveries. If:

    

    (A)           a
party does not perform any obligation that, but for Section 2(a)(iii), would
have been required to be settled by delivery;

    
      
        
           

          

          

          

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    (B)           
a delivery is deferred pursuant to Section 5(d); or

    

    (C)           a
party fails to make a delivery due to the occurrence of an Illegality or a Force
Majeure Event at a time when any applicable Waiting Period has
expired,

    

    the party
required (or that would otherwise have been required) to make the delivery will,
to the extent permitted by applicable law and subject to Section 6(c),
compensate and pay interest to the other party on demand (after, in the case of
clauses (A) and (B) above, such delivery is required) if and to the extent
provided for in the relevant Confirmation or elsewhere in this
Agreement.

    

    (ii)           Early
Termination. Upon the occurrence or
effective designation of an Early Termination Date in respect of a
Transaction:

    

    (1)           Unpaid Amounts. For the
purpose of determining an Unpaid Amount in respect of the relevant Transaction,
and to the extent permitted by applicable law, interest will accrue on the
amount of any payment obligation or the amount equal to the fair market value of
any obligation required to be settled by delivery included in such determination
in the same currency as that amount, for the period from (and including) the
date the relevant obligation was (or would have been but for Section 2(a)(iii)
or 5(d)) required to have been performed to (but excluding) the relevant Early
Termination Date, at the Applicable Close-out Rate.

    

    (2)           Interest on Early Termination
Amounts.  If an Early Termination Amount is due in respect of
such Early Termination Date, that amount will, to the extent permitted by
applicable law, be paid together with interest (before as well as after
judgment) on that amount in the Termination Currency, for the period from (and
including) such Early Termination Date to (but excluding) the date the amount is
paid, at the Applicable Close-out Rate.

    

    (iii)           Interest
Calculation. Any interest pursuant
to this Section 9(h) will be calculated on the basis of daily compounding and
the actual number of days elapsed.

    

    10.           Offices;
Multibranch Parties

    

    (a)           If
Section 10(a) is specified in the Schedule as applying, each party that enters
into a Transaction through an Office other than its head or home office
represents to and agrees with the other party that, notwithstanding the place of
booking or its jurisdiction of incorporation or organization, its obligations
are the same in terms of recourse against it as if it had entered into the
Transaction through its head or home office, except that a party will not have
recourse to the head or home office of the other party in respect of any payment
or delivery deferred pursuant to Section 5(d) for so long as the payment or
delivery is so deferred. This representation and agreement will be deemed to be
repeated by each party on each date on which the parties enter into a
Transaction.

    

    (b)           If
a party is specified as a Multibranch Party in the Schedule, such party may,
subject to clause (c) below, enter into a Transaction through, book a
Transaction in and make and receive payments and deliveries with respect to a
Transaction through any Office listed in respect of that party in the Schedule
(but not any other Office unless otherwise agreed by the parties in
writing).

    

    (c)           The
Office through which a party enters into a Transaction will be the Office
specified for that party in the relevant Confirmation or as otherwise agreed by
the parties in writing, and, if an Office for that party is not specified in the
Confirmation or otherwise agreed by the parties in writing, its head or home
office. Unless the parties otherwise agree in writing, the Office through which
a party enters into a Transaction will also be the Office in which it books the
Transaction and the Office through which it makes and receives payments and
deliveries with respect to the Transaction. Subject to Section 6(b)(ii), neither
party may change the Office in which it books the Transaction or the Office
through which it makes and receives payments or deliveries with respect to a
Transaction without the prior written consent of the other
party.

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    11.
Expenses

    

    A
Defaulting Party will on demand indemnify and hold harmless the other party for
and against all reasonable out-of-pocket expenses, including legal fees,
execution fees and Stamp Tax, incurred by such other party by reason of the
enforcement and protection of its rights under this Agreement or any Credit
Support Document to which the Defaulting Party is a party or by reason of the
early termination of any Transaction, including, but not limited to, costs of
collection.

    

    12.
Notices

    

    (a)           Effectiveness, Any notice or other
communication in respect of this Agreement may be given in any manner described
below (except that a notice or other communication under Section 5 or 6 may not
be given by electronic messaging system or e-mail) to the address or number or
in accordance with the electronic messaging system or e-mail details provided
(see the Schedule) and will be deemed effective as indicated:

    

    (i)           if
in writing and delivered in person or by courier, on the date it is
delivered;

    

    (ii)           
if sent by telex, on the date the recipient's answerback is
received;

    

    (iii)           
if sent by facsimile transmission, on the date it is received by a responsible
employee of the recipient in legible form (it being agreed that the burden of
proving receipt will be on the sender and will not be met by a transmission
report generated by the sender's facsimile machine);

    

    (iv)           
if sent by certified or registered mail (airmail, if overseas) or the equivalent
(return receipt requested), on the date it is delivered or its delivery is
attempted;

    

    (v)           
if sent by electronic messaging system, on the date it is received;
or

    

    
      	
              (vi)  

            	
              if
      sent by e-mail, on the date it is
delivered,

            

    

    

    unless
the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication will be deemed given and
effective on the first following day that is a Local Business Day.

    

    (b)           Change of
Details. Either party may by
notice to the other change the address, telex or facsimile number or electronic
messaging system or e-mail details at which notices or other communications are
to be given to it.

    

    13.           Governing
Law and Jurisdiction

    

    (a)           Governing
Law. This
Agreement will be governed by and construed in accordance with the law specified
in the Schedule.

    

    (b)           Jurisdiction. With respect to any
suit, action or proceedings relating to any dispute arising out of or
in

    connection
with this Agreement ("Proceedings"), each party irrevocably:

    

    (i)
submits:

    

    (1)           if
this Agreement is expressed to be governed by English law, to (A) the
non-exclusive jurisdiction of the English courts if the Proceedings do not
involve a Convention Court and (B) the exclusive jurisdiction of the English
courts if the Proceedings do involve a Convention Court; or

    

    (2)           
if this Agreement is expressed to be governed by the laws of the State of New
York, to

    
      
        
           

          

          

          

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    the
non-exclusive jurisdiction of the courts of the State of New York and the United
States District Court located in the Borough of Manhattan in New York
City;

    

    (ii)           waives
any objection which it may have at any time to the laying of venue of any
Proceedings brought in any such court, waives any claim that such Proceedings
have been brought in an inconvenient forum and further waives the right to
object, with respect to such Proceedings, that such court does not have any
jurisdiction over such party; and

    

    (iii)           agrees,
to the extent permitted by applicable law, that the bringing of Proceedings in
any one or more jurisdictions will not preclude the bringing of Proceedings in
any other jurisdiction.

    

    (c)           Service of
Process. Each party irrevocably
appoints the Process Agent, if any, specified opposite its name in the Schedule
to receive, for it and on its behalf, service of process in any Proceedings. If
for any reason any party's Process Agent is unable to act as such, such party
will promptly notify the other party and within 30 days appoint a substitute
process agent acceptable to the other party. The parties irrevocably consent to
service of process given in the manner provided for notices in Section 12(a)(i),
12(a)(iii) or 12(a)(iv). Nothing in this Agreement will affect the right of
either party to serve process in any other manner permitted by applicable
law.

    

    (d)           Waiver of
Immunities. Each party irrevocably
waives, to the extent permitted by applicable law, with respect to itself and
its revenues and assets (irrespective of their use or intended use), all
immunity on the grounds of sovereignty or other similar grounds from (i) suit,
(ii) jurisdiction of any court, (iii) relief by way of injunction or order for
specific performance or recovery of property, (iv) attachment of its assets
(whether before or after judgment) and (v) execution or enforcement of any
judgment to which it or its revenues or assets might otherwise be entitled in
any Proceedings in the courts of any jurisdiction and irrevocably agrees, to the
extent permitted by applicable law, that it will not claim any such immunity in
any Proceedings.

    

    14.
Definitions

    

    As used
in this Agreement:

    

    "Additional
Representation" has the meaning
specified in Section 3.

    

    "Additional
Termination Event" has the meaning
specified in Section 5(b).

    

    "Affected Party"
has the meaning specified in Section 5(b).

    

    "Affected
Transactions" means (a) with respect to any Termination Event consisting
of an Illegality, Force Majeure Event, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event (which, in the
case of an Illegality under Section 5(b)(i)(2) or a Force Majeure Event under
Section 5(b)(ii)(2), means all Transactions unless the relevant Credit Support
Document references only certain Transactions, in which case those Transactions
and, if the relevant Credit Support Document constitutes a Confirmation for a
Transaction, that Transaction) and (b) with respect to any other Termination
Event, all Transactions.

    

    "Affiliate”  means,
subject to the Schedule, in relation to any person, any entity controlled,
directly or indirectly, by the person, any entity that controls, directly or
indirectly, the person or any entity directly or indirectly under common control
with the person. For this purpose, "control" of any entity or person means
ownership of a majority of the voting power of the entity or
person.

    

    "Agreement"
has the meaning specified in Section 1(c).

    

    "Applicable
Close-out Rate" means:

    

    (a)           in
respect of the determination of an Unpaid Amount:

    
      
        
          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    

    (i)           in
respect of obligations payable or deliverable (or which would have been but for
Section 2(a)(iii)) by a Defaulting Party, the Default Rate;

    

    (ii)           in
respect of obligations payable or deliverable (or which would have been but for
Section 2(a)(iii)) by a Non-defaulting Party, the Non-default Rate;

    

    (iii)           in
respect of obligations deferred pursuant to Section 5(d), if there is no
Defaulting Party and for so long as the deferral period continues, the
Applicable Deferral Rate; and

    

    (iv)           in
all other cases following the occurrence of a Termination Event (except where
interest accrues pursuant to clause (iii) above), the Applicable Deferral Rate;
and

    

    (b)           in
respect of an Early Termination Amount:

    

    (i)           for
the period from (and including) the relevant Early Termination Date to (but
excluding) the date (determined in accordance with Section 6(d)(ii)) on which
that amount is payable:

    

    (1)           if
the Early Termination Amount is payable by a Defaulting Party, the Default
Rate;

    

    (2)           if
the Early Termination Amount is payable by a Non-defaulting Party, the
Non-default Rate; and

    

    (3)           
in all other cases, the Applicable Deferral Rate; and

    

    (ii)           for
the period from (and including) the date (determined in accordance with Section
6(d)(ii)) on

    which
that amount is payable to (but excluding) the date of actual
payment:

    

    (1)           
if a party fails to pay the Early Termination Amount due to the occurrence of an
event or circumstance which would, if it occurred with respect to a payment or
delivery under a Transaction, constitute or give rise to an Illegality or a
Force Majeure Event, and for so long as the Early Termination Amount remains
unpaid due to the continuing existence of such event or circumstance, the
Applicable Deferral Rate;

    

    (2)           if
the Early Termination Amount is payable by a Defaulting Party (but excluding
any

    period in
respect of which clause (1) above applies), the Default Rate;

    

    (3)           if
the Early Termination Amount is payable by a Non-defaulting Party (but excluding
any period in respect of which clause (1) above applies), the Non-default Rate;
and

    

    (4)           in
all other cases, the Termination Rate.

    

    "Applicable
Deferral Rate" means:

    

    (a)           for
the purpose of Section 9(h)(i)(3)(A), the rate certified by the relevant payer
to be a rate offered to the payer by a major bank in a relevant interbank market
for overnight deposits in the applicable currency, such bank to be selected in
good faith by the payer for the purpose of obtaining a representative rate that
will reasonably reflect conditions prevailing at the time in that relevant
market;

    

    (b)           for
purposes of Section 9(h)(i)(3)(B) and clause (a)(iii) of the definition of
Applicable Close-out Rate, the rate certified by the relevant payer to be a rate
offered to prime banks by a major bank in a relevant interbank market for
overnight deposits in the applicable currency, such bank to be selected in good
faith by the payer after consultation with the other party, if practicable, for
the purpose of obtaining a representative rate that will
reasonably

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    reflect
conditions prevailing at the time in that relevant market; and

    

    (c)           for
purposes of Section 9(h)(i)(3)(C) and clauses (a)(iv), (b)(i)(3) and (b)(ii)(1)
of the definition of Applicable Close-out Rate, a rate equal to the arithmetic
mean of the rate determined pursuant to clause (a) above and a rate per annum
equal to the cost (without proof or evidence of any actual cost) to the relevant
payee (as certified by it) if it were to fund or of funding the relevant
amount.

    

    "Automatic Early
Termination" has the meaning specified in Section 6(a).

    

    "Burdened Party"
has the meaning specified in Section 5(b)(iv).

    

    "Change in Tax
Law” means the enactment, promulgation, execution or ratification of, or
any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs after the parties enter into the relevant
Transaction.

    

    "Close-out
Amount" means, with respect to each Terminated Transaction or each group
of Terminated Transactions and a Determining Party, the amount of the losses or
costs of the Determining Party that are or would be incurred under then
prevailing circumstances (expressed as a positive number) or gains of the
Determining Party that are or would be realized under then prevailing
circumstances (expressed as a negative number) in replacing, or in providing for
the Determining Party the economic equivalent of, (a) the material terms of that
Terminated Transaction or group of Terminated Transactions, including the
payments and deliveries by the parties under Section 2(a)(i) in respect of that
Terminated Transaction or group of Terminated Transactions that would, but for
the occurrence of the relevant Early Termination Date, have been required after
that date (assuming satisfaction of the conditions precedent in Section
2(a)(iii) and (b) the option rights of the parties in respect of that Terminated
Transaction or group of Terminated Transactions.

    

    Any
Close-out Amount will be determined by the Determining Party (or its agent),
which will act in good faith and use commercially reasonable procedures in order
to produce a commercially reasonable result. The Determining Party may determine
a Close-out Amount for any group of Terminated Transactions or any individual
Terminated Transaction but, in the aggregate, for not less than all Terminated
Transactions. Each Close-out Amount will be determined as of the Early
Termination Date or, if that would not be commercially reasonable, as of the
date or dates following the Early Termination Date as would be commercially
reasonable.

    

    Unpaid
Amounts in respect of a Terminated Transaction or group of Terminated
Transactions and legal fees and out-of-pocket expenses referred to in Section 11
are to be excluded in all determinations of Close-out Amounts.

    

    In
determining a Close-out Amount, the Determining Party may consider any relevant
information, including, without limitation, one or more of the following types
of information:

    

    (i)           quotations
(either firm or indicative) for replacement transactions supplied by one or more
third parties that may take into account the creditworthiness of the Determining
Party at the time the quotation is provided and the terms of any relevant
documentation, including credit support documentation, between the Determining
Party and the third party providing the quotation;

    

    (ii)           information
consisting of relevant market data in the relevant market supplied by one or
more third parties including, without limitation, relevant rates, prices,
yields, yield curves, volatilities, spreads, correlations or other relevant
market data in the relevant market; or

    

    (iii)           information
of the types described in clause (i) or (ii) above from internal sources
(including any of the

    Determining
Party's Affiliates) if that information is of the same type used by the
Determining Party in the regular course of its business for the valuation of
similar transactions.

    

    The
Determining Party will consider, taking into account the standards and
procedures described in this definition,

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    quotations
pursuant to clause (i) above or relevant market data pursuant to clause (ii)
above unless the Determining Party reasonably believes in good faith that such
quotations or relevant market data are not readily available or would produce a
result that would not satisfy those standards. When considering information
described in clause (i), (ii) or (iii) above, the Determining Party may include
costs of funding, to the extent costs of funding are not and would not be a
component of the other information being utilized. Third parties supplying
quotations pursuant to clause (i) above or market data pursuant to clause (ii)
above may include, without limitation, dealers in the relevant markets,
end-users of the relevant product, information vendors, brokers and other
sources of market information.

    

    Without
duplication of amounts calculated based on information described in clause (i),
(ii) or (iii) above, or other relevant information, and when it is commercially
reasonable to do so, the Determining Party may in addition consider in
calculating a Close-out Amount any loss or cost incurred in connection with its
terminating, liquidating or re-establishing any hedge related to a Terminated
Transaction or group of Terminated Transactions (or any gain resulting from any
of them).

    

    Commercially
reasonable procedures used in determining a Close-out Amount may include the
following:

    

    (1)           application
to relevant market data from third parties pursuant to clause (ii) above or
information from internal sources pursuant to clause (iii) above of pricing or
other valuation models that are, at the time of the determination of the
Close-out Amount, used by the Determining Party in the regular course of its
business in pricing or valuing transactions between the Determining Party and
unrelated third parties that are similar to the Terminated Transaction or group
of Terminated Transactions; and

    

    (2)           application
of different valuation methods to Terminated Transactions or groups of
Terminated Transactions depending on the type, complexity, size or number of the
Terminated Transactions or group of Terminated Transactions.

    

    "Confirmation"
has the meaning specified in the preamble.

    

    "consent"
includes a consent, approval, action, authorization, exemption, notice,
filing, registration or exchange control consent.

    

    "Contractual
Currency" has the meaning specified in Section 8(a).

    

    "Convention
Court" means any court which is bound to apply to the Proceedings either
Article 17 of the 1968 Brussels Convention on Jurisdiction and the Enforcement
of Judgments in Civil and Commercial Matters or Article 17 of the 1988 Lugano
Convention on Jurisdiction and the Enforcement of Judgments in Civil and
Commercial Matters.

    

    "Credit Event
Upon Merger" has the meaning specified in Section 5(b).

    

    "Credit Support
Document" means any agreement or instrument that is specified as such in
this Agreement.

    

    "Credit Support
Provider” has the meaning specified in the Schedule.

    

    "Cross-Default" means the event
specified in Section 5(a)(vi).

    

    "Default Rate"
means a rate per annum equal to the cost (without proof or evidence of
any actual cost) to the relevant payee (as certified by it) if it were to fund
or of funding the relevant amount plus 1% per annum.

    

    "Defaulting
Party" has the meaning specified in Section 6(a).

    

    "Designated
Event" has the meaning specified in Section 5(b)(v).

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    

    "Determining
Party" means the party determining a Close-out Amount.

    

    "Early
Termination Amount" has the meaning specified in Section
6(e).

    

    "Early
Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iv).

    

    "electronic
messages" does not include e-mails but does include documents expressed
in markup languages, and "electronic
messaging system" will be construed accordingly.

    

    "English law"
means the law of England and Wales, and "English"
will be construed accordingly.

    

    "Event of
Default" has the meaning specified in Section 5(a) and, if applicable, in
the Schedule.

    

    “Force Majeure
Event" has the meaning specified in Section 5(b).

    

    "General Business
Day" means a day on which commercial banks are open for general business
(including dealings in foreign exchange and foreign currency
deposits).

    

    "Illegality"
has the meaning specified in Section 5(b).

    

    "Indemnifiable
Tax" means any Tax other than a Tax that would not be imposed in respect
of a payment under this Agreement but for a present or former connection between
the jurisdiction of the government or taxation authority imposing such Tax and
the recipient of such payment or a person related to such recipient (including,
without limitation, a connection arising from such recipient or related person
being or having been a citizen or resident of such jurisdiction. or being or
having been organized, present or engaged in a trade or business in such
jurisdiction, or having or having had a permanent establishment or fixed place
of business in such jurisdiction, but excluding a connection arising solely from
such recipient or related person having executed, delivered, performed its
obligations or received a payment under, or enforced, this Agreement or a Credit
Support Document).

    

    "law"
includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority),
and "unlawful"
will be construed accordingly.

    

    "Local Business
Day" means
(a) in relation to any obligation under Section 2(a)(i), a General Business Day
in the place or places specified in the relevant Confirmation and a day on which
a relevant settlement system is open or operating as specified in the relevant
Confirmation or, if a place or a settlement system is not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement (b) for the purpose
of determining when a Waiting Period expires, a General Business Day in the
place where the event or circumstance that constitutes or gives rise to the
Illegality or Force Majeure Event, as the case may be, occurs, (c) in relation to any
other payment, a General Business Day in the place where the relevant account is
located and, if different, in the principal financial centre, if any, of the
currency of such payment and, if that currency does not have a single recognized
principal financial centre, a day on which the settlement system necessary to
accomplish such payment is open, (d) in relation to any notice or other
communication, including notice contemplated under Section 5(a)(i), a General
Business Day (or a day that would have been a General Business Day but for the
occurrence of an event or circumstance which would, if it occurred with respect
to payment, delivery or compliance related to a Transaction, constitute or give
rise to an Illegality or a Force Majeure Event) in the place specified in the
address for notice provided by the recipient and, in the case of a notice
contemplated by Section 2(b), in the place where the relevant new account is to
be located and (e) in relation to Section 5(a)(v)(2), a General Business Day in
the relevant locations for performance with respect to such Specified
Transaction.

    

    "Local Delivery
Day" means,
for purposes of Sections 5(a)(i) and 5(d), a day on which settlement systems
necessary to accomplish the relevant delivery are generally open for business so
that the delivery is capable of being

    
      
        
          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    accomplished
in accordance with customary market practice, in the place specified in the
relevant Confirmation or, if not so specified, in a location as determined in
accordance with customary market practice for the relevant
delivery.

    

    "Master
Agreement" has the meaning specified in the preamble.

    

    "Merger Without
Assumption" means the event specified in Section 5(a)(viii).

    

    "Multiple
Transaction Payment Netting" has the meaning
specified in Section 2(c).

    

    "'Non-affected
Party" means, so long as there is only one Affected Party, the other
party.

    

    "Non-default
Rate" means the rate certified by the Non-defaulting Party to be a rate
offered to the Non-defaulting Party by a major bank in a relevant interbank
market for overnight deposits in the applicable currency, such bank to be
selected in good faith by the Non-defaulting Party for the purpose of obtaining
a representative rate that will reasonably reflect conditions prevailing at the
time in that relevant market.

    

    “Non-defaulting
Party" has
the meaning specified in Section 6(a).

    

    "Office"
means a branch or office of a party, which may be such party's head or
home office.

    

    "Other Amounts"
has the meaning specified in Section 6(f).

    

    "Payee"
has the meaning specified in Section 6(f).

    

    "Payer"
has the meaning specified in Section 6(f).

    

    "Potential Event
of Default" means any event which, with the giving of notice or the lapse
of time or both, would constitute an Event of Default.

    

    "Proceedings"
has the meaning specified in Section 13(b).

    

    "Process
Agent" has
the meaning specified in the Schedule.

    

    "rate of
exchange" includes, without
limitation, any premiums and costs of exchange payable in connection with the
purchase of or conversion into the Contractual Currency.

    

    "Relevant
Jurisdiction" means, with respect to
a party, the jurisdictions (a) in which the party is
incorporated, organized, managed and controlled or considered to have its seat,
(b) where an Office through which the party is acting for purposes of this
Agreement is located, (c) in which the party executes this Agreement and (d) in
relation to any payment, from or through which such payment is
made.

    

    "Schedule" has the meaning
specified in the preamble.

    

    "Scheduled
Settlement Date” means a date on which a
payment or delivery is to be made under Section 2(a)(1) with respect to a
Transaction.

    

    "Specified
Entity" has
the meaning specified in the Schedule.

    

    "Specified
Indebtedness" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.

    

    "Specified
Transaction" means, subject to the Schedule, (a) any transaction
(including an agreement with respect to any such transaction) now existing or
hereafter entered into between one party to this Agreement (or any
Credit

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    Support
Provider of such party or any applicable Specified Entity of such party) and the
other party to this Agreement (or any Credit Support Provider of such other
party or any applicable Specified Entity of such other party) which is not a
Transaction under this Agreement but (i) which is a rate swap transaction, swap
option, basis swap, forward rate transaction, commodity swap, commodity option,
equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option, credit protection transaction, credit swap,
credit default swap, credit default option, total return swap, credit spread
transaction, repurchase transaction, reverse repurchase transaction,
buy/sell-back transaction, securities lending transaction, weather index
transaction or forward purchase or sale of a security, commodity or other
financial instrument or interest (including any option with respect to any of
these transactions) or (ii) which is a type of transaction that is similar to
any transaction referred to in clause (i) above that is currently, or in the
future becomes, recurrently entered into in the financial markets (including
terms and conditions incorporated by reference in such agreement) and which is a
forward, swap, future, option or other derivative on one or more rates,
currencies, commodities, equity securities or other equity instruments, debt
securities or other debt instruments, economic indices or measures of economic
risk or value, or other benchmarks against which payments or deliveries are to
be made, (b) any combination of these transactions and (c) any other transaction
identified as a Specified Transaction in this Agreement or the relevant
confirmation.

    

    "Stamp
Tax" means
any stamp, registration documentation or similar tax.

    

    "Stamp Tax
Jurisdiction" has the meaning
specified in Section 4(e).

    

    "Tax” means any present or
future tax, levy, impost, duty, charge, assessment or fee of any nature
(including interest, penalties and additions thereto) that is imposed by any
government or other taxing authority in respect of any payment under this
Agreement other than a stamp, registration, documentation or similar
tax.

    

    "Tax
Event" has
the meaning specified in Section 5(b).

    

    "Tax Event Upon
Merger" has
the meaning specified in Section 5(b).

    

    "Terminated
Transactions" means, with respect to
any Early Termination Date, (a) if resulting from an Illegality or a Force
Majeure Event, all Affected Transactions specified in the notice given pursuant
to Section 6(b)(iv), (b) if resulting from any other Termination Event, all
Affected Transactions and (c) if resulting from an Event of Default, all
Transactions in effect either immediately before the effectiveness of the notice
designating that Early Termination Date or, if Automatic Early Termination
applies, immediately before that Early Termination Date.

    

    “Termination
Currency" means (a) if a
Termination Currency is specified in the Schedule and that currency is freely
available, that currency, and (b) otherwise, euro if this Agreement is expressed
to be governed by English law or United States Dollars if this Agreement is
expressed to be governed by the laws of the State of New York.

    

    "Termination
Currency Equivalent" means, in respect of any amount denominated in the
Termination Currency, such Termination Currency amount and, in respect of any
amount denominated in a currency other than the Termination Currency (the "Other
Currency"), the amount in the Termination Currency determined by the party
making the relevant determination as being required to purchase such amount of
such Other Currency as at the relevant Early Termination Date, or, if the
relevant Close-out Amount is determined as of a later date, that later date,
with the Termination Currency at the rate equal to the spot exchange rate of the
foreign exchange agent (selected as provided below) for the purchase of such
Other Currency with the Termination Currency at or about 11:00 a.m. (in the city
in which such foreign exchange agent is located) on such date as would be
customary for the determination of such a rate for the purchase of such Other
Currency for value on the relevant Early Termination Date or that later date.
The foreign exchange agent will, if only one party is obliged to make a
determination under Section 6(e), be

    selected
in good faith by that party and otherwise will be agreed by the
parties.

    

    "Termination
Event" means an Illegality, a
Force Majeure Event, a Tax Event, a Tax Event Upon Merger or,
if

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    specified
to be applicable, a Credit Event Upon Merger or an Additional Termination
Event.

    

    "Termination
Rate" means
a rate per annum equal to the arithmetic mean of the cost (without proof or
evidence of any actual cost) to each party (as certified by such party) if it
were to fund or of funding such amounts.

    

    "Threshold
Amount" means the amount, if any, specified as such in the
Schedule.

    

    "Transaction" has the meaning
specified in the preamble.

    

    "Unpaid
Amounts" owing to any party
means with respect to an Early Termination Date, the aggregate of (a) in respect
of all Terminated Transactions, the amounts that became payable (or that would
have become payable but for Section 2(a)(iii) or due but for Section 5(d) to
such party under Section 2(a)(i) or 2(d)(i)(4) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date, (b)
in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii) or 5(d))
required to be settled by delivery to such party on or prior to such Early
Termination Date and which has not been so settled as at such Early Termination
Date, an amount equal to the fair market value of that which was (or would have
been) required to be delivered and (c) if the Early Termination Date results
from an Event of Default, a Credit Event Upon Merger or an Additional
Termination Event in respect of which all outstanding Transactions are Affected
Transactions, any Early Termination Amount due prior to such Early Termination
Date and which remains unpaid as of such Early Termination Date, in each case
together with any amount of interest accrued or other compensation in respect of
that obligation or deferred obligation, as the case may be, pursuant to Section
9(h)(ii)(1) or (2), as appropriate. The fair market value of any obligation
referred to in clause (b) above will be determined as of the originally
scheduled date for delivery, in good faith and using commercially reasonable
procedures, by the party obliged to make the determination under Section 6(e)
or, if each party is so obliged, it will be the average of the Termination
Currency Equivalents of the fair market values so determined by both
parties.

    

    "Waiting
Period" means:

    

    (a)           in respect of an event or
circumstance under Section 5(b)(i), other than in the case of Section 5(b)(i)(2)
where the relevant payment, delivery or compliance is actually required
on the relevant day (in which case no Waiting Period will apply), a period of
three Local Business Days (or days that would have been Local Business Days but
for the occurrence of that event or circumstance) following the occurrence
of that event or circumstance; and

    

    (b)           in
respect of an event or circumstance under Section 5(b)(ii), other than in the
case of Section 5(b)(ii)(2) where the relevant payment, delivery or compliance
is actually required on the relevant day (in which case no Waiting Period will
apply), a period of eight Local Business Days (or days that would have been
Local Business Days but for the occurrence of that event or circumstance)
following the occurrence of that event or circumstance.

    

    

    IN
WITNESS WHEREOF the parties have executed this document on the respective dates
specified below with effect from the date specified on the first page of this
document.

    

    Sovereign
Bank                                                                                                CPI
Aerostructures Inc.

    

    By:
/s/ Bradley S.
Geist                                                                                         By:
/s/ Vincent
Palazzolo

    

    Name:
Bradley S.
Geist                                                                                         Name:
Vincent Palazzolo

    

    Title:                  
Senior Vice
President                                                                       Title:
Chief Financial Officer

    

    Date:
10/22/2008                                                                                        Date:
10/22/2008

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    

    

    ISDA

    International
Swap and Derivatives Association, Inc.

    

    SCHEDULE

    to
the

    Master
Agreement

    

    dated as
of October 22, 2008

    

    between

    

    
      	
              Sovereign
      Bank

            	
              And

            	
              CPI
      Aerostructures Inc.

            
	
              ("Party
      A")

            	 
      	
              ("Party
      B")

            

    

    

    

    
      	
               
      

            	
              Part
      1. Termination
      Provisions.

            

    

    

    In The
Agreement:

    

    
      	
               
      

            	
              (a)

            	
              "Specified
      Entity" means in relation to Party A for the purpose
      of:

            

    

    

    
      	
              Section
      5(a)(v),

            	
              None;

            
	
              Section
      5(a)(vi),

            	
              None;

            
	
              Section
      5(a)(vii),

            	
              None;
      and

            
	
              Section
      5(b)(v),

            	
              None;

            

    

    

    
      	
               
      

            	
              and
      in relation to Party B for the purpose
of:

            

    

    

    
      	
              Section
      5(a)(v),

            	
              None;

            
	
              Section
      5(a)(vi),

            	
              None;

            
	
              Section
      5(a)(vii),

            	
              None;
      and

            
	
              Section
      5(b)(v),

            	
              None.

            

    

    

    If a
party or any Credit Support Provider of a party is a partnership, then for
purposes of Section 5(a)(v), 5(a)(vi), 5(a)(vii) and 5(b)(v), “Specified Entity”
also means each general partner of that partnership.

    

    (b)           "Specified
Transaction" will have the meaning specified in Section 14 of this
Agreement.

    

    
      	
               
      

            	
              (c)

            	
              The
      "Cross
      Default" provisions of
      Section 5(a)(vi) will apply to Party A and to Party
  B.

            

    

    

    "Specified
Indebtedness" will have the meaning specified in Section 14 of this
Agreement; provided, however, that indebtedness or obligations in respect of
deposits received in the ordinary course of the banking business shall not
constitute Specified Indebtedness; provided further that indebtedness or
obligation payments not made because of an intervening change of law making such
payment illegal, Force Majeure Event or act of state shall not constitute
Specified Indebtedness.

    

    
      	
               
      

            	
              "Threshold
      Amount" will mean

            

    

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    

    
      	
               
      

            	
              (i)

            	
              with
      respect to Party A, the greater of $100,000,000 or 2% of stockholders'
      equity of Party A as reflected on its most recent financial statements ,
      and

            

    

    
      	
               
      

            	
              (ii)

            	
              with
      respect to Party B, an amount equal to any amount of Specified
      Indebtedness to Party A and $100,000 with respect to other Specified
      Indebtedness.

            

    

    

    
      	
               
      

            	
              (d)

            	
              The
      "Credit
      Event Upon Merger" provisions of Section 5(b)(v) will apply to
      Party A and to Party B.

            

    

    

    
      	
               
      

            	
              (e)

            	
              The
      "Automatic
      Early Termination" provisions of Section 6(a) will not apply
      to Party A or to Party B.

            

    

    

    
      	
               
      

            	
              (f)

            	
              “Termination
      Currency” will mean U.S. Dollars as per Section 14 of this
      Agreement.

            

    

    

    
      	
               
      

            	
              (g)

            	
              Payments On
      Early Termination. If an Early
      Termination Date occurs for any reason, the amount, if any, payable in
      respect of that Early Termination Date (the "Early Termination Amount")
      will be determined pursuant to Section 6(e) and will be subject to Section
      6(f). Party A will always be the Determining Party for the purpose of
      determining the Close-out Amount, notwithstanding any provision in Section
      6(e) or 6(f).

            

    

    

    
      	
               
      

            	
              (h)

            	
              Additional
      Termination Event. In addition to the Termination Events specified
      in Section 5(b), the occurrence of either of the following shall
      constitute an Additional Termination Event, subject to Section
      5(b)(vi):

            

    

    

    
      	
               
      

            	
              (i)

            	
              Both
      (a) all of the principal, interest, fees and other amounts owing by Party
      B (which will be the Affected Party) under or in respect of the Financial
      Agreement shall have been paid in full and (b) all commitments of Party A
      to make extensions of credit under or in respect of, or as contemplated
      by, the Financial Agreement shall have expired or been terminated in
      accordance with their terms.

            

    

    

    
      	
               
      

            	
              (ii)

            	
              If
      a party (which will be the Affected Party), or Specified Entity of that
      party is a natural person, the death of, or the appointment of a guardian
      for that natural person.

            

    

    

    
      	
               
      

            	
              (i)

            	
              The
      following provision is hereby added to Section 5(a) of the Agreement as an
      Event of Default:

            

    

    

    
      	
               
      

            	
              "(ix)    Unsatisfied
      Judgments.  With
      respect to Party B, the party, any Credit Support Provider of such party
      or any Specified Entity of such party for the purpose of Section 5(a)(vii)
      has a final judgment issued against it by a court of competent
      jurisdiction in an amount in excess of $100,000, and such judgment is not
      discharged or its execution stayed pending appeal within 60 days of such
      judgment or such judgment is not discharged within 60 days of the
      expiration of any such stay."

            

    

    

    
      	
               
      

            	
              Part
      2.

            	
              Tax
      Representations.

            

    

    

    
      	
               
      

            	
              (a)

            	
              Payer
      Representations. For the purpose of Section 3(e) of this Agreement,
      Party A and Party B each makes the following
    representation:

            

    

    

    It is not
required by any applicable law, as modified by the practice of any relevant
governmental revenue authority, of any Relevant Jurisdiction to make any
deduction or withholding for or on account of any Tax from any payment (other
than interest under Section 9(h) of this Agreement) to be made by it to the
other party under this Agreement. In making this representation, it may rely on
(i) the accuracy of any representations made by the other party pursuant to
Section 3(f) of
this Agreement, (ii) the satisfaction of the agreement contained in Section
4(a)(i) or 4(a)(iii) of this Agreement and the accuracy and effectiveness of any
document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of
this Agreement and (iii) the satisfaction of the agreement of the other party
contained in Section 4(d) of this

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    Agreement,
except that it will not be a breach of this representation where reliance is
placed on clause (ii) above and the other party does not deliver a form or
document under Section 4(a)(iii) by reason of material prejudice to its legal or
commercial position.

    

    
      	
               
      

            	
              (b)

            	
              Payee
      Representations. For the purpose of Section 3(f) of this Agreement,
      Party A and Party B each makes the following
    representation:

            

    

    

    It is a
"U.S. person" (as that term is used in section 1.l441-4(a)(3)(ii) of United
States Treasury Regulations) for United States federal income tax
purposes.

    

    

    Part 3.
                      Agreement to Deliver
Documents.

    

    For the
purpose of Section 4(a) of this Agreement, each party agrees to deliver the
following documents, as applicable:

    

    
      	
              Party
      required to deliver document

            	
              Form/Document
      Certificate

            	
              Date
      by which to be delivered

            	
              Covered
      by Section 3(d)

              Representation?

            
	
              Party
      B

            	
              A
      certificate of an authorized officer for such party and any Credit Support
      Provider of such party certifying the authority, names and true signatures
      of the officers signing this Agreement, each Confirmation and any Credit
      Support Document, reasonably satisfactory in form and substance to Party
      A.

            	
              Upon
      execution of this Agreement and as deemed necessary for any further
      documentation.

               

            	
              Yes

            
	
              Party
      B

            	
              Certified
      copies of documents evidencing each action taken by Party B and any Credit
      Support Provider of such party to authorize its execution of this
      Agreement, each Confirmation, and any Credit Support Document referred to
      in Part 3 of this Schedule, and the performance of its obligations
      hereunder as well as its bylaws and articles of
    incorporation.

            	
              Upon
      execution of this Agreement.

            	
              Yes

            
	
              Party
      B

            	
              Annual
      financial statements prepared in a form reasonably  acceptable to
      Party A.

            	
              Promptly
      upon request.

            	
              Yes

            
	
              Party
      B

            	
              Quarterly
      financial statements prepared in a form reasonably  acceptable to
      Party A.

            	
              Promptly
      upon request.

            	
              Yes

            
	
              Party
      B

            	
              A
      written opinion of legal counsel to Party B and any Credit Support
      Provider for Party B reasonably satisfactory in form and substance to
      Party A.

            	
              Upon
      execution of this Agreement if requested and as deemed
      necessary.

            	
              No

            
	
              Party
      B

            	
              Such
      other documents as Party A may reasonably request in connection with each
      transaction.

            	
              Promptly
      upon request.

            	
              Yes

            

    

    

    

    Part
4. Miscellaneous.

    

    
      	
               
      

            	
              (a)

            	
              Addresses
      for Notices.  For the purpose of Section 12(a) of this
      Agreement:

            

    

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    

    
      	 
      	
              Address
      for notices or communications to Party A:

            	
              Sovereign
      Bank

              Capital
      Markets Division

              Centre
      Square - Concourse

              1500
      Market Street

              Philadelphia,
      PA 19102

              Attention:
      Gina Barile

               

              Telephone
      Number:  267-256-2802

              Facsimile
      Number:   267-675-0654

              E-Mail:
      GBarile@sovereignbank.com

               

            
	 
      	
              Address
      for notices or communications to Party B:

            	
              CPI
      Aerostructures Inc.

              60
      Heartland Blvd.

              Edgewood,
      New York  11717

              Attention:
      Chief Financial Officer

               

              Telephone
      Number:  (631) 586-5200

              Facsimile
      Number:  (631) 586-5840

              E-Mail:  vpalazzolo@cpiaero.com

               

            

    

    

    

    (b)           Process
Agent. For
the purpose of Section 13(c) of this Agreement

    

    
      	
              Party
      A appoints as its Process Agent:

            	
              Not
      Applicable

            
	
              Party
      B appoints as its Process Agent:

            	
              Not
      Applicable

            

    

    

    

    (c)           Offices. The provisions of
Section 10(a) will not apply to this Agreement.

    

    
      	
               
      

            	
              (d)

            	
              Multibranch
      Party. For
      the purpose of Section 10 of this Agreement, neither Party A nor Party B
      is a Multibranch Party.

            

    

    

    
      	
               
      

            	
              (e)

            	
              Calculation
      Agent. The Calculation
      Agent is Party A.

            

    

    

    
      	
               
      

            	
              (f)

            	
              “Credit
      Support Document” means each document which, by its terms, secures,
      guarantees or otherwise supports Party B‘s obligations hereunder from time
      to time, whether or not this Agreement, any Transaction, or any type of
      Transaction entered into hereunder is specifically referenced or described
      in any such document.

            

    

    

    (g)           “Credit Support
Default” is
amended by adding at the end of Section 5(a)(iii):

    

    “(4) any
default, event of default or other similar condition or event (however
described) exists under any Credit Support Document, any action is taken to
realize upon any collateral provided to secure such party's obligations
hereunder or under any Transaction, or the other party fails at any time to have
a valid and perfected first priority security interest in any such
collateral."

    

    
      	
               
      

            	
              (h)      Definitions.  Section
      14 of this Agreement is hereby amended to add the following definitions in
      their appropriate alphabetical
order:

            

    

    

    
      	
               
      

            	
              “Stockholders Equity”
      means, at any time, the sum (as shown on the most recent Annual Audited
      Financial Statements of the applicable Party at such time) of (i) its
      capital stock

            

    

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    
      	
               
      

            	
              (including
      preferred stock) outstanding, taken at par value, (ii) its capital surplus
      and (iii) its retained earnings, minus (iv) treasury stock, each to be
      determined in accordance with generally accepted accounting
      principles.

            

    

    

    “Financial Agreement” for the
purposes hereof, means each existing or future agreement or instrument relating
to any loan or extension of credit from Party A to Party B (whether or not
anyone else is a Party hereto), as the same exists when executed and without
regard to any termination or cancellation thereof, or unless consented to in
writing by Party A, any amendment, modification, addition, waiver or consent
thereto or thereof.

    

    
      	
               
      

            	
              (i)

            	
              “Credit
      Support Provider” means each party to a Credit Support Document
      that provides or is expected to provide security, a guaranty or other
      credit support for Party B’s obligations
  hereunder.

            

    

    

    
      	
               
      

            	
              (j)

            	
              Governing
      Law. This Agreement
      will be governed by and construed in accordance with the laws of the State
      of New York without reference to choice of law
  doctrine.

            

    

    

    
      	
               
      

            	
              (k)

            	
              Netting of
      Payments. "Multiple Transaction Payment Netting" will apply for the
      purpose of Section 2(c) of this Agreement to all Transactions in each case
      starting from the date of this
Agreement.

            

    

    

    (l)           "Affiliate"
will have the meaning specified in Section 14 of this
Agreement.

    

    (m)           Absence of
Litigation. For
the purpose of Section 3(c):

    

    "Specified Entity" means in
relation to Party A, None.

    "Specified Entity" means in
relation to Party B, None.

    

    (n)           No
Agency. The
provisions of Section 3(g) will apply to this Agreement.

    

    
      	
               
      

            	
              (o)

            	
              Consent to
      Recording. Each party (i) consents to the recording of telephone
      conversations between the trading, marketing and other relevant personnel
      of the parties in connection with this Agreement or any potential
      Transaction, (ii) agrees to obtain any necessary consent of, and give any
      necessary notice of such recording to, its relevant personnel and (iii)
      agrees, to the extent permitted by applicable law, that recordings may be
      submitted in evidence in any
Proceedings.

            

    

    

    
      	
               
      

            	
              (p)

            	
              Waiver of
      Jury Trial.  To the extent permitted by applicable law,
      each party irrevocably waives any and all right to trial by jury in any
      legal proceeding in connection with this Agreement, any Credit Support
      Document to which it is a party, or any
  Transaction.

            

    

    

    
      	
               
      

            	
              (q)

            	
              Joint
      Party.  If more than one entity or natural person is
      executing this Agreement as Party B,
then

            

    

    

    
      	
               
      

            	
              (i)

            	
              the
      obligations of the party B hereunder and under each Transaction shall be
      the joint and several obligations of each such entity or natural
      person,

            

    

    

    
      	
               
      

            	
              (ii)

            	
              any
      Event of Default or Potential Event of Default occurring with respect to
      any such entity or natural person shall be an Event of Default or
      Potential Event of Default, respectively, with respect to party
      B,

            

    

    

    
      	
               
      

            	
              (iii)

            	
              the
      death, release or discharge, in whole or in part, of any such entity or
      natural person, or the occurrence of any bankruptcy, liquidation,
      dissolution or any other event described in Section 5(a)(vii) with respect
      to any such entity or natural person, shall not discharge or affect the
      liabilities of any other such entity or natural person, shall not
      discharge or affect the liabilities of any other such entity or natural
      person;

            

    

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    

    
      	
               
      

            	
              (iv)

            	
              unless
      the context otherwise requires, each reference herein or in any
      Confirmation to “party” shall, as applied to Party B, be construed as a
      joint and several reference to each such entity or natural person;
      and

            

    

    

    
      	
               
      

            	
              (v)

            	
              any
      person or entity receiving notices given to Party B, at the address shown
      above shall be deemed to receive such notices on behalf of each such
      entity or person.

            

    

    

    
      	
               
      

            	
              (r)

            	
              Severability.  Any
      provision of this Agreement that is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent
      of such prohibition or unenforceability without invalidating the remaining
      provisions of the Agreement or affecting the validity or enforceability of
      such provisions in any other jurisdiction.  The Parties hereto
      shall endeavor in good faith negotiations to replace the prohibited or
      unenforceable provisions with a valid provision, the economic effect of
      which comes as close as possible to that of the prohibited or
      unenforceable provision.

            

    

    

    Part 5.  Other
Provisions.

    

    
      	
               
      

            	
              (a)

            	
              2000 ISDA
      Definitions.  The definitions and provisions contained in
      the 2000 ISDA Definitions (the "2000 Definitions") and the 1998 FX and
      Currency Option Definitions (the "FX Definitions") as published by the
      International Swaps and Derivatives Association, Inc. are incorporated
      into this Agreement by reference.  For these purposes, all
      references in the 2000 Definitions to a "Swap Transaction" and all
      references in the FX Definitions to a "FX Transaction" or "Currency
      Option" shall be deemed to apply to each Transaction under this
      Agreement.  With respect to FX Transactions, in the event of any
      inconsistency between the 2000 Definitions and the FX Definitions, the FX
      Definitions will prevail.  Any definitions incorporated into a
      Confirmation shall prevail over the provisions of this Agreement, or the
      2000 Definitions or the FX
Definitions.

            

    

    

    
      	
               
      

            	
              (b)

            	
              Right of
      Set-off.  If any amount
      payable hereunder is not paid as and when due, the party ("Party X")
      obligated to make that payment hereby authorizes the other party ("Party
      Y") and each Affiliate of Party Y to proceed, to the fullest extent
      permitted by applicable law, without prior notice, by Right of Set-off,
      banker's lien, counterclaim or otherwise, against any assets of Party X
      that may at any time be in the possession of Party Y or that Affiliate, at
      any branch or office, to the full extent of all amounts payable to Party Y
      hereunder.

            

    

    

    
      	
               
      

            	
              In
      addition, if a party would, but for this provision, have an obligation to
      pay the other party any amount calculated pursuant to Section 6(e) in
      connection with early termination which occurs on the ground of (i) a
      Termination Event in which that other party is the only Affected Party or
      (ii) an Event of Default with respect to that other party at a time when
      any amount is payable (whether at such time or in the future or upon the
      occurrence of a contingency) to that party or its Affiliate by that other
      party under any other agreement between them or any instrument or
      undertaking of that other party (each such amount, an "Other Obligation"),
      the party that, but for this provision would have an obligation to make a
      payment hereunder is authorized by that other party to Set-off that
      obligation hereunder against any Other Obligation, without prior notice.
      If an obligation is unascertained, the party exercising a Right of Set-off
      hereunder may in good faith estimate that obligation and set off in
      respect of the estimate, subject to the relevant party accounting to the
      other when the obligation is
ascertained.

            

    

    

    
      	
               
      

            	
              If
      the party exercises a Right of Set-off hereunder, it shall give the other
      party notice of the amounts of the obligations hereunder and the Other
      Obligations reduced and discharged by the Set-off, as soon as practicable
      after the Set-off is effected.

            

    

    

    Nothing
in this provision, titled Right of Set-off, shall be effective to create a
charge or other security interest.  This provision, titled Right of
Set-off, shall be without prejudice and in addition to any Right
of

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    Setoff,
combination of accounts, lien or other right to which any party is at any time
otherwise entitled (whether by operation of law or otherwise).

    

    
      	
               
      

            	
              (c)

            	
              Confirmations.  For
      each Transaction Party A and Party B agree to enter into hereunder, Party
      A shall promptly send to Party B a Confirmation setting forth the terms of
      such Transaction.  Party B shall execute and return the
      Confirmation to Party A or request correction of any error within two
      Local Business Days of trade date.  Failure of Party B to
      respond within such period shall not affect the validity or enforceability
      of such Transaction and shall be deemed to be an affirmation of such
      terms.

            

    

    

    
      	
               
      

            	
              (d)

            	
              Notice of
      Event of Default.  Each party agrees, upon learning of
      the occurrence of any event or commencement of any condition that
      constitutes an Event of Default or a Potential Event of Default with
      respect to itself, promptly to give the other party notice of such event
      or condition.  Failure to give notice within 30 days of learning
      of such event or condition shall constitute an Event of Default with
      respect to such party.

            

    

    

    
      	
               
      

            	
              (e)

            	
              Change of
      Account.  Section 2(b) of this Agreement is hereby
      amended by the addition of the following after the word "delivery" in the
      first line thereof:

            

    

    

    “to
another account in the same legal and tax jurisdiction as the original
account,”

    

    
      	
               
      

            	
              (f)

            	
              Consent to
      Transfer.  Section 7
      of this Agreement is amended by deleting the word “and” at the end of
      paragraph (a); replacing the period at the end of  paragraph (b)
      with the phrase “; and”; and inserting the following
      paragraph:

            

    

    

    “(c)           Party
A may transfer, without the consent of Party B (or any Credit Support Provider
and Specified Entity of Party B), this Agreement and all or any portion of the
Transactions under this Agreement in the event that any of Party B’s
obligation(s) to Party A or its Affiliates, as identified in Part 3 of this
Agreement, are sold, transferred, or otherwise assigned by Party A to another
party, in which case Party B (and each Credit Support Provider and Specified
Entity of Party B) shall execute, or cause to be executed, such documents,
instruments and agreements, including without limitation, amendments to this
Agreement, as Party A shall deem necessary to effect the foregoing, including,
but not limited to any release by Party B (or any Credit Support Provider or
Specified Entity of Party B) of Party A’s obligations under this
Agreement.”

    

    
      	
               
      

            	
              (g)

            	
              Pari Passu
      Basis of Security for Obligations. All of the obligations of Party
      B (or any Credit Support Provider or Specified Entity of Party B) under
      this Agreement shall be secured on a pari passu basis by all of the
      collateral provided to secure Party B’s obligations under any Financial
      Agreement unless it would result in a default under any such Financial
      Agreement.

            

    

    

    
      	
               
      

            	
              (h)

            	
              Covenants
      of Financial Agreements.

            

    

    

    (i)           Party
B shall provide Party A at all times hereunder with the same covenant protection
as Party A requires of Party B under Financial Agreements.  Therefore,
in addition to the Cross Default provisions of this Agreement, and
notwithstanding the satisfaction of any obligation or promise to pay money to
Party A under any Financial Agreement, or the termination or cancellation of any
Financial Agreement, Party B hereby agrees to perform, comply with and observe
for the benefit of Party A hereunder all affirmative and negative covenants
contained in each Financial Agreement applicable to Party B (excluding any
obligation or promise to pay money under any Financial Agreement) at any time
Party B has any obligation (whether absolute or contingent) under this
Agreement.

    

    (ii)           For
purposes hereof: (A) the affirmative and negative covenants of each Financial
Agreement applicable to Party B (together with related definitions and ancillary
provisions, but in any event

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    excluding
any obligation or promise to pay money under any Financial Agreement) are
incorporated (and upon execution of any future Financial Agreement, shall
automatically be incorporated) by reference herein (mutatis
mutandis):  (B) if other lenders or creditors are parties to any
Financial Agreement then references therein to the lenders or creditors shall be
deemed references to Party A: and (C) for any such covenant applying only when
any loan, other extension of credit, obligation or commitment under the
Financial Agreement is outstanding, that covenant shall be deemed to apply
hereunder at any time Party B has any obligation (whether absolute or
contingent) under this agreement.

    

    (iii)           Notwithstanding
the foregoing, if the incorporation of any provision by reference from any
Financial Agreement would result in the violation by Party B of the terms of
that Financial Agreement, this Agreement shall not incorporate that
provision.

    

    

    
      	
               
      

            	
              (i)

            	
              Representations.  The
      introductory clause of Section 3 of this Agreement is hereby amended to
      read in its entirety as follows:

            

    

    

    “Each
party makes each of the representations contained in Section 3 to the other
party (which representations will be deemed to be repeated by each party on each
date on which a Transaction is entered into and, in the case of the
representations in Sections 3(a) and 3(f), at all times until the termination of
this Agreement), absent a written agreement between the parties that expressly
imposes affirmative obligations to the contrary for that Transaction. If any
"Additional Representation" is specified in the Schedule or any Confirmation as
applying, the party or parties specified for such Additional Representation will
make and, if applicable, be deemed to repeat such Additional Representation at
the time or times specified for such Additional Representation, absent a written
agreement between the parties that expressly imposes affirmative obligations to
the contrary for that Transaction.”

    

    
      	
               
      

            	
              (j)

            	
              Accuracy of
      Specified Information.  Section 3(d) is hereby amended by
      adding in the third line thereof after the word "respect" and before the
      period:

            

    

    

    
      	
               
      

            	
              "or,
      in the case of audited or unaudited financial statements, a fair
      presentation of the financial condition of the relevant
    party"

            

    

    

    
      	
               
      

            	
              (k)

            	
              Additional
      Representations.  For
      purposes of Section 3 of this Agreement, the following shall be added,
      immediately following paragraph (g) thereof and the parties agree that
      each additional representation contained in this Part 5(k) shall be deemed
      repeated by the party making such representation on each date on which a
      Transaction is entered into:

            

    

    

    
      	
               
      

            	
              (h)

            	
              This
      Agreement and each Transaction constitutes a "swap agreement" within the
      meaning of Commodity Futures Trading Commission ("CFTC") regulations
      Section 35.1(b)(1).

            

    

    

    
      	
               
      

            	
              (i)

            	
              It
      is an "eligible swap participant" within the meaning of CFTC Regulations
      Section 35.1(b)(2).

            

    

    

    
      	
               
      

            	
              (j)

            	
              Neither
      this Agreement nor any Transaction is one of a fungible class of
      agreements that are standardized as to their material economic terms,
      within the meaning of CFTC Regulations Section
  35.2(b).

            

    

    

    
      	
               
      

            	
              (k)

            	
              The
      creditworthiness of the other party was or will be a material
      consideration in entering into or determining the terms of this Agreement
      and each Transaction, including pricing, cost or credit enhancement terms
      of the Agreement or Transaction, within the meaning of CFTC Regulations
      Section 35.2(c).

            

    

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    
      	
               
      

            	
              (l)

            	
              It
      has entered into this Agreement (including each Transaction evidenced
      hereby) in conjunction with its line of business (including financial
      intermediation services) or the financing of its business rather than for
      any speculative purpose.

            

    

    

    
      	
               
      

            	
              (m)

            	
              The
      individual(s) executing and delivering this Agreement and any other
      documentation (including any Credit Support Document) relating to this
      Agreement to which it is a party or that it is required to deliver are
      duly empowered and authorized to do so, and it has duly executed and
      delivered this Agreement and any Credit Support Documents to which it is a
      party.

            

    

    

    
      	
               
      

            	
              (n)

            	
              Party
      B represents and warrants that, since the date of Party B’s (and any
      Credit Support Provider’s or Specified Entity’s) latest audited financial
      statements, there has been no material adverse change in its financial
      condition or results of operations which has not been disclosed to Party
      A.

            

    

    

    
      	
               
      

            	
              (o)

            	
              Non-Reliance.  In
      connection with the negotiation of, the entering into, and the confirming
      of the execution of this Agreement, and Credit Support Document to which
      it is a party, each Transaction, and any other documentation relating to
      this Agreement to which it is a party or that it is required by this
      Agreement to deliver:

            

    

    

    
      	
               
      

            	
              (i)

            	
              it
      is not relying (for purposes of making any investment decision or
      otherwise) upon any advice, counsel, or representations (whether written
      or oral) of the other party to this Agreement, such Credit Support
      Document, each Transaction or such other documentation other than the
      representations expressly set forth in this Agreement, such Credit Support
      Document and in any Confirmation;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              it
      has consulted with its own legal, regulatory, tax, business, investment,
      financial and accounting advisors to the extent it has deemed necessary,
      and it has made its own independent investment, hedging and trading
      decisions (including decisions regarding the suitability of any
      Transaction pursuant to this Agreement) based upon any advice from such
      advisors as it has deemed necessary and not upon any view expressed by the
      other party to this Agreement, such Credit Support Document, each
      Transaction or such other
documentation;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              it
      is capable of assessing the merits of and of understanding (on its own
      behalf or through independent professional advice) and understands all the
      terms, conditions, and risks (economic and otherwise) of the Agreement,
      such Credit Support Document, each Transaction, and such other
      documentation and is capable of assuming and willing to assume
      (financially and otherwise) those terms, conditions, and
      risks;

            

    

    

    
      	
               
      

            	
              (iv)

            	
              it
      is entering into this Agreement, such Credit Support Document, each
      Transaction, and such other documentation for the purposes of managing its
      borrowings or investments, hedging its underlying assets or liabilities or
      in connection with a line of business and not for purposes of
      speculation;

            

    

    

    (v)           it
is entering into this Agreement, such Credit Support Document, each Transaction,
and such other documentation as principal, and not as agent or in any other
capacity, fiduciary or otherwise.

    

    (vi)           it
is acting for its own account, and it has made its own independent decisions to
enter into that Transaction and as to whether that Transaction is appropriate or
proper for it based upon its own judgment and upon advice from such advisers as
it has deemed necessary. It is not relying on any communication (written or
oral) of the other party as investment advice or as a recommendation to enter
into that Transaction, it being

    
      
        
           

          

          

          

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

        

      

    

    understood
that information and explanations related to the terms and conditions of a
Transaction will not be considered investment advice or a recommendation to
enter into that Transaction. No communication (written or oral) received from
the other party will be deemed to be an assurance or guarantee as to the
expected results of that Transaction.

    

    

    
      	
              Sovereign
      Bank

            	 
      	
              CPI Aerostructures Inc.

            
	 
      	 
      	 
      	 
      	 
      
	
              By:

            	
              /s/
      Bradley S. Geist

            	 
      	
              By:

            	
              /s/
      Vincent Palazzolo

            
	
              Name:

            	
              Bradley
      S. Geist

            	 
      	
              Name:

            	
              Vincent
      Palazzolo

            
	
              Title:

            	
              Senior
      Vice President

            	 
      	
              Title:

            	
              Chief
      Financial Officer

            
	
              Date:

            	
              October
      22, 2008

            	 
      	
              Date:

            	
              October
      22, 2008

            

    

    
      
        
           

          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          Exhibit
10.17

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