Document:

ex10-2.htm

Exhibit 10.2

 

AMENDED AND RESTATED

CONTINUING GENERAL SECURITY AGREEMENT 

	 	 
	
Grantor:       CPI Aerostructures, Inc.

91 Heartland Boulevard

Edgewood, New York 11717

 
	
Lender:     BankUnited, N.A., as Administrative Agent and Collateral Agent for the Lenders defined below

Commercial Lending

14817 Oak Lane

Miami Lakes, Florida 33016

 

WHEREAS, CPI AEROSTRUCTURES, INC. executed and delivered to Santander Bank, N.A., successor by merger to Sovereign Bank, N.A. (as agent for the lenders in connection therewith, the “Prior Lender”) a prior security agreement which granted security interests in certain personal property and which prior security agreement is still in full force and effect (“Prior Security Agreement”); and

 

WHEREAS, the Prior Lender assigned to the Lender (defined below) all right, title and interest of Prior Lender in and to the Prior Security Agreement; and

 

WHEREAS, the Grantor and the Lender, each as defined below, wish to amend and restate such Prior Security Agreement in its entirety, including (but not limited to) the grant of a first priority security interest in all personal property of Grantor, upon the terms and conditions set forth herein.

 

GRANT OF SECURITY INTEREST. For valuable consideration, the undersigned, CPI AEROSTRUCTURES, INC. (the “Grantor”) hereby pledges and grants to BANKUNITED, N.A., as Administrative Agent and Collateral Agent for the Lenders (collectively, the Agent and the Lenders, the “Lender”) under that certain Amended and Restated Credit Agreement among the Grantor and the Lender of even date herewith (the “Credit Agreement”) a security interest in the Collateral to secure the Indebtedness (inclusive of obligations arising under any Swap Contract as defined in the Credit Agreement) and agrees that Lender shall have the rights stated in this Agreement and the Credit Agreement with respect to the Collateral, in addition to all other rights which Lender may have by law.

 

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

 

All Inventory, Chattel Paper, Accounts, Equipment, General Intangibles, Deposit Accounts, Commercial Tort Claims, Commingled Goods, Consumer Goods, Documents of Title, Instruments, Investment Property, Payment Intangibles, Contract Rights, Letter of Credit Rights, Software, Money, Supporting Obligations and all other Personal Property.

 

 

 

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AMENDED AND RESTATED CONTINUING GENERAL SECURITY AGREEMENT 

(continued) 

 

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

 

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

 

(B)     All products and produce of any of the property described in this “Collateral Description” section. 

 

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

 

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

 

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

 

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

 

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

 

 

 

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AMENDED AND RESTATED CONTINUING GENERAL SECURITY AGREEMENT

(continued)

 

FUTURE ADVANCES. In addition to the Note, this Agreement secures all future advances made by Lender to Grantor regardless of whether the advances are made a) pursuant to a commitment or b) for the same purposes.

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

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AMENDED AND RESTATED CONTINUING GENERAL SECURITY AGREEMENT 

(continued)

 

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

 

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

 

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

 

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

 

 

 

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AMENDED AND RESTATED CONTINUING GENERAL SECURITY AGREEMENT

(continued)

 

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

 

Transactions Involving Collateral. Except for inventory sold or accounts collected in the ordinary course of Grantor's business, and as otherwise provided for in this Agreement and in Sections 7.6(a)-(d) of the Credit Agreement (“Permitted Sales”), Grantor shall not sell, offer to sell, or otherwise transfer or dispose of the Collateral. While no Event of Default is continuing under this Agreement, Grantor may sell inventory, but only in the ordinary course of its business and only to buyers who qualify as a buyer in the ordinary course of business. A sale in the ordinary course of Grantor's business does not include a transfer in partial or total satisfaction of a debt or any bulk sale. Except for Liens (as defined in the Credit Agreement) permitted by Section 7.3 of the Credit Agreement, Grantor shall not pledge, mortgage, encumber or otherwise permit the Collateral to be subject to any lien, security interest, encumbrance, or charge, other than the security interest provided for in this Agreement, without the prior written consent of Lender. This includes security interests even if junior in right to the security interests granted under this Agreement. Except with respect to Permitted Sales, unless waived by Lender, all proceeds from any disposition of the Collateral (for whatever reason) shall be held in trust for Lender and shall not be commingled with any other funds; provided however, this requirement shall not constitute consent by Lender to any sale or other disposition. Upon receipt, Grantor shall immediately deliver any such proceeds held in trust to Lender. If any of the Collateral shall be sold, transferred or otherwise disposed of by any Grantor in a Permitted Sale, then the security interest created pursuant to this Agreement in such Collateral shall be released, and the term “Collateral” shall cease to include the assets or property so released, provided that Grantor is in compliance with the provisions hereof.

 

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

 

 

 

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AMENDED AND RESTATED CONTINUING GENERAL SECURITY AGREEMENT 

(continued)

 

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

 

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

 

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

 

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

 

 

 

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AMENDED AND RESTATED CONTINUING GENERAL SECURITY AGREEMENT

(continued)

 

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

 

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

 

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

 

 

 

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AMENDED AND RESTATED CONTINUING GENERAL SECURITY AGREEMENT

(continued)

 

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

 

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

 

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

 

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

 

 

 

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AMENDED AND RESTATED CONTINUING GENERAL SECURITY AGREEMENT 

(continued)

 

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

 

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

 

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

 

 

 

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AMENDED AND RESTATED CONTINUING GENERAL SECURITY AGREEMENT 

(continued)

 

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

 

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

 

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

 

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

 

 

 

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AMENDED AND RESTATED CONTINUING GENERAL SECURITY AGREEMENT 

(continued)

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

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AMENDED AND RESTATED CONTINUING GENERAL SECURITY AGREEMENT 

(continued)

 

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

 

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

 

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

 

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

 

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

 

 

 

-12-

 

 

	
AMENDED AND RESTATED CONTINUING GENERAL SECURITY AGREEMENT 

(continued)

 

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

 

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

 

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

 

 

 

-13-

 

 

	
AMENDED AND RESTATED CONTINUING GENERAL SECURITY AGREEMENT 

(continued)

 

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

 

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

 

Subordination. Notwithstanding any provision herein to the contrary, the security interest and lien upon the Collateral created hereby is subject and subordinate to the rights of the United States of America (“Government”) pursuant to that USA Subordination Agreement by Grantor and Lender in favor of the Government.

 

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

 

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

 

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

 

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

 

Restated Agreement. This Agreement amends, restates and supercedes the Prior Security Agreement.

 

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

 

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

 

 

 

-14-

 

 

	
AMENDED AND RESTATED CONTINUING GENERAL SECURITY AGREEMENT 

(continued)

 

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

 

Credit Agreement. The words “Credit Agreement” mean that certain Amended and Restated Credit Agreement dated on or about the date hereof among the Grantor, and the Lender, as same may be hereafter amended, restated, increased or otherwise modified in writing from time to time.

 

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

 

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

 

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

 

Guarantor. The word “Guarantor” means any guarantor, surety, or accommodation party, if any, of any or all of the Indebtedness.

 

Guaranty. The word “Guaranty” means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Indebtedness.

 

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

 

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

 

 

 

-15-

 

 

	
AMENDED AND RESTATED CONTINUING GENERAL SECURITY AGREEMENT 

(continued)

 

Lender. The word “Lender” shall have the meaning set forth in the “Grant of Security Interest” paragraph on the first page of this Agreement, its successors and assigns.

 

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

 

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

 

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

 

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

 

[NO FURTHER TEXT ON THIS PAGE]

 

 

-16-

 

 

	
AMENDED AND RESTATED CONTINUING GENERAL SECURITY AGREEMENT 

(continued)

 

GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AMENDED AND RESTATED CONTINUING GENERAL SECURITY AGREEMENT AND AGREE TO ITS TERMS. THIS AGREEMENT IS DATED AS OF MARCH 24, 2016.

 

 

	 	GRANTOR:	 
	 	 	 
	 	CPI AEROSTRUCTURES, INC.	 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Vincent Palazzolo
	
 

	
 
	
 
	
Vincent Palazzolo
	
 

	
 
	
 
	
Chief Financial Officer
	
 

 

	 	LENDER: 	 
	 	 	 
	 	BANKUNITED, N.A., 	 
	 	as Administrative Agent and Collateral Agent for the Lenders	 
	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Christine Gerula
	
 

	
 
	
 
	
Christine Gerula
	
 

	
 
	
 
	
Senior Vice President
	
 

 

-17-Exhibit 4.6

 

AMENDED AND RESTATED

COGNOVIT PROMISSORY NOTE

 

	$1,012,500	October ___, 2015

 

THIS AMENDED AND RESTATED PROMISSORY NOTE
(this “Note”) is executed by Intellinetics, Inc., an Ohio corporation (the “Company”), and delivered
to the Director of the Ohio Development Services Agency, formerly known as the Department of Development of the State of
Ohio (the “Director”), and amends and restates the Cognovit Promissory Note dated July 17, 2019, delivered by the
Company in favor of the Director.

 

The Director is authorized to modify such schedule from time to
time, setting forth the amount of principal, interest and service fee payable under the Note.

 

NOW THEREFORE, the Company reaffirms its promise to pay to the
order of the Director the principal sum of One Million Twelve Thousand Five Hundred Dollars ($1,012,500), or such amount
thereof as shall be disbursed to the Company, with interest on the amount of principal from time to time outstanding from the
first Escrow Funding Date as specified under and defined in the Loan Agreement between the Director and the Company dated as
of July 17, 2009 (the “Loan Agreement”), at the rate of six percent (6%) per annum until paid, subject to
adjustment as set forth in the Loan Agreement or herein. The principal of and interest on this Note shall be paid in monthly
installments in accordance with the amortization schedule attached as Exhibit A and made a part hereto; provided, however,
that the balance of the principal sum outstanding, together with interest accrued thereon, shall be due and payable no later
than August 1, 2018. In addition, the Company promises to pay to the order of the Director a monthly service fee equal to
one-twelfth (1/12) of one percent (1.0%) of the principal balance outstanding from time to time under this Note
(the “Service Fee”), and such Service Fee shall be due and payable on the first day of each calendar month, in
accordance with the amortization schedule attached as Exhibit A.

 

In addition to all other payments required under hereunder, upon
maturity of the Loan (as defined in the Loan Agreement) whether at scheduled maturity, by acceleration or otherwise,
the Company shall pay to the Director a loan participation fee equal to 10% of the dollar amount of the Loan actually
funded; provided, however, if the Loan is prepaid in full prior to Last Installment Date, the loan participation fee shall be
paid to the Director at the time of such prepayment.

 

This Note does not of itself constitute a commitment by
the Director to make any disbursement of the Loan (as defined in the Loan Agreement) to the Company. The conditions for
making such a disbursement are set forth in the Loan Agreement. The disbursements made by the Director to the Company shall
not exceed the face amount of this Note and the total amount of such disbursement is limited by and subject to the conditions
for making disbursement of the Loan as set forth in the Loan Agreement.

 

     

     

    

 

The annual rate of interest stated
herein shall apply to a 360-day period, and amounts of interest due hereunder shall be computed upon the basis of 30-day
months. Installments of principal. interest and monthly service fee shall be applied first to monthly service fee, then
interest as provided herein and the balance to principal due hereunder.

 

The Company may prepay all or any
portion of the principal sum hereof at any time without penalty. All such prepayments shall be applied to the payment of the
principal installments due hereon in the inverse order of their maturity, and shall be accompanied by the payment of accrued
interest and monthly service fee on the amount of the prepayment to the date thereof.

 

The payment of this Note and all
interest and monthly service fees hereon is secured by a Security Agreement, Intercreditor Agreement, and UCC Financing
Statements (collectively, the “Security Documents”). The covenants, conditions and agreements contained in the
Security Documents and the Loan Agreement are hereby made a part of this Note.

 

If default be made in the payment of
any installment of principal, interest and/or monthly service fee under this Note when any such payment shall have become due
and payable, or if an “Event of Default,” as defined in the Loan Agreement or the Security Documents, shall
have occurred and be subsisting, then, at the option of the Director, the entire principal sum payable hereunder and all
interest and monthly service fees accrued thereon shall become due and payable at once, without demand or notice.

 

To the extent permitted by law, upon the
occurrence of an Event of Default and until such time such Event of Default shall have been cured or waived, the rate of interest
under this Note and on any obligation of the Company under the Loan Documents shall be increased to ten percent (10%) per annum.

  

THE COMPANY AND THE DIRECTOR, AFTER CONSULTING
OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER OF THEM
MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS NOTE, THE LOAN AGREEMENT, THE SECURITY DOCUMENTS,
OR ANY RELATED INSTRUMENT OR AGREEMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY, OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN), OR ACTIONS OF EITHER OF THEM. THIS WAIVER SHALL NOT IN ANY WAY AFFECT THE DIRECTOR’S ABILITY TO
PURSUE REMEDIES PURSUANT TO ANY CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED HEREIN, IN THE LOAN AGREEMENT, THE SECURITY
DOCUMENTS OR ANY RELATED INSTRUMENT OR AGREEMENT. NEITHER THE COMPANY NOR THE DIRECTOR SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM
OR OTHERWISE, ANY ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT
BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY THE COMPANY OR THE DIRECTOR
EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY BOTH OF THEM.

 

     

     

    

 

The Company hereby irrevocably authorizes
any attorney-at-law, including any attorney-at-law employed or retained by the Director, to appear for it in any action on this
Note at any time after the same becomes due as herein provided, in any court of record situated in Franklin County, Ohio (which
the Company acknowledges to be the place where this Note was signed), or in the county where the Company then resides or can be
found, to waive the issuing and service of process, and confess a judgment in favor of the Director or other holder of this Note
against the Company for the amount that may then be due, with interest at the rate provided for herein, together with the costs
of suit, and to waive and release all errors in said proceedings and the right to appeal from the judgment rendered. The Company
consents to the jurisdiction and venue of such court. The Company waives any conflict of interest that any attorney-at-law employed
or retained by the Director may have in confessing judgment hereunder and consents to the payment of a legal fee to any attorney-at-law
confessing judgment hereunder.

 

This note was executed in Hilliard, Ohio,
and shall be construed in accordance with the laws of Ohio.

   

WARNING – BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT
TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND
THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED
GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.

  

	 	INTELLINETICS, INC.,
	 	An Ohio corporation
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 

  

This Note is subject to the terms and
conditions of a certain Intercreditor Agreement of even date herewith between the Director and The Delaware County Bank and Trust
Company.

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