CPI AEROSTRUCTURES, INC. 8-K

Exhibit 10.1

SECOND AMENDMENT TO

STOCK PURCHASE AGREEMENT

This Second Amendment (“ Second Amendment ”) to the Agreement (as defined below) is entered into as of December 20, 2018, by Air Industries Group, a Nevada corporation (“ Seller ”) and CPI Aerostructures, Inc., a New York corporation (“ Buyer ”). Capitalized terms not otherwise defined herein shall have the meaning given to such terms in the Agreement.

WHEREAS, Seller and Buyer have entered into a Stock Purchase Agreement, dated as of March 21, 2018 (the “ Agreement ”), which provides, among other things, for Buyer to purchase and Seller to sell all of the issued and outstanding shares of capital stock of Welding Metallurgy Inc., a New York corporation; and

WHEREAS, Seller, Buyer, Welding Metallurgy, Inc., and Compac Development Corp. have entered into a stipulation and order, dated October 2, 2018 (“ October 2 Stipulation and Order ”) in CPI Aerostructures, Inc. v. Air Industries Group, Welding Metallurgy, Inc. and Compac Development Corp. , Supreme Court, New York County Index No. 653397/2018 (the “ Action ”); and

WHEREAS, Hon. Charles E. Ramos of the Supreme Court of the State of New York (the “ Court ”) caused the October 2 Stipulation and Order to be e-filed with the Court on October 2, 2018; and

WHEREAS, paragraph 6 of the October 2 Stipulation and Order required Seller and Buyer to incorporate the terms of the October 2 Stipulation and Order into an amendment to the Agreement; and

WHEREAS, Buyer and Seller could not agree on text to incorporate the pertinent terms of the October 2 Stipulation and Order into an amendment to the Agreement; and

WHEREAS, pursuant to paragraph 7 of the October 2 Stipulation and Order, the Court retained continuing jurisdiction over the Action for all purposes including, but not limited to, enforcing the terms of such Order; and

WHEREAS, pursuant to paragraph 7 of the October 2 Stipulation and Order, on November 9, 2018 the Court entered a further Order (the “ November 9 Order ”) establishing the document attached as Exhibit 2 thereto (the “ First Amendment ”) as an amendment to the Agreement that appropriately incorporates the pertinent terms of the October 2 Stipulation and Order; and

WHEREAS, Hon. Charles E. Ramos of the Supreme Court of the State of New York caused the November 9 Order to be e-filed with the Court on November 9, 2018; and

WHEREAS, Buyer and Seller desire to ratify and confirm the First Amendment, and amend the Agreement to provide for a $300,000 reduction in the Target Working Capital amount and certain other matters; and

WHEREAS, the parties to the Action are entering into a further Stipulation as of December 19, 2018 to be so-ordered by the Court to facilitate the transactions contemplated in the Agreement as amended (the “ December 19 Stipulation and Order ”).

NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1.                 

Buyer and Seller hereby ratify, confirm and agree to the First Amendment.

2.                 

At Closing, Seller will deliver to Buyer a duly signed IRS Form 8023.

3.                 

The reference to “$9,500,000” in the definition of Target Working Capital in Article I of the Agreement is hereby deleted and replaced with “$9,200,000.”

4.                 

This Second Amendment shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction).

5.                 

Except as specifically provided in this Second Amendment, no provision of the Agreement, as previously amended by the First Amendment, is modified, changed, waived, discharged or otherwise terminated, and the Agreement, as amended, shall continue to be in full force and effect. This Second Amendment, together with the First Amendment (together, the “ Amendments ”) and the Agreement, constitute the entire agreement between the parties with respect to the subject matter hereof, and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. Notwithstanding the previous sentence, the Amendments do not supersede any subject matter of the October 2 Stipulation and Order, the November 9 Order, or the December 19 Stipulation and Order, not expressly provided for in the Amendments including, without limitation, paragraph 7 of the October 2 Stipulation and Order.

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

CPI AEROSTRUCTURES, INC. 8-K

Exhibit 10.2

FOURTH AMENDMENT

TO AMENDED AND RESTATED CREDIT AGREEMENT

FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the “ Amendment ”) entered into as of December 20, 2018 by and among CPI AEROSTRUCTURES, INC. (the “ Borrower ”), BANKUNITED, N.A., a national banking association, as Sole Arranger, Agent, and a Lender, CITIZENS BANK, N.A., a national banking association, as a Lender, and the other financial institutions from time to time parties thereto as lenders (collectively, the “ Lender ”), and BANKUNITED, N.A., a national banking association, as administrative agent and collateral agent for the Lender thereunder (in such capacities, the “ Administrative Agent ” and the “ Collateral Agent ,” respectively and each an “ Agent ”).

WHEREAS , the Borrower, the Agent and the Lender are parties to that Amended and Restated Credit Agreement dated as of March 24, 2016, as amended by that First Amendment and Waiver to Amended and Restated Credit Agreement dated as of May 9, 2016, as further amended by that Second Amendment to Amended and Restated Credit Agreement dated as of July 13, 2017 and as further amended by that Third Amendment and Waiver to Amended and Restated Credit Agreement dated as of August 15, 2018, as same may be hereafter amended and modified (the “ Agreement ”); and

WHEREAS , the Borrower has requested that the Agent and the Lender amend certain provisions of the Agreement; and

WHEREAS , the Agent and Lender is willing to accede to such request to amend certain provisions of the Agreement, subject to the terms and conditions hereinafter set forth; and

WHEREAS , the Borrower has completed a public stock offering, a portion of the proceeds of which shall be used by Borrower to acquire all of the issued shares of stock of (i) Welding Metallurgy, Inc. and (ii) Compac Development Corporation (each a “ Guarantor ” and, collectively, the “ Guarantors ”); and

WHEREAS , in accordance with Section 6.9 of the Agreement, each Guarantor, as a direct or indirect Subsidiary of Borrower, will guaranty all Obligations under the Agreement pursuant to an unlimited continuing guaranty of payment of even date herewith (each a “ Guaranty ” and, collectively, the “ Guaranties ”), which Guaranties shall be secured by a first priority security interest upon each Guarantor’s personal property pursuant to a general security agreement in favor of Agent for the benefit of the Lenders (collectively, the “ Security Agreements ”; together with the Guaranties, being collectively referred to herein as the “ Guarantor Documents ”);

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

1.                 

All capitalized terms used herein, unless otherwise defined herein, have the same meanings provided therefor in the Agreement. This Amendment constitutes a Loan Document.

2.                 

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

(A)            

The last paragraph of the definition of “ Permitted Acquisition ” in Section 1.1 of the Agreement (Defined Terms) is amended by deleting same and substituting the following therefor:

“For purposes of the definition of “Permitted Acquisitions,” the Administrative Agent acknowledges and recognizes that the projections provided for and on behalf of Borrower or any of the Loan Parties relating to any Acquisition will be based upon good faith estimates and assumptions disclosed to the Administrative Agent and believed by the Borrower to be likely and reasonable at the time made, and such projections as to future events are not to be viewed as a fact and that actual results during the period or periods covered by the projections may differ from projected results. For purposes hereof, the WMI Acquisition shall constitute a Permitted Acquisition and condition (x) above with respect to the WMI Acquisition shall be deemed satisfied.”

(B)             

Section 1.1 of the Agreement (Defined Terms) is amended by adding the following definitions, each to read as follows:

“ Air Group ”: shall mean Air Industries Group.

“ Air Group Agreement ”: shall mean that certain Stock Purchase Agreement dated as of March 21, 2018 between Borrower as purchaser and Air Group as seller.

“ WMI Acquisition ”: shall mean the transactions described in the Air Group Agreement.

“ WMI Sale Date ”: means, the date the WMI Acquisition is completed pursuant to the Air Group Agreement.

(C)             

Section 7.6(d) of the Agreement is amended by deleting same and substituting the following therefor:

“(d) the sale of the Sold Receivables of (i) Sikorsky Aircraft Corporation to Citibank, N.A., (ii) Triumph Group, Inc. to Orbian Financial Services VII, LLC, and (iii) GKN Westland Aerospace Inc. and/or other Affiliates of GKN Holdings to Citibank, N.A.”

(D)            

Schedule 4.14 of the Agreement (Subsidiaries) is hereby amended by deleting same and substituting Schedule 4.14 (attached hereto) therefor.

(E)             

Schedule 7.2 of the Agreement (Existing Indebtedness and Subordinated Debt) is hereby amended by deleting same and substituting Schedule 7.2 (attached hereto) therefor.

(F)             

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

3.                 

The Lender and the Borrower agree that as of December 13, 2018, the aggregate outstanding principal amount of: (a) the Revolving Credit Loans as evidenced by Revolving Credit Notes is $25,338,684.58, and (b) the Term Loan as evidenced by the corresponding Term Notes is $5,433,333.32.

4.                 

The Borrower hereby represents and warrants to the Lender that:

(c)              

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

(d)              

The WHEREAS clauses set forth hereinabove are true and correct.

5.                 

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

6.                 

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

7.                 

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

8.                 

This Amendment shall become effective on such date as all of the following conditions shall be satisfied retroactive to the date hereof (the “ Effective Date ”):

(a)              

Loan Documents . The Administrative Agent shall have received (i) this Amendment (inclusive of all exhibits, and attachments), executed and delivered by a duly authorized officer of the Borrower, with a counterpart or a conformed copy for each Lender, (ii) the Guaranty Agreements and Security Documents, executed and delivered by a duly authorized officer of each party thereto (including, without limitation, the Guarantors), with a counterpart or a conformed copy for each Lender, and (iii) executed counterparts of all other Loan Documents.

(b)              

Effective Date Certificate . The Administrative Agent shall have received, with a copy for each Lender, a certificate of each of the Borrower and the other Loan Parties, dated the Effective Date, substantially in the form of Exhibit E to the Agreement, with appropriate insertions and attachments satisfactory in form and substance to the Administrative Agent, executed by the President of the Borrower or the relevant Loan Party, as applicable.

(c)              

Corporate Proceedings of the Borrower . The Administrative Agent shall have received, with a counterpart for each Lender, a copy of the resolutions, in form and substance satisfactory to the Administrative Agent, of the Board of Directors of the Borrower authorizing the execution, delivery and performance of this Amendment, certified by the Secretary or an Assistant Secretary of the Borrower as of the Effective Date, which certificate shall be in form and substance satisfactory to the Administrative Agent and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded.

(d)              

Officers’ Certificate of the Borrower . The Administrative Agent shall have received, with a counterpart for each Lender, a certificate of the Borrower dated as of the Effective Date, as to the incumbency and signature of the officers of the Borrower executing any Loan Document satisfactory in form and substance to the Administrative Agent, executed by the President or any Vice President and the Secretary or any Assistant Secretary of the Borrower.

(e)              

Corporate Proceedings of Subsidiaries . The Administrative Agent shall have received, with a counterpart for each Lender, a copy of the resolutions, in form and substance satisfactory to the Administrative Agent, of the Board of Directors of each other Subsidiary of the Borrower which is a party to a Loan Document authorizing the execution, delivery and performance of the Loan Documents to which it is a party, certified by the Secretary or an Assistant Secretary of each such Subsidiary as of the Effective Date, which certificate shall be in form and substance satisfactory to the Administrative Agent and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded.

(f)               

Subsidiary Incumbency Certificates . The Administrative Agent shall have received, with a counterpart for each Lender, a certificate of each other Subsidiary of the Borrower which is a party to a Loan Document, dated the Effective Date, as to the incumbency and signature of the officers of such Subsidiary, satisfactory in form and substance to the Administrative Agent, executed by the President or any Vice President and the Secretary or any Assistant Secretary of each such Subsidiary.

(g)              

Insurance Certificates . The Bank shall have received insurance certificates and paid receipts (i) naming the Agent on behalf of the Lenders as loss payee, evidencing personal property coverage (for inventory and equipment) on ACORD Form 28 and general liability coverage on ACORD Form 25, and (ii) such other certificates necessary to show compliance with Section 6.5.

(h)              

Corporate Documents . The Administrative Agent shall have received, with a counterpart for each Lender, true and complete copies of the certificate of incorporation and by-laws of each Loan Party, certified as of the Effective Date as complete and correct copies thereof by the Secretary or an Assistant Secretary of such Loan Party, together with evidence of good standing in all states where Borrower and its Subsidiaries conducts business.

(i)                

Fees . The Arranger, the Agent and the Lenders shall have received the fee due to Lenders (pro rata) in the aggregate amount of $30,000.00 together with all invoiced fees, costs, expenses and compensation required to be paid on the Effective Date (including any fees payable under this Amendment, any fee letter with the Lenders and the reasonable fees, disbursements and other charges of legal counsel to the Arranger, the Agent and the Lenders and expenses of appraisers, consultants and other advisors to the Arranger, the Agent and the Lenders and who have been approved by the Borrower).

(j)                

Legal Opinion . The Administrative Agent shall have received, with a counterpart for each Lender, the executed legal opinion of Graubard Miller, counsel to the Borrower and the other Loan Parties, substantially in the form of Exhibit E to the Agreement.

(k)              

Actions to Perfect Liens . The Administrative Agent shall have received evidence in form and substance satisfactory to it that all filings, recordings, registrations and other actions, including, without limitation, the filing of duly executed financing statements on form UCC-1 or UCC-3 as necessary or, in the opinion of the Administrative Agent, desirable to perfect or continue the Liens created by the Security Documents shall have been completed or shall continue to be in full force and effect.

(l)                

Lien Searches . The Administrative Agent shall have received the results of a recent search by a Person satisfactory to the Administrative Agent of the Uniform Commercial Code filings which may have been filed with respect to personal property of each Loan Party and each patent, trademark or copyright recorded with the United States Patent and Trademark Office or the United States Copyright Office, as applicable, and such search shall reveal no material liens on any of the assets of such Loan Party except for liens created by the Security Documents or Liens permitted by the Loan Documents.

(m)            

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

(n)              

Litigation . There shall be no litigation or administrative proceeding or proposed or pending regulatory changes in law or regulations applicable to the Borrower or its Subsidiaries, that would reasonably be expected to have a Material Adverse Effect or a material adverse effect on the ability of the parties to consummate the execution, delivery and performance of the Loan Documents and the Borrowings hereunder.

(o)              

Indebtedness . As of the Effective Date, the Borrower and its Subsidiaries shall not have outstanding Indebtedness for borrowed money or preferred stock other than (i) Indebtedness under the Loan Documents, (ii) Indebtedness permitted under the Agreement, (iii) Indebtedness as set forth on Schedule 7.2 updated as of December 20, 2018 and (iv) other Indebtedness for borrowed money not enumerated above, not to exceed $500,000.

(p)              

Documentation: Projections . The Lenders have received such other legal opinions, corporate documents and other instruments and/or certificates as they may reasonably request, including, but not limited to, projections of Borrower’s balance sheet, income statement, and statement of cash flow, (consistent with the proposed structure and advance rates), through the fiscal year ended December 31, 2018, in a form acceptable to the Administrative Agent.

(q)              

Material Adverse Change . Since June 30, 2018, there has been no development or event which has had or would reasonably be expected to have a Material Adverse Effect.

(r)               

Landlord Waiver and Consent . Provided that Borrower’s Subsidiaries have not moved their operations to Borrower’s location at 91 Heartland Boulevard, Edgewood, New York within one hundred eighty (180) days after the Effective Date, the Administrative Agent shall have received a Landlord Waiver and Consent from the landlord with respect to the premises at 110 Plant Avenue, Hauppauge, New York, reasonably satisfactory in form and substance to Administrative Agent and its counsel.

(s)               

WMI Acquisition . All conditions precedent to the WMI Acquisition pursuant to the Air Group Agreement or otherwise shall have been satisfied or waived in writing, all transactions contemplated thereby shall have been completed, the WMI Sale Date shall have occurred and Welding Metallurgy Inc. and Compac Development Corporation shall constitute Subsidiaries of the Borrower.

(t)                

Execution by Lenders . The Amendment shall have been executed and delivered by each Lender hereunder.

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 Agent and the Lenders, retroactive to such date.

10.             

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.

[NO FURTHER TEXT ON THIS PAGE]

SIGNATURE PAGE

Fourth Amendment to Amended and Restated Credit Agreement

CPI AEROSTRUCTURES, INC. 8-K

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(i)                

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

(ii)             

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

(iii)           

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

(iv)            

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

(v)              

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

(vi)            

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

(vii)         

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

(viii)       

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

(ix)            

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

CPI AEROSTRUCTURES, INC. 8-K

Exhibit 10.4

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

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

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

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

(A)       

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

(B)       

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

(C)       

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

(D)       

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

(E)       

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

(F)       

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

THIS AGREEMENT IS DATED AS OF DECEMBER 20, 2018.