Item
1.01.
|
Entry
into a Material Definitive Agreement.
|
On December 20, 2018, CPI
Aerostructures, Inc. (the “
Company
”) consummated the acquisition contemplated by that certain Stock
Purchase Agreement, dated as of March 21, 2018 (the “
Agreement
”) between the Company and Air Industries
Group (“
Seller
”), as amended. The Agreement provides, among other things, for the purchase by the Company
from Seller all of the shares of Welding Metallurgy, Inc. (“
WMI
”), a wholly owned subsidiary of Seller
(the “
Acquisition
”). At closing, the Company paid approximately $7.9 million in cash, after a closing
working capital adjustment of the purchase price. $2,000,000 of such amount was placed in escrow, $500,000 to cover any
adjustment of the purchase price based on a post-closing reconciliation of closing working capital and $1,500,000 to cover
any post-closing adjustment of closing working capital in excess of $500,000 and Company indemnification claims.
Immediately prior to the consummation
of the Acquisition, the Company and Seller entered into an amendment to the Agreement (the “
Second Amendment
”)
which provides, among other things, for a reduction of target working capital from $9.5 million to $9.2 million.
As previously disclosed, the Company
filed a complaint in the Supreme Court of the State of New York, County of New York, against Seller relating to the Agreement.
On December 20, 2018, the Company and Seller entered into a stipulation and order (“
Stipulation and Order
”)
which, among other things, discontinued with prejudice all monetary causes of action, claims, and counterclaims asserted by the
Company and Seller in connection with the Agreement. The Court retained jurisdiction for all purposes other than the monetary
claims and counterclaims discontinued, including enforcing the terms of the Stipulation and Order and preceding Court orders and
stipulations and enforcing the terms of the Agreement after consummation of the Acquisition.
On December 20, 2018, the Company entered
into an Amendment No. 4 (the “
Fourth Amendment
”) to the Amended and Restated Credit Agreement among the Company,
the lenders party thereto, and BankUnited, N.A., lead arranger, administrative agent, and collateral agent (the “
Agent
”
and together with such lenders, the “
Lenders
”). Under the Fourth Amendment, the Lenders consented to the execution
and consummation of the Agreement and amended the existing facility by (i) entering into a guaranty agreement (the “
Guaranty
”)
with each of WMI and its wholly-owned subsidiary, Compac Development Corporation (“
Compac
”), evidencing each
of their continuing, absolute, and unconditional guaranty of the Company’s indebtedness under the credit facility and (ii)
entering into a security agreement (the “
Security Agreement
”) whereby each of WMI and Compac pledged all of
their assets as collateral to the Agent for the benefit of the Lenders to secure the Company’s indebtedness under the credit
facility.
The foregoing description of the Agreement
does not purport to be complete, and is qualified in its entirety by reference to the Agreement that was previously included as
Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “
SEC
”)
on March 22, 2018 and the Order and Amendment to the Stock Purchase Agreement, dated November 9, 2018, included as Exhibit 10.1
to the Company’s Quarterly Report on Form 8-K filed with the SEC on November 13, 2018. The foregoing description of the
Second Amendment does not purport to be complete, and is qualified in its entirety by reference to the Second Amendment, a copy
of which is filed with this Current Report as Exhibit 10.1 and is incorporated herein by reference. The foregoing descriptions
of the Fourth Amendment, the Guaranty and the Security Agreement do not purport to be complete, and are qualified in their entirety
by reference to the Fourth Amendment, the Guaranty, and the Security Agreement, copies of which are filed with this Current Report
as Exhibits 10.2, 10.3, and 10.4, respectively, and are incorporated herein by reference.