Form 8-K CPI AEROSTRUCTURES INC For: Aug 19
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
| (Exact Name of Registrant as Specified in Charter) |
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
| (Address of Principal Executive Offices) |
Registrant’s telephone number, including area
code:
| N/A |
| (Former Name or Former Address, if Changed Since Last Report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e 4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01 | Entry into a Material Definitive Agreement. |
On August 19, 2022 (the “Effective Date”), CPI Aerostructures, Inc. (the “Company”) entered into a Consent, Waiver and Tenth Amendment (the “Tenth Amendment”) to that certain Amended and Restated Credit Agreement with the lenders named therein and BankUnited, N.A. (“BankUnited”) as Sole Arranger, Agent and a Lender, dated as of March 24, 2016 (as amended from time to time, the “Credit Agreement”).
Under the Tenth Amendment, the parties amended the Credit Agreement by (a) increasing the maximum leverage ratio applicable for the fiscal quarter ending September 30, 2022 to 5.0 to 1.0, (b) waiving and/or consenting to the exclusion from the Company’s financial covenant compliance requirements for the fiscal quarters ended December 31, 2021, March 31, 2022, June 30, 2022 and September 30, 2022 up to (i) 566,024 of losses incurred and reserves taken under the Company’s welded product contracts, and (ii) $367,045 of reserves taken with respect to the Company’s welded product inventory, and (c) waiving and/or consenting to the exclusion from the Company’s financial covenant compliance requirements for the fiscal quarters ended March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022 up to $795,997 of accrued severance and COBRA costs and employer taxes incurred by the Company during the fiscal quarter ending March 31, 2022. Additionally, under the Tenth Amendment, BankUnited waived or consented to late delivery of certain financial information required by the Credit Agreement.
The foregoing description is qualified in its entirety by reference to the Tenth Amendment, a copy of which is attached to this Form 8-K as Exhibit 10.1 and incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits:
| Exhibit | Description | |||
| 10.1* | Consent, Waiver and Tenth Amendment to the Amended and Restated Credit Agreement, dated as of August 17, 2022 by and between CPI Aerostructures, Inc., the several lenders from time to time party thereto, and BankUnited, N.A., as Sole Arranger, Administrative Agent and Collateral Agent. | |||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||
| * |
Certain exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Company agrees to furnish supplementally a copy of all omitted exhibits and schedules to the Securities and Exchange Commission upon its request. |
|||
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: August 19, 2022
CPI AEROSTRUCTURES, INC.
By: /s/ Andrew Davis
Andrew Davis
Chief Financial Officer
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Exhibit 10.1
CONSENT,
WAIVER AND TENTH AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT
CONSENT, WAIVER AND TENTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) entered into as of August 17, 2022 by and among CPI AEROSTRUCTURES, INC. (the “Borrower”), BANKUNITED, N.A., a national banking association, as Sole Arranger, Agent and a Lender, DIME COMMUNITY BANK, a New York banking corporation, as a Lender, and the other financial institutions from time to time parties thereto as lenders (collectively, the “Lenders” and each a “Lender”), and BANKUNITED, N.A., a national banking association, as administrative agent and collateral agent for the Lenders thereunder (in such capacities, the “Administrative Agent” and the “Collateral Agent,” respectively and each an “Agent”).
WHEREAS, the Borrower, the Agent and each 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, as further amended by that Third Amendment and Waiver to Amended and Restated Credit Agreement dated as of August 15, 2018, as further amended by that Fourth Amendment dated as of December 20, 2018, as further amended by that Fifth Amendment to Amended and Restated Credit Agreement dated as of June 25, 2019, as further amended by that Sixth Amendment and Waiver to Amended and Restated Credit Agreement dated as of August 24, 2020 (the “Sixth Amendment”), as further amended by that Consent, Waiver and Seventh Amendment to Amended and Restated Credit Agreement dated as of May 11, 2021, as further amended by that Waiver and Eighth Amendment to Amended and Restated Credit Agreement dated as of October 28, 2021 (the “Eighth Amendment”), and as further amended by that Consent, Waiver and Ninth Amendment to Amended and Restated Credit Agreement (collectively, the “Agreement”);
WHEREAS, the Borrower has requested that the Agent and each Lender (i) amend the Agreement to increase the maximum Leverage Ratio applicable for the third quarter of the fiscal year ending December 31, 2022, and (ii) consent to and waive certain covenant non-compliance under the Agreement; and
WHEREAS, the Agent and each Lender are willing to accede to such request to (i) amend the Leverage Ratio for the third quarter of the fiscal year ending December 31, 2022, and (ii) grant the requested consents and waivers, subject to the terms and conditions hereinafter set forth.
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) Section 7.1(b) of the Agreement (Maximum Leverage Ratio) is amended by deleting same and substituting the following therefor:
“(b) Maximum Leverage Ratio. Permit the Leverage Ratio of the Borrower at the end of each fiscal quarter determined for the trailing four-quarter period then ended (or in the case of the fiscal quarter ended March 31, 2021, determined on an annualized basis for the three-quarter period then ended) to be more than the corresponding ratio set forth below (subject to adjustment pursuant to Section 3.4(i)); “Leverage Ratio” shall mean Funded Debt, divided by EBITDA:
| Fiscal Quarter End | Maximum Leverage Ratio |
| 6/30/16 and 9/30/16 | 3.5 to 1.0 |
| 12/31/16 – 12/31/17 | 3.0 to 1.0 |
| 3/31/18 – 12/31/20 | waived |
| 3/31/21 | 5.0 to 1.0 |
| 6/30/21 | 4.75 to 1.0 |
| 9/30/21 | 5.35 to 1.0 |
| 12/31/21 | 4.65 to 1.0 |
| 3/31/22 | 7.30 to 1.0 |
| 6/30/22 | 6.30 to 1.0 |
| 9/30/22 | 5.00 to 1.0 |
| 12/31/22 and thereafter | 4.00 to 1.0” |
(b) Schedule I of the Agreement is hereby amended by deleting the same and substituting the attached Schedule I therefor.
(c) Except as amended herein, all other provisions of the Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed.
3. Each Lender and the Borrower agree that as of August 17, 2022, the aggregate outstanding principal amount of: (a) the Revolving Credit Loans as evidenced by Revolving Credit Notes is $21,000,000.00, (b) the Term Loan as evidenced by the corresponding Term Notes is $2,633,333.32 (exclusive of the component of the Term Loan consisting of the Amendment Fee (as defined below) and (c) the fee payable by the Borrower under Section 9 of the Eighth Amendment is $250,000 (the “Amendment Fee”), which is accruing interest, since the Effective Date (as defined in the Eighth Amendment), at the rate applicable to the Term Loan.
4. The Borrower hereby represents and warrants to each Lender that:
(a) Each and every of the representations and warranties set forth in the Agreement is true as of the date hereof and with the same effect as though made on the date hereof, and is hereby incorporated herein in full by reference as if fully restated herein in its entirety.
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(b) No Default or Event of Default and no event or condition which, with the giving of notice or lapse of time or both, would constitute a Default or Event of Default, now exists or would exist after giving effect hereto.
(c) There are no defenses or offsets to the Borrower’s obligations under the Agreement, the Notes or the other Loan Documents or any of the other agreements in favor of the Lenders referred to in the Agreement.
(d) The WHEREAS clauses set forth hereinabove are true and correct.
5. Non-compliance by the Borrower with the following covenants is hereby waived by the Agent and each Lender as follows:
(a) Section 6.1(a) and Section 6.2(a) of the Credit Agreement: The Borrower’s late submission to each Lender of the audited consolidated financial statements of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2021, together with a related compliance certificate, is waived until August 31, 2022.
(b) Section 6.1(b) and Section 6.2(a) of the Credit Agreement: The Borrower’s late submission to each Lender of the quarterly consolidated financial statements of the Borrower and its Subsidiaries for the fiscal quarters ended March 31, 2022 and June 30, 2022, in each case, together with a related compliance certificate, is waived until September 30, 2022 and October 31, 2022, respectively.
(c) Section 6.1(c) and Section 6.1(d) of the Credit Agreement: The Borrower’s late submission to each Lender of the Work-in-Progress Schedules for the month ended June 30, 2022, with related accounts receivable aging, accounts payable aging and cash flow schedules, is waived until October 31, 2022.
(d) Section 7.1(a), Section 7.1(b), Section 7.1(c) and Section 7.1(d) of the Credit Agreement – Welded Product Adjustments: The Borrower’s non-compliance with these Sections is waived for the fiscal quarters ended December 31, 2021, March 31, 2022 and June 30, 2022 solely to the extent such non-compliance was the direct result of up to (i) $566,024.81 of losses incurred and reserves taken under the Borrower’s welded product contracts and (ii) $367,044.51 of reserves taken with respect to the Borrower’s welded product inventory during such fiscal quarters (collectively, the “Welded Product Adjustments”) it being understood that the Borrower may add back to the calculation made under clause (II) of the definition of “EBITDA” the amount of the Welded Product Adjustments with respect to the fiscal quarter ended June 30, 2022.
(e) Section 7.1(a), Section 7.1(b), Section 7.1(c) and Section 7.1(d) of the Credit Agreement – Employee Costs: The Borrower’s non-compliance with these Sections is waived for the fiscal quarters ended March 31, 2022 and June 30, 2022 solely to the extent such non-compliance was the direct result of up to $795,997.06 of accrued severance and COBRA costs and employer taxes incurred during such fiscal quarter (collectively, the “Employee Costs”) it being understood that the Borrower may add back to the calculation made under clause (II) of the definition of “EBITDA” the amount of the Employee Costs with respect to the fiscal quarter ended June 30, 2022.
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6. The Agent and each Lender hereby consent to non-compliance by the Borrower with the following covenants until the dates set forth hereunder:
(a) Section 6.1(c) and Section 6.1(d) of the Credit Agreement: The Agent and each Lender consent to the Borrower furnishing each Lender with the Work-in-Progress Schedule for the months ended July 31, 2022 and August 31, 2022 together in each case with related accounts receivable aging, accounts payable aging and cash flow schedules, by no later than October 31, 2022.
(b) Section 7.1(a), Section 7.1(b), Section 7.1(c) and Section 7.1(d) of the Credit Agreement – Welded Product Adjustments: The Agent and each Lender consent to the Borrower’s non-compliance with these Sections for the fiscal quarter ending September 30, 2022, solely to the extent such non-compliance is the direct result of the Welded Product Adjustments, it being understood that the Borrower may add back to the calculation made under clause (II) of the definition of “EBITDA” the amount of the Welded Product Adjustments with respect to the fiscal quarter ending September 30, 2022.
(c) Section 7.1(a) , Section 7.1(b), Section 7.1(c) and Section 7.1(d) of the Credit Agreement – Employee Costs: The Agent and each Lender consent to the Borrower’s non-compliance with these Sections for the fiscal quarters ending September 30, 2022 and December 31, 2022, solely to the extent such non-compliance is the direct result of the Employee Costs, it being understood that the Borrower may add back to the calculation made under clause (II) of the definition of “EBITDA” the amount of the Employee Costs with respect to the fiscal quarters ending September 30, 2022 and December 31, 2022.
7. 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 other Loan Documents.
8. The amendments and waivers 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 other Loan Documents or any of the documents referred to therein, or (b) prejudice any right or rights which either Lender may now have or may have in the future under or in connection with the Agreement, the other Loan Documents or any documents referred to therein. Whenever the Agreement is referred to in this Amendment, the other 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.
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9. The Borrower agrees to pay on demand, and the Agent may charge any deposit or loan accounts of the Borrower, all expenses (including reasonable attorneys’ fees) incurred by the Lenders in connection with the negotiation and preparation of this Amendment and all instruments, agreements and other documents executed or delivered in connection herewith.
10. In consideration of the accommodations provided by the Agent and the Lenders under this Amendment, the Borrower and the Guarantors (by virtue of their undersigned consent), on behalf of themselves and for each of their direct and indirect Affiliates, successors, predecessors and assigns, and their present and former legal representatives, employees, agents, and attorneys, and their trustees, successors and assigns (collectively, the “Releasors”), hereby knowingly, voluntarily, intentionally, unconditionally and irrevocably waive, release and forever discharge (the “Release”) the Agent and the Lenders and the Agent and the Lenders’ Affiliates and subsidiaries (collectively, the “Lender Parties”) from and against any and all rights, claims, counterclaims, demands, suits, actions or causes of action against the Agent or either Lender or the other Lender Parties, whether known or unknown, contingent or absolute, liquidated or unliquidated or otherwise, arising out of the Agent or the Lenders’ or the other Lender Parties’ actions or inactions in connection with the Loans prior to the execution and delivery of this Amendment prior to the execution and delivery of this Amendment, as well as any and all rights of setoff, defenses, claims, counterclaims, demands, suits, actions, and causes of action, in each case in connection with the Loans prior to the execution and delivery of this Amendment, and any other bar to the enforcement of the Agreement, the Notes or any of the other Loan Documents which shall have accrued prior to the execution and delivery of this Amendment. In any litigation arising from or related to an alleged breach of the Release, the Release may be pleaded as a defense, counterclaim or cross claim and shall be admissible into evidence without foundation testimony whatsoever. The Releasors expressly covenant and agree that the Release shall be binding in all respects upon their respective successors, assigns and transferees including, without limitation, any trustee in bankruptcy, and shall inure to the benefit of the successors and assigns of the Agent, the Lenders and the other Lender Parties.
11. If any of the Borrower or the Guarantors shall (a) file with any bankruptcy or similar court or be the subject of any petition under any Debtor Relief Law; (b) be the subject of an order for relief under any Debtor Relief Law; (c) file or be the subject of a petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future Debtor Relief Law; (d) seek, consent to or acquiesce in the appointment of a trustee, receiver, conservator or liquidator; or (e) be the subject of an order, judgment or decree entered by a court of competent jurisdiction approving a petition filed against any of the Borrower or the Guarantors for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future Debtor Relief Law, then the Agent shall thereupon be entitled to relief from any automatic stay imposed by Section 362 of the United States Bankruptcy Code or from any other stay or suspension of remedies of the rights and remedies otherwise available to the Agent under the Agreement or any other Loan Documents, and each of the Borrower and the Guarantors specifically acknowledges that “cause” exists for such relief within the meaning of Section 362(d) of the United States Bankruptcy Code and agrees not to oppose any motion by the Agent for relief from the automatic stay imposed by Section 362.
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12. This Amendment shall become effective on such date as all of the following conditions shall be satisfied retroactive to the date set forth in the first paragraph hereof (the “Effective Date”):
(a) Loan Documents. The Administrative Agent shall have received four (4) original counterparts of this Amendment (inclusive of all exhibits, and attachments), executed and delivered by a duly authorized officer of the Borrower and the Guarantors, with a counterpart or a conformed copy for each Lender.
(b) Secretary’s Certificate of the Borrower. The Administrative Agent shall have received, with a counterpart for each Lender, a certificate, dated as of the Effective Date, executed by the Secretary or any Assistant Secretary of the Borrower certifying (i) 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 and (ii) the incumbency and signature of the officers of the Borrower executing this Amendment and any other Loan Document, 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.
(c) Secretary’s Certificates of the Guarantors. The Administrative Agent shall have received, with a counterpart for each Lender, a certificate, dated as of the Effective Date, executed by the Secretary or any Assistant Secretary of each Guarantor certifying (i) a copy of the resolutions, in form and substance satisfactory to the Administrative Agent, of the Board of Directors of such Guarantor authorizing the execution, delivery and performance of this Amendment and (ii) the incumbency and signature of the officers of such Guarantor executing this Amendment and any other Loan Document, 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) Fees. The Lenders shall have received all invoiced fees, costs, expenses and compensation required to be paid on the Effective Date (including the reasonable fees, disbursements and other charges of legal counsel to the Arranger, the Agent and the Lenders).
(e) 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.
(f) Litigation. Except as set forth on Schedule 4.6 of the Agreement, 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, which, if adversely determined, could 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.
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(g) 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, and Indebtedness as set forth on Schedule 7.2 of the Agreement.
(h) Documentation. The Lenders shall have received such other documents and other instruments or certificates as they may reasonably request.
(i) Material Adverse Effect. Since June 30, 2020, there has been no development or event which has had or would reasonably be expected to have a Material Adverse Effect, except (i) the Restatement (as defined in the Sixth Amendment) and (ii) the Borrower’s restatement of its financial statements as of the end of each fiscal quarter for the fiscal year ended 2020 and for fiscal year ended 2020 due to certain incorrect inventory values resulting from inventory costing errors, adjustments to inventory reserves and provisions for loss contracts.
(j) Execution by Lenders. This Amendment shall have been executed and delivered by each Lender hereunder.
13. 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 Section 12 above) on the date of execution by the Agent and the Lenders, retroactive to such date.
14. This Amendment shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York.
15. 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.
[Signature Page to Follow]
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SIGNATURE PAGE
Consent, Waiver and Tenth Amendment to Amended and Restated Credit Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective duly authorized officers as of the date first above written.
CPI AEROSTRUCTURES, INC.,
as Borrower
| By: | /s/ Andrew L. Davis Andrew L. Davis Chief Financial Officer |
BANKUNITED, N.A.,
as Arranger, Agent and a Lender
| By: | /s/ Brian McGahee Brian McGahee Senior Vice President |
BANKUNITED, N.A.,
as Administrative Agent and Collateral Agent
| By: | /s/ Brian McGahee Brian McGahee Senior Vice President |
DIME COMMUNITY BANK,
as a Lender
By: /s/ Jeffrey Barber
Jeffrey Barber
Executive Vice President
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Each of the Guarantors indicated below hereby consent to this Amendment and acknowledge its continuing liability under its respective Guaranty with respect to the Agreement, as amended hereby, including (without limitation) the Loan Documents executed in connection with the Obligations and all other documents, instruments and agreements executed pursuant thereto or in connection therewith, without offset, defense of counterclaim, any such offset, defense or counterclaim as may exist being hereby irrevocably waived by each Guarantor.
GUARANTORS:
WELDING METALLURGY, INC.
By: /s/ Andrew L. Davis
Andrew L. Davis:
Chief Financial Officer
COMPAC DEVELOPMENT CORPORATION
By: /s/ Andrew L. Davis
Andrew L. Davis
Chief Financial Officer
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