ITEM 5. OTHER EVENTS
On June 25, 2002, CPI Aerostructures, Inc. (the "Company") and its
wholly-owned subsidiary, Kolar, Inc. ("Kolar", and together with the Company,
the "Borrowers") signed the Amended and Restated Credit Agreement with the
several banks and other financing institutions or entities from time to time
parties thereto and JPMorgan Chase Bank, as Administrative Agent ("JPMorgan"),
restructuring their original debt facilities with JPMorgan (formerly known as
Chase Manhattan Bank) and GE Capital CFE, Inc. (as assignee of Mellon Bank,
N.A.).
Under the Amended and Restated Credit Agreement, one tranche ("Tranche
A") of the senior bank loans will be amortized at an amount beginning at $50,000
per month, increasing to $100,000 during the term, with a final payment of the
balance due on June 30, 2003. The aggregate principal amount of the Tranche A
loan currently outstanding is $2,631,570.
A second tranche ("Tranche B"), the amount representing the remaining
mortgage debt from the Kolar properties, will be repaid in monthly installments
accordance with the terms of the original Credit Agreement, with a final payment
on September 30, 2007. The aggregate remaining principal amount of the Tranche B
loan is $275,462.
A third tranche ("Tranche C"), the amount representing the net
deficiency arising from the sale of certain equipment previously leased to Kolar
by JPMorgan Leasing, Inc. (formerly Chase Equipment Leasing, Inc.), an affiliate
of JPMorgan, will be amortized at $20,000 per month, with a final payment on
June 30, 2003. The aggregate remaining principal amount of the Tranche C loan is
$704,484.
In 1997, the Borrowers entered into a purchase money note agreement
with Kolar Machine, Inc, (now known as Ralok, Inc. ("Ralok")) in the principal
amount of $4,000,000. The note issued was originally due on June 30, 2002 and is
secured by a security interest on all of the assets of the Borrowers that is
subordinate to the security interest of the bank lenders. The note is currently
convertible, at Ralok's option, into 333,334 shares of Common Stock of the
Company. Pursuant to the terms of the subordination agreement between the bank
lenders and Ralok, Ralok was prohibited from receiving current payments of
interest on its note. As amended, the subordinated note issued in connection
with the Kolar acquisition will mature ninety days after the maturity of the
bank loans but not later than September 30, 2007. Until then, it will continue
to accrue interest, which will be compounded monthly and paid at maturity
together with the principal amount. As of June 30, 2002, $898,035 of unpaid
interest will have accrued. |
