Precision Aerospace Components, Inc. (OTCMKTS:PAOS) Files An 8-K Entry into a Material Definitive Agreement

Precision Aerospace Components, Inc. (OTCMKTS:PAOS) Files An 8-K Entry into a Material Definitive Agreement

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Item 1.01 Entry into a Material Definitive Agreement

On April 28, 2017 (the Closing Date), Precision Aerospace
Components, Inc. (the Company or Precision) and its wholly-owned
subsidiary Aero-Missile Components, (Aero-Missile) entered into
an Asset Purchase Agreement (the Asset Purchase Agreement) with
Apollo Aerospace Components LLC, an Ohio limited liability
company, (Apollo) to which Aero-Missile sold substantially all of
its assets to Apollo and Apollo assumed certain liabilities of
Aero-Missile (the Asset Sale) for an aggregate purchase price of
$10.5 million paid by Apollo to Aero-Missile (the Base Purchase
Price). The Base Price Purchase is subject to a working capital
adjustment (the Working Capital Adjustment) and $1.0 million
being held in escrow to secure the indemnification obligations of
the Company and Aero-Missile (the Escrow Amount).

The Asset Purchase Agreement contains standard representations
and warranties and indemnification obligations. to the Asset
Purchase Agreement, Aero-Missile assigned all of its supply
contracts and open purchase orders to Apollo. Aero-Missile
assigned to Apollo its lease obligations for its Bensalem,
Pennsylvania and Oxford, Alabama facilities. The Company has
relocated its headquarters to 6002 Groveport Road, Groveport,
Ohio 43125. In addition, Apollo offered employment to all of the
Aero-Missile employees on terms identical or similar to those of
their employment with Aero-Missile.

The Working Capital Adjustment will be determined ninety (90)
days after the Closing Date. to the Asset Purchase Agreement,
Closing Working Capital (Closing Working Capital) is defined as
the sum of the trade receivables, net of reserves, and inventory,
net of reserves, assumed by Apollo as of the Closing Date minus
any liabilities of Aero-Missile assumed by Apollo as of the
Closing Date. If Closing Working Capital exceeds $7.2 million,
Apollo will pay to Aero-Missile any amounts exceeding that
amount. If Closing Working Capital is less than $6.9 million,
Aero-Missile will pay to Apollo the difference between the
Closing Working Capital and $6.9 million. Any disputes are
subject to binding arbitration.

The Escrow Amount has been deposited with J.P. Morgan. to the
Asset Purchase Agreement, half the Escrow Amount will be released
to Aero-Missile on the first annual anniversary of the Closing
Date if no indemnification provisions have been triggered. The
remaining balance of the Escrow Amount will be released to
Aero-Missile on the eighteen (18) month anniversary of the
Closing Date if no indemnification provisions have been
triggered.

the Asset Purchase Agreement, both Precision and Aero-Missile
agreed to sell Apollo the rights to the Precision and
Aero-Missile names. Aero-Missile has changed its name to PolyAero
Inc. Precision will have forty-five (45) days from the Closing
Date to implement its name change.

Simultaneous with the Asset Sale, the Company repaid all amounts
owing to C3 Capital Partners III L.P. (C3) owing under Note A, as
defined in that Securities Purchase Agreement by and among C3 and
the Company and Aero Missile and Creative Assembly Systems Inc.
(CAS and with AMC, the Subsidiaries) dated January 16, 2015 (the
Securities Purchase Agreement) and Note B, as defined in the
Securities Purchase Agreement, including all accrued interest as
of the Closing Date. The total principal amount repaid was $4
million ($0.5 million for Note A and $3.5 million for Note B)
with $42,388.89 in accrued interest for the month of April. C3
agreed to waive all prepayment penalties under the Securities
Purchase Agreement.

Additionally on the Closing Date, the Company repurchased the
96,697 shares of common stock of the Company owned by C3 for an
aggregate purchase price of $900,000.00 (the Stock Repurchase) or
approximately $9.31 per share of common stock. Nicole Doyle, C3s
designated representative on the Companys Board of Directors,
resigned as a director of the Company immediately following the
Stock Repurchase.

On the Closing Date, the Company entered into Amendment No. 2 to
and Consent No.1 under (the Amendment and Consent), that Credit
Agreement dated as of August 25, 2015 between Precision and
Webster Business Credit Corporation (WBCC or Lender) (the Credit
Agreement). Under the Amendment and Consent, WBCC amended the
Credit Agreement and consented to the Asset Sale, the repayment
of all amounts owing to C3, and the Stock Repurchase.

The foregoing descriptions of the Asset Purchase Agreement and
the Amendment and Consent do not purport to be complete and are
subject to, and qualified in their entirety by reference to the
full text of the Asset Purchase Agreement, which is attached as
Exhibit 10.1 to this Current Report on Form 8-K and is
incorporated herein by reference, and the full text of the
Amendment and Consent, which is attached as Exhibit 10.2 to this
current Report on Form 8-K and is incorporated herein by
reference.

Item 2.01 Completion of Disposition of Assets

Reference is made to Item 1.01 of this Current Report on Form
8-K.

Item 5.02 Departure of Directors

Reference is made to Item 1.01 of this Current Report on Form
8-K.

Item 9.01 Financial Statements and Exhibits.

(d) The Exhibit Index is incorporated herein by reference.


Precision Aerospace Components, Inc. (OTCMKTS:PAOS) Recent Trading Information

Precision Aerospace Components, Inc. (OTCMKTS:PAOS) closed its last trading session at with 160 shares trading hands.

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