(

)

Strategic Actions

The Company completed a number of strategic actions during the past

four

years in response to the nonrenewal of supply agreements with certain Tier I automotive customers primarily due to global pricing constraints, the downturn in the commercial vehicle market beginning in the

fourth

quarter of

2015

and other market and economic factors impacting the Company. Strategic actions taken included: (i) the Company’s exit from the Broadway Plant (defined below) (see Note

), (ii) the sale of Sypris Electronics’ SioMetrics, Cyber Range, Information Security Solutions and Data Systems product lines (the “CSS business”) in

2016,

(iii) the sale and leaseback of the Company’s facility in Toluca, Mexico in

2016,

(iv) the sale of the Company’s manufacturing facility in Morganton, North Carolina in

2015,

(v) the capacity reallocation of certain oil and gas industry components to Mexico, (vi) the relocation of its Sypris Electronics operation to a new facility beginning in

2017,

and (vii) reductions in employment costs through senior management pay reductions. Using a portion of the proceeds generated from the asset sales noted above, the Company paid off all of its most senior secured debt consisting of a “Term Loan” and “Revolving Credit Facility” in

August 2016.

During this period, the Company also received the benefit of cash infusions from Gill Family Capital Management, Inc. (“GFCM”) in the form of secured promissory note obligations totaling

$6,500,000

in principal, scheduled to mature in part in

2021,

2023

and

2025.

The Company has reduced its reliance on certain of its traditional Tier

customers that represent the primary suppliers to the original equipment manufacturers (“OEMs”) in the commercial vehicle markets, while targeting to replace these customers with more diversified, longer-term relationships, especially among the OEMs and others who place a higher value on the Company’s innovation, flexibility and core commitment to lean manufacturing principles. Among the customer programs

not

being renewed was a supply agreement with Meritor Inc. (“Meritor”), which expired on

January 1, 2017,

and the Company’s business with Eaton Corporation (“Eaton”), both of which utilized production at the Company’s Louisville, Kentucky automotive and commercial vehicle manufacturing plant (the “Broadway Plant”). As a result of these decisions, the Company experienced a significant reduction in its commercial vehicle revenues in

2017

(See Note

). During the

fourth

quarter of

2018,

the Company entered into a

three

-year agreement to supply axle shafts, as well as a number of other product lines, to Sistemas Automotrices de Mexico, S.A. de C.V. (“Sistemas”) for periods of up to

six

years from the commencement of production.