ELEVENTH AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT,
TERM LOAN AND SECURITY AGREEMENT

THIS ELEVENTH AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT, TERM LOAN AND
SECURITY AGREEMENT (this “Agreement”) is entered into February 8, 2016 by and
among AIR INDUSTRIES MACHINING, CORP. (as successor by merger with Gales
Industries Acquisition Corp., Inc.) (“Air”), a corporation organized under the
laws of the State of New York, WELDING METALLURGY, INC. (as successor by merger
with WMS Merger Corp.) (“WM”), a corporation organized under the laws of the
State of New York, NASSAU TOOL WORKS, INC. (formerly known as NTW Operating
Inc.) (“NTW”), a corporation organized under the laws of the State of New York,
WOODBINE PRODUCTS, INC. (“WP”), a corporation organized under the laws of the
State of New York, MILLER STUART INC. (“MS”), a corporation organized under the
laws of the State of New York, EUR-PAC CORPORATION (“Eur-Pac”), a corporation
organized under the laws of the State of New York, ELECTRONIC CONNECTION
CORPORATION (“ECC”), a corporation organized under the laws of the State of
Connecticut, AMK WELDING, INC., (“AMK”) a corporation organized under the laws
of the State of Delaware, and THE STERLING ENGINEERING CORPORATION
(“STERLING”  and collectively with Air, WM, NTW, WP, MS, EUR-PAC, ECC and AMK,
the “Borrower”), a corporation organized under the laws of the State of
Connecticut, AIR INDUSTRIES GROUP (as successor by merger with Air Industries
Group, Inc. f/k/a Gales Industries Incorporated, a Delaware corporation)(“AIR
GROUP”) a corporation organized under the laws of the State of Nevada and AIR
REALTY GROUP, LLC (“REALTY”, and collectively with Air Group and  with the
Borrower, the “Obligor”), a limited liability company  organized under the laws
of the State of Connecticut, and PNC BANK, NATIONAL ASSOCIATION (“PNC”), the
various financial institutions named therein or which hereafter become a party
thereto, (together with PNC, collectively, “Lenders”) and PNC as agent for
Lenders (in such capacity, “Agent”).
 
RECITALS
 
Whereas, Obligor and PNC entered into a certain Amended and Restated Revolving
Credit, Term Loan and Security Agreement dated June 27, 2013 (which has been, is
being and may be further amended, replaced, restated, modified and/or extended,
the “Loan Agreement”); and
 
Whereas, Obligor and PNC have agreed to modify the terms of the Loan Agreement
as set forth in this Agreement.
 
Now, therefore, in consideration of PNC’s continued extension of credit and the
agreements contained herein, the parties agree as follows:
 
AGREEMENT
 
1)
ACKNOWLEDGMENT OF BALANCE. Obligor acknowledges that the most recent statement
of account sent to Obligor with respect to the Obligations is correct.

 
2)
MODIFICATIONS.  The Loan Agreement be and hereby is modified as follows:

 
(a)      The following definitions in Section 1.2 of the Loan Agreement are
hereby deleted, andare replaced to read as follows:
 
“Maximum Loan Amount” shall mean $47,520,856.20 including the Overadvance
Facility less repayments of the Term Loan.
 
 
 

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“Maximum Revolving Advance Amount” shall mean $37,500,000.00 including the
Overadvance Facility.
 
“Revolving Interest Rate” shall mean an interest rate per annum equal to (a) the
sum of the Alternate Base Rate plus three-quarters of one percent (0.75%) with
respect to Domestic Rate Loans; and (b) the sum of LIBOR Rate plus two and
one-half percent (2.50%) with respect to LIBOR Rate Loans.  With respect to the
Overadvance Facility, the Term “Revolving Interest Rate” shall mean an interest
rate per annual equal to (c) the sum of the Alternate Base Rate plus one and
one-half percent (1.50%) with respect to Domestic Rate Loans; and (d) the sum of
LIBOR Rate plus three and three-quarters percent (3.75%) with respect to LIBOR
Rate Loans.
 
(b)      The following definition is hereby added to Section 1.2 of the Loan
Agreement to readas follows:
 
“Overadvance Facility” shall mean: (a) the sum of $4,500,000 for the period
commencing on February 8, 2016 and ending February 14, 2016; (b) the sum of
$2,500,000 for the period commencing February 15, 2016 and ending February 21,
2016; and (c) the sum of $2,000,000 for the period commencing February 22, 2016
and ending March 1, 2016.
 
3)
GUARANTOR’S RATIFICATION.  (A) Air Industries Group, a corporation organized
under the laws of the State of Nevada (as successor by merger with Air
Industries Group, Inc. f/k/a Gales Industries Incorporated, a Delaware
corporation) hereby reaffirms its continuing obligations under the terms of that
certain Guaranty and Suretyship Agreement dated August 24, 2007 executed by Air
Industries Group, Inc. f/k/a Gales Industries Incorporated, a Delaware
corporation, and (B) Air Realty Group, LLC, a Connecticut limited liability
company hereby reaffirms its continuing obligations under the terms of that
certain Continuing Unlimited Guaranty dated March 9, 2015 (collectively, the
“Guaranty”), and acknowledge that (i) they have read this Agreement, (ii) the
Obligations under the Loan Agreement are secured by the Guaranty, and (iii) they
make such reaffirmation with full knowledge of the terms thereof.

 
4)
ACKNOWLEDGMENTS.  Borrower acknowledges and represents that:

 
(A)     the Loan Agreement and Other Documents, as amended hereby, are in full
force and effect without any defense, claim, counterclaim, right or claim of
set-off;
 
(B)      to the best of its knowledge, no default by the Agent or Lenders in the
performance of their duties under the Loan Agreement or the Other Documents has
occurred;
 
(C)      all representations and warranties of the Borrower contained herein, in
the Loan Agreement and in the Other Documents are true and correct in all
material respects as of this date, except for any representation or warranty
that specifically refers to an earlier date;
 
(D)      Borrower has taken all necessary action to authorize the execution and
delivery of this Agreement; and
 
(E)      this Agreement is a modification of an existing obligation and is not a
novation.
 
5)
PRECONDITIONS.  As preconditions to the effectiveness of any of the
modifications, consents, or waivers contained herein, the Borrower agrees to:

 
(A)      provide the Agent with this Agreement and the Sixth Amended and
Restated Revolving Credit Note each properly executed;
 
 
 

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(B)      provide the Agent with secretary’s certificates and resolutions from
the Borrower and Guarantor, in form and substance acceptable to the Agent;
 
(C)      provide the Agent with all information and documentation required by
the Agent;
 
(D)      pay to the Agent an Amendment Fee in the amount of $75,000.00;
 
(E)      pay all legal fees incurred by the Agent in entering into this
Agreement to Wilentz, Goldman & Spitzer; and
 
(F)      pay all other fees and costs incurred by the Lenders in entering into
this Agreement.
 
6)
MISCELLANEOUS.  This Agreement shall be construed in accordance with and
governed by the laws of the State of New York, without reference to that state’s
conflicts of law principles.  This Agreement, the Loan Agreement and the Other
Documents constitute the sole agreement of the parties with respect to the
subject matter thereof and supersede all oral negotiations and prior writings
with respect to the subject matter thereof.  No amendment of this Agreement, and
no waiver of any one or more of the provisions hereof shall be effective unless
set forth in writing and signed by the parties hereto.  The illegality,
unenforceability or inconsistency of any provision of this Agreement shall not
in any way affect or impair the legality, enforceability or consistency of the
remaining provisions of this Agreement, the Loan Agreement or the Other
Documents.  This Agreement, the Loan Agreement and the Other Documents are
intended to be consistent.  However, in the event of any inconsistencies among
this Agreement, the Loan Agreement and/or any of the Other Documents, the terms
of this Agreement, then the Loan Agreement, shall control.  This Agreement may
be executed in any number of counterparts and by the different parties on
separate counterparts.  Each such counterpart shall be deemed an original, but
all such counterparts shall together constitute one and the same agreement.

 
7)
DEFINITIONS.  The terms used herein and not otherwise defined or modified herein
shall have the meanings ascribed to them in the Loan Agreement.  The terms used
herein and not otherwise defined or modified herein or defined in the Loan
Agreement shall have the meanings ascribed to them by the Uniform Commercial
Code as enacted in State of New York.

 
IN WITNESS WHEREOF, the undersigned have signed and sealed this Agreement the
day and year above written.
 
ATTEST:
AIR INDUSTRIES MACHINING, CORP.
       
By: /s/ Kristie Petersen
By: /s/ Daniel R. Godin
       Name:  KRISTIE PETERSEN
       Name:  DANIEL R. GODIN
       Title:    Secretary
       Title:    President
   
(SIGNATURES CONTINUED ON NEXT PAGE)

 
 
 

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ATTEST:
WELDING METALLURGY, INC.  (as
 
successor by merger with WMS Merger Corp.)
       
By: /s/ Kristie Petersen
By: /s/ Daniel R. Godin
       Name:  KRISTIE PETERSEN
       Name:  DANIEL R. GODIN
       Title:    Secretary
       Title:    President
       
ATTEST:
NASSAU TOOL WORKS, INC.
 
(formerly known as NTW Operating Inc.)
       
By: /s/ Kristie Petersen
By: /s/ Daniel R. Godin
       Name:  KRISTIE PETERSEN
       Name:  DANIEL R. GODIN
       Title:    Secretary
       Title:    President
   
ATTEST:
AIR INDUSTRIES GROUP
       
By: /s/ Kristie Petersen
By: /s/ Daniel R. Godin
       Name:  KRISTIE PETERSEN
       Name:  DANIEL R. GODIN
       Title:    Secretary
       Title:    President
   
ATTEST:
MILLER STUART INC.
       
By: /s/ Kristie Petersen
By: /s/ Daniel R. Godin
       Name:  KRISTIE PETERSEN
       Name:  DANIEL R. GODIN
       Title:    Secretary
       Title:    President
   
ATTEST:
WOODBINE PRODUCTS, INC.
       
By: /s/ Kristie Petersen
By: /s/ Daniel R. Godin
       Name:  KRISTIE PETERSEN
       Name:  DANIEL R. GODIN
       Title:    Secretary
       Title:    President
   
(SIGNATURES CONTINUED ON NEXT PAGE)

 
 
 

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ATTEST:
EUR-PAC CORPORATION
       
By: /s/ Kristie Petersen
By: /s/ Daniel R. Godin
       Name:  KRISTIE PETERSEN
       Name:  DANIEL R. GODIN
       Title:    Secretary
       Title:    President
       
ATTEST:
ELECTRONIC CONNECTION CORPORATION
       
By: /s/ Kristie Petersen
By: /s/ Daniel R. Godin
       Name:  KRISTIE PETERSEN
       Name:  DANIEL R. GODIN
       Title:    Secretary
       Title:    President
   
ATTEST:
AMK WELDING, INC.
       
By: /s/ Kristie Petersen
By: /s/ Daniel R. Godin
       Name:  KRISTIE PETERSEN
       Name:  DANIEL R. GODIN
       Title:    Secretary
       Title:    President
       
ATTEST:
THE STERLING ENGINEERING CORPORATION
   
By: /s/ Kristie Petersen
By: /s/ Daniel R. Godin
       Name:  KRISTIE PETERSEN
       Name:  DANIEL R. GODIN
       Title:    Secretary
       Title:    President
   
ATTEST:
AIR REALTY GROUP, LLC
       
By: /s/ Kristie Petersen
By: /s/ Daniel R. Godin
       Name:  KRISTIE PETERSEN
       Name:  DANIEL R. GODIN
       Title:    Secretary
       Title:    President
   
 (SIGNATURES CONTINUED ON NEXT PAGE)
   

 
 
 

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PNC BANK, NATIONAL ASSOCIATION
 
Lender and as Agent
         
By: /s/ Patrick McConnell
 
       Name:  PATRICK McCONNELL
 
       Title:   Senior Vice President