Exhibit 10.1


 


SECOND
AMENDMENT TO LOAN AND SECURITY AGREEMENT


 


THIS
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (the “Amendment”), is dated June 14, 2021, effective as of
April 15, 2021, and is made by and among (a) AIR INDUSTRIES MACHINING, CORP., a New York corporation (“AIM”), NASSAU
TOOL WORKS, INC., a New York corporation (“NTW”), THE STERLING ENGINEERING CORPORATION, a Connecticut corporation
(“Engineering”; and together with AIM and NTW, “Borrowers”), (b) AIR INDUSTRIES GROUP, a Nevada
corporation (“Parent”) and AIR REALTY GROUP, LLC, a Connecticut limited liability company (“Realty”; and
together with Parent, the “Guarantors”) and (b) STERLING NATIONAL BANK, a national banking association (together with
its successors and permitted assigns, the “Lender”).


 


RECITALS


 


Pursuant
to that certain Loan and Security Agreement, dated as of December 31, 2019 (the “Loan Agreement”) by and among Borrowers,
Guarantors, the other Credit Parties party thereto, and Lender, Lender has agreed to make certain financial accommodations available
to Borrowers from time to time pursuant to the terms and conditions thereof (capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Loan Agreement, as amended hereby).


 


Borrowers
and Lender desire to confirm Lender’s agreement to extend the due date for payment of the portion of Parent’s Excess Cash Flow for the
Fiscal Year ending December 31, 2020, as required by Section 4.2(b) of the Loan Agreement, as described in this Amendment.


 


NOW,
THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, it is agreed as follows:


 


1. Amendment
to Loan Agreement. As of the effective date of this Amendment, the Loan Agreement is amended as follows:


 


(a) Section
1.1. The definition of “Excess Cash Flow” set forth in Section 1.1 of the Loan Agreement is amended by the addition
of the following proviso at the end of such definition:


 


; provided,
however, the “Loss from Discontinued Operations” reported on Parent’s financial statements for the Fiscal Year
ending December 31, 2020 in the amount of $230,000, shall be deducted from EBITDA for purposes of calculating Excess Cash Flow for
the Fiscal Year ending December 31, 2020 only. The foregoing proviso is a one-time accommodation to Borrowers by Lender.


 


(b)Section
4.2.Section 4.2(b) of the Loan Agreement is amended by the addition of the following proviso at the end of such section:


 


; provided,
however, and notwithstanding the foregoing, the prepayment due under this Section 4.2(b) from Excess Cash Flow for
Parent’s Fiscal Year ending December 31, 2020,  shall be payable as follows: (a) $186,250 shall be due and payable on
June 15, 2021, (b) $186,250 shall be due and payable on June 30, 2021, and (c) $186,250 on September 15, 2021.


 



     


     

    

 


2. No
Other Changes; Affirmation of Obligations and Liens. Except as explicitly amended by this Amendment, all of the terms and conditions
of the Loan Agreement shall remain in full force and effect and shall apply to any Loan made thereunder. Each Credit Party hereby approves
and consents to the amendments contemplated by this Amendment and agrees that its obligations under the Loan Agreement and the other Loan
Documents to which it is a party shall not be diminished as a result of the execution of this Amendment. This acknowledgement by the Credit
Parties is made and delivered to induce the Lender to enter into this Amendment, and the Credit Parties acknowledge that the Lender would
not enter into this Amendment in the absence of the acknowledgements contained herein. Each Credit Party hereby ratifies and confirms
the grant of a security interest in and Lien on the Collateral contained in the Loan Documents to which it is a party, which security
interest and Lien shall continue in full force and effect without interruption, and shall constitute the single grant of a security interest
and Lien.


 


3. Conditions
Precedent. This Amendment shall be effective when Lender shall have received the following:


 


(a) Fully
executed counterparts of this Amendment properly executed by Borrowers and each Guarantor, with originals delivered to the Lender within
two (2) Business Days of the date hereof.


 


(b)
Payment of the amendment fee described in paragraph 5 below.


 


(c)
Such other matters as Lender may require.


 


4. Representations
and Warranties. Each Credit Party hereby represents and warrants to Lender as follows:


 


(a) Each
Credit Party has all requisite power and authority to execute this Amendment and to perform all of its obligations hereunder.


 


(b) The
execution, delivery and performance by each Credit Party of this Amendment has been duly authorized by all necessary action on the part
of such Credit Party.


 


(c) Each Credit Party’s execution, delivery, and performance of this
Amendment do not and will not conflict with, violate or constitute a violation of or breach or default under, as applicable, (i) its organizational
documents, (ii) any agreement or instrument to which it or any of its Subsidiaries is a party or which is otherwise binding upon it or
any of its Subsidiaries or (iii) any Applicable Law applicable to it or any of its Subsidiaries.


 


(d) No approval, consent, exemption, authorization or other action by, or notice
to, or filing with, any Governmental Authority is necessary or required in connection with the execution, delivery or performance by,
or enforcement against, any Credit Party of this Amendment.


 



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(e) This
Amendment has been duly executed and delivered by each Credit Party that is a party hereto and is the legally valid and binding obligation
of such Credit Party, enforceable against such Credit Party in accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to enforcement of creditors’ rights.


 


(f) After
giving effect to this Amendment and the transactions contemplated hereby, no Default or Event of Default has occurred and is continuing.


 


(g) Both immediately before and immediately after giving effect to this Amendment
and the transactions contemplated hereby, all of the representations and warranties contained in Article VII of the Loan Agreement are
true, complete and correct in all respects as of the date of this Amendment as though made on and as of the date hereof (except to the
extent such representations or warranties relate solely to an earlier date, in which case such representations and warranties shall be
true and correct in all respects as of such earlier date).


 


5. Amendment
Fee. In consideration of Lender’s agreement to enter into this Amendment, Borrowers shall pay to Lender a non-refundable amendment
fee in an amount equal to $10,000, which amendment fee has been fully earned as of the effective date of this Amendment, and which shall
be charged as a Loan upon execution and delivery of this Amendment.


 


6. References.
All references in the Loan Agreement to “this Agreement” shall be deemed to refer to the Loan Agreement as amended hereby;
and any and all references in the Loan Documents to the Loan Agreement shall be deemed to refer to the Loan Agreement as amended hereby.


 


7. No
Waiver. The execution of this Amendment shall not be deemed to be a waiver of any Default or Event of Default under the Loan Agreement
or breach, default or event of default under any Loan Documents or other document held by Lender, whether or not known to Lender and
whether or not existing on the date of this Amendment.


 


8. Release.
Each Credit Party hereby absolutely and unconditionally releases and forever discharges Lender, and any and all participants, parent
corporations, subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with
all of the present and former directors, officers, agents and employees of any of the foregoing, from any and all claims, demands or
causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or
federal law or otherwise, which such Credit Party has had, now has or has made claim to have against any such person for or by reason
of any act, omission, matter, cause or thing whatsoever relating to any Loan Document arising from the beginning of time to and including
the date of this Amendment, whether such claims, demands and causes of action are matured or unmatured or known or unknown.


 


9. Costs
and Expenses. Borrowers hereby reaffirm their agreement under the Loan Agreement to pay or reimburse Lender on demand for all
costs and expenses relating to this Amendment. Without limiting the generality of the foregoing, Borrowers specifically agree to pay
Lender’s reasonable costs and expenses (including reasonable attorneys’ fees and costs) incurred in in connection with
the preparation of this Amendment and the documents and instruments incidental hereto. Borrowers hereby agree that Lender may, at
any time or from time to time in its sole discretion and without further authorization by Borrowers, make a Loan to Borrowers under
the Loan Agreement, or apply the proceeds of any Loan, for the purpose of paying any such fees, disbursements, costs and
expenses.


 



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10. Execution
in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one
and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by facsimile or other electronic transmission
(i.e., “pdf’’ or “tif’’) shall be effective as delivery of a manually executed counterpart of this Amendment. Notwithstanding
the foregoing, the Loan Parties shall promptly deliver original signatures of this Amendment to Lender.


 


11. Headings.
Section Headings are for convenience of reference only, and are not part of, and are not to be taken into consideration in interpreting
this Amendment.


 


12. Governing
Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.


 


 [Signature
pages follow]


  



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IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first written above.


 


	 	AIR INDUSTRIES MACHINING, CORP.,
	 	as a Borrower
	 	 	 
	 	By:	/s/
    Michael Recca
	 	 	Michael Recca
	 	 	Chief Financial Officer
	 	 	 
	 	NASSAU TOOL WORKS, INC., as a Borrower
	 	 	 
	 	By:	/s/
    Michael Recca
	 	 	Michael Recca
	 	 	Chief Financial Officer
	 	 	 
	 	THE STERLING ENGINEERING
	 	CORPORATION, as a Borrower
	 	 	 
	 	By:	/s/
    Michael Recca
	 	 	Michael Recca
	 	 	Chief Financial Officer
	 	 	 
	 	AIR INDUSTRIES GROUP, as a Guarantor
	 	 	 
	 	By:	/s/
    Michael Recca
	 	 	Michael Recca
	 	 	Chief Financial Officer
	 	 	 
	 	AIR REALTY GROUP, LLC, as a Guarantor
	 	 	 
	 	By:	/s/
    Michael Recca
	 	 	Michael Recca
	 	 	Managing Member


 


Second
Amendment to Loan and Security Agreement


 




     


     


    

 


	 	STERLING NATIONAL BANK
	 	 	 
	 	By:
    	/s/
    Mark J. Long
	 	Name:	Mark
J. Long
	 	Title:	Managing
Director


  


Second
Amendment to Loan and Security Agreement