Document:

Exhibit 10.37

 

Execution version

 

SIXTEENTH AMENDMENT TO AMENDED AND RESTATED

REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT

 

THIS
SIXTEENTH AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT (this “Agreement”) is
entered into May 30, 2018 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.) (“Nassau”), 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,
EUR-PAC CORPORATION (“Eur-Pac”), a corporation organized under the laws of the State of Connecticut, ELECTRONIC CONNECTION
CORPORATION (“ECC”), a corporation organized under the laws of the State of Connecticut, and THE STERLING ENGINEERING
CORPORATION (“STERLING”), a corporation organized under the laws of the State of Connecticut, (“Sterling,”
and collectively with Air, WM, Nassau, WP, EUR-PAC and ECC, the “Borrower”), a corporation organized under the laws
of the State of New York, 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”);

 

WHEREAS, Borrower has
requested that PNC consent to the sale of all of the assets of WM to CPI Aerostructures, Inc. for valuable consideration, specifically
gross cash proceeds of up to approximately $10,000,000, including contingency payments (the “Sale”);

 

WHEREAS, as a condition
to PNC’s consent to the Sale, Borrower has agreed to apply the proceeds of the Sale to, among other things, the following
specific uses: (i) pay down the outstanding balance of Revolving Advances in an amount necessary to maintain compliance with Section
2.6 of the Loan Agreement, (ii) $1,000,000 to be applied and utilized by Borrower for Borrower’s working capital needs; and
(iii) any remaining balance to be applied towards the existing Term Loan; and

  

WHEREAS, Obligor has
requested modifications to 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 new definitions are hereby added to Section 1.2 of the Loan Agreement to read as
follows:

 

“Beneficial Owner”
shall mean, for each Borrower, each of the following: (a) each individual, if any who, directly or indirectly, owns 25% or more
of such Borrower’s Equity Interests; and (b) a single individual with significant responsibility to control, manage, or direct
such Borrower.

 

“Certificate of Beneficial
Ownership” shall mean, for each Borrower, a certificate in form and substance acceptable to Agent (as amended or modified
by Agent from time to time in its sole discretion), certifying, among other things, the Beneficial Owner of such Borrower.

 

“Sixteenth Amendment
Closing Date” shall mean May 30, 2018.

 

“WM Sale” shall
mean the sale of the assets of WM to CPI Aerostructures, Inc. for valuable consideration, specifically gross cash proceeds of up
to approximately $10,000,000.

 

		(b)	The following definitions contained in Section 1.2 of the Loan Agreement are hereby amended to
read as follows:

 

“EBITDA” shall
mean for any period with regard to Air Group the sum of (i) Earnings Before Interest and Taxes for such period on a consolidated
basis plus (ii) depreciation expenses for such period on a consolidated basis, plus (iii) amortization expenses for such period
on a consolidated basis, plus (iv) stock compensation expense from continuing operations, as defined per GAAP.

 

“Inventory Sublimit”
shall mean (i) 15,000,000 until the WM Sale is closed and (ii) $10,000,000 upon the closing of the WM Sale and thereafter.

 

“Maximum Loan Amount”
shall mean (i) Until the WM Sale is closed, $22,856,000 less repayments of the Term Loan and (ii) Upon the closing of the
WM Sale and thereafter, $17,856,000.00 less repayments of the Term Loan.]

 

“Maximum Revolving Advance
Amount” shall mean (i) Until the WM Sale is closed, $20,000,000, and (ii) Upon the closing of the WM Sale and thereafter,
$15,000,000.00.

 

“Revolving Interest Rate”
shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus three percent (3.00%) with respect to
Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus four and one half percent (4.50%) with respect to Eurodollar Rate
Loans.

 

“Term Loan Rate”
shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus three percent (3.00%) with respect to
Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus four and one half percent (4.50%) with respect to Eurodollar Rate
Loans.

 

    	 	2	 

     

    

 

“Termination Date”
shall mean December 31, 2018 or such other date as the Lenders may agree in writing to extend the Termination Date until, without
there being any obligation on the part of the Lenders to extend the Termination Date.

 

		(c)	Section 2.1 is hereby deleted and replaced with a new Subsection 2.1 to read as follows:

 

2.1       Revolving
Advances.

  

(a)       Amount
of Revolving Advances. Subject to the terms and conditions set forth in this Agreement specifically including Section 2.1(b),
each Lender, severally and not jointly, will make Revolving Advances to Borrowers in aggregate amounts outstanding at any time
equal to such Lender’s Revolving Commitment Percentage of the lesser of (x) the Maximum Revolving Advance Amount, less
the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit or (y) an amount equal to the sum of:

 

(i)       up
to the sum of (A) 85%, subject to the provisions of Section 2.1(b) hereof (the “Receivables Advance Rate A”), of Eligible
Receivables that do not constitute Eligible Unassigned Government Receivables (specifically excluding all Eligible Receivables
of Sigma) plus (B) the lesser of (I) 50%, subject to the provisions of Section 2.1(b) hereof (the “Receivables Advance Rate
B” and collectively with the Receivables Advance Rate A, the “Receivables Advance Rate”), of Eligible Unassigned
Government Receivables (specifically excluding all Eligible Unassigned Government Receivables of Sigma) and (II) the Unassigned
Government Receivables Sublimit, plus

 

(ii)       up
to the lesser of (A) 75%, subject to the provisions of Section 2.1(b) hereof, of the value of the Eligible Inventory (specifically
excluding all Eligible Inventory of Sigma), (B) (1) Until the WM Sale is closed, 90% of the appraised net orderly liquidation value
of Eligible Inventory (as evidenced by an Inventory appraisal satisfactory to Agent in its sole discretion exercised in good faith
and specifically excluding all Eligible Inventory of Sigma) and (2) Upon the closing of the WM Sale and thereafter, 85% of the
appraised net orderly liquidation value of Eligible Inventory (as evidenced by an Inventory appraisal satisfactory to Agent in
its sole discretion exercised in good faith and specifically excluding all Eligible Inventory of Sigma), or (C) the Inventory Sublimit
in the aggregate at any one time (“Inventory Advance Rate” and together with the Receivables Advance Rate, collectively,
the “Advance Rates”), minus

 

(iii)       such
reserves as Agent may reasonably deem proper and necessary from time to time.

 

The amount derived from the sum
of (x) Sections 2.1(a)(y)(i) and (ii) minus (y) Section 2.1 (a)(y)(iii) at any time and from time to time shall be referred to
as the “Formula Amount”. The Revolving Advances shall be evidenced by one or more secured promissory notes (collectively,
the “Revolving Credit Note”) substantially in the form attached hereto as Exhibit 2.1(a).

 

(b)       Discretionary
Rights. The Advance Rates may be increased or decreased by Agent at any time and from time to time in the exercise of its reasonable
discretion. Each Borrower consents to any such increases or decreases and acknowledges that decreasing the Advance Rates or increasing
or imposing reserves may limit or restrict Advances requested by Borrowing Agent. The rights of Agent under this subsection are
subject to the provisions of Section 16.2(b).

 

    	 	3	 

     

    

 

		(d)	Section 5.28 is hereby added to the Loan Agreement to read as follows:

  

5.28       Certificate
of Beneficial Ownership. The Certificate of Beneficial Ownership executed and delivered to Agent and Lenders for each Borrower
on or prior to the date of this Agreement, as updated from time to time in accordance with this Agreement, is accurate, complete
and correct as of the date hereof and as of the date any such update is delivered. The Borrower acknowledges and agrees that the
Certificate of Beneficial Ownership is one of the Other Documents.

 

		(e)	Section 6.16 is hereby added to the Loan Agreement to read as follows:

 

6.16       Certificate
of Beneficial Ownership and Other Additional Information. Provide to Agent and the Lenders: (i) confirmation of the accuracy
of the information set forth in the most recent Certificate of Beneficial Ownership provided to the Agent and Lenders; (ii) a new
Certificate of Beneficial Ownership, in form and substance acceptable to Agent and each Lenders, when the individual(s) to be identified
as a Beneficial Owner have changed; and (iii) such other information and documentation as may reasonably be requested by Agent
or any Lender from time to time for purposes of compliance by Agent or such Lender with applicable laws (including without limitation
the USA Patriot Act and other “know your customer” and anti-money laundering rules and regulations), and any policy or
procedure implemented by Agent or such Lender to comply therewith.

 

		(f)	Subsection 6.5(a) and 6.5(b) are hereby deleted from the Loan Agreement in their entirety and replaced
with the following new Section 6.5:

  

Minimum EBITDA. Maintain
EBITDA of not less than (i) $75,000 for the three-month period ending March 31, 2018, (ii) $485,000 for the six month period ending
June 30, 2018, and (iii) $1,200,000 for the nine-month period ending September 30, 2018.

 

		(g)	Subsection 7.5 is hereby deleted from the Loan Agreement in its entirety and replaced with the
following new Section 7.5:

 

7.5       Loans.
Make advances, loans or extensions of credit to any Person, including any Parent, Subsidiary or Affiliate except with respect to
the extension of commercial trade credit in connection with the sale of Inventory in the Ordinary Course of Business.

 

		(h)	Subsection 7.7 is hereby deleted from the Loan Agreement in its entirety and replaced with the
following new Section 7.7:

 

7.7.       Dividends.
Declare, pay or make any dividend or distribution on any shares of the common stock or preferred stock of Obligor (other than dividends
or distributions payable in its stock, or split-ups or reclassifications of its stock) or apply any of its funds, property or assets
to the purchase, redemption or other retirement of any common or preferred stock, or of any options to purchase or acquire any
such shares of common or preferred stock of Obligor.

 

    	 	4	 

     

    

 

		3)	GUARANTOR’S RATIFICATION. (A) AIR GROUP 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 each acknowledges that (i) it has 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)	WAIVER OF DEFAULT. Agent, on behalf of the Lenders, hereby waives Borrower’s failure
to comply with Subsection 6.5(a), the Fixed Charge Coverage Ratio covenant, for the periods ending September 30, 2017, December
31, 2017 and March 31, 2018. Such waiver is solely for such periods and does not extend to any other default which might exist
now or in the future.

 

		5)	CONSENT TO SALE AND THE USE OF PROCEEDS THEREOF AND RELEASE OF COLLATERAL. Subject to the
conditions set forth herein, Agent, on behalf of the Lenders, will consent to the Sale and the application of the net proceeds
thereof to the uses described in the third Recital of this Agreement. Agent’s consent to the Sale is conditioned upon (i)
Agent’s receipt of the specific list of assets to be sold pursuant to the Sale, (ii) Agent’s receipt of copies of all
documentation executed in connection with the Sale, including but not limited to the purchase agreement, bill of sale, and closing
statement with respect thereto, (iii) $2,000,000 of the escrowed funds pursuant to the Sale being assigned to PNC as Collateral
for the Obligations, and (iv) Agent’s receipt of any other information or documentation reasonably requested by Agent. Upon
the closing of the Sale to Agent’s satisfaction, Agent will unconditionally release WM from any and all obligations relating
to, arising from, or in connection with, the Loan Agreement and the Other Documents, and will release and terminate any security
interest, or lien granted by WM to Agent or Lenders thereunder on the assets sold pursuant to the Sale. Agent will authorize an
appropriate letter to the purchaser of the assets pursuant to the Sale to confirm PNC’ s release of its security interest
and lien on such assets being sold. For the avoidance of doubt, WM shall be recognized as a discontinued operation as of the fiscal
year ended December 31, 2017.

 

		6)	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	 

     

    

 

		7)	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, properly executed;

 

(B)       pay
to Agent an Amendment and Waiver Fee in the amount of $125,000 payable as follows: (i) $62,500 due on the Sixteenth Amendment Closing
Date and (ii) the remaining $62,500 due thirty (30) days later;

 

(C)       provide
the Agent with Secretary’s Certificates and Resolutions of the Obligor approving the transaction;

 

(D)       provide
Agent with a copy of all executed documentation with respect to the Sale;

 

(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 Agent in entering into this Agreement.

 

		8)	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.

 

		9)	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.

 

(SIGNATURES ON NEXT
PAGE)

 

    	 	6	 

     

    

 

IN WITNESS WHEREOF,
the undersigned have signed and sealed this Agreement the day and year above written.

 

	ATTEST:	 	AIR INDUSTRIES MACHINING, CORP.
	 	 	 
	By:	/s/
    MICHAEL RECCA	 	By:	/s/
    LUCIANO MELLUZZO
	      	Name:   MICHAEL RECCA	 	      	Name:  LUCIANO MELLUZZO
	      	Title:    Chief Financial Officer	 	      	Title:    Chief Executive Officer
	 	 	 
	ATTEST:	 	WELDING METALLURGY, INC.  (as 
	 	 	successor by merger with WMS Merger Corp.)
	 	 	 
	By:	/s/
    MICHAEL RECCA	 	By:	/s/
    LUCIANO MELLUZZO
	      	Name:  MICHAEL RECCA	 	      	Name: LUCIANO MELLUZZO 
	      	Title:    Chief Financial Officer	 	      	Title:    Chief Executive Officer
	 	 	 
	ATTEST:	 	NASSAU TOOL WORKS, INC.
	 	 	(formerly known as NTW Operating Inc.)
	 	 	 
	By:	/s/
    MICHAEL RECCA	 	By:	/s/
    LUCIANO MELLUZZO
	      	Name:  MICHAEL RECCA	 	      	Name:  LUCIANO MELLUZZO
	      	Title:   Chief Financial Officer	 	      	Title:    Chief Executive Officer

 

(SIGNATURES CONTINUED ON NEXT PAGE)

 

    	 	7	 

     

    

 

	ATTEST:	 	AIR INDUSTRIES GROUP
	 	 	 
	By:	/s/ MICHAEL RECCA	 	By:	/s/ LUCIANO MELLUZZO
	 	Name:  MICHAEL RECCA	 	 	Name:  LUCIANO MELLUZZO
	 	Title:   Chief Financial Officer	 	 	Title:    Chief Executive Officer
	 	 	 
	ATTEST:	 	WOODBINE PRODUCTS, INC.
	 	 	 
	By:	/s/ MICHAEL RECCA	 	By:	/s/ LUCIANO MELLUZZO
	 	Name:   MICHAEL RECCA	 	 	Name:  LUCIANO MELLUZZO     
	 	Title:     Chief Financial Officer	 	 	Title:    Chief Executive Officer
	 	 	 
	ATTEST:	 	EUR-PAC CORPORATION
	 	 	 
	By:	/s/ MICHAEL RECCA	 	By:	/s/ LUCIANO MELLUZZO
	 	Name:   MICHAEL RECCA	 	 	Name:  LUCIANO MELLUZZO
	 	Title:     Chief Financial Officer	 	 	Title:    Chief Executive Officer
	 	 	 
	ATTEST:	 	ELECTRONIC CONNECTION CORPORATION
	 	 	 
	By:	/s/ MICHAEL RECCA	 	By:	/s/ LUCIANO MELLUZZO
	 	Name:  MICHAEL RECCA	 	 	Name:  LUCIANO MELLUZZO
	 	Title:    Chief Financial Officer	 	 	Title:    Chief Executive Officer

 

 

(SIGNATURES CONTINUED ON NEXT PAGE)

 

    	 	8	 

     

    

 

	ATTEST:	 	THE STERLING ENGINEERING CORPORATION
	 	 	 
	By:	/s/
    Michael Recca	 	By:	/s/
    Luciano Meluzzo
	      	Name:   MICHAEL RECCA	 	      	Name:  LUCIANO MELLUZZO
	      	Title:     Chief Financial
Officer	 	      	Title:    Chief Executive Officer
	 	 	 
	ATTEST:	 	AIR REALTY GROUP, LLC
	 	 	 
	By:	/s/
    Michael Recca	 	By:	/s/
    Luciano Melluzzo
	      	Name:  MICHAEL RECCA	 	      	Name:  LUCIANO MELLUZZO
	      	Title:    Chief Financial Officer	 	      	Title:    Chief Executive Officer

 

(SIGNATURES CONTINUED ON NEXT PAGE)

 

    	 	9	 

     

    

 

	 	PNC BANK, NATIONAL ASSOCIATION
	 	Lender and as Agent
	 	 
	 	By:	/s/
    VICTOR ALARCON
	 	      	Name:  VICTOR ALARCON
	 	      	Title:     Senior Vice President

 

 

10Exhibit
10.38

 

SUBSCRIPTION
AGREEMENT

 

This
Subscription Agreement (this “Agreement”) is dated as of July 19, 2018 between Air Industries Group, a Nevada
corporation (the “Company”), and the person identified on the signature page hereto (“Purchaser”).

 

The
Company is offering (the “Offering”) pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule
506 promulgated thereunder, up to 330,000 shares (the “Shares”) of the Company’s common stock, par value
$0.001 per share (the “Common Stock”).

 

The
per share purchase price for the Shares will be the closing price of a share of Common Stock on the NYSE AMERICAN on the trading
day immediately prior to the closing for the sale of the Shares, or $1.60 per share, whichever is lower; provided that if the
Purchaser is an affiliate of the Company the per share price shall not be less than the closing price of the Common Stock on the
day prior to the date of acceptance of his Subscription Agreement.

 

The
Offering will commence on July 19, 2018, and terminate on the close of business on July 20, 2018 (the “Initial Offering
Period”), which period may be extended by the Company for up to an additional 10 days (this additional period and the
Initial Offering Period shall be referred to as the “Offering Period”). The Company may hold one or more closings
at any time during the Offering Period.

 

The
Company will issue certificates representing the shares purchased by each Purchaser (the “Purchased Shares”)
against payment of the purchase price therefor (the “Purchase Price”) at one or more closings conducted from
time to time (each, a “Closing”) until the termination or expiration of the Offering Period, or the earlier
sale of all of the Shares. The Company has the right to terminate the Offering at any time, or to sell less than all of the Shares.
The Company has the right to reject a subscription from any subscriber, in whole or in part.

  

Purchaser
desires to purchase, and the Company is willing to sell to the Purchaser, upon the terms and conditions stated in this Agreement,
the number of shares of Common Stock set forth on the signature page hereof, for the total purchase price set forth on the signature
page hereof.

 

NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration
the receipt and adequacy of which are hereby acknowledged, the Company and Purchaser agree as follows:

 

ARTICLE
I.

DEFINITIONS

 

1.1       Definitions.
In addition to the terms defined elsewhere in this Agreement the following terms have the meanings set forth in this Section 1.1:

 

“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act. For the avoidance of doubt,
all directors and officers of the Company are deemed Affiliates of the Company.

 

“Board
of Directors” means the board of directors of the Company.

 

“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action
to close.

 

“Commission”
means the United States Securities and Exchange Commission.

 

“Common
Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.

 

     

     

    

 

“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive,
Common Stock.

  

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

  

“Placement
Agent” means Taglich Brothers, Inc.

 

“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

 

“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.

 

“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.

 

“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company
formed or acquired after the date hereof.

 

“Transfer
Agent” means Broadridge Corporate Issuer Solutions, Inc., the current transfer agent of the Company, with a mailing
address of P. O. Box 1342, Brentwood, New York 11717 and a facsimile number of (215) 553-5402, and any successor transfer agent
of the Company.

 

ARTICLE
II.

PURCHASE
AND SALE

 

2.1      
Purchase of the Securities. Subject to the terms and conditions of this Agreement, the Purchaser, intending to be legally
bound, hereby irrevocably subscribes for and agrees to purchase the number of Shares set forth on the signature page hereto, and
the Company agrees to issue such Shares against receipt of the Purchase Price.

 

2.2      
Deliveries. The Purchaser will deposit the Purchase Price for the Shares to be acquired by Purchaser to an account designated
by the Company by wire transfer of immediately available funds. The Company will deliver to the Purchaser his Shares against receipt
of the Purchase Price.

 

    	 	2	 

     

    

 

ARTICLE
III.

REPRESENTATIONS
AND WARRANTIES

 

3.1       Representations
and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed
a part hereof and shall qualify any representation or warranty contained or otherwise made herein to the extent of the disclosure
contained in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and
warranties to Purchaser:

 

(a)       Subsidiaries.
All of the direct and indirect subsidiaries of the Company are set forth on Exhibit 21.1 to the Annual Report on Form 10-K filed
with the SEC on April 18, 2018, as amended (the “10-K”). The Company owns, directly or indirectly, all of the capital
stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of
capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights
to subscribe for or purchase securities.

 

(b)       Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company
nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of this Agreement or the Securities, (ii) a material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely basis its obligations under this Agreement
(any of (i), (ii) or (iii), a “Material Adverse Effect”) and no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

  

(c)       Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement
by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action
on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders
in connection herewith or therewith. This Agreement has been (or upon delivery will have been) duly executed by the Company and,
when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’
rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(d)       No
Conflicts. The execution, delivery and performance by the Company of this Agreement, the issuance and sale of the Shares and
the consummation by it of the transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational
or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would
become a default) under, 1result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary,
or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or
both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary
is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary
is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or
a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably
be expected to result in a Material Adverse Effect.

 

    	 	3	 

     

    

 

(e)       Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of this Agreement and the issuance of the Shares,
other than: (i) the notice and/or application(s) to NYSE-American for the listing of the Shares on the NYSE-American, (ii) the
filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws; and (iii)
the consent of PNC Bank, National Association, as the Company’s senior lender, under the Amended and Restated Revolving
Credit, Term Loan and Security Agreement, as amended (collectively, the “Required Approvals”).

  

(f)       Issuance
of the Shares. The Shares been duly authorized, and when issued in accordance with the terms set forth in this Agreement,
will be duly and validly issued, and constitute the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with their terms.

 

(g)       Capitalization.
The authorized capital stock of the Company consists of 50,000,000 shares of Common Stock and 3,000,000 shares of preferred stock,
$.001 par value per share. As of June 30, 2018, there were outstanding 26,205,341 shares of Common Stock and no shares of preferred
stock. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate
in the transactions contemplated by this Agreement. Except as a result of the purchase and sale of the Shares and the issuance
of shares to Taglich Brothers, Inc., placement agent for the Shares (the “Placement Agent”) and as set forth in the
SEC Reports, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any
right to subscribe for or acquire any shares of Common Stock or the capital stock of any Subsidiary, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common
Stock or Common Stock Equivalents or capital stock of any Subsidiary, except for such rights as CPI Aerostructures may have notwithstanding
the termination of the Agreement to purchase all of the outstanding shares of Welding Metallurgy, Inc. The issuance and sale of
the Shares will not obligate the Company or any Subsidiary to issue shares of Common Stock or other securities to any Person (other
than the Purchaser, the other purchasers of the Shares and the Placement Agent) and will not result in a right of any holder of
Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. There are no outstanding
securities or instruments of the Company or any Subsidiary that contain any redemption or similar provisions, and there are no
contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to redeem
a security of the Company or such Subsidiary. The Company does not have any stock appreciation rights or “phantom stock”
plans or agreements or any similar plan or agreement. All of the outstanding shares of capital stock of the Company are duly authorized,
validly issued, fully paid and non-assessable, have been issued in compliance with all federal and state securities laws, and
none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase
securities. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s
capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s
stockholders.

 

(h)       SEC
Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such
material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”). As of their respective dates, the SEC Reports complied in all material
respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during
the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all
material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.

 

    	 	4	 

     

    

 

(i)       Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (i) there
has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse
Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company
has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock
and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company
stock option plans or as a result of sales disclosed in the SEC Reports. The Company does not have pending before the Commission
any request for confidential treatment of information. Except for the issuance of the Shares, no event, liability, fact, circumstance,
occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its
Subsidiaries or their respective businesses, properties, operations, assets or financial condition, that would be required to
be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not
been publicly disclosed at least 1 Trading Day prior to the date that this representation is made.

  

(j)       Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or enforceability of this Agreement or (ii) could, if there were
an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect, except CPI Aerostructures has
threatened to commence an action against the Company as a result of the termination of the Agreement whereby it had the right
to acquire Welding Metallurgy, Inc. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been
the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of
breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation
by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued
any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary
under the Exchange Act or the Securities Act.

 

(k)       Labor
Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of
the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries
believe that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company
or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company
or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are
in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices,
terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.

  

    	 	5	 

     

    

 

(l)       Compliance.
Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has
the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), except that the Company has received notice from CPI Aerostructures
alleging that the Company has breached the Agreement pursuant to which CPI could have acquired Welding Metallurgy, Inc., (ii)
is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority or (iii) is or has been
in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign,
federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material
Adverse Effect.

 

(m)      
Environmental Laws. The Company and its Subsidiaries (i) are in compliance with all federal, state, local and foreign laws
relating to pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land
surface or subsurface strata), including laws relating to emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”)
into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments,
licenses, notices or notice letters, orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder
(“Environmental Laws”); (ii) have received all permits licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses; and (iii) are in compliance with all terms and conditions of any such
permit, license or approval, where in each clause (i), (ii) and (iii), the failure to so comply could be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect.

 

(n)       Regulatory
Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any Material Permit.

  

(o)       Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them
and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except for (i) Liens set forth in the SEC Reports, (ii) such Liens as do not materially
affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by
the Company and the Subsidiaries and (iii) Liens for the payment of federal, state or other taxes, for which appropriate reserves
have been made therefor in accordance with GAAP and, the payment of which is neither delinquent nor subject to penalties. Any
real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases with which the Company and the Subsidiaries are in compliance.

 

(p)       Intellectual
Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights
and similar rights as described in the SEC Reports as necessary or required for use in connection with their respective businesses
and which the failure to so have could have a Material Adverse Effect.

 

    	 	6	 

     

    

 

(q)       Insurance.
The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged. Neither
the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business
without a significant increase in cost.

 

(r)      Transactions
With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company or
any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party
to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case
in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option
plan of the Company.

 

(s)       Sarbanes-Oxley;
Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any and all applicable requirements
of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated
by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. Except as disclosed in the SEC
Reports, the Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance
that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and
procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.
The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company
and the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such
date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange
Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the internal control over financial
reporting (as such term is defined in the Exchange Act) of the Company and its Subsidiaries that have materially affected, or
is reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries.

 

(t)       Certain
Fees. Except for (i) a sales commission to be paid to the Placement Agent in an amount equal to six percent (6)% of the purchase
price of the Shares, payable at the Company’s option, in cash or additional shares of Common Stock, no brokerage or finder’s
fees or commissions are or will be payable by the Company or any Subsidiary to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. The
Purchaser shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons
for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement.

 

(u)       Private
Placement. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Shares by the Company to the Purchaser as contemplated hereby.
The issuance and sale of the Shares hereunder does not contravene the rules and regulations of the Trading Market.

  

    	 	7	 

     

    

 

(v)       Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Shares, will not
be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration
under the Investment Company Act of 1940, as amended.

 

(w)       Registration
Rights. Except as disclosed in the Company’s SEC Reports, no Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company or any Subsidiary.

 

(x)       Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company
has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the
Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or
maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance requirements. The Common Stock is currently eligible
for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company is current
in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in connection with such
electronic transfer.

 

(y)       Disclosure.
All of the disclosure furnished by or on behalf of the Company to the Purchaser regarding the Company and its Subsidiaries, their
respective businesses and the transactions contemplated hereby, is true and correct and does not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.

 

(z)       No
Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering
of the Shares to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require
the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any
Trading Market on which any of the securities of the Company are listed or designated.

  

(aa)   
Solvency. Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the
receipt by the Company of the proceeds from the sale of the Securities hereunder: (i) the fair saleable value of the Company’s
assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities
(including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small
capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company, consolidated and projected capital requirements
and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would
receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient
to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend
to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable
on or in respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe that it will
file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the
Closing Date. For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money
or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (y) all
guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or
should be reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement
of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present
value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Neither
the Company nor any Subsidiary is in default with respect to any Indebtedness.

 

    	 	8	 

     

    

 

(bb)   
Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and
local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which
it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined
to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the
payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There
are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of
the Company or of any Subsidiary know of no basis for any such claim.

 

(cc)   
No General Solicitation. Neither the Company nor any Person acting on behalf of the Company has offered or sold any of
the Shares by any form of general solicitation or general advertising. The Company has offered the Shares for sale only to the
Purchaser and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.

  

(dd)   
Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary,
any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii)
made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties
or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made
by any person acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material
respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

(ee)   
Regulation M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly
or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of any of the Shares, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another
to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Placement
Agent in connection with the placement of the Shares.

 

(ff)   
Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director,
officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered
by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).

 

(gg) 
Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance
with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money
Laundering Laws”), and no Action or Proceeding by or before any court or governmental agency, authority or body or any
arbitrator involving the Company and any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge
of the Company or any Subsidiary, threatened.

 

    	 	9	 

     

    

 

(hh) 
No Disqualification Events.  With respect to the Securities to be offered and sold hereunder in reliance on Rule 506
under the Securities Act, none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer,
other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s
outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule
405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered
Person” and, together, “Issuer Covered Persons”) is subject to any of the "Bad Actor" disqualifications
described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for
a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any
Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure
obligations under Rule 506(e), and has furnished to the Purchaser a copy of any disclosures provided thereunder.

  

(ii)       Other
Covered Persons. Other than the Placement Agent, the Company is not aware of any person (other than any Issuer Covered Person)
that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sale
of any Shares.

 

3.2       Representations
and Warranties of the Purchaser. Purchaser hereby represents and warrants to the Company as follows:

 

(a)       Organization;
Authority. Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability
company or similar power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise
to carry out its or his obligations hereunder. The execution and delivery of this Agreement and performance by Purchaser of the
transactions contemplated by this Agreement have been duly authorized by all necessary corporate, partnership, limited liability
company or similar action, as applicable, on the part of Purchaser. This Agreement, when delivered by Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation of Purchaser, enforceable against it or him in
accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by
laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.

 

(b)       Own
Account. Purchaser understands that the Shares are “restricted securities” and have not been registered under
the Securities Act or any applicable state securities law and is acquiring the Shares as principal for its own account and not
with a view to or for distributing or reselling such Shares or any part thereof in violation of the Securities Act or any applicable
state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any
applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute
or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law. Purchaser
is acquiring the Securities hereunder in the ordinary course of its business.

 

(c)       Purchaser
Status. At the time Purchaser was offered the Shares, it was, and as of the date hereof it is, either: (i) an “accredited
investor” as defined in Rule 501(a) under the Securities Act or (ii) a “qualified institutional buyer” as defined
in Rule 144A(a) under the Securities Act.

  

(d)       Experience
of Purchaser. Purchaser, either alone or together with its or his representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Shares. Purchaser is able to bear the economic risk of an investment in the Shares and, at the present time, is able to
afford a complete loss of such investment.

 

(e)       General
Solicitation. Purchaser is not purchasing the Shares as a result of any advertisement, article, notice or other communication
regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented
at any seminar or any other general solicitation or general advertisement.

 

    	 	10	 

     

    

 

(f)       Access
to Information. Purchaser acknowledges that it or he has had the opportunity to review this Agreement (including all exhibits
and schedules thereto) and the SEC Reports and has been afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning the terms and conditions of the Shares and the merits
and risks of investing in the securities of the Company; (ii) access to information about the Company and its financial condition,
results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and
(iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort
or expense that is necessary to make an informed investment decision with respect to the investment. The Purchaser acknowledges
that the Company has discussed the status of the sale of its Welding Metallurgy Inc. subsidiary to CPI Aerostructures Inc, (the
“WMI Transaction”) with Purchaser.

  

ARTICLE
IV.

OTHER
AGREEMENTS OF THE PARTIES 

 

4.1       Transfer Restrictions.

 

(a)       The
Shares only may be disposed of in compliance with state and federal securities laws. In connection with any transfer of Shares
other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser, the
Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Shares under the Securities Act. As a condition of transfer,
any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights and obligations
of a Purchaser under this Agreement.

  

(b)       The
Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any certificates representing the
Shares in the following form:

 

THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

4.2       Use
of Proceeds. The Company shall use the net proceeds from the sale of the Shares hereunder for working capital purposes, including
the payment of Indebtedness.

 

 

ARTICLE
V.

MISCELLANEOUS

 

5.1      
Indemnity. The Purchaser agrees to indemnify and hold harmless the Company, its officers and directors, employees and its
affiliates and their respective successors and assigns and each other person, if any, who controls any thereof, against any loss,
liability, claim, damage and expense whatsoever (including, but not limited to, any and all expenses whatsoever reasonably incurred
in investigating, preparing or defending against any litigation commenced or threatened or any claim whatsoever) arising out of
or based upon any false representation or warranty or breach or failure by the Purchaser to comply with any covenant or agreement
made by the Purchaser herein or in any other document furnished by the Purchaser to any of the foregoing in connection with this
transaction.

 

    	 	11	 

     

    

 

5.2       Modification.
Neither this Agreement nor any provisions hereof shall be modified, discharged or terminated except by an instrument in writing
signed by the party against whom any waiver, change, discharge or termination is sought.

 

5.3       Notices.
Any notice, demand or other communication which any party hereto may be required, or may elect, to give to anyone interested hereunder
shall be sufficiently given if (a) deposited, prepaid, with a recognized international courier service, (b) delivered personally,
(c) upon the expiration of twenty four (24) hours after transmission, if sent by facsimile if a confirmation of transmission is
produced by the sending machine (and a copy of each facsimile promptly shall be sent as provided in clause (a), in each case to
the parties at their respective addresses set forth below their signatures to this Agreement (or at such other address for a party
as shall be specified by like notice; provided that the notices of a change of address shall be effective only upon receipt thereof).

 

5.4       Counterparts.
This Agreement may be executed through the use of separate signature pages or in any number of counterparts and by facsimile,
and each of such counterparts shall, for all purposes, constitute one agreement binding on all parties, notwithstanding that all
parties are not signatories to the same counterpart. Signatures may be facsimiles.

  

5.5       Binding
Effect. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the parties
and their heirs, executors, administrators, successors, legal representatives and assigns.

 

5.6       Entire
Agreement. This Agreement (including the exhibits and schedules hereto) contain the entire agreement of the parties and there
are no representations, covenants or other agreements except as stated or referred to herein and therein.

 

5.7       Assignability.
This Agreement is not transferable or assignable by the undersigned.

 

5.8       Applicable
Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of New York,
without giving effect to conflicts of law principles. If there is any litigation relating to this Agreement or the transaction
contemplated hereby, the parties hereto irrevocably consent to the jurisdiction of the courts of the State of New York and of
any federal court located in such State in connection with any action or proceeding arising out of or relating to this Agreement,
any document or instrument delivered pursuant to, in connection with or simultaneously with this Agreement, or a breach of this
Agreement or any such document or instrument. In any such action or proceeding, each party hereto waives personal service of any
summons, complaint or other process and agrees that service thereof may be made in accordance with Section 5.3. Within 30 days
after such service, or such other time as may be mutually agreed upon in writing by the attorneys for the parties to such action
or proceeding, the party so served shall appear or answer such summons, complaint or other process. EACH PARTY HERETO WAIVES
TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY BREACH OR ALLEGED BREACH HEREOF.

 

(Signature
Pages Follow)

 

    	 	12	 

     

    

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year this subscription has been accepted
by the Company as set forth below.

 

Name
of Purchaser: ____________________________________________________

 

Name
of Purchaser, if Joint: _____________________________________________

 

Signature
of Individual or Authorized Signatory: __________________________

 

Signature
of Purchaser, if Joint Individuals: ________________________________________

 

Name
of Authorized Signatory, if Entity: ____________________________________

 

Title
of Authorized Signatory, if Entity: _____________________________________

 

Email
Address of Authorized Signatory: ___________________________________________

 

Facsimile
Number of Authorized Signatory: _________________________________________

 

Address
for Notices to Purchaser: 

 

__________________________________

 

__________________________________

 

Address
for Delivery of Shares to Purchaser (if not same as address for notice):

 

__________________________________

 

__________________________________

 

Number
of Purchased Shares: ___________

Purchase
Price for the Purchased Shares: $1.43

EIN
Number: _______________________

 

ACCEPTANCE
OF SUBSCRIPTION

 

	 	AIR
    INDUSTRIES GROUP
	 	 	 
	 	By:	 
	 	 	Michael
    Recca
	 	 	Chief
    Financial Officer

 

Date:
July __, 2018

 

    	 	13

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