Document:

Exhibit 10.3

 

 

PLEDGE AGREEMENT

 

THIS PLEDGE AGREEMENT
is entered into effective as of December 31, 2019, by and between (a) STERLING NATIONAL BANK (herein called the “Secured
Party”) and (b) the pledgors identified on the signature pages hereto (whether one or more, each, together with its successors
and permitted assigns, a “Pledgor” and collectively, the “Pledgors”).

 

WHEREAS, Air
Industries Machining, Corp., a New York corporation, Nassau Tool Works, Inc., a New York corporation, and The Sterling Engineering
Corporation, a Connecticut corporation (collectively, the “Borrowers”, and each a “Borrower”),
Air Industries Group, a Nevada corporation (“Parent”), Air Realty Group, LLC, a Connecticut limited liability
company (“Realty”), and Secured Party have entered into that certain Loan and Security Agreement of even date
herewith (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”),
pursuant to which the Secured Party has agreed to make one or more term loans and make available a revolving line of credit to
Borrowers, all in accordance with and subject to the terms and conditions set forth in the Loan Agreement;

 

WHEREAS, Parent
owns, directly, 100% of the Equity Interests in Borrowers and Realty;

 

WHEREAS, Parent
and Realty, as guarantors thereunder have executed and delivered to Secured Party a Guaranty Agreement of even date herewith, pursuant
to which such Persons have guaranteed the payment and performance of all obligations of the Borrowers under the Loan Agreement
and the other Loan Documents (as amended, supplemented, restated or otherwise modified from time to time, the “Guaranty
Agreement”); and

 

WHEREAS, it
is a condition precedent to the Secured Party’s obligation to make the Loans and advances under the Loan Agreement that each
Pledgor, among other things, shall execute and deliver this Agreement and pledge to Secured Party the Pledged Collateral (as hereinafter
defined) as security for the Secured Obligations (as hereinafter defined);

 

NOW, THEREFORE,
in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the receipt and sufficiency
of which are hereby acknowledged, and as an inducement for Secured Party to enter into the Loan Agreement and other Loan Documents,
the parties hereto, intending to be legally bound hereby, do agree as follows:

 

1.
DEFINITIONS AND REFERENCES

 

1.1.
Defined Terms

 

As used in this Agreement
(including the recitals hereof), the following terms shall have the meanings specified in this Section 1.1:

 

“Agreement”
means this Pledge Agreement, as amended, restated, supplemented or otherwise modified from time to time in accordance with the
terms hereof.

 

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“Company
Rights” means, collectively, all LLC Rights, all Partnership Rights and all Pledged Shares.

 

“Company
Rights to Payments” means, collectively, all LLC Rights to Payments, Partnership Rights to Payments and all rights in
respect of Pledged Shares described in item (iv) of the definition thereof.

 

“Excluded
Equity” means the voting Equity Interest of any Issuer that is a First Tier Foreign Subsidiary in excess of 65% of all
voting Equity Interests of such Issuer.

 

“Equity
Interest” means, with respect to any Person, shares of capital stock, partnership interests, membership or limited liability
company interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person,
and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such interest.

 

“First
Tier Foreign Subsidiary” means a direct Foreign Subsidiary of any Pledgor.

 

“Foreign
Subsidiary” means any Subsidiary of a Pledgor that is a “controlled foreign corporation” (as defined in the
IRC).

 

“IRC”
means the Internal Revenue Code of 1986, as amended and in effect from time to time.

 

“Issuer”
means each Subsidiary of a Pledgor.

 

“LLC
Agreements” means, collectively, any and all articles or certificates forming any Issuer that is a limited liability
company now owned or hereafter acquired by a Pledgor and any operating agreement, limited liability company agreement or other
agreement governing any such Issuer or the relations among the members and/or managers of any such Issuer.

 

“LLC
Rights” means, collectively, to the extent permitted under Applicable Law, all LLC Units, all LLC Rights to Payments,
all LLC Agreements and all other interests and rights of a Pledgor in any limited liability company Issuer now owned or hereafter
acquired by such Pledgor, including without limitation any right to cause the dissolution of any such Issuer or to appoint or nominate
a successor to such Pledgor as a member of any such Issuer and all proceeds of the foregoing.

 

“LLC
Rights to Payments” means, collectively, to the extent permitted under Applicable Law, (i) all proceeds, interest, profits,
and other payments or rights to payment attributable to a Pledgor’s interests in any limited liability company Issuer now
owned or hereafter acquired by such Pledgor, including without limitation, such limited liability company Issuers listed on Schedule
1.1, and (ii) all dividends, distributions, cash, instruments and other property now or hereafter received, receivable or otherwise
made with respect to or in exchange for any interest of such Pledgor in any such Issuer, including interim distributions, returns
of capital, loan repayments, and payments made in liquidation of any such Issuer, and whether or not the same arise or are payable
under any LLC Agreements.

 

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“LLC
Units” means, collectively, to the extent permitted under Applicable Law, (i) all membership or limited liability company
ownership interests or other ownership interests of a Pledgor in any limited liability company Issuer, whether now owned or hereafter
acquired by such Pledgor, including without limitation, the limited liability company Issuers listed on Schedule 1.1 and,
(ii) all certificates representing any such membership or limited liability company ownership (or other ownership) interests, if
applicable (iii) all options and other rights, contractual or otherwise, at any time existing with respect to such membership or
limited liability company ownership (or other ownership) interests, and (iv) all dividends, cash, instruments and other property
now or hereafter received, receivable or otherwise distributed in respect of or in exchange for any or all of such membership or
limited liability company ownership (or other ownership) interests.

 

“Obligor”
means each Pledgor, each Borrower and any other Person who may now or may at any time hereafter be primarily or secondarily liable
for any of the Secured Obligations or who may now or may at any time hereafter have granted to Secured Party a lien upon any property
as security for the Secured Obligations.

 

“Paid
in Full” means payment and performance, in full, of the Secured Obligations (other than contingent indemnity obligations)
and termination of Secured Party’s Commitment to make Revolving Loans under the Loan Agreement.

 

“Partnership”
means any general partnership, limited liability partnership or limited partnership Issuer and any successor of any such partnership,
whether now owned or hereafter acquired by a Pledgor.

 

“Partnership
Agreements” means, collectively, any and all articles or certificates forming any Partnership and any partnership agreement,
operating agreement or other agreement governing any such Partnership or the relations among the partners in any such Partnership.

 

“Partnership
Rights” means, collectively, to the extent permitted under Applicable Law, all Partnership Units, all Partnership Rights
to Payments, all Partnership Agreements and all other interests and rights of a Pledgor in any Partnership now owned or hereafter
acquired by such Pledgor, including without limitation any right to cause the dissolution of such Partnership or to appoint or
nominate a successor to such Pledgor as a partner in such Partnership and all proceeds of the foregoing.

 

“Partnership
Rights to Payments” means, collectively, to the extent permitted under Applicable Law, (i) all proceeds, interest, profits,
and other payments or rights to payment attributable to a Pledgor’s interests in any Partnership, including without limitation,
the Partnerships listed on Schedule 1.1, and (ii) all distributions, dividends, cash, instruments and other property now
or hereafter received, receivable or otherwise made with respect to or in exchange for any Pledgor’s interest in any such
Partnership, including interim distributions, returns of capital, loan repayments, and payments made in liquidation of any such
Partnership, and whether or not the same arise or are payable under any Partnership Agreements.

 

“Partnership
Units” means, collectively, to the extent permitted by Applicable Law, (i) all general partnership, limited partnership
or limited liability partnership (or other ownership) interests of a Pledgor in any Partnership, including without limitation,
the Partnerships listed on Schedule 1.1, (ii) all certificates representing any such general partnership, limited partnership
or limited liability partnership (or other ownership) interests, (iii) all options and other rights, contractual or otherwise,
at any time existing with respect to such general partnership, limited partnership or limited liability partnership (or other ownership)
interests, and (iv) all dividends, cash instruments and other property now or hereafter received, receivable or otherwise distributed
in respect of or in exchange for any or all of such general partnership, limited partnership or limited liability partnership (or
other ownership) interests.

 

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“Pledged
Collateral” means, collectively and each individually, (i) the Company Rights, (ii) the Company Rights to Payments and
(iii) any and all replacements, products and cash and non-cash proceeds of, and dividends, distributions in property, returns
of capital or other distributions made on or with respect to, any of the foregoing Equity Interests; provided, however,
that the Pledged Collateral shall not at any time include (and expressly excludes) any Excluded Equity or any rights in respect
thereof.

 

“Pledged
Shares” means, collectively, (i) all of the issued and outstanding shares of stock or other equity securities of a Pledgor
in any Issuer owned or held of record or beneficially by such Pledgor on the date hereof, including but not limited to such shares
of stock and equity securities described in Schedule 1.1; (ii) all other shares of stock or other equity securities
now owned or hereafter acquired by a Pledgor in an Issuer, whether of the Issuers listed on Schedule 1.1 or any other Person; (iii)
all certificates representing any such shares and equity securities, all options, and other rights, contractual or otherwise, at
any time existing with respect to such shares; (iv) all distributions, dividends, cash, instruments and other property now or hereafter
received, receivable or otherwise distributed in respect of or in exchange for any Pledgor’s interest in any corporate Issuer,
including interim distributions, returns of capital loan repayments and payments made in liquidation of any such Issuer, and whether
or not the same arise or are payable under any articles or certificate of incorporation or the bylaws of such Issuer; and (v) any
articles or certificate of incorporation forming any corporate Issuer now owned or hereafter acquired by a Pledgor or any bylaws
or other agreement governing any such Issuer or the relations among the shareholders of any such Issuer and all rights thereunder.

 

“Secured
Obligations” has the meaning given to such term in Section 2(a) hereof.

 

1.2.
Accounting Terms

 

Unless otherwise specified,
as used in this Agreement or in any certificate, report, instrument or other document made or delivered pursuant to this Agreement,
all accounting terms not defined in this Agreement or in the Loan Agreement shall have the meanings given to such terms in and
shall be interpreted in accordance with GAAP.

 

1.3.
Other Definitional Provisions

 

All capitalized terms
in this Agreement (including the recitals hereof) and not defined herein shall have the defined meanings provided in the Loan Agreement.
Whenever the context so requires, each reference to gender includes the masculine and feminine, the singular number includes the
plural and vice versa. The words “hereof” “herein” and “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and
references to section, article, annex, schedule, exhibit and like references are references to this Agreement unless otherwise
specified. A Default or Event of Default shall “continue” or be “continuing” until such Default or Event
of Default has been waived by Secured Party in writing or cured. References in this Agreement to any Person shall include such
Person and its successors and permitted assigns.

 

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2.
PLEDGE OF COLLATERAL

 

(a) Each Pledgor
hereby pledges and collaterally assigns to Secured Party and grants to Secured Party a continuing first priority security interest
in and lien upon all of its right, title and interest in and to the Pledged Collateral, whether now or hereafter existing and the
proceeds thereof, in each case, as continuing collateral security for the due and punctual payment and performance of (1) the Loans
and all other Obligations of Borrowers and each other Pledgor under the Loan Agreement and the other Loan Documents (including,
without limitation, all obligations or liabilities arising from all Bank Products and, if such Pledgor is party to a Guaranty Agreement,
the payment by such Pledgor when due and payable of all amounts from time to time owing by it under or in respect of such Guaranty
Agreement and the due performance by such Pledgor of all of its other obligations under or in respect of such Guaranty Agreement),
whether now existing or hereafter incurred or arising, (2), all other sums payable under the Loan Agreement and the other Loan
Documents, whether for principal, interest, fees or otherwise, whether now existing or hereafter incurred or arising, and (3) all
renewals, extensions, amendments, modifications, supplements, or restatements of or substitutions for any of the foregoing, in
each case, whether or not evidenced by any note or other instrument or document, whether arising from or in connection with a loan,
extension of credit, issuance of a letter of credit, acceptance, guaranty, indemnification or otherwise, whether direct or indirect,
absolute or contingent, due or to become due, primary or secondary, as principal or guarantor, and including all principal, interest,
charges, costs, fees, and expenses (all such obligations, indebtedness and liabilities described in this Section 2(a) collectively,
whether now existing or incurred hereafter and including any interest which accrues after the commencement of any case, proceeding
or other action relating to the bankruptcy, insolvency or reorganization of any Borrower, any Pledgor or any Issuer, the “Secured
Obligations”). As used herein, the term “Secured Obligations” refers to all present and future indebtedness,
obligations and liabilities of whatever type which are described above in this section, including any interest which accrues after
the commencement of any case, proceeding, or other action relating to the bankruptcy, insolvency, or reorganization of any Borrower,
a Pledgor or any Issuer. Notwithstanding anything in this Agreement to the contrary, the Secured Obligations shall be limited to
a maximum aggregate amount equal to the largest amount that would render this Agreement and/or the security interest granted hereunder
subject to avoidance as a fraudulent transfer or conveyance under Applicable Law.

 

(b) Pledgors
shall deliver (or cause to be delivered) to Secured Party any and all certificates or instruments evidencing or representing its
Pledged Collateral. At any time that a Pledgor holds any certificates or instruments evidencing or representing its Pledged Collateral,
such Pledgor shall hold such certificates and/or instruments as bailee, in trust, for the Secured Party. Each Pledgor shall, upon
request of Secured Party in connection with delivery of any certificates or instruments evidencing or representing Pledgor’s
Pledged Collateral to Secured Party, execute and deliver to Secured Party one or more equity powers duly executed by such Pledgor
in blank in respect of each certificate or instrument evidencing or representing any Pledged Collateral, in form and substance
satisfactory to Secured Party in its Permitted Discretion, together with such other documents or instruments reasonably requested
by Secured Party in order for Secured Party to have a valid and perfected continuing first priority Lien on the Pledged Collateral.

 

(c) Secured Party
shall have the right, but not the obligation, to pay any taxes or levies on or relating to the Pledged Collateral and any costs
to preserve the Pledged Collateral, which payments shall be made for the account of the applicable Pledgor and shall constitute
a part of the Obligations.

 

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(d) Each Pledgor
(i) irrevocably grants Secured Party the right to file any or all financing statements or continuation statements, and (ii) hereby
agrees, within five (5) Business Days of any request by the Secured Party, at such Pledgor’s own cost and expense, to duly
execute and deliver to Secured Party such assignments, certificates and/or such other agreements, assignments, instructions or
documents as Secured Party may reasonably request, in each case, relating to such Pledgor’s Pledged Collateral or otherwise
to enable Secured Party to create, maintain and perfect or from time to time renew the security interests granted hereby or to
create, maintain and perfect a security interest in any additional Pledged Collateral hereafter acquired by such Pledgor or in
any and all additions to and/or replacements, products and proceeds of any of the foregoing, all in form and substance reasonably
satisfactory to Secured Party. Pledgors will pay all fees, costs and expenses (including, without limitation, reasonable attorneys’
fees) associated therewith, including without limitation, the cost of filing any of the foregoing in all public offices or other
locations wherever Secured Party deems filing to be necessary or desirable. Each Pledgor irrevocably grants Secured Party the right,
at Secured Party’s option, to file any or all of the foregoing referenced financing statements and continuations pursuant
to the Uniform Commercial Code as enacted in the State of such Pledgor’s organization and otherwise without such Pledgor’s
signature, and each Pledgor irrevocably appoints Secured Party as such Pledgor’s true and lawful attorney in fact, for such
Pledgor and in its name, place and stead, with full power of substitution, and as fully and to the same extent and with the same
effect as such Pledgor can, might or could do under Applicable Law, to execute any of the foregoing in such Pledgor’s name
and to perform all other acts that Secured Party deems appropriate to perfect and continue the security interests conferred by
this Agreement or otherwise to effect fully the purposes, terms and conditions of this Agreement, the Loan Agreement and the other
Loan Documents. The aforesaid power of attorney is irrevocable, coupled with an interest, durable and shall not be affected by
the subsequent disability or incapacity of any Pledgor.

 

(e) No injury
to, or loss or destruction of, the Pledged Collateral or any Material Adverse Effect shall relieve any Pledgor of any of its Secured
Obligations.

 

3.
VOTING RIGHTS, DIVIDENDS AND DISTRIBUTIONS

 

(a) Unless an
Event of Default shall have occurred and be continuing or would result from or be caused by any of the following:

 

(i) Each Pledgor
shall be entitled to exercise any and all voting and/or consensual rights and powers relating or pertaining to its Pledged Collateral
or any part thereof, subject to the terms hereof;

 

(ii) Each Pledgor
shall be entitled to receive and retain any and all Company Rights to Payments, including those paid in cash in respect of its
Pledged Collateral; provided, however, that, any and all Company Rights to Payments paid or issued other than in
cash (including, without limitation, stock and liquidating dividends) in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of or in exchange for, any of its Pledged Collateral whether resulting from a subdivision,
combination or reclassification of the outstanding Equity Interests or other ownership interests of any Issuer or any other Person
or received in conversion or exchange for its Pledged Collateral or any part thereof or as a result of any merger, consolidation,
conversion, acquisition, transfer, sale or disposition of any Issuer or its Pledged Collateral or other exchange of assets to which
such Pledgor or any Issuer may be a party or otherwise, and any and all cash and other property received in exchange for or redemption
of any of its Pledged Collateral, shall be, and shall promptly, and in any event within two (2) Business Days of receipt thereof,
be delivered to Secured Party to hold as, Pledged Collateral and shall, if received by a Pledgor, be received in trust for the
benefit of Secured Party, be segregated from the other property or funds of such Pledgor and be forthwith delivered to Secured
Party in the exact form received with any necessary endorsement or appropriate equity powers duly executed in blank, to be held
by Secured Party as Pledged Collateral;

 

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(iii) Secured
Party shall execute and deliver (or cause to be executed and delivered) to any applicable Pledgor all such proxies, powers of attorney,
dividend orders, interest orders and other instruments as such Pledgor may request for the purpose of enabling such Pledgor to
exercise the voting and/or consensual rights and powers that such Pledgor is entitled to exercise pursuant to Section 3(a)
and/or to receive the Company Rights to Payments that such Pledgor is authorized to receive and retain pursuant to Section 3(a)(ii);
and each Pledgor shall execute and deliver to Secured Party all proxies, powers of attorney, dividend orders, interest orders and
other instruments and documents as may be required or may be requested by Secured Party to enable Secured Party to receive and
retain the Company Rights to Payments in property, returns of capital and other distributions it is authorized to receive and retain
pursuant to Section 3(b); and

 

(b) Upon the
occurrence and during the continuance of an Event of Default:

 

(i) all rights
of any Pledgor to receive the Company Rights to Payments that such Pledgor is authorized to receive and retain pursuant to Section 3(a)(ii)
shall cease immediately, without any notice to any Pledgor or action by or on behalf of Secured Party or any other Person, and
all such rights thereupon shall become vested in Secured Party automatically without any action by any Person, and Secured Party
shall have the sole and exclusive right and authority to receive and retain such Company Rights to Payments. Upon notice by the
Secured Party to any Pledgor, the Secured Party may elect to terminate such Pledgor’s rights to exercise the voting and/or
consensual rights and powers that such Pledgor is entitled to exercise pursuant to Section 3(a)(i) and upon the delivery
of such notice, the Secured Party shall have the sole and exclusive right and authority to exercise such voting and/or consensual
rights and powers. Each Pledgor shall execute and deliver such proxies, powers of attorney, dividend orders, interest orders and
other instruments and documents as Secured Party may request to enable Secured Party to exercise such rights and receive such Company
Rights to Payments and to exercise voting and/or consensual powers with respect to any Issuer. In addition, Secured Party is hereby
appointed the true and lawful attorney-in-fact, for such Pledgor and in its name, place and stead, with full power of substitution
and as fully and to the same extent and with the same effect as such Pledgor can, might or could do under Applicable Law, with
full power of substitution, which appointment as attorney-in-fact is irrevocable and coupled with an interest, to take all such
actions after the occurrence and continuation of an Event of Default, whether in the name of Secured Party or such Pledgor, as
Secured Party may consider necessary or desirable for the purpose of exercising such rights and receiving such Company Rights to
Payments. The aforesaid power of attorney is irrevocable, coupled with an interest, durable and shall not be affected by the subsequent
disability or incapacity of any Pledgor. Any and all money and other property paid over to or received by Secured Party pursuant
to the provisions of this Section 3(b)(i) shall be retained by Secured Party as part of the Pledged Collateral and
shall be applied in accordance with the provisions hereof and the Loan Agreement;

 

(ii) without
limiting the generality of the foregoing, Secured Party may at its option exercise any and all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining to any of the Pledged Collateral (other than, except as otherwise
expressly allowed hereunder, voting rights pertaining to the Pledged Collateral or any part thereof), as if it were the absolute
owner thereof, including, without limitation, the right to exchange, in its discretion, any and all of the Pledged Collateral upon
the merger, consolidation, reorganization, recapitalization or other adjustment of any Issuer, or upon the exercise by any Issuer
of any right, privilege or option pertaining to any Pledged Collateral, and, in connection therewith, to deposit and deliver any
and all of the Pledged Collateral with any committee, depository, transfer agent, registrar or other designated agent upon such
terms and conditions as it may determine and any and all rights to dissolve any Issuer or to compel distribution of any Issuer’s
assets; and

 

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(iii) all Company
Rights to Payments of any kind in respect of Pledged Collateral which are received by any Pledgor contrary to the provisions of
subsection (b)(i) and (b)(ii) of this Section 3 shall be received in trust for the benefit of Secured Party, shall
be segregated from other funds of Pledgors, and shall be forthwith paid over to Secured Party as Pledged Collateral in the exact
form received, to be held by Secured Party as Pledged Collateral.

 

4.
REMEDIES ON DEFAULT

 

(a) Notwithstanding
and without limiting any other provision of this Agreement, the Loan Agreement or any of the Loan Documents, if at any time an
Event of Default shall have occurred and be continuing, then, Secured Party may from time to time in its discretion, without limitation
and without notice except as expressly provided below or by law:

 

(i) exercise
in respect of the Pledged Collateral, in addition to any other rights or remedies provided for herein, under the other Loan Documents
or otherwise available to it, all the rights and remedies of a secured party upon default under the UCC (whether or not the UCC
applies to the affected Pledged Collateral) or at law or in equity generally or otherwise, including without limitation: (A) to
foreclose the security interests and Liens created hereunder, (B) to realize upon or take possession of or sell any of the Pledged
Collateral with or without judicial process, (C) to exercise such rights and powers with respect to the Pledged Collateral as any
Pledgor might exercise; and

 

(ii) to the
extent permitted by Applicable Law, without being required to give any notice to any Pledgor or to take or do any action (except
as provided below or by Applicable Law):

 

(A) apply any
cash held by it hereunder in the manner provided in Section 4(l); and

 

(B) collect,
receive, appropriate and realize upon the Pledged Collateral or any part thereof, and/or sell, assign, transfer, contract to sell
or otherwise dispose of and deliver the Pledged Collateral or any part thereof, in its entirety or in portions, at public or private
sale or at any broker’s board, on any securities exchange or at any of Secured Party’s places of business or elsewhere,
for cash, upon credit or for future delivery, and at such price or prices as Secured Party may deem best, and Secured Party may
(except as otherwise provided by law) be the purchaser of any or all of the Pledged Collateral so sold and thereafter may hold
the same, absolutely, free from any right or claim of whatsoever kind.

 

(b) In the event
of a sale as aforesaid, Secured Party may, at any such sale, if it deems it advisable to do so, restrict the number of prospective
bidders or purchasers and/or further restrict such prospective bidders or purchasers to Persons who will represent and agree that
they are purchasing for their own account, for investment and not with a view to the distribution or resale of the Pledged Collateral,
and may otherwise require that such sale be conducted subject to restrictions as to such other matters as Secured Party may deem
necessary in order that such sale may be effected in such manner as to comply with all applicable state and federal securities
and other laws. Upon any such sale, Secured Party shall have the right to deliver, assign and transfer the Pledged Collateral so
sold to the purchaser thereof.

 

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(c) Each Pledgor
hereby acknowledges that, notwithstanding that a higher price might be obtained for the Pledged Collateral at a public sale than
at a private sale or sales, the making of a public sale of the Pledged Collateral may be subject to registration requirements under
applicable securities laws and other legal restrictions, compliance with which would require such actions on the part of such Pledgor,
would entail such expenses and would subject Secured Party, any underwriter through whom the Pledged Collateral may be sold or
any controlling person of any of the foregoing to such liabilities, as would make a public sale of the Pledged Collateral impractical.
Accordingly, each Pledgor hereby agrees that private sales made by Secured Party in good faith in accordance with the provisions
of this Article 4, may be at prices and on other terms less favorable to any or all Pledgors than if the Pledged Collateral
were sold at a public sale, and that Secured Party shall not have any obligation to take any steps in order to permit the Pledged
Collateral to be sold at a public sale, such a private sale being considered or deemed to be a sale in a commercially reasonable
manner and that Secured Party shall have no obligation to delay the sale of any Pledged Collateral for the period of time necessary
to permit their registration under the Securities Act of 1933, as amended (the “Securities Act”). Each Pledgor
further acknowledges and agrees that any offer to sell any Pledged Collateral which has been (i) publicly advertised on a bona
fide basis in a newspaper or other publication of general circulation in the financial community of Dallas, Texas (to the extent
that such an offer may be so advertised without prior registration under the Securities Act), or (ii) made privately in the manner
described above to not less than fifteen (15) bona fide offerees shall be deemed to involve a “public disposition”
for the purposes of Section 9-610(c) of the UCC (or any successor or similar, applicable statutory provision), notwithstanding
that such sale may not constitute a “public offering” under the Securities Act, and that Secured Party may, in such
event, bid for the purchase of such Pledged Collateral.

 

(d) Each Pledgor
also hereby acknowledges that any private sale of the Pledged Collateral may be subject to compliance with federal and state securities
and/or other laws.

 

(e) Each purchaser
at any such sale shall hold the property sold, absolutely free from any claim or right whatsoever of any Pledgor, including any
equity or right of redemption of any Pledgor, and each Pledgor hereby specifically waives all rights of redemption, stay or appraisal
and other rights that such Pledgor has or may have under any law, regulation or statute now existing or hereafter adopted or otherwise.
Secured Party shall give Pledgors not less than ten (10) calendar days’ written notice of its intention to make any such
public or private sale. In the case of a public sale, such notice shall state the time and place fixed for such sale, and, in case
of a sale at broker’s board, on a securities exchange, at one or more of Secured Party’s places of business or elsewhere,
shall state the board, exchange or other location at which such sale is to be made and the day on which the Pledged Collateral,
or that portion thereof so being sold, will first be offered for sale at such location. In the case of a private sale, such notice
shall state only the date on or after which such sale may be made. Any such notice given as aforesaid shall be deemed to be reasonable
notification.

 

(f) Any such
public sale shall be held at such time or times within ordinary business hours and at such place or places as Secured Party may
fix in the notice of such sale. At any sale the Pledged Collateral may be sold in one lot as an entirety or in parts, as Secured
Party may determine. Secured Party shall not be obligated to make any sale pursuant to any such notice. Secured Party may, without
notice or publication, adjourn any sale or cause the same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of
all or any part of the Pledged Collateral on credit or for future delivery, the Pledged Collateral so sold may be retained by Secured
Party until the selling price is paid by the purchaser thereof, but Secured Party shall not incur any liability in case of the
failure of such purchaser to take up and pay for the Pledged Collateral so sold and, in case of any such failure, such Pledged
Collateral may again be sold upon like notice.

 

(g) Secured Party,
instead of exercising the power of sale herein conferred upon it, may proceed by a suit or suits at law or in equity to foreclose
its lien or security interest arising from this Agreement and sell the Pledged Collateral, or any portion thereof, under a judgment
or decree of a court or courts of competent jurisdiction.

 

    PLEDGE AGREEMENT - Page 9

     

    

 

(h) On any sale
of any part of the Pledged Collateral, Secured Party is hereby authorized to comply with any limitation or restriction in connection
with such sale that may be necessary in order to avoid any violation of applicable law or in order to obtain any required approval
of the purchaser(s) by any Governmental Authority.

 

(i) Each Pledgor
hereby acknowledges, understands and agrees that Secured Party (i) may exercise its rights under the Loan Agreement and the other
Loan Documents, whether or not they provide security for any of the Secured Obligations, without exercising its rights hereunder
or affecting the security provided hereunder, and (ii) may proceed against all or any portion of the Pledged Collateral and all
other collateral securing any of the Secured Obligations in such order and at such time as determined by Secured Party in its sole
discretion. Each Pledgor hereby expressly waives any rights under the doctrine of marshalling of assets.

 

(j) Each Pledgor
hereby acknowledges, understands and agrees that compliance with the foregoing procedures shall satisfy any applicable requirements
that such sale or disposition be made in a commercially reasonable manner, and shall result in such sale or disposition being considered
and deemed to have been made in a commercially reasonable manner.

 

(k) Each of the
rights, powers and remedies provided herein, or in the Loan Agreement or any Loan Document, or now or hereafter existing at law,
in equity, by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power or remedy
provided for herein or therein or now or hereafter existing at law, in equity, by statute or otherwise. The exercise of any such
right, power or remedy shall not preclude the simultaneous or later exercise of any or all other such rights, powers or remedies.
Secured Party shall have the right in its sole discretion to determine which rights, powers, Liens, security interest or remedies
Secured Party may at any time pursue, relinquish, subordinate or modify or to take any other action with respect thereto and such
determination will not in any way modify or affect any of Secured Party’s rights, powers, Liens, security interests or remedies
hereunder, under the Loan Agreement or any of the Loan documents, or under Applicable Law or at equity. No notice to or demand
on any Pledgor in any case shall entitle such Pledgor or any other Pledgor to any other notice or demand in similar or other circumstances.

 

(l) The proceeds
of any collection, recovery, receipt, appropriation, realization, transfer, exchange, disposition or sale as aforesaid shall be
applied by Secured Party as provided in the Loan Agreement.

 

5.
REPRESENTATIONS, WARRANTIES and covenants OF pledgor

 

(a) Each Pledgor
represents and warrants to Secured Party as of the date hereof and in all material respects as of the date of each request for
a Revolving Loan except as relates to an earlier date (which representations and warranties shall survive the execution and delivery
of this Agreement and the making of Loans and advances under the Loan Agreement) as follows:

 

(i) it has
all requisite power, right and authority to (A) own its Pledged Collateral, (B) execute, deliver and perform this Agreement, (C)
pledge its Pledged Collateral, and (D) grant the security interests and Liens in its Pledged Collateral pursuant to this Agreement
and otherwise consummate the transactions contemplated under this Agreement and the other Loan Documents to which it is a party,
and such Pledgor is under no legal restriction or limitation that would prevent it from doing any of the foregoing;

 

(ii) this Agreement
has been duly executed and delivered by such Pledgor and constitutes the legal, valid and binding obligation of such Pledgor, enforceable
against such Pledgor in accordance with its terms, subject to the effect of any applicable bankruptcy, moratorium, insolvency,
reorganization or other similar law affecting the enforceability of creditors’ rights generally and to the effect of general
principles of equity which may limit the availability of equitable remedies (whether in a proceeding at law or in equity);

 

    PLEDGE AGREEMENT - Page 10

     

    

 

(iii) such
Pledgor is the direct record and beneficial owner of its Pledged Collateral, and such Pledgor has and will have good, valid and
marketable title thereto, free and clear of all Liens other than the security interests created by this Agreement and Permitted
Liens;

 

(iv) all of
its Pledged Collateral has been duly authorized and validly issued, is fully paid and (other than with respect to limited liability
company and partnership interests) non-assessable and none of its Pledged Collateral was issued in violation of the preemptive
or subscription rights of any Person or of any agreement by which such Pledgor or any Issuer is bound;

 

(v) such Pledgor’s
Pledged Collateral described on Schedule 1.1 attached hereto constitutes 100% of (1) the issued and outstanding Partnership
Units of each Partnership, (2) the issued and outstanding LLC Units of each limited liability company Issuer, and (3) the issued
and outstanding Pledged Shares of each corporate Issuer (other than, in each case, the Excluded Equity);

 

(vi) its Pledged
Collateral is and will be duly and validly pledged to Secured Party in accordance with Applicable Law, and Secured Party has a
good, valid and perfected first priority Lien on and security interest in its Pledged Collateral and the proceeds thereof subject
to no Liens in favor of any other Person (except Permitted Liens), and no filing or other action will be necessary to perfect or
protect such lien or security interest other than the filing of any financing statement with the appropriate secretary of state
naming such Pledgor, as debtor, and Secured Party, as secured party, and describing its Pledged Collateral and delivery to Secured
Party of any certificates evidencing its Pledged Collateral endorsed in blank;

 

(vii) no restrictions
or conditions exist with respect to the transfer, voting or capital of any Pledged Collateral and no approval, consent or authorization
of, filing, registration or qualification with, or other action by, any Issuer, any Governmental Authority or any other Person
is or will be necessary to permit the valid execution, delivery or performance of this Agreement by such Pledgor or consummation
of the transactions or creation or granting of the Liens and security interests contemplated hereby and all documentary stamp and
other taxes and fees owing in connection with the issuance transfer or pledge of its Pledged Collateral (or rights in respect thereof)
have been paid;

 

(viii) the
foregoing representations and warranties are made with the knowledge and intention that Secured Party is relying and will rely
thereon, and such representations and warranties shall survive the execution and delivery of this Agreement and the making of Loans
and advances under the Loan Agreement and shall continue until this Agreement is terminated as provided herein;

 

(ix) such Pledgor
has delivered to Secured Party all certificates and instruments evidencing its Pledged Collateral and all such certificates and
instruments are valid and genuine and have not been altered; and

 

(x) as of the
date hereof, other than with respect to any corporate Issuer: (1) no Issuer has elected the application of Article 8 of the
UCC to apply to any of its Company Rights, and (2) no LLC Rights or Partnership Rights constitutes a “security” within
the meaning of, and governed by, Article 8 of the UCC.

 

    PLEDGE AGREEMENT - Page 11

     

    

 

(b) Until all
Obligations have been Paid in Full and the Loan Agreement has been terminated, each Pledgor hereby covenants that:

 

(i) Pledgor
shall: (A)  maintain, or cause to be maintained, at all times, the pledge of its Pledged Collateral to Secured Party and Secured
Party’s perfected first priority lien on and security interest in its Pledged Collateral; (B) use commercially reasonable
efforts to defend its Pledged Collateral and Secured Party’s security interest therein and perfected first priority lien
thereon against all claims and demands (other than Permitted Liens) of all Persons at any time claiming the same or any interest
therein adverse to Secured Party, and pay all reasonable costs, fees and expenses (including, without limitation, in-house documentation
and diligence fees and legal expenses and reasonable attorneys’ fees and expenses) in connection with such defense, which
may at Secured Party’s discretion be charged to such Pledgor’s account and added to the Obligations, and (C) if Secured
Party so demands in writing in accordance with this Agreement to the extent entitled thereto pursuant to this Agreement or otherwise
at any time during the continuance of an Event of Default, deliver all replacements, products and proceeds of, and dividends, distributions
in property, returns of capital or other distributions made on or with respect to, its Pledged Collateral to Secured Party promptly
upon receipt in a form and manner reasonably satisfactory to Secured Party;

 

(ii) Each Pledgor
shall, and shall cause each Issuer to, keep correct and complete books of record with respect to its Pledged Collateral in accordance
with commercially reasonable business practices;

 

(iii) Each
Pledgor shall, and shall cause each Issuer to, take all necessary and appropriate commercially reasonable actions to ensure that
(A) this Agreement and the security interests and Liens created hereby are and remain perfected and enforceable against such
Pledgor in accordance with its terms, and (B) such Pledgor complies with each of its covenants, agreements and obligations
under this Agreement;

 

(iv) Such Pledgor
shall not take or permit to be taken, or permit or cause any Issuer to take or permit to be taken, any action in connection with
its Pledged Collateral or otherwise which would reasonably be expected to impair the value of its Pledged Collateral or any portion
thereof or the value of the interests or rights of such Pledgor or Secured Party therein or with respect thereto, including, without
limitation, any amendment to or modification of the articles of incorporation or certificate of formation (or similar charter documents)
or bylaws, operating agreement, partnership agreement, or limited liability company agreement (or similar governing documents)
of such Person which would reasonably be expected to result in or cause any of the foregoing;

 

(v) Except
for the Pledged Shares, the Pledged Collateral is not and shall not at any time be evidenced by any certificates;

 

(vi) No Pledgor
will effect or permit any amendment to any of the LLC Agreements or the Partnership Agreements to elect the application of Article
8 of the UCC to apply to any of the LLC Rights or the Partnership Rights or elect to cause the LLC Rights or the Partnership Rights
to constitute “securities” within the meaning of, and governed by, Article 8 of the UCC; and

 

    PLEDGE AGREEMENT - Page 12

     

    

 

(vii) The certificates
evidencing the Pledged Collateral shall at all times be valid and shall not be altered. The Pledged Collateral at all times shall
be duly authorized, validly issued, fully paid and (other than with respect to partnership and limited liability company interests)
non-assessable, and shall not be issued in violation of the pre-emptive or subscription rights of any Person or of any agreement
by which any Pledgor or any Issuer is bound and shall not be subject to any restrictions with respect to transfer, voting or capital
of such Pledged Collateral.

 

6.
MISCELLANEOUS PROVISIONS

 

6.1.
Additional Actions and Documents

 

Each Pledgor hereby agrees
to take or cause to be taken such further commercially reasonable actions to obtain such consents and approvals and to duly execute,
deliver and file or cause to be executed, delivered and filed such further agreements, assignments, instructions, documents and
instruments as may be reasonably requested by Secured Party in order to fully effectuate the purposes, terms and conditions of
this Agreement and the consummation of the transactions contemplated hereby, whether before, at or after the performance and/or
consummation of the transactions contemplated hereby or the occurrence of a Default or Event of Default hereunder.

 

6.2.
Notices

 

Any notice or request hereunder shall be given
to Pledgors or to Secured Party in accordance with the provisions set forth in the Loan Agreement.

 

6.3.
Delay

 

No course of action or
dealing, renewal or extension of this Agreement, any security interests or liens created hereunder or rights or obligations hereunder,
release of any Pledgor or any of the foregoing or delay, failure or omission on Secured Party’s part in enforcing this Agreement,
the Loan Agreement or any other Loan Document or in exercising any right, remedy, option or power hereunder or thereunder shall
affect the liability of any Pledgor or operate as a waiver of such or of any other right, remedy, power or option or of any default,
nor shall any single or partial exercise of any right, remedy, option or power hereunder or under any other Loan Document affect
the liability of any Pledgor or preclude any other or further exercise of such or any other right, remedy, power or option. No
waiver by any party to this Agreement of any one or more defaults by the other party in the performance of any of the provisions
of this Agreement shall operate or be construed as a waiver of any future default or defaults, whether of a like or different nature.
Notwithstanding any other provision of this Agreement, the Loan Agreement or any other Loan Document, by completing the closing
or by making Loans or advances, Secured Party does not waive a breach of any representation or warranty of any Pledgor under this
Agreement and all of Secured Party’s claims and rights resulting from any breach or misrepresentation by any Pledgor hereunder
are specifically reserved by Secured Party.

 

6.4.
Successors and Assigns; Participations; New Secured Parties

 

This Agreement shall
inure to the benefit of Secured Party and each of its successors and permitted assigns. No Pledgor may assign, delegate or transfer
this Agreement or any of its rights or obligations under this Agreement, the Loan Agreement or any other Loan Document without
the prior written consent of Secured Party except by operation of law in connection with a merger or consolidation permitted under
the Loan Agreement. No rights are intended to be created under this Agreement or under any other Loan Document for the benefit
of any third party donee, creditor or incidental beneficiary of any Pledgor. Nothing contained in this Agreement or any other Loan
Document shall be construed as a delegation to Secured Party of any Pledgor’s duty of performance, including, without limitation,
any duties under any account or contract in which Secured Party has a security interest or Lien. This Agreement shall be binding
upon Pledgors and their respective successors and permitted assigns.

 

    PLEDGE AGREEMENT - Page 13

     

    

 

6.5.
Severability

 

The illegality or unenforceability
of any provision of this Agreement shall not in any way affect or impair the legality or enforceability of the remaining provisions
hereof.

 

6.6.
Survival

 

It is the express intention
and agreement of the parties hereto that all obligations, covenants, agreements, representations, warranties, waivers and indemnities
made by Pledgors herein shall survive the execution and delivery of this Agreement and the making of Loans and advances until all
Obligations have been Paid in Full and this Agreement is terminated.

 

6.7.
Effectiveness and Termination

 

This Agreement shall
be effective on the date hereof and shall continue in full force and effect until all Secured Obligations shall have been Paid
in Full and the Loan Agreement shall have been terminated, all in accordance with the Loan Agreement. The parties hereto acknowledge
that the Obligations secured hereby include a revolving line of credit and hereby agree that the rights and powers and security
interests and Liens granted to Secured Party hereunder and the financing statements filed pursuant hereto shall continue in full
force and effect notwithstanding the fact that Borrowers’ borrowings under the Loan Agreement may from time to time be temporarily
in a zero credit position. Each Pledgor waives any rights which it may have under the UCC or otherwise to demand the filing of
termination statements with respect to the Pledged Collateral, and Secured Party shall not be required to send such termination
statements to any Pledgor, or to file them with any filing office, unless and until this Agreement shall have been terminated in
accordance with its terms and all Secured Obligations shall have been Paid in Full or in respect of Pledged Collateral to the extent
sold or otherwise disposed of as permitted under the Loan Documents.

 

6.8.
Governing Law; Venue; Construction

 

THIS
AGREEMENT HAS BEEN EXECUTED OR COMPLETED AND/OR IS TO BE PERFORMED IN NEW YORK, AND IT AND ALL TRANSACTIONS HEREUNDER OR PURSUANT
HERETO SHALL BE GOVERNED AS TO INTERPRETATION, VALIDITY, EFFECT, RIGHTS, DUTIES AND REMEDIES OF THE PARTIES HEREUNDER AND IN ALL
RESPECTS BY THE LAWS OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF, BUT INCLUDING SECTIONS 5-1401
AND 5-1402 OF THE GENERAL OBLIGATIONS LAW.

 

EACH PLEDGOR
HEREBY IRREVOCABLY SUBMITS ITSELF TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN NEW YORK COUNTY, ROCKLAND COUNTY
OR WESTCHESTER COUNTY, NEW YORK, AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER RELATIONSHIP BETWEEN SECURED PARTY AND SUCH PLEDGOR BY ANY MEANS ALLOWED UNDER STATE OR FEDERAL
LAW. ANY LEGAL PROCEEDING ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR ANY OTHER RELATIONSHIP BETWEEN SECURED PARTY
AND ANY PLEDGOR MAY BE BROUGHT AND LITIGATED IN ANY ONE OF THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, ROCKLAND COUNTY
OR WESTCHESTER COUNTY, NEW YORK, HAVING JURISDICTION. THE PARTIES HERETO HEREBY WAIVE AND AGREE NOT TO ASSERT, BY WAY OF MOTION,
AS A DEFENSE OR OTHERWISE, THAT ANY SUCH PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS IMPROPER.

 

    PLEDGE AGREEMENT - Page 14

     

    

 

6.9.
Captions

 

The captions in this
Agreement are intended for convenience and reference only and do not constitute and shall not be interpreted as part of this Agreement,
and shall not affect the meaning or interpretation of this Agreement.

 

6.10.
Counterparts

 

This Agreement may be
executed in any number of counterparts, and signature pages may be detached from multiple separate counterparts and attached to
a single counterpart so that all signature pages are physically attached to the same document. A telecopy, pdf or other electronic
transmission of any such executed counterpart signature page shall be deemed valid as an original.

 

6.11.
Indemnity

 

(a) to
the fullest extent permitted by applicable law, Each PLEDGOR agrees to defend, indemnify and hold the secured party harmless from
and against any and all Indemnified Claims including those Indemnified Claims which relate to or arise out of any secured party’s
own NEGLIGENCE, provided, that no PLEDGOR shall have any obligation hereunder to the secured party with respect to Indemnified
Claims resulting directly from the willful misconduct or gross negligence of such Indemnified Person. The agreements in THIS SECTION
shall survive any termination of this Agreement or payment of all other Obligations. 

 

(b) Notwithstanding
the foregoing, if any insurer agrees to undertake the defense of an event (an “Insured Event”), Secured Party
agrees not to select counsel to defend the event if that would cause a Pledgor’s insurer to deny coverage; provided,
however, that Secured Party reserves the right to retain counsel to represent it or any of the other Indemnified Persons
with respect to an Insured Event at its sole cost and expense. To the extent that Secured Party obtains recovery from a third party
other than an Indemnified Person of any of the amounts that Pledgor has paid to Secured Party pursuant to the provisions of this
Section 6.11, then Secured Party shall promptly pay to Pledgor the amount of such recovery.

 

6.12.
Setoff

 

In addition to any other
rights Secured Party may have hereunder, under the Loan Agreement or any of the Loan Documents, or under applicable law or at equity,
upon the occurrence and continuation of any Event of Default Secured Party shall have the right to apply any property of Pledgors
held by Secured Party to reduce the Obligations.

 

    PLEDGE AGREEMENT - Page 15

     

    

 

6.13.
Waiver of Notice; Waiver of Statute of Limitations

 

Each Pledgor hereby waives
demand, presentment, protest, notice of dishonor or non-payment, as well as all defenses with respect to any and all instruments,
notice of acceptance hereof, notice of Loans or advances made, credit extended, collateral received or delivered, or any other
action taken by Secured Party in reliance hereon, and all other demands and notices of any description, except such as are expressly
provided for herein. The pleading of any statute of limitations as a defense to any demand against Pledgor hereunder and under
the Loan Documents is expressly waived by Pledgor.

 

6.14.
Waiver of Defenses

 

Each Pledgor hereby waives
any and all defenses and counterclaims it may have or could interpose in any action or procedure brought by Secured Party to obtain
an order of court recognizing the assignment of or security interests and liens of Secured Party in and to the Pledged Collateral.

 

6.15.
Discharge of Pledgor’s Obligations

 

In addition to and notwithstanding
any other provision of this Agreement, the Loan Agreement or any other Loan Document, Secured Party, in its sole discretion, shall
have the right, but not the obligation, at any time that Pledgors fail to do so, without prior notice to Pledgors, to: (i) obtain
insurance covering any of the Pledged Collateral as and to the extent required under the Loan Agreement; (ii) perform any of any
Pledgor’s obligations hereunder; (iii) discharge taxes, liens, security interests, or other encumbrances at any time levied
or placed on any of the Pledged Collateral in violation of this Agreement unless a Pledgor is in good faith with due diligence
by appropriate proceedings contesting those items; and (iv) pay for the maintenance and preservation of any of the Pledged Collateral.
Such expenses and advances shall be added to the Secured Obligations until reimbursed to Secured Party and shall be secured by
the Pledged Collateral. Any such payments and advances by Secured Party shall not be construed as a waiver by Secured Party of
any Default or Event of Default or any other rights, remedies or powers of Secured Party hereunder, or under the Loan Agreement
or any other Loan Document or otherwise.

 

6.16.
Jury Waiver

 

EACH PLEDGOR AND SECURED
PARTY EACH IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ITS RESPECTIVE RIGHT TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN
ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY KIND BROUGHT BY EITHER AGAINST THE OTHER, WHETHER WITH RESPECT TO CONTRACT CLAIMS,
TORT CLAIMS, OR OTHERWISE. PLEDGORS AND SECURED PARTY EACH AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES HERETO FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY
IS WAIVED, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF.
THIS WAIVER SHALL, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT, WHETHER OR NOT SPECIFICALLY SET FORTH THEREIN.

 

    PLEDGE AGREEMENT - Page 16

     

    

 

6.17.
Entire Agreement

 

This Agreement and the
other Loan Documents constitute the entire agreement between Pledgors and Secured Party with respect to the subject matter hereof,
and supersede all prior agreements and understandings, if any, relating to the subject matter hereof, which are, to the fullest
extent permitted by Applicable Law, hereby terminated, null and void and of no further force or effect. Neither this Agreement
nor any portion hereof may be changed, modified, amended, restated, waived, supplemented, canceled or terminated orally or by any
course of dealing or in any other manner other than by an agreement in writing signed by both Secured Party and Pledgors. Any waiver
of this Agreement by Secured Party shall be limited solely to the express terms and provisions of such waiver. Each party to this
Agreement acknowledges that it has been advised by counsel in connection with the negotiation and execution of this Agreement and
is not relying upon oral representations or statements inconsistent with the terms and/or provisions of this Agreement and the
other Loan Documents.

 

6.18.
Sole Duty of Secured Party

 

Except for the safe custody
of any Pledged Collateral in its actual possession and the accounting for any moneys received by it hereunder, Secured Party shall
have no responsibility for or obligation or duty with respect to all or any part of the Pledged Collateral or any matter or proceeding
arising out of or relating thereto, including without limitation, any obligation or duty to collect any sums due in respect thereof
or to protect or preserve any rights pertaining thereto. Secured Party shall have been deemed to have exercised reasonable care
in the custody and preservation of any Pledged Collateral in its actual possession if such Pledged Collateral is accorded treatment
substantially equal to that which Secured Party accords its own property.

 

6.19.
Secured Party Approvals

 

Unless expressly provided
herein to the contrary, any approval, consent, waiver or satisfaction of Secured Party with respect to any matter that is subject
of this Agreement may be granted or withheld by Secured Party in its sole and absolute discretion.

 

6.20.
No Unwritten Oral Agreements

 

THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS REPRESENTS THE FINAL AND ENTIRE AGREEMENT BETWEEN PLEDGOR AND SECURED PARTY AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
PLEDGORS AND SECURED PARTY. THIS AGREEMENT SUPERSEDES ALL PRIOR (IF ANY) ORAL AGREEMENTS, ARRANGEMENTS, OR UNDERSTANDINGS RELATING
TO THE SUBJECT MATTER HEREOF.

 

[SIGNATURES APPEAR
ON THE FOLLOWING PAGE]

 

    PLEDGE AGREEMENT - Page 17

     

    

 

IN WITNESS WHEREOF,
each of the parties hereto has duly executed this Pledge Agreement as of the date first written above.

 

	 	PLEDGORS:
	 	 	 	 
	 	AIR INDUSTRIES GROUP, a Nevada corporation
	 	 	 	 
	 	By:	/s/ Michael Recca
	 	 	Name: 	Michael Recca
	 	 	Title:	Chief Financial Officer
	 	 	 	 
	 	SECURED PARTY:
	 	 
	 	STERLING NATIONAL BANK
	 	as the Secured Party
	 	 	 	 
	 	By:	/s/ Lawrence Cannariato
	 	 	Name:	Lawrence Cannariato
	 	 	Title:	Vice President

    

    PLEDGE AGREEMENT - Signature Page

     

    

 

Pledge Agreement

Schedule 1.1

 

Description of Initial Pledged Shares

 

	Name of Issuer	Class or Series of Equity Interest	Number of Shares	Certificate Representing Equity Interest	Percentage of Equity Interest Pledged
	Air Industries Machining, Corp.	Common	100	9	100%
	The Sterling Engineering Corporation	Common	100	2	100%
	NTW Operating Inc. (n/k/a Nassau Tool Works, Inc.)	Common	100	2	100%

 

Description of Initial LLC Units Pledged

 

	Name of Issuer	Class or Series of Equity Interest	Number of Units/ Membership Interests	Certificate Representing Equity Interest	Percentage of Equity Interest Pledged
	Air Realty Group, LLC	Membership Interests - the only class outstanding	100%	N/A	100%

 

 

PLEDGE AGREEMENT -
Schedule 1.1exhibit101amendmentno5

                                                                       Exhibit 10.1               AMENDMENT  NO.  5,  dated  as  of  December  31,  2019  (this  “Amendment”),  among  JELD-WEN  Holding,  Inc.,  a  Delaware  corporation  (“Holdings”),  JELD-WEN,  Inc.,  a  Delaware  corporation (the “Borrower Representative”), JELD-WEN of Canada, Ltd., an Ontario corporation (“JW  Canada”), the other Borrowers (this and each other capitalized term used herein without definition having  the meaning assigned to such term in the Credit Agreement described below) party hereto, the Subsidiary  Guarantors party hereto, Wells Fargo Bank, National Association, as Administrative Agent, U.S. Issuing  Bank, Canadian Issuing Bank and Swingline Lender (in such capacities, the “Agent”), and the Lenders  party hereto.               WHEREAS, reference is hereby made to the Amended Revolving Credit Agreement, dated  as of October 15, 2014 (as amended, supplemented, amended and restated or otherwise modified from time  to time prior to the date hereof, the “Credit Agreement”), among the Borrower Representative, JW Canada,  the other Borrowers party thereto, Holdings, the other Guarantors party thereto, the Agent and the Lenders  party thereto;                WHEREAS, pursuant to Section 10.1 of the Credit Agreement, the Loan Parties, the Agent  and the Lenders party hereto, constituting the Required Lenders, may, and hereby express their desire to,  amend the Credit Agreement for certain purposes set forth more fully herein;               NOW, THEREFORE, in consideration of the premises and covenants contained herein and  for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,  the parties hereto, intending to be legally bound hereby, agree as follows:               Section 1.  Amendments to Credit Agreement.  On the Amendment Effective Date,  the Credit Agreement shall be amended as follows:               (a)   Section 1.1 of the Credit Agreement shall be amended by amending and restating  the definition of “Loan Documents” in its entirety as follows:         “Loan Documents”:  this Agreement, Amendment No. 1, Amendment No. 2, Amendment No. 3,        Amendment  No.  4,  Amendment  No.  5,  any  Intercreditor  Agreement,  the  Notes,  the  Security        Documents, an Incremental Amendment, if any, and an Extension Agreement, if any.               (b)   Section 1.1 of the Credit Agreement shall be amended by adding the following  new defined terms (and corresponding definitions) in appropriate alphabetical order therein:         “Amendment No. 5”:  Amendment No. 5, dated as of the Amendment No. 5 Effective Date, by        and among the Loan Parties, the Administrative Agent and the Lenders party thereto.         “Amendment No. 5 Effective Date”: December 31, 2019.         “BHC Act Affiliate”: with respect to any Person, an “affiliate” (as such term is defined under, and  interpreted in accordance with, 12 U.S.C. 1841(k)) of such Person.         “Covered Entity”: any of the following:                (a)  a “covered entity” as that term is defined in, and interpreted in accordance with,  12 C.F.R. § 252.82(b);             

 

            (b)   a “covered bank” as that term is defined in, and interpreted in accordance with, 12  C.F.R. § 47.3(b); or                (c)  a “covered FSI” as that term is defined in, and interpreted in accordance with, 12  C.F.R. § 382.2(b).         “Covered Party”: as defined in Section 10.25.         “Default Right”: has the meaning assigned to that term in, and shall be interpreted in accordance  with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.         “QFC”:  has  the  meaning  assigned  to  the  term  “qualified  financial  contract”  in,  and  shall  be  interpreted in accordance with, 12 U.S.C. § 5390(c)(8)(D).           “QFC Credit Support”: as defined in Section 10.25.         “Supported QFC”: as defined in Section 10.25.         “US Special Resolution Regimes”: as defined in Section 10.25.               (c)   The Credit Agreement is amended by adding the following to appear as a new  Section 10.25 (Acknowledgement Regarding any Supported QFCs) thereof:         “10.25     Acknowledgement  Regarding  Any  Supported QFCs.   To  the  extent  that the  Loan Documents provide support, through a guarantee or otherwise, for Hedge Agreements or any other  agreement  or  instrument  that  is  a  QFC  (such  support,  “QFC  Credit  Support”  and  each  such  QFC  a  “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of  the Federal Deposit Insurance Corporation under the Federal Deposit  Insurance Act and Title II of the  Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated  thereunder, the  “US  Special  Resolution  Regimes”) in  respect  of  such  Supported  QFC  and  QFC  Credit  Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported  QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States  or any other state of the United States): In the event a Covered Entity that is a party to a Supported QFC  (each, a “Covered Party”) becomes subject to a proceeding under a US Special Resolution Regime, the  transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation  in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such  Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent  as the transfer would be effective under the US Special Resolution Regime if the Supported QFC and such  QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws  of the United States or a state of the United States.  In the event a Covered Party or a BHC Act Affiliate of  a Covered Party becomes subject to a proceeding under a US Special Resolution Regime, Default Rights  under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support  that may be exercised against such Covered Party are permitted to be exercised to no greater extent than  such Default Rights could  be exercised under the US Special Resolution Regime if the Supported QFC and  the Loan Documents were governed by the laws of the United States or a state of the United States.  Without  limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect 

 

to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported  QFC or any QFC Credit Support.”                Section 2. Representations and Warranties.  Each of the Loan Parties represents  and warrants to the Agent and the Lenders as of the Amendment Effective Date that this Amendment has  been duly authorized, executed and delivered by it and constitutes a legal, valid and binding obligation of  such Loan Party, enforceable against it in accordance with its terms, except as such enforceability may be  limited  by  bankruptcy,  insolvency,  reorganization,  receivership,  moratorium  or  other  laws  affecting  creditors’ rights generally and by general principles of equity.  The Credit Agreement, as amended by this  Amendment, constitutes a legal, valid and binding obligation of such Loan Party.               Section 3.  Conditions to Effectiveness.  This Amendment shall become effective on  the  date  of  the  Agent’s  receipt  of  counterparts  of  this  Amendment  that,  when  taken  together,  bear  the  signatures  of  the  Loan  Parties  and  the  Required  Lenders  subject  to  the  satisfaction  of  the  following  conditions precedent (the date upon which this Amendment becomes effective, the “Amendment Effective  Date”).                Section 4. Counterparts.   This  Amendment  may  be  executed  in  any  number  of  counterparts and by different parties hereto on separate counterparts, each of which when so executed and  delivered shall be deemed to be an original, but all of which when taken together shall constitute a single  instrument.   Delivery  of  an  executed  counterpart  of  a  signature  page  of  this  Amendment  by  facsimile  transmission or by email in Adobe “.pdf” format shall be effective as delivery of a manually executed  counterpart hereof.                Section 5. Applicable  Law.   The  validity,  interpretation  and  enforcement  of  this  Amendment and any dispute arising out of the relationship between the parties hereto, whether in contract,  tort, equity or otherwise, shall be governed by the internal laws of the State of New York but excluding any  principles  of  conflicts  of  law  or  other  rule  of  law  that  would  cause  the  application  of  the  law  of  any  jurisdiction other than the laws of the State of New York.                Section 6. Headings.  The headings of this Amendment are for purposes of reference  only and shall not limit or otherwise affect the meaning hereof.                Section 7. Effect  of  Amendment.   Except  as  expressly  set  forth  herein,  this  Amendment shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations,  covenants or agreements contained in the Credit Agreement or any other provision of the Credit Agreement  or any other Loan Document, all of which are ratified and affirmed in all respects and shall continue in full  force and effect.  As of the Amendment Effective Date, each reference in the Credit Agreement to “this  Agreement,” “hereunder,” “hereof,” “herein,” or words of like import, and each reference in the other Loan  Documents to the Credit Agreement (including, without limitation, by means of words like “thereunder,”  “thereof” and words of like import), shall mean and be a reference to the Amended Credit Agreement, and  this Amendment and the Credit Agreement shall be read together and construed as a single instrument.   This Amendment shall constitute a Loan Document.                  Section 8. Acknowledgement  and  Affirmation.   Each  Loan  Party  party  hereto  hereby expressly acknowledges, (i) all of its obligations under the Guarantee and the Security Documents  to which it is a party are reaffirmed and remain in full force and effect on a continuing basis, (ii) its grant  of security interests pursuant to the Security Documents are reaffirmed and remain in full force and effect  after giving effect to this Amendment and (iii) except as expressly set forth herein, the execution of this  Amendment shall not operate as a waiver of any right, power or remedy of the Agent or Lenders, constitute  a waiver of any provision of any of the Loan Documents or serve to effect a novation of the Obligations. 

 

[signature pages follow] 

 

               IN  WITNESS  WHEREOF,  the  parties  hereto  have  caused  this  Amendment  to  be  duly  executed as of the date first above written.    BORROWERS:                   JELD-WEN, INC.                                                                                                                                                        By:/s/ Brian Luke                                                                                                          Name:  Brian Luke                                      Title:  Vice President & Treasurer                                                                                                                  JELD-WEN OF CANADA, LTD.                                      KARONA, INC.                                      AMERICAN BUILDING SUPPLY, INC.                                      J B L HAWAII, LIMITED                                                                                                                                                        By:/s/ Brian Luke                                                                                                          Name: Brian Luke                                      Title:   Treasurer                                                                                                         Signature Page to Amendment No. 5 (ABL Facility) 

 

   HOLDINGS:                           JELD-WEN HOLDING, INC.                                            By:/s/ Brian Luke                                                                                                          Name: Brian Luke                                      Title:   Treasurer                               Signature Page to Amendment No. 5 (ABL Facility) 

 

   OTHER GUARANTORS:                    JW INTERNATIONAL HOLDINGS, INC.                                       JW REAL ESTATE, INC.                                                                                 By:/s/ Brian Luke                                                                                                          Name: Brian Luke                                       Title:   Treasurer                                                                                                                     HARBOR ISLES, LLC                                       By: JELD-WEN, Inc., its Sole Member                                                                                                                     By:/s/ Brian Luke                                                                                                      Name: Brian Luke                                       Title:   Treasurer                                                                                                                     JELD-WEN DOOR REPLACEMENT SYSTEMS,                                       INC.                                                                                 By: /s/ Wallace D. Corwin                                                                                         Name: Wallace D. Corwin                                       Title:   President & Director                                                                                                       Signature Page to Amendment No. 5 (ABL Facility) 

 

                              WELLS FARGO BANK, NATIONAL                 ASSOCIATION, as Administrative Agent and a Lender                                                                    By: /s/ Peter Schuebler                                                                     Name: Peter Schuebler                 Title:   Vice President                                       Signature Page to Amendment No. 5 (ABL Facility) 

 

                              BANK OF AMERICA, N.A.,                 as a Lender                                                            By:/s/ Andrew A Doherty                                                                     Name: Andrew A Doherty                 Title:   Senior Vice President                     Signature Page to Amendment No. 5 (ABL Facility) 

 

                              BARCLAYS BANK PLC,                 as a Lender                                                                  By: /s/ Komal Ramkirath                                                                     Name: Komal Ramkirath                 Title:   Assistant Vice President                     Signature Page to Amendment No. 5 (ABL Facility) 

 

                              TRUIST BANK (as successor by merger to SunTrust                 Bank), as a Lender                                                                 By: /s/ Christopher M. Waterstreet                                                           Name: Christopher M. Waterstreet                 Title:   Director    Signature Page to Amendment No. 5 (ABL Facility) 

 

                              ROYAL BANK OF CANADA,                 as a Lender                                                                 By: /s/ Anna Bernat                                                                      Name: Anna Bernat                 Title:   Attorney In Fact                                                                      Signature Page to Amendment No. 5 (ABL Facility)

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