Document:

Exhibit 10.1

 

EXECUTION VERSION

 

 

 

LOAN AND SECURITY AGREEMENT

 

by and among

 

AIR INDUSTRIES MACHINING, CORP.,

NASSAU TOOL WORKS, INC.,

and

THE STERLING ENGINEERING CORPORATION,

 

as Borrowers,

 

AIR INDUSTRIES GROUP

and

AIR REALTY GROUP, LLC,

each as a Guarantor and a Credit Party,

 

and

 

STERLING NATIONAL BANK,

as Lender

 

Dated as of December 31, 2019

 

     

     

    

 

Table of Contents

 

	ARTICLE I DEFINITIONS	 	1
	 	 	 	 	 
	Section 1.1.	 	Definitions	 	1
	Section 1.2.	 	Interpretive Provisions	 	22
	 	 	 	 	 
	ARTICLE II LOANS	 	23
	 	 	 	 	 
	Section 2.1.	 	Loans	 	23
	Section 2.2.	 	Request for and Making of Revolving Loans and Term Loan Advances.	 	24
	Section 2.3.	 	Deemed Request for Revolving Loans	 	25
	Section 2.4.	 	Protective Advances	 	25
	Section 2.5.	 	Cross Guaranty	 	25
	 	 	 	 	 
	ARTICLE III INTEREST, FEES, REIMBURSEMENTS	 	27
	 	 	 	 	 
	Section 3.1.	 	Interest	 	27
	Section 3.2.	 	Fees	 	27
	Section 3.3.	 	Increased Costs	 	27
	Section 3.4.	 	Illegality	 	28
	Section 3.5.	 	Taxes	 	28
	Section 3.6.	 	Maximum Interest; Controlling Limitation	 	29
	 	 	 	 	 
	ARTICLE IV payment	 	31
	 	 	 	 	 
	Section 4.1.	 	Interest	 	31
	Section 4.2.	 	Prepayment; Mandatory Payment of Deficiencies; Excess Cash Flow Repayment of Term Loan	 	31
	Section 4.3.	 	Mandatory Payments; Payment on the Termination Date	 	31
	Section 4.4.	 	Mandatory Prepayment in Respect of Certain Events	 	31
	Section 4.5.	 	Early Termination; Prepayment Penalty	 	32
	Section 4.6.	 	General Payment Provisions	 	32
	Section 4.7.	 	Application	 	32
	Section 4.8.	 	Reinstatement	 	32
	Section 4.9.	 	Account Stated	 	33
	 	 	 	 	 
	ARTICLE V COLLATERAL	 	33
	 	 	 	 	 
	Section 5.1.	 	Security Interest	 	33
	Section 5.2.	 	Perfection and Protection of Lender’s Security Interest	 	33
	Section 5.3.	 	Collateral Proceeds Management	 	34
	Section 5.4.	 	Examinations; Inspections; Verifications	 	35
	Section 5.5.	 	Appraisal	 	35
	Section 5.6.	 	Right to Cure	 	36
	Section 5.7.	 	Power of Attorney	 	36
	Section 5.8.	 	Preservation of Lender’s Rights	 	37
	Section 5.9.	 	Deficiency	 	37

 

    LOAN AND SECURITY AGREEMENT – i 

     

    

 

	ARTICLE VI CONDITIONS	 	37
	 	 	 	 	 
	Section 6.1.	 	Conditions Precedent to Initial Loan	 	37
	Section 6.2.	 	Conditions Precedent to Term Loan Advance	 	40
	Section 6.3.	 	Conditions Precedent to all Loans	 	40
	 	 	 	 	 
	ARTICLE VII REPRESENTATIONS AND WARRANTIES	 	41
	 	 	 	 	 
	Section 7.1.	 	Fundamental Information	 	41
	Section 7.2.	 	Prior Transactions	 	41
	Section 7.3.	 	Subsidiaries	 	41
	Section 7.4.	 	Authorization, Validity and Enforceability	 	41
	Section 7.5.	 	Noncontravention	 	41
	Section 7.6.	 	Financial Statements	 	41
	Section 7.7.	 	Litigation	 	42
	Section 7.8.	 	ERISA and Employee Benefit Plans	 	42
	Section 7.9.	 	Compliance with Laws	 	42
	Section 7.10.	 	Taxes	 	42
	Section 7.11.	 	Location of Collateral and Books and Records	 	43
	Section 7.12.	 	Accounts	 	43
	Section 7.13.	 	Inventory	 	43
	Section 7.14.	 	Documents, Instruments, and Chattel Paper	 	43
	Section 7.15.	 	Proprietary Rights	 	43
	Section 7.16.	 	Investment Property	 	44
	Section 7.17.	 	Real Property and Leases	 	44
	Section 7.18.	 	Material Agreements	 	44
	Section 7.19.	 	Bank Accounts	 	44
	Section 7.20.	 	Title to Property	 	44
	Section 7.21.	 	Debt	 	45
	Section 7.22.	 	Liens	 	45
	Section 7.23.	 	Solvency	 	45
	Section 7.24.	 	Non-Regulated Entities	 	45
	Section 7.25.	 	Governmental Authorization	 	45
	Section 7.26.	 	Investment Banking or Finder’s Fees	 	45
	Section 7.27.	 	Full Disclosure	 	45
	Section 7.28.	 	Other Obligations and Restrictions	 	45
	Section 7.29.	 	Acts of God and Labor Matters	 	46
	Section 7.30.	 	Environmental and Other Laws	 	46
	Section 7.31.	 	Security Interests	 	47
	Section 7.32.	 	Commercial Tort Claims	 	47
	Section 7.33.	 	Common Enterprise	 	47
	Section 7.34.	 	Anti-Terrorism Laws	 	47
	Section 7.35.	 	Trading with the Enemy	 	48
	Section 7.36.	 	Anti-Corruption Laws and Sanctions	 	48
	Section 7.37.	 	Continuing Representations	 	48
	 	 	 	 	 
	ARTICLE VIII AFFIRMATIVE COVENANTS	 	48
	 	 	 	 	 
	Section 8.1.	 	Existence and Good Standing	 	48
	Section 8.2.	 	Compliance with Agreements and Laws	 	48
	Section 8.3.	 	Books and Records	 	49

 

    LOAN AND SECURITY AGREEMENT – ii 

     

    

 

	Section 8.4.	 	Financial Reporting	 	48
	Section 8.5.	 	Collateral Reporting	 	50
	Section 8.6.	 	Compliance Certificate	 	52
	Section 8.7.	 	Notification to Lender	 	52
	Section 8.8.	 	Accounts	 	52
	Section 8.9.	 	Inventory	 	52
	Section 8.10.	 	Equipment and Machinery	 	53
	Section 8.11.	 	Insurance	 	53
	Section 8.12.	 	Payment of Trade Liabilities, Taxes, Etc.	 	54
	Section 8.13.	 	Protective Advances	 	54
	Section 8.14.	 	Evidence of Compliance	 	54
	Section 8.15.	 	Environmental Matters; Environmental Reviews	 	54
	Section 8.16.	 	Subsidiaries; Fundamental Information	 	55
	Section 8.17.	 	Further Assurances	 	55
	Section 8.18.	 	Maintenance of Properties	 	55
	Section 8.19.	 	Lien Law	 	55
	Section 8.20.	 	Post-Closing Requirements	 	55
	 	 	 	 	 
	ARTICLE IX NEGATIVE COVENANTS	 	56
	 	 	 	 	 
	Section 9.1.	 	Fundamental Changes	 	56
	Section 9.2.	 	Collateral Locations	 	56
	Section 9.3.	 	Use of Proceeds	 	57
	Section 9.4.	 	Business	 	57
	Section 9.5.	 	Debt	 	57
	Section 9.6.	 	Subordinated Debt	 	57
	Section 9.7.	 	Liens	 	58
	Section 9.8.	 	Disposition of Property	 	58
	Section 9.9.	 	Sale and Leaseback	 	58
	Section 9.10.	 	Distributions; Capital Contribution; Redemption	 	58
	Section 9.11.	 	Investments	 	59
	Section 9.12.	 	Transactions with Affiliates	 	59
	Section 9.13.	 	New Subsidiaries	 	59
	Section 9.14.	 	Financial Covenants	 	59
	Section 9.15.	 	Fiscal Year; Accounting Method	 	59
	Section 9.16.	 	Impairment of Security Interest	 	59
	Section 9.17.	 	Prohibited Contracts	 	59
	Section 9.18.	 	Deposit Accounts and Securities Accounts	 	59
	Section 9.19.	 	Compliance with ERISA	 	60
	 	 	 	 	 
	ARTICLE X EVENT OF DEFAULT	 	60
	 	 	 	 	 
	Section 10.1.	 	Event of Default	 	60
	 	 	 	 	 
	ARTICLE XI REMEDIES	 	62
	 	 	 	 	 
	Section 11.1.	 	Obligations	 	62
	Section 11.2.	 	Collateral	 	62
	Section 11.3.	 	Injunctive Relief	 	63
	Section 11.4.	 	Setoff	 	63

 

    LOAN AND SECURITY AGREEMENT – iii 

     

    

 

	ARTICLE XII TERMINATION	 	63
	 	 	 	 	 
	Section 12.1.	 	Term and Termination	 	63
	 	 	 	 	 
	ARTICLE XIII MISCELLANEOUS	 	64
	 	 	 	 	 
	Section 13.1.	 	Waivers & Amendments	 	64
	Section 13.2.	 	Severability	 	64
	Section 13.3.	 	Governing Law; Venue	 	64
	Section 13.4.	 	WAIVER OF JURY TRIAL	 	64
	Section 13.5.	 	Fees and Expenses	 	65
	Section 13.6.	 	Notices	 	65
	Section 13.7.	 	Waiver of Notices	 	66
	Section 13.8.	 	Non-applicability of Chapter 346 of Texas Finance Code	 	66
	Section 13.9.	 	Binding Effect	 	66
	Section 13.10.	 	INDEMNITY BY CREDIT PARTIES	 	66
	Section 13.11.	 	Limitation of Liability	 	67
	Section 13.12.	 	Continuing Rights of Lender in Respect of Obligations	 	67
	Section 13.13.	 	Assignments	 	67
	Section 13.14.	 	Confidentiality	 	68
	Section 13.15.	 	USA Patriot Act Notice	 	69
	Section 13.16.	 	Schedules	 	69
	Section 13.17.	 	Counterparts	 	69
	Section 13.18.	 	Captions	 	69

 

SCHEDULES and EXHIBITS

 

	Exhibit A	-	Form of Compliance Certificate
	 	 	 
	Schedule 1.2	-	Term Loan Primary Collateral
	Schedule 6.1	-	Specified Subordinated Creditors
	Schedule 7.1	-	Fundamental Information; Equity Ownership Interests
	Schedule 7.2	-	Prior Transactions
	Schedule 7.7	-	Litigation
	Schedule 7.8	-	ERISA Benefit Plans
	Schedule 7.11	-	Location of Collateral
	Schedule 7.15	-	Proprietary Rights
	Schedule 7.16	-	Investment Property
	Schedule 7.17	-	Real Property and Leases
	Schedule 7.18	-	Material Agreements
	Schedule 7.19	-	Bank Accounts
	Schedule 7.21	-	Debt
	Schedule 7.22	-	Liens
	Schedule 7.30	-	Release of Hazardous Materials
	Schedule 7.32	-	Commercial Tort Claims

 

    LOAN AND SECURITY AGREEMENT – iv 

     

    

 

LOAN AND SECURITY AGREEMENT

 

This Loan and Security
Agreement is executed and entered into as of December 31, 2019, by and among (a) AIR INDUSTRIES MACHINING, CORP., a New York corporation
(“AIM”), NASSAU TOOL WORKS, INC., a New York corporation (“NTW”), and THE STERLING ENGINEERING
CORPORATION, a Connecticut corporation (“Engineering”), as Borrowers (as such term is hereinafter defined),
(b) AIR INDUSTRIES GROUP, a Nevada corporation (together with its successors and permitted assigns, “Parent”),
and AIR REALTY GROUP, LLC, a Connecticut limited liability company (“Realty”), each as a Guarantor and a Credit
Party (as such terms are hereinafter defined), and (c) STERLING NATIONAL BANK, a national banking association (together with
its successors and permitted assigns, the “Lender”).

 

RECITALS

 

Lender and each Borrower
desire to enter into certain financing arrangements according to the terms and provisions as set forth herein below. Therefore,
for value received, the receipt and sufficiency of which is hereby acknowledged, together with the mutual benefits provided herein,
the Lender, each Borrower and each other Credit Party hereby agree as follows:

 

ARTICLE
I

DEFINITIONS

 

Section 1.1. Definitions.
The following definitions shall apply throughout this Agreement:

 

“Account”
has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and includes,
without limitation, a right to payment of a monetary obligation, whether or not earned by performance, for property that has been
or is to be sold, leased, licensed, assigned, or otherwise disposed of, or for services rendered or to be rendered and further
includes, without limitation, any “payment intangible” (as defined in Article 9 of the UCC), together with all income,
payments and proceeds thereof, owed by an issuer of a credit or debit card or any servicing or processing agent thereof, resulting
from charges by a customer in connection with the sale of goods or for services rendered.

 

“Account Debtor”
means a Person obligated on an Account, Chattel Paper, or General Intangible.

 

“Adjusted
LIBOR Rate” means, for any Loan, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined
by Lender to be equal to the sum of the LIBOR Rate plus the Applicable Margin for such Loan.

 

“Affiliate”
means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, “control” of a Person means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership
of Equity Interests, by contract, or otherwise; provided, that for purposes of the definition of Eligible Account and Section
9.12: (a) any Person which owns (directly or indirectly) 10% or more of the outstanding Equity Interests of another Person,
(b) each director (or comparable manager) of a Person and (c) each partnership in which a Person is a general partner shall, in
each case, be deemed an Affiliate of such Person.

 

    
LOAN AND SECURITY AGREEMENT – Page 1

     

    

 

“Agreement”
means this Loan and Security Agreement and all schedules, exhibits and addenda hereto, as may be renewed, extended, amended, supplemented,
restated or otherwise modified from time to time.

 

“Agreement
Date” means the date as of which this Agreement is dated as specified in the preamble to this Agreement.

 

“Anti-Corruption
Laws” means all laws, rules, and regulations of any jurisdiction applicable to Credit Parties and their Subsidiaries
from time to time concerning or relating to bribery or corruption, all as amended, supplemented or replaced from time to time.

 

“Anti-Terrorism
Laws” shall mean any laws, rules and regulations of any jurisdiction applicable to Credit Parties and their Subsidiaries
relating to terrorism, trade sanctions programs and embargoes, import/export licensing, bribery, or money laundering, all as amended,
supplemented or replaced from time to time.

 

“Applicable
Concentration Percentage” means (a) 50% for any Account Debtor that is an Investment Grade Company, and (b) 25% for any
Account Debtor that is not an Investment Grade Company.

 

“Applicable
Law” means, as to a Person, any law (statutory or common), treaty, ordinance, decree, rule, regulation, executive order
or code of a Governmental Authority or judgment, decree, injunction, order or determination of a court or binding arbitrator, in
each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject,
including, without limitation, all Environmental Laws, all FAA Regulations, all Anti-Terrorism Laws, all Anti-Corruption Laws,
the Patriot Act and the Trading with the Enemy Act.

 

“Applicable
Margin” means, (a) for any day with respect to a Revolving Loan, 2.50% per annum, and (b) for any day with
respect to the Term Loan, 2.50% per annum.

 

“Applicable
Term Loan Advance Amount” means, with respect to a Term Loan Advance, an amount equal to or less than 85% of the Net
Amount of all Eligible Equipment being refinanced with the proceeds thereof.

 

“Approved
Add Backs” means, collectively for any period, any stock based compensation and other non-cash expenses and any non-recurring
items, in each case to the extent approved by Lender and in such amounts as may be approved by Lender, which approval may be granted
or withheld in Lender’s sole and absolute discretion and if granted such approval shall be in writing.

 

“Availability”
means, with respect to Revolving Loans at any time of determination, an amount equal to (a) the Borrowing Base less
(b) the unpaid principal balance of Revolving Loans, in each case determined at such time.

 

“Bank Products”
means any one or more of the following financial products or accommodations extended to a Credit Party by Lender or an Affiliate
of Lender: (a) credit cards (including commercial credit cards and including so-called “procurement cards” or “P-Cards”),
(b) credit card processing services, (c) debit cards, (d) stored value cards or (e) Cash Management Services.

 

“Bankruptcy Code”
means the United States Bankruptcy Code (11 U.S.C. § 101 et seq.).

 

    
LOAN AND SECURITY AGREEMENT – Page 2

     

    

 

“Borrowers”
means, collectively, AIM, NTW and Engineering and each other Person who becomes a Borrower hereunder in accordance with the terms
of Section 8.16, whether now or hereafter existing, and their successors and assigns.

 

“Borrower
Representative” means AIM, in its capacity as such hereunder.

 

“Borrowing
Base” means, as of any day of determination, an amount equal to the difference between:

 

(a) the sum
of (i) eighty-five percent (85%) of the Net Amount of Eligible Accounts other than Eligible Canadian Accounts, plus (ii)
the lesser of (1) eighty-five percent (85%) of the Net Amount of Eligible Canadian Accounts, or (2) $500,000, plus (iii)
the lesser of (1) fifty percent (50%) of the Net Amount of Eligible Government Accounts, or (2) $500,000, plus (iv) the
lesser of (1) eighty-five percent (85%) of the Net Amount of Eligible Inventory, (2) fifty percent (50%) of the lower of cost or
market value of Eligible Inventory and (3) the Inventory Sublimit, minus

 

(b) the aggregate
amount of reserves implemented by Lender pursuant to Section 2.1, in each case determined as of such day;

 

provided, however, that Lender
shall have the continuing right to reduce the percentages specified in clauses (a)(i), (ii) and (iii) of this definition by one
percentage point or fraction of a percentage point for every percentage point or fraction of a percentage point of dilution of
Accounts over five percent.

 

“Borrowing
Base Certificate” means a certificate of Borrower Representative, signed by a Responsible Officer of Borrower Representative,
setting forth the calculation of the Borrowing Base, including a calculation of each component thereof, all in form, presentation
and detail satisfactory to Lender in its Permitted Discretion.

 

“Borrowing
Notice” means a request for a Revolving Loan or a request for a Term Loan Advance by the Borrower Representative in compliance
with Section 2.2.

 

“Business
Day” means (a) any day that is not a Saturday, Sunday or a day on which commercial banks in Dallas, Texas are required
or permitted to be closed and (b) with respect to any borrowing, payment or other dealings with respect to any Loan, any day which
is a Business Day described in clause (a) preceding and which is also a day on which dealings in Dollar deposits are
carried out in the London interbank market.

 

“Capital Expenditures”
has the meaning prescribed for such term by GAAP.

 

“Capital Lease”
means, with respect to any Person, any lease of property by such Person which, in accordance with GAAP, should be reflected as
a capital lease on the balance sheet of such Person.

 

    
LOAN AND SECURITY AGREEMENT – Page 3

     

    

 

“Cash Management
Services” means cash management or related services including treasury, depository, return items, overdraft, controlled
disbursement, netting, merchant store value cards, e-payables services, electronic funds transfer, interstate depository network
and automatic clearing house transfer (including the Automated Clearing House processing of electronic funds transfers through
the direct Federal Reserve Fedline system).

 

“Change in
Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect
of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation,
implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline
or directive (whether or not having the force of law) by any Governmental Authority; provided that, notwithstanding anything
herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or
directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the
Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United
States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change
in Law”, regardless of the date enacted, adopted or issued.

 

“Change of
Control” means, except as permitted by Section 9.1, any occurrence the result of which is that (a) Permitted Holders
shall no longer own and control of record and beneficially, free and clear of all Liens (other than any Liens securing the Obligations),
directly or indirectly, at least 20% of the Equity Interest and voting interest of Parent, or (b) Parent fails to own and control,
of record and beneficially, free and clear of all Liens (other than Liens securing the Obligations), directly or indirectly, 100%
of the Equity Interest and voting interest of each other Credit Party.

 

“Chattel Paper”
has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and includes,
without limitation, a record or records that evidence both a monetary obligation and a security interest in specific goods, a security
interest in specific goods and software used in the goods, a security interest in specific goods and license of software used in
the goods, a lease of specific goods, or a lease of specific goods and license of software used in the goods. “Chattel
Paper” includes, without limitation, electronic chattel paper.

 

“Collateral”
means all personal property of the Credit Parties in or upon which a Lien is granted (or purported to be granted) to Lender, whether
pursuant to this Agreement or any other Loan Document.

 

“Collateral
Access Agreement” means a landlord or mortgagee waiver or subordination, bailee letter, acknowledgment agreement, use
agreement or other agreement of any lessor, mortgagee warehouseman, processor, consignee, or other Person in possession of, having
a Lien upon, or having rights or interests in any of Credit Parties’ books and records, Equipment, Inventory or other Collateral,
in each case, in form and substance satisfactory to Lender in its Permitted Discretion.

 

“Collection
Account” has the meaning given to such term in Section 5.3.

 

“Commercial
Tort Claim” has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by
reference, and includes, without limitation, in the case of a Credit Party, any tort cause of action claimed by such Credit Party,
including those listed on Schedule 7.32.

 

“Commitment”
means the obligation of Lender to make Loans to Borrowers pursuant to the terms hereof.

 

“Compliance
Certificate” means a certificate, in the form of Exhibit A, meeting the requirements of Section 8.6 and
otherwise in form satisfactory to Lender in its Permitted Discretion.

 

“Connection
Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that
are franchise Taxes or branch profits Taxes.

 

“Control Agreement”
means, with respect to any Deposit Account or Securities Account, a control agreement, in form and substance acceptable to Lender
in its Permitted Discretion, executed by Lender, the Credit Party owner of such Deposit Account or Securities Account and the applicable
bank (with respect to a Deposit Account) or Securities Intermediary (with respect to a Securities Account), and pursuant to which
Lender obtains “control” pursuant to the UCC over such Deposit Account or Securities Account (as applicable).

 

    
LOAN AND SECURITY AGREEMENT – Page 4

     

    

 

“Credit Parties”
means, collectively, each Borrower and each Guarantor (as applicable).

 

“Debt”
means, with respect to a Person, (a) all obligations for borrowed money of such Person, (b) all obligations of such Person
evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations in respect of letters
of credit, bankers acceptances, or other similar financial products, (c) all obligations or liabilities of others secured
by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) a Lien on any asset
of such Person, irrespective of whether such obligation or liability is assumed, (d) all obligations of such Person in respect
of the deferred purchase price of assets or services (other than trade payables incurred in the ordinary course of business and
repayable in accordance with customary trade practices), (e) any obligation of such Person guaranteeing or intended to guarantee
(whether directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation of the type otherwise
described in this definition of any other Person, (f) asset securitizations and synthetic leases, (g) all obligations
of such Person as a lessee under Capital Leases, (h) all net indebtedness, liabilities and other monetary obligations under
interest rate, credit, commodity and foreign exchange swaps or similar transactions entered into for the purpose of hedging such
Person’s exposure to fluctuations in interest or exchange rates, currency valuations or commodity prices and all cancellations,
buybacks, reversals, terminations or assignments of any such transaction, and (i) all liabilities which would under GAAP be
shown on such Person’s balance sheet as a liability.

 

“Default”
means an event, condition or occurrence that, with the giving of notice, the passage of time, or both, would constitute an Event
of Default.

 

“Default Rate”
means a rate per annum equal to the lesser of (a) the sum of (i) the Adjusted LIBOR Rate for such Loan (which shall be
adjusted, from time to time, simultaneously with any change in the LIBOR Rate) plus (ii) two percent (2.0%) and
(b) the Maximum Rate.

 

“Deposit Account”
has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and includes,
without limitation, a nonnegotiable certificate of deposit or a demand, time, savings, passbook, or similar account maintained
with a bank.

 

“Designated
Account” means Deposit Account No. 8026224586 maintained at PNC in the name of Borrower Representative, and any other
Deposit Account replacing such Deposit Accounts with Lender’s consent, including pursuant to Section 5.3(c).

 

“Distribution”
means, for any Person: (a) any dividend, payment or distribution (whether in cash, securities or other property) made on account
of any class of such Person’s Equity Interests or (b) any payment (whether in cash, securities or other property) on account
of, or setting apart of assets for a sinking or analogous fund for, the purchase, redemption, retirement, cancellation, termination,
defeasance or acquisition of any (i) shares of its Equity Interests or (ii) options, warrants or other rights to purchase Equity
Interests in such Person.

 

    
LOAN AND SECURITY AGREEMENT – Page 5

     

    

 

“Document”
has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and includes,
without limitation, any bill of lading, dock warrant, dock receipt, warehouse receipt or order for the delivery of goods, or any
other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession
of it is entitled to receive, hold and dispose of the document and the goods it covers, and which purports to be issued by or addressed
to a bailee and purporting to cover goods in the bailee’s possession which are either identified or are fungible portions
of an identified mass. “Document” includes, without limitation, electronic documents.

 

“Dollars”
or “$” refers to lawful money of the United States of America.

 

“EBITDA”
means, with respect to a Person for any period, an amount equal to (a) consolidated net earnings (or loss) from continuing operations,
for such period minus (b) extraordinary gains for such period plus (c) Interest Expense (whether paid or accrued),
income taxes, depreciation and amortization for such period plus (d) Approved Add Backs for such period, plus (e)
for the first four Fiscal Quarters after the Agreement Date only, beginning with the Fiscal Quarter ending March 31, 2020 and ending
with the Fiscal Quarter ending December 31, 2020, closing costs for this Agreement and the transactions contemplated hereby in
an aggregate amount not to exceed $150,000, in each case determined for such Person and its Subsidiaries on a consolidated basis
in accordance with GAAP on a rolling twelve month basis ending on the last day of the measurement period.

 

“Eligible
Account” means, with respect to any Borrower, an Account of such Borrower which is acceptable to Lender for purposes
of determining the Borrowing Base and meets all criteria for inclusion in the Borrowing Base as determined and established by Lender
from time to time in its Permitted Discretion. Without limiting the discretion of Lender to establish other criteria of ineligibility,
unless otherwise agreed by Lender, Eligible Accounts of any Borrower shall not include any Account: (a) which is not owned
exclusively by such Borrower, (b) which is not subject to a first priority and perfected security interest in favor of Lender
or which is subject to any other Lien, (c) with respect to which (i) more than 90 days have elapsed since the date of the original
invoice or which is unpaid, in whole or in part, more than 60 days after its original due date, with regard to Accounts owing by
each Account Debtor other than Goodrich and Pratt & Whitney, and (ii) more than 120 days have elapsed since the date of the
original invoice or which is unpaid, in whole or in part, more than 60 days after its original due date, with regard to Accounts
owing by Goodrich or Pratt & Whitney, (d) if twenty-five percent (25%) or more of the aggregate Dollar amount of outstanding
Accounts owed at such time by the Account Debtor thereon to such Borrower or any of its Affiliates is classified as ineligible
under clause (c) above, (e) owed by an Account Debtor whose total obligations (including the obligations of such Account
Debtor’s Affiliates) owing to Borrowers and their Affiliates that would, but for this clause (e), constitute Eligible Accounts,
exceed the Applicable Concentration Percentage of the aggregate amount of all Eligible Accounts of the Borrowers, to the extent
such obligations owing by such Account Debtor are in excess of such percentage, (f) which represents a sale on a bill-and-hold,
guaranteed sale, sale and return, sale on approval, consignment, or other repurchase or return basis or a progress billing under
an agreement which requires further performance by such Borrower, is otherwise contingent on such Borrower’s completion of
any future performance or is subject to any other terms by reason of which the payment by the Account Debtor may be conditional,
(g) with respect to which any of the following events has occurred as to the Account Debtor on such Account: the filing of
any petition for relief under the Bankruptcy Code or other insolvency laws, a general assignment for the benefit of creditors,
the appointment of a receiver or trustee, application or petition for dissolution, its dissolution, the sale or transfer of all
or any material part of the assets or the cessation of the business as a going concern, (h) owed by an Account Debtor which
does not maintain its chief executive office in the United States or Canada (not including Quebec) or is not organized under the
laws of the United States or Canada (not including Quebec) or any state or province thereof, (i) which is not payable in United
States Dollars, (j) owed by an Account Debtor which is an Affiliate or employee of any Borrower or any of Borrowers’ Affiliates,
(k) with respect to which either the perfection, enforceability, or validity of Lender’s Lien in such Account, or Lender’s
right or ability to obtain direct payment to Lender of the proceeds of such Account, is governed by any federal, state, provincial
or local statutory requirements other than those of the UCC, or comparable law of Canada (not including Quebec), or the Federal
Assignment of Claims Act (the eligibility requirements of which are governed by clause (q) below), (l) owed by an Account
Debtor to which such Borrower or any of its Affiliates are indebted in any way, or which is subject to any right of setoff or recoupment,
or if the Account Debtor thereon has disputed liability or made any claim with respect to any other Account due from such Account
Debtor, but in each such case only to the extent of such indebtedness, setoff, recoupment, dispute, or claim, (m) which is
evidenced by a promissory note or other instrument or by chattel paper, (n) which arises out of a sale not made in the ordinary
course of such Borrower’s business, (o) with respect to which the goods giving rise to such Account have not been shipped
and delivered to and accepted by the Account Debtor or the services giving rise to such Account have not been fully performed by
such Borrower, and, if applicable, accepted by the Account Debtor, or with respect to which the Account Debtor has revoked its
acceptance of any such goods or services, (p) which arises out of an enforceable contract or order which, by its terms, forbids,
restricts or makes void or unenforceable the granting of a Lien by such Borrower to Lender with respect to such Account or otherwise
requires the consent of the respective Account Debtor in order for the Lender to obtain direct payment of the proceeds of such
Account (except for Permitted Government Accounts), (q) other than with respect to Permitted Government Accounts, with respect
to which the Account Debtor is either (i) the United States or any department, agency, or instrumentality of the United States
or (ii) any state of the United States or province or territory of Canada or any department agency or instrumentality of such state
, province or territory, (r) with respect to which the Account Debtor is an individual or natural person, (s) with respect to which
the Account Debtor is a Sanctioned Person or Sanctioned Country, (t) with respect to which the books and records evidencing or
otherwise relating to such Account are located in a public warehouse, are in possession of a bailee or are in a facility leased
by such Borrower or subject to a mortgage lien, unless the warehouseman, bailee, lessor or mortgagee, as the case may be, has executed
an enforceable Collateral Access Agreement, or in the case of leased premises Lender in its discretion has established a reserve
in the amount of at least three months’ rent, (u) with respect to which Lender believes that the prospect of collection of
such Account is impaired or that the Account may not be paid by reason of the Account Debtor’s financial inability to pay,
or (v) owed by an Account Debtor, to the extent the amount owing thereon exceeds the credit limit extended to such Account
Debtor by such Borrower. The identification of specific exclusions from eligibility herein is not exclusive or exhaustive. Lender
reserves the right in its Permitted Discretion to establish additional or different criteria for determining Eligible Accounts,
at any time, without prior notice.

 

    
LOAN AND SECURITY AGREEMENT – Page 6

     

    

 

“Eligible
Canadian Account” means an Eligible Account owed by an Account Debtor which maintains its chief executive office in Canada
(not including Quebec) or is organized under the laws of Canada (not including Quebec) or any province thereof

 

“Eligible
Equipment” means, with respect to any Borrower, Equipment and Machinery of such Borrower that is designated by Lender
as eligible from time to time in its Permitted Discretion, but excluding Equipment and Machinery having any of the following characteristics:

 

(a) with respect to
Equipment, it is located at premises other than those (i) owned by such Borrower or (ii) leased and controlled by such Borrower
and as to which an enforceable Collateral Access Agreement with the owner and any mortgagee of such premises shall have been delivered
to Lender, or Lender in its discretion has established a reserve in the amount of at least three months’ rent;

 

(b) with respect to
Machinery, it is located at premises other than those owned by such Borrower;

 

(c) it is located outside
the United States of America;

 

(d) it is not subject
to the first priority, valid and perfected security interest of Lender or it is subject to any other Lien;

 

(e) it is damaged or
defective or not used or usable in the ordinary course of such Borrower’s business as presently conducted or is obsolete
or not currently saleable or has been removed from services;

 

(f) it is not covered
by “all risk” hazard insurance for an amount equal to its replacement cost;

 

(g) it requires proprietary
software in order to operate in the manner in which it is intended and such software is not freely assignable to Lender or any
potential purchaser thereof;

 

(h) it consists of
computer hardware, software, tooling, or molds;

 

(i) it is not owned
exclusively by such Borrower or as to which such Borrower does not have good, valid and marketable title thereto; or

 

(j) it is otherwise
deemed unacceptable by Lender in its Permitted Discretion.

 

    
LOAN AND SECURITY AGREEMENT – Page 7

     

    

 

“Eligible
Government Account” means an Account (a) with respect to which the Account Debtor is the United States of America or
any political subdivision, department, agency or instrumentality thereof pursuant to a contract for which a completed task order
has been approved for billing by the applicable Account Debtor, (b) which is not a Permitted Government Account, (c) with respect
to which not more than 90 days have elapsed since the date of the original invoice and which is not unpaid, in whole or in part,
more than 60 days after its original due date and (d) which is an Eligible Account but for the requirements of clauses (p) and
(q) of the definition of “Eligible Account” set forth in this Section 1.1.

 

“Eligible
Inventory” means, with respect to any Borrower, Inventory of such Borrower which is acceptable to Lender for purposes
of determining the Borrowing Base and meets all criteria for inclusion in the Borrowing Base as determined and established by Lender
from time to time in its Permitted Discretion. Without limiting the discretion of Lender to establish other criteria of ineligibility,
unless otherwise agreed by Lender, Eligible Inventory shall not include any Inventory: (a) which is not owned exclusively
by such Borrower or as to which Borrower does not have good, valid and marketable title thereto, (b) which is not subject
to a first priority and perfected security interest in favor of Lender or which is subject to any other Lien, (c) other than
finished goods, work in process and raw materials Inventory, (d) which is not in good condition, or is unmerchantable or does
not meet all standards imposed by any Governmental Authority having regulatory authority over such goods or their use or sale,
(e) which is not currently either usable or salable, at prices approximating at least cost, in the normal course of such Borrower’s
business, or is slow moving or stale, (f) which is obsolete or returned or repossessed or used goods taken in trade or goods
that constitute spare parts, packaging and shipping materials or supplies used or consumed in such Borrower’s business, (g) which
is located outside the United States or is in-transit to or from a location of such Borrower (other than in-transit from one location
set forth on Schedule 7.11 to another location set forth on Schedule 7.11), (h) as to which such Borrower
does not have actual and exclusive possession thereof (either directly or through a bailee or agent of such Borrower) or which
is located in a public warehouse or is in possession of a bailee or in a facility leased by such Borrower or an Affiliate thereof
or subject to a mortgage lien unless the warehouseman, bailee, lessor, or mortgagee, as the case may be, has delivered to Lender
a Collateral Access Agreement, or in the case of leased premises Lender in its discretion has established a reserve in the amount
of at least three months’ rent, and unless it is segregated or otherwise separately identifiable from goods of others, if
any, stored on the premises, (i) which is on consignment from any consignor, or on consignment to any consignee, (j) is subject
to a bill of lading or other document of title or (k) that contains or bears any Proprietary Rights licensed to such Borrower
by another Person unless such Borrower has delivered to Lender a consent or sublicense agreement from such licensor in form and
substance acceptable to Lender or Lender is otherwise satisfied that it may sell or otherwise dispose of such Inventory in accordance
with Section 11.2 without infringing the rights of the licensor of such Proprietary Rights or violating any contract of
such Borrower with such licensor (and without payment of any royalties other than any royalties due with respect to the sale or
disposition of such Inventory pursuant to the existing license agreement). The identification of specific exclusions from eligibility
herein is not exclusive or exhaustive. Lender reserves the right in its Permitted Discretion to establish additional or different
criteria for determining Eligible Inventory, at any time, without prior notice.

 

    
LOAN AND SECURITY AGREEMENT – Page 8

     

    

 

“Environmental
Laws” means any and all applicable federal, state, provincial, foreign or local statutes, laws, rules, regulations, ordinances,
codes, binding and enforceable guidelines, binding and enforceable written policies or rules of common law now or hereafter in
effect and in each case as amended, or any judicial or administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, relating to the environment, the effect of the environment or employee health
or relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic
or hazardous substances or wastes into the environment including ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.

 

“Equipment”
has the meaning prescribed for such term as defined by the UCC (which definition is incorporated herein by reference), wherever
located, and whether now or hereafter existing, and all parts thereof, all accessions thereto and all replacements therefor. The
Equipment includes, without limitation, with respect to a Person, all personal property used or useable by such Person in its business.

 

“Equity Interests”
means, with respect to a 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, participations or other rights entitling the holder thereof to purchase or acquire any such interest, whether voting or
nonvoting.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto.

 

“ERISA Affiliate”
means (a) any Person, trade or business (whether or not incorporated) subject to ERISA whose employees are treated as being
employed by the same employer as the employees of any Credit Party under Section 414(b) of the IRC, (b) any Person, trade
or business (whether or not incorporated) subject to ERISA whose employees are treated as being employed by the same employer as
the employees of any Credit Party under Section 414(c) of the IRC, (c) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any organization subject to ERISA that is a member of an affiliated service group of which any Credit Party is
a member under Section 414(m) of the IRC, or (d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
Person subject to ERISA that is a party to an arrangement with any Credit Party and whose employees are aggregated with the employees
of any Credit Party under Section 414(o) of the IRC.

 

    
LOAN AND SECURITY AGREEMENT – Page 9

     

    

 

“ERISA Benefit
Plan” means any “employee benefit plan” (as defined in Section 3(3) of ERISA) as to which any Credit Party
or any ERISA Affiliate (a) is (currently or hereafter), or at any time during the immediately preceding six (6) years has, sponsored,
maintained or contributed to on behalf of any of its employees or (b) has (currently or hereafter), or has had at any time within
the preceding six (6) years, any liability (contingent or otherwise).

 

“Event of
Default” has the meaning prescribed by Section 10.1.

 

“Excess Cash
Flow” means, an amount, determined as of the end of each Fiscal Year of Parent and based upon the financial statements
delivered to Lender pursuant to Section 8.4(a), equal to the difference between (a) EBITDA for such period, minus
(b) the sum of (i) unfinanced Capital Expenditures during the applicable period in an amount not exceeding the amount permitted
by this Agreement, (ii) taxes paid during the applicable period, (iii) Distributions made by Parent during the applicable period
(provided that Distributions by Parent are not permitted without Lender’s prior written consent, which consent may be granted
or withheld in Lender’s sole and absolute discretion), and (iv) regularly scheduled payments of principal and interest paid
on all long-term Debt during the applicable period (and expressly not including any payments on the Revolving Loans or any prepayments
of any amounts on any other Debt), in each case determined for the Parent and their its Subsidiaries on a consolidated basis in
accordance with GAAP on the last day of the measurement period.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as in effect from time to time.

 

“Excluded
Account” means (a) any Deposit Account of a Credit Party specially and exclusively used for payroll, payroll taxes and
other employee wage and benefit payments to or for the benefit of any Credit Party’s employees, and (b) the Permitted Citibank
Accounts.

 

“Excluded
Property” means, with respect to any Credit Party, collectively, (i) property of such Credit Party subject to Liens permitted
by clauses (d) or (m) of the definition of Permitted Liens solely in the event and to the extent that a grant or perfection of
a Lien in favor of Lender on any such property is prohibited by or results in a breach or termination of, or constitutes a default
under, the documentation governing such Liens or the obligations secured by such Liens (other than to the extent that such terms
would be rendered ineffective pursuant to Section 9.406, 9.407, 9.408 or 9.409 of the UCC (or any successor provision or provisions)
of any relevant jurisdiction and other than to the extent all necessary consents to creation, attachment and perfection of the
Lender’s Liens thereon have been obtained) and, in any event, immediately upon the ineffectiveness, lapse or termination
of such terms or the obtainment of such consents, such property shall cease to constitute Excluded Property and shall be Collateral,
(ii) any personal property lease, contract, permit, license, franchise or letter of credit right of such Credit Party, solely in
the event and to the extent that a grant or perfection of a Lien on such personal property lease, contract, permit, license, franchise
or letter of credit right is prohibited by applicable law or results in a breach or termination of, or constitutes a default under,
any such personal property lease, contract, permit, license, franchise or letter of credit right (other than to the extent that
such law or terms would be rendered ineffective pursuant to Section 9.406, 9.407, 9.408 or 9.409 of the UCC (or any successor provision
or provisions) of any relevant jurisdiction and other than to the extent all necessary consents to creation, attachment and perfection
of the Lender’s Liens thereon have been obtained) and, in any event, immediately upon the ineffectiveness, lapse or termination
of such law or terms or the obtainment of such consents, such personal property lease, contract, permit, license, franchise or
letter of credit right shall cease to constitute Excluded Property and shall be Collateral, (iii) the voting equity interests of
controlled foreign corporations (as defined in the IRC) of such Credit Party in excess of 65% of the voting rights of such corporations
and (iv) any United States intent-to-use trademark applications to the extent that, and solely during the period in which, the
grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark applications under
applicable federal law, provided, that upon submission and acceptance by the United States Patent and Trademark Office of
an amendment to allege use pursuant to 15 U.S.C. Section 1060(a) (or any successor provision) such intent-to-use trademark application
shall cease to constitute Excluded Property and shall be Collateral.

 

    
LOAN AND SECURITY AGREEMENT – Page 10

     

    

 

“Excluded
Taxes” means any of the following Taxes imposed on or with respect to Lender or required to be withheld or deducted from
a payment to Lender: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits
Taxes, in each case (i) imposed as a result of Lender being organized under the laws of, or having its principal office or its
applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are
Other Connection Taxes, and (b) U.S. federal withholding Taxes imposed under FATCA.

 

“FAA”
means the Federal Aviation Administration and any successor thereto.

 

“FAA Regulations”
means any and all regulations by the FAA under the provisions of the Federal Aviation Act of 1958, as amended, or otherwise.

 

“FATCA”
means Sections 1471 through 1474 of the IRC, as of the date of this Agreement (or any amended or successor version that is substantively
comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof,
and any agreement entered into pursuant to Section 1471(b)(1) of the IRC.

 

“Fiscal Month”
means a calendar month.

 

“Fiscal Quarter”
means one of four fiscal quarters of a Fiscal Year, each consisting of a period of three (3) consecutive Fiscal Months, with the
first of such quarters beginning on the first day of a such Fiscal Year and the last of such quarters ending on the last day of
such Fiscal Year.

 

“Fiscal Year”
means Credit Parties’ fiscal year for financial accounting purposes, beginning on January 1 and ending on December 31
of such year.

 

“Fitch”
means Fitch Ratings Inc.

 

“Fixed Charge
Coverage Ratio” means, for a Person on any date of determination, the ratio of (a) EBITDA less unfinanced
Capital Expenditures to (b) (i) taxes paid in cash, plus (ii) to the extent Distributions have not been reflected in
net income, Distributions that are made by Parent (provided that Distributions by Parent are not permitted without Lender’s
prior written consent, which consent may be granted or withheld in Lender’s sole and absolute discretion), plus, (iii) Interest
Expense paid in cash, plus (iv) principal payments made or required to be made on any and all long term Debt (other
than in respect of the Revolving Loans prior to the Maturity Date), in each case determined for such Person and its Subsidiaries
on a consolidated basis in accordance with GAAP on a rolling twelve month basis on such date of determination; provided,
however, that for all calculations of Fixed Charge Coverage Ratio made for the first three (3) Fiscal Quarters ending after
the Agreement Date, calculation of Interest Expense for clause (iii) above and principal payments for clause (iv) above shall be
calculated as follows: (1) the amount of Interest Expense for the twelve months ending as of the end of the first such Fiscal Quarter
shall be the amount equal to actual Interest Expense for such Fiscal Quarter, multiplied by four, (2) the amount of Interest Expense
for the twelve months ending as of the end of the second Fiscal Quarter shall be the amount equal to actual Interest Expense for
the two Fiscal Quarters then ended, multiplied by two, (3) the amount of Interest Expense for the twelve months ending as of the
end of the third Fiscal Quarter shall be the amount equal to actual Interest Expense for the three Fiscal Quarters then ended,
multiplied by 1.33, and (4) the amount of such principal payments shall be $542,857.

 

    
LOAN AND SECURITY AGREEMENT – Page 11

     

    

 

“Foreign Subsidiary”
means a Subsidiary of a Credit Party organized under the laws of a jurisdiction not located in the United States.

 

“GAAP”
means generally accepted accounting principles in the United States, as in effect from time to time, consistently applied. Notwithstanding
anything herein to the contrary, all financial statements delivered hereunder shall be prepared and all financial covenants contained
herein shall be calculated, without giving effect to any election under Statement of Financial Accounting Standards 159 (or any
similar account principal) permitting a Person to value its financial liabilities at the fair value thereof.

 

“General Intangibles”
has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and in any
event includes, without limitation, all intangible personal property of every kind and nature (other than Accounts, Chattel Paper,
Commercial Tort Claims, Deposit Accounts, Securities Accounts, Documents, Instruments, Investment Property, Letter of Credit Rights,
letters of credit and money), including, without limitation, contract rights, business records, rights and claims against carriers
and shippers, customer lists, registrations, licenses, franchises, tax refund claims, rights to indemnification, warranty or guaranty
contract, claims for any damages arising out of or for breach or default under or in connection with any contract, rights to exercise
or enforce remedies, powers and privileges under any contract and rights and claims to any amounts payable under any contract of
insurance, including without limitation, business interruption, property, casualty, key employee life or any other insurance.

 

“Goodrich”
means Goodrich Corporation and its Affiliates.

 

“Governmental
Authority” means any federal, state or local government, any subdivision thereof, and any agency, entity, instrumentality
or authority owned or controlled thereby.

 

“Guarantor”
means, collectively, Parent and each direct or indirect Subsidiary of Parent (other than a Borrower or a Foreign Subsidiary), and
includes each Person that is required to execute a Guaranty Agreement in favor of Lender after the Agreement Date pursuant to Section 8.16,
and the successors and permitted assigns of each such Person.

 

“Guaranty”
means, with respect to a Person, any direct or indirect guaranty by such Person of any Debt or other obligation of another Person
or any obligation by such Person to purchase or acquire or otherwise protect or insure a creditor against loss in respect of Debt
or other obligations of another Person, but excluding customary contractual indemnities in contracts made in the ordinary course
of business or under organizational documents.

 

“Guaranty
Agreement” means each Guaranty Agreement now or hereafter executed by a Guarantor in favor of Lender pursuant to which
such Guarantor guarantees the payment and/or performance of all or any portion of the Obligations of the Borrowers, in form and
substance acceptable to Lender in its Permitted Discretion, as amended, restated, supplemented or otherwise modified from time
to time.

 

“Hazardous
Materials” means any substances regulated under any Environmental Law, whether as pollutants, contaminants, or chemicals,
or as industrial, toxic or hazardous substances or wastes, or otherwise.

 

    
LOAN AND SECURITY AGREEMENT – Page 12

     

    

 

“Indemnified
Claims” means any and all claims, demands, actions, causes of action, judgments, obligations, liabilities, losses, damages
and consequential damages, penalties, fines, costs, fees, expenses, Lender Expenses and disbursements (including without limitation,
fees and expenses of attorneys and other professional consultants and experts in connection with investigation or defense) of every
kind, known or unknown, existing or hereafter arising, foreseeable or unforeseeable, which may be imposed upon, threatened or asserted
against, or incurred or paid by, an Indemnified Person at any time and from time to time, because of, resulting from, in connection
with, or arising out of any transaction, act, omission, event or circumstance in any way connected with the Collateral, the Loan
Documents (including enforcement of Lender’s rights thereunder or defense of Lender’s actions thereunder), any Default
or Event of Default or any acts or omissions taken by such Indemnified Person in connection with this Agreement or administration
of the Loan Documents.

 

“Indemnified
Persons” means, collectively, Lender, and each of its Affiliates, Equity Interest owners, officers, directors, members,
managers, partners, employees, agents and representatives.

 

“Indemnified
Taxes” means (a) any Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account
of any obligation of any Credit Party under any Loan Document and (b) to the extent not otherwise described in the foregoing clause
(a) of this definition, Other Taxes.

 

“Initial Term
Loan Advance” has the meaning given to such term in Section 2.1(b).

 

“Initial Term
Loan Amount” means $3,800,000.

 

“Initial Term
Loan Funding Date” has the meaning given to such term in Section 2.1(b).

 

“Installment
Payment Date” means with respect to the Term Loan, the first day of each calendar month, commencing February 1, 2020,
and continuing thereafter until the earlier of the Termination Date or the date on which the Term Loan has been irrevocably paid
in full.

 

“Instrument”
has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and includes,
without limitation, a negotiable instrument or any other writing that evidences a right to the payment of a monetary obligation,
is not itself a security agreement or lease, and is of a type that in the ordinary course of business is transferred by delivery
with any necessary endorsement or assignment.

 

“Intangible
Assets” means, for any Person, assets that are treated as intangible pursuant to GAAP, including, without limitation:
(a) obligations owing to such Person by its stockholders, officers, directors, members, managers, partners, employees, subsidiaries,
Affiliates or any Person in which any such stockholder, officer, director, member, manager, partner, employee, subsidiary, or Affiliate
owns any interest and (b) any asset which is intangible or lacks intrinsic or marketable value or collectability, including, without
limitation, goodwill, noncompetition agreements, patents, copyrights, trademarks, franchises, organization or research and development
costs.

 

“Interest
Expense” means, for a Person for a period, total interest expense for such Person for such period, as determined in accordance
with GAAP.

 

“Inventory”
has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and includes,
without limitation, with respect to a Person, goods (including goods in-transit) that (a) are held or to be held by such Person
for sale or lease or to be furnished under a contract of service, (b) are leased or to be leased by such Person as lessor
or (c) consist of raw materials, work in process, finished goods or materials used or consumed in such Person’s business.

 

    
LOAN AND SECURITY AGREEMENT – Page 13

     

    

 

“Inventory
Sublimit” means $11,000,000.

 

“Investment”
means, with respect to any Person, any investment made, directly or indirectly by such Person in, to or with respect to any other
Person, and any other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP,
whether by (a) acquisition of shares of capital stock or other Equity Interests, indebtedness, securities or other obligations,
(b) a loan, guarantee, advance, capital contribution or other like investment, or (c) any purchase or other acquisition (or any
commitment to make any such purchase or other acquisition) of all or a material portion of the assets of (or any division or business
line of) any other Person, in each case, whether made in cash, by the transfer of property or otherwise (including, without limitation,
any joint venture relationship).

 

Investment Grade
Company” means, as of any date, a Person with a Credit Rating of BBB or higher by S&P (or the equivalent rating by
Moody’s or Fitch).

 

“Investment
Property” has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by
reference, and includes, without limitation, a security (whether certificated or uncertificated), security entitlement, securities
account, commodity contract, or commodity account.

 

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

 

“IRS”
means the United States Internal Revenue Service.

 

“Joinder Agreement”
has the meaning given to such term in Section 8.16.

 

“Lender”
has the meaning given to such term in the preamble hereto.

 

“Lender Account”
means Sterling National Bank account number 6700044124, ABA number 221970443, or such other account as Lender may from time to
time specify to Borrower Representative in writing.

 

“Lender Expenses”
has the meaning prescribed by Section 13.5.

 

“Lender’s
Liens” means Liens granted (or purported to be granted) in favor of Lender pursuant to this Agreement or any of the other
Loan Documents.

 

“Letter of
Credit Rights” has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein
by reference, and includes, without limitation, a right to payment or performance under a letter of credit, whether or not the
beneficiary has demanded or is at the time entitled to demand payment or performance and whether or not evidenced by a writing.

 

“LIBOR Rate”
means the greater of (i) the rate per annum published on each Business Day in the “Money Rates” table of The
Wall Street Journal (or such other presentation within The Wall Street Journal as may be adopted hereafter for such
information) as the one-month LIBOR rate, adjusted daily, and (ii) 1.00%; provided, that, if any change in market
conditions or any change in Applicable Law shall at any time after the date hereof, in the reasonable opinion of the Lender, make
it unlawful or impractical for the Lender (other than as a result of the Lender’s creditworthiness) to fund or maintain Loans
at the LIBOR Rate or to continue such funding or maintaining, or to determine or change interest rates based on the LIBOR Rate
then the LIBOR Rate shall be a rate per annum determined by the Lender in its Permitted Discretion.

 

    
LOAN AND SECURITY AGREEMENT – Page 14

     

    

 

“Lien”
means any interest in property securing an obligation owed to, or a claim by, a Person other than the owner of the property, whether
such interest is based on the common law, statute, or contract, and including a security interest, collateral assignment, charge,
claim, or lien arising from a security agreement, mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, conditional sale, trust receipt, lease, consignment or bailment for security purposes or similar agreement, or any
contingent or other agreement to provide any of the foregoing.

 

“Loan”
means any loan or advance made by Lender to Borrowers under this Agreement and includes Revolving Loans and the Term Loan, and
“Loans” means, collectively, all such loans and advances.

 

“Loan Documents”
means this Agreement, each Guaranty Agreement, each Subordination Agreement, each Term Note (if any), each Revolving Note (if any),
each Pledge Agreement, each Control Agreement, each Collateral Access Agreement, and any other documents, instruments or agreements
heretofore, now or hereafter evidencing, securing, guaranteeing or otherwise relating to or executed by any Credit Party in connection
with the Obligations, the Collateral or any other aspect of the transactions contemplated by this Agreement, and in each case including
any and all renewals, extensions, modifications, amendments, or restatements of any of the foregoing.

 

“Machinery”
refers to Collateral that would be classified within the definition of “Equipment” but for the fact that such items
have become so affixed to the related Real Property that an interest has arisen therein under real property law.

 

“Margin Stock”
means “margin stock” as such term is defined in Regulation T, U or X of the Federal Reserve Board.

 

“Material
Adverse Effect” means the occurrence of any of the following: (i) a material adverse change in, or effect on, the
business, assets, operations, prospects or financial condition of any Credit Party, (ii) a material impairment of the ability
of any Credit Party to perform any obligations under the Loan Documents to which it is a party, (iii) a material adverse effect
upon the Collateral or the validity, perfection or priority of Lender’s Liens on the Collateral, or (iv) a material adverse
effect upon the legality, validity, binding effect or enforceability of any Loan Document.

 

“Maturity
Date” means (a) September 30, 2020, in the event that Credit Parties do not satisfy in full the requirements set forth
in Section 8.20(b) before such date, and (b) December 30, 2022 in the event that Credit Parties satisfy in full the requirements
set forth in Section 8.20(a) before the date specified therein.

 

“Maximum Rate”
means the maximum rate of interest permitted to be charged under Applicable Law from time to time in effect; provided, that
in the event Applicable Law provides for an interest ceiling on any day under Chapter 303 of the Texas Finance Code, as amended
(the “Texas Finance Code”), for that day the ceiling shall be the “monthly ceiling” as referred
to and in effect from time to time under the provisions of Section 303.004 of the Texas Finance Code.

 

“Maximum Term
Loan Advance Amount” means, on any day, an amount equal to (a) the Term Loan Commitment minus (b) the aggregate
principal amount of Term Loan Advances made by Lender prior to such day pursuant to Section 2.1(b).

 

“Moody’s”
means Moody’s Investors Service, Inc.

 

    
LOAN AND SECURITY AGREEMENT – Page 15

     

    

 

“Multiemployer
Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which any Credit Party
or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding six plan years, has made or been obligated
to make contributions.

 

“Net Amount”
means, (a) with respect to an Eligible Account or Eligible Government Account of any Borrower at any time, an amount equal
to: (i) the gross amount of such Account less (ii) sales, excise or similar taxes, and all returns, discounts, claims, credits,
rebates and allowances of any nature at any time issued, owing, granted, outstanding, available or claimed, (b) with respect
to Eligible Inventory at any time, the net orderly liquidation value of such Inventory, as determined pursuant to the most recent
appraisal acceptable to Lender in its discretion, and (c) with respect to Term Loan Primary Collateral at any time, the net orderly
liquidation value thereof, as determined pursuant to the most recent appraisal acceptable to Lender in its discretion.

 

“Obligations”
means all obligations, liabilities and indebtedness now or hereafter owing by any Credit Party to Lender pursuant to or otherwise
arising in connection with this Agreement or any other Loan Documents, including, without limitation, all loan repayment obligations,
accrued interest obligations (including interest that accrues after the commencement of an insolvency proceeding, regardless of
whether allowed or allowable in whole or in part as a claim in such insolvency proceeding), Indemnified Claims, Lender Expenses
(including any fees or expenses that accrue after the commencement of an insolvency proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in such insolvency proceeding), all obligations or liabilities arising from Bank Products,
premiums, fees, or guaranties arising out of, under, pursuant to, in connection with or evidenced by this Agreement or any other
Loan Document, in each case, whether direct or indirect, primary or secondary, joint, several, or joint and several, fixed or contingent,
including indebtedness, liabilities and obligations, if any, which may be assigned to or acquired by Lender, and any and all renewals
and extensions of the foregoing or of any part thereof.

 

“OFAC”
means the Office of Foreign Assets Control of the United States Department of the Treasury.

 

“Other Connection
Taxes” means Taxes imposed as a result of a present or former connection between Lender and the jurisdiction imposing
such Tax (other than connections arising from Lender having executed, delivered, become a party to, performed its obligations under,
received payments under, received or perfected a security interest under, engaged in any other transactions pursuant to or enforced
any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

 

“Other Taxes”
means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment
made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security
interest under, or otherwise with respect to, any Loan Document except any such Taxes that are Other Connection Taxes imposed with
respect to an assignment.

 

“Parent”
has the meaning given to such term in the preamble hereto.

 

“Patriot Act”
means the USA Patriot Act (Title III of Pub. L. 107–56) as amended, supplemented or replaced from time to time.

 

“Payment Intangibles”
means all “payment intangibles” as defined in the UCC, which definition is incorporated herein by reference.

 

    
LOAN AND SECURITY AGREEMENT – Page 16

     

    

 

“PBGC”
shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.

 

“Perfection
Certificate” means any perfection certificate executed by the Credit Parties on and as of the Agreement Date which provides
information with respect to the assets and/or property of such Credit Parties as of the Agreement Date and is in form acceptable
to Lender in its Permitted Discretion and any additional similar perfection certificate delivered by one or more Credit Parties
to the Lender after the Agreement Date pursuant to Section 8.16.

 

“Permitted
Citibank Accounts” means the following Deposit Accounts maintained with Citibank NA: (a) Deposit Account No. 6792034870
so long as the aggregate balance of funds in such account does not exceed $15,000 at any time, and (b) Deposit Account No. 075
060 954 so long as such Deposit Account is specially and exclusively used for payroll.

 

“Permitted
Debt” shall have the meaning given to such term in Section 9.5.

 

“Permitted
Discretion” means a determination made by the Lender in the exercise of its commercially reasonable business judgment
(from the perspective of a secured asset-based lender).

 

“Permitted
Disposition” shall have the meaning given to such term in Section 9.8.

 

“Permitted
Government Account” means an Account with respect to which (a) the Account Debtor is the United States of America or
any political subdivision, department, agency or instrumentality thereof, (b) a copy of the related contract has been delivered
to Lender, (c) a completed task order has been approved for billing by the applicable Account Debtor, and (d) the Federal Assignment
of Claims Act, as amended, or any similar law, if applicable, has been complied with in a manner satisfactory to the Lender.

 

“Permitted
Holders” means, collectively, Michael Taglich, Robert Taglich, and Taglich Brothers Inc.

 

“Permitted
Investment” means, with respect to any Credit Party, (a) advances made in connection with purchases of goods and
services in the ordinary course of business, (b) acquisitions (not otherwise prohibited by this Agreement) of Equipment by such
Credit Party for use in the ordinary course of business, (c) Investments in negotiable instruments deposited or to be deposited
for collection in the ordinary course of business, (d) guarantees constituting Permitted Debt, (e) direct obligations of the United
States of America or any agency thereof, or obligations guaranteed by the United States of America, that mature within one year
from the date of acquisition thereof, (f) certificates of deposit maturing within one year from the date of acquisition, issued
by a commercial bank organized under the laws of the United States of America or any state thereof having capital and surplus aggregating
at least $100,000,000, (g) commercial paper of an issuer rated at least A-1 by S&P or P-1 from Moody’s, (h) money
market mutual funds so long as substantially all of the assets of such fund are comprised of securities of the type described in
clauses (e), (f) and (g) above, (i) travel and similar advances to employees made in the ordinary course of business, and
(j) ordinary extensions of credit and loans to customers buying goods, supplies and services in the ordinary course of business
so long as not for longer periods than in the ordinary course of business and payable on customary trade terms for such Credit
Party, and (k) receivables owing to such Credit Party created or acquired in the ordinary course of business, so long as not for
longer periods than in the ordinary course of business and payable on customary trade terms.

 

    
LOAN AND SECURITY AGREEMENT – Page 17

     

    

 

“Permitted
Liens” means, with respect to any Credit Party, (a) Lender’s Liens, (b) Liens for unpaid taxes, assessments
or other governmental charges or levies that either (i) are not delinquent or (ii) do not have priority over the Lender’s
Liens and are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and for which
adequate reserves are maintained on the books of such Credit Party in accordance with GAAP, (c) Liens, if any, described in
Schedule 7.22, but only to the extent such Liens secure Permitted Debt existing on the Agreement Date and any Refinancing
Debt, (d) Liens which constitute purchase money Liens and secure Debt permitted under clause (d) of Section 9.5, but
only to the extent such Liens attach only to the property acquired by the incurrence of such purchase money secured Debt and such
Liens only secure the Debt incurred to acquire such property or any related Refinancing Debt, (e) the interests of lessors
or sublessors under operating leases entered into in the ordinary course of business and not prohibited by any other provision
hereof, (f) statutory Liens in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers or suppliers,
incurred in the ordinary course of business of such Credit Party and not in connection with the borrowing of money, and which Liens
are for sums not delinquent or sums being contested in good faith by appropriate proceedings promptly instituted and diligently
conducted and for which adequate reserves are maintained on the books of such Credit Party in accordance with GAAP, (g) Liens
arising from deposits made in connection with obtaining worker’s compensation or other unemployment insurance, (h) purported
Liens evidenced by the filing of precautionary UCC financing statements relating solely to operating leases of personal property
entered into in the ordinary course of business, (i) Liens in favor of customs and revenue authorities arising as a matter
of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business, (j) judgment
liens in respect of judgments that do not constitute an Event of Default, (k) non-exclusive licenses of intellectual property
rights granted by such Credit Party in the ordinary course of business, (l) with respect to real property, zoning restrictions,
easements, rights of way, restrictions, reservations, declarations, licenses, covenants, encroachments, and other minor defects
or irregularities in title, in each case which do not and will not interfere in any material respect with the ordinary conduct
of the business of such Credit Party, (m) Liens on cash deposits to secure the performance of tenders, statutory obligations,
surety, stay, customs and appeals bonds, bids, insurance, leases, government contracts, trade contracts, performance and return
of money bonds, letters of credit and other similar obligations (exclusive of obligations for the payment of borrowed money) entered
into in the ordinary course of business, (n) security deposits to public utilities or to any municipalities or Governmental Authority
or other public authorities when required by such utility, municipality, Governmental Authority or other public authority in connection
with the supply of services or utilities, and (o) statutory or common law rights of setoff of depository banks with respect to
funds of Credit Parties at such banks to secure fees and charges in connection with returned items or the standard fees and charges
of such banks in connection with Deposit Accounts maintained by Credit Parties at such banks (but not any other Debt or other obligations).

 

“Person”
means any natural person, corporation, joint venture, limited liability company, general partnership, limited partnership, limited
liability limited partnership, trust, land trust, unincorporated organization or Governmental Authority.

 

“Pledge Agreement”
means, collectively, each Pledge Agreement now or hereafter executed by any Credit Party in favor of the Lender, pursuant to which
such Credit Party pledges and grants to Lender, as security for such Credit Party’s Obligations, a security interest in all
or any portion of the Equity Interests owned by it, in form and substance acceptable to Lender in its Permitted Discretion, as
amended, restated, supplemented or otherwise modified from time to time.

 

“PNC”
means PNC Bank, National Association, a national banking association.

 

“Pratt &
Whitney” means Pratt & Whitney and its Affiliates.

 

    
LOAN AND SECURITY AGREEMENT – Page 18

     

    

 

“Proprietary
Rights” means collectively, all rights, priorities and privileges relating to intellectual property, whether arising
under United States, multinational, foreign laws or otherwise, including, without limitation, inventions, invention disclosures,
designs, blueprints, plans, specifications, licenses, permits, patents, patent rights, copyrights, works which are the subject
matter of copyrights, trademarks, service marks, trade names, trade styles, patent, trademark and service mark applications, trade
secrets, domain names, good will and all licenses and rights related to any of the foregoing, including, without limitation, all
royalties, license fees or other payments due under or in respect of any of the foregoing, all extensions, renewals, reissues,
divisions and continuations of any of the foregoing, and all rights to sue at law or in equity for past, present and future infringement,
misappropriation, violation or other impairment of any of the foregoing, including the right to receive all proceeds and damages
therefrom.

 

“Protective
Advances” has the meaning set forth in Section 2.4.

 

“Real Property”
means any estates or interests in real property now owned or hereafter acquired by any Credit Party and the improvements thereto.

 

“Refinancing
Debt” means, with respect to any Debt of any Person, refinancings, renewals, or extensions thereof so long as (a) the
terms and conditions of such refinancings, renewals, or extensions do not materially impair the prospects of repayment of the Obligations
or materially impair such Person’s creditworthiness, (b) the terms of such refinancings, renewals and extensions are not
less favorable to the obligor thereon or to the Lender than the Debt so refinanced, renewed or extended (individually or in the
aggregate), (c) such refinancings, renewals, or extensions do not result in an increase in the principal amount of the Debt so
refinanced, renewed, or extended, (d) such refinancings, renewals, or extensions do not result in an increase in the interest rate
with respect to the Debt so refinanced, renewed, or extended, (e) such refinancings, renewals, or extensions do not result in a
shortening of the average weighted maturity of the Debt so refinanced, renewed, or extended, nor are they on terms or conditions
that, taken as a whole, are materially more burdensome or restrictive to such Person, (f) if the Debt that is refinanced, renewed,
or extended (or any Lien securing such Debt) was subordinated in right of payment or priority to the Obligations (or any Lien securing
any Obligations), then the terms and conditions of the refinancing, renewal, or extension must include subordination terms and
conditions that are at least as favorable to the Lender as those that were applicable to the refinanced, renewed, or extended Debt
and any Liens securing such Debt, and (g) the Debt that is refinanced, renewed, or extended is not recourse to any Person that
is liable on account of the Obligations other than that Person or those Persons which were obligated with respect to the Debt that
was refinanced, renewed, or extended.

 

“Reportable
Event” shall mean an event described in Section 4043(c) of ERISA with respect to an ERISA Benefit Plan that is subject
to Title IV of ERISA other than those events as to which the 30 day notice period is waived under 29 C.F.R. Sections 4043.22, .23,
..25, .27 or .28.

 

“Reporting
Date” means, with respect to any Schedule hereto, (i) initially, the Agreement Date and (ii) thereafter, the most recent
date as to which such Schedule was updated or required to be updated, as applicable, in accordance with the terms hereof.

 

“Responsible
Officer” means, for any Person, the chief executive officer, chief financial officer, chief accounting officer or president
of such Person and, in addition, with respect to a Borrowing Base Certificate or a Compliance Certificate, the treasurer of such
Person or any other Person authorized by board resolution and approved by Lender in its Permitted Discretion.

 

“Revolving
Credit Limit” means $16,000,000.

 

    
LOAN AND SECURITY AGREEMENT – Page 19

     

    

 

“Revolving
Loans” has the meaning set forth in Section 2.1(a).

 

“Revolving
Note” has the meaning set forth in Section 2.1(a).

 

“S&P”
means Standard & Poor’s Rating Group.

 

“Sanctioned
Country” means, at any time, a country or territory which is the subject or target of any Sanctions.

 

“Sanctioned
Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC,
the U.S. Department of State, any other U.S. government entity, the United Nations Security Council or any similar list maintained
by Canada, the European Union or any EU member state, (b) any Person operating, organized or resident in a Sanctioned Country or
(c) any Person controlled by any Person described in clauses (a) or (b) of this definition.

 

“Sanctions”
means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government,
including those administered by OFAC or the U.S. Department of State, the U.S. Department of Commerce or the U.S. Department of
the Treasury or (b) the United Nations Security Council, the European Union of Her Majesty’s Treasury of the United Kingdom
or the relevant sanctions authority of Canada, and in each case, the regulations promulgated thereunder.

 

“Securities
Account” has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference.

 

“Securities
Intermediary” has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein
by reference.

 

“Settlement”
has the meaning set forth in Section 2.5(b)

 

“Settlement
Date” has the meaning set forth in Section 2.5(b).

 

“Shareholder’s
Equity” means, as of any date, stockholder’s or member’s equity as determined in accordance with GAAP or,
in the case of a partnership, a partner’s partnership interest.

 

“Solvent”
means, when used with respect to any Person at any time of determination, that:

 

(a) the assets
of such Person, at a fair valuation, are in excess of the total amount of its liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities); and

 

(b) the present
fair saleable value of such Person’s assets is greater than the total amount of its existing debts (including contingent,
subordinated, unmatured and unliquidated liabilities) as such debts become absolute and matured; and

 

(c) such
Person is then able and expects to be able to pay its debts (including contingent, subordinated, unmatured and unliquidated liabilities)
as they mature; and

 

(d) such
Person has capital sufficient to carry on its business as conducted and as proposed to be conducted.

 

    
LOAN AND SECURITY AGREEMENT – Page 20

     

    

 

For purposes of determining whether a Person
is Solvent, the amount of any contingent liability shall be computed as the amount that, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

“Subordinated
Debt” means (a) Debt (whether secured or unsecured) that is subordinated to the Obligations pursuant to a Subordination
Agreement or (b) unsecured Debt that is subordinated in right of payment to the Obligations, on terms acceptable to Lender in its
Permitted Discretion, in each case that from and after September 30, 2020 does not have a final maturity on or before the date
that is six months after the Maturity Date.

 

“Subordination
Agreement” means any subordination agreement among Lender, the applicable Credit Party and the applicable third party
creditor (including, without limitation, any Affiliate of such Credit Party), pursuant to which all obligations and indebtedness
now or hereafter owing by such Credit Party to such creditor are subordinated to the Obligations in right of payment and claim,
and all Liens securing such obligations and indebtedness are subordinated to Lender’s Liens in the Collateral, in form and
substance satisfactory to Lender in its Permitted Discretion.

 

“Subsidiary”
means, with respect to a Person, any other Person of which more than ten percent (10%) of the voting Equity Interests is owned
or controlled directly or indirectly by such Person or one or more of its Subsidiaries, or a combination thereof; provided that,
for the purposes of this definition, any Person that is required to be consolidated with a Credit Party in accordance with GAAP
will be considered to be a Subsidiary of such Credit Party.

 

“Supporting
Obligations” has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein
by reference and includes letters of credit and guaranties issued in support of Accounts, Chattel Paper, Documents, General Intangibles,
Instruments or Investment Property.

 

“Taxes”
means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments,
fees or other charges imposed by any Governmental Authority or taxing authority thereof or therein, including any interest, additions
to tax or penalties applicable thereto.

 

“Termination
Date” means the earlier of (a) the Maturity Date, (b) the day on which the obligations of Lender to make Loans hereunder
have been terminated pursuant to Section 12.1 or (c) the day on which the Obligations first become due and payable in full
(or, with the exception of contingent indemnity obligations for which no claim has been asserted, are paid in full) and the obligation
of Lender to make Loans hereunder are terminated.

 

Termination Event”
shall mean (i) a Reportable Event with respect to any ERISA Benefit Plan; (ii) the existence with respect to any ERISA Benefit
Plan of a non-exempt “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the IRC); (iii)
the withdrawal of any Credit Party or any ERISA Affiliate from an ERISA Benefit Plan or Multiemployer Plan during a plan year in
which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA; (iv) the providing of notice
of intent to terminate an ERISA Benefit Plan in a distress termination described in Section 4041(c) of ERISA; (v) the institution
by the PBGC of proceedings to terminate an ERISA Benefit Plan or Multiemployer Plan; (vi) any event or condition (a) which might
constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any ERISA
Benefit Plan or Multiemployer Plan, or (b) that may result in termination of a Multiemployer Plan pursuant to Section 4041A of
ERISA; or (vii) the partial or complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of any Credit Party or
any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization.

 

    
LOAN AND SECURITY AGREEMENT – Page 21

     

    

 

“Term Loan”
has the meaning given to such term in Section 2.1(b).

 

“Term Loan
Advance” has the meaning given to such term in Section 2.1(b).

 

“Term Loan
Commitment” means $3,800,000.

 

“Term Loan
Commitment Period” means the period from the Agreement Date through the earliest of March 30, 2020 and the Termination
Date.

 

“Term Loan
Primary Collateral” means the Eligible Equipment of Borrowers listed in Schedule 1.2 attached hereto.

 

“Term Note”
has the meaning given to such term in Section 2.1(b).

 

“Total Facility”
means on any date of determination an amount equal to the sum of (a) the Revolving Credit Limit plus (b) the Term Loan Commitment.

 

“Trading with
the Enemy Act” shall mean the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) and any enabling legislation or executive order relating thereto.

 

“UCC”
means the Uniform Commercial Code in effect in the State of New York, as amended from time to time.

 

“U.S. Person”
means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the IRC.

 

Section 1.2. Interpretive
Provisions. Unless expressly provided otherwise, any term which is defined by the UCC, wherever used in this Agreement, shall
have the same meaning as is prescribed by the UCC. The meanings of defined terms are equally applicable to the singular and plural
forms of the defined terms. The words “hereof,” “herein,” “hereunder” and similar words refer
to this Agreement as a whole and not to any particular provision of this Agreement. Unless the context indicates otherwise, references
to “Section,” “Subsection,” “clause” “Schedule” and “Exhibit” are
references to this Agreement. The term “documents” (if not capitalized as a defined term) includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings, however evidenced. The term “including”
is not limiting and means “including without limitation.” Unless the context requires otherwise, in the computation
of periods of time from a specified date to a later specified date, the word “from” means “from and including,”
the words “to” and “until” each mean “to but excluding” and the word “through”
means “to and including.” The term “discretion” when used in reference to a Person means, unless qualified
by the word(s) “reasonable” or Permitted Discretion, the sole and absolute discretion of such Person, honestly determined
by such Person under the circumstances. Unless otherwise expressly provided herein, references to agreements (including this Agreement)
and other contractual documents shall be deemed to include all subsequent amendments, restatements and other modifications thereto,
and references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting the statute or regulation. The captions and headings of this Agreement are
for convenience of reference only and shall not affect the interpretation of this Agreement. This Agreement and the other Loan
Documents are the result of negotiations among the parties, have been reviewed by counsel to each party and are the products of
all parties, and in consideration thereof, it is agreed that they shall not be construed against either party solely because of
such party’s involvement in their preparation. Unless otherwise specified, any reference to time shall be deemed to mean
Central Standard Time or Central Daylight Time, as applicable, as in effect in Dallas County, Texas.

 

    
LOAN AND SECURITY AGREEMENT – Page 22

     

    

 

ARTICLE
II

LOANS

 

Section 2.1. Loans.

 

(a) Revolving Loans.
Subject to the terms and provisions of this Agreement, Lender agrees to make advances to Borrowers from time to time during the
period from the date of this Agreement to the Termination Date in an amount not exceeding the Availability as of such time of determination
(such advances made by Lender pursuant to this Section 2.1(a) collectively, the “Revolving Loans”);
provided, that in no event shall the aggregate outstanding principal balance of the Revolving Loans exceed the Revolving
Credit Limit. Borrower may borrow, repay and re-borrow Revolving Loans from time to time, subject to the terms of this Agreement.
Lender shall have the continuing right to establish and maintain any reserves for purposes of calculating the Borrowing Base in
such amounts and at such times and with respect to such matters and for such purposes as Lender deems appropriate without prior
notice to Borrowers, including reserves with respect to collection performance, slow moving or obsolete Inventory, dilution of
Accounts, contingencies, amounts a Borrower is or may be required to pay (such as taxes, freight and shipping charges, duties,
insurance premiums, amounts owing to licensors, landlords, warehousemen, carriers, mechanics, materialmen, laborers or suppliers,
or ad valorem, excise, sales, or other taxes) or any other matter in Lender’s discretion. Any such reserves are solely for
purposes of calculating the Borrowing Base and do not constitute or represent cash funds. No Revolving Loans shall be evidenced
by a note unless requested otherwise by Lender, in which case the Revolving Loans shall be evidenced by a note executed by Borrowers
in favor of Lender (as amended, supplemented, restated or otherwise modified, the “Revolving Note”) in form
and substance reasonably satisfactory to Lender.

 

(b) Term Loan.
Subject to the terms and provisions of this Agreement, Lender agrees to make a term loan to Borrowers for the purpose of financing
Eligible Equipment once all conditions precedent to the initial funding hereunder have been met in accordance with Sections 6.1
and 6.3 (such date, the “Initial Term Loan Funding Date”) in an amount equal to the Initial Term Loan
Amount (the “Initial Term Loan Advance”). Thereafter, subject to the terms and provisions of this Agreement,
Lender agrees to make additional term loan advances to Borrowers from time to time during the Term Loan Commitment Period for the
purpose of refinancing Eligible Equipment in an amount not to exceed the lesser of (i) the Applicable Term Loan Advance Amount
and (ii) the Maximum Term Loan Advance Amount at such time (such term loan advances and the Initial Term Loan Advance, collectively,
the “Term Loan Advances” and each a “Term Loan Advance”); provided, that no more than
five (5) Term Loan Advances will be made after the Agreement Date. Amounts paid on the Term Loan may not be re-borrowed. The Term
Loan shall not (and no portion of the Term Loan shall) be evidenced by a note unless requested by Lender, in which case the Term
Loan shall be evidenced by a note executed by Borrowers in favor of Lender (as amended, supplemented, restated or otherwise modified,
the “Term Note”) in form and substance satisfactory to Lender.

 

(c) Accounting for
Loans. Lender shall maintain, in accordance with its usual practice, electronic or written records evidencing the outstanding
Obligations of each Borrower to Lender, including without limitation the Obligations resulting from each Loan made by Lender to
each Borrower from time to time, and the amounts of principal and interest payable and paid to Lender from time to time in respect
of each Loan. The entries made in the electronic or written records maintained pursuant to this Section 2.1(c) shall be
prima facie evidence of the existence and amounts of the Obligations therein recorded; provided, however, that the
failure of Lender to maintain such records or any error therein shall not in any manner affect the obligations of the Borrowers
to repay their respective Obligations in accordance with the terms of this Agreement and the other Loan Documents.

 

    
LOAN AND SECURITY AGREEMENT – Page 23

     

    

 

Section 2.2. Request
for and Making of Revolving Loans and Term Loan Advances.

 

(a) Request for Revolving
Loans and Term Loan Advances. Borrower Representative shall request each Revolving Loan, on behalf of all Borrowers, by delivering
to Lender a written Borrowing Notice, signed by a Responsible Officer of Borrower Representative, accompanied by a Borrowing Base
Certificate complying with Section 8.5 and reflecting sufficient Availability. After the Agreement Date, Borrower shall
request each Term Loan Advance, on behalf of all Borrowers, by delivering to Lender a written Borrowing Notice, signed by a Responsible
Officer of Borrower Representative, payoff letters as required by Section 6.2, and such other information as Lender may
require relating to Eligible Equipment being refinanced by such Loan. Unless otherwise agreed by Lender, each request for a Loan
shall be irrevocable and, in order to be effective, must be received by Lender prior to 10:00 a.m., Dallas time, on the requested
funding date, specifying (i) the amount of the requested Loan, and (ii) the requested funding date, which shall be a Business Day.

 

(b) Making of Loans.
Lender shall make the amount of any requested borrowing available to Borrowers on the applicable funding date by transferring
immediately available funds equal to such amount to the Designated Account; provided, however, that Lender shall
not be required (nor have any obligation) to make any advance if (1) one or more of the applicable conditions precedent set forth
in Article VI will not be satisfied on the requested funding date for the applicable borrowing unless such condition has
been waived, (2) with respect to a request for a Revolving Loan, the requested borrowing would exceed the Availability on
such funding date or, after giving effect thereto, cause the aggregate principal amount outstanding of the Revolving Loans to
exceed the Revolving Credit Limit or (3) with respect to a request for a Term Loan Advance, the requested borrowing would, after
giving effect thereto, cause the aggregate principal amount of the Term Loan to exceed the lesser of (i) the Term Loan Commitment
or (ii) the amount equal to eighty-five percent (85%) times the Net Amount of the Term Loan Primary Collateral at such
time. Lender shall make the amount of the Term Loan available to Borrowers on the Agreement Date by transferring immediately available
funds equal to the Term Loan Amount to the Designated Account on such date; provided, however, that Lender shall
have no obligation to make the Term Loan available to Borrowers unless all conditions precedent set forth in Article VI
have been satisfied in full (or waived by Lender).

 

(c) Disbursement of
Proceeds; Borrower Representative. Unless otherwise requested by Borrower Representative and agreed by Lender, the proceeds
of each Loan, when funded, shall be disbursed by Lender to the Designated Account. Each Borrower shall have the full benefit of
and access to each Loan made hereunder. Each Borrower (other than AIM) hereby designates and appoints AIM to act as Borrower Representative
for and on behalf of it for purposes of requesting Loans and for all other purposes hereunder and under the other Loan Documents
for which Borrower Representative acts from time to time. The agency relationship established pursuant to this Section 2.2(c)
is for administrative convenience only and such agency relationship shall not extend to any matter outside the scope of the Loan
Documents.

 

(d) Joint and Several
Obligations. Each Borrower hereby agrees that the Obligations under this Agreement and the other Loan Documents are joint and
several obligations of each Borrower.

 

    
LOAN AND SECURITY AGREEMENT – Page 24

     

    

 

(e) No Fraudulent
Conveyances. Notwithstanding any provisions of this Agreement to the contrary, it is intended that the joint and several nature
of the Obligations and the Liens granted by Borrowers to secure the Obligations not constitute a “Fraudulent Conveyance”
(as defined below). Consequently, the Lender and Borrowers agree that if the Obligations of a Borrower, or any Liens granted by
such Borrower securing the Obligations would, but for the application of this sentence, constitute a Fraudulent Conveyance, the
Obligations of such Borrower and the Liens securing such Obligations shall, to the fullest extent permitted by Applicable Law,
be valid and enforceable only to the maximum extent that would not cause such Obligations or such Liens to constitute a Fraudulent
Conveyance, and the Obligations of such Borrower and this Agreement shall automatically be deemed to have been amended accordingly.
For purposes hereof, “Fraudulent Conveyance” means a fraudulent conveyance under Section 548 of the Bankruptcy
Code or a fraudulent conveyance or fraudulent transfer under the applicable provisions of any fraudulent conveyance or fraudulent
transfer law or similar law of any state, nation or other governmental unit, as in effect from time to time.

 

Section 2.3. Deemed
Request for Revolving Loans. Each Borrower irrevocably authorizes the Lender, at its election and without necessity for request
by any Borrower, to make a Revolving Loan to Borrowers in an amount equal to any amount due and owing by Borrowers pursuant to
the terms of this Agreement and the other Loan Documents, including, without limitation, payments of principal, interest, fees
and Lender Expenses, and to apply the proceeds thereof in payment of such Obligations. Any such Revolving Loans shall be secured
by the Collateral and shall be included in the Obligations.

 

Section 2.4. Protective
Advances. Upon the occurrence and during the continuance of a Default or an Event of Default, Lender may make from time to
time in its discretion (but without any obligation to do so), Revolving Loans to Borrowers which Lender deems necessary or appropriate
to preserve or protect the Collateral, or any portion thereof, or to enhance the likelihood of collection of any of the Obligations
(“Protective Advances”). All such Revolving Loans shall be secured by the Collateral and shall be included
in the Obligations.

 

Section 2.5. Cross
Guaranty.

 

(a) Guaranty.
Each Borrower (each referred to in this Section individually as a “Co-Borrower” and collectively, as the “Co-Borrowers”)
hereby agrees that it is liable for, and hereby irrevocably, absolutely and unconditionally guarantees to Lender the full and prompt
payment (whether at stated maturity, by acceleration or otherwise) and performance of, all Obligations and other amounts owed or
hereafter owing to the Lender under this Agreement and the other Loan Documents by the other Co-Borrowers. Each Co-Borrower agrees
that its guaranty obligation hereunder is a continuing guaranty of payment and performance and not of collection, that its obligations
under this Section shall not be discharged until indefeasible payment and performance, in full, of the Obligations and other amounts
owed or hereafter owing under this Agreement has occurred, and that its obligations under this Section shall be absolute and unconditional,
irrespective of, and unaffected by:

 

(i) the genuineness,
validity, regularity, enforceability or any future amendment of, or change in, this Agreement or any other Loan Document;

 

(ii) the absence
of any action to enforce this Agreement (including this Section) or any other Loan Document or the waiver or consent by Lender
with respect to any of the provisions hereof or thereof;

 

    
LOAN AND SECURITY AGREEMENT – Page 25

     

    

 

(iii) the existence,
value or condition of, or failure to perfect its security interest in or lien against, any security for the Obligations or any
action, or the absence of any action, by Lender in respect thereof (including the release of any such security);

 

(iv) the insolvency
of any Co-Borrower; or

 

(v) any other
action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor.

 

Each Co-Borrower shall be regarded, and
shall be in the same position, as principal debtor with respect to the Obligations and other amounts guaranteed hereunder.

 

(b) Waivers. Each
Co-Borrower expressly waives, to the fullest extent permitted by Applicable Law, all rights it may have now or in the future under
any statute, or at common law, or at law or in equity, or otherwise, to subrogation, to compel Lender to marshal assets or to proceed
in respect of the Obligations and other amounts guaranteed hereunder against any other Co-Borrower, any other party or against
any security for the payment and performance of the Obligations and other amounts before proceeding against, or as a condition
to proceeding against, such Co-Borrower.

 

(c) Benefit of Guaranty.
Each Co-Borrower agrees that the provisions of this Section are for the benefit of Lender and its successors, transferees, endorsees
and assigns.

 

(d) Election of Remedies.
If Lender, under Applicable Law, proceeds to realize its benefits under any of the Loan Documents giving Lender a security interest
in or lien upon any Collateral, whether owned by any Co-Borrower or by any Guarantor, either by judicial foreclosure or by non
judicial sale or enforcement, Lender may, at its sole option, determine which of its remedies or rights it may pursue without affecting
any of the rights and remedies under this Section. If, in the exercise of any of its rights and remedies, Lender shall forfeit
any of its rights or remedies, including its right to enter a deficiency judgment against any Co-Borrower or any other Guarantor,
whether because of any applicable laws pertaining to “election of remedies” or the like, each Co-Borrower hereby consents
to such action by Lender and waives any defense to the Lender’s enforcement of remedies based upon such action, to the fullest
extent permitted by Applicable Law. Any election of remedies that results in the denial or impairment of the right of Lender to
seek a deficiency judgment against any Co-Borrower shall not impair any other Co-Borrower’s obligation to pay the full amount
of the Obligations and other amounts owed or hereafter owing under this Agreement.

 

(e) Liability Cumulative.
The liability of Co-Borrowers under this Section is in addition to and shall be cumulative with all liabilities of each Co-Borrower
to Lender under this Agreement and other Loan Documents to which such Co-Borrower is a party or in respect of any Obligations or
obligation of the other Co-Borrowers, without any limitation as to amount, unless the instrument or agreement evidencing or creating
such other liability specifically provides to the contrary.

 

(f) Limitation of
Liability. Notwithstanding anything in this Section to the contrary, the liability of each Co-Borrower as a Guarantor hereunder
shall, to the fullest extent permitted by Applicable Law, be limited to the maximum amount of liability that can be incurred without
rendering such Person’s guaranty hereunder voidable under Applicable Law relating to fraudulent transfer or fraudulent conveyance,
and not for any greater amount.

 

    
LOAN AND SECURITY AGREEMENT – Page 26

     

    

 

ARTICLE
III

INTEREST, FEES, REIMBURSEMENTS

 

Section 3.1. Interest.

 

(a) Except as otherwise
provided herein, all outstanding Loans shall bear interest at a per annum rate equal to the lesser of (1) the Adjusted LIBOR
for such Loan and (2) the Maximum Rate.

 

(b) At any time when
any Default or Event of Default has occurred and is continuing, effective as of the date on which such Default or Event of Default
occurred and continuing for so long as any such Default or Event of Default is continuing, all Obligations shall bear interest
at a rate per annum equal to the Default Rate applicable thereto.

 

(c) Subject to Section
3.6, interest shall be computed on the basis of a year of 360 days and actual days elapsed (which results in more interest
being paid than if computed on the basis of a 365 day year).

 

Section 3.2. Fees.
Subject to the terms of this Agreement:

 

(a) Commitment Fee.
In consideration of Lender’s commitment hereunder to make Revolving Loans and the Term Loan, Borrowers agree to pay to the
Lender a commitment fee, which amount shall be payable on the Agreement Date, in an amount equal to one-half of one percent (0.50%)
multiplied by the Total Facility.

 

(b) Unused Line Fee.
Borrowers agree to pay to Lender an unused line fee determined on a daily basis, payable on the first day of each month, in an
amount equal to one-quarter of one percent (0.25%) per annum multiplied by the amount by which the Revolving Credit Limit
exceeded the sum of the average daily outstanding amount of Revolving Loans during the immediately preceding calendar month, or
shorter period if calculated on the Termination Date (prorated for a partial calendar month). Such fee shall be computed on the
basis of a 360-day year for the actual number of days elapsed. All payments on the Revolving Loans received by Lender shall be
deemed to be credited to the Revolving Loans immediately upon receipt for purposes of calculating the amount payable pursuant to
this Section 3.2(b).

 

(c) Collateral Monitoring
Fee. Borrowers shall pay to Lender a monthly collateral monitoring fee in the amount of $1,000 for each calendar month, or
portion thereof, during the term of this Agreement. The collateral monitoring fee for each calendar month shall be due and payable
in arrears on the first day of each calendar month and on the Termination Date, and shall be prorated for any partial calendar
month.

 

Section
3.3. Increased Costs.

 

(a) Increased Costs.
If any Change in Law shall (i) subject Lender to any Taxes (other than (i) Indemnified Taxes, (ii) Taxes described in clause
(b) of the definition of Excluded Taxes and (iii) Connection Income Taxes) on any Loan, Loan principal, the Commitments or other
obligations or its deposits, reserves, other liabilities or capital attributable thereto, (ii) impose or modify any reserve, special
deposit, compulsory loan, insurance charge, assessment or similar requirement against assets of, deposits with or for the account
of, or credit extended or participated in by, Lender (except any reserve requirement reflected in the Adjusted LIBOR Rate) or (iii) impose
on Lender any condition, cost or expense (other than Taxes) affecting this Agreement or any extensions of credit or commitments
hereunder, and the result of any of the foregoing is to increase the cost to Lender of making, converting to, continuing or maintaining
any Loans (or of maintaining its obligation to make any Loan) or to reduce any amount received or receivable by Lender under this
Agreement (whether of principal, interest or any other amount), then upon written demand by Lender (which demand shall be delivered
to Borrower Representative and accompanied by a statement setting forth the basis for such demand and calculation of the amount
thereof in reasonable detail), Borrowers shall promptly pay to Lender such amount or amounts as will compensate Lender for such
additional costs incurred or reduction suffered.

 

    
LOAN AND SECURITY AGREEMENT – Page 27

     

    

 

(b) Capital Requirements.
If Lender determines that any Change in Law affecting Lender, any lending office of Lender or Lender’s holding company regarding
capital or liquidity requirements, has or would have the effect of reducing the rate of return on Lender’s capital or on
the capital of Lender’s holding company as a consequence of this Agreement, the Commitment of, the Loans made by Lender,
to a level below that which Lender or Lender’s holding company could have achieved but for such Change in Law (taking into
consideration Lender’s policies and the policies of Lender’s holding company with respect to capital adequacy), then
from time to time the Borrowers will pay to Lender such additional amount or amounts as will compensate Lender or Lender’s
holding company for any such reduction suffered.

 

(c) Certificates for
Reimbursement. Demand of Lender setting forth the amount or amounts necessary to compensate Lender or its holding company,
as the case may be, as specified in clauses (a) or (b) of this Section and delivered to the Borrower Representative shall be conclusive
absent manifest error. The Borrowers shall pay Lender the amount shown as due on any such certificate within 10 days after receipt
thereof.

 

(d) Delay in Requests.
Failure or delay on the part of Lender to demand compensation pursuant to this Section shall not constitute a waiver of Lender’s
right to demand such compensation; provided that the Borrowers shall not be required to compensate Lender pursuant to this
Section for any increased costs incurred or reductions suffered more than nine months prior to the date that Lender notifies the
Borrower Representative of the Change in Law giving rise to such increased costs or reductions, and of Lender’s intention
to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive,
then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

 

Section 3.4. Illegality.
Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for Lender or its applicable lending
office to make, maintain or fund Loans hereunder, then Lender shall promptly notify Borrower Representative thereof and Lender’s
obligation to make Loans shall be suspended until such time as Lender may again make, maintain and fund Loans.

 

Section 3.5. Taxes.

 

(a) Indemnified Taxes.
Any and all payments by or on account of any obligation of any Credit Party under any Loan Document shall be made free and clear
of, and without deduction or withholding for, any present or future Indemnified Taxes, except as required by Applicable Law (which,
for purposes of this Section 3.5, includes FATCA). If any Applicable Law requires the deduction or withholding of any Indemnified
Tax from any payment by any Credit Party, then Credit Parties agree: (i) to timely pay the full amount of such Indemnified Taxes
to the relevant Governmental Authority in accordance with Applicable Law and (ii) that the sum payable by Credit Parties shall
be increased as necessary so that after such deduction or withholding has been made (including deductions and withholdings applicable
to additional sums payable under this Section 3.5(a)), the Lender receives an amount equal to the sum it would have
received had no such deductions or withholdings been made. Without duplication of any other obligation set forth in this Section
3.5 or in Section 3.3, the Credit Parties shall timely pay to the relevant Governmental Authority in accordance with
Applicable Law, or at the option of the Lender timely reimburse it for the payment of, any Other Taxes. As soon as practicable
after any payment of Taxes by the Credit Parties to a Governmental Authority pursuant to this Section 3.5, the Credit
Parties shall deliver to the Lender the original or a certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Lender.

 

    
LOAN AND SECURITY AGREEMENT – Page 28

     

    

 

(b) Indemnification
by Credit Parties. Each Credit Party hereby agrees to indemnify, to the fullest extent permitted by Applicable Law, the Lender,
within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or
asserted on or attributable to amounts payable under this Section 3.5) payable or paid by Lender or required to be withheld
or deducted from a payment to Lender and any reasonable expenses arising therefrom or with respect thereto (including, without
limitation, reasonable attorneys’ fees incurred in connection therewith), whether or not such Indemnified Taxes were correctly
or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability
delivered to the Borrower Representative by the Lender shall be conclusive absent manifest error.

 

(c) Refunds. If
Lender determines, in its sole discretion exercised in good faith, that it has received a refund of any Indemnified Taxes that
were paid by Credit Parties pursuant to this Section 3.5, so long as no Event of Default has occurred and is continuing,
it shall pay an amount equal to such refund (but only to the extent of indemnity payments made under this Section 3.5 with
respect to the Indemnified Taxes giving rise to such refund) to Credit Parties, net of all out-of-pocket expenses (including Taxes)
of Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund);
provided, that Credit Parties, upon request of Lender, agree to repay the amount paid to Credit Parties (plus any
penalties, interest or other charges imposed by the applicable Governmental Authority, other than such penalties, interest or other
charges imposed as a result of the willful misconduct or gross negligence of Lender hereunder) to Lender in the event Lender is
required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 3.5(d),
in no event will Lender be required to pay any amount to Credit Parties pursuant to this Section 3.5(d) if such payment
would place Lender in a less favorable net after-Tax position than Lender would have been in if the Indemnified Tax giving rise
to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with
respect to such Tax had never been paid. This paragraph shall not be construed to require Lender to make available its tax returns
(or any other information relating to its Taxes that it deems confidential) to the Credit Parties or any other Person.

 

(d) Survival of Obligations.
Each party’s obligations under this Section 3.5 shall survive the assignment of rights by the Lender, the termination
of the Commitments and the repayment, satisfaction or discharge of all Obligations under any Loan Document.

 

Section 3.6. Maximum
Interest; Controlling Limitation.

 

(a) Maximum Interest.
If the rate of interest on the Obligations, absent the limitations set forth in this Section 3.6, would at any time
exceed the Maximum Rate, then the actual rate of interest shall be the Maximum Rate, and, if in the future, the interest rate would
otherwise be less than the Maximum Rate, then the interest rate shall remain at the Maximum Rate until such time as the amount
of interest paid hereunder equals the amount of interest which would have been paid if the same had not been limited by the Maximum
Rate. In the event that, upon payment in full of the Obligations, the total amount of interest paid or accrued under the terms
of this Agreement is less than the total amount of interest which would, but for this Section 3.6, have been paid or
accrued if the interest rate otherwise provided by this Agreement had at all times been in effect, then Borrowers shall, to the
fullest extent permitted by Applicable Law, pay to Lender an amount equal to (a) the lesser of (i) the amount of interest
which would have been paid or accrued if the Maximum Rate had, at all times, been in effect and (ii) the amount of interest
which would have been paid or accrued had the interest rate otherwise set forth in this Agreement, at all times, been in effect,
less (b) the amount of interest actually paid or accrued under this Agreement.

 

    
LOAN AND SECURITY AGREEMENT – Page 29

     

    

 

(b) Controlling Limitation.
Lender, each Borrower and each other Credit Party hereby acknowledge, agree, and declare that it is its intention to expressly
comply with all Applicable Laws in respect of limitations on the amount or rate of interest that can legally be contracted for,
charged or received under or in connection with the Loan Documents. Notwithstanding anything to the contrary contained in any Loan
Document (even if any such provision expressly declares that it controls all other provisions of the Loan Documents), in no contingency
or event whatsoever shall the amount of interest (including the aggregate of all charges, fees, benefits, or other compensation
which constitutes interest under any Applicable Law) under the Loan Documents paid by Borrowers or any other Credit Party, received
by Lender, agreed to be paid by Borrowers or any other Credit Party, or requested or demanded to be paid by Lender exceed the Maximum
Rate, and all provisions of the Loan Documents in respect of the contracting for, charging, or receiving compensation for the use,
forbearance, or detention of money shall be limited as provided by this Section 3.6. In the event any such interest
is paid to Lender by Borrowers or any other Credit Party in an amount or at a rate which would exceed the Maximum Rate, then, notwithstanding
any entry on Lender’s books otherwise, such excess shall conclusively be deemed to be automatically applied to any unpaid
amount of the Obligations other than interest, in inverse order of maturity, or if the amount of such excess exceeds said unpaid
amount, such excess shall be refunded to Borrowers or such other applicable Credit Party. All interest paid, or agreed to be paid,
by Borrowers or any other Credit Party, or taken, reserved, or received by Lender shall be amortized, prorated, spread, and allocated
in respect of the Obligations throughout the full term of this Agreement. Notwithstanding any provision contained in any of the
Loan Documents, or in any other related documents executed pursuant hereto, the Lender shall not be entitled to charge, receive,
take, reserve, collect, or apply as interest any amount which, together with all other interest under the Loan Documents, would
result in a rate of interest under the Loan Documents in excess of the Maximum Rate and, in the event the Lender ever charges,
receives, takes, reserves, collects, or applies any amount in respect of Borrowers or any other Credit Party that otherwise would,
together with all other interest under the Loan Documents, be in excess of the Maximum Rate, such amount shall automatically be
deemed to be applied in reduction of the unpaid principal balance of the Obligations other than interest and, if the principal
balance thereof is paid in full, any remaining excess shall forthwith be refunded to the Borrowers or such other applicable Credit
Party. Each Credit Party and the Lender shall, to the maximum extent permitted under any Applicable Law, (i) characterize
any non-principal payment as a standby fee, commitment fee, prepayment charge, delinquency charge, expense, or reimbursement for
a third-party expense rather than as interest and (ii) exclude prepayments, acceleration, and the effect thereof. Nothing
in any Loan Document shall be construed or so operate as to require or obligate Borrowers or any other Credit Party to pay any
interest, fees, costs, or charges greater than is permitted by any Applicable Law. Subject to the foregoing, each Credit Party
hereby agrees that the actual effective rate of interest from time to time existing under the Loan Documents, including all amounts
agreed to by the Credit Parties pursuant to and in accordance with the Loan Documents which may be deemed to be interest under
any Applicable Law, shall be deemed to be a rate which is agreed to and stipulated by the Credit Parties and the Lender in accordance
with Applicable Law.

 

    
LOAN AND SECURITY AGREEMENT – Page 30

     

    

 

ARTICLE
IV

payment

 

Section 4.1. Interest.
Accrued interest on the Loans shall be due and payable in arrears on the first calendar day of each month and on the Termination
Date.

 

Section 4.2. Prepayment;
Mandatory Payment of Deficiencies; Excess Cash Flow Repayment of Term Loan.

 

(a) Borrowers may prepay
Loans at any time. Any voluntary prepayment under this Section 4.2 of less than all of the outstanding principal of
the Term Loan shall be applied to the principal of the Term Loan in the inverse order of maturity. Borrowers promise to pay to
Lender on demand, the amount, if any, at any time, by which (i) the unpaid principal balance of the Revolving Loans exceeds the
lesser of the Borrowing Base or the Revolving Credit Limit at such time, and (ii) the unpaid principal balance of the Term Loan
at such time exceeds an amount equal to eighty-five percent (85%) times the Net Amount of the Term Loan Primary Collateral
at such time.

 

(b) For so long as the
Term Loan remains outstanding, if Excess Cash Flow for any Fiscal Year of Parent and its consolidated subsidiaries is a positive
number, beginning with the Fiscal Year ending December 31, 2020, Borrowers shall pay to Lender, for application to the Term Loan,
an amount equal to the lesser of (i) twenty-five percent (25%) of the Excess Cash Flow for such Fiscal Year and (ii) the outstanding
principal balance of the Term Loan. Such payment shall be made to Lender and applied to the outstanding principal balance of the
Term Loan, on or prior to April 15 of the Fiscal Year immediately following such Fiscal Year.

 

Section 4.3. Mandatory
Payments; Payment on the Termination Date.

 

(a) The principal of
the Term Loan shall be payable to Lender in equal monthly installments on each Installment Payment Date in an amount equal to $45,238
(plus interest payable pursuant to Section 4.1).

 

(b) On the Termination
Date:

 

(i) Borrowers
shall pay to Lender in full (1) the outstanding principal balance, if any, of the Revolving Loans plus all unpaid accrued
interest thereon, and (2) the outstanding principal balance, if any, of the Term Loan plus all unpaid accrued interest thereon;

 

(ii) If the
Termination Date is prior to the Maturity Date, Borrowers shall pay to Lender the amount required by Section 4.5; and

 

(iii) Borrowers
shall pay to Lender all unpaid Lender Expenses and all other Obligations payable under the Loan Documents.

 

(c) If the credit facility
for Revolving Loans hereunder is terminated for any reason, Borrower shall immediately pay to Lender, in full, the outstanding
Term Loan (plus all unpaid accrued interest thereon).

 

Section 4.4. Mandatory
Prepayment in Respect of Certain Events. All proceeds or other cash payments received by any Borrower in respect of a Distribution
to such Borrower (other than Distributions to such Borrower made by another Credit Party) or in respect of the sale, lease or
other disposition by any Borrower of any asset (other than the sale of Inventory in the ordinary course of business or the sale
of Equipment permitted under Section 9.8(c)(ii)), shall be promptly paid to Lender for application to the Obligations in
accordance with Section 4.7 (unless, with respect to any sale of Equipment, such proceeds are reinvested in accordance
with Section 9.8(c)).

 

    
LOAN AND SECURITY AGREEMENT – Page 31

     

    

 

Section 4.5. Early
Termination; Prepayment Penalty. Each Borrower may at any time prepay in full the Obligations and terminate the commitment
of Lender to make Loans hereunder (it being understood that, if Borrowers terminate the Lender’s Commitment to make Revolving
Loans, then the Term Loan and all other Obligations shall be due and payable in full on such date of termination). Each Borrower
acknowledges that occurrence of the Termination Date and prepayment of all outstanding Obligations prior to the Maturity Date
would result in the loss by Lender of benefits under this Agreement and that the damages incurred by Lender as a result thereof
would be difficult and impractical to ascertain. Subject to the terms of this Agreement, if for any reason the Termination Date
occurs on any date prior to the Maturity Date, Borrowers shall pay to Lender, in addition to all other amounts payable under the
Loan Documents, a prepayment penalty, calculated as of the Termination Date, equal to the product of (a) the sum of (i) the
Revolving Credit Limit plus (ii) the outstanding principal amount of the Term Loan times (b) one percent
(1.0%), which amount Borrower and Lender each acknowledges to be the best estimate of the amount necessary to fairly and reasonably
compensate Lender for its loss resulting from occurrence of the Termination Date and prepayment of all outstanding Loans prior
to the Maturity Date.

 

Section 4.6. General
Payment Provisions. All payments to be made by Borrowers under the Loan Documents shall be made without set-off, recoupment,
or counterclaim. Except as otherwise expressly provided herein, all payments by Borrowers shall be made in Dollars and in immediately
available funds to Lender at its address set forth in Section 13.6 or to the Lender Account no later than 2:00 p.m.
on the date specified herein. Any payment received by Lender later than 2:00 p.m. shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall continue to accrue. Whenever any payment is due on a day other
than a Business Day, such payment shall be due on the following Business Day, and such extension of time shall in such case be
included in the computation of interest or fees, as the case may be.

 

Section 4.7. Application.
All payments not relating to amounts due on Loans (including interest) or specific fees, and all proceeds of Accounts or other
Collateral received and applied by Lender during any time when no Event of Default has occurred and is continuing, shall be applied
first, to pay to Lender any Lender Expenses then due; second, to interest due and payable on the Revolving Loans;
third, to interest due and payable on the Term Loan; fourth, to principal of the Revolving Loans; fifth,
to principal due and payable on the Term Loan, if any; sixth, to the payment of any other outstanding Obligations then
due and payable, in such manner and order as Lender determines in its discretion; and seventh, to the Borrowers by deposit
in the Designated Account. At any time that an Event of Default has occurred and is continuing, all payments and collections received
by Lender and all proceeds of Collateral, shall be applied, first, to pay to Lender any Lender Expenses then due; second,
to interest due and payable in respect of the remaining Obligations; third, on a pro rata basis, to pay or prepay principal
of the Loans, in such manner and order as Lender determines in its discretion; and fourth to the payment of any other Obligations,
in such manner and order as Lender determines in its discretion. Lender shall have the continuing right, to the fullest extent
permitted by Applicable Law, to apply and reverse and reapply any application, subject to the terms of this Agreement.

 

Section 4.8. Reinstatement.
If after receipt and application of any payment or proceeds any such application is invalidated, set aside, determined to be void
or voidable for any reason, then the Obligations or part thereof intended to be satisfied by such application shall be revived
and continued and this Agreement shall continue in full force as if such payment or proceeds had not been received by Lender and
the Borrowers shall be liable to pay to Lender and each Borrower hereby does indemnify Lender and defend and hold Lender harmless
in, an amount equal to the amount of such application. The provisions of this Section 4.8 shall survive the termination
of this Agreement.

 

    
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Section 4.9. Account
Stated. Lender will provide to Borrower Representative a monthly statement of all Loans, payments thereon, and other transactions
pursuant to this Agreement. Such statement shall be deemed correct, accurate, and binding on Borrowers and an account stated,
subject to reversals and reapplications made as provided in Section 4.8 and corrections of errors discovered by Lender,
unless Borrower Representative notifies Lender in writing to the contrary within thirty (30) days after such statement is rendered.
In the event a timely written notice of objections is given by Borrower Representative, only the items to which exception is expressly
made will be considered to be disputed.

 

ARTICLE
V

COLLATERAL

 

Section 5.1. Security
Interest. Each Credit Party hereby pledges, assigns to and grants to Lender, as security for the payment and performance of
such Credit Party’s Obligations, a continuing security interest, lien and collateral assignment in all of such Credit Party’s
right, title and interest in and to all of the following, in each case both now owned and hereafter acquired by such Credit Party:
all Accounts, Inventory, Equipment, other goods, Machinery, fixtures, General Intangibles, Payment Intangibles, Chattel Paper,
Letter of Credit Rights, Supporting Obligations, Proprietary Rights, Instruments, promissory notes, Documents and documents of
title, Investment Property, Deposit Accounts, Securities Accounts, Commercial Tort Claims, money, cash, cash equivalents, securities
and other personal property of any kind (whether held directly or indirectly by such Credit Party), all books and records, whether
in tangible or intangible form, all other assets, if any, and all accessions to, substitutions for and replacements, products
and proceeds (including all “proceeds” as defined in Section 9.102 of the UCC and, including all dividends, distributions
and other income from such Credit Party’s Collateral, collections thereon or distributions with respect thereto) of any
of the foregoing. Lender’s Liens shall continue in full force and effect in all Collateral until all Obligations (other
than contingent indemnification obligations) have been indefeasibly and fully paid and all commitments of the Lender under this
Agreement have been terminated. Notwithstanding anything to the contrary, in no event shall the Collateral include, or the security
interest in this Section 5.1 attach to, any property or assets that constitute Excluded Property, but only for so long
as such property or assets constitute Excluded Property.

 

Section 5.2. Perfection
and Protection of Lender’s Security Interest. Lender’s Liens at all times shall be and remain first, prior and
senior to any other interests in the Collateral, except those Permitted Liens which are expressly permitted to be prior to Lender’s
Liens in accordance with the definition thereof and except as may be expressly agreed otherwise by Lender in writing. Credit Parties
shall take all action reasonably requested by Lender at any time to perfect, maintain, protect and enforce Lender’s Liens
and to ensure that Lender’s Liens at all times are first, prior and senior to any other interests in the Collateral, except
those Permitted Liens which are expressly permitted to be prior to Lender’s Liens in accordance with the definition thereof.
Without limiting the foregoing, unless Lender agrees otherwise in writing, Credit Parties will deliver to Lender the originals
of all Instruments, Documents and Chattel Paper, duly endorsed or assigned to Lender without restriction, and all certificates
of title covering any portion of the Collateral for which certificates of title have been issued (other than any motor vehicle
having a value less than $5,000), together with executed applications for corrected certificates of title, notations of lien and
other such documentation as may be requested by Lender. If at any time any Collateral or any books and records relating to Borrowers’
Accounts or Inventory or Equipment are located on any leased premises not owned by a Borrower or any other Credit Party or any
Premises owned by any Credit Party that are subject to a mortgage lien, then the applicable Credit Party shall use commercially
reasonable efforts to obtain a Collateral Access Agreement from the record owner or mortgagee thereof (it being understood that,
without a Collateral Access Agreement, Accounts and Inventory of the Borrowers will not be eligible for inclusion in the Borrowing
Base in accordance with the definitions of Eligible Account and Eligible Inventory and Equipment of the Borrowers will not be
eligible for inclusion as Eligible Equipment unless Lender in its discretion has established a reserve in the amount of at least
three months’ rent). If any Collateral is at any time in the possession or control of any warehouseman, bailee, processor
or any other Person other than a Credit Party, then Borrower Representative shall notify Lender thereof and shall use commercially
reasonable efforts to obtain a Collateral Access Agreement from such Person (it being understood that, without a Collateral Access
Agreement, Accounts and Inventory of the Borrowers will not be eligible for inclusion in the Borrowing Base in accordance with
the definitions of Eligible Account and Eligible Inventory and Equipment of the Borrowers will not be eligible for inclusion as
Eligible Equipment). If at any time any of Credit Parties’ Equipment that is necessary or otherwise material (as determined
by Lender in its Permitted Discretion) to the manufacturing of any Borrower’s Inventory is subject to a Lien of a third
party, then such Borrower shall obtain a Collateral Access Agreement and/or Subordination Agreement from such Person.

 

    
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Section 5.3. Collateral
Proceeds Management. All collections and proceeds of Collateral shall be subject to an express trust for the benefit of Lender
and shall be subject to this Section 5.3.

 

(a) Borrowers have established
Deposit Account Nos. 8026224578, 8026583474 and 8026326793 (such Deposit Accounts and any other Deposit Account and any other Deposit
Account replacing any or all such Deposit Accounts with Lender’s consent, including pursuant to Section 5.3(c)
below, together with any related lockbox, collectively, the “Collection Account”) with PNC. All collections
and amounts deposited into or held in the Collection Account shall be swept to the Lender Account on a daily basis and no Credit
Party shall have any access to any funds therein. The Collection Account shall at all times be subject to a Control Agreement or,
if the Collection Account is held by Lender, otherwise be subject to Lender’s “control” under the UCC. Any such
Control Agreement shall provide, among other things, for Lender’s “control” under the UCC over the Collection
Account and further that (i) all items of payment received in such account are received by such bank for the Lender, (ii) such
bank has no rights of setoff or recoupment or any other claim against such items (other than for payment of its service fees and
other charges directly related to the administration of such account, returned or charged back items, reversals, cancellation of
payment orders and other electronic fund transfers or other corrections, adjustments or overdrafts), (iii) no Credit Party shall
have access to any funds therein and (iv) such bank will deposit all collections and amounts therein to the Lender Account
on a daily basis.

 

(b) Schedule 7.19
lists all of Credit Parties’ Deposit Accounts and Securities Accounts as of the date hereof (with the Collection Account
being listed in Part A thereof, Excluded Accounts being listed in Part C thereof and all other Deposit Accounts and Securities
Accounts listed in Part B thereof). All Deposit Accounts and Securities Accounts listed or required to be listed in Part B of Schedule 7.19
(as updated pursuant to the terms of Section 7.19), other than the Permitted Citibank Accounts, are and shall at all
times be subject to a Control Agreement or, if such Deposit Accounts and/or Securities Accounts are held with Lender, shall otherwise
be subject to Lender’s “control” under the UCC (such accounts so subject to a Control Agreement or otherwise
under Lender’s “control” under the UCC, collectively the “Controlled Accounts”). Each Control
Agreement in respect of a Controlled Account shall provide, among other things, for Lender’s “control” under
the UCC over such accounts (allowing the applicable Credit Party access to funds therein until such time as an activation notice
is sent to the applicable bank by Lender). Lender hereby agrees that (i) it will not send an activation notice with respect to
any Controlled Account subject to a Control Agreement unless an Event of Default has occurred and is continuing and (ii) it will
not block Credit Parties’ access to any Controlled Account held by Lender unless an Event of Default has occurred and is
continuing (but, for the avoidance of doubt, it is expressly agreed that Lender can block Credit Parties’ access to any Controlled
Account after the occurrence and during the continuance of any Event of Default).

 

    
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(c) Within 60 days following
the Agreement Date (the “Cash Management Transition Date”), each Credit Party shall (i) establish and maintain
at Lender all cash management services, including a new Collection Account, all Controlled Accounts and all lockbox services and
(ii) close all Deposit Accounts (other than the Permitted Citibank Accounts) and Securities Accounts not maintained with
Lender. Such cash management services maintained by each Credit Party with Lender shall be of a type and on terms reasonably satisfactory
to Lender. On the Cash Management Transition Date, Credit Parties shall deliver an updated Schedule 7.19 to Lender.

 

(d) No Credit Party will
use, dispose, withhold or otherwise exercise dominion over any proceeds of Collateral. Borrowers shall instruct all Account Debtors
to send all payments in respect of Accounts to the Collection Account or the related lock-box. At all times on and after Borrowers
borrow the initial Loan hereunder, if a Borrower or any other Credit Party at any time receives any proceeds of Collateral, it
shall receive such proceeds as Lender’s trustee and shall immediately (and in any event within one (1) Business Day of such
receipt) deliver such proceeds to Lender in their original form duly endorsed in blank or to the order of Lender.

 

(e) All payments received
by Lender pursuant to Section 5.3(a) or Section 5.3(d) shall be credited to the Obligations in accordance
with Section 4.7, immediately upon receipt (conditional upon final collection) after allowing one (1) Business Day for collection,
provided, that such payments shall be deemed to be credited to such Obligations immediately upon receipt for purposes of
determining Availability and calculating the unused line fee pursuant to Section 3.2(b). Any payments received by Lender
pursuant to Section 5.3(a) or Section 5.3(d) that are to be distributed to Borrowers pursuant to Section
4.7 shall be deposited in the Designated Account within one Business Day of receipt of good funds by Lender.

 

Section 5.4. Examinations;
Inspections; Verifications. Lender shall have the right at any time without hindrance or delay to conduct field examinations
(including through third party field examiners) to inspect the Collateral and to inspect, audit and copy Credit Parties’
books and records relating to the Collateral or Credit Parties’ business. Credit Parties agree to pay all fees and expenses
of such third party field examiners and Lender’s customary fees and disbursements relating to such field examinations and
the preparation of reports thereof. Lender is authorized to discuss Credit Parties’ affairs with any Person, including without
limitation employees of any Credit Party, as Lender may deem necessary in relation to the Collateral, Credit Parties’ business
or financial condition or Lender’s rights under the Loan Documents. Lender shall have full access to all records available
to Credit Parties from any credit reporting service, bureau or similar service and shall have the right to examine and make copies
of any such records. Lender may exhibit a copy of this Agreement to such service and such service shall be entitled to rely on
the provisions hereof in providing access to Lender as provided herein. If requested by Lender, Credit Parties will deliver to
Lender any authorization or consent necessary for Lender to obtain records from any such service.

 

Section 5.5. Appraisal.
At least two times per year, and more frequently in Lender’s discretion at any time including without limitation any time
when a Default or an Event of Default exists, Lender shall have the right, at Borrowers’ expense, conduct appraisals, or
updates of appraisals, of Inventory, prepared by an appraiser acceptable to Lender and on a basis satisfactory to the Lender.

 

    
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Section 5.6. Right
to Cure. Lender may pay any amount or do any act required of Credit Parties hereunder or under any other Loan Document in
order to preserve, protect, maintain or enforce the Collateral or Lender’s Liens, and which Credit Parties fail to pay or
do, including payment of any license, fee, maintenance costs, judgment lien, insurance premium, charge, landlord’s claim
or bailee’s claim relating to the Collateral or Lender’s Liens. All payments that Lender makes under this Section 5.6
and all costs, fees and expenses that Lender pays or incurs in connection therewith shall be paid or reimbursed to Lender
on demand. Any action taken by Lender under this Section 5.6 shall not waive any Default or Event of Default or any
rights of Lender with respect thereto.

 

Section 5.7. Power
of Attorney. Each Credit Party hereby irrevocably appoints Lender as its agent and attorney-in-fact to take any action necessary
to preserve and protect the Collateral and Lender’s interests under the Loan Documents or to sign and file any document
necessary to perfect Lender’s Liens, in each case, to the fullest extent permitted under Applicable Law. Without limiting
the foregoing:

 

(a) Lender shall have
the right at any time to take any of the following actions, in its own name or in the name of any Credit Party, whether or not
an Event of Default is in existence: (i) make written or verbal requests for verification of the validity, amount or any other
matter relating to any Collateral from any Person, (ii) endorse a Credit Party’s name on checks, instruments or other evidences
of payment on Collateral, (iii) sign and file, in a Credit Party’s name or in Lender’s name as secured party, any proof
of claim or other document in any bankruptcy proceedings of any Account Debtor or obligor on Collateral, (iv) access, copy or utilize
any information related to the Collateral, recorded or contained in any computer or data processing equipment or system maintained
by a Credit Party in respect of the Collateral and (v) open mail addressed to a Credit Party and take possession of checks or other
proceeds of Collateral for application in accordance with this Agreement.

 

(b) Lender shall have
the right at any time to take any of the following actions, in its own name or in the name of a Credit Party, at any time when
any Event of Default is in existence: (i) notify any or all Persons which Lender believes may be Account Debtors or obligors
on Collateral to make payment directly to Lender, for the account of such Credit Party, (ii) redirect the deposit and disposition
of collections and proceeds of Collateral; provided, that such proceeds shall be applied to the Obligations as provided
by this Agreement, (iii) settle, adjust, compromise or discharge Accounts or extend time of payment upon such terms as Lender may
determine, (iv) notify post office authorities, in the name of such Credit Party or in the name of Lender, as secured party,
to change the address for delivery of such Credit Party’s mail to an address designated by Lender, (v) sign such Credit Party’s
name on any invoice, bill of lading, warehouse receipt or other document of title relating to any Collateral and (vi) clear Inventory
through customs in such Credit Party’s name, in Lender’s name as secured party or in the name of Lender’s designee,
and to sign and deliver to customs officials powers of attorney in Credit Party’s name for such purpose.

 

(c) Each Credit Party
authorizes Lender at any time and from time to time to file, transmit, or communicate, as applicable, financing statements and
amendments naming such Credit Party as debtor thereon (i) describing such Credit Party’s Collateral as “all personal
property of debtor” or “all assets of debtor” or words of similar effect, (ii) describing such Credit Party’s
Collateral as being of equal or lesser scope or with greater detail, or (iii) that contain any information required by part 5 of
Article 9 of the UCC for the sufficiency or filing office acceptance.

 

(d) The powers of attorney
granted under this Section 5.7 are coupled with an interest and are irrevocable until all Obligations (other than contingent
indemnification Obligations) have been indefeasibly paid in full and all commitments of Lender under this Agreement have been terminated.
The powers of attorney granted under this Section 5.7 are durable and should not be affected by the subsequent disability
or incapacity of any Credit Party. Costs, fees and expenses incurred by Lender in connection with any of such actions by Lender,
including attorneys’ fees and out-of-pocket expenses, shall be reimbursed to Lender on demand.

 

    
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Section 5.8. Preservation
of Lender’s Rights. To the extent allowed by Applicable Law, none of Lender, its Affiliates nor any of its officers,
directors, stockholders, members, managers, employees or agents shall be liable or responsible in any way for the safekeeping
of any Collateral or for any act or failure to act with respect to the Collateral, or for any loss or damage thereto or any diminution
in the value thereof, or for any act by any other Person, except to the extent of gross negligence or willful misconduct on the
part of Lender (as determined by a final non-appealable judgment of a court of competent jurisdiction). In the case of any Instruments
and Chattel Paper included within the Collateral, Lender shall have no duty or obligation to preserve rights against prior parties.
The Obligations shall not be affected by any failure of Lender to take any steps to perfect its security interests or to collect
or realize upon the Collateral, nor shall loss of or damage to the Collateral release any Credit Party from any of the Obligations.

 

Section 5.9. Deficiency.
In the event that the proceeds of any sale, collection or realization of or upon the Collateral by Lender are insufficient to
pay all Obligations in full, each Credit Party shall be liable for the deficiency, together with interest thereon as provided
in this Agreement, together with the costs of collection and the reasonable fees of any attorneys employed by the Lender to collect
such deficiency.

 

ARTICLE
VI

CONDITIONS

 

Section 6.1. Conditions
Precedent to Initial Loan. The obligation of Lender to make the initial extension of credit under this Agreement is subject
to the fulfillment, to Lender’s satisfaction, of each of the following conditions precedent:

 

(a) Lender shall have
received each of the following, in each case in form and substance satisfactory to Lender:

 

(i) A copy
of the organizational documents of each Credit Party and all amendments thereto, accompanied by the certificate of the appropriate
Governmental Authority of such Person’s jurisdiction of organization bearing a recent date acceptable to Lender, to the effect
that such copy is correct and complete and that such Person is duly organized and validly existing in such jurisdiction;

 

(ii) Certification
by the appropriate Governmental Authority, bearing a recent date acceptable to Lender, to the effect that each Credit Party is
in good standing and qualified to transact business in its jurisdiction of organization and in each other jurisdiction where it
transacts business where failure to be so qualified or maintain such good standing could not reasonably be expected to have a Material
Adverse Effect;

 

(iii) (A) a
copy of the bylaws or similar governing document of each Credit Party and all amendments thereto, (B) certification of the name,
signature and incumbency of all officers of such Person who are authorized to execute any Loan Document or, with respect to Borrower
Representative, request Loans and (C) a copy of authorizing resolutions approving the transactions contemplated by the Loan Documents,
and authorizing and directing an officer or officers of such Person to sign and deliver all Loan Documents to be executed by it,
duly adopted by such Person’s board of directors or similar governing body, all accompanied by a certificate from a secretary
or a Responsible Officer of such Person dated as of the Agreement Date to the effect that each such item is true and complete and
in full force and effect as of the Agreement Date;

 

    
LOAN AND SECURITY AGREEMENT – Page 37

     

    

 

(iv) This Agreement,
duly executed by each Credit Party;

 

(v) Evidence
of insurance in compliance with the requirements of this Agreement;

 

(vi) All Collateral
Access Agreements and other third-party waivers, subordinations and consents as are required hereunder;

 

(vii) Copies
of any and all instruments and other documents evidencing or otherwise relating to any Subordinated Debt

 

(viii) Evidence
that all Subordinated Debt has a maturity date no earlier than December 31, 2020, including executed amendments, modifications
or restatements of subordinated notes;

 

(ix) A Subordination
Agreement with respect to Debt proposed by Credit Parties as Subordinated Debt that is held by or payable to the creditors specified
on Schedule 6.1, executed by each such creditor and the other parties thereto;

 

(x) An executed
Guaranty Agreement from each Guarantor, pursuant to which Guarantors guaranty the payment and performance of all of Borrowers’
Obligations;

 

(xi) An executed
Pledge Agreement from Parent;

 

(xii) Each
Control Agreement required under Sections 5.3(a) and (b);

 

(xiii) A payoff
letter executed by PNC and payoff letters executed by the providers of any and all other financing to be paid off with proceeds
of the initial Loan under this Agreement, in each case in form and substance acceptable to Lender;

 

(xiv) An executed
Perfection Certificate from each Credit Party;

 

(xv) A disbursement
letter executed by Borrower Representative to Lender setting forth therein the flow of funds information for the initial Loans
and extensions of credit made by the Lender, which such letter shall include the name of, the amount to be sent to, and the wiring
instructions for each such party receiving Loan proceeds, and shall be in form acceptable to Lender;

 

(xvi) Original
certificates representing any equity interests included in the Collateral, together with transfer powers duly executed in blank;

 

(xvii) Original
certificates of title and documentation to have Lender’s Lien noted thereon, to the extent required by this Agreement;

 

    
LOAN AND SECURITY AGREEMENT – Page 38

     

    

 

(xviii) A net
orderly liquidation value appraisal of Borrowers’ Equipment, prepared by a credentialed appraiser acceptable to Lender;

 

(xix) UCC-3
termination statements, partial releases or such other releases, assignments and other documents as may be required by Lender with
respect to the Collateral;

 

(xx) Copies
of Parent’s consolidated financial statements for the Fiscal Year ending December 31, 2018, audited by Parent’s independent
certified public accountants;

 

(xxi) Copies
of the interim unaudited consolidated financial statements of the Parent and its Subsidiaries for the period ending October 31,
2019;

 

(xxii) Copies
of the Credit Parties’ forecasts and projections for the period specified by Lender, in form and substance reasonably satisfactory
to Lender;

 

(xxiii) Opinions
of counsel for each Credit Party, respectively, in form and substance satisfactory to Lender;

 

(xxiv) With
respect to the initial Revolving Loan, an executed Borrowing Notice as required by Section 2.2(a) and Borrowing Base Certificate
as required by Section 8.5(a), in each case, duly executed by a Responsible Officer of Borrower Representative; and

 

(xxv) An appraisal
of the Inventory in form and substance acceptable to Lender in its sole discretion;

 

(b) Lender shall have
received satisfactory evidence that the sum of (1) Availability, after giving effect to (i) the initial Revolving Loans, (ii) payment
of all fees and Lender Expenses required to be paid hereunder, (iii) payment of all taxes due and owing and (iv) payment of all
trade indebtedness such that no trade indebtedness is 60 days or more past due (based on the original payment terms, but excluding
any trade indebtedness that is subject to an agreed written payment plan approved by Lender so long as such trade indebtedness
is in compliance with such payment plan), plus (2) cash on hand will be in an amount equal to or greater than $2,000,000;

 

(c) A field examination
of the Credit Parties and the Collateral satisfactory to Lender shall have been completed and delivered to Lender;

 

(d) Credit Parties shall
have established cash proceeds management pursuant to Section 5.3 and confirmed that Credit Parties’ reporting
systems are acceptable to Lender;

 

(e) Lender shall have
filed all financing statements as required to perfect Lender’s Liens in all Collateral with respect to which perfection can
be achieved by filing a financing statement, and shall have received evidence or other confirmation of such filing, satisfactory
to Lender;

 

(f) Lender shall have
received satisfactory reference checks with respect to the senior management of each Credit Party;

 

(g) Lender shall have
completed confirmation of Borrowers’ Accounts, via telephone or otherwise, and the results of such confirmation shall be
satisfactory to Lender;

 

(h) Credit Parties shall
have paid all Lender Expenses owed by them as of the Agreement Date; and

 

    
LOAN AND SECURITY AGREEMENT – Page 39

     

    

 

(i) All legal and business
matters in connection with the transaction contemplated by this Agreement shall be satisfactory to Lender.

 

Section 6.2. Conditions
Precedent to Term Loan Advance. In addition to the conditions precedent specified by Sections 6.1 and 6.3, the
obligation of Lender to make any Term Loan Advance after the Agreement Date shall be subject to the receipt by Lender of each
of the following:

 

(a) A payoff letter executed
by each provider of any and all financing to be paid off with proceeds of such Term Loan Advance, in each case in form and substance
acceptable to Lender; and

 

(b) A Borrowing Notice
for such Term Cap Ex Loan Advance meeting the requirements set forth in Section 2.2(a).

 

Section 6.3. Conditions
Precedent to all Loans. In addition to the conditions precedent specified by Section 6.1, the obligation of Lender
to make any Loan shall be subject to the following conditions precedent:

 

(a) All representations
and warranties in this Agreement and the other Loan Documents shall be true and correct in all material respects on and as of the
date of such Loan, as though such representations and warranties are made on and as of such date (except to the extent any such
representations and warranties relate solely to an earlier date);

 

(b) No Default or Event
of Default shall have occurred and be continuing on the date of such Loan, and no Default or Event of Default will result from
the making of such Loan;

 

(c) The funding of such
Loan shall not be prohibited by any Applicable Law;

 

(d) Borrowers shall have
satisfied all applicable requirements for requesting such Loan;

 

(e) No Material Adverse
Effect shall have occurred or will result from the making of such Loan;

 

(f) No involuntary petition
shall have been filed against any Credit Party that has not been dismissed and there shall not exist any other action or proceeding
seeking relief under the Bankruptcy Code or seeking any reorganization, arrangement, consolidation or readjustment of the debts
of any Credit Party under any other bankruptcy or insolvency law; and

 

(g) Credit Parties shall
have paid all Lender Expenses incurred through the date of the funding of such Loan.

 

Any request for a Loan pending at a time
when any condition precedent specified by Section 6.1, Section 6.2 or Section 6.3 is not satisfied may be declined
by Lender without prior notice.

 

    

LOAN AND SECURITY AGREEMENT – Page 40

 

     

    

 

ARTICLE
VII

REPRESENTATIONS AND WARRANTIES

 

In order to induce
the Lender to enter into this Agreement and make Loans, each Credit Party, jointly and severally, makes each of the following representations
and warranties to the Lender as being true, complete and correct in all respects as of the Agreement Date and as of the date of
the making of each Loan thereafter, as though made on and as of the date of such Loan (except to the extent such representations
or warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in
all respects as of such earlier date):

 

Section 7.1. Fundamental
Information. Schedule 7.1 sets forth, as of the most recent Reporting Date, for each Credit Party: (a) its
legal name, (b) its federal tax identification number, (c) its jurisdiction of organization, (d) its address of
its chief executive office, (e) jurisdictions in which qualification is necessary in order for it to own or lease its property
and conduct its business, except where failure to so qualify could not reasonably be expected to have a Material Adverse Effect,
and (f) the number and the percentage of the outstanding shares of each class of such Person’s and its direct and indirect
Subsidiaries’ Equity Interests, all of which are validly issued, outstanding, fully paid and non-assessable, and owned beneficially
and of record by the Person identified therein. Each Credit Party (i) is a registered organization, as defined by the UCC, duly
organized and validly existing and in good standing under the laws of its jurisdiction of organization, (ii) is qualified to do
business and is in good standing as a foreign organization in each jurisdiction in which qualification is necessary in order for
it to own or lease its property and conduct its business, except where failure to so qualify or maintain such good standing could
not reasonably be expected to have a Material Adverse Effect and (iii) has all requisite power and authority to conduct its business
and to own its property.

 

Section 7.2. Prior
Transactions. No Credit Party has, during the past five (5) years, (a) except as set forth on Schedule 7.2, changed
its name or used any fictitious name or been a party to any merger or organizational change or (b) acquired any of its property
outside of the ordinary course of business.

 

Section 7.3. Subsidiaries.
No Credit Party has any Subsidiaries except as shown in Schedule 7.1.

 

Section 7.4. Authorization,
Validity and Enforceability. Each Credit Party has the corporate or company power and authority to execute, deliver and perform
this Agreement and the other Loan Documents to which it is a party, to incur the Obligations, and to grant the Lender’s
Liens on the Collateral. Each Credit Party has taken all necessary action to properly authorize its execution, delivery and performance
of the Loan Documents to which it is a party. This Agreement and the other Loan Documents to which each Credit Party is a party
have been duly executed and delivered by such Credit Party, and constitute the legal, valid and binding obligations of such Credit
Party, enforceable against it in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to enforcement of creditors’ rights.

 

Section 7.5. Noncontravention.
Each Credit Party’s execution, delivery, and performance of this Agreement and the other Loan Documents to which it is a
party do not and will not conflict with, violate or constitute a violation of or breach or default under, as applicable, (a) its
organizational documents, (b) any agreement or instrument to which it or any of its Subsidiaries is a party or which is otherwise
binding upon it or any of its Subsidiaries or (c) any Applicable Law applicable to it or any of its Subsidiaries.

 

Section 7.6. Financial
Statements. Credit Parties have delivered to Lender the audited consolidated and consolidating balance sheet and related statements
of income, retained earnings, cash flows and changes in stockholders’ equity for Parent and its consolidated Subsidiaries
as of December 31, 2018, and for the Fiscal Year then ended, accompanied by the report thereon of the Credit Parties’ independent
certified public accountants. Credit Parties have also delivered to Lender the unaudited consolidated and consolidating balance
sheet and related statements of income and cash flows for Parent and its consolidated Subsidiaries as of October 31, 2019. All
such financial statements have been prepared in accordance with GAAP and present accurately and fairly the financial position
of Parent and its consolidated Subsidiaries as at the dates thereof and their results of operations for the specified periods,
subject, in the case of such unaudited financials to normal year-end adjustments and the absence of footnote disclosure. No Material
Adverse Effect has occurred since the dates of such financial statements, respectively.

 

    
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Section 7.7. Litigation.
As of the most recent Reporting Date, except as set forth on Schedule 7.7 (which sets forth a complete and accurate
description of each action, suit, claim or proceeding described therein, the parties thereto, the nature of such dispute, and
whether any potential liability is covered by insurance), there is no pending or, to the knowledge of Credit Parties after due
inquiry, threatened, action, suit, proceeding or claim by any Person against or with respect to a Credit Party or its Subsidiaries,
or to the knowledge of Credit Parties after due inquiry, investigation by any Governmental Authority into or relating in any way
to a Credit Party or its Subsidiaries, or any basis for any of the foregoing, which, in each case, could reasonably be expected
to result in a Material Adverse Effect. To the extent any Credit Party notifies Lender of any new pending or threatened action,
suit, proceeding or claim pursuant to Section 8.7(b) hereto, such new information shall be deemed added to Schedule
7.7 hereto.

 

Section 7.8. ERISA
and Employee Benefit Plans. Except as set forth on Schedule 7.8, no Credit Party nor any ERISA Affiliate maintains
or contributes to an ERISA Benefit Plan. Except for those events or circumstances that could not reasonably be expected to result
in a Material Adverse Effect, (x) each ERISA Benefit Plan is in compliance with applicable provisions of ERISA, the IRC and other
Applicable Law and (y) there are no existing or pending (or to the knowledge of Credit Parties, threatened) claims (other than
routine claims for benefits in the normal course), sanctions, actions, lawsuits or other proceedings or investigations involving
any ERISA Benefit Plan to which a Credit Party or any of its Subsidiaries incurs or otherwise has or could have a material obligation
or any material liability. No ERISA Affiliate is required to contribute to, or has any other absolute or contingent liability
in respect of, any Multiemployer Plan. No “accumulated funding deficiency” (as defined in Section 412(a) of the IRC)
exists with respect to any ERISA Benefit Plan, whether or not waived by the Secretary of the Treasury or his delegate, and the
current value of the benefits of each ERISA Benefit Plan that is subject to the funding requirements of Section 412 of the IRC
does not exceed the current value of such ERISA Benefit Plan’s assets available for the payment of such benefits. No Termination
Event has occurred, and none of the Credit Parties is aware of any fact, event or circumstance that could reasonably be expected
to constitute or result in a Termination Event with respect to any ERISA Benefit Plan. None of the Credit Parties or any ERISA
Affiliate has (i) incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments
which have become due that are unpaid or (ii) engaged in a transaction that could be subject to Section 4069 or Section 4212(c)
of ERISA.

 

Section 7.9. Compliance
with Laws. Each Credit Party and its Subsidiaries are (a) in compliance, in all material respects, with the Patriot Act and
(b) in compliance with all other Applicable Laws, except where such failure to comply under this subsection (b) could not reasonably
be expected to result in a Material Adverse Effect. Without in any way limiting the foregoing, each Credit Party is in compliance
in all respects with any and all FAA Regulations applicable to such Credit Party or its business, including without limitation
any and all standards and licensing requirements for aircraft and aircraft components. None of the Credit Parties are now or ever
have been subject to any fines, penalties, orders to cease production, or termination or disqualification from any of their contracts
for noncompliance with any FAA Regulations.

 

Section 7.10. Taxes.
Credit Parties have filed all federal and other tax returns and reports required to be filed by Applicable Law, and have paid
all federal and other taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable other than any unpaid taxes, assessments fees or other charges that are being contested
in good faith by appropriate proceedings promptly instituted and diligently conducted and for which adequate reserves are maintained
on the books of the applicable Credit Party in accordance with GAAP, and so long as none of the Collateral would become subject
to forfeiture, any Lien (other than a Permitted Lien not prior to Lender’s Lien on the Collateral) or any loss as a result
of such contest or delay in payment.

 

    
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Section 7.11. Location
of Collateral and Books and Records. Schedule 7.11 is a complete list of the location of the Collateral and of
Credit Parties’ books and records as of the most recent Reporting Date, with a notation as to whether such location is leased
or owned and which Credit Party so leases or owns such property. If any such location is not owned by a Credit Party, Schedule 7.11
includes the name and mailing address of the owner thereof. If any Collateral or any books or records of any Credit Party
is transported or transferred to a location not previously disclosed in Schedule 7.11, such schedule shall be updated
within five (5) Business Days of such transfer.

 

Section 7.12. Accounts.
Each Account represents a bona fide sale or lease and delivery of goods or rendition of services by a Borrower in the ordinary
course of such Borrower’s business. Each Account is for a liquidated amount payable by the Account Debtor thereon on the
terms set forth in the invoice therefor and in the schedule of Accounts delivered to Lender, without any offset, deduction, defense
or counterclaim except those known to Borrowers and disclosed to Lender in writing. No payment has been received, and no credit,
discount or extension or agreement has been granted, on any Account except as reported to and permitted by Lender in writing.
Each copy of an invoice delivered to Lender by Borrowers is a genuine copy of the original invoice sent to the Account Debtor
named therein. All goods described in any invoice representing a sale of goods have been delivered to the Account Debtor named
therein and all services of Borrowers described in each invoice representing services have been performed.

 

Section 7.13. Inventory.
No Instruments or documents of title have been issued in respect of any Inventory.

 

Section 7.14. Documents,
Instruments, and Chattel Paper. All Documents, Instruments and Chattel Paper, and all signatures and endorsements thereon,
are complete, valid and genuine.

 

Section 7.15. Proprietary
Rights. Schedule 7.15 sets forth a correct and complete list of all Proprietary Rights owned by the Credit Parties
that are material to the Credit Parties’ business as of the most recent Reporting Date. None of such Proprietary Rights
is subject to any licensing agreement or similar arrangement except as set forth on Schedule 7.15. All Proprietary
Rights set forth on Schedule 7.15 are valid, subsisting, unexpired and enforceable. To Credit Parties’ knowledge,
none of such Proprietary Rights infringes on, misappropriates, dilutes or conflicts with any other Person’s property, and
no other Person’s property infringes on, misappropriates, dilutes or conflicts with such Proprietary Rights. The Proprietary
Rights described on Schedule 7.15 and all other Proprietary Rights in which Credit Parties have an interest constitute
all of the property of such type necessary to the current and anticipated future conduct of Credit Parties’ business. No
holding, decision or judgment has been rendered by any Governmental Authority or court of law which would cancel or question the
validity of, or such Credit Parties’ rights in, any Proprietary Rights material to the conduct of any Credit Party’s
business. No action, suit, claim, demand, order or proceeding is pending, or threatened in writing (i) seeking to limit,
cancel or question the validity of any Proprietary Rights material to the conduct of any Credit Party’s business, or such
Credit Party’s ownership interest therein (other than office actions issued in the ordinary course of prosecution of any
pending applications for Patents or applications for registration of other Proprietary Rights), or (ii) which, if adversely determined,
could reasonably be expected to have a Material Adverse Effect on any Proprietary Rights material to the conduct of any Credit
Party’s business. If any Credit Party becomes the owner of any Proprietary Rights that are material to the conduct of any
Credit Party’s business not previously disclosed in Schedule 7.15, such Schedule shall be updated promptly, and in
any event, within five (5) Business Days of becoming the owner thereof. If any Credit Party enters into any licensing agreement
or similar arrangement with respect to any of Credit Parties’ Proprietary Rights not previously disclosed in Schedule
7.15, such Schedule shall be updated promptly, and in any event, within five (5) Business Days of entering into such agreement.

 

    
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Section 7.16. Investment
Property. Schedule 7.16 sets forth a correct and complete list of all Investment Property owned by Credit Parties
as of the most recent Reporting Date. As of the most recent Reporting Date, Credit Parties are the legal and beneficial owner
of such Investment Property, as applicable, and have not sold, granted any option with respect to, assigned or transferred, or
otherwise disposed of any of their rights or interest therein. Credit Parties shall update Schedule 7.16 on the last
Business Day of any month in which (and to the extent) there are any changes thereto.

 

Section 7.17. Real
Property and Leases. The Credit Parties have good, valid, marketable and legal title to all of the Real Property owned by
them, free and clear of all Liens, encumbrances, or adverse claims other than Permitted Liens and free and clear of all impediments
to the use of such properties in Credit Parties’ business. Schedule 7.17 sets forth a correct and complete list of
all Real Property owned by the Credit Parties, all leases and subleases of Real Property on which a Credit Party is lessee or
sublessee, and all leases or subleases of Real Property on which a Credit Party is lessor or sublessor, each as of the most recent
Reporting Date. Each Credit Party enjoys peaceful and undisturbed possession under all leases listed in Schedule 7.17 and
each such lease is valid and enforceable in accordance with its terms and is in full force and effect, and no default by any party
to any such lease exists. Credit Parties shall update Schedule 7.17 on the last Business Day of any month in which
(and to the extent) there are any changes thereto.

 

Section 7.18. Material
Agreements. Schedule 7.18 sets forth all material agreements to which any Credit Party is a party or is otherwise
bound as of the most recent Reporting Date. Credit Parties shall update Schedule 7.18 on a monthly basis on the last
Business Day of each month to the extent there are any changes thereto. All such material agreements set forth on Schedule
7.18 are in full force and effect and no defaults by a Credit Party exist thereunder.

 

Section 7.19. Bank
Accounts. Schedule 7.19 contains a complete list of all Deposit Accounts and Securities Accounts maintained by
the Credit Parties as of the most recent Reporting Date. If any Credit Party opens or otherwise comes into possession of a Deposit
Account or a Securities Account not previously disclosed on Schedule 7.19, such schedule shall be updated immediately
upon such opening, or coming into possession (including, without limitation, upon transition of Credit Parties’ cash management
services to the Lender on the Cash Management Transition Date).

 

Section 7.20. Title
to Property. Each Credit Party has good, valid, marketable and exclusive title to, or a valid leasehold interest or license
in (as applicable), all of its property, free of all Liens except Permitted Liens. Each Credit Party possesses all Proprietary
Rights (or otherwise possesses the right to use such Proprietary Rights without violation of the rights of any other Person) which
are necessary to carry out its business as presently conducted and as presently proposed to be conducted hereafter, and no Credit
Party is in violation in any material respect of the terms under which it possesses such Proprietary Rights or the right to use
such Proprietary Rights. Lender’s Liens are not subject or junior to any other Lien other than those Permitted Liens that
are prior to Lender’s Liens.

 

    
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Section 7.21. Debt.
After giving effect to the making of the initial Loans, no Credit Party has any Debt except the Obligations and other Debt expressly
permitted under Section 9.5. Borrower has delivered or caused to be delivered to
Lender true, correct and complete copies of any and all instruments, documents and agreements evidencing or relating to any and
all Subordinated Debt and all amendments thereto, waivers relating thereto and other side letters or agreements affecting the
terms thereof.  None of such instruments, documents and agreements has been amended or supplemented, nor have any of
the provisions thereof been waived, except pursuant to a written agreement or instrument which has heretofore been delivered to
Lender.

 

Section 7.22. Liens.
There are no Liens on any property of any Credit Party other than Permitted Liens.

 

Section 7.23. Solvency.
Prior to and after giving effect to the making of the initial Loans hereunder and each subsequent Loan thereafter, each Credit
Party is, on an individual basis, Solvent.

 

Section 7.24. Non-Regulated
Entities. No Credit Party and no Subsidiary of any Credit Party is a “registered investment company” or a company
“controlled” by a “registered investment company” or a “principal underwriter” of a “registered
investment company” as such terms are defined in the Investment Company Act of 1940. No Credit Party and no Subsidiary of
any Credit Party is subject to regulation under the Federal Power Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur Debt or may otherwise render all or any portion of
the Obligations unenforceable.

 

Section 7.25. Governmental
Authorization. No approval, consent, exemption, authorization or other action by, or notice to, or filing with, any Governmental
Authority is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Credit
Party of this Agreement or any other Loan Document, other than: (i) the filing of UCC Financing Statements to be filed against
the Credit Parties evidencing Lender’s Liens; (ii) filings to be made with the United States Patent and Trademark Office
or United States Copyright Office evidencing Lender’s Liens on registered Proprietary Rights; (iii) as may be required in
connection with any exercise of remedies by Lender in respect of the Equity Interests of any Credit Party by Applicable Laws affecting
the offering and sale of securities generally; and (iv) those which have been obtained and are still in full force and effect.

 

Section 7.26. Investment
Banking or Finder’s Fees. No Credit Party has agreed to pay or is otherwise obligated to pay or reimburse any Person
with respect to any investment banking or similar or related fee, underwriter’s fee, finder’s fee or broker’s
fee in connection with this Agreement.

 

Section 7.27. Full
Disclosure. None of the representations or warranties made by any Credit Party in the Loan Documents and none of the statements
contained in any Schedule or any report, statement or certificate furnished to Lender by or on behalf of any Credit Party in connection
with the Loan Documents contains any untrue statement of a material fact or omits any material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of
the time when made or delivered.

 

Section 7.28. Other
Obligations and Restrictions. No Credit Party has any outstanding liabilities of any kind (including contingent obligations,
tax assessments, or long-term commitments) of a nature and type required to be set forth as a liability on a balance sheet in
accordance with GAAP which are, in the aggregate, material to Credit Parties or material with respect to Borrowers’ consolidated
financial condition that are not reflected on the financial statements delivered pursuant to Section 6.1(a), Section
8.4(a) or Section 8.4(b), or in the notes thereto. No Credit Party is subject to or restricted by any franchise, contract,
deed, charter restriction, or other instrument or restriction which could reasonably be expected to result in a Material Adverse
Effect.

 

    
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Section 7.29. Acts
of God and Labor Matters. Neither the business nor the properties of any Credit Party has been affected by any fire, explosion,
accident, drought, storm, hail, earthquake, embargo, act of God or other casualty (whether or not covered by insurance), which
could reasonably be expected to result in a Material Adverse Effect. There is (a) no unfair labor practice complaint pending or,
to the knowledge of any Credit Party, threatened against any Credit Party or its Subsidiaries before any Governmental Authority
and no grievance or arbitration proceeding pending or, to the knowledge of any Credit Party, threatened against any Credit Party
or its Subsidiaries which arises out of or under any collective bargaining agreement, (b) no strike, labor dispute, lockout, slowdown,
stoppage or similar action or grievance, pending or, to Credit Parties knowledge, threatened against any Credit Party or any of
their respective Subsidiaries that could reasonably be expected to result in a material liability and (c) no union certification
application or representation petition existing with respect to the employees of any Credit Party or any of their respective Subsidiaries,
and no union organizing activities are taking place with respect to any of the employees of any Credit Party or their Subsidiaries.
No labor union contract is scheduled to expire prior to the Maturity Date other than as
set forth on Schedule 7.8. No Credit Party nor their Subsidiaries has incurred any liability or obligation under
the Worker Adjustment and Retraining Notification Act or similar state law, which remains unpaid or unsatisfied. The hours worked
and payments made to employees of each Credit Party and its Subsidiaries have not been in violation of the Fair Labor Standards
Act or any other applicable legal requirements, except to the extent such violations could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect. All material payments due from any Credit Party or its Subsidiaries
on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the
books of Credit Parties, except where the failure to do so could not individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect.

 

Section 7.30. Environmental
and Other Laws. (a) Except as individually or in the aggregate could not result in a Material Adverse Effect, each Credit
Party is conducting its business in material compliance with all Applicable Laws, including Environmental Laws, and is in compliance
with all licenses and permits required under any such laws; (b) to the knowledge of Credit Parties, (i) none of the operations
or properties of any Credit Party is the subject of federal, state or local investigation evaluating whether any material remedial
action is needed to respond to a release of any Hazardous Materials into the environment or to the improper storage or disposal
(including storage or disposal at offsite locations) of any Hazardous Materials, except as set forth on Schedule 7.30 and
(ii) no Credit Party’s nor any of its Subsidiaries’ properties or assets has ever been used by a Credit Party, its
Subsidiaries or any previous owner or operator in the disposal of, or to produce, store, handle, treat, release, or transport
any Hazardous Materials, where such disposal, production, storage, handling, treatment, release or transport was in violation,
in any material respect, of any applicable Environmental Law; (c) no Credit Party has (and to the knowledge of Credit Parties,
no other Person has) filed any notice under any Applicable Law indicating that any Credit Party or their Subsidiaries is responsible
for the improper release into the environment, or the improper storage or disposal, of any material amount of any Hazardous Materials
or that any Hazardous Materials have been improperly released, or are improperly stored or disposed of, upon any property of any
Credit Party or their Subsidiaries; (d) no Credit Party has (nor have any of Credit Parties’ Subsidiaries) transported
or arranged for the transportation of any Hazardous Material to any location which is (i) listed on the National Priorities List
under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, listed for possible inclusion
on such National Priorities List by the Environmental Protection Agency in its Comprehensive Environmental Response, Compensation
and Liability Information System List, or listed on any similar state list or (ii) the subject of federal, state or local
enforcement actions or other investigations which may lead to claims against such Credit Party for clean-up costs, remedial work,
damages to natural resources or for personal injury claims (whether under Environmental Laws or otherwise); and (e) no Credit
Party has any known material contingent liability under any Environmental Laws or in connection with the release into the environment,
or the storage or disposal, of any Hazardous Materials.

 

    
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Section 7.31. Security
Interests.

 

(a) Lender has a valid
and perfected first priority security interest in the Collateral, subject only to Permitted Liens, and

 

(b) no further or subsequent
filing, recording, registration, other public notice or other action is necessary or desirable to perfect or otherwise continue,
preserve or protect Lender’s security interest in the Collateral that may be perfected by the filing of a financing statement
pursuant to the UCC except (i) for continuation statements described in UCC §9.515(d), (ii) for filings required to be filed
in the event of a change in the name, jurisdiction of organization, type of organization or organizational structure of a Credit
Party, or (iii) in the event any financing statement filed by Lender relating hereto otherwise becomes inaccurate or incomplete.

 

Section 7.32. Commercial
Tort Claims. Schedule 7.32 sets forth all Commercial Tort Claims brought by any Credit Party against any Person as
of the most recent Reporting Date. If any Credit Party brings a Commercial Tort Claim against any Person on or after such Reporting
Date, such Schedule shall be updated promptly, and in any event, within five (5) Business Days of such Credit Party bringing such
Commercial Tort Claim against such Person.

 

Section 7.33. Common
Enterprise. The successful operation and condition of each of the Borrowers is dependent on the continued successful performance
of the functions of the group of Borrowers as a whole and the successful operation of each of the Borrowers is dependent on the
successful performance and operation of each other Borrower. Each Borrower expects to derive benefit (and its board of directors,
manager(s), general partner(s) or other governing body has determined that it may reasonably be expected to derive benefit), directly
and indirectly, from (i) successful operations of each of the other Borrowers and (ii) the credit extended by the Lender
to the Borrowers hereunder, both in their separate capacities and as members of the group of companies. Each Borrower has determined
that execution, delivery, and performance of this Agreement and any other Loan Documents to be executed by such Borrower is within
its purpose, will be of direct and indirect benefit to such Borrower, is in its best interest and necessary or convenient to the
conduct, promotion or attainment of the business of such Borrower, its wholly owned direct or indirect Subsidiaries and/or its
direct or indirect parent. Each Guarantor has determined that execution, delivery and performance of this Agreement and any other
Loan Document to which it is a party (including without limitation, its Guaranty Agreement) is within its purpose, will be of
direct and indirect benefit to such Guarantor, is in its best interest and is necessary or convenient to the conduct, promotion,
or attainment of the business of such Guarantor.

 

Section 7.34. Anti-Terrorism
Laws.

 

(a) No Credit Party nor
any Subsidiary of any Credit Party is in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in
any Anti-Terrorism Law.

 

    
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(b) No Credit Party nor
any Subsidiary of any Credit Party, nor to the knowledge of any Credit Party, their respective agents acting or benefiting in any
capacity in connection with the Loans or other transactions hereunder, is any of the following (each a “Blocked Person”):
(i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224; (ii) a
Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject
to the provisions of, the Executive Order No. 13224; (iii) a Person or entity with which Lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law; (iv) a Person or entity that commits, threatens or conspires to commit or
supports “terrorism” as defined in the Executive Order No. 13224; (v) a Person or entity that is named as a “specially
designated national” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at
its official website or any replacement website or other replacement official publication of such list, or (vi) a Person or entity
who is affiliated or associated with a Person or entity listed above. No Credit Party nor any Subsidiary of any Credit Party, nor
to the knowledge of any Credit Party, their respective agents acting in any capacity in connection with the Loans or other transactions
hereunder (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for
the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests
in property blocked pursuant to the Executive Order No. 13224.

 

Section 7.35. Trading
with the Enemy. No Credit Party has engaged, nor does it intend to engage, in any business or activity prohibited by the Trading
with the Enemy Act.

 

Section 7.36. Anti-Corruption
Laws and Sanctions. Each Credit Party, its Subsidiaries and, to the knowledge of such Credit Party, their respective officers,
employees, directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects
and have instituted and maintain policies and procedures designed to promote and achieve compliance with such laws. None of the
Credit Parties, their Subsidiaries or, to the knowledge of Credit Parties, their respective directors, officers, employees, agents
or representatives (a) is a Sanctioned Person, (b) is a Person owned or controlled by a Sanctioned Person, (c) is located, organized
or resident in a Sanctioned Country or (d) has directly or indirectly engaged in, or is now directly or indirectly engaged
in, any dealings or transactions (i) with any Sanctioned Person, (ii) in any Sanctioned Country or (iii) otherwise in violation
with any Sanctions. No Loan or use of proceeds of the Loans has or will violate Anti-Corruption Laws or applicable Sanctions.

 

Section 7.37. Continuing
Representations. All representations and warranties under this Agreement shall survive the execution and delivery of this
Agreement.

 

ARTICLE
VIII

AFFIRMATIVE COVENANTS

 

Until termination of
this Agreement and the indefeasible payment and performance in full of the Obligations (other than contingent indemnification obligations),
each Credit Party agrees, jointly and severally, as follows:

 

Section 8.1. Existence
and Good Standing. Each Credit Party shall maintain (a) its existence and good standing in its jurisdiction of organization
and (b) its qualification and good standing in all other jurisdictions in which the failure to maintain such qualification or
good standing could reasonably be expected to result in a Material Adverse Effect.

 

Section 8.2. Compliance
with Agreements and Laws. Each Credit Party will perform all obligations it is required to perform under the terms of each
indenture, mortgage, deed of trust, security agreement, lease, franchise, agreement, contract or other instrument or obligation
to which it is a party or by which it or any of its properties is bound, except where failure to do so could not reasonably be
expected to result in a Material Adverse Effect. Each Credit Party will conduct its business and affairs in compliance with all
Applicable Laws applicable thereto, except where the failure to do so could not reasonably be expected to result in a Material
Adverse Effect. Each Credit Party shall, and shall ensure that each of its Subsidiaries will (a) conduct its business in compliance
with all Anti-Corruption Laws and Anti-Terrorism Laws and (b) maintain policies and procedures designed to promote and achieve
compliance with Anti-Corruption Laws. Each Credit Party will cause all licenses and permits necessary for the conduct of its business
and the ownership and operation of its property used and property reasonably expected to be used in the conduct of its business
to be at all times maintained in good standing and in full force and effect, except where failure to do so could not reasonably
be expected to result in a Material Adverse Effect.

 

    
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Section 8.3. Books
and Records. Each Credit Party shall maintain at all times correct and complete books and records in which complete, correct
and timely entries are made of its transactions in accordance with GAAP applied consistently with the audited financial statements
required to be delivered pursuant to Section 8.4.

 

Section 8.4. Financial
Reporting. Borrower Representative and, to the extent required hereby, each other Credit Party, shall promptly furnish to
Lender all such financial information with respect to Credit Parties as Lender may reasonably request. Without limiting the foregoing,
Borrower Representative and, to the extent required hereby, each other Credit Party, will furnish to Lender the following:

 

(a) As soon as available,
but in any event not later than ninety (90) days after the end of each Fiscal Year, (i) consolidated audited balance sheets, and
statements of income and expense, cash flow and of stockholders’ equity for Parent and its consolidated Subsidiaries for
such Fiscal Year, and the accompanying notes thereto, and (ii) unaudited consolidating balance sheets, and statements of income
and expense, cash flow and of stockholders’ equity for Parent and its consolidated Subsidiaries, each prepared in accordance
with GAAP, in reasonable detail and fairly presenting the financial position and results of operations of Parent and its consolidated
Subsidiaries as of the date thereof and for the Fiscal Year then ended. Such audited statements shall be examined in accordance
with generally accepted accounting standards by independent certified public accountants selected by Parent and reasonably satisfactory
to Lender, whose report thereon shall not be qualified in any respect. Each Credit Party hereby authorizes Lender to communicate
directly with its certified public accountants and, by this provision, authorizes such accountants to disclose to Lender any and
all financial statements and other supporting financial documents and schedules relating to any Credit Party and to discuss directly
with Lender the finances and affairs of Credit Parties.

 

(b) As soon as available,
but in any event not later than thirty (30) days after the end of each Fiscal Month (other than the last Fiscal Month of any Fiscal
Quarter), consolidated and consolidating unaudited balance sheets of Parent and its consolidated Subsidiaries as of the end of
such Fiscal Month, and consolidated and consolidating unaudited statements of income and expense and cash flow for Parent and its
consolidated Subsidiaries for such Fiscal Month and for the period from the beginning of the Fiscal Year to the end of such Fiscal
Month, all in reasonable detail, fairly presenting the financial position and results of operations of Parent and its consolidated
Subsidiaries as of the date thereof and for such Fiscal Months, and prepared in accordance with GAAP applied consistently with
the audited financial statements required by Section 8.4(a). Borrower Representative shall certify by a certificate signed
by a Responsible Officer of Borrower Representative that all such statements have been prepared in accordance with GAAP and present
fairly, subject to normal year-end adjustments and the absence of footnote disclosure, Credit Parties’ financial position
as of the dates thereof and its results of operations for the Fiscal Months then ended.

 

    
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(c) As soon as available,
but in any event not later than forty-five (45) days after the end of each Fiscal Quarter (other than the last Fiscal Quarter of
any Fiscal Year), consolidated and consolidating unaudited balance sheets of Parent and its consolidated Subsidiaries as of the
end of such Fiscal Quarter, and consolidated and consolidating unaudited statements of income and expense and cash flow for Parent
and its consolidated Subsidiaries for such Fiscal Quarter and for the period from the beginning of the Fiscal Year to the end of
such Fiscal Quarter, all in reasonable detail, fairly presenting the financial position and results of operations of Parent and
its consolidated Subsidiaries as of the date thereof and for such Fiscal Quarters, and prepared in accordance with GAAP applied
consistently with the audited financial statements required by Section 8.4(a). Borrower Representative shall certify by
a certificate signed by a Responsible Officer of Borrower Representative that all such statements have been prepared in accordance
with GAAP and present fairly, subject to normal year-end adjustments and the absence of footnote disclosure, Credit Parties’
financial position as of the dates thereof and its results of operations for the Fiscal Quarters then ended.

 

(d) Annually, not sooner
than October 1 and not later than November 30 of each Fiscal Year of Parent, beginning with the Fiscal Year ending December 31,
2020, annual forecasts (to include forecasted consolidated balance sheets, statements of income and expenses and statements of
cash flow) for Parent and its consolidated Subsidiaries as of the end of and for each Fiscal Month of the following Fiscal Year
of Parent.

 

(e) As soon as available,
but in any event not later than fifteen (15) days after any Credit Party’s receipt thereof, a copy of all management reports
and management letters prepared for Credit Parties by any independent certified public accountants of Credit Parties.

 

(f) Promptly after filing,
a copy of each tax return filed by each Credit Party and each Guarantor.

 

(g) Promptly after receipt
thereof, copies of all bank statements in respect of any Deposit Account or Securities Account of any Credit Party (which may be
satisfied by providing Lender electronic read-only access to such accounts).

 

(h) Such additional information
as Lender may from time to time reasonably request regarding the financial and business affairs of Credit Parties or any of their
Subsidiaries.

 

Section 8.5. Collateral
Reporting. Borrower Representative, on behalf of all Borrowers, shall provide the following to Lender:

 

(a) At least once during
each calendar week, on the fifteenth (15th) day of each month (and reporting as of the last day of the prior calendar
month), at the time of each request for a Revolving Loan and at any other time requested by Lender, a Borrowing Base Certificate
including (i) a detailed calculation of the Borrowing Base, (ii) a certification of Eligible Accounts, Eligible Government Accounts
and Eligible Inventory (provided that Eligible Inventory reported shall be as of the last day of the most recent calendar month)
and (iii) all supporting documents and information (including, without limitation, sales journals, credit memos, cash receipts
journals and reconciliation of changes from the most recent certificate delivered to Lender);

 

(b) Monthly, not later
than the fifteenth (15th) day of each Fiscal Month:

 

(i) a schedule
of Accounts and a schedule of payments on Accounts, as of the last day of the preceding Fiscal Month;

 

    
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(ii) a reconciliation
to the Borrowing Base as calculated in the most recent Borrowing Base Certificate delivered to Lender, in the form prescribed by
Lender;

 

(iii) an aging
of Borrowers’ Accounts as of the last day of the preceding Fiscal Month, showing (A)(i) Accounts aged 30 days or less from
date of invoice, (ii) Accounts aged over 30 days, but less than 61 days, from date of invoice, (iii) Accounts aged over 60 days,
but less than 91 days, from date of invoice, (iv) Accounts aged over 90 days, but less than 120 days, from date of invoice, and
(v) Accounts aged 120 days or more from date of invoice and (B) a listing of the name and complete address of each Account
Debtor and such other information as Lender may request and (C) a reconciliation to the previous calendar month’s aging of
Borrowers’ Accounts and to Borrowers’ general ledgers;

 

(iv) an aging
of Borrowers’ accounts payable (including the due date for each account payable) as of the last day of the preceding Fiscal
Month;

 

(v) Inventory
reports as of the last day of the preceding Fiscal Month, by category and location, with detail showing additions to and deletions
from Inventory, together with a reconciliation to the general ledger; and

 

(vi) at Lender’s
request, copies of invoices and supporting delivery or service records, copies of credit memos or other advices of credit or reductions
against amounts previously billed, shipping and delivery documents, purchase orders and such other copies or reports in respect
of any Collateral as Lender may request from time to time; and

 

(c) semiannually, on
or before the last Business Day in June and December of each year, or more often at Lender’s request, a listing of each Account
Debtor in respect of Borrowers’ Accounts, with full contact information for each such Account Debtor (including, without
limitation, the complete address, contact person, phone number and email address) and such other information as Lender may request
in respect of the Borrowers’ Accounts.

 

Each Borrowing Base Certificate, schedule,
reconciliation, aging, copy or report delivered to Lender shall bear a signed statement by a Responsible Officer of Borrower Representative
certifying the accuracy and completeness of all information included therein. The execution and delivery of a Borrowing Base Certificate
shall in each instance constitute a representation and warranty by each Borrower to Lender that no Account included therein as
an Eligible Account or an Eligible Government Account should be excluded from inclusion in the Borrowing Base pursuant to the terms
of the definition of “Eligible Account” or “Eligible Government Account”, as applicable, and that no Inventory
included therein as Eligible Inventory should be excluded from inclusion in the Borrowing Base pursuant to the terms of the definition
of “Eligible Inventory”. In the event any request for a Revolving Loan or a Borrowing Base Certificate or other
information required by this Section 8.5 is delivered to Lender by Borrower Representative electronically or otherwise without
signature, such request, or such Borrowing Base Certificate or other information shall, upon such delivery, be deemed to be signed
and certified on behalf of Borrower Representative by a Responsible Officer thereof and constitute a representation to Lender
as to the authenticity thereof. Lender shall have the right to review and adjust any such calculation of the Borrowing Base to
reflect exclusions from Eligible Accounts, Eligible Government Accounts or Eligible Inventory, reserves pursuant to Section
2.1, declines in value of Collateral or such other matters as are necessary to determine the Borrowing Base. Lender shall have
the continuing right to establish and adjust reserves in determining or re-determining the Borrowing Base, pursuant to Section 2.1.

 

    
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Section
8.6. Compliance Certificate. With each of the financial statements delivered pursuant to Section 8.4(a), Section 8.4(b)
and Section 8.4(c), respectively, Parent shall deliver to Lender a Compliance Certificate signed by a Responsible Officer
of Parent (i) with respect to each Compliance Certificate delivered with financial statements delivered pursuant to Sections
8.4(a) and (c), setting forth in reasonable detail the calculations required to establish that Credit Parties were
in compliance with the covenants set forth in Section 9.14 during the period covered in such financial statements
and as of the end thereof, and (ii) with respect to each Compliance Certificate, stating that, except as explained in reasonable
detail in such certificate (A) all of the representations and warranties of Credit Parties contained in this Agreement and
the other Loan Documents are correct and complete in all material respects as at the date of such certificate as if made at such
time, except for those that are solely effective as of a particular date, which shall be correct and complete in all material
respects as of such particular date, (B) on the date of such certificate, Credit Parties are in compliance in all material respects
with all of their respective covenants and agreements in this Agreement and the other Loan Documents and (C) no Default or Event
of Default then exists or existed during the period covered by such financial statements. If such certificate discloses that a
representation or warranty is not correct or complete, or that a covenant has not been complied with, or that a Default or Event
of Default existed or exists, such certificate shall set forth what action Credit Parties have taken or propose to take with respect
thereto.

 

Section 8.7. Notification
to Lender. Credit Parties shall notify Lender in writing immediately (a) of the occurrence of any Default or Event of
Default, (b) after becoming aware of any event or circumstance, including without limitation any pending or threatened action,
suit or claim by any Person, any pending or threatened investigation by a Governmental Authority or any violation of any Applicable
Law, that would be treated as a contingent liability of any Credit Party under GAAP and is in an amount in excess of $50,000 or
which could reasonably be expected to result in a Material Adverse Effect, (c) if any Credit Party’s board of directors,
other governing boards or committees, members or partners authorizes the filing by such Credit Party of a petition in bankruptcy,
(d) of the acceleration of the maturity of any Debt owed by any Credit Party or of any default by any Credit Party under
any indenture, mortgage, agreement, contract or other instrument to which such Credit Party is a party or by which any of its
properties is bound and is in an amount in excess of $50,000, (e) of any claim under any Environmental Law or in respect
of any Hazardous Materials of $50,000or more, any notice of potential liability under any Environmental Laws which might exceed
such amount, or any other material adverse claim asserted against any Credit Party or with respect to any Credit Party’s
properties and (f) any other development that results or could reasonably be expected to result in, a Material Adverse Effect.
Each notice given shall describe the subject matter thereof in reasonable detail and specify the action that Credit Parties have
taken or propose to take with respect thereto.

 

Section 8.8. Accounts.
If any Borrower becomes aware of any matter adversely affecting the collectability of any Account of any Borrower involving an
amount greater than $25,000, including information regarding the Account Debtor’s creditworthiness, such Borrower will promptly
so advise Lender. Each Borrower hereby agrees to promptly notify Lender of all disputes and claims in excess of $50,000 with respect
to any Account Debtor of such Borrower. No discount, credit or allowance shall be granted to any such Account Debtor without Lender’s
prior written consent. Borrowers shall deliver to Lender a copy of each credit memorandum upon demand by Lender.

 

Section 8.9. Inventory.

 

(a) All Inventory shall
be held for sale in the ordinary course of Credit Parties’ business, and is and will be fit for such purpose. Credit Parties
will keep the Inventory in good and marketable condition, at their own expense. No Borrower will acquire or accept any Inventory
on consignment or approval. No Borrower will sell any Inventory on a bill-and-hold, guaranteed sale, sale and return, sale on approval,
consignment or other repurchase or return basis.

 

    
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(b) Borrowers will maintain
a perpetual inventory system at all times. Borrowers will conduct a physical count of the Inventory at least once per Fiscal Year
and at Lender’s request, within five (5) days of conducting any physical count, Borrowers shall supply Lender with a copy
of such count.

 

(c) Borrowers shall promptly
report to Lender in writing any Inventory returned by an Account Debtor involving an amount in excess of $75,000. All such returned
Inventory shall be segregated from all other Inventory, and shall not be reportable as Eligible Inventory unless and until Borrowers
demonstrate to Lender’s satisfaction that such returned Inventory is in saleable condition and meets all criteria for Eligible
Inventory. Unless otherwise agreed by Lender, the amount of Borrowers’ Accounts relating to such returned Inventory shall
be deemed excluded from Eligible Accounts. No Borrower shall issue any credits or allowances with respect to such returned Inventory
without Lender’s prior written consent. All returned Inventory shall be subject to Lender’s Liens.

 

Section 8.10. Equipment
and Machinery. Credit Parties will maintain, preserve, protect and keep all Equipment and Machinery in good condition, repair
and working order, ordinary wear and tear excepted, and will cause such Equipment and Machinery to be used and operated in a good
and workmanlike manner, in accordance with Applicable Law and in a manner which will not make void or cancelable any insurance
with respect to such Equipment and Machinery. Credit Parties will promptly make or cause to be made all repairs, replacements
and other improvements to or in connection with such Equipment and Machinery which are necessary or desirable or that Lender may
request to such end. Current maintenance records will be maintained on all Equipment and Machinery and made available to Lender
upon request. Borrowers will promptly furnish to Lender a statement respecting any loss or damage to any of such Equipment or
Machinery with an aggregate value in excess of $25,000. No Credit Party will alter or remove any identifying symbol or number
on any Equipment or Machinery or permit any of the Collateral which constitutes Equipment to at any time become so related or
attached to, or used in connection with any particular real property so as to become a fixture upon such real property, or to
be installed in or affixed to other goods so as to become an accession to such other goods unless such other goods are also included
in the Collateral and as to which Lender has a first priority Lien.

 

Section 8.11. Insurance.
Credit Parties shall, keep and maintain insurance with respect to their business and all Collateral, wherever located, covering
liabilities, losses or damages as are customarily insured against by other Persons in the same or similar business and similarly
situated or located. All such policies of insurance shall be written by financially sound and reputable insurers reasonably acceptable
to Lender. Such insurance shall be with respect to loss, damages, and liability of amounts acceptable to Lender and shall include,
at a minimum, business interruption, workers compensation, general premises liability, fire, theft, casualty and all risk. Credit
Parties will make timely payment of all premiums required to maintain such insurance in force. Credit Parties shall cause Lender
to be an additional insured and loss payee under all policies of insurance covering any of the Collateral, to the extent of Lender’s
interest, in form satisfactory to Lender, and shall cause a lenders loss payable endorsement to be issued in favor of Lender in
respect of Credit Parties’ property insurance. All insurance proceeds paid to Lender shall be applied in reduction of the
Obligations unless otherwise agreed by Lender. Credit Parties shall deliver copies of each insurance policy to Lender upon request.

 

    
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Section 8.12. Payment
of Trade Liabilities, Taxes, Etc.. Each Credit Party will (a) timely file all required tax returns including any extensions;
(b) timely pay all taxes, assessments, and other governmental charges or levies imposed upon it or upon its income, profits or
property before the same become delinquent; (c) timely (and in any event within ninety (90) days past the original invoice billing
date, or such later date as may be agreed pursuant to a written payment plan approved by Lender), pay all material liabilities
owed by it on ordinary trade terms to vendors, suppliers and other Persons providing goods and services used by it in the ordinary
course of its business; (d) pay and discharge when due all other material liabilities now or hereafter owed by it, other than
royalty payments suspended in the ordinary course of business; and (e) maintain appropriate accruals and reserves for all of the
foregoing in accordance with GAAP. A Credit Party may, however, delay paying or discharging any of the foregoing so long as (i)
it is in good faith contesting the validity thereof by appropriate proceedings promptly instituted and diligently conducted and
has set aside on its books adequate reserves therefore in accordance with GAAP, and (ii) none of the Collateral would become subject
to forfeiture, any Lien (other than a Permitted Lien not prior to Lender’s Lien on the Collateral) or loss as a result of
such delay or contest.

 

Section 8.13. Protective
Advances. Borrowers hereby agree to immediately pay Lender for any Protective Advances made by the Lender on their behalf
or in respect of any Collateral and such amounts are due and payable by Borrowers on the date such Protective Advances are so
made.

 

Section 8.14. Evidence
of Compliance. Credit Parties will furnish to Lender at Credit Parties’ expense all evidence which Lender may from time
to time reasonably request in writing as to the accuracy and validity of or compliance with all representations, warranties and
covenants made by Credit Parties in the Loan Documents, the satisfaction of all conditions contained therein, and all other matters
pertaining thereto.

 

Section 8.15. Environmental
Matters; Environmental Reviews.

 

(a) Each Credit Party
will, and will cause its Subsidiaries to, comply in all material respects with all Environmental Laws now or hereafter applicable
to such Person, as well as all contractual obligations and agreements with respect to environmental remediation or other environmental
matters, and shall obtain, at or prior to the time required by applicable Environmental Laws, all environmental, health and safety
permits, licenses and other authorizations necessary for its operations and will maintain such authorizations in full force and
effect, except for those which if not obtained or maintained could not reasonably be expected to result in a Material Adverse Effect.
No Credit Party will do anything or permit anything to be done which will subject any of its properties or Subsidiaries to any
remedial obligations under, or result in noncompliance with applicable permits and licenses issued under, any applicable Environmental
Laws, assuming disclosure to the applicable governmental authorities of all relevant facts, conditions and circumstances.

 

(b) Credit Parties will
promptly furnish to Lender all written notices of violation, orders, claims, citations, complaints, penalty assessments, suits
or other proceedings received by any Credit Party, or of which Credit Parties otherwise have notice, pending or threatened against
any such Person by any Governmental Authority with respect to any alleged violation of or non-compliance with any Environmental
Laws or any permits, licenses or authorizations in connection with such Person’s ownership or use of its properties or the
operation of its business.

 

(c) Credit Parties will
promptly furnish to Lender all requests for information, notices of claim, demand letters, and other notifications, received by
any Credit Party in connection with Credit Parties’ or their Subsidiaries’ ownership or use of their properties or
the conduct of its business, relating to potential responsibility with respect to any investigation or clean-up of Hazardous Material
at any location.

 

    
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Section 8.16. Subsidiaries;
Fundamental Information. In the event that a direct or indirect Subsidiary of any Credit Party is created or acquired or otherwise
comes into existence (which new Subsidiary must have been created or acquired in compliance with the terms hereof), then (a) such
Subsidiary shall (i) become party to this Agreement as a Borrower (or, with the Lender’s consent, as a Credit Party and
a Guarantor) through a joinder agreement in form and substance acceptable to Lender (a “Joinder Agreement”),
(ii) execute and deliver to Lender a Perfection Certificate, (iii) if not joining as a Borrower hereunder, execute and deliver
to Lender a Guaranty Agreement, guarantying all of the Obligations of the Borrowers, and (iv) execute and deliver to Lender such
other documents, instruments and agreements as reasonably required by Lender in order to pledge such Person’s real and personal
property to Lender as security for the Obligations free and clear of any Liens (other than Permitted Liens) and (b) the Credit
Party parent of such Subsidiary shall execute and deliver to Lender a Pledge Agreement and such other documents, instruments and
agreements as reasonably required by Lender in order to pledge the Equity Interest of such new Subsidiary (and confer such other
rights as reasonably required by Lender in respect thereof) to Lender as security for the Obligations. Upon creation of any new
Subsidiary or any change to any fundamental information of any Credit Party from that set forth in Schedule 7.1 hereto,
Credit Parties shall promptly (and in any event within three (3) days of such change) deliver to Lender an updated Schedule 7.1
hereto.

 

Section 8.17. Further
Assurances. Credit Parties shall execute and deliver, or cause to be executed and delivered, to Lender such documents and
agreements, and shall take or cause to be taken such actions, as Lender may, from time to time, reasonably request to carry out
the terms and conditions of this Agreement and the other Loan Documents.

 

Section 8.18. Maintenance
of Properties. Each Credit Party will, and will cause its Subsidiaries to, keep and maintain all property material to the
conduct of its business in good working order and condition, ordinary wear and tear excepted.

 

Section 8.19. Lien
Law. If any account or general intangible included in the Collateral represents money owing pursuant to any contract for the
improvement of real property or for a public improvement for purposes of the Lien Law of the State of New York (the “Lien
Law”), Borrowers shall comply with the filing requirements of the Lien Law and (i) give Lender notice of such fact;
(ii) receive and hold any money advanced by Lender with respect to such account or general intangible as a trust fund to be applied
to the payment of trust claims as such term is defined in the Lien Law (Section 71 or otherwise); and (iii) until such trust claim
is paid, not use or permit the use of any such money for any purpose other than the payment of such trust claims.

 

Section 8.20. Post-Closing
Requirements. To the extent not completed prior to the Agreement Date, the Credit Parties shall satisfy the requirements set
forth below on or prior to the dates set forth below:

 

(a) On or before February
15, 2020, Borrower shall deliver or cause to be delivered to the Lender one or more Subordination Agreements with respect to any
and all Subordinated Debt held by or payable to creditors other than those specified on Schedule 6.1, executed by each such
creditor and the other parties thereto.

 

(b) Prior to September
30, 2020, with respect to any and all Subordinated Debt, (i) the maturity date for such Subordinated Debt shall be extended to
a date that is more than six months after December 30, 2022, or (ii) such Subordinated Debt shall be converted to common stock
of Borrower, in each case pursuant to documentation satisfactory to Lender, and Borrower shall deliver or cause to be delivered
to Lender any and all such documentation.

 

    
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(c) Within thirty (30)
days after the Agreement Date, Credit Parties shall deliver to Lender the originals of all certificates of title for each vehicle
having a value or $5,000 or more, together with executed applications for notation of lien and other such documentation as may
be requested by Lender.

 

(d) On or before January
15, 2020, Credit Parties shall pay any and all amounts due and take any and all actions to cause any and all tax and judgment liens
existing on the Agreement Date to be paid in full and released and shall provide to Lender evidence of such payment and release.

 

(e) Within thirty (30)
days after the Agreement Date, Credit Parties shall (a) (i) cause the creditors or lessors receiving proceeds of the Initial Term
Loan Advance for payoff of any equipment lease or Lien on any Collateral (collectively, the “Paid Off Creditors”)
to terminate any and all UCC financing statements in favor of such Paid Off Creditors or (ii) cause an authorized representative
of each Paid Off Creditor to authorize Lender or its designee to file termination statements for such UCC financing statements,
and (b) provide to Lender confirmation or documentation satisfactory to Lender showing that title to such Collateral has passed
to the applicable Borrower.

 

(f) Within thirty (30)
days after the Agreement Date, Credit Parties shall deliver to Lender any and all endorsements, each in form and substance satisfactory
to Lender, related to the property and liability insurance policies of the Credit Parties, which (i) provide for notice of cancellation
to Lender, (ii) name (whether directly or indirectly by reference to the requirements set forth in this Agreement) the Lender as
additional insured or lender loss payee, as applicable, with respect to such insurance, and (iii) remove other parties currently
named as additional insured or loss payee other than those permitted by Lender.

 

ARTICLE
IX

NEGATIVE COVENANTS

 

Until termination of
this Agreement and the indefeasible payment and performance in full of the Obligations (other than contingent indemnification obligations),
each Credit Party agrees, jointly and severally, as follows:

 

Section 9.1. Fundamental
Changes. No Credit Party shall enter into any transaction of merger, reorganization, consolidation, wind-up, liquidation,
recapitalization or dissolution (or suffer any liquidation or dissolution) except that (a) any Credit Party may merge with and
into another Credit Party provided that (i) a Borrower must be the surviving entity of any such merger to which it is party
and no merger may occur between Parent and a Borrower, and (b) any Credit Party (other than Parent and any Borrower) shall be
permitted to liquidate or dissolve so long as the assets of such Credit Party are transferred to a Borrower or, if such Credit
Party is not a Borrower, another Credit Party. No Credit Party will change its name, identity, jurisdiction of organization, organizational
type or location of its chief executive office or principal place of business unless such Credit Party (or Borrower Representative,
on behalf of such Credit Party) gives Lender at least thirty (30) days prior written notice thereof and executes (or causes such
applicable Credit Party to execute) all documents and takes (or causes such applicable Credit Party to take) all other actions
that Lender reasonably requests in connection therewith, including but not limited to the delivery of a legal opinion to Lender,
reasonably satisfactory in form and substance to Lender.

 

Section 9.2. Collateral
Locations. Except for Inventory in transit to a Credit Party in the ordinary course of business, no Credit Party will maintain
any Collateral at any location other than those locations listed on Schedule 7.11 unless it (i) gives the Lender at least
thirty (30) days prior written notice thereof, (ii) delivers or causes to be delivered to Lender all documents that Lender reasonably
requests in connection therewith and, in the case of any leased location, exercises commercially reasonable efforts to deliver
to Lender a Collateral Access Agreement, in accordance with the terms of Section 5.2, signed by the owner of such location,
and (iii) takes all other actions that Lender reasonably requests in connection therewith.

 

    
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Section 9.3. Use
of Proceeds. Borrowers will not use any proceeds of any Loan, directly or indirectly, for any purpose other than (a) on the
Agreement Date, to pay transactional fees, costs and expenses incurred in connection with the Loan Documents, (b) on the Agreement
Date, to refinance or pay off indebtedness for money borrowed prior to the Agreement Date, and (c) on the Agreement Date and thereafter,
for working capital in the ordinary course of Borrowers’ business. Borrowers will not use any proceeds of any Loan, directly
or indirectly, to purchase or carry margin stock, repay or otherwise refinance indebtedness incurred to purchase or carry Margin
Stock or to extend credit for the purpose of purchasing or carrying any Margin Stock. None of the Borrowers, the other Credit
Parties or their Subsidiaries have used or procured, nor shall they use or procure, the proceeds of any Loan or other extension
of credit (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving money, or anything
else of value, to any Person in violation of any Anti-Corruption Laws, (ii) for the purpose of funding, financing or facilitating
any activities, business or transaction of or with any Sanctioned Person or any Blocked Person, or in any Sanctioned Country or
(iii) in any manner that would result in the violation of any Sanctions applicable to any party hereto.

 

Section 9.4. Business.
No Credit Party will (i) engage, directly or indirectly, in any line of business other than the businesses in which Credit Parties
are engaged on the Agreement Date and similar or related businesses associated therewith, or (ii) make any expenditure or
commitment or incur any obligation or enter into or engage in any transaction except, in each case, in the ordinary course of
business.

 

Section 9.5. Debt.
No Credit Party shall incur, create, assume or suffer to exist any Debt, other than the following (collectively, “Permitted
Debt”): (a) the Obligations, (b) trade payables and contractual obligations to suppliers and customers arising in the
ordinary course of business, (c) Subordinated Debt in an aggregate amount not to exceed $9,201,000, as described on Schedule
7.21 (d) Debt other than Subordinated Debt, existing on the Agreement Date and described on Schedule 7.21, and
any related Refinancing Debt, (e) purchase money secured Debt (including Capital Leases) incurred to purchase Equipment, provided,
that the aggregate amount of such Debt outstanding does not exceed $1,000,000 at any one time outstanding, (f) Debt of such Credit
Party with respect to surety, appeal, indemnity, performance, or other similar bonds incurred in the ordinary course of business,
(g) Debt owing to any Person providing property, casualty, liability or other insurance to Credit Parties, so long as the amount
of such Debt does not exceed the amount of the unpaid cost of, and shall be incurred only to defer the cost of, such insurance
for the year in which such Debt is incurred and such Debt is outstanding only during such year, (h) Debt incurred in the ordinary
course of business in respect of credit cards, credit card processing services, debit cards, stored value cards, or purchase cards
(including so-called “procurement cards” or “P-cards”), (i) Debt constituting Permitted Investments,
(j) Debt arising from endorsement of instruments or other payment items for deposit, (k) unsecured Debt incurred in respect of
netting services, overdraft protection, and other like services, in each case incurred in the ordinary course of business, (l)
guarantees by one Credit Party of Debt of another Credit Party otherwise permitted under this Section 9.5.

 

Section 9.6. Subordinated
Debt. No Credit Party shall make any payment or prepayment of, or redemption, purchase, retirement, defeasance, sinking fund
or similar payment with respect to (a) any Subordinated Debt, except as expressly permitted under the applicable Subordination
Agreement or (b) any Debt owing to a holder of such Person’s Equity Interests. No Credit Party shall enter into or permit
any amendment, waiver or modification of any instrument, document or agreement evidencing or relating to any of the Subordinated
Debt or any term or provision thereof.

 

    
LOAN AND SECURITY AGREEMENT – Page 57

     

    

 

Section 9.7. Liens.
No Credit Party shall create, incur, assume, or permit to exist any Lien on any property now owned or hereafter acquired by any
of them, except Permitted Liens. No Credit Party will enter into or become subject to any agreement whereby any Credit Party is
prohibited from, or would otherwise be in default as a result of, creating, assuming, incurring, or suffering to exist, directly
or indirectly, any Lien on any of its assets in favor of Lender.

 

Section 9.8. Disposition
of Property. No Credit Party will transfer, sell, assign, lease, license or otherwise dispose of any of its property, or agree
to do any of the foregoing, except any of the following (collectively, “Permitted Dispositions”):

 

(a) use of money or cash
equivalents, not constituting proceeds of Collateral, in the ordinary course of business and in a manner that is not prohibited
by this Agreement;

 

(b) sale of Inventory
in the ordinary course of business;

 

(c) sale or other disposition
of Equipment in the ordinary course of business that is obsolete or no longer useable by such Credit Party in the ordinary course
of its business, provided, that (i) if such sale or disposition is made without replacement of such Equipment, or such
Equipment is replaced by Equipment leased by a Borrower, then such Borrower shall deliver to Lender all net proceeds of any such
sale or disposition for application to the Obligations in accordance with the terms hereof or (ii) if such sale or disposition
is made in connection with the purchase by a Borrower of replacement Equipment, then such Borrower shall use the proceeds of such
sale or disposition to purchase such replacement Equipment and shall deliver to Lender written evidence of the use of such proceeds
for such purchase (and any net proceeds of such sale or disposition not used in connection with the purchase of replacement Equipment
shall be delivered to Lender for application to the Obligations in accordance with the terms hereof);

 

(d) sales or assignments
of past-due receivables which do not constitute Eligible Accounts to a collection agency in the ordinary course of business, only
in connection with the compromise or collection thereof;

 

(e) the license, on a
non-exclusive basis, by such Credit Party of its Proprietary Rights in the ordinary course of business;

 

(f) the granting of Permitted
Liens;

 

(g) liquidation or dissolution
of a Credit Party permitted by Section 9.1; and

 

(h) the making of Permitted
Investments.

 

Section 9.9. Sale
and Leaseback. No Credit Party shall directly or indirectly enter into any arrangement with any Person providing for any Credit
Party to lease or rent property that such Credit Party has sold or will sell or otherwise transfer to such Person.

 

Section 9.10. Distributions;
Capital Contribution; Redemption. No Credit Party shall directly or indirectly declare or make, or incur any liability to
make, any Distribution, except Distributions to any Borrower by its Subsidiaries. No Credit Party will, directly or indirectly:
(a) make any capital contribution of any nature to any Person, (b) purchase, redeem, acquire or retire any share of the capital
stock of or partnership or limited liability company interests in any other Credit Party (whether such interests are now or hereafter
issued, outstanding or created), or (c) cause or permit any reduction or retirement of the capital stock of any other Credit Party.

 

    
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Section 9.11. Investments.
No Credit Party will acquire any assets other than in the ordinary course of business and otherwise meeting the requirements of
this Agreement. No Credit Party will make any Investment other than a Permitted Investment.

 

Section 9.12. Transactions
with Affiliates. No Credit Party will sell, lease or otherwise transfer any property or any assets to, or purchase, lease
or otherwise acquire any property or assets from, or otherwise engage in any other transactions with any Affiliate of any Credit
Party, except transactions (not including payment of any management, consulting, monitoring, advisory or other similar fees) that
are not otherwise restricted hereunder entered into between Credit Parties only in the ordinary course of such Credit Parties’
business, consistent with past practices and undertaken in good faith, upon fair and reasonable terms fully disclosed to Lender
in amounts and upon terms no less favorable to such Credit Parties than would be obtained in a comparable arm’s-length transaction
with a Person who is not an Affiliate.

 

Section 9.13. New
Subsidiaries. No Credit Party shall organize, create or acquire any new Subsidiary without the consent of Lender (which shall
be in Lender’s sole discretion) and unless such Credit Party and new Subsidiary complies with Section 8.16 hereof.

 

Section 9.14. Financial
Covenants.

 

(a) The Fixed Charge
Coverage Ratio for Parent and its consolidated Subsidiaries for any Fiscal Quarter of Parent, determined as of the last day of
such Fiscal Quarter, beginning with the Fiscal Quarter ending March 31, 2020, shall not be less than 1.25 to 1.00.

 

(b) The aggregate amount
of Capital Expenditures by Parent and its consolidated Subsidiaries in any Fiscal Year shall not exceed $500,000.

 

Section 9.15. Fiscal
Year; Accounting Method. No Credit Party will change its Fiscal Year or its method of accounting (other than as required to
conform to GAAP).

 

Section 9.16. Impairment
of Security Interest. Credit Parties will not take or fail to take any action which would in any manner impair the value of,
or the enforceability of Lender’s security interest in, any Collateral. Further, Credit Parties will not adjust, settle,
compromise, amend or modify any of their rights in the Collateral (other than in the ordinary course of business).

 

Section 9.17. Prohibited
Contracts. Except as expressly provided for in the Loan Documents, no Credit Party will, directly or indirectly, enter into,
create, or otherwise allow to exist any contract or other consensual restriction on the ability of any Subsidiary of a Credit
Party to: (a) pay dividends or make other distributions to such Credit Party, (b) redeem equity interests held in it by such Credit
Party, (c) repay loans and other indebtedness owing by it to such Credit Party, or (d) transfer any of its assets to such Credit
Party. No Credit Party will amend or permit any amendment to any contract or lease which releases, qualifies, limits, makes contingent
or otherwise detrimentally affects the rights and benefits of Lender under or acquired pursuant to any Loan Document.

 

Section 9.18. Deposit
Accounts and Securities Accounts. No Credit Party shall establish or maintain any new Deposit Account or Securities Account
unless Lender shall have received a Control Agreement in respect thereof or shall otherwise have “control” over such
Deposit Account or Securities Account under the UCC in accordance with the terms of Section 5.3; provided, however,
no such Control Agreement shall be required for Excluded Accounts.

 

    
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Section 9.19. Compliance
with ERISA. No Credit Party shall, nor shall it permit any of its Subsidiaries to: (i) maintain, or permit any ERISA Affiliate
to maintain, or become obligated to contribute, to any ERISA Benefit Plan other than those ERISA Benefit Plans disclosed on Schedule 7.8,
(ii) engage, or knowingly permit any ERISA Affiliate to engage, in any non-exempt “prohibited transaction”, as that
term is defined in section 406 of ERISA and Section 4975 of the IRC, (iii) incur, or permit any ERISA Affiliate to incur, any
“accumulated funding deficiency”, as that term is defined in Section 302 of ERISA or Section 412 of the IRC, (iv)
terminate, or permit any ERISA Affiliate to terminate, any ERISA Benefit Plan where such event could result in any liability of
any Credit Party or any ERISA Affiliate or the imposition of a lien on the property of any Credit Party or any ERISA Affiliate
pursuant to Section 4068 of ERISA, (v) assume, or permit any ERISA Affiliate to assume any obligation to contribute to any Multiemployer
Plan, (vi) incur or permit any ERISA Affiliate to incur, any withdrawal liability to any Multiemployer Plan, (vii) fail promptly
to notify the Lender of the occurrence of any Termination Event, (viii) fail to comply in any material respect, or permit an ERISA
Affiliate to fail to comply in any material respect, with the requirements of ERISA or the IRC or other Applicable Law in respect
of any ERISA Benefit Plan, (ix) fail to meet, or permit any ERISA Affiliate to fail to meet, all minimum funding requirements
under ERISA or the IRC or postpone or delay or allow any ERISA Affiliate to postpone or delay any funding requirement with respect
of any ERISA Benefit Plan.

 

ARTICLE
X

EVENT OF DEFAULT

 

Section 10.1. Event
of Default. Each of the following shall constitute an Event of Default under this Agreement:

 

(a) any failure by Borrowers
to timely pay any of the Obligations when due;

 

(b) any representation
or warranty made or deemed made by any Credit Party in any Loan Document, or any financial or other written statement, or any information
furnished by such Person to Lender shall be untrue in any material respect as of the date on which made, deemed made or furnished;

 

(c) any noncompliance
or breach of any requirements contained in:

 

(i) Sections
5.3 through 5.5, Sections 8.1 through 8.7, Sections 8.10 through 8.12, Section 8.16, Section
8.20 or Article IX;

 

(ii) Section
8.8, or Section 8.9, and any such failure continues for a period of five (5) days; or

 

(iii) any provision
of the Loan Documents other than those listed in clauses (i) and (ii) of this Section 10.1(c), and
such failure continues for a period of ten (10) days after the earlier of any Credit Party’s actual knowledge thereof
or written or verbal notice thereof by Lender to Borrower Representative;

 

(d) any Credit Party
shall (i) file a voluntary petition in bankruptcy or otherwise commence any action or proceeding seeking reorganization, arrangement
or readjustment of its debts, or consent to or acquiesce in any such petition, action or proceeding; (ii) apply for or acquiesce
in the appointment of a receiver, assignee, liquidator, custodian, trustee or similar officer for it or for all or any part of
its property; (iii) make an assignment for the benefit of creditors; or (iv) be generally unable to pay (or admit in writing that
it is unable to pay) its debts as they become due;

 

    
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(e) an involuntary petition
shall be filed or an action or proceeding otherwise commenced seeking relief under the Bankruptcy Code in respect of, or seeking
any reorganization, arrangement, consolidation or readjustment of the debts of, any Credit Party under any other bankruptcy or
insolvency law and any of the following events occur: (i) such Credit Party consents or acquiesces to the institution of such petition
or proceeding, (ii) the petition commencing such proceeding is not timely controverted, (iii) the petition commencing such proceeding
is not dismissed within thirty (30) calendar days of the filing date thereof, (iv) an interim trustee is appointed to take possession
of all or any substantial portion of the property or assets of, or to operate all or any substantial portion of the business of,
such Credit Party or (v) an order for relief shall have been issued or entered therein; provided, that Lender shall have
no obligation to provide any extension of credit to Borrowers during such thirty (30) day calendar period specified in (iii) above;

 

(f) a receiver, interim
receiver, receiver manager, assignee, liquidator, sequestrator, custodian, trustee or similar officer shall be appointed for any
Credit Party or for all or any part of its property or a warrant of attachment, execution or similar process shall be issued against
any part of the property of any Credit Party;

 

(g) except as otherwise
permitted by Section 9.1, any Credit Party shall file a certificate of dissolution or shall be liquidated, dissolved or
wound-up or shall commence or have commenced against it any action or proceeding for dissolution, winding-up or liquidation, or
shall take any action in furtherance thereof;

 

(h) any default, event
of default or other breach shall occur with respect to any Debt for borrowed money (other than the Obligations) of any Credit Party
in an outstanding principal amount which exceeds $50,000 and such default shall continue for more than the period of grace, if
any, therein with respect thereto, if the effect thereof (with or without the giving of notice or further lapse of time or both)
is to accelerate, or to permit the holder of any such Debt to accelerate, the maturity of any such Debt, or any such Debt shall
be declared due and payable or be required to be prepaid (other than by a regularly scheduled required prepayment) prior to the
stated maturity thereof;

 

(i) one or more judgments,
orders, decrees or arbitration awards is entered against any Credit Party involving in the aggregate liability (to the extent not
covered by independent third-party insurance as to which the insurer does not dispute coverage) of $50,000 or more and either (i)
there is a period of 30 consecutive days at any time after the entry of such judgment, order, decree or award during which (1)
the same is not discharged, satisfied, vacated or bonded pending appeal or (2) a stay of enforcement thereof is not in effect or
(ii) enforcement proceedings are commenced upon such judgment, order, decree or award;

 

(j) the filing or commencement
of any attachment, sequestration, garnishment, execution or other Lien or action against or with respect to any Collateral;

 

(k) any Loan Document
ceases to be in full force and effect or any Lien with respect to any material portion of the Collateral intended to be secured
thereby ceases to be, or is not, valid, perfected (for any reason other than the failure of Lender to file a financing statement
or continuation thereof to maintain perfection) and prior to all other Liens (other than Permitted Liens that are expressly allowed
to be prior pursuant to the terms hereof) or is terminated, revoked or declared void, or any Loan Document shall terminate (other
than in accordance with its terms with the written consent of Lender) or become void or unenforceable, or the validity or enforceability
of any Loan Document shall be contested by any Credit Party, or any Affiliate of a Credit Party;

 

    
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(l) any event or circumstance
occurs which, in the Permitted Discretion of Lender exercised in good faith, causes Lender to suspect that any Credit Party has
engaged in fraudulent activity;

 

(m) the occurrence of
a Material Adverse Effect;

 

(n) the occurrence of
a Change of Control;

 

(o) the occurrence of
any default, event of default or other breach under or with respect to: (i) any Subordinated Debt, (ii) any document, instrument
or agreement evidencing or relating to any Subordinated Debt, or (iv) any Subordination Agreement; or

 

(p) a Termination Event
occurs.

 

ARTICLE
XI

REMEDIES

 

Section 11.1. Obligations.

 

(a) If an Event of Default
exists, Lender may do any one or more of the following, at any time or times during such existence of an Event of Default and in
any order, without notice to or demand on any Credit Party: (i) reduce the Revolving Credit Limit, or the advance rates used in
computing the Borrowing Base, (ii) restrict the amount of or refuse to make Loans, (iii) terminate the Lender’s Commitment
to make Revolving Loans or otherwise extend credit hereunder, (iv) declare the Obligations to be immediately due and payable and
(v) pursue its other rights and remedies under the Loan Documents or otherwise under Applicable Law.

 

(b) Notwithstanding anything
to the contrary contained in Section 11.1(a) and in addition to the remedies set forth therein, upon the occurrence of any
Event of Default described in Sections 10.1(d), 10.1(e), 10.1(f) or 10.1(g), the Lender’s
Commitment to make Revolving Loans or otherwise extend credit hereunder shall automatically and immediately terminate and all Obligations
shall automatically become immediately due and payable without notice or demand of any kind.

 

Section 11.2. Collateral.
If an Event of Default has occurred and is continuing, Lender shall have, in addition to all other rights of Lender, the rights
and remedies of a secured party under the UCC. At any time when an Event of Default is in existence: (i) Lender may notify Account
Debtors to make payment directly to Lender or to such address as Lender may specify, and enforce, settle or adjust Accounts, General
Intangibles or Chattel Paper with Account Debtors or obligors thereon for amounts and upon terms which Lender considers appropriate,
and in such case, Lender will credit the Obligations with only the net amounts received by Lender in payment thereof after deducting
all Lender Expenses incurred or expended in connection therewith; (ii) Lender may take possession of the Collateral and keep it
on Credit Parties’ premises or remove all or any part of it to another location selected by Lender; (iii) on request by
Lender, Credit Parties will, at Credit Parties’ cost, assemble the Collateral and make it available to Lender at a place
reasonably convenient to Lender; and (iv) Lender may, to the fullest extent permitted by Applicable Law, sell or otherwise
dispose of any Collateral at public or private sales, for cash, upon credit or otherwise, at such prices and upon such terms as
Lender deems appropriate. Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, Lender will give the appropriate Credit Party reasonable notice of the time and place of any public
sale thereof or of the time after which any private sale or any other intended disposition thereof is to be made. For this purpose,
it is agreed that at least ten (10) days’ notice of the time of sale or other intended disposition of the Collateral delivered
in accordance with Section 13.6 shall be deemed to be reasonable notice in conformity with the UCC. Lender may adjourn
or otherwise reschedule any public sale by announcement at the time and place specified in the notice of such public sale, and
such sale may be made at the time and place as so announced without necessity of further notice. Lender shall not be obligated
to sell or dispose of any Collateral, notwithstanding any prior notice of intended disposition. If any Collateral is sold on terms
other than payment in full at the time of sale, no credit shall be given in reduction of the Obligations until Lender receives
payment in cash, and if any such buyer defaults in payment, Lender may resell the Collateral without further notice to Credit
Parties. In the event Lender seeks to take possession of all or any portion of the Collateral by judicial process, each Credit
Party waives the posting of any bond, surety or security with respect thereto which might otherwise be required. Each Credit Party
agrees that Lender has no obligation to preserve rights to the Collateral or marshal any Collateral for the benefit of any Person.
Lender is hereby granted a license or other right to use, without charge, each Credit Party’s Proprietary Rights in completing
production of, advertising or selling any Collateral, and each Credit Party’s rights under all licenses shall inure to Lender’s
benefit for such purpose. The proceeds of any sale or disposition of Collateral shall be applied to the Obligations as set forth
in Section 4.7. The rights and remedies of the Lender under this Agreement and the other Loan Documents shall be cumulative.
The Lender shall have all other rights and remedies not inconsistent herewith as provided under the UCC, other Applicable Law
or in equity.

 

    
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Section 11.3. Injunctive
Relief. All cash proceeds of Collateral from time to time existing, including without limitation collections and payments
of Accounts, whether consisting of cash, checks or other similar items, at all times shall be subject to an express trust for
the benefit of Lender. All such proceeds shall be subject to Lender’s Liens. Except as may be specifically allowed otherwise
by this Agreement (including use of cash not in violation of the terms hereof distributed to Borrowers by Lender pursuant to Section
4.7), Credit Parties are expressly prohibited from using, spending, retaining or otherwise exercising any dominion over such
proceeds. Each Credit Party acknowledges and agrees that an action for damages against a Credit Party for any breach of such prohibitions
shall not be an adequate remedy at law. In the event of any such breach, each Credit Party agrees to the fullest extent allowed
by law that Lender shall be entitled to injunctive relief to restrain such breach and require compliance with the requirements
of this Agreement.

 

Section 11.4. Setoff.
If an Event of Default shall have occurred and be continuing, Lender is hereby authorized at any time and from time to time to
the fullest extent permitted by Applicable Law to set off and apply any and all cash and any and all deposits (whether general
or special, time or demand, provisional or final) at any time held, and any obligations at any time owing, by Lender to or for
the credit or the account of any Borrower or other Credit Party against any Obligations held by Lender, irrespective of whether
or not Lender shall have made any demand under the Loan Documents and regardless of whether such Obligations are contingent or
unmatured. The rights of Lender under this Section 11.4 are in addition to other rights and remedies (including other rights
of setoff) that Lender may have. Lender agrees to notify the Borrower Representative promptly after any such setoff and application;
provided that the failure to give such notice shall not affect the validity of such setoff and application.

 

ARTICLE
XII

TERMINATION

 

Section 12.1. Term
and Termination. Upon the effective date of termination of this Agreement for any reason, Lender’s obligation to make
Loans shall automatically terminate and all Obligations shall become immediately due and payable in full. Notwithstanding the
termination of this Agreement, until all Obligations (other than contingent indemnity obligations) are indefeasibly paid in cash
and performed in full, Credit Parties shall remain bound by the terms of this Agreement and Lender shall retain all rights and
remedies under the Loan Documents.

 

    
LOAN AND SECURITY AGREEMENT – Page 63

     

    

 

ARTICLE
XIII

MISCELLANEOUS

 

Section 13.1. Waivers
& Amendments. No waiver or amendment of any provision of any Loan Document and no consent to any departure therefrom shall
be effective unless it is in writing and signed as provided below in this Section, and then such waiver, amendment or consent
shall be effective only in the specific instances and for the purposes for which given and to the extent specified in such writing.
No waiver, consent, release, modification or amendment of or supplement to this Agreement or the other Loan Documents shall be
valid or effective against any party hereto unless the same is in writing and signed by (i) if such party is a Credit Party, by
such Credit Party, and (ii) if such party is Lender, by Lender.

 

Section 13.2. Severability.
The illegality or unenforceability of any provision of any Loan Document shall not in any way affect or impair the legality or
enforceability of the remaining provisions thereof.

 

Section 13.3. Governing
Law; Venue.

 

(a)
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 THEREUNDER
AND IN ALL OTHER 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.

 

(b)
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS
OF THE STATE OF NEW YORK OR IN ANY FEDERAL OR STATE COURT SITTING IN NEW YORK COUNTY, ROCKLAND COUNTY OR WESTCHESTER COUNTY, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH CREDIT PARTY AND LENDER CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.
EACH CREDIT PARTY, AND LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO VENUE ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH JURISDICTION. NOTWITHSTANDING
THE FOREGOING, LENDER SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY CREDIT PARTY OR ITS PROPERTY IN THE COURTS
OF ANY OTHER JURISDICTION AS LENDER DEEMS NECESSARY OR APPROPRIATE IN ORDER TO EXERCISE REMEDIES WITH RESPECT TO THE COLLATERAL.

 

Section 13.4. WAIVER
OF JURY TRIAL. EACH CREDIT PARTY AND LENDER EACH IRREVOCABLY WAIVES 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, THE OTHER
LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY KIND
BROUGHT BY ANY SUCH PERSON AGAINST ANOTHER, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH CREDIT PARTY
AND LENDER 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 FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED 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 THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, WHETHER OR NOT SPECIFICALLY SET FORTH THEREIN.

 

    
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Section 13.5. Fees
and Expenses. Credit Parties agree to pay to Lender, on demand, all costs, fees and expenses that Lender pays or incurs in
connection with the negotiation, preparation, consummation, administration, enforcement, perfection and termination of this Agreement
or any of the other Loan Documents, including: (a) reasonable attorney’s fees and costs for preparation, negotiation and
closing of the Loan Documents and any amendment, supplement, waiver, consent or subsequent closing in connection with the Loan
Documents and the transactions contemplated thereby, (b) ongoing administration of the Loan Documents, including without limitation,
reasonable attorney’s fees and costs incurred in consultation with attorneys, (c) costs and expenses of lien and title
searches, (d) taxes, fees and other charges for filing financing statements and other actions to perfect, protect and continue
Lender’s Liens, (e) sums paid or incurred to pay any amount or take any action required of any Credit Party under the
Loan Documents that Credit Parties fail to pay or take, (f) costs of appraisals, inspections and verifications of the Collateral,
including travel, lodging, and meals for inspections of the Collateral and Credit Parties’ operations by Lender, (g) costs
and expenses of disbursing Loans and administering cash management of Collateral proceeds, including collection accounts and lock-boxes,
(h) costs and expenses of preserving and protecting the Collateral, (i) costs, fees and expenses, including reasonable
attorney’s fees and costs, paid or incurred to enforce Lender’s Liens, sell or dispose of the Collateral, and obtain
payment of the Obligations and (j) costs and expenses, including reasonable attorney’s fees and costs, paid or incurred
to defend any claims made or threatened against Lender arising out of the transactions contemplated by the Loan Documents (all
such costs, expenses and fees described in this Section 13.5, the “Lender Expenses”). The foregoing
shall not limit any other provisions of the Loan Documents regarding costs and expenses to be paid by any Credit Party.

 

Section 13.6. Notices.
Except as otherwise expressly provided in any Loan Document, all notices, demands and requests that any party is required to give
to any other party shall be in writing and shall become effective (a) upon personal delivery or upon delivery by any nationally
recognized courier service, (b) three (3) days after it shall have been mailed by United States mail, first class, certified
or registered, with postage prepaid, or (c) when properly transmitted by telecopy or email, in each case addressed to the
party to be notified as follows:

 

If to Lender:

 

Sterling National Bank

8401 North Central Expressway, Suite 600

Dallas, Texas 75225

Attention: Portfolio Manager, URGENT

 

    
LOAN AND SECURITY AGREEMENT – Page 65

     

    

 

With a copy to:

 

Sterling National Bank

21 Scarsdale Road

Yonkers, New York 10707

Attention: General Counsel

Fax No.: (914) 961-7378

 

If to Borrowers or any other Credit Party, to Borrower
Representative, as follows:

 

c/o Air Industries Machining, Corp.

1460 Fifth Ave

Bay Shore, New York 11706

Telephone: (631) 252-1375

Fax No.: (631) 968-5377

Attention: Luciano M. Melluzzo

Email: lou.melluzzo@airindustriesgroup.com

 

or to such other address as each party
may designate for itself by like notice.

 

Section 13.7. Waiver
of Notices. Unless otherwise expressly provided in any Loan Document, each Credit Party hereby waives presentment and notice
of demand or dishonor and protest, notice of intent to accelerate the Obligations and notice of acceleration of the Obligations,
as well as any and all other notices to which it might otherwise be entitled. No notice to or demand on any Credit Party which
Lender may elect to give shall entitle such Credit Party or any other Credit Party to any or further notice or demand in the same,
similar or other circumstances.

 

Section 13.8. Non-applicability
of Chapter 346 of Texas Finance Code. Except for the opt-out provision of Section 346.004 thereof, the provisions of Chapter
346 of the Texas Finance Code (regulating certain revolving credit loans and revolving tri-party accounts) shall not be applicable
to this Agreement, any other Loan Document or the Loans.

 

Section 13.9. Binding
Effect. This Agreement shall be binding upon and inure to the benefit of the Credit Parties, the Lender and their respective
representatives, successors, and assigns, provided, that no interest herein may be assigned, and no obligation may be delegated,
by any Credit Party without prior written consent of the Lender. Subject to Section 13.13, the rights and benefits
of the Lender under the Loan Documents shall inure to any Person acquiring any interest in the Obligations from the Lender, unless
otherwise agreed by the Lender and any such Person.

 

Section 13.10. INDEMNITY
BY CREDIT PARTIES. EACH CREDIT PARTY AGREES TO DEFEND, INDEMNIFY AND HOLD
EACH INDEMNIFIED PERSON HARMLESS FROM AND AGAINST ANY AND ALL INDEMNIFIED CLAIMS INCLUDING THOSE INDEMNIFIED CLAIMS WHICH RELATE
TO OR ARISE OUT OF ANY INDEMNIFIED PERSON’S OWN NEGLIGENCE, provided, that no Credit Party shall have any obligation
hereunder to any Indemnified Person with respect to Indemnified Claims resulting solely and 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 Obligations.

 

    
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Section 13.11. Limitation
of Liability. To the fullest extent permitted by Applicable Law, no claim may be made by any party hereto against any other
party hereto or any of their Affiliates, directors, officers, members, managers, stockholders, employees or agents (and their
respective successors and assigns) for any special, indirect, consequential, exemplary or punitive damages (as opposed to direct
or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document, or any agreement
or instrument contemplated hereby or thereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds
thereof, or any act, omission or event occurring in connection therewith, and each party hereto hereby waives, releases and agrees
not to sue upon any claim for such damages, whether or not accrued and whether or not known or suspected to exist in its favor;
provided, that nothing in this Section 13.11 shall relieve any Credit Party of any obligations it may have to indemnify
an Indemnified Person against special, indirect, or consequential Indemnified Claims by a third party.

 

Section 13.12. Continuing
Rights of Lender in Respect of Obligations. In the event any amount from time to time applied in reduction of the Obligations
is subsequently set aside, avoided, declared invalid or recovered by any Credit Party or any trustee or in bankruptcy, or in the
event the Lender is otherwise required to refund or repay any such amount pursuant to any Applicable Law, then the Obligations
shall automatically, to the fullest extent permitted by Applicable Law, be deemed to be revived and increased to the extent of
such amount and the same shall continue to be secured by the Collateral as if such amount had not been so applied.

 

Section 13.13. Assignments.

 

(a) Lender may at any
time sell, assign, delegate or otherwise transfer all or part of the rights and duties of Lender under this Agreement and the other
Loan Documents to any of the following Persons (an “Assignee”): (i) any Affiliate of the Lender or (ii) any
other Person with the prior written consent of the Borrowers (which consent may be given by Borrower Representative on behalf of
all Borrowers and shall not be unreasonably withheld, conditioned or delayed; provided, however, Borrowers shall
be deemed to have given their consent unless they (or Borrower Representative, on behalf of all Borrowers) shall object thereto
by written notice to the Lender within five (5) Business Days after notice thereof has actually been delivered by the Lender to
Borrower Representative); provided, that the consent of Borrowers shall not be required under this subclause (ii) if an
Event of Default has occurred and is continuing or for any such sale, assignment or transfer in connection with a sale of all or
substantially all of the assets of Lender or all or substantially all of the loans or asset based loans of Lender. Subject to the
provisions of Section 13.14, each Credit Party hereby authorizes Lender to disseminate any information it has pertaining
to the Obligations, including without limitation, complete and current credit information on the Credit Parties and any of their
principals to any Assignee or prospective Assignee. Each Credit Party hereby acknowledges and agrees that any assignment will give
rise to a direct obligation of Borrowers and each other Credit Party to the Assignee and that the Assignee shall be considered
to be a Lender hereunder. Except as otherwise provided herein, Lender shall be relieved of any of its obligations hereunder as
a result of any sale, assignment, delegation or other transfer of all or any part of the Loans or other Obligations owed to it.
Lender may furnish any information concerning Credit Parties from time to time to Assignees and participants and to any Affiliate
of Lender or its parent company. Credit Parties hereby agree to execute any amendment or other document that may be necessary to
effectuate such an assignment, including an amendment to this Agreement providing for multiple lenders and an administrative agent
to act on behalf of such lenders.

 

(b) Notwithstanding anything
in this Agreement or the other Loan Documents to the contrary, Lender may pledge, or grant a security interest in, all or any portion
of its rights and other obligations under or relating to Loans under this Agreement and the other Loan Documents to secure obligations
of the Lender, including, without limitation, any pledge or assignment to secure obligations to a Federal Reserve Lender; provided
that, no such pledge or grant of a security interest shall release the Lender from any of its obligations hereunder or under
any other Loan Document.

 

    
LOAN AND SECURITY AGREEMENT – Page 67

     

    

 

(c) Lender shall have
the right at any time, without the consent of Borrowers, to sell one or more participant rights to any Person in all or any part
of its Commitments, Loans or in any other Obligation. The holder of any such participation shall not be entitled to require Lender
to take or omit to take any action hereunder or under the other Loan Documents except with respect to any amendment, modification
or waiver that would extend the final scheduled maturity of any Loan in which such participant is participating, or reduce the
rate or extend the time of payment of interest or fees thereon (except in connection with a waiver of applicability of any post
default increase in interest rates) or reduce the principal amount thereof, or increase the amount of the participant’s participation
over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default or of a mandatory
reduction in the Commitment shall not constitute a change in the terms of such participation, and that an increase in any Commitment
or Loan shall be permitted without the consent of any participant if the participant’s participation is not increased as
a result thereof). Borrowers agree that each participant shall be entitled to the benefits of Sections 3.3 and 3.5
(subject to the requirements and limitations therein) to the same extent as if it were Lender and had acquired its interest by
assignment pursuant to Section 13.13(a); provided that such participant shall not be entitled to receive any greater
payment under Sections 3.3 or 3.5 with respect to any participation than such participating Lender would have been
entitled to receive, except to the extent such entitlement to receive a greater payment results from a change in Applicable Law
that occurs after the participant acquired the applicable participation.

 

Section 13.14. Confidentiality.

 

(a) Each Credit Party
agrees, and agrees to cause each of its Affiliates, (i) not to transmit or disclose any provision of any Loan Document to any Person
(other than (1) to such Credit Party’s employees, auditors, advisors, consultants, Affiliates and counsel, (2) as may be
required by statute judicial decision, or judicial or administrative order, rule or regulations, (3) as may be agreed in advance
by Credit Parties and Lender or as requested or required by any Governmental Authority pursuant to any subpoena or other process,
(4) as to any such information that is or becomes generally available to the public (other than as a result of a prohibited disclosure
by any Credit Party) or (5) in connection with any litigation or other adversary proceeding involving parties hereto which such
litigation or adversary proceeding involves claims related to the rights or duties of such parties under this Agreement or the
other Loan Documents) without Lender’s prior written consent, (ii) to inform all Persons of the confidential nature of the
Loan Documents and to direct them not to disclose the same to any other Person and to require each of them to be bound by these
provisions. Each Credit Party agrees to submit to Lender and Lender reserves the right to review and approve all materials that
such Credit Party or any of its Affiliates prepares that contain Lender’s name or describe or refer to any Loan Document,
any of the terms thereof or any of the transactions contemplated thereby. No Credit Party shall, and shall not permit any of its
Affiliates to, use the Lender’s name (or the name of any of its Affiliates) in connection with any of its business operations,
including without limitation, advertising, marketing or press releases or such other similar purposes, without the Lender’s
prior written consent (except as required by Applicable Law). Nothing contained in any Loan Document is intended to permit or authorize
any Credit Party or any of its Affiliates to contract on behalf of the Lender.

 

(b) Lender agrees that
material, non-public information regarding the Credit Parties, their operations, assets, and existing and contemplated business
plans shall be treated by Lender in a confidential manner, and shall not be disclosed by Lender to Persons who are not parties
to this Agreement, except: (i) to attorneys for and other advisors, accountants, auditors, and consultants to the Lender, (ii)
to Subsidiaries and Affiliates of the Lender, (iii) as may be required by statute, judicial decision, or judicial or administrative
order, rule, or regulation, (iv) as may be agreed to in advance by the Credit Parties or as requested or required by any Governmental
Authority pursuant to any subpoena or other legal process, (v) as to any such information that is or becomes generally available
to the public (other than as a result of prohibited disclosure by the Lender), (vi) in connection with any assignment, participation
or pledge of the Lender’s interest under this Agreement, and (vii) in connection with any litigation or other adversary proceeding
involving parties hereto which such litigation or adversary proceeding involves claims related to the rights or duties of such
parties under this Agreement or the other Loan Documents. Notwithstanding the foregoing, each Credit Party hereby expressly authorizes
the Lender to use the respective Credit Party’s name and logo in tombstone advertisements and press releases regarding this
transaction, provided that the Borrower Representative has had a chance to review and approve the contents of such tombstone
or press release, such approval not to be unreasonably withheld or delayed.

 

    
LOAN AND SECURITY AGREEMENT – Page 68

     

    

 

Section 13.15. USA
Patriot Act Notice. The Lender hereby notifies the Credit Parties that, pursuant to the requirements of the Patriot Act, it
is required to obtain, verify and record information that identifies each Credit Party, which information includes the name and
address of each Credit Party and other information that will allow the Lender to identify each Credit Party in accordance with
the Patriot Act.

 

Section 13.16. Schedules.
All Schedules referenced herein and attached hereto are incorporated in this Agreement and made a part hereof for all purposes.

 

Section 13.17. 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 or other
electronic transmission of any such executed counterpart signature page shall be deemed valid as an original.

 

Section 13.18. Captions.
The captions contained in this Agreement are for convenience of reference only, are without substantive meaning and may not be
construed to modify, enlarge or restrict any provision of this Agreement.

 

THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

[Remainder of page intentionally left blank]

 

    
LOAN AND SECURITY AGREEMENT – Page 69

     

    

 

IN WITNESS WHEREOF,
the parties have entered into this Agreement as of the Agreement Date.

 

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

 

    
LOAN AND SECURITY AGREEMENT – Signature Page

     

    

 

	 	STERLING NATIONAL BANK, as Lender
	 	 	 
	 	By: 	/s/ Lawrence Cannariato
	 	Name: 	Lawrence Cannariato
	 	Title:	Vice President

 

    
LOAN AND SECURITY AGREEMENT – Signature Page

     

    

 

EXHIBIT
A

 

Form of Compliance Certificate

 

    
LOAN AND SECURITY AGREEMENT – Exhibit A

     

    

 

SCHEDULE
1.2

 

Term Loan Primary Collateral

 

See the list annexed hereto which was derived from the Appraisal
Report dated October 7, 2019, prepared by Tiger Group and provided to Lender.

 

    
LOAN AND SECURITY AGREEMENT - SCHEDULE 1.2

     

    

 

SCHEDULE
6.1

 

Specified Subordinated Creditors

 

Michael Taglich

Robert Taglich

Michael N. Taglich and Claudia Taglich

Taglich Brothers Inc. 

 

    
LOAN AND SECURITY AGREEMENT - SCHEDULE 6.1

     

    

 

SCHEDULE
7.1

 

Fundamental Information; Equity Ownership
Interests

 

I. Fundamental Information

 

	Credit Party
 Legal Name	 	Federal Tax
 I.D. No.	 	Jurisdiction of Organization	 	Chief Executive Office Address	 	Foreign
 Qualifications
	Air Industries Group	 	80-0948413	 	Nevada	 	1460 Fifth Avenue 
Bay Shore, New York 11706	 	New York
	Air Industries Machining, Corp.	 	11-2256757	 	New York	 	1460 Fifth Avenue 
Bay Shore, New York 11706	 	None
	Nassau Tool Works, Inc.	 	45-5357188	 	New York	 	1460 Fifth Avenue 
Bay Shore, New York 11706	 	None
	The Sterling Engineering Corporation	 	47-2805309	 	Connecticut	 	236 New Hartford Road 
Barkhamsted, Ct. 06063	 	None 

	Air Realty Group, LLC	 	N/A	 	Connecticut	 	1460 Fifth Avenue 
Bay Shore, New York 11706	 	None

 

II. Equity Ownership

 

	Issuer	 	Owner	 	Certificate Number(s)	 	Number of Shares	 	Percentage Interest
	Air Industries Group	 	N/A (Publicly held)	 	N/A	 	N/A	 	N/A
	Air Industries Machining, Corp.	 	Air Industries Group	 	9	 	100	 	100%
	Nassau Tool Works, Inc.	 	Air Industries Group	 	2	 	100	 	100%
	The Sterling Engineering Corporation	 	Air Industries Group	 	2	 	100	 	100%
	Air Realty Group, LLC	 	Air Industries Group	 	N/A	 	N/A	 	100% of the membership interests

  

    
LOAN AND SECURITY AGREEMENT - SCHEDULE 7.1

     

    

 

SCHEDULE 7.2

 

Prior Transactions

 

In March 2015, the Company
acquired The Sterling Engineering Corporation (“Sterling”) by causing it to merge into a newly formed subsidiary, SEC
Acquisition Corp., a Connecticut corporation. In connection with the merger, the name of the subsidiary was changed to “The
Sterling Engineering Corporation.” 

 

    
LOAN AND SECURITY AGREEMENT - SCHEDULE 7.2

     

    

 

SCHEDULE
7.7

 

Litigation

 

1. CPI
Aerostructures, Inc. vs. Air Industries Group, et. al. Index No. 653397/2018E

 

On December 20, 2018, pursuant to a Stock
Purchase Agreement dated as of March 21, 2018 (“SPA”), Air completed the sale of the shares of its subsidiary, Welding
Metallurgy, Inc. to CPI Aerostructures.

 

On March 19, 2019, in accordance with the
procedures set forth in the SPA, the Company received a notice from CPI claiming that the working capital deficit used to compute
the purchase price was understated. The issue of the amount of the working capital deficit was submitted to BDO USA, LLP (“BDO”),
acting as an expert, and it issued a report dated September 3, 2019, where it determined that the amount of the working capital
deficit was approximately $4,145,870. On September 9, 2019 the Company received a demand from CPI for payment of such amount. The
Company advised CPI that the determination of BDO is void because, among other things, BDO exceeded the scope of its authority
as set forth in the SPA. 

 

On September 27, 2019, CPI filed a notice
of motion in the Supreme Court of the State of New York, County of New York, against the Company seeking, among other things, an
order of specific performance requiring delivery of the funds deposited in escrow, together with the balance of the working capital
deficit which it claimed, and a judgment against the Company in the amount of approximately $4,200,000 of which $2,000,000 would
be satisfied by delivery of the funds in escrow. In its motion, CPI requested oral argument before the court.

 

On October 7, 2019, the Company agreed
to the release of $619,316 of the funds held in escrow in respect of claims related to the working capital deficit not related
to the value of WMI’s inventory. As a result of this release, approximately $1,400,000 remains in escrow.

 

On November 10, 2019, Air Industries filed
its opposition to CPI’s Motion and a Cross-Motion to vacate the BDO Determination due to BDO’s failure to act within
the scope of its authority and apply the standard prescribed in the SPA, or, in the alternative, seeking limited discovery and
other relief. In addition, in its Memorandum Air argued that monetary damages are not an appropriate remedy to be awarded on CPI’s
motion in that it was required to commence a new action which would have allowed for discovery and that, in all events, the maximum
adjustment permitted by the SPA was $2 million.

 

On October 31, 2019, CPI filed its reply
to Air’s Opposition and Cross Motion.

 

The Court has yet to set a date for oral
argument by the parties.

 

    
LOAN AND SECURITY AGREEMENT - SCHEDULE 7.7

     

    

 

2. Contract Pharmacal
Corp v. Air Industries Group Index No. 619183/2018

 

On October 2, 2018, Contract Pharmacal
Corp. commenced an action, relating to a Sublease entered into in May 2018 with respect to the property the company occupied at
110 Plant Avenue, Hauppauge, New York. The property was to be delivered to CPCl once it was vacated by Welding Metallurgy after
its purchase by CPI. In its complaint CPC initially sought damages of approximately $2,500,000 as a result of the Company’s
decision to allow CPC to occupy a portion of the property, as opposed to the entire property, when CPI made such portion available.
In a conference before the Court CPC reduced its demand to $600,000. The Company disputes the validity of the claims asserted by
CPC and believes it has meritorious defenses to those claims. In particular, the Company argues that the lease was not to commence
until all the space was available and that it should not be penalized for making a portion of the space available to CPC when it
was vacated by CPI. The Company recently submitted a motion in opposition to CPC’s motion for summary judgement.

 

3. Peter Cook adv. Rechler
Equity B-2, LLC

 

Peter Cook, a former employee of the Company
commenced an action against, among others, Rechler Equity B-2, LLC and Air Industries Group, in the Supreme Court State of New
York, Suffolk County, seeking compensation in an undetermined amount for injuries suffered while leaving the premises then occupied
by Welding Metallurgy, Inc. Rechler Equity B-2, LLC served a Third Party Complaint in this action against Air Industries Group,
Inc. and Welding Metallurgy, Inc. The defense of this action has been undertaken by the Company’s insurer. The Company believes
it is not liable to Mr. Cook and any amount it might have to pay would be covered by insurance.

 

4. Westbury Park Associates
vs. Air Industries Group Index No. 600532/17

 

Westbury Park Associates, LLC commenced
an action on or about January 11, 2017 against Air in NYS Supreme Court, County of Suffolk, seeking the recovery of past rent arrears,
and for an unspecified sum representing all additional rent due under an alleged commercial lease through the end of its term,
plus interest and attorney’s fees. The Plaintiff filed a motion for summary judgment in May of 2019. This Motion has been
granted, in part, by the Court, finding that Air Industries Group had a lease and was liable. The Court made no finding as to the
amount of the Plaintiff’s damages and directed the parties to use their best efforts to agree on any amount due to Plaintiff.

 

This action has been settled and the company
agreed to pay 13 monthly instalments of $8,548.36 continuing until September 2020. All instalments due to date have been paid and
there remain 9 monthly instalments remain.

5. Michelle Prisco adv. Air Industries
Group, et. Al.

 

A suit for wrongful dismissal which remains
in the pleadings stage.

 

    
LOAN AND SECURITY AGREEMENT - SCHEDULE 7.7

     

    

 

SCHEDULE
7.8

 

ERISA Benefit Plans

 

None.

    
LOAN AND SECURITY AGREEMENT - SCHEDULE 7.8

     

    

 

SCHEDULE
7.11

 

Location of Collateral

 

	Credit Party	 	Location Address	 	Leased, Owned or Other type of Arrangement

(e.g., warehouse consignment, etc.)	 	Name/Address of Owner (if different from Credit Party)	 	Type of Collateral at Location
	Air Industries Machining, Corp.	 	
        1460 Fifth Ave

        Bay Shore,

        New York 11706
	 	Leased	 	
        Hope Horizon Realty LLC

        85 Main St., Suite 204

        Hackensack, NJ 07601

         
	 	Inventory & Machinery
	Nassau Tool Works, Inc.* 	 	
        34 Lamar St

        West Babylon,

        New York 11704
	 	Leased	 	
        FW Web

        160 Middlesex Turnpike

        Bedford MA 01730
	 	Inventory
	
        The Sterling Engineering Corp.

         
	 	
        236 New Hartford Rd

        Barkhamsted, CT 06063
	 	Owned	 	N/A	 	Inventory & Machinery

 

 

		*	The lease for 34 Lamar Street has been terminated and the
company must vacate by April 1, 2020.

 

    
LOAN AND SECURITY AGREEMENT - SCHEDULE 7.11

     

    

 

SCHEDULE
7.15

 

Proprietary Rights

 

None.

 

    
LOAN AND SECURITY AGREEMENT - SCHEDULE 7.15 

     

    

 

SCHEDULE
7.16

 

Investment Property

 

1. Equity Interests owned by
each Credit Party described in Schedule 7.1.

 

    
LOAN AND SECURITY AGREEMENT - SCHEDULE 7.16 

     

    

 

SCHEDULE
7.17

 

Real Property and Leases

 

	Tenant	 	Property Address	 	Leased or Owned	 	Name/Address of Owner 
	Air Industries Machining, Corp.	 	
        1460 Fifth Ave

        Bay Shore,

        New York 11706
	 	Leased	 	
        Hope Horizon Realty LLC

        85 Main St., Suite 204

        Hackensack, NJ 07601 

	 	 	 	 	 	 	 
	Nassau Tool Works, Inc.* 	 	
        34 Lamar St

        West Babylon,

        New York 11704
	 	Leased	 	
        FW Web

        160 Middlesex Turnpike

        Bedford MA 01730

	 	 	 	 	 	 	 
	
        The Sterling Engineering Corp.

         
	 	
        236 New Hartford Rd

        Barkhamsted, CT 06063
	 	Owned	 	N/A

 

		*	The lease for 34 Lamar Street has been terminated and the
company must vacate by April 1, 2020.

 

    
LOAN AND SECURITY AGREEMENT - SCHEDULE 7.17
 

     

    

 

SCHEDULE
7.18

 

Material Agreements

 

None.

 

    
LOAN AND SECURITY AGREEMENT - SCHEDULE 7.18
 

     

    

 

SCHEDULE
7.19

 

Bank Accounts

 

Part A – Collection Account

 

	
         

        Credit Party
	 	Account #	 	Depository Bank Information	 	Purpose
	Air Industries Machining, Corp.	 	8026224578	 	PNC	 	Collection Account
	Nassau Tool Works, Inc.	 	8026583474	 	PNC	 	Credit Collection AC
	The Sterling Engineering Corporation	 	8026326793	 	PNC	 	  Collection Account

 

Part B – Controlled Accounts

	
         

        Credit Party
	 	Account #	 	Depository

Bank Information	 	Purpose
	Air Industries Machining, Corp.	 	8026224586	 	PNC	 	Operating Account
	Air Industries Machining, Corp.	 	8026229432	 	PNC	 	Operating Account
	Nassau Tool Works, Inc.	 	8026583466	 	PNC	 	Operating Account
	The Sterling Engineering Corporation	 	8026326785	 	PNC	 	Operating Account
	Air Industries Group           	 	8026224666	 	PNC	 	Debit Card Account

 

Part C – Excluded Accounts

 

	Credit Party	 	Account #	 	Depository

Bank Information	 	Purpose
	Air Industries Machining, Corp.	 	075 060 954	 	Citibank NA 	 	Checking 
	Air Industries Machining, Corp.	 	6792034870	 	Citibank NA 	 	Checking 

 

    
LOAN AND SECURITY AGREEMENT - SCHEDULE 7.19
 

     

    

 

SCHEDULE
7.21

 

Debt

 

	Original Lessor	 	Account Number	 	 	Principle Balance as of 11-30-19	 	 	Payoff Amount	 	 	Monthly Payment	 	 	Appraisal Valuation	 	 	Last Payment Date	 	Description
	Valley National Bank	 	 	51000371004004	 	 	$	2,490.40	 	 	$	2,582.15	 	 	$	516.45	 	 	$	8,000	 	 	4/12/20	 	2013 Ford
	Citizens One	 	 	00002746642384	 	 	$	5,363.08	 	 	$	5,531.36	 	 	$	691.42	 	 	$	14,000	 	 	7/21/20	 	2014 Ford
	Bank of West	 	 	299-1001444-001	 	 	$	4,902.25	 	 	$	4,952.16	 	 	$	2,476.08	 	 	 	 	 	 	1/08/20	 	Hexigon
	Bank of West	 	 	600-0141319-000	 	 	$	4,032.81	 	 	$	4,436.88	 	 	$	1,478.96	 	 	$	45,000	 	 	1/15/20	 	Zoiler
	Bank of West	 	 	001-0003855-001	 	 	$	169,346.75	 	 	$	168,165.48	 	 	$	33,869.35	 	 	 	 	 	 	4/21/20	 	ECC/Komax
	NMHG Financial	 	 	 	 	 	$	10,500.21	 	 	 	 	 	 	$	409.42	 	 	 	 	 	 	2-1-22	 	Yale Forklift
	HVB Equipment Capital LLC*	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Leaf Capital Funding, LLC	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Copiers

 

		*	This lease has been paid off

 

The following two Supplier Agreements will remain in place after
closing:

 

Air Machining -

 

Citibank, N.A. – as described in UCC
Filing Number 201901160022494, Citibank claims an interest in receivables due from Sikorsky and United Technologies to the extent
those receivables are purchased by Citibank.

 

Sterling Engineering –

 

Citibank Europe PLC - as described in UCC Filing Number
0003096251, Citibank claims an interest in receivables due from GKN to the extent those receivables are purchased by Citibank Europe.

 

The following UCC filing and related obligations will
remain in place after closing:

 

As described in UCC Filing Number 2013025063-0, Taglich
Brothers, Inc., as agent for purchasers, claims an interest in payments due to Parent from Meyer Tool, Inc.

 

    
LOAN AND SECURITY AGREEMENT - SCHEDULE 7.21
 

     

    

 

The following Subordinated Debt will remain in place
post-closing:

 

	Title of Account	 	Note Amount	 
	 	 	 	 
	ANDREW K LIGHT	 	$	50,000	 
	BARKTONES LLC	 	 	100,000	 
	CHARLES SBRAND PEGGY ANN BRAND JT TEN	 	 	85,000	 
	THE DENIS FORTIN REVOCABLE TRUST	 	 	 	 
	UAD 04/30/14 VIRGINIA FORTIN TTEE	 	 	300,000	 
	EMBRY FAMILY LIVING TRUST DTD 12/15/94 LLOYD BERTIS	 	 	 	 
	EMBRY AND KIM THU NGO EMBRY CO-TTEE’S	 	 	75,000	 
	JOHN A FRIEDMAN	 	 	100,000	 
	KENNETH SOLOMON	 	 	25,000	 
	KYLE G BUCHAKJIAN	 	 	10,000	 
	LEGEND CAPITAL MANAGEMENT	 	 	15,000	 
	LIGHTHOUSE CAPITAL LLC	 	 	75,000	 
	MICHAEL TAGLICH CLAUDIA TAGLICH JTWROS	 	 	2,300,000	 
	NUVIEW IRA INC. FBO TERRY THUEMLING	 	 	100,000	 
	RICHARD BUCHAKJIAN	 	 	50,000	 
	ROBERT ANTHONY SOUREK JR	 	 	50,000	 
	Robert F. Taglich	 	 	2,500,000	 
	RONALD A BERO	 	 	50,000	 
	RONALD D COWEN IRREVOCABLE TRUST UAD 05/08/03	 	 	 	 
	MARSHA’S COWEN TTEE	 	 	50,000	 
	SHADOW CAPITAL LLC	 	 	700,000	 
	STERLING FAMILY INVESTMENT LLC	 	 	200,000	 
	JANET SAU-HAN HO	 	 	50,000	 
	TAGLICH BROTHERS INC	 	 	406,000	 
	ANNA KATHLEEN SENYARD	 	 	25,000	 
	THE LADENDORF FAMILY REVOCABLE LIVING TRUST UAD 04/11/11	 	 	 	 
	MARK C LADENDORF & DEBRA L LADENDORF TTEES	 	 	25,000	 
	VAHAN BUCHAKJIAN	 	 	10,000	 
	Michael N. Taglich	 	 	1,750,000	 
	ROBERT W ALLEN TRUST UAD 04/29/08 ROBERT W ALLEN TTEE	 	 	100,000	 

  

    
LOAN AND SECURITY AGREEMENT - SCHEDULE 7.21
 

     

    

 

SCHEDULE
7.22

 

Liens

 

See Schedule 7.21 for information regarding Equipment Lease
liens. Otherwise, none.

 

    
LOAN AND SECURITY AGREEMENT - SCHEDULE 7.22
 

     

    

 

SCHEDULE
7.30

 

Release of Hazardous Materials

 

None.

 

    
LOAN AND SECURITY AGREEMENT - SCHEDULE 7.30 
 

     

    

 

SCHEDULE
7.32

 

Commercial Tort Claims

 

None.

 

 

LOAN AND SECURITY AGREEMENT - SCHEDULE 7.32Exhibit 10.2

 

   

GUARANTY AGREEMENT

 

This Guaranty Agreement
(as may be amended, restated, or otherwise modified from time to time, “Guaranty Agreement”), is executed and
delivered on December 31, 2019, by each of the guarantors identified on the signature pages hereto (each, together with its successors
and permitted assigns, a “Guarantor” and collectively the “Guarantors”) in favor of STERLING
NATIONAL BANK, a national banking association (in such capacity, together with its successors and assigns, the “Lender”).

 

Recitals:

 

WHEREAS, AIR INDUSTRIES
MACHINING, CORP., a New York corporation (“AIM”), NASSAU TOOL WORKS, INC., a New York corporation (“NTW”),
and THE STERLING ENGINEERING CORPORATION, a Connecticut corporation (“Engineering”, and together with AIM and NTW,
herein collectively called, together with their successors, “Borrowers” and each a “Borrower”),
Guarantors, and Lender have entered into that certain Loan and Security Agreement of even date herewith (as amended, supplemented,
restated or otherwise modified from time to time, the “Loan Agreement”; terms used and not defined herein shall
have the meaning given to such terms in the Loan Agreement), pursuant to which Lender has agreed to make available to Borrowers
a revolving line of credit and one or more term loans, all in accordance with and subject to the terms and conditions set forth
in the Loan Agreement;

 

WHEREAS, it is a condition
precedent to the Lender’s obligation to make the Loans and advances available to Borrowers under the Loan Agreement that
the Guarantors execute and deliver to Lender this Guaranty Agreement;

 

WHEREAS, Air
Industries Group, a Nevada corporation (“Parent”), is the sole shareholder of each Borrower, and Air
Realty Group, LLC, a Connecticut limited liability company (“Realty”), is an affiliate of Borrowers;
and

 

WHEREAS, each Guarantor
has determined that (a) it will directly and indirectly benefit from the availability of extensions of credit to the Borrowers
under the Loan Agreement and from the other transactions evidenced by and contemplated in the Loan Documents, (b) it will
benefit, directly and indirectly, from executing and delivering this Guaranty Agreement, (c) it is in such Guarantor’s
best interest, and within its organizational purpose, to execute and deliver and, if called upon to do so, to perform its obligations
under this Guaranty Agreement, and (d) the execution and delivery of this Guaranty Agreement and the other Loan Documents to which
such Guarantor is a party is necessary or convenient to the conduct, promotion, and attainment of the business of such Guarantor;

  

    GUARANTY AGREEMENT (AIR INDUSTRIES) - Page 1

     

    

 

NOW, THEREFORE, in consideration of the
foregoing and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, each Guarantor hereby
agrees as follows:

 

1. Guaranty of Guaranteed
Obligations. As an inducement to Lender to make the Loans or otherwise extend credit and other financial accommodations to
Borrowers under the Loan Agreement, each Guarantor, for value received, does hereby unconditionally, irrevocably, and absolutely
guarantee to Lender the prompt and full payment and performance of the following obligations when due, whether at stated maturity,
by acceleration or otherwise (collectively, the “Guaranteed Obligations”): all indebtedness, liabilities and
other obligations now or hereafter owing by Borrowers to Lender under or in connection with the Loan Agreement and any other Loan
Document (including, without limitation, all Obligations as defined thereunder), 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, expenses, including
costs, fees and expenses of attorneys employed or engaged by Lender in connection with any of the foregoing, filing fees, and any
other sums chargeable to Borrowers or any Guarantor under this Guaranty Agreement or any of the other Loan Documents. This Guaranty
Agreement is and shall be an absolute, unconditional, irrevocable, and continuing unlimited guaranty of payment, and not solely
of collection. Notwithstanding anything in this Guaranty Agreement to the contrary, the amount of the Guaranteed Obligations shall
be limited to a maximum aggregate amount equal to the largest amount that would not render this Guaranty Agreement subject to avoidance
as a fraudulent transfer or conveyance under any Applicable Laws, after giving effect to all other liabilities of Guarantors, contingent
or otherwise, that are relevant under such laws, and after giving effect to the value, as assets (as determined under the applicable
provisions of such laws), of any rights of Guarantors to contribution, indemnity, and/or subrogation from any Borrower or any other
Person.

 

2. Representations
and Warranties. Each Guarantor hereby represents and warrants to Lender as follows:

 

(a) Parent
is the sole shareholder of each Borrower, and Realty is an affiliate of Borrowers with operations that are dependent on Borrowers
and Borrowers’ business.

 

(b) Each
Guarantor has received and will receive a direct and indirect material benefit from the transactions evidenced by and contemplated
in the Loan Agreement and the other Loan Documents. The value of the consideration received and to be received by such Guarantor
is reasonably worth at least as much as the liability and obligation of such Guarantor hereunder. This Guaranty Agreement is given
by such Guarantor in furtherance of its direct and indirect business interests.

 

(c) Such
Guarantor is currently informed of the financial condition of each Borrower and of all other circumstances which a diligent inquiry
would reveal and which bear upon the risk of nonpayment of the Guaranteed Obligations. Such Guarantor has read and understands
the terms and conditions of the Loan Documents. Such Guarantor is familiar with, and has had an opportunity to review the books
and records regarding, the financial condition of each Borrower and is familiar with the value of any and all property intended
to be security for the payment of all or any part of the Guaranteed Obligations; provided, that such Guarantor is not relying
on such financial condition or the existence or value of any such security as an inducement to enter into this Guaranty Agreement.
Such Guarantors has adequate means to obtain, on a continuing basis, information concerning the financial condition of each Borrower.
Such Guarantor has not been induced to enter into this Guaranty Agreement on the basis of a contemplation, belief, understanding,
or agreement that any Person other than Borrowers or Guarantors will be liable to pay the Guaranteed Obligations. Lender has not
made any representation, warranty, or statement to such Guarantor in order to induce such Guarantor to execute this Guaranty Agreement.

 

    GUARANTY AGREEMENT (AIR INDUSTRIES) - Page 2

     

    

 

3. Covenants.
Each Guarantor hereby agrees to comply with each covenant and agreement contained in the Loan Agreement applicable to it as a Credit
Party or Guarantor, as applicable.

 

4. Obligations Not
Impaired. Each Guarantor agrees that its obligations under this Guaranty Agreement shall not be released, diminished, impaired,
reduced, or affected by the occurrence of any one or more of the following events: (a) lack of organizational authority of
any Borrower; (b) any receivership, insolvency, bankruptcy, or other proceedings affecting any Borrower or its property; (c) partial
or total release or discharge of any Borrower or any other Guarantor or other Person from the performance of any obligation contained
in any instrument or agreement evidencing, governing, or securing all or any part of the Guaranteed Obligations, whether occurring
pursuant to any Applicable Law or otherwise; (d) any change in the time, manner, or place of payment of, or in any other term
of, or any increase or decrease in the amount of, all the Guaranteed Obligations, or any portion thereof, or any other amendment
or waiver of any term of, or any consent to departure from any requirement of, any of the Loan Documents; (e) the taking or
accepting of any collateral security for all or any part of the Guaranteed Obligations, this Guaranty Agreement, or any other guaranty;
(f) the taking or accepting of any other guaranty for all or any part of the Guaranteed Obligations; (g) any failure
to acquire, perfect, or continue any security interest or lien on Collateral securing all or any part of the Guaranteed Obligations
or on any property securing this Guaranty Agreement; (h) any exchange, release, or subordination of any security interest
or lien on any Collateral, or any release, amendment, waiver, or subordination of any term of any guaranty of the Guaranteed Obligations
or any other impairment of any collateral security or guaranty now or hereafter securing all or any part of the Guaranteed Obligations;
(i) any failure to dispose of any collateral security at any time securing all or any part of the Guaranteed Obligations or
this Guaranty Agreement in a commercially reasonable manner or as otherwise may be required by any Applicable Law; (j) any
merger, reorganization, consolidation, or dissolution of any Borrower or any other Person at any time liable for any of the Obligations,
any sale, lease, or transfer of any or all of the assets of any Borrower or any other Person at any time liable for any of the
Obligations, or any change in name, business, organization, location, composition, structure, or organization of any Borrower or
any other Person at any time liable for any of the Obligations; (k) any change of control or any other change in the capitalization
or Equity Interest ownership of any Borrower or any other Person at any time liable for any of the Obligations; (l) any invalidity
or unenforceability of or defect or deficiency in any of the Loan Documents or all or any part of the Guaranteed Obligations; (m) avoidance
or subordination of the Guaranteed Obligations, or any portion thereof, (n) the unenforceability of all or any part of the Guaranteed
Obligations against the Borrowers because any interest contracted for, charged, or received in respect of the Guaranteed Obligations
exceeds the amount permitted by any Applicable Law; (o) any waiver, consent, extension, forbearance, or granting of any indulgence
by Lender with respect to the Guaranteed Obligations or any provision of any of the Loan Documents; (p) any delay in or lack
of enforcement of any remedies under the Loan Documents; (q) the act of creating all or any part of the Guaranteed Obligations
is ultra vires, or the officers or other representatives creating all or any part of the Guaranteed Obligations acted in excess
of their authority; (r) any election of remedies by Lender; (s) any of the Loan Documents were forged; (t) the election
by Lender in any proceeding under the Bankruptcy Code of the application of Section 1111(b)(2) thereof; (u) any borrowing
or grant of a security interest by any Borrower as debtor-in-possession, under Section 364 of the Bankruptcy Code; (v) any use
by a Borrower (whether with the consent of Lender or otherwise) of cash collateral during the pendency of any bankruptcy proceeding;
(w) the making of post-petition loans or any other provision for the extension of post-petition credit to any Borrower as
debtor-in-possession in any bankruptcy proceedings; (x) the disallowance in bankruptcy of all or any portion of the claims of Lender
for payment of any of the Guaranteed Obligations; or (y) any other circumstance which might otherwise constitute a legal or
equitable discharge or defense available to any Borrower or any Guarantor (other than that the Guaranteed Obligations shall have
been paid and performed in full).

 

    GUARANTY AGREEMENT (AIR INDUSTRIES) - Page 3

     

    

 

5. Consent and Waiver.

 

(a) Each
Guarantor hereby waives: (i) notice of acceptance of this Guaranty Agreement; (ii) notice of any Loans or other financial
accommodations or the creation or existence of any Guaranteed Obligations; (iii) notice of the amount of the Guaranteed Obligations;
(iv) notice of any adverse change in the financial condition of any Borrower or any other Person or of any other fact that
might increase or otherwise change such Guarantor’s risk with respect to the Guaranteed Obligations, any Borrower or any
other Person under or in connection with this Guaranty Agreement; (v) notice of presentment for payment, demand, protest and
notice thereof, notice of intent to accelerate, notice of acceleration, notice of dishonor, diligence or promptness in enforcement,
and indulgences of every kind as to any promissory notes or other instruments; (vi) notice of any of the events or circumstances
enumerated in Section 4, and all other notices and demands to which such Guarantor might otherwise be entitled (except if
such notice is specifically required to be given to such Guarantor hereunder or under any other Loan Documents); (vii) any
requirement that Lender protect, secure, perfect, or insure its security interest and liens on any Collateral or other property
as security for the Guaranteed Obligations or exhaust any right or take any action against Lender or any other Person or any Collateral
or any other property subject to a security interest or lien; (viii) the benefit of any statute of limitation applicable to
enforcement of the Guaranteed Obligations, or any portion thereof, or any security interests or liens in the Collateral or other
property as security for the Guaranteed Obligations or this Guaranty Agreement; (ix) all rights by which such Guarantor might
be entitled to require suit on an accrued right of action in respect of any of the Guaranteed Obligations or require suit against
any Borrower or any other Person, whether arising pursuant to Section 17.001 or Section 43.002 of the Texas Civil Practice and
Remedies Code, as amended,, or Rule 31 of the Texas Rules of Civil Procedure, as amended, or otherwise; or (x) any other defense
of any Borrower or any other Person (other than that the Guaranteed Obligations shall have been paid and performed in full, or
in part, to the extent of any such partial payment or performance).

 

(b) Each
Guarantor hereby waives and agrees not to assert against Lender, to the extent allowed by any Applicable Law: (i) any defense,
setoff, counterclaim, or claim of any kind or nature available to any Borrower or any other Person against Lender arising directly
or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of the Guaranteed Obligations
or any security interest or lien in the Collateral or any other property as security for the Guaranteed Obligations; or (ii) any
right or defense arising by reason of any claim or defense based upon an election of remedies by Lender under any Applicable Law.

 

(c) Lender shall have the right
to seek recourse against any or all Guarantors to the fullest extent provided for herein, and no election by Lender to proceed
in one form of action or proceeding, or against any party, or on any obligation, shall constitute a waiver of Lender’s right
to proceed in any other form of action or proceeding or against other parties unless Lender has expressly waived such right in
writing. Without limiting the foregoing, no action or proceeding by Lender under any document or instrument evidencing the Guaranteed
Obligations shall serve to diminish the liability of any Guarantor under this Guaranty Agreement except to the extent that Lender
finally and unconditionally shall have realized payment in full of the Guaranteed Obligations.

 

    GUARANTY AGREEMENT (AIR INDUSTRIES) - Page 4

     

    

 

(d) Each Guarantor waives, and
agrees that its liability hereunder shall not be affected by, any neglect, delay, omission, failure, or refusal of Lender to (i) exercise
or properly or diligently exercise any right or remedy with respect to any or all of the Guaranteed Obligations or the collection
thereof or any security interests or liens or other security for or guaranty of the Guaranteed Obligations, or any portion thereof,
(ii) take or prosecute, or properly or diligently take or prosecute, any action for the collection of any or all of the Guaranteed
Obligations against any Borrower, any Guarantor or any other Person in respect of any or all of the Guaranteed Obligations, (iii) foreclose
or prosecute, or properly or diligently foreclose or prosecute, any action in connection with any agreement, document or instrument
or arrangement evidencing, securing, or otherwise affecting all or any part of the Guaranteed Obligations, or (iv) mitigate
damages or take any other action to reduce, collect, or enforce the Guaranteed Obligations;

 

(e) Lender may at any time, without
the consent of or notice to any Guarantor, without incurring responsibility to any Guarantor and without impairing, releasing,
reducing, or affecting the obligations of any Guarantor hereunder: (i) change the manner, place, or terms of payment of all
or any part of the Guaranteed Obligations, or renew, extend, modify, rearrange, refinance, refund, increase or alter all or any
part of the Guaranteed Obligations; (ii) sell, exchange, release, surrender, subordinate, realize upon, or otherwise deal
with in any manner and in any order any Collateral and any security interest or lien securing all or any part of the Guaranteed
Obligations or this Guaranty Agreement or setoff against all or any part of the Guaranteed Obligations; (iii) neglect, delay,
omit, fail, or refuse to take or prosecute any action for the collection of all or any part of the Guaranteed Obligations or this
Guaranty Agreement or to take or prosecute any action in connection with any of the Loan Documents; (iv) exercise or refrain
from exercising any rights against any Borrower or other Person, or otherwise act or refrain from acting; (v) settle or compromise
all or any part of the Guaranteed Obligations and subordinate the payment of all or any part of the Guaranteed Obligations to the
payment of any indebtedness, liabilities, or obligations which may be due or become due to Lender; (vi) release all or any
one or more parties to any one or more of the Loan Documents or grant forbearance or other indulgences to any Borrower or any other
Person in respect thereof; (vii) amend or modify in any manner and at any time (or from time to time) any of the Loan Documents;
(viii) partially or fully release or substitute any Guarantor, or enforce, exchange, release, or waive any security for the
Guaranteed Obligations, or any portion thereof; (ix) bring suit against any and all Persons liable or obligated in respect
of the Guaranteed Obligations, collectively together, jointly and severally or separately, and apply any amounts obtained by Lender
in such manner as Lender may elect, subject to the Loan Documents; and (x) apply to the Guaranteed Obligations any sums paid
to Lender by any Borrower, any Guarantor or any other Person as provided by the Loan Documents.

 

(f) Should Lender seek to enforce
this Guaranty Agreement by action in any court or otherwise, each Guarantor waives any requirement, substantive or procedural,
that (i) rights or remedies be enforced first against any Borrower or any other Person liable for all or any part of the Guaranteed
Obligations, including, without limitation, that a judgment first be rendered against such Borrower or any such Person, or that
such Borrower or any such Person should be joined in such cause or (ii) enforcement shall first be made against any Collateral
or other property which shall ever have been given to secure all or any part of the Guaranteed Obligations or this Guaranty Agreement.

 

(g) No Guarantor’s obligations
under this Guaranty Agreement shall be impaired by any action, if any, which results in the denial or impairment of any right to
seek a deficiency against any Borrower.

 

(h) Each Guarantor agrees that
it has the sole responsibility for keeping itself informed of the financial condition of Borrowers and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations or any part thereof, and Lender shall not have any obligation
or duty to advise such Guarantor of information known to it regarding such condition or any such circumstance.

 

    GUARANTY AGREEMENT (AIR INDUSTRIES) - Page 5

     

    

 

(i) Each Guarantor consents and
agrees that Lender shall not have any obligation to marshal assets securing the Guaranteed Obligations in favor of such Guarantor.

 

(j) Lender may, at any time and
from time to time in its discretion (subject to the Loan Agreement) and with or without valuable consideration, allow substitution
or withdrawal of Collateral or other security and release Collateral or other security without impairing or diminishing the indebtedness,
liabilities, or obligations of such Guarantor under this Guaranty Agreement.

 

(k) Any determination by a court
of competent jurisdiction of the amount of any principal and/or interest or other amount constituting any of the Guaranteed Obligations
shall be conclusive and binding on each Guarantor irrespective of whether such Guarantor was a party to the suit or action in which
such determination was made.

 

6. Default.
Upon the occurrence and during the continuation of an Event of Default, each Guarantor agrees to pay to Lender, at its office located
in Dallas County, Texas, or at such other place as Lender may specify to such Guarantor in writing, on demand by Lender and without
further notice of dishonor and without notice of any kind to any Borrower, any Guarantor, or any other Person, the full unpaid
amount of the Guaranteed Obligations, in immediately available funds, or such lesser amount, if any, as may then be due and payable
and demanded by Lender from time to time. If acceleration of the time for payment of any amount payable by Borrowers under or with
respect to any of the Guaranteed Obligations is stayed or otherwise delayed upon the insolvency, bankruptcy, or reorganization
of any Borrower, all such amounts otherwise subject to acceleration under the terms of the Guaranteed Obligations shall nonetheless
be payable by Guarantors hereunder promptly on demand by Lender, each Guarantor expressly and unconditionally agrees to make such
payment to Lender in full.

 

7. No Waiver.
No failure on the part of Lender to exercise, and no forbearance, delay or omission by Lender in exercising, any right or remedy
hereunder shall impair such right or remedy or operate or be construed as a waiver thereof or any acquiescence therein, nor shall
any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof or the exercise
of any other right or remedy hereunder.

 

8. Notice of Sale.
In the event that Guarantors are entitled to receive any notice under the UCC, as it exists in the state governing any such notice,
of the sale or other disposition of any Collateral or other property securing all or any part of the Guaranteed Obligations or
this Guaranty Agreement, it is agreed that at least ten (10) days’ notice to Guarantors of the time and place of any public
sale, or the time after which any private sale or other disposition may be made of any such Collateral or other property, shall
be deemed to be reasonable notice in conformity with such requirements.

 

9. Payment by Guarantor.
Whenever any Guarantor pays any sum which is or may become due under this Guaranty Agreement, written notice must be delivered
to Lender contemporaneously with such payment.

 

10. Binding Effect.
This Guaranty Agreement is for the benefit of Lender, and its successors and assigns, and in the event of an assignment by Lender
(in accordance with the terms of the Loan Agreement) of the Guaranteed Obligations, or any part thereof, the rights and benefits
hereunder, to the extent applicable to the indebtedness, liabilities, and obligations so assigned, shall be deemed transferred
with such indebtedness, liabilities, and obligations without necessity of further express action. This Guaranty Agreement is binding
upon each Guarantor and its successors and permitted assigns.

 

    GUARANTY AGREEMENT (AIR INDUSTRIES) - Page 6

     

    

 

11. Subordination
of Indebtedness and Liens. The payment of any and all principal of and interest on all Debt of any Borrower to any Guarantor,
whether direct, indirect, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, now or hereafter existing,
due or to become due to such Guarantor under any and all circumstances, including, without limitation, any rights of subrogation
of such Guarantor in respect of any payment by such Guarantor under this Guaranty Agreement (herein called the “Subordinated
Debt”), shall in all respects be subordinate and junior in right of payment and enforcement to the prior payment and
enforcement in full of the Guaranteed Obligations as provided in this Section. Except to the extent, if any, as may be expressly
permitted by the Loan Agreement, no payment shall be made on or with respect to the Subordinated Debt unless and until the Guaranteed
Obligations shall have been paid and performed in full. In the event that any Guarantor shall receive any payment on account of
the Subordinated Debt in violation of this Section, such Guarantor will hold, or cause to be held (as the case may be), any amount
so received in trust for the benefit of Lender and will forthwith deliver, or cause to be delivered (as the case may be), such
payment to Lender, in the form received, to be applied to the Guaranteed Obligations. All security interests and liens, if any,
at any time securing payment of all or any part of the Subordinated Debt (herein called the “Subordinated Liens”)
shall be and remain inferior and subordinate to the security interests and liens securing payment of all or any part of the Guaranteed
Obligations, regardless of whether such Subordinated Liens presently exist or are hereafter created or when such Subordinated Liens
were created, perfected, filed, or recorded (provided that the foregoing shall not be interpreted or deemed to allow the
existence of any security interests or liens that are prohibited by the Loan Documents). No Guarantor shall exercise or enforce
any creditors’ rights or remedies that it may have against any Borrower, or foreclose, repossess, sequester, or otherwise
institute any action or proceeding (whether judicial or otherwise, including, without limitation, the commencement of, or joinder
in, any bankruptcy, insolvency, reorganization, liquidation, receivership, or other debtor relief law) to enforce the Subordinated
Debt or any Subordinated Lien on any assets of any Borrower unless and until the Guaranteed Obligations shall have been paid and
performed in full. The terms and provisions of this Section are given by Guarantors as additional rights and benefits to any and
all other subordination agreements heretofore, concurrently herewith, or hereafter executed by any Guarantor to or in favor of
Lender, and nothing in this Guaranty Agreement shall be deemed to in any way negate or replace any other such previous, concurrent,
or subsequent subordination agreements.

 

12. Right of Offset.
Each Guarantor hereby grants to Lender right of offset to secure the payment of the Guaranteed Obligations and such Guarantor’s
obligations and liabilities hereunder, which right of offset shall be upon any and all monies, securities and other property (and
the proceeds therefrom) of such Guarantor now or hereafter held or received by or in transit to Lender from or for the account
of such Guarantor, whether for safekeeping, custody, pledge, transmission, collection or otherwise, and also upon any and all deposits
(general or special), credits and claims of such Guarantor at any time existing against Lender. Upon the occurrence of any Event
of Default, Lender is hereby authorized at any time and from time to time, without notice to any Guarantor, to offset, appropriate
and apply any and all items hereinabove referred to against the Guaranteed Obligations and such Guarantor’s obligations and liabilities
hereunder irrespective of whether or not Lender shall have made any demand under this Guaranty Agreement and although such obligations
and liabilities may be contingent or unmatured. Lender agrees promptly to notify Guarantors after any such offset and application
made by Lender, provided that the failure to give such notice shall not affect the validity of such offset and application. The
rights of Lender under this section are in addition to, and shall not be limited by, any other rights and remedies (including other
rights of offset) which Lender may have.

 

13. Invalid Provisions.
If any provision of this Guaranty Agreement is held to be illegal, invalid, or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable, this Guaranty Agreement shall be construed and enforced as if
such illegal, invalid, or unenforceable provision was not a part hereof, and the remaining provisions hereof shall remain in full
force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance herefrom. Notwithstanding
any language to the contrary contained herein, no provision herein or in any other Loan Document evidencing the Guaranteed Obligations
shall require the payment or permit the collection of interest in excess of the maximum permitted by any Applicable Law.

 

    GUARANTY AGREEMENT (AIR INDUSTRIES) - Page 7

     

    

 

14. Modification
in Writing. No modification, consent, amendment, or waiver of any provision of this Guaranty Agreement, and no consent to any
departure by any Guarantor herefrom, shall be effective unless the same shall be in writing and signed by a duly authorized officer
of Lender and, as to any modification or amendment, such Guarantor, and then shall be effective only in the specific instance and
for the specific purpose for which given.

 

15. Limited Effect
of Notices; Consents. No notice to or demand on, or consent by, any Guarantor in any case shall, of itself, entitle any Guarantor
to any other or further notice or demand, or right to grant or refuse consent, in similar or other circumstances.

 

16. Cumulative Rights.
All rights and remedies of Lender under this Guaranty Agreement are cumulative of each other and of every other right or remedy
which Lender may otherwise have under any applicable law or under any other agreement.

 

17. Expenses.
Each Guarantor agrees, jointly and severally, to pay on demand all reasonable costs and expenses incurred by Lender in connection
with the negotiation, preparation, execution, and performance of this Guaranty Agreement and any and all amendments, modifications,
renewals, restatements, and/or supplements hereto from time to time, including, without limitation, reasonable attorneys’
fees. If a Guarantor should breach or fail to perform any provision of this Guaranty Agreement, the Guarantors agree to pay to
Lender all reasonable costs and expenses incurred by Lender in the enforcement of this Guaranty Agreement from time to time, including,
without limitation, reasonable attorneys’ fees.

 

18. Limitation of
Liability. Notwithstanding anything in this Agreement to the contrary, the liability of each Guarantor hereunder shall be limited
to the maximum amount of liability that can be incurred without rendering this Guaranty Agreement, as it relates to each Guarantor,
voidable under Applicable Law relating to fraudulent transfer or fraudulent conveyance, and not for any greater amount.

 

19. Governing
Law; Venue; WAIVER OF JURY TRIAL.

 

(a) THIS GUARANTY
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.

 

(b) EACH GUARANTOR
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 GUARANTY AGREEMENT OR ANY OTHER RELATIONSHIP BETWEEN LENDER AND SUCH GUARANTOR BY ANY MEANS ALLOWED UNDER STATE OR FEDERAL
LAW. ANY LEGAL PROCEEDING ARISING OUT OF OR IN ANY WAY RELATED TO THIS GUARANTY AGREEMENT OR ANY OTHER RELATIONSHIP BETWEEN LENDER
AND ANY GUARANTOR 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.

 

    GUARANTY AGREEMENT (AIR INDUSTRIES) - Page 8

     

    

 

(c) EACH GUARANTOR (AND LENDER, BY ITS
ACCEPTANCE OF THIS GUARANTY AGREEMENT) HEREBY (i) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS GUARANTY AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR ASSOCIATED HEREWITH; (ii) IRREVOCABLY WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY
HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT
SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS; AND (iv) ACKNOWLEDGES THAT IT HAS
BEEN INDUCED TO ENTER INTO THIS GUARANTY AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY, AMONG OTHER THINGS, BY THE MUTUAL
WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.

 

20. Notices.
All notices or demands by any party relating to this Guaranty Agreement shall be given as set forth in the Loan Agreement.

 

21. Survival.
All representations, warranties, covenants, and agreements of Guarantors in this Guaranty Agreement shall survive the execution
of this Guaranty Agreement.

 

22. Counterparts.
This Guaranty Agreement may be executed in any number of counterparts and a telecopy, pdf or other electronic transmission of any
such executed counterpart shall be deemed valid as an original.

 

23. FINAL AGREEMENT.
THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES HERETO.

 

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IN WITNESS WHEREOF, each of the undersigned
Guarantors has executed this Guaranty Agreement as of the effective date specified in the introductory paragraph hereinabove.

 

	 	GUARANTORS:
	 	 	 
	 	AIR INDUSTRIES GROUP, a Nevada corporation
	 	 
	 	By:	/s/ Michael Recca
	 	 	Name: 	Michael Recca
	 	 	Title: 	Chief Financial Officer
	 	 	 	 
	 	AIR REALTY GROUP, LLC, a Connecticut limited liability company
	 	 
	 	By:	/s/ Michael Recca
	 	 	Name: 	Michael Recca
	 	 	Title: 	Chief Financial Officer

  

 

GUARANTY AGREEMENT (AIR INDUSTRIES) –
Signature Page

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